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Medicare Part C/Medicare Advantage Fraud

Medicare Fraud Whistleblower Lawyer

The Department of Justice pursues healthcare fraud cases involving the Medicare Part C program, which is Medicare’s managed care program, also known as Medicare Advantage.

Enforcing violations of the False Claims Act involving the Medicare Advantage program has been a priority for the Justice Department. According to the Assistant Attorney General, “Federal healthcare programs rely on the accuracy of information submitted by healthcare providers to ensure that managed care plans receive the appropriate compensation. We will pursue those who undermine the integrity of the Medicare program and the data it relies upon.”

Roughly 60 million Americans who are age 65 and over or disabled receive healthcare benefits through the Medicare program. Around 20 million Medicare beneficiaries participate in this program.

If you know of Medicare fraud taking place and are not sure about what to do next, get in touch with Tycko & Zavareei LLP. Our Medicare fraud whistleblower lawyers can offer professional guidance and insight on your next moves and help ensure your rights are protected every step of the way. Medicare fraud cases tend to be complex and involve powerful parties, so do not go into this legal battle alone.

What is Medicare Fraud, Waste, and Abuse?

Medicare fraud, waste, and abuse occur when healthcare providers report false information to Medicare in order to receive additional government funds. Medicare reimburses healthcare providers for the services they provide to patients who receive Medicare, and some medical professionals submit false reports to make patients appear sicker than they really are. They may do this by billing for medical services and procedures which were never actually performed or which were administered unnecessarily.

What’s the Difference between Medicare Part A, B, & C?

Medicare Part A helps patients pay for inpatient and outpatient care and skilled nursing. Medicare Part B covers medical insurance for patients from doctors and other healthcare providers, outpatient care, home health care, durable medical equipment, and some preventive services.

Unlike Medicare Parts A and B, where Medicare pays for each patient admission or service, Medicare Part C pays a capitated amount for each patient that is risk-adjusted based on a patient’s demographic information and health status.

Under Part C, a Medicare Advantage plan is a private health insurance plan approved by Medicare and administered by a healthcare insurer called a Medicare Advantage Organization. A Medicare patient may opt to get all of their healthcare benefits through a single Medicare Advantage plan instead of through traditional Medicare. These private Medicare insurance plans usually have an HMO or PPO network of doctors.

In 2019, a third of all Medicare beneficiaries – approximately 22 million beneficiaries – were covered by Medicare Part C. The Medicare Advantage program was projected to pay $250 billion to its participants for services in 2019, accounting for 33 percent of total Medicare spending.

Importance of Getting the Right Diagnosis

Getting the right diagnosis is a key aspect of healthcare, as it provides an explanation of a patient’s health problem and informs their medical decisions, according to the National Academies of Sciences, Engineering, and Medicine. Additionally, diagnostic errors — whether deliberate or inadvertent — “can lead to negative health outcomes, psychological distress, and financial costs. If misdiagnosis occurs, inappropriate or unnecessary treatment may be given to a patient, or appropriate and potentially lifesaving treatment may be withheld or delayed.”

Each year, an estimated one in 20 adults experiences missed, delayed, or incorrect diagnoses. Of the estimated 12 million Americans impacted, four million are believed to suffer serious harm. Diagnostic errors contribute to about 10 percent of patient deaths. According to the Agency for Healthcare Research and Quality, “[a]mong a clinician’s long list of responsibilities, perhaps none is more consequential than the act of diagnosis. The initial determination of a patient’s condition sets in motion a series of steps that may include life-altering tests, referrals, and treatments. A correct diagnosis starts a patient on the path toward all that modern medicine has to offer.”

The health and safety of hundreds of thousands of patients are significantly dependent upon the intermediary’s health assessments and diagnoses being comprehensive, accurate, and truthful.

Role of an Intermediary in Reaching a Diagnosis

An intermediary (also called a “first-tier entity”) plays a specific role in the Medicare Advantage program. A first-tier entity assesses the health needs of patients and makes diagnoses of patient illnesses. These health assessments and diagnoses are provided to the patient’s insurer and healthcare providers. In turn, healthcare providers rely upon the intermediary’s diagnoses to provide courses of treatment and care to patients. The insurers also rely upon the patient’s health assessment to determine how to appropriately bill Medicare.

Under the Medicare Advantage program, the intermediary is responsible for:

  • Performing a comprehensive patient assessment that involves meeting in-person with the patient
  • Reviewing the patient’s medical records and medical history
  • Performing diagnostic tests such as echocardiograms and diabetes tests if necessary
  • Determining the patient’s diagnosis and which Medicare-approved diagnoses codes (also known as ICD codes) are appropriate for the patient
  • Completing a written assessment to be used by the patient’s health care provider

Many first-tier entities employ healthcare professionals to perform their health assessments and diagnostic tests, such as physicians, nurse practitioners, physician assistants, nurses, and other clinical staff.

What Are ICD Codes?

ICD codes inform healthcare providers of the health status of the patient and how to bill Medicare. Medicare also relies upon ICD codes for reimbursement. Each disease, injury, infection, and symptom has its own ICD code. ICD codes are very specific to the patient’s illness, and the assignment of an ICD code by a healthcare provider requires careful review. For example, “Type 1 diabetes mellitus without complications” is ICD code “E10.9,” and “Unspecified systolic (congestive) heart failure” is ICD code “I50.20.”

It is critically important to patient care and treatment and for Medicare reimbursement that health care providers report accurate ICD codes for patients. According to the American Hospital Association, “[c]lear and accurate diagnosis and procedure code reporting provide valuable information about patient care. It provides important information for accurate reimbursements such as key Medicare payment and medical necessity determination. Clinical codes must be capable of accurately describing diagnoses, illnesses, and medical procedures—especially to improve the quality of health care and design a more equitable reimbursement model.”

Medicare Part C Fraud

The Medicare Advantage Organization (MAO) relies upon the diagnostic codes provided by the intermediary to determine the amount of the claim to submit to Medicare. The Medicare reimbursement amount is calculated using a complex formula that is risk-adjusted based upon these intermediary-assigned diagnostic codes. The “sicker” the patient is, the higher “risk” they are to the insurer, and the higher the reimbursement paid by the Medicare program is for the insurer.

Further, due to the financial trickle-down structure of the Medicare Advantage program, the more money Medicare pays to insurers, the more money the insurers pay to the first-tier entity for its diagnostic and health assessment services.

Individuals have reported to the Department of Justice that some intermediaries have perversely viewed this arrangement as an incentive to use diagnostic codes to make patients appear sicker than they actually are. In this way, the first-tier entity fraudulently exploits the Medicare program at the risk to patient health and safety.

Medicare Fraud Examples & False Claims Settlements

Unfortunately, it is anticipated that there is rampant fraud in the Medicare Part C program. The Department of Justice has focused its investigative efforts on Medicare Part C cases that involve Medicare Advantage Organizations (MAOs), participating plans, first-tier entities or intermediaries, and healthcare organizations and providers who manipulate the risk adjustment process by submitting unsupported diagnosis ICD codes to make their patients appear sicker than they actually were. In 2020 alone, the Centers for Medicare and Medicaid Services (CMS) reported that over $16 billion in Medicare Advantage payments were improperly made.

Additionally, one Medicare Advantage provider paid a $270 million False Claims Act settlement for allegedly causing an MAO to submit incorrect diagnosis codes to the Medicare program and obtaining inflated payments. The Department of Justice filed a lawsuit against healthcare providers alleging that they violated the False Claims Act by knowingly submitting unsupported diagnosis codes. This fraud was brought to the attention of the Department of Justice by an individual who was entitled to a percentage of the financial recovery the Department of Justice receives after the litigation ends.

Another Medicare Advantage healthcare provider and its affiliates paid a $30 million False Claims Act settlement for allegedly submitting unsupported diagnosis codes, which inflated the risk scores of the Medicare patients and led to the MAOs receiving more Medicare money than they were entitled to receive.

A Medicare Advantage provider and physician paid $5 million to settle False Claims Act allegations that they reported invalid diagnosis codes to Medicare Advantage plans and thereby caused those plans to receive inflated payments from Medicare.

Another MAO paid over $6 million to resolve allegations that it submitted invalid diagnoses which resulted in inflated Part C payments.

In each case where a financial settlement was obtained, an individual or group of individuals reported the fraud to the Department of Justice, and they were entitled to receive a financial reward.

According to the Department of Justice, one common scheme that has been investigated is manipulation by MAOs and health care providers of the risk-adjustment process whereby they audit, or hire others to audit, patient medical records to identify additional ICD codes that would increase their Medicare reimbursement. In the process of conducting these audits, MAOs have uncovered unsupported diagnosis ICD codes that were improperly submitted to Medicare. Rather than deleting these ICD codes at the same time they submitted them to Medicare, they simply ignored the unsupported diagnosis codes.

Reporting Medicare Fraud

You can help prevent Medicare fraud and abuse by filing a qui tam lawsuit under the False Claims Act.

Whistleblowers with information regarding fraud or abuse in a Medicare Advantage Plan or a Medicare drug plan should seek legal guidance from a well-versed and experienced attorney. Our whistleblower lawyers can offer insight on the qui tam claim process, help you report Medicare fraud, and encourage the government to get involved in your case.

Are There Protections for Medicare Fraud Qui Tam Whistleblowers?

A law known as the False Claims Act protects whistleblowers who report fraudulent activity from any form of workplace retaliation. Specifically, employees who report Medicare fraud taking place at their jobs are protected against disciplinary action by an employer or supervisor, such as demotions, pay cuts, termination, harassment, and discrimination of any kind on the basis of their decision to come forward and blow the whistle on fraudulent activity. A Medicare fraud attorney could be vital to enforcing these legal protections and holding an employer accountable for retaliating against a brave whistleblower.

Medicare Whistleblower Rewards

The False Claims Act also entitles whistleblowers whose Medicare fraud reports lead to the successful recovery of defrauded funds to 15-30 percent of the total funds recovered. Whether you win compensation depends on the government’s success in finding instances of Medicare fraud using your whistleblower tip.

A Medicare fraud attorney with Tycko & Zavareei LLP can help encourage the government to get involved in your whistleblower claim and offer insight on the kinds of compensation you might be entitled to based on the facts of your case. For instance, some whistleblower claims are settled for hundreds of thousands, if not millions, of dollars.

Call our Medicare Fraud Whistleblower Attorneys Today

If you have information about fraud schemes involving the Medicare Part C or Medicare Advantage program, consider enlisting the help of an attorney to help you report the fraud to the Department of Justice. Tell our Medicare fraud whistleblower lawyers about the information you have during a free consultation.

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