Medicare Advantage, or Medicare Part C, is a government-funded healthcare program that contracts with private health insurers in order to provide Medicare benefits to Americans over the age of 65. The program covers about 18 million seniors. The private insurance companies, or Medicare Advantage Organizations, submit bids to CMS offering to insure members at a specified rate. The Government pays the companies on a monthly basis for each member insured. Companies whose members are sicker receive higher payments.
A few large firms dominate the program: United Healthcare, Humana, Aetna, and Blue Cross Blue Shield together insure over half of Medicare Advantage members. The program has been incredibly profitable for health insurance companies.
However, recent cases are shedding light on troubling fraudulent conduct by insurance companies. Several whistleblowers have alleged that insurance companies represent their costs as being higher than they truly are in order to receive higher payments from the Government. Last year, the 9th Circuit found in a case filed in California that it would be fraudulent for an insurance company to conduct “retroactive review” of their patient files if the review was only to add under-reported diagnoses, but not remove erroneous diagnoses from the files. See United States v. United Healthcare Ins. Co., 848 F.3d 1161, 1169 (9th Cir. 2016). In that case, a whistleblower alleged that United Healthcare had contracted with HealthCare Partners to review the medical charts of its patients in order to find any diagnosis codes that could be added. This month, the Department of Justice intervened in another lawsuit alleging that United Health Group inflated risk adjustment payments based on untruthful and inaccurate information about the health status of their members.
Courts have agreed that such conduct would violate the False Claims Act. Under the Act, whistleblowers who discover violations of these requirements may contract a whistleblower lawyer (or “qui tam” lawyer) to file a False Claims Act lawsuit. The False Claims Act allows whistleblowers to sue companies that defraud the Government, and to receive a portion of the recovery.
Filing a False Claims Act suit initiates a civil litigation on behalf of the whistleblower and the United States and makes it possible for the whistleblower to receive 15-30% of any recovery made by the Government. The Government may also choose to intervene in the lawsuit, which means that it agrees to litigate on its own behalf a case that was initially filed by a whistleblower. Whistleblowers are also protected from any retaliation by their employer.
Similar to the United Healthcare case, another whistleblower has alleged that United Health Group paid kickbacks to physicians in order to induce them to provide the company with the names of potential members for its Medicare Advantage program. The 3rd Circuit found that such payments would violate the Anti-Kickback Statute and therefore the False Claims Act. U.S. ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 300 (3d Cir. 2011). The Anti-Kickback Statute prohibits providing payments to induce referrals of patients or services that are paid for by the Government.
As federal contractors, Medicare Advantage Organizations are required to comply with federal requirements, such as accurately reporting their costs and complying with the Anti-Kickback Statute. Where the Medicare Advantage Organizations are failing to comply with their requirements, whistleblowers are stepping up to correct the wrongs.