December 6, 2022

Volume XII, Number 340


December 05, 2022

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As DOJ Focuses on Medicare Advantage Reimbursement, So Should Health Care Providers

Over the past year, the federal government has taken concrete steps to fulfill its promise of a heightened commitment to investigating and enforcing health care fraud within the Medicare Advantage program (Medicare Part C).  Health care providers that contract with Medicare Advantage Organizations (“MAOs”) and provide care to Medicare Advantage beneficiaries should take note, as they are not immune to the government’s enforcement efforts.  Across two speeches in 2020, the Department of Justice (“DOJ”) identified Medicare Part C as a program of increasing focus and an important priority for False Claims Act (“FCA”) investigations and litigation.  There are a growing number of recent decisions by DOJ to intervene in FCA cases alleging Medicare Advantage fraud, and a growing number of cases pulling health care providers into the fray.  Looking to these settled or intervened FCA cases, some common themes arise of which providers should be aware to mitigate potential FCA liability.  

Combatting Medicare Advantage Fraud Is An “Important Priority”

In 2020, the Medicare Advantage program provided health care coverage for 25 million Americans (accounting for 40% of all Medicare beneficiaries) resulting in a total annual cost of $314 billion, according to a recent report issued by the Office of Inspector General for the Department of Health and Human Services (“OIG”).  The significant and growing cost of the Medicare Advantage program has led the DOJ to identify it as an “important priority,” as reflected in Deputy Assistant Attorney General Michael Granston’s comments in December 2020. 

Medicare Advantage Theories of Liability

The Centers for Medicare & Medicaid Services (“CMS”) pays MAOs capitated per-member payments that are adjusted for risk factors reported through provider-supplied diagnoses codes.  Diagnoses with greater severity and treatment costs result in higher future capitated payments to MAOs and increase the overall costs to the Medicare Program.  This risk-adjustment reimbursement process is integral to FCA cases asserting Medicare Advantage fraud.  

In those FCA matters involving health care providers, the government alleges that the provider knowingly submitted false, inaccurate, or unsupported diagnoses codes to an MAO and caused the MAO to submit such information to CMS, thereby increasing its risk-adjusted capitation payments.  If a provider receives inflated capitated payments from the MAO as a result of the provider’s inaccurate submission of diagnoses codes, the government may seek to establish FCA liability for knowingly retaining overpayments.  More recently, the government is pursuing FCA liability against a group of providers based on the theory that care rendered in violation of Medicare requirements caused complications for Medicare Advantage patients that resulted in additional diagnosis codes, increased risk scores, and inflated capitation payments.

Recent Medicare Advantage Case Developments

Recent case developments illustrate these common theories of liability asserted in FCA cases alleging Medicare Part C fraud. 

On July 29, 2021, the United States intervened in and consolidated six FCA actions filed against Kaiser Foundation Health Plan, Inc. and several of its affiliated providers for purportedly upcoding diagnoses and submitting inflated risk adjustment information to CMS for Medicare Advantage beneficiaries.  Allegations focus on pressuring physicians to create medical record addenda after patient encounters, purportedly months to a year later, to add diagnoses related to risk-adjustment.  The diagnoses allegedly were unsupported by the patient’s medical condition or were not addressed during the patient’s encounter.  The cases remain pending in the Northern District of California.  See United States ex rel. Osinek v. Kaiser Permanente, No. 3:13-cv-03891 (N.D. Cal.).

On August 30, 2021, Sutter Health and several of its provider affiliates agreed to pay $90 million to settle an intervened FCA case alleging the knowing submission of risk adjustment information based on diagnosis codes that were not supported by patient medical records to MAOs for beneficiaries under Sutter Health’s care.  The diagnosis codes submitted allegedly resulted in higher payments made from CMS to the MAOs and, in turn, to Sutter Health, given the capitation and gainsharing agreements between Sutter Health and MAOs.  Allegations focused on several campaigns by Sutter Health designed to improve Medicare Advantage patients’ risk scores, such as tracking risk adjustment data, educating and training physicians on diagnosis coding, scheduling annual patient wellness exams to capture diagnosis codes, and running electronic medical record queries regarding diagnosis codes.  Sutter Health also purportedly ignored audits reflecting unsupported diagnosis codes and failed to repay identified overpayments.  Sutter Health entered into a Corporate Integrity Agreement as part of the settlement.  See United States ex rel. Ormsby v. Sutter Health et al., No. 15-CV-01062-JD (N.D. Cal.). 

On September 3, 2021, the United States intervened in a FCA action brought against the University of Pittsburgh Medical Center (“UPMC”), its multi-specialty physician practice group, and an employed surgeon alleging the submission of false claims for (i) overlapping/concurrent surgeries performed in violation of requirements that teaching physicians be immediately available throughout, and present during critical portions, of the procedure and (ii) medically unnecessary anesthesia billings as a result of unnecessary delays in surgeries that artificially lengthened surgical time.  The government alleges that the non-compliant surgical procedures caused complications, lengthy hospital stays, or complex follow-up procedures.  For Medicare Advantage patients, the government further asserts such outcomes resulted in additional diagnoses codes, which increased risk scores and, thus, capitation payments made to MAOs and the UPMC.  In essence, the government appears to be trying to establish FCA liability by threading together allegedly-poor Medicare Advantage patient outcomes associated with noncompliant surgeries and defendants’ purported knowledge of the increased risk of patient harm resulting from the surgeries with the receipt of inflated capitation payments.  This case remains pending in the Western District of Pennsylvania.  See United States ex rel. D’Cunha v. Luketich et al., No. 2:19-cv-00495-CB (W.D. Pa.). 

On September 14, 2021, the United States intervened in an FCA action brought against Independent Health Association (an MAO), and its subsidiary that provides chart review services, alleging inaccurate submission of diagnosis codes to CMS that increased plan reimbursement. While no health care providers are named as defendants, the government’s allegations are nonetheless instructive.  The government focuses on alleged retrospective chart reviews designed to capture patient conditions missed by treating providers or coders that remained unsupported by medical records as well as processes for providers to retroactively add unsupported diagnoses to medical record addenda, in order to submit new risk adjustment data to CMS.  The case remains pending in the Western District of New York.  See United States ex rel. Ross v. Independent Health Association et al., No. 12-CV-0299(S) (W.D.N.Y.). 

While unrelated to pending FCA litigation, on September 21, 2021, OIG released a study identifying concerns that 20 different MAOs may have inappropriately used chart reviews and health risk assessments to drive a disproportionate share of payments (amounting to $5 billion) from diagnoses reported through these reviews and not linked to other service records.  While the study addresses the role of MAOs in submitting inaccurate data to CMS, the government’s focus on risk-adjustment data being supported by underlying medical records is instructive to providers as well. 

Key Takeaways for Health Care Providers

  • As is the case with other federal health care programs, diligent documentation practices are critical when providing care for Medicare Advantage beneficiaries.  Have processes in place to ensure that medical records support claims and risk-adjustment data, like diagnoses codes, that are submitted to MAOs. 

  • Internal and external audits that flag potential inconsistencies with submitted claims and diagnoses codes should not be ignored.  Such audit findings may signal the potential receipt of overpayments if MAOs pass risk-adjusted payments along to providers.  Inaction can lead to the alleged retention of overpayments in violation of the FCA.

  • Given the government’s stated, and demonstrated, focus on investigating and enforcing Medicare Advantage fraud, it is prudent to incorporate this program into routine compliance activities, such as training, medical record reviews, and claims audits.  Training, however, should focus on compliant documentation and coding practices and be carefully crafted to ensure that providers and coders are not swayed to up-code diagnoses codes, for example. 

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume XI, Number 270

About this Author

Dayna C. LaPlante, Polsinelli PC, Chicago, Complex Healthcare Matters Attorney, Administrative Compliance Lawyer,

Dayna LaPlante works with clients who benefit from her diligence, enthusiasm and strong grasp of the complex health care legal sector. She represents a range of health care providers, including hospitals, pharmacies, and long term care providers. Dayna focuses her general practice on helping clients maintain compliance with state and federal law, and represents clients in civil and administrative litigation should disputes arise. She also serves as regulatory counsel for health care transactions, helping clients remain in regulatory compliance post-closing. 

Gregory R. Jones Healthcare Attorney Polsinelli Los Angeles

Gregory Jones is an attorney in the firm’s Health Care Litigation practice. He is a distinguished litigator with more than 16 years of experience defending clients in a variety of health care litigation matters. Greg represents a broad range of health care companies, including health systems, hospitals, medical providers, physicians, and physician groups, in lawsuits and arbitrations involving a wide array of disputes, including claims for unfair competition and business practices, health insurance fraud, antitrust, breach of contract, false advertising, and other...

Jessica Andrade Commercial Litigation Lawyer Polsinelli Law Firm

Jessica is a commercial litigator and investigations attorney with Polsinelli, where she is chiefly associated with the firm’s Government Investigations practice group.  Jessica has significant experience defending clients facing government investigations and enforcement proceedings, as well as in False Claims Act, Anti-Kickback, and Stark litigation.  This experience includes working with clients in both the healthcare and government contracting industries.  In addition, Jessica provides compliance advice to help clients avoid government inquiries.

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