Health Law Update

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The U.S. Department of Justice (DOJ) recently filed its complaint in <a href="https://www.justice.gov/opa/pr/united-states-intervenes-false-claims-act-lawsuit-against-unitedhealth-group-inc-mischarging">intervention</a>in another whistleblower lawsuit brought under the False Claims Act against the nation’s largest owner and operator of Medicare Advantage (MA) organizations, UnitedHealth Group, Inc. (United). The DOJ’s 39-page complaint alleges that United had fraudulently obtained inflated risk adjustment payments by over reporting diagnosis codes for MA beneficiaries since 2005. At the heart of the complaint is the allegation that United “systematically ignored information” in blind audits that revealed both under reporting (i.e., diagnoses that the providers did not report) and over reporting (i.e., invalid diagnoses not supported by medical records). The complaint alleges that by failing to “look both ways,” United “improperly generated and reported skewed data artificially inflating beneficiaries’ risk scores, avoided negative payment adjustments and retained payments to which it was not entitled.”

The Centers for Medicare &amp; Medicaid Services (CMS) makes a fixed monthly payment for each beneficiary enrolled in an MA plan. These payments are risk adjusted annually for the expected cost of providing medical care to each beneficiary, including health status. A risk score is used by CMS to calculate the MA plan’s Medicare payments for the following year. While the goal is to ensure that MA plans are paid more for less-healthy beneficiaries who are expected to incur higher medical expenses, this payment methodology according to the HHS Office of Inspector General, “creates a powerful incentive for [MA plans] to over-report diagnosis codes in order to exaggerate expected healthcare costs for their enrollees.”

A similar whistleblower case remains pending in the Central District of California, where the DOJ alleges that United knowingly obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in United’s MA plans. The DOJ has indicated that it wants to consolidate the two cases against United. It is anticipated that the consolidated cases could result in damages exceeding $1 billion.

In a recent press release, Sandra R. Brown, acting U.S. attorney for the Central District of California, said the DOJ’s recent actions in joining the whistleblower lawsuits against United “sends a warning that our office will continue to scrutinize and hold accountable Medicare Advantage insurers to safeguard the integrity of the Medicare program.”

Meanwhile, a U.S. District judge recently ruled that United has standing to sue CMS over a 2014 rule that requires MA organizations to return overpayments within 60 days. The lawsuit, filed by United in January 2016, alleges the rule violates the statutory mandate of “actuarial equivalence” under Medicare law in that it requires MA plans to report and return overpayments “based on an assessment of the health status of the plan’s members that is wholly inconsistent with (and far more searching than) the manner in which CMS assesses the health status of the average traditional Medicare beneficiary.”

The DOJ Enters Another FCA Lawsuit Against UnitedHealth