Loyola University Chicago School of Law, JD 2017
The United States Department of Justice (“DOJ”) recently intervened in a qui tam action against UnitedHealth Group (“United”) and its subsidiary, UnitedHealthcare Medicare & Retirement, the nation’s largest provider of Medicare Advantage (“MA”) Plans. The suit alleges that United engaged in an “up-coding” scheme to receive higher payments than they should have under MA’s risk adjustment program. Assuming these allegations of United’s false claims are true, then United billed and received hundreds of millions of dollars in improper payments from Medicare.
Benjamin Poehling filed the qui tam action in 2011. Mr. Poehling, a former director at United, claimed that United inflated patient risk scores and consequently submitted false claims for managed care services covered under Medicare Part C. The suit also claimed that United submitted improper reimbursement claims for Part D prescription drugs by claiming their patients were sicker than they really were. The case was kept under seal while the DOJ investigated these claims. After six years of investigation, the DOJ announced its decision to intervene in Poehling’s whistleblower lawsuit.
How United Submitted False Claims Under the Risk Adjustment Program
Traditionally, the purpose of a risk adjustment program is to assist the Centers for Medicare & Medicaid Services (“CMS”) – the agency responsible for healthcare reimbursements – with paying each MA plan the appropriate amount of capitation payments based upon the enrolled beneficiaries’ risk to the MA plan. Through the risk adjustment program, CMS makes appropriate and accurate payments for enrollees with varying expected costs instead of calculating an average amount of the beneficiaries. Since risk adjustment factors determine the amount of the payments, patients with sicker conditions can receive increased reimbursement. In order to receive higher risk adjusted reimbursements, MA plans must be able to produce documents to prove that the patients received an in-person evaluation from a qualified provider during the past twelve months.
In this case, Mr. Poehling stated that United’s coding specialists bypassed this requirement by looking into patient records for evidence of a possible long-term medical condition. If they found this evidence, they would skip the in-person evaluation requirement and automatically request the higher risk adjusted payments.
United has since denied the claims, arguing that the accusations are based on a flawed interpretation of Medicare rules. Under the False Claims Act, United may be subject to a civil penalty of up to $11,000 for each violation, plus three times the amount of the damages sustained by the United States.
How an effective compliance program can make a difference
This case follows more than a half-dozen whistleblower suits filed against MA organizations in the past five years. In 2013, CMS estimated that it improperly paid $14.1 billion to MA organizations, primarily due to fraudulent risk adjustment claims. These lawsuits indicate that it is now more important than ever to advocate for an effective compliance program within each MA organization. For example, each organization should hire the proper personnel (i.e. – compliance officer) to develop and implement preventive policies and procedures that ensure diagnoses are received from acceptable data sources. In addition, regular training for all levels of employees (i.e. coding specialists) will help raise awareness of the severity of submitting, or causing to be submitted, false claims. Awareness of the FCA’s punitive damages may deter employees from committing such unethical violations. Furthermore, each organization must have effective auditing and monitoring systems in place to mitigate the risk of running into these non-compliance issues.