Does Your Plan’s Risk Adjustment Strategy Violate the False Claims Act?

(Transcription of Powerpoint presentation)

  • Overview of Risk Adjustment Fraud
    • Risk adjustment fraud is essentially "upcoding" for diagnosis codes
      • Traditional Upcoding: doctors and hospitals, paid by the procedure, claim payment for procedures they did not truly perform, or for a more complex version of the procedure they did perform
      • Risk Adjustment Upcoding: Medicare Advantage ("MA") HMOs, paid in large part by their members' health status, claim payment for diagnoses they do not have/were not treated for

  • Principles of Risk Adjustment
    • CMS pays Medicare Advantage HMOs on a capitated basis
      • Per-member-per-month
    • CMS recognizes, however, the risk HMOs take by agreeing to insure beneficiaries for a flat monthly fee
      • A single hospitalization costs an average of $10,000 and can wipe out the Medicare premiums the HMO received that year
    • To help HMOs manage their risk, CMS created a system that increases its premium for beneficiaries who are receiving treatment for diseases that typically correspond to high costs
      • The additional money comes in the form of an increased capitation rate:
        • Member's Capitation Rate = (The HMO's Base Capitation Rate) x (The Member's Risk Adjustment Multiplier)
    • Example: 76-year-old female with diabetes and renal failure
    • Requirements for Risk Adjustment Claims
      • The patient must have been treated that year
      • Face-to-face
      • By a qualifying provider

  • Requirements for Risk Adjustment Claims
    • CMS has rigid requirements about how plans qualify for increased risk adjustment payments
      • The diagnosis codes must be documented in the medical record, following standard industry guidelines (ICD-9-CM)
      • The diagnosis codes must stem from a face-to-face encounter between the physician and the patient
    • To ensure these goals are met, CMS requires HMOs to follow its guidance as to what diagnosis codes they submit
      • For example: HMOs cannot submit diagnosis codes taken from certain types of medical records, such as radiology and lab reports, because the records do not reflect a face-to-face physician encounter
  • Risk Adjustment and the False Claims Act
    • The False Claims Act prohibits:
      • knowingly presenting (or causing to be presented) to the federal government a false or fraudulent claim for payment or approval; and
      • knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the Government.
      • 31 U.S.C. § 3729(a)(1).
    • Any person who violates the FCA is liable for a civil penalty of up to $11,000 for each violation, plus three times the amount of the damages sustained by the United States. 31 U.S.C. § 3729(a)(1).
    • Each Diagnosis Submitted to CMS is a Claim for Payment
    • With every diagnosis, HMOs submit information to CMS asserting the member has the diagnosed condition and received treatment for it:
        • The member's Health Insurance Claim ("HIC") number
        • The ICD-9-CM diagnosis code
        • The "service from" date and "service through" date
        • The provider type
      • Each risk adjustment claim is itself a false statement, if the diagnosis is unsupported
      • No separate certification is required to establish falsity
      • That being said, Medicare Advantage HMOs must attest to the accuracy of their risk adjustment data on an annual basis.
    • United States v. Janke
      • United States v. Janke, 09-CV-14044-Moore-Lynch (S.D. Fla. Feb. 10, 2009)
        • MA plan used coding reviewers to submit diagnosis codes to CMS that were not documented in the medical record or supported by an actual medical condition
          • Data sweeps to find additional codes
        • MA plan submitted codes via an automated system that could not delete unsupported or false claims
          • Example: reviewers are unable to submit delete codes when they find erroneous data (there is an "add" function, though)
    • Pending Unsealed Cases Involving Medicare Advantage Plans and Risk Adjustment Fraud
      • United States ex rel. Valdez v. Aveta, Inc. et al .,
        No. 3:15cv1140 (D. P.R.)
        • The complaint alleges that MA plans submitted inflated Risk Adjustment Factor scores based on diagnosis codes reported by Puerto Rican physicians and hospitals.
        • The complaint alleges that risk scores were unsupported by the patients' medical records.
      • United States ex rel. ex rel. Graves v. Plaza Medical Centers, et al., No. 8:13cv1348 (C.D. Cal.)
        • In a recent ruling on a motion to dismiss, the district court upheld a magistrate judge's opinion holding that a doctor systematically "upcoded" patient diagnoses to increase their risk adjustment factors, and a MA plan knowingly failed to correct the issues despite audits of patient files.
      • United States ex rel . Silingo, et al ., v. Mobile Medical Examination Services Inc., et al., No. 1:10cv23382 (S.D. Fla.))
        • The complaint alleges that defendant Mobile Medical Examination Services systematically upcoded patients to increase their risk scores without performing a face-to-face evaluation under the supervision of a physician.
        • Health plans then "turned a blind eye to the truth" and failed to properly certify or validate the claims submitted by Mobile Medical Examination Services.
      • United States ex rel. Ledesma v. Censeo Health LLC, et al. , No. 3:14-CV-0118-M (N.D. Tx.)
        • The Complaint alleges that the defendant developed an algorithm to identify patients who previously suffered from conditions that would increase their risk-adjusted capitation payments and sends "physicians" to conduct "in home assessments" of these patients, then submits the old diagnoses to CMS. These visits usually did not result in any follow-up care, but were rather exclusively to increase risk adjustment scores.
        • These in-home assessments are, according to the whistleblower, not valid assessments but rather "self-reported conditions captured from the medical history and verbally confirmed" by the physician. Such "assessments" cannot form the basis for higher risk scores.
        • The complaint also alleges that many of the physicians were not licensed to practice medicine.
      • United States ex rel. Valdez v. Aveta, Inc. et al .,
        No. 3:15cv1140 (D. P.R.)
        • The complaint alleges that MA plans submitted inflated Risk Adjustment Factor scores based on diagnosis codes reported by Puerto Rican physicians and hospitals.
        • The complaint also alleges that risk scores were unsupported by the patients' medical records.
  • Areas of Risk for the Submission of False Risk Adjustment Claims
    • Causes of False Claims: Affirmative Upcoding
      • Simple fraud - "making it up"
      • Exaggerating severity of patient's condition (e.g., depression, malnutrition)
      • Claiming current treatment of condition (e.g., stroke, cancer) instead of past history of treatment
      • Claims based on laboratory, radiology or other improper provider or service type
      • Improperly linking complications and conditions
    • Causes of False Claims: Business Practices and Systemic Causes of Falsity
      • Conducting chart reviews or other audits that only look for new risk adjustment claims
      • Failure to properly filter data used to generate risk adjustment claims
      • Compliance risk due to incentives to providers and failure to monitor provider submissions
      • Compliance risk due to vendor business methods and incentives