Medicare Advantage Risk-Scoring Fraud

Part I of this three-part series on Medicare Advantage (MA) Risk-Scoring Fraud explains the logic behind the 2003 health status based payment adjustments from CMS to Medicare Advantage (health insurance) plans, or payers: It is logical to compensate private payers more richly for providing coverage for the sicker, higher insurance-risk Medicare beneficiaries. Part I also explains the basis for developing “risk scores” based on provider-submitted diagnoses, which prospectively correlate with future need for both in-hospital resources and resources required to provide ambulatory care services. These diagnoses are easily retrieved from provider claims, and, if properly representative of medical records, the diagnoses truly predict the need for future medical care expenditures. Diagnoses (and associated ICD-9 codes) are aggregated into closely-related risk family categories known as Hierarchical Condition Categories (HCCs). [HCCs are calculated from the slightly more than 3,000 ICD-9-CM diagnosis codes approved by the Centers for Medicare & Medicaid Services (CMS)].

Part II of this three-part series describes widespread exaggeration of MA risk scores, based on medical record audits carried out by Medicare. These audits reviewed in and out-patient records which were documentation for diagnoses that were forwarded to Medicare and used to assign risk scores. The audits frequently uncovered absent of inadequate documentation of burden of illness to support the HCC assignment. The latter audits have been entitled, “Risk Adjustment Data Validation” (RADV) to determine that all diagnoses were substantiated by objective medical record documentation as true reflections of each beneficiary’s medical history, use of resources, and health status.

The latest chapter in this saga of abusive billing of the government was uncovered in June 2015. The Center for Public Integrity, a not-for-profit, 501(c)(3) watchdog organization, uncovered Medicare Advantage risk scoring fraud committed by some of America’s largest health insurers. An audit, disclosed under the Freedom of Information Act, uncovered excessive payments within the HCC Risk Scoring System involving some of the US’ largest plans. An estimate of the dollar impact of these Medicare overpayments, after extrapolation to the entire governmental Managed Medicare book of business, suggested many millions of dollars in overpayments. Recoupments are presently underway. Clearly, a medical accounting system designed to assure appropriate compensation for physician and hospital providers has been abused by some, to enhance revenue streams and mitigate insurance risk.

REAL PEOPLE making real change Medicare Fraud Wins

Kathleen Hawkins

Dignity Health
$37 million

Kathleen Hawkins, RN MSN, had been employed by Defendant, Catholic Healthcare West (CHW) for approximately 6 years when she decided she had had enough of trying to change the hospital system from within.

CHW, a California not-for-profit corporation that operated hospitals in California, Arizona, and Nevada, was at the time the eighth largest hospital system in the nation and the largest not-for-profit hospital provider in California.

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Joe Strom

Johnson & Johnson
$184 Million

Joe Strom contacted us in 2005. We were very grateful that he did. We immediately formed an all-star legal team and a process to stop a very harmful pharmaceutical marketing strategy. It was this process we set into motion that ultimately returned hundreds of millions of dollars to the U.S. Treasury, and a portion of that, very well-deserved, into Joe’s bank account.

Joe told us a very troubling story about the off-label promotion of a pharmaceutical drug for patients who already suffered from chronic heart failure.

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Description
Description

“I collaborated with Nolan, Auerbach and White on a broad variety of cases where whistleblowers stepped forward to disclose tactics employed by large companies to influence physicians' medical decision-making in patient care. They and their medical consultants, have consistently leveraged biomedical research and best medical evidence to advance patient safety, optimize clinical outcomes, and control precious resource utilization.”

— Fred Polsky M.D.,, Former Medical Director, CMS Zone 7 Integrity Contractor

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