Humana Inc. (NYSE: HUM) is suing the U.S. Department of Health and Human Services (HHS) due to its attempt to claw back billions of perceived overpayments from Medicare Advantage (MA) plans.
The Centers for Medicare & Medicaid Services (CMS), which is a part of HHS, finalized a rule in January that would allow the agency to recoup overpayments through Risk Adjustment Data Validation (RADV).
“The commonsense policies finalized in the RADV final rule will help CMS ensure that people with Medicare are able to access the benefits and services they need, including in Medicare Advantage, while responsibly protecting the fiscal sustainability of Medicare and aligning CMS’s oversight of the Traditional Medicare and MA programs,” CMS said at the time.
Humana operates one of the largest MA plans in the country. The company is looking to block the finalized rule, and, in turn, CMS’ ability to claw back money from private MA plans.
“The rule did not provide the details needed to fully understand the potential impact of the future audits,” Humana CEO Bruce Broussard said during the company’s fourth-quarter earnings call. “We are disappointed CMS’ final rule did not include a fee-for-service adjuster in the process, which we believe is necessary to determine appropriate payment amounts to MA organizations. We are considering all our options to address or challenge this admission and obtain clarity about our compliance obligations. With that said, we are committed to working productively with CMS to ensure the integrity of the program is maintained.”
In the lawsuit, Humana takes issue with multiple components of the final rule.
“The lawsuit claims the finalized rule violates the basis of actuarial soundness regarding the payment audit methodology,” a note from the investment banking company Stephens read. “Specifically, the suit claims the RADV audits disregard actuarial standards and lack ‘actuarial equivalence’ between Medicare FFS and MA payments, by not including an FFS Adjuster. Additionally, the lawsuit claims the rule violates the Administrative Procedure Act (APA), which Humana argues hinders CMS from taking significant policy actions without a reasoned explanation reconciling the agency’s policy with controlling statutory mandates.”
Potential effect on home-based care agencies
Personal home care agencies have gotten more involved with MA since plans began offering primarily-health related supplemental benefits and Special Supplemental Benefits for the Chronically Ill (SSBCI).
Through benefits such as in-home support services, providers have been able to care for MA enrollees.
Plans have invested in these benefits – which often address care access, transportation and food needs – to help member retention. A tighter financial belt could put those benefits in jeopardy.
Helper Bees COO Andy Friedell – who works directly with plans and providers to streamline benefit offerings – doesn’t see that bearing out, however.
“I think it caused a little bit of pause for some plans,” Friedell said last week at Home Health Care News’ FUTURE conference in Nashville. “But no, I don’t see them cutting it back. We actually the opposite, we see them growing pretty significantly.”
As for home health providers, some are likely happy to see CMS taking a closer look at how MA plans operate in general.
But there could be greater ramifications for the home health care industry than just that. CMS has also suggested it plans to claw back overpayments from home health providers in the coming years.
If Humana’s lawsuit against CMS is successful, that could encourage legal action from the home health industry as well. The National Association for Home Care & Hospice (NAHC) has already filed a lawsuit against CMS for the agency’s recent payment rate cuts in home health care.
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