Upcoding, chart review, chart mining and other ways risk-adjustment and Medicare Advantage fraud can occur
Medicare Advantage and PACE plans commit fraud when they knowingly submit — or have a contractor submit on their behalf — risk-adjustment data to the Centers for Medicare & Medicaid Services (CMS) that are inaccurate or ineligible for payment under CMS rules.
In many cases, Medicare Advantage fraud occurs by claiming risk-adjustment payments for medical conditions that their members were not treated for and may not even have. Program of All-Inclusive Care for the Elderly (PACE) plans also can cheat Medicare in that same way.
These fraudulent practices are violations of the False Claims Act and could be investigated and stopped if a whistleblower files a “qui tam” (whistleblower) lawsuit. If any funds are recovered as a result of the qui tam lawsuit, the whistleblower will receive a reward.
A qui tam case filed by Phillips & Cohen on behalf of a Florida doctor, Darren Sewell, resulted in the largest settlement so far of a false claims case against a Medicare Advantage plan. Freedom Health, Optimum Healthcare and their affiliates paid the federal government and the state of Florida $32.5 million to settle the case.
The whistleblower’s lawsuit alleged that Freedom Health, Optimum Healthcare and their affiliates submitted false risk adjustment data and misstated to Medicare the number of doctors and medical facilities that would be available to their members.
Medicare Advantage fraud and fraud in PACE plans involving risk-adjustment can take several forms, including:
- Upcoding members’ diagnoses to exaggerate the severity of the members’ condition (claiming that they are sicker than they really are) in order to submit to CMS a diagnosis code that risk adjusts or a more serious diagnosis code that risk adjusts at a higher rate (i.e., has a higher risk score or larger risk multiplier), and thereby allows the Medicare Advantage plan to improperly increase the amount of the per member per month (pm/pm) capitation rate it receives for such members.
- Conducting or hiring an outside vendor to conduct “chart audits,” “chart reviews,” or “chart mining” in which the chart reviewers upcode diagnoses and/or only look for new risk adjustment claims and fail to correct invalid, inaccurate or unsupported diagnoses that were improperly submitted to CMS.
- Training, incentivizing and otherwise encouraging doctors, independent practice associations (IPAs), hospitals or other healthcare providers to upcode and submit diagnosis codes for diseases that risk adjust but which the member does not have or for which the member was not treated that year (such as diagnoses that only appear on the member’s problem list), including submissions through “at risk” or “capitated” reimbursement arrangements.
- Asking coders to look beyond the physician-documented diagnoses and attempt to identify diagnoses based on other evidence in medical charts (e.g., medications, laboratory test results, radiology reports, rule-out diagnoses or problem lists).
- Failing to properly filter the diagnosis codes and other data the Medicare Advantage plan submits to CMS to generate risk adjustment claims, including failing to remove diagnoses that were not made during a face-to-face visit with a qualifying health care provider, such as a doctor or hospital.
- Performing an internal audit of the validity of risk adjustment diagnoses the Medicare Advantage or PACE plan submitted to CMS – e.g., a mock risk adjustment data validation (RADV) audit – and failing to submit to CMS delete codes for the erroneous diagnoses identified in the audit or to investigate and correct any coding or data submission problems the audit may have uncovered.
What Medicare Advantage fraud and fraud in PACE plans looks like:
- Submitting to CMS a code for major depressive disorder (major depression) or cachexia (malnutrition) — two codes that qualify for risk adjustment — when there is no support in the medical records for the existence or treatment of such conditions in the relevant year.
- Claiming current treatment of a condition like stroke or cancer when it is more properly characterized as a past “history of” treatment (e.g., coding acute stroke when stroke occurred years ago, coding cancer when it is in complete remission and not being treated in the relevant year or coding old myocardial infarction – “old MI” – when it only appears on a problem list and was not treated in the relevant year).
- Submitting to CMS diagnosis codes based on laboratory or radiology claims, in which providers typically do not document confirmed diagnoses, or other improper provider or service types.
- Improperly linking complications and conditions to increase risk score (e.g., claiming a member has diabetes with renal or vascular manifestations without any support that the member’s diabetes caused a renal or vascular manifestation. Diabetes without complications has a lower risk adjustment score than diabetes with renal or vascular manifestations.)
Risk-adjustment fraud can be led by the Medicare Advantage or PACE plan itself or by contractors or consultants that the Medicare Advantage or PACE plan hires to find diagnosis codes and improve the plan’s revenue.
There are a host of companies that offer to provide Medicare Advantage and PACE plans with retrospective chart review services, risk-adjustment data submission services (including claims filtering), and/or prospective risk-adjustment services, including home visits. Many contractors market their services by their high return on investment, not accuracy.
Furthermore, instead of being paid hourly, some contractors have contingency fee arrangements with the Medicare Advantage and PACE plans, which pay them based on the number of new diagnosis codes they find for the plan. This type of arrangement gives the contractors a perverse incentive to focus on finding and adding to the Medicare Advantage or PACE plan’s submission to CMS as many diagnosis codes as possible, whether or not the codes are valid, as opposed to ensuring the accuracy of the codes submitted.
Ultimately, each Medicare Advantage and PACE plan is responsible for the diagnosis codes it submits, whether or not it hires a third party to do the work and submit the risk-adjustment processing (RAPS) files to CMS on its behalf. Under the False Claims Act, both the Medicare Advantage plan and the contractor it hired can be held liable for risk-adjustment fraud.
Part C Risk-Adjustment Fraud (Medicare Advantage Fraud) Cases under the False Claims Act
The US Department of Justice has intervened in a whistleblower lawsuit, originally filed by Phillips & Cohen and in which Phillips & Cohen is co-counsel, that includes allegations that UnitedHealth developed a company-wide program to review the medical charts of its Medicare Advantage members to find additional diagnoses that would boost payments from Medicare to UnitedHealth. At the same time, the lawsuit says, UnitedHealth avoided meaningfully investigating or correcting errors and high error rates that it found during those reviews because corrections would have decreased its Medicare payments.
In a separate case, the owners of a Medicare Advantage plan in Florida (Dr. Walter Janke and his wife, Lalita Janke) paid the federal government $22.6 million in 2010 to resolve allegations they caused Medicare to pay inflated capitation payments by submitting false diagnosis codes in connection with risk adjustment claims.
The government alleged the Jankes’ Medicare Advantage plan had hired “chart auditors” to look through medical records for additional or upcoded diagnoses that it could submit to CMS for increased payment — whether or not those diagnoses were actually eligible for risk adjustment under CMS rules. The government also alleged the Jankes’ Medicare Advantage plan used a software program to submit diagnosis codes to CMS that was incapable of submitting delete codes to delete false data from CMS’s database and thereby correct mistakes, i.e., diagnosis codes the Medicare Advantage plan knew had been submitted improperly.
For more information, see “The Risk Adjustment Scoring Scam – A Medicare (Dis) Advantage,” by Phillips & Cohen partner Erika A. Kelton.