Have a Claim?

Click here for a confidential contact or call:

1-347-417-2192

Windfall to Health Insurers Due to COVID-19 Is Not Yet Resulting in Resolution of FCA Risk Adjustment Cases

Posted  August 21, 2020

As health insurers book record profits during the COVID-19 pandemic due to a dramatic decline in elective surgeries and procedures, this seems like a good time to ask about the status of False Claims Act litigation against Medicare Advantage Organizations (MAOs) relating to risk adjustment fraud.  Given the dire shortfall in state and federal money to fight the pandemic, when will MAOs begin paying back the billions of dollars that HHS OIG itself estimates CMS has overpaid to MAOs and their affiliates?  Unfortunately, without an increase in government resources to FCA litigation or sudden shift in tactics by MAO executives and their army of lawyers, the answer is:  probably not very soon.

General Observations

As reported by a Constantine Cannon attorney at a recent AHLA webinar, at least sixteen FCA whistleblower cases and two non-whistleblower cases involving allegations of Medicare Advantage risk adjustment fraud have been filed to date and publicly unsealed.   The primary targets of these FCA complaints have been MAOs and their affiliates.  But also frequently named as defendants are group providers, such as hospitals, as well as vendors who assist MAOs in conducting home health assessments and “data-mining” to raise MA patient risk scores.  Four of the FCA whistleblower cases are unresolved and still being litigated.  One of the DOJ-initiated cases—against Anthem—is on-going as well.

Categories of Risk Adjustment Allegations

Allegations in these eighteen FCA cases can be organized into four separate “buckets.”  First, whistleblowers and DOJ attorneys allege that MAOs and their affiliates engage in direct upcoding of diagnosis codes, sometimes without the treating physician’s knowledge or consent, and with little or any connection to an actual patient encounter.  This type of flagrant misconduct has been alleged in at least seven FCA cases.

Second, MAOs and their affiliates are alleged to have engaged in improper aggressive coding and manipulation of patient records.  Examples of this misconduct include mislabeling “acute” diagnoses as “chronic,” use of datamining to add codes, pressuring physicians to submit addenda, and pre-populating medical records.  This more subtle type of upcoding appears to be more commonplace than direct upcoding and has been alleged in at least twelve FCA cases.

Third, MAOs knowingly fail to correct unsupported diagnosis codes that have already been submitted to CMS, or to take reasonable action to prevent such unsupported diagnosis codes from being submitted in the first place.  Currently, the MAO practice of engaging in “one-way look” retrospective chart reviews to add but not delete diagnosis codes is under particularly intense government scrutiny.  These “failure to act” allegations appear in at least eleven FCA complaints.

The fourth and last bucket of allegations in MA risk adjustment cases involve kickbacks, such as payments to beneficiaries to undergo home health assessments, or bonuses to physicians to engage in chart review.  These allegations appear in only two FCA cases.

Types of Whistleblowers in Risk Adjustment Cases

An analysis of the sixteen unsealed FCA qui tam cases involving MA risk adjustment fraud shows that the whistleblowers who have stepped forward are not all of one type but have instead held a variety of positions within MAO or affiliate organizations.  At least seven whistleblowers worked as auditors, coders, or billers.  Six came from upper management, including a Chief Medical Officer and billing manager.  Notably, five physicians have acted as whistleblowers in these cases, reflecting the threat that many physicians see to the integrity of the medical profession by the constant pressure that MAOs exert on staff to capture any and all diagnoses and increase patient risk scores.  A New Yorker article featuring a Constantine Cannon attorney and her whistleblower client describes this threat to the practice of medicine in compelling detail.

Government Intervention in Risk Adjustment Cases

A critical stage in any FCA case is when the Government decides whether to intervene in the litigation.  To date, the Government has intervened (at least partially) in seven of sixteen FCA qui tam cases involving MA risk adjustment fraud—a much higher percentage than in FCA cases generally.  It has declined to intervene in six cases but filed a Statement of Interest in two of these cases, essentially supporting the relator’s position.  Because many factors influence the Government’s intervention decision, many courts have recognized that Government declination does not necessarily mean that a case lacks merit.  More telling is the fact that the Government has not moved to dismiss any MA risk adjustment cases.

Overall Settlements in Risk Adjustment Cases

To date, there have been at least nine settlements or judgments in FCA cases involving MA risk adjustment fraud allegations.  In total, not included undisclosed sums from several cases, the Government has recovered approximately $660 million from these cases.  Settlements appear to be pending in at least two more cases.  Only two cases were “duds,” i.e., resolved without any settlement or payment by the defendants.  Unfortunately, the Government’s total recovery to date pales in comparison to HHS OIG’s own estimates of MA risk adjustment overpayments.

Conclusion

Despite the unexpected windfall that MAOs, health plans, and their affiliates are receiving as a result of decreased operating costs from the COVID-19 pandemic, the Government has not yet used this as an opportunity to step up enforcement of Medicare regulations and recoup the billions of dollars overpaid to MAOs in the form of risk adjustment payments.  Now more than ever is the time for whistleblowers and their attorneys to step into the breach and help make American taxpayers whole.

If you would like more information about Medicare or Medicaid managed care fraud or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please click here.

Read More:

Tagged in: FCA Federal, Healthcare Fraud, Importance of Whistleblowers, Medicare, Provider Fraud, Risk Adjustment Fraud, Upcoding, Whistleblower Eligibility,