There is no bigger target for fraud than the Medicare Advantage program, which insures over half of Medicare-eligible beneficiaries. The New York Times reports that “Most large insurers in the program have been accused in court of fraud.” Understaffed government auditors cannot keep up. Not satisfied with the unlevel playing field, however, one of the accused fraudsters, Humana, is suing to make sure the auditors cannot easily root out all of Humana’s overcharges.
Humana has good reason to hobble the auditors. It is one of the largest Medicare Advantage participants to be sued for “risk adjustment” fraud. The opportunity for fraud arises because Medicare pays insurers, referred to as “Medicare Advantage Organizations” or MAOs, a flat fee for each Medicare patient they insure. But that fee is “risk adjusted” based on the subscriber’s health status. Medicare Advantage pays more for sicker patients, so the MAOs have a financial incentive to make their subscribers appear as unhealthy as possible. That’s where the “fraud” part comes in, and whistleblowers have played a dominant role in exposing it.
One technique to commit risk adjustment fraud is a profit-plumping practice known as “chart review.” In a chart review program, the MAO hires specialist “coders” to comb the medical charts of MAO subscribers to try to find additional diagnoses that the physician or health care provider did not record. The MAO submits these previously hidden diagnoses to Medicare for additional payment. The extra diagnoses cost Medicare between $12-$25 billion per year.
Whistleblowers have come forward in many cases to reveal that when the MAO coders find diagnoses the physician did not, the MAO seeks more money from Medicare. But when those same coders find a lack of support for diagnoses the physician recorded and for which the MAO was paid, the MAO keeps the money and says nothing to Medicare. This one-way flow of cash violates the rules of the Medicare Advantage program.
MAOs, including Humana, have tried to defend this practice based on the claim that traditional Medicare pays more than Medicare Advantage to treat patients with similar health conditions. According to the MAOs, this violates a requirement that both programs should pay the same amount for equally sick patients. So far, the courts have rejected that claim, finding that the MAOs are not underpaid, and even if they were, the proper remedy is not to exaggerate the sickness of their subscribers to recoup the supposed shortfall.
But the MAOs have not given up. In the latest salvo, Humana filed a case in Texas before Judge Reed O’Connor challenging Medicare’s rules for auditing MAOs, and once again raised the argument that compared to traditional Medicare, Medicare Advantage reimbursement “underpays” the MAOs. O’Connor is best known as the judge who overturned Obamacare as unconstitutional, a conclusion that the Supreme Court later rejected. According to Reuters, Judge O'Connor's “courtroom has remained a favored venue for conservative and business interests that have made use of Texas federal court rules that allow plaintiffs effectively to pick judges by filing their cases in small divisions.” Judge O’Connor recently refused the government’s request to transfer the case.
Attorneys at Whistleblower Partners are keeping a close eye on the Texas case, because we represent whistleblower Benjamin Poehling, who has filed what appears to be the largest risk adjustment case in history. The defendant is the dominant MAO UnitedHealth Group, and the Justice Department is seeking billions of dollars in damages and penalties in the case. Like Humana, UnitedHealth has invoked the “underpayment” argument to defend its conduct. We shall see whether Humana’s judge-shopping pays off in Texas.
But our interest in the Texas case extends beyond the UnitedHealth case. Attorneys at Whistleblower Partners have represented whistleblowers in more major risk adjustment cases than any other firm. These include one of the very first risk adjustment cases, a $32.7 million settlement against Florida MAO Freedom Health, a settlement against Sutter Health for $96 million, a $6.3 million settlement against Independent Health and Group Health Cooperative, as well as a large pending case against Kaiser Permanente. We will continue to bring cases to keep MAOs honest and protect taxpayer funds that support Medicare for all seniors.
