Amid record enrollment, some Medicare Advantage insurers are finding their payment-linked risk scoring practices to be the subject of scrutiny and lawsuits.
A number of whistleblower lawsuits are targeting Medicare Advantage plans with allegations of risk scoring abuses, just as the Department of Justice investigates risk adjustment practices in Humana's Medicare Advantage plans and a big provider partner. The developments suggest that the boom in False Claims Act lawsuits, where whistleblowers can get a portion from government overpayment recoveries, may hit the $150 billion Medicare Advantage industry.
The Center for Public Integrity has detailed the half-a-dozen FCA whistleblower suits filed against MA plans in the last five years; the organization is also suing the Centers for Medicare & Medicaid Services to release Medicare Advantage plan audits. Two more recent complaints level risk code manipulation accusations against health plans in Washington State and South Carolina, including the nonprofit South Carolina Blues.
One of the suits did not go very far. In greater Seattle, a former practice supervisor at The Polyclinic accused physician-directed HMO Essence Healthcare of trying "to maximize the opportunity to bill Medicare" by calling in patients for visits and waiving co-pays. The manager cited a 2010 memo asking clinic staff to bring in MA patients because they could "enhance our financial results and thus our paychecks." In 2011, the Clinic was eligible to receive as much as $500,000 from increased risk scores.
A local doctor protested the suggestion in the memo, as the Center for Public Integrity noted. "In order to get more $$$ for the Polyclinic, we have to bring patients in for a visit they didn't need or initiate?...Considering the advancing age of these patients, they struggle to find and pay for parking, often having to coax a friend or family to bring them in."
The Department of Justice declined to support the case, effectively limiting its chances of success. The PolyClinic and Essence Healthcare have called the lawsuit frivolous and noted that the government found no evidence of wrongdoing.
A whistleblower lawsuit that may live on, though, is going after some $20 million in alleged overpayments to a local giant, Blue Cross Blue Shield of South Carolina. In a complaint filed last month, a former billing specialist and a former contractor allege that the South Carolina Blues submitted inflated MA claims between 2006 and 2010 and "then "acted to cover up and hide the false submissions so that they would be able to retain the wrongly paid reimbursements."
The insurer has acknowledged some overcharges as well as underpayments, worked with CMS to fix problems and moved to repay about $2 million. The two self-identified whistleblowers argue that the total amount of inflated claims was around $20 million, although the insurer is denying the charges and fighting the lawsuit.
While the government has yet to decide whether to support that case, the Department of Justice is widening its probe of Humana's risk adjustment practices to include DaVita Healthcare Partners, whose clinics treated Humana's MA patients.
Earlier this year, the DOJ sought documents from Humana related to oversight and submission of risk adjustment data by network providers, including two involved in pending whistleblower lawsuits.
In the one whose details have been made public, a physician alleges that her clinic was induced to add diagnostic codes to patient medical records erroneously indicating diseases like diabetes or kidney failure.
The budding whistleblower suits and government queries come as Medicare Advantage is in a growth spurt that could see it cover the majority of American seniors. Nearly one third of Medicare beneficiaries, more than 16 million seniors, are enrolled in MA plans, and annual spending is hovering around $150 billion, a quarter of the program.
With reimbursement that according to critics unjustifiably exceeds fee-for-service on a per-beneficiary basis, Medicare Advantage may be a ripe area for cost control scrutiny.
CMS "could save billions of dollars by improving the accuracy of its payments to Medicare Advantage programs, such as through methodology adjustments to account for diagnostic coding differences between Medicare Advantage and traditional Medicare," the Government Accountability Office wrote in its 2015 annual report. The GAO estimated that CMS has a 9 percent payment error rate for Medicare Advantage, equivalent to about $12 billion; Medicare's Part A and B error rate is thought to be just under 13 percent, equivalent to $45 billion.