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Cigna’s $172 million settlement signals increased focus on Medicare Advantage and “Chart Review” programs

The Department of Justice announced a $172 million settlement with Cigna Group, a Medicare Advantage provider, for allegedly violating the False Claims Act for submitting inaccurate and unsupported diagnosis codes to increase payments from Medicare.

Medicare Advantage Risk Adjustment

Under Medicare Part C, Medicare beneficiaries have an option of obtaining their Medicare-covered benefits through private insurance plans, called Medicare Advantage (MA) programs. The Centers for Medicare and Medicaid Services (CMS) pays MA plans a fixed monthly amount for each person who enrolls, adjusting the amounts for various “risk” factors that impact the enrollee’s anticipated healthcare needs. The amount that CMS pays for each person is based on the person’s unique “risk score,” which accounts for their demographic and health status. Medicare Advantage plans are responsible for reporting their members’ health status to CMS by submitting the diagnoses the members received from their healthcare providers.  This process is known as risk adjustment.

Generally, Medicare Advantage plans are paid more for beneficiaries with more severe health diagnoses as the cost of their care involves greater risk. For example, members diagnosed with diabetes or congestive heart failure would trigger higher payments from CMS. Just one diagnosis can increase a Medicare Advantage plan’s revenue by thousands of dollars annually.  Because many diagnoses correspond to greater payments, Medicare Advantage plans have an incentive to overreport diagnoses, including diagnoses that may exaggerate the member’s condition (such as reporting diabetes with complications instead of diabetes without complications) or unsupported in the member’s medical record.

Chart Review Program and In-Home Assessments

The government’s lawsuit alleges that for payment years 2014 to 2019, Cigna operated a “chart review” program where the company obtained medical records, or “charts,” from healthcare providers for beneficiaries enrolled in Cigna’s Medicare Advantage plans.  Cigna retained medical coders to review the charts to identify medical conditions that appeared in the charts but that the providers had not previously reported to Cigna.  While the review generated additional diagnoses for Cigna, it also failed to identify many of the diagnoses that the providers had reported to Cigna and that Cigna had submitted to CMS.  Thus, Cigna allegedly found mistakes in both directions: providers had not reported some conditions that existed in the medical record while reporting other conditions that did not exist.  According to the government, Cigna chose to look one way with the results: it submitted the additional diagnoses to CMS to obtain higher payments and ignored the conditions it had failed to substantiate.

The lawsuit further alleges that Cigna hired people to conduct in-home assessments, also called health risk assessments, of plan members.  One purpose of these health risk assessments, the government alleged, was to generate additional diagnoses for Cigna.  However, the lawsuit alleges the healthcare providers (typically nurse practitioners) who conducted these in-home visits did not perform or order the diagnostic testing or imaging that would have been necessary to diagnose the complex medical conditions reported. The government also alleged that Cigna’s program did not treat patients for the conditions the providers diagnosed and lacked supporting documentation for the conditions, which none of the patients’ other healthcare providers had diagnosed in many instances.  Cigna allegedly submitted these diagnoses to CMS to claim increased payments, and falsely certified each year that the diagnosis data it submitted was “accurate, complete, and truthful.”

“Cigna knew that these diagnoses would increase its Medicare Advantage payments by making its plan members appear sicker,” said Damian Williams, United States Attorney for the Southern District of New York. “This Office is committed to holding insurers accountable if they seek to manipulate the Medicare Advantage Program and boost their profits by submitting false information to the Government.”

As part of the $172 million settlement, Cigna entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) that requires Cigna to implement numerous accountability and auditing provisions.

$9.2 billion in payments comes from risk adjustment and health risk assessments (HRA)

Medicare Advantage Risk Assessment cases are not new.  In fact, in 2021, the U.S. Department of Health and Human Services Office of Inspector General issued a review on the subject, titled “Some Medicare Advantage Companies Leveraged Chart Reviews and Health Risk Assessments to Disproportionately Drive Payments.”  The review found that 20 MA companies drove a disproportionate share of the $9.2 billion in payments generated from chart reviews and health risk assessments. And while twenty MA companies drove over half (54%) of the risk-adjusted payments from diagnoses submitted solely on chart reviews and health risk assessments, they enrolled only 31 percent of MA beneficiaries.

Whistleblowers Needed

Whistleblowers play an important role in preventing risk adjustment fraud. Often they have confidential knowledge obtained from being on the inside of a Medicare Advantage company or providing in-home visits.

The government has had a string of whistleblower risk adjustment cases involving Medicare Advantage providers, including a case against Sutter Health, northern California’s largest hospital system, that settled for $90 million in 2021.  The lawsuit alleged Sutter Health submitted inaccurate or unsupported diagnosis codes for Medicare Advantage patients under its care, causing the government to make inflated payments to Sutter Health.

Phillips & Cohen’s Expertise in Risk Adjustment Cases

Phillips & Cohen has extensive experience representing whistleblowers alleging risk-adjustment fraud.  For example, Phillips & Cohen represented a doctor in a qui tam case alleging that Florida-based Medicare Advantage plans defrauded Medicare by engaging in risk adjustment fraud and misstating the number of doctors and medical facilities that would be available to members of their Medicare Advantage plans. The Medicare Advantage plans and the other defendants paid a total of $32.5 million in 2017 to settle the case. At the time, it was the largest settlement of false claims against a Medicare Advantage plan.

Phillips & Cohen successfully represented a whistleblower in a False Claims Act case against Martin’s Point Health Care Inc. that settled in 2023 for $22.48 million.  The allegations include Martin’s Point knowingly submitting diagnosis codes that were not supported by the medical records – making patients appear sicker than they were – for the purpose of obtaining higher monthly payments for patients enrolled in their Medicare Advantage plans. The settlement is believed to be the largest in Maine under the False Claims Act.

In another Phillips & Cohen case, Kaiser Foundation Health Plan of Washington, previously known as Group Health Cooperative, paid $6.3 million to the government to settle a qui tam lawsuit filed alleging risk-adjustment fraud.

DOJ also intervened in a qui tam lawsuit against UnitedHealth Group, which Phillips & Cohen filed, which alleges UnitedHealth engaged in fraudulent use of risk-adjustment data through a chart review program for UnitedHealth’s Medicare Advantage plan, UnitedHealth Medicare Advantage.

In addition, DOJ has joined another whistleblower lawsuit filed by Phillips & Cohen against Kaiser Permanente and certain Kaiser consortium members that also allege risk-adjustment fraud.

[Learn more about risk-adjustment fraud and other types of Medicare Advantage fraud. ]

How to report Medicare Advantage fraud and earn rewards

Company insiders with knowledge of risk adjustment are well-situated to discover fraud by Medicare Advantage plans, but they may be at a loss for what to do about it.

The False Claims Act empowers individuals to report fraudulent healthcare practices by filing “qui tam” lawsuits against entities that are defrauding Medicare, Medicaid, and other government healthcare programs. The law provides protection against job retaliation for whistleblowers as well as rewards based on the amount of money recovered as a result of a qui tam case.

After a qui tam lawsuit is filed, the government investigates the allegations to decide whether to join the case.

If funds are recovered for the government as a result of the qui tam lawsuit, whistleblowers are entitled to 15 percent to 30 percent of the recovery as a reward based on numerous factors, including the assistance provided by the whistleblower and their attorneys.

If you are aware of Medicare Advantage fraud and would like to talk to experienced whistleblower lawyers, please contact us for a free, confidential review of your matter.


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