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Judge Shines a Light on Medicare Program Bids

WASHINGTON (CN) - A federal judge ordered disclosure as to how private health insurance companies bid for business through the Medicare Advantage program.

Dr. Brian Biles studies the federal program as a professor at the George Washington University School of Public Health and Health Services. He sued the U.S. Department of Health and Human Services in 2011 over the information it withheld under an exemption to the Freedom of Information Act for commercial trade secrets.

Abbreviating the name of the Centers for Medicare and Medicaid Services, Chief U.S. District Judge Royce Lamberth explained in a ruling Thursday that Biles had requested "specific data and other information for 2009 provided to CMS, in or about June 2010, by all Medicare Part C Medicare Advantage Organizations." He sought such information "to analyze the efficiency and effectiveness" of the Medicare Advantage and Medicare programs.

Medicare Advantage Organizations, or MAOs, are private insurance companies that offer health insurance coverage to Medicare beneficiaries. Federal law requires them to submit a bid-pricing tool with CMS every year.

Their bids contain data that determine the projected costs and revenue for an MAO to provide coverage to the program's beneficiaries in the next calendar year. Such bids are not necessarily competitive, however, because they are based on a company's actual costs expended the previous year.

HHS refused to give Biles retroactive data on the cost and utilization MAOs submitted to CMS, citing Exemption Four of the Freedom of Information Act, which allows the government to withhold information relating to trade secrets and commercial or financial information.

"Private companies participate as MAOs because it is profitable to them, and neither an MAO official nor HHS has suggested that an MAO would refuse to participate in the MA program if the requested data were released," Lamberth explained.

He shot down this reasoning and granted Biles summary judgment.

"Defendant is ordered to disclose to plaintiff, in the form requested by plaintiff, all information requested in plaintiff's July 18, 2011, FOIA request submitted to CMS," the 27-page ruling states.

Biles and the agency must also confer as to attorneys fees, the judge ordered.

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