DOJ Joins High-Profile Lawsuit Against UnitedHealth Alleging Medicare Fraud

By: Hailey Cleek *| Guest Writer

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The U.S. Department of Justice (DOJ) is a party to a high-profile case, brought under the False Claims Act, involving one of the largest health insurers in the United States, UnitedHealth Group (UHG). False Claims Act cases allow private individuals or the federal government to file a lawsuit against those individuals or businesses that have defrauded the federal government. Congress strengthened the Act in 1986 by increasing incentives for whistleblowers to file lawsuits. Federal prosecutors said that they want to consolidate their case with another whistleblower lawsuit that alleges UHG, and customers of its subsidiary for data and analytics received billions of dollars in government overpayments.

The DOJ accused UHG of overcharging the federal government by more than $1 billion through its Medicare Advantage plans. In 2016, CMS reportedly paid UnitedHealth $56 billion for covering 3.6 million Medicare Advantage beneficiaries. The government alleges that UHG overbilled by making patients appear sicker than they actually were.

The Centers for Medicare and Medicaid Services added a “risk adjustment factor” to its reimbursement schedules for managed care in 2013. Risk adjustment systems look to ongoing, costly health conditions from a base year in order to better predict Medicare costs for the following year. Under the Medicare Advantage system, member organizations with more chronic conditions have higher risk scores; thus, plans that cover these vulnerable populations can receive higher taxpayer-funded payments. This made health management organizations more willing to sign up unhealthy people, but it also possibly gave them a new incentive: to make people appear sicker than they were.

“Since 2005, UnitedHealth knew that many diagnosis codes that it submitted to the Medicare Program for risk adjustment were not supported and validated by the medical records of its enrolled beneficiaries,” according to the complaint filed in May earlier of this year. The DOJ contends that UHG boosted risk-adjustment claims by submitting diagnostic codes that health plan members were not treated for in the relevant year. Furthermore, the DOJ contends that UHG knew that it was required to identify and delete invalid codes submitted to them in order to ensure accuracy.

UHG Spokesman Matt Burns said in an emailed statement to Bloomberg that the company and its leaders are confident they complied with Medicare Advantage. UHG rejects the DOJ’s claims. “We are honored to serve millions of seniors through Medicare Advantage, proud of the access to quality health care we provided, and confident we complied with program rules,” Burns wrote.

Medicare Advantage audits obtained by the Center for Public Integrity through a court lawsuit showed that payment errors, typically overpayments, are common. As reported by Kaiser Health News and NPR, “all but two of 37 Medicare Advantage plans examined in a 2007 audit were overpaid. Overall, just 60% of the medical conditions health plans were paid to cover could be verified.”

While issues in Medicare Advantage payments have remained largely clandestine despite increasing popularity, this lawsuit has potentially far-reaching implications for addressing the need for transparency. The growing power of Medicare Advantage leaves the government in a unique position to corral problems in overbilling. Given the potential for abuse in mining patient data for overbilling purposes, the government’s intervention likely signals increased enforcement.

Hailey Cleek is a second-year law student at Wake Forest University School of Law. She holds a Bachelor of Science in Psychology with a minor in Medical Humanities from Davidson College. She is pursuing her Master’s in Bioethics simultaneously.