Recent Industry News
The Department of Justice (DOJ) recently disclosed their ongoing investigation of Health Net Inc., Aetna Inc., Cigna Corp’s Bravo Health Inc., and Humana Inc. in connection with a 2011 qui tam action. A former UnitedHealth executive, Benjamin Poehling, filed the whistleblower case against these insurers and others under the False Claims Act. The lawsuit alleges that the insurers defrauded Medicare through claims of exaggerated patient sicknesses or nonexistent patient conditions or treatments. The allegations involve billions of dollars in questionable Medicare claims and payments. The DOJ previously intervened in the case against UnitedHealth on February 14, 2017 and declined to intervene in the case against the other insurers. However, on March 14, 2017, the DOJ filed a corrected notice of intervention indicating that they were unable to decide whether to intervene in the case against these four insurers, due to the ongoing investigations.
When the DOJ conducts an initial investigation, their purpose is to determine whether there is sufficient evidence to warrant their intervention and takeover of the case. The key issue in this matter relates to risk adjusted payments made to managed-care plans in the Medicare Advantage (“MA”) program. These payments offset an MA plan’s increased costs associated with treating patients with serious or multiple health conditions. Payment rates in Medicare Advantage are based on regional trends and utilization in traditional fee-for-service Medicare, as well as adjustments to plan members’ risk scores. Members with more chronic conditions have higher risk scores and accordingly, those plans receive higher payments. The lawsuit alleges that the insurers falsely claimed patient conditions and diagnoses to seek higher risk adjusted payments. Accordingly, plan members’ risk scores were inflated in order to boost payments under the MA risk adjustment program. Risk scores were created to incentivize plans to cover all seniors regardless of their health status. However, in recent years, several whistle-blower lawsuits have alleged the unlawful conduct by health plans to inflate scores and receive more funds.
The DOJ’s corrected notice of intervention is available at: