News & Insights


August 16, 2021

Health Headlines – August 16, 2021

OIG Audit Alleges that CMS Made $1.9 Million in Overpayments for Chronic Care Management Services During 2017 and 2018 – In a report issued by OIG in August of 2021, OIG alleged that for Chronic Care Management (CCM) services, “providers billed for and received overpayments totaling $1,918,278, and beneficiaries were required to pay a total of up to $540,680 in Medicare cost sharing” for these services which they did not pay.  OIG recommends, and CMS agrees, that it will seek recovery of the overpayment amounts from providers and will instruct providers to refund the cost share amounts that the beneficiaries were required to cover.

CCM consists of “management and support services provided by clinical staff, under the direction of a physician or other qualified health care professional, to a patient.” Specifically, the “services include establishing, implementing, revising, or monitoring the care plan, coordinating the care of other professionals and agencies, and educating the patient or caregiver about the patient’s condition, care plan, and prognosis.”

Prior to 2017, CCM services did not distinguish between complex and non-complex. Effective January 1, 2017, CMS created a separate category for complex CCM to allow complex chronic care services to be billed separately. (81 Fed. Reg. 80170, 80244-80245, 80349, 80364 (Nov. 15, 2016).) Non-complex CCM can be billed once per month per member after the clinical staff furnishes at least 20 minutes of care management services at the direction of a physician. Complex CCM can be billed once per month per member once an initial 60 minutes of care management services are provided and can be billed in subsequent increments of 30 minutes. However, this incremental complex CCM cannot be submitted if a physician has submitted a claim for noncomplex CCM.

During its audit, OIG claims to have reviewed 50,192 CCM claims from calendar years 2017 and 2018 and identified 38,447 claims resulting in $1.4 million in overpayments for instances in which providers billed noncomplex or complex CCM services more than once for the same beneficiary for the same month.  OIG also allegedly identified 10,882 claims that resulted in $438,262 in overpayments for instances in which the same provider billed for both noncomplex or complex CCM services and overlapping care management services rendered to the same beneficiaries for the same service periods.  Lastly, OIG purportedly identified 863 claims that resulted in $52,086 in overpayments for incremental complex CCM services that were billed along with complex CCM services that were identified as overpayments.

CMS states that its Medicare contractors will be seeking recovery of the overpayment amounts. To this end, CMS also states that it will be notifying appropriate providers of the potential overpayments and tracking returned overpayments that are made in accordance with the 60-day rule and OIG’s recommendation.  Moreover, CMS stated that, since the audit “it has implemented claims processing controls, including system edits, to prevent and detect these types of overpayments” going forward.

A copy of OIG’s report can be found here.

Reporter, Amy L. O’Neill, Sacramento, +1 916 321 4812,

D.C. Circuit Rejects UnitedHealthcare’s Challenge to the Medicare Advantage 60-Day Overpayment Rule – The D.C. Circuit Court overturned UnitedHealthcare’s victory in the lower court that resulted in vacatur of the Medicare Advantage 60-day overpayment rule (the Overpayment Rule).  Last week, the D.C. Circuit Court held that the actuarial-equivalence requirement does not apply to the Overpayment Rule’s statutory-refund obligation.  This decision is also a setback to Medicare Advantage plans’ use of actuarial equivalence as a defense to FCA liability.  The Circuit Court also denied UnitedHealthcare’s claim that the Overpayment Rule violates the “same methodology” requirement and held that the Overpayment Rule is not arbitrary and capricious.

Pursuant to the Patient Protection and Affordable Care Act, 42 U.S.C. §§ 1320a-7k(d)(1), (2), Medicare Advantage organizations must report and return Medicare Advantage overpayments to CMS within 60 days of identifying the overpayments. Failure to report and return a known overpayment within the 60 days may give rise to a violation of the FCA. CMS promulgated the Overpayment Rule which clarifies that if a Medicare Advantage plan submits a diagnosis for payment that ends up being invalid because there is not a medical record to support it then that submission is considered an overpayment that must be reported and returned to CMS within 60 days.

UnitedHealthcare argued that the Overpayment Rule violated the actuarial equivalence standard set forth in the Medicare statute. The Medicare statute requires that when CMS adjusts its monthly, per-capita payments to Medicare Advantage insurers based on certain risk factors that there must be “actual equivalence” between the Medicare Advantage insurer’s population and the traditional Medicare beneficiary population. UnitedHealthcare claimed that the calculations were not identical because the Medicare Advantage risk calculations relied only on supported codes backed by medical documentation and the traditional Medicare calculations relied on supported and unsupported codes, resulting in different payments for identical beneficiaries.

The D.C. Circuit Court rejected UnitedHealthcare’s argument, reasoning that the actuarial-equivalence requirement does not apply to the overpayment-refund obligation or to the Overpayment Rule. The court performed a statutory review and found no overlap or cross-reference between the actuarial equivalence standard and the overpayment-refund obligations. The D.C. Circuit Court also noted that even if the actuarial-equivalence requirement did relate to the overpayment-refund requirement, UnitedHealthcare did not challenge the risk-adjustment model, nor provide evidence that the model resulted in an imbalance between Medicare and Medicare Advantage payments. In fact, the court stated that traditional Medicare would probably underreport diagnoses because Medicare beneficiaries are paid based on services, not diagnoses. Furthermore, the court stated that the Overpayment Rule and overpayment-refund requirement do not require Medicare Advantage insurers to audit their data as assumed by UnitedHealthcare, but only to report and refund known overpayments. The court also pointed out that if Medicare had unsupported codes then that would raise payments, not lower payments to Medicare Advantage organizations, because the base rate is based on CMS’s traditional Medicare expenditures.

Reporter, Taylor Whitten, Sacramento, +1 916 321 4815,

HHS Rescinds Medicaid Work Requirements for Ohio, South Carolina, and Utah, and Reopens Comment Period for Tennessee – On August 10, 2021, CMS notified Ohio, South Carolina, and Utah that it is withdrawing its prior approval of the Medicaid demonstration projects in these states, which had established work requirements as a condition for Medicaid eligibility.  These states now join a number of others that have seen the Biden Administration undo similar work requirement demonstration projects that were approved by the Trump Administration.  On the same day, CMS also announced that it is seeking public comments on Tennessee’s Medicaid demonstration project.

Under Section 1115 of the Social Security Act, the Administrator of CMS (acting on behalf of the HHS Secretary) can approve experimental, pilot, or demonstration projects that are found by the Secretary to be likely to assist in promoting the objectives of the Medicaid program.  The demonstrations may waive some of the traditional Medicaid requirements, and can give states additional flexibility to design state-specific policy approaches to serve their Medicaid populations.  During the Trump Administration, a dozen states received approval from CMS to include some form of work requirements as a condition for Medicaid eligibility under those states’ Section 1115 waivers. 

In letters sent to Ohio, South Carolina, and Utah, the Administrator explained her finding that the programs’ work requirements are “not likely to promote the objectives of the Medicaid program.”  Among the reasons for rescinding approval, the Administrator noted that the “short-to-long-term adverse implications of the COVID-19 pandemic on the economic opportunities for Medicaid beneficiaries, which have been aggravated further by challenges around shifting childcare and caregiving responsibilities as well as constraints on public transportation during the pandemic, heightens the risks of attaching a community engagement requirement to eligibility for coverage.”  These states have the ability to appeal the Secretary’s decision.

Ohio, South Carolina, and Utah now join a number of others, including Arizona, Arkansas, Indiana, Kentucky, Michigan, Nebraska, New Hampshire and Wisconsin, that have seen their work requirements end either voluntarily, by court order, or by agency action.  As previously discussed, in March 2021, the Supreme Court announced that it would no longer hear oral arguments in the case litigating the Medicaid work requirement programs in Arkansas and New Hampshire given the Biden’s administration change in policy on Medicaid work requirements.
Tennessee’s demonstration project, as approved by the Trump Administration in January 2021, imposes a cap on the State’s funding, and permits the State to use a portion of that funding below the cap for non-Medicaid purposes.  A group of Medicaid beneficiaries, represented by King & Spalding, contend that this funding formula is contrary to the Medicaid statute and have brought suit to challenge the legality of the project, as discussed here.  The plaintiffs have also contended that CMS had failed to provide the public with the opportunity to comment on the proposed project before its approval.  In light of the procedural claims in the litigation, CMS agreed to reopen the comment period and to render another decision on the project, and the plaintiffs agreed to stay the litigation while the Secretary considers these public comments.
Reporter, Michael L. LaBattaglia, Washington, D.C., +1 202 626 5579,


In Dispute Against Kaiser, California Jury Finds the Reasonable Value of Kaweah Health’s Services is 90% of its Charges – Daron Tooch and Ariana Fuller of King & Spalding won a unanimous jury verdict on behalf of Plaintiff Kaweah Health Medical Center (Kaweah) in California Superior Court for the County of Tulare.  Kaweah filed suit against Kaiser Foundation Health Plan (Kaiser) after Kaiser unilaterally reduced its reimbursement to Kaweah for emergency medical services provided to Kaiser’s members.  This was an out-of-network dispute related to Kaiser’s statewide strategy in California, implemented in 2015, to reduce the amounts it paid non-Kaiser facilities for emergency care provided to Kaiser members.  Click here to access additional information.

SAVE THE DATE: King & Spalding 30th Annual Health Law & Policy Forum

On Monday, September 20, 2021, from 8:00 am to 5:00 pm, King & Spalding LLP will host a virtual 30th Annual Health Law & Policy Forum.  The Health Law & Policy Forum will focus on the foremost legal and political developments impacting the healthcare industry.  Further details and registration will be available soon.

WEBINAR: King & Spalding presents on Post-Acute Care False Claims Act Trends

On August 26, 2021, from 12:00 - 1:00 ET, King & Spalding LLP will present on Post-Acute Care False Claims Act Trends. Our panel will explore recent government enforcement trends and current scrutiny of post-acute providers, including hospice, home health, skilled nursing facilities and inpatient rehabilitation facilities. The post-acute space has historically been and continues to be a focus area for government enforcement. At the same time, government expectations for compliance program design and effectiveness continue to increase. Topics for discussion include:

  • Department of Justice and Office of Inspector General healthcare enforcement trends impacting post-acute care providers, including a look at key recent settlements

  • Compliance program expectations for post-acute care providers

  • Specific enforcement trends and compliance challenges for hospice, home health, skilled nursing facilities and inpatient rehabilitation facilities

  • Practical strategies to promote compliance and minimize enforcement risks

To register and obtain additional information, click here. You do not have to be a client to attend, and there is no charge.

Editors: Chris Kenny and Kate Stern

Issue Editors: Dominic Nunneri and Christopher Jew