A decade ago, federal officials drafted a plan to discourage Medicare Advantage health insurers from overcharging the government by billions of dollars \u2014 only to abruptly back off amid an \u201cuproar\u201d from the industry, newly released court filings show.<\/p>\n
The Centers for Medicare & Medicaid Services published the draft regulation in January 2014. The rule would have required health plans, when examining patient\u2019s medical records, to identify overpayments by CMS and refund them to the government.<\/p>\n
But in May 2014, CMS dropped the idea without any public explanation. Newly released court depositions show that agency officials repeatedly cited concern about pressure from the industry.<\/p>\n
The 2014 decision by CMS, and events related to it, are at the center of a multibillion-dollar Justice Department civil fraud case against UnitedHealth Group pending in federal court in Los Angeles.<\/p>\n
The Justice Department alleges the giant health insurer cheated Medicare out of more than $2 billion by reviewing patients\u2019 records to find additional diagnoses, adding revenue while ignoring overcharges that might reduce bills. The company \u201cburied its head in the sand and did nothing but keep the money,\u201d DOJ said in a court filing.<\/p>\n
Medicare pays health plans higher rates for sicker patients but requires that the plans bill only for conditions that are properly documented in a patient\u2019s medical records.<\/p>\n
In a court filing, UnitedHealth Group denies wrongdoing and argues it shouldn\u2019t be penalized for \u201cfailing to follow a rule that CMS considered a decade ago but declined to adopt.\u201d<\/p>\n
This month, the parties in the court case made public thousands of pages of depositions and other records that offer a rare glimpse inside the Medicare agency\u2019s long-running struggle to keep the private health plans from taking taxpayers for a multibillion-dollar ride.<\/p>\n
\u201cIt\u2019s easy to dump on Medicare Advantage plans, but CMS made a complete boondoggle out of this,\u201d said Richard Lieberman, a Colorado health data analytics expert.<\/p>\n
Spokespeople for the Justice Department and CMS declined to comment for this article. In an email, UnitedHealth Group spokesperson Heather Soule said the company\u2019s \u201cbusiness practices have always been transparent, lawful and compliant with CMS regulations.\u201d<\/p>\n
Missed Diagnoses<\/strong><\/p>\n Medicare Advantage insurance plans have grown explosively in recent years and now enroll about 33 million members<\/a>, more than half of people eligible for Medicare. Along the way, the industry has been the target of dozens of whistleblower lawsuits, government audits<\/a>, and other investigations alleging the health plans often exaggerate how sick patients are to rake in undeserved Medicare payments \u2014 including by doing what are called chart reviews, intended to find allegedly missed diagnosis codes.<\/p>\n By 2013, CMS officials knew some Medicare health plans were hiring medical coding and analytics consultants to aggressively mine patient files \u2014 but they doubted the agency\u2019s authority to demand that health plans also look for and delete unsupported diagnoses.<\/p>\n The proposed January 2014 regulation mandated that chart reviews \u201ccannot be designed only to identify diagnoses that would trigger additional payments\u201d to health plans.<\/p>\n CMS officials backed down in May 2014 because of \u201cstakeholder concern and pushback,\u201d Cheri Rice, then director of the CMS Medicare plan payment group, testified in a 2022 deposition made public this month. A second CMS official, Anne Hornsby, described the industry\u2019s reaction as an \u201cuproar.\u201d<\/p>\n Exactly who made the call to withdraw the chart review proposal isn\u2019t clear from court filings so far.<\/p>\n \u201cThe direction that we received was that the rule, the final rule, needed to include only those provisions that had wide, you know, widespread stakeholder support,\u201d Rice testified.<\/p>\n \u201cSo we did not move forward then,\u201d she said. \u201cNot because we didn\u2019t think it was the right thing to do or the right policy, but because it had mixed reactions from stakeholders.\u201d<\/p>\n The CMS press office declined to make Rice available for an interview. Hornsby, who has since left the agency, declined to comment.<\/p>\n But Erin Fuse Brown, a professor at the Brown University School of Public Health, said the decision reflects a pattern of timid CMS oversight of the popular health plans for seniors.<\/p>\n \u201cCMS saving money for taxpayers isn\u2019t enough of a reason to face the wrath of very powerful health plans,\u201d Fuse Brown said.<\/p>\n \u201cThat is extremely alarming.\u201d<\/p>\n Invalid Codes<\/strong><\/p>\n The fraud case against UnitedHealth Group, which runs the nation\u2019s largest Medicare Advantage plan, was filed in 2011 by a former company employee. The DOJ took over<\/a> the whistleblower suit in 2017.<\/p>\n DOJ alleges Medicare paid the insurer more than $7.2 billion from 2009 through 2016 solely based on chart reviews; the company would have received $2.1 billion less if it had deleted unsupported billing codes, the government says.<\/p>\n The government argues that UnitedHealth Group knew that many conditions it had billed for were not supported by medical records but chose to pocket the overpayments. For instance, the insurer billed Medicare nearly $28,000 in 2011 to treat a patient for cancer, congestive heart failure, and other serious health problems that weren\u2019t recorded in the person\u2019s medical record, DOJ alleged in a 2017 filing.<\/p>\n In all, DOJ contends that UnitedHealth Group should have deleted more than 2 million invalid codes.<\/p>\n Instead, company executives signed annual statements attesting that the billing data submitted to CMS was \u201caccurate, complete, and truthful.\u201d Those actions violated the False Claims Act, a federal law that makes it illegal to submit bogus bills to the government, DOJ alleges.<\/p>\n The complex case has featured years of legal jockeying, even pitting the recollections of key CMS staff members \u2014 including several who have since departed government for jobs in the industry \u2014 against those of UnitedHealthcare executives.<\/p>\n \u2018Red Herring\u2019<\/strong><\/p>\n Court filings describe a 45-minute video conference arranged by then-CMS administrator Marilyn Tavenner on April 29, 2014. Tavenner testified she set up the meeting between UnitedHealth and CMS staff at the request of Larry Renfro, a senior UnitedHealth Group executive, to discuss implications of the draft rule. Neither Tavenner nor Renfro attended.<\/p>\n Two UnitedHealth Group executives on the call said in depositions that CMS staffers told them the company had no obligation at the time to uncover erroneous codes. One of the executives, Steve Nelson, called it a \u201cvery clear answer\u201d to the question. Nelson has since left the company.<\/p>\n For their part, four of the five CMS staffers on the call said in depositions that they didn\u2019t remember what was said. Unlike the company\u2019s team, none of the government officials took detailed notes.<\/p>\n \u201cAll I can tell you is I remember feeling very uncomfortable in the meeting,\u201d Rice said in her 2022 deposition.<\/p>\n Yet Rice and one other CMS staffer said they did recall reminding the executives that even without the chart review rule, the company was obligated to make a good-faith effort to bill only for verified codes \u2014 or face possible penalties under the False Claims Act. And CMS officials reinforced that view in follow-up emails, according to court filings.<\/p>\n DOJ called the flap over the ill-fated regulation a \u201cred herring\u201d in a court filing and alleges that when UnitedHealth asked for the April 2014 meeting, it knew its chart reviews had been under investigation for two years. In addition, the company was \u201cgrappling with a projected $500 million budget deficit,\u201d according to DOJ.<\/p>\n Data Miners<\/strong><\/p>\n Medicare Advantage plans defend chart reviews against criticism that they do little but artificially inflate the government\u2019s costs.<\/p>\n \u201cChart reviews are one of many tools Medicare Advantage plans use to support patients, identify chronic conditions, and prevent those conditions from becoming more serious,\u201d said Chris Bond, a spokesperson for AHIP, a health insurance trade group.<\/p>\n Whistleblowers have argued that the cottage industry<\/a> of analytics firms and coders that sprang up to conduct these reviews pitched their services as a huge moneymaking exercise for health plans \u2014 and little else.<\/p>\n \u201cIt was never legitimate,\u201d said William Hanagami, a California attorney who represented whistleblower James Swoben in a 2009 case<\/a> that alleged chart reviews improperly inflated Medicare payments. In a 2016 decision<\/a>, the 9th Circuit Court of Appeals wrote that health plans must exercise \u201cdue diligence\u201d to ensure they submit accurate data.<\/p>\n Since then, other insurers have settled DOJ allegations that they billed Medicare for unconfirmed diagnoses stemming from chart reviews. In July 2023, Martin\u2019s Point Health Plan, a Portland, Maine, insurer, paid $22,485,000<\/a> to settle whistleblower allegations that it improperly billed for conditions ranging from diabetes with complications to morbid obesity. The plan denied any liability.<\/p>\n A December 2019 report<\/a> by the Health and Human Services Inspector General found that 99% of chart reviews added new medical diagnoses at a cost to Medicare of an estimated $6.7 billion for 2017 alone.<\/p>\n KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. Learn more about KFF<\/a>.<\/p>\nUSE OUR CONTENT<\/h3>\n