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New Lawsuit Against Anthem Shows the Government’s Commitment to Medicare Advantage Fraud

Posted  April 3, 2020

Medicare Advantage, also called Medicare Part C, is ever-expanding part of our healthcare system. The program now insures over a third of total Medicare beneficiaries, well over 10 million people. An expansion in fraud has accompanied the program’s expansion, and the Department of Justice is zeroing in, with the Assistant Attorney General for the Civil Division, Joseph Hunt, recently declaring it a priority.

Traditional Medicare, also called Medicare Parts A and B, generally reimburse healthcare providers based on the services they perform. Medicare Advantage is different. The program generally pays private insurers, called Medicare Advantage Organizations, premiums on behalf of Medicare beneficiaries. These private insurers then manage the beneficiaries’ health, acting as traditional, commercial insurers. The amount of premium that the government pays the commercial insurers is “risk adjusted,” with higher premium outlays corresponding to older, sicker beneficiaries than to younger, healthier ones.

This system provides clear incentives for fraud. The sicker an insurer can make their beneficiaries appear, regardless of their actual health status, the more they will be paid. Some insurers have allegedly turned this incentive structure into a rather simple scheme. These insurers collect their beneficiaries’ medical records from providers and review them for health conditions that the provider may have not originally coded, and then submit those conditions to the Medicare program, resulting in higher premiums.

Provider coding is often imperfect, and providers are often paid for the services they provide and not the conditions they treat, removing incentive for accurate diagnoses coding. As a result, a lot of what insurers find are real, evidenced medical conditions that they deserve payment for.

Where plans have allegedly committed fraud is not using the results of these reviews to isolate conditions that their reviews did not support and remove those diagnoses from the government’s databases, which would result in lower premiums. Last week, prosecutors in New York filed a lawsuit against Anthem, alleging just that. Per the complaint, Anthem operated a large program that would target the medical records of specific beneficiaries and review those records for additional diagnoses, submitting the newly discovered to the government for increased premiums. When these reviews revealed erroneous diagnoses that had been previously submitted, for example, diagnoses in which the provider might have errored, Anthem ignored this information and collected premium payment resulting from a calculation including both supported and unsupported diagnoses codes. A similar case is currently pending against another insurer, UnitedHealth Group.

As Medicare Advantage grows, as will Department of Justice’s interest in rooting fraud in the field, we’ll be seeing more and more similar cases.

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Tagged in: FCA Federal, Healthcare Fraud, Medicare, Provider Fraud, Risk Adjustment Fraud,