Sep 1, 2023 - Health

Humana sues Biden admin to prevent Medicare payment clawbacks

Illustration of a red marker line being stopped by a gavel.

Illustration: Maura Losch/Axios

Humana on Friday filed a lawsuit challenging the Biden administration's plan to claw back billions of dollars in overpayments to Medicare Advantage insurers.

Why it matters: Studies show that the government has regularly overpaid private Medicare Advantage plans for care that isn't supported by patient records. Medicare projected it would recoup $4.7 billion from insurers in the next decade under the policy it finalized earlier this year.

Driving the news: At issue is the Centers for Medicare and Medicaid Services audit process called risk adjustment data validation, or RADV, to identify improper payments.

  • Humana, the second largest Medicare Advantage insurer by enrollment, filed its suit in the U.S. District Court for the Northern District of Texas.
  • The insurer said the government violated the federal rulemaking process and called it a "capricious reversal of a policy" that had established equivalent auditing standards for Medicare Advantage and traditional fee-for-service Medicare.

What they're saying: "This parity is foundational to the Medicare Advantage program and the high-quality benefits and low premiums that Humana members and seniors choosing Medicare Advantage depend on," spokesman Mark Taylor said in an emailed statement.

  • Humana also claims CMS failed to give a reasoned justification for the rule or provide meaningful opportunity for public comment, and said its decision to apply the rule retroactively violated the law.
  • A CMS spokesperson said the agency does not comment on pending litigation.

Of note: The case was assigned to U.S. District Judge Reed O'Connor, who previously ruled against the Affordable Care Act, per Reuters.

Catch up quick: In 2021, a federal auditor concluded a Humana health plan in Florida improperly collected $200 million in 2015 by overstating how sick its Medicare patients were, NPR reported.

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