April 20, 2017 - Posts

Medicare Advantage Fraud a New Focus for the Feds

Two False Claims Act cases against UnitedHealthcare reflect growing scrutiny of plan providers


In February and March of this year, the U.S. Justice Department announced that it was intervening in two separate whistleblower lawsuits against UnitedHealthcare, the county’s largest provider of Medicare Advantage Plans.  This is a major development in Medicare fraud enforcement, as Medicare Advantage has generally not been an enforcement priority for the United States.


Under Medicare Advantage—also known as Medicare Part C—private health insurers such as UnitedHealthcare, Humana, and BlueCross BlueShield provide coverage directly to Medicare beneficiaries, in exchange for fixed monthly payments from the government and monthly premium payments from the beneficiary.  Medicare Advantage plans have become very popular in recent years as private insurers have been able to offer additional types of coverage (vision, dental, etc…) that are not offered under a traditional Medicare plan.


From the government’s perspective, a major benefit of Medicare Advantage is the idea that the private insurance companies bear most of the financial risk.  For example, if a doctor deliberately overcharges for a Medicare Advantage patient, it is the private insurer, not Medicare, that loses money—as the government continues to pay the same flat rate per month to the insurer to cover that patient, at least under most circumstances.  For that reason, there have traditionally been very few whistleblower actions alleging that the United States has been defrauded based on false claims submitted under Medicare Advantage plans.


More recently, though, that thinking has begun to change.  One issue, which is front and center in the two False Claims Act lawsuits against UnitedHealthcare, is that the insurance providers themselves might submit false data to the United States in order to receive higher monthly reimbursement for their Medicare Advantage patients.  The United States determines compensation per month for a given Medicare Advantage patient in part by looking at how healthy or how sick that patient is—as sicker patients generally require more care and cost more money to insure.  Accordingly, if an insurance company reports that a patient is sicker than that patient really is, the company will get more money each month from the United States.


Senator Chuck Grassley, who a longtime leader in the fight against Medicare fraud, has also raised Medicare Advantage as a new enforcement priority.  In an April 17, 2017 letter to CMS Administrator Seema Verma, Senator Grassley emphasized that CMS needs to step up its oversight audits of Medicare Advantage plans, due to increasing fraud concerns and the fact that enrollment in these plans is expected to increase significantly in the years ahead.


It is too early to tell what will come of these lawsuits and increasing Congressional scrutiny.  In public statements, UnitedHealthcare has denied any wrongdoing, and it is not clear whether Senator Grassley’s letter will result in any additional audits by CMS.  However, if nothing else, it is clear that the federal government is beginning to look seriously at a potential fraud and abuse issue that for years has largely flown under the radar.


For more on the two UnitedHealthcare lawsuits, see the following story on NPR: Justice Department Joins Second Lawsuit Against UnitedHealth.


For more on Senator Grassley’s letter: Sen. Grassley demands new scrutiny of Medicare Advantage plans


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