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HomeNewsCrying Wolf: Fraudulent Diagnosis Inflation for Increased Medicare Part C Reimbursements

Crying Wolf: Fraudulent Diagnosis Inflation for Increased Medicare Part C Reimbursements

SEPTEMBER 14, 2021. Medicare Advantage plans: the “advantage” is intended for the beneficiaries, not the providers! The United States Department of Justice settled a case against a California-based health care services provider for False Claims Act violations entailing inflating diagnosis codes to garner higher reimbursements.

Under the terms of the settlement, the service provider paid $90 million to resolve these allegations.  A former employee of one of the service provider’s affiliates blew the whistle on this Medicare Part C fraud.  The whistleblower is entitled to receive 15-25% of the government’s recovery.  Under the False Claims Act, a private party can file suit on behalf of the United States and receive a portion of the recovery.

As previously noted, Medicare Part C is a “capitated” healthcare plan wherein providers receive payments on a per-person basis.  The amount of those payments varies based on demographics and diagnoses.  According to the allegations, unscrupulous actors at this California health care services provider knowingly submitted incorrect and inflated diagnosis codes.  The service provider offers 10 Medicare Advantage (MA) plans administered by three different health insurance carriers.  For the thousands of inflated diagnosis codes submitted to these carriers, the service provider also knowingly retained the overpayments they received in return for false diagnosis codes.  According to the complaint the service provider and its affiliates “recklessly pursued” their “campaign” to get maximum reimbursements “without any meaningful training programs for their affiliated physicians relating to preventing Part C fraud, waste, or abuse.”

As part of the settlement, the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) required that the service provider and its affiliates enter into a five-year Corporate Integrity Agreement (CIA). The service provider must rectify its lack of compliance training and enforcement by implementing a centralized risk assessment program in conjunction with hiring an Independent Review Organization to analyze its Medicare Advantage patient data. This type of Medicare Part C fraud is not only an abuse of taxpayer funds but also skews Medicare diagnosis data, diverting Medicare funds from truly harming vulnerable and ill beneficiaries. The whistleblower in this case, as many whistleblowers do, saw a problem, and tried to implement a compliance program to mitigate it, but was ultimately unsuccessful in doing so. Reporting fraud was the next best course of action.

Tycko & Zavareei LLP Partner Eva Gunasekera will be speaking on the topic of “Enforcing the False Claims Act in Medicare Part C Cases” at the February 2022 Federal Bar Association Qui Tam Section’s annual conference.

If you would like to report Medicare fraud, you can contact attorneys at Tycko & Zavareei LLP. Eva Gunasekera and Renée Brooker are former officials of the United States Department of Justice and prosecuted whistleblower cases under the False Claims Act. Eva was the Senior Counsel for Health Care Fraud. Renée served as Assistant Director at the United States Department of Justice, the office that supervises False Claims Act cases in all 94 United States District Courts. Eva and Renée now represent whistleblowers. For a free consultation, you can contact Eva Gunasekera at [email protected] or contact Renée at [email protected] (tel.: 202-417-3664). Visit Tycko & Zavareei LLP’s website for whistleblowers to learn more at

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