Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and
business strategies about Medicare Advantage plans, product design, marketing,
enrollment, market expansions, CMS audits, and countless federal initiatives in
MA and Medicaid managed care. !
By Lauren
Flynn Kelly, Managing Editor
June 8, 2017 Volume 23 Issue 11
As the Dept. of Justice pursues two
whistleblower lawsuits against UnitedHealth Group and investigates other
insurers’ alleged “upcoding” practices that lead to higher-than-deserved
Medicare Advantage payments, a recent $32.5 million settlement between a
Florida-based MA plan operator and the federal government reflects the DOJ’s
growing scrutiny over MA plans’ risk adjustment practices. But the settlement
is also significant in that it resolves the alleged manipulation of
requirements around provider network adequacy, which has become a focus of CMS
in recent years.
The DOJ on May 30 said that Tampa-based Freedom
Health Inc. and Optimum Healthcare, Inc., both subsidiaries of America’s 1st
Choice Holdings of Florida LLC, had agreed to pay $31.7 million to resolve
allegations that the plans violated the False Claims Act by “engaging in
illegal schemes to maximize their payment from the government in connection
with their” MA plans. Central to the alleged schemes were “unsupported
diagnosis codes” that led to the defendants receiving “inflated reimbursements”
between 2008 and 2013 from CMS. Law firm Constantine Cannon LLP, which
represented the plaintiff along with attorneys from Phillips & Cohen LLP,
said this is the largest whistleblower settlement involving health insurers’
manipulation of risk scores.
But the settlement also resolves allegations
that the plans made “material misrepresentations” regarding the size and makeup
of their provider networks when applying to CMS for service area expansions
(SAEs) in the late 2000s. The plans agreed to pay $15 million for the alleged
fraudulent expansion of their service areas, while the company’s chief
operating officer will pay $750,000 for his alleged role in the network scheme.
The qui tam *complaint (U.S. ex rel.
Sewell v. Freedom Health, Inc. et al., *Case No. 8:09-cv-1625), which was filed
in 2009 by former Chief Medical Officer Darren Sewell, M.D., and unsealed on
May 30, alleged that the plans did not have sufficient networks in place when
they applied for service area expansions and instead listed in their
applications to CMS a “rented network” of health care providers that they did
not intend to use due to higher rates. Once the expansions were approved, they
removed the network’s providers from the list of authorized providers available
to their beneficiaries and took steps to ensure that members would not be
referred to those providers by hiding existence of the contracts from low-level
staff, alleges the complaint. Only upper management allegedly had access to the
health service delivery tables submitted to CMS to demonstrate that the plans
had complete provide networks in the requested expansion counties.
According to the complaint, Chief Operating
Officer Siddhartha Pagidipati boasted that use of the rented network to gain
service area expansion approval was the result of his “creative thinking.”
“The settlement for mischaracterizing the
provider network is probably the biggest of its kind,” observes Michael
Adelberg, principal at FaegreBD Consulting and a former top CMS MA official who
had a leading role on network-adequacy issues there. “It is one more data point
in the building narrative that plans need to be concerned about differentials,
at least large ones, between their reported and actual provider networks.”
CMS last year beefed up its oversight of MA
provider networks, including the addition of new reporting requirements on
mid-year network changes and the review of entire networks of plans requesting
SAEs. Also new for 2017 was the creation of a centralized team to review
network exception requests and partial county justifications, whereas this
process historically had been handled across 10 regional offices. CMS officials
told attendees at a conference last fall that those exceptions should be rare
and must be warranted (MAN 9/15/16, p. 1).
The Sewell lawsuit also alleged that Freedom and
Optimum were “knowingly submitting incorrect and/or unsubstantiated risk
adjustment data” in order to boost their risk adjusted capitation payments from
the federal government. The fraudulent practices alleged in the complaint
include: (a) deploying internal coding auditors to submit false risk adjustment
data to CMS; (b) providing risk adjustment data to CMS without checking their
validity and knowingly using an automated submission processing system that is
incapable of filtering out invalid data; (c) conducting an internal audit that
uncovered a significant percentage of risk adjustment data that did not qualify
for CMS reimbursement, without refunding the overpayments or alerting CMS to
the audit results; and (d) failing to in the normal course of business correct
or notify CMS of risk adjustment data that was found to have been incorrect and
improperly submitted.
Settlement Highlights
Enforcement Risks
Meanwhile, the federal government recently filed
two complaints-in-intervention against UnitedHealth Group that contain
allegations of fraudulently inflating risk adjustment payments by claiming
patients were sicker than they really were (MAN 5/25/17, p. 8), and
has said it is investigating the risk adjustment practices of other large
insurers named in the original whistleblower complaints (MAN 3/30/17,
p. 1). While the two cases — U.S. ex rel. Swoben v. Secure
Horizons, et al., 09-5013 and U.S. ex rel. Benjamin Poehling
v. UnitedHealth Group, Inc., 16-08697 — focus on a failure to “look
both ways” when conducting chart reviews to identify diagnosis codes that would
lead to higher reimbursement, the recent settlement reflects that the
“enforcement risks are real” and that the DOJ is focused on “MA plans of all
sizes,” observes Steven Chananie, a partner in the Corporate Practice Group in
the New York office of the law firm Sheppard, Mullin, Richter & Hampton
LLP.
Moreover, the settlement highlights that “senior
management at these plans have potential personal liability,” says Chananie.
“There are certifications that are required by senior management on forms and
applications that are submitted to CMS. There is certification that all the
coding and data submission are accurate. And this creates personal liability
potentially for senior management who are involved in that process or delegated
it to someone if they’re not careful in ensuring that those certifications are
accurate.” He recalls the 2015 release of the so-called “Yates memo” from then
Deputy Attorney General Sally Yates outlining DOJ policy on federal
prosecutions of individuals as an effective means to combat corporate
misconduct.
Chananie says it’s also significant that when
the Ninth Circuit Court of Appeals revived the Swoben case last year, it ruled
that “biased retrospective reviews” (i.e., a failure to look both ways) do
state a cause of action under the False Claims Act and that it is a legal
matter, depending on what the facts are. “That Ninth Circuit decision was the
first salvo that laid at least a little bit of groundwork to say [not] looking
both ways…is potentially a basis for liability, and that’s now I think where
the gray area comes in,” he remarks. “What is such egregious not looking both
ways that you could be liable? I think that’s really a matter of
interpretation…and there’s going to be a lot of contentious back and forth on
those issues between United and the DOJ.”
CIA on Risk Adjustment
Is First of Its Kind
The Freedom/Optimum settlements, which do not
make any determination of liability, also required that the plans enter into a
five-year Corporate Integrity Agreement (CIA) with the HHS Office of Inspector
General to establish and maintain a robust compliance program. Chananie observes
that while the majority of provisions in the agreement are pretty standard, the
CIA is “the first that we’ve seen for an MA plan on these kinds of issues — the
unsupported diagnoses and the misrepresentation of the size of the provider
network.”
In a statement, Freedom/Optimum General Counsel
Bijal Patel denied any wrongdoing. “Although Medicare managed care is a complex
and constantly changing industry in which it is common to have differing
interpretations of regulations, with this settlement, we have agreed to resolve
disputed claims without any admission of liability in order to avoid delay and
the expense of litigation, so that we can focus on providing quality care,
member service and maintaining the highest Medicare Star Ratings,” said Patel.
https://aishealth.com/archive/nman060817-03?utm_source=Real%20Magnet&utm_medium=email&utm_campaign=116169601
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