The Sicker, The Better: Cigna Orchestrates Fraudulent Scheme to Defraud Government

Jake Parentis

Associate Editor

Loyola University Chicago School of Law, JD 2024

Cigna Corporation (Cigna)–a global juggernaut in the insurance arena–faces a health care fraud lawsuit brought by the government under the federal False Claims Act (the FCA). By allegedly exaggerating patients’ illnesses to boost its own risk scores, Cigna secured inflated payments from the Medicare Advantage reimbursement system.

 The anatomy of the scandal––rigging the results

In a United States Department of Justice (a “DOJ”) news release, Damian Williams, the United States Attorney for the Southern District of New York, estimated that Cigna, “obtained tens of millions of dollars in Medicare funding” when it purportedly submitted invalid diagnoses to the government. Cigna falsified medical information with clear knowledge that federal funding would increase contingent on the degree to which its Medicare members appeared sick.

Through its subsidiaries and affiliates, Cigna operates several Medicare Advantage Organizations that administer Medicare Advantage Plans (MAPs). Contracting with mostly nurse practitioners (the Vendors), Cigna instructed its Vendors to conduct home visits of MAP members pursuant to its 360 comprehensive assessment initiative. Based on their visits, the Vendors were tasked with completing a Cigna-created form, that included a laundry list of potential medical conditions. Subsequently, Cigna assigned its coding staff to identify diagnosis codes corresponding to the indicated medical conditions. Thereafter, Cigna submitted those codes to the Centers for Medicare and Medicaid services for risk adjustment evaluation.

In its own internal documents–which were never disclosed to the Vendors–Cigna described the primary goal of a “360 visit” to be “administrative code capture and not chronic care or acute care management.” Cigna also targeted individuals likely to yield the greatest risk score increases. The Vendors never conducted comprehensive physical examinations, and when completing the assessments and recording the diagnoses, the Vendor HCPs relied largely on the patient’s own self-assessment and responses to screening questions. Additionally, Vendors were restricted access from the patients’ full medical history. The DOJ additionally noted that Cigna “exerted pressure on the [Vendors] to record high-value diagnoses,” encouraging the Vendors to remain keenly vigilant of “often underdiagnosed” conditions. Strikingly, Cigna even provided trainings to Vendors to improve their “performance” when they failed to deliver certain amounts of high-value diagnosis codes.

Thus, the government’s complaint details that in tens of thousands of instances, Cigna submitted a variety of markedly complex diagnoses to the government, including medical conditions such as chronic kidney disease, congestive heart failure, rheumatoid arthritis, and diabetes with renal complications. Also, notably, according to Cigna’s own clinical guidelines, such conditions can only be accurately diagnosed through specialized testing, which cannot be administered in a patient’s home.

Denying the allegations in their entirety, Cigna released the following statement: “We reject these allegations and will vigorously defend our Medicare Advantage business against them. Our focus remains on serving our Medicare customers and advancing our mission of making health care more affordable, predictable and simple for all.”

Medicare’s exploitation––A widespread concern? 

According to government watchdog MedPAC, Medicare Advantage enrollment has doubled since 2013, to about 28.8 million, or nearly 49% of all eligible Medicare beneficiaries. The New York Times reported that Medicare Advantage overbilling–due to upcoding–is so endemic (possibly up to $25 billion) that it amounts to nearly the entire NASA budget ($21.5 billion) and more than twice the Environmental Protection Agency’s budget ($8.7 billion). The Cigna scandal is just the latest in a series of related cases in which insurers have exploited Medicare for billions combined. For example, in 2021, the DOJ filed a complaint against Kaiser Permanente (Kaiser)–one of the largest healthcare providers in the United States–in which information leaked by an internal whistleblower suggested the health-care consortium defrauded Medicare out of nearly $1 billion.

The complaint detailed a confounding chain of events including Kaiser executives meeting with doctors during their lunch breaks to encourage them to add additional illnesses to patients’ medical records despite not examining them for weeks. Those executives would even reward the doctors administering new diagnoses with bottles of Champagne and paycheck bonuses. Dr. James Taylor–a former coding expert at Kaiser and one of the ten whistleblowers to expose the company’s fraud, commented that “[t]he cash monster was insatiable,” describing Kaiser’s ulterior, avaricious motive.

On a broader scale, federal audits found that eight of the ten largest Medicare Advantage insurers, representing as much as two-thirds of the larger market, have submitted inflated bills. And four of those five insurers, including UnitedHealth, Humana, Elevance, and Kaiser, have faced FCA lawsuits all involving allegations that “efforts to overdiagnose their customers crossed the line into fraud.”

Analysts are skeptical of any major legislative or regulatory changes on the horizon. “Medicare Advantage overpayments are a political third rail,” said Dr. Richard Gilfillan, a former hospital and insurance executive and a former top regulator at Medicare, in an email. “The big health care plans know it’s wrong, and they know how to fix it, but they’re making too much money to stop.” Gilfillan, proposing a solution, posited that “[t]heir C.E.O.s should come to the table with Medicare as they did for the Affordable Care Act, end the coding frenzy, and let providers focus on better care, not more dollars for plans.”

America’s concentrated wealth continues to strangle its democracy and promote widespread fraud. Cigna’s scheme is yet another example of how the nation’s corporate governance system is plagued by continued executive manipulation. Those in power remain equipped and entrenched with an unprecedented degree of control. The floodgates remain open for corporate abuse. Change ought to be imminent, but it remains to be seen whether the DOJ can gain ground in its stand against corporate insurance fraud.