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New York Times Covers “Cash Monster” of Risk Adjustment Fraud, Featuring Cases Initiated by Constantine Cannon Clients

Posted  October 11, 2022

Kaiser whistleblower Dr. James Taylor got the headline on the front page of Sunday’s New York Times: “The cash monster was insatiable.” The article, subtitled How Insurers Exploited Medicare for Billions, highlights that nearly half of the Medicare beneficiaries in the U.S. are now enrolled in Medicare Advantage programs. Federal payments to Medicare Advantage insurers make up a correspondingly increasing share of total Medicare spending.

With billions of taxpayer dollars flowing to the private insurance companies that run Medicare Advantage programs, “even a small increase in the average patient’s bill adds up,” write Times reporters Reed Abelson and Margot Sanger-Katz. MA insurers have found that they can “effectively game the system” of risk adjustment to obtain such increases.  Estimates of overpayments to MA organizations range from $12 billion to $25 billion each year.

Reviewing enforcement actions against Medicare Advantage organizations, the Times reports that federal audits have found that eight of the ten largest Medicare Advantage insurers, representing more than two-thirds of the market, have submitted inflated bills, and four of the five largest players have been publicly sued by whistleblowers and the U.S. in actions under the False Claims Act alleging that their risk adjustment practices crossed the line into fraud.

The article argues that while Medicare regulator CMS may be seen as “less aggressive,” the Department of Justice has made Medicare Advantage fraud a top enforcement priority.  The article highlights several actions involving Constantine Cannon whistleblower clients, including Dr. Taylor’s action against Kaiser and claims against UnitedHealth Group which are set for trial in 2023.  Additionally, the article highlights the role of vendors offering risk adjustment services, such as those offered by coding consultant DxID LLC, currently facing FCA claims in an action brought by Constantine Cannon client Teresa Ross.

Regulators are not always in the best position to uncover fraud. Insiders and others with knowledge of wrongful actions by insurers, providers, or vendors to game the risk adjustment system can report fraud by filing an action under the False Claims Act.  A case under the False Claims Act is filed under seal for investigation by the Department of Justice.

As outlined in the Times article, the types of fraud and wrongful activity alleged in whistleblower and government actions include:  falsifying diagnoses; paying for additional diagnoses; using home visits to extract additional diagnoses, even when those diagnoses could not properly be made in a home visit; and, failing to delete diagnoses when there was evidence they were unsupported.  Demonstrating that these additional diagnoses were about the bottom line and not about care, the article reports that defendants “took steps to ensure the extra diagnoses didn’t lead to expensive care.”

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Tagged in: CC Lawyers, FCA Federal, Healthcare Fraud, Managed Care, Risk Adjustment Fraud,