Medicare Advantage, also known as Medicare Part C, has become the country’s largest taxpayer-funded health insurance program with more than 31 million participants. But as annual expenditures for the program have tripled over the past decade to $450 million, fraud is on the rise as well. 

According to a New York Times report, the Department of Justice and whistleblowers have pursued False Claims Act cases against at least half of the top 10 Medicare Advantage providers. Also, the U.S. Department of Health and Human Services Office of the Inspector General has found at least eight of those 10 private insurers have overbilled Medicare. 

“Fraudsters follow the money,” HHS Inspector General Christi A. Grimm said in recent congressional testimony. “With the tremendous growth of Medicare Advantage enrollment and expenditures, a corresponding increase in fraud in Medicare Advantage is predictable. Fraud schemes in traditional Medicare have migrated to Medicare Advantage.”

One of those schemes that threatens the financial health of Medicare Advantage, according to Grimm, is risk adjustment fraud. Whereas in traditional Medicare the government is paying providers for each medically necessary need or service that’s covered by the plan, in Part C the government pays private insurance plans a fixed monthly payment per each Medicare Advantage enrollee to cover their needs.

That fixed monthly payment can be increased, however, through risk adjustment payments, which provide private insurers an additional amount above the fixed monthly payment to account for specific needs of Medicare Advantage enrollees and discourage plans only enrolling healthier people. The Centers for Medicare & Medicaid Services bases risk adjustment payments on enrollee diagnoses contained in encounters or claims that Medicare Advantage plans submit. If a beneficiary is diagnosed with cancer, for example, the plan will receive a higher payment as long as the patient has a cancer diagnosis in their medical record.

As Grimm said, however, the Medicare Advantage plans stand to benefit financially when the monthly payment from the government exceeds their costs to provide care to the enrollee. That health care plans could overstate how sick their enrollees are to pocket higher Medicare Advantage reimbursements and not to provide patient care is a “troubling concern,” according to Grimm. A 2021 HHS-OIG report, Grimm said, raises serious questions when health risk assessments or chart reviews are the sole source of diagnoses driving higher risk adjustment payments.

She said HHS-OIG found that Medicare Advantage companies received more than $9 billion in risk adjustment payments in one year for serious medical conditions that only appeared on health risk assessments or chart reviews and not on any service records: 20 Medicare Advantage companies accounted for $5 billion of that $9 billion.

The most common diagnoses driving these payments, Grimm said, included vascular disease, serious mental illness, chronic obstructive pulmonary disorder, and congestive heart failure. A review of service records did not show any treatments indicating these serious conditions, she said.

Keller Grover attorneys have unique experience in risk adjustment fraud and a proven track record of getting the government’s attention to address it. We represented the whistleblower whose information led to a $90 million payout by Sutter Health, a precedent-setting settlement against a hospital system involving allegations of fraud on the Medicare Advantage program.

In that case, the whistleblower was a Certified Coder and risk adjustment manager who alleged Sutter artificially inflated its reimbursements for Medicare Advantage enrollees, claiming patients were treated for conditions they either did not have or were not treated for, which increased their risk scores and how much the government reimbursed Sutter for their care.

In another case last year, Cigna agreed to pay $172 million to resolve allegations that it violated the False Claims Act after it was accused of submitting inaccurate diagnoses codes based on health risk assessments and chart reviews for its Medicare Advantage enrollees. 

Oftentimes, whistleblowers are the only ones who can speak up and stop these types of frauds that cheat taxpayers and patients. When a FCA case is successful, the whistleblower typically receives a portion of the fraud recovered, ranging between 15% and 30%. In fiscal year 2023, the government paid $350 million to whistleblowers.

If you have information about risk adjustment fraud or other fraud in Medicare Part C, contact Keller Grover for a confidential, free consultation. We can advise potential whistleblowers about the best path forward from the very beginning, helping minimize the impact of reporting, protect rights and achieve the best possible outcome for the situation.

 

The nonpartisan U.S. Government Accountability Office, in a first-of-its-kind report, has produced an estimate of how much money the federal government is losing each year to fraud. It’s not only a staggering figure — $233 billion to $521 billion annually — but of even greater concern is the amount of undetected fraud in that estimate.

According to GAO statistics, confirmed fraud in fiscal years 2018 to 2022 ranged from $4.41 billion to $7.31 billion annually, a fraction of the GAO’s annual estimate. Even including False Claims Act settlements and judgments, which exceeded $2 billion in FY 2022, that means the government cannot account for at least $220 billion dollars each year and possibly hundreds of billions more. And despite the valiant effort of whistleblowers to expose fraudsters, only a fraction of fraud is recovered each year: about $2.7 billion last fiscal year, or a little over 1 percent of the estimated loss to fraud overall.

If the government is serious about tracking down the source of this undetected fraud, it can put its support behind established whistleblower programs that have proven to recover billions in unlawful spending.

“Today’s GAO report confirms what we long suspected: hundreds of billions of dollars are being lost to fraud, and the government is recovering only a fraction of the taxpayer funds being lost,” said Jacklyn DeMar, The Anti-Fraud Coalition President & CEO. “While government spending has increased exponentially, recoveries under the False Claims Act have remained flat. This first-of-its-kind estimate should redouble efforts to fight fraud by empowering whistleblowers and bolstering enforcement programs.”

Keller Grover attorney Kate Scanlan is a member of TAF who helped compile the organization’s annual “Fraud by the Numbers” series that highlights the success of whistleblowers to combat fraud in areas and programs such as Medicare Advantage, the defense industry, cryptocurrency, customs, and cybersecurity. As she wrote in the introduction to the series, just because we can’t precisely measure how many instances of fraud have gone undetected doesn’t mean whistleblowing doesn’t deter fraud or that existing whistleblowing efforts are adequate given the incidence of fraud. For example: more than $2.3 billion of the $2.68 billion in False Claims Act recoveries last fiscal year came from whistleblower-initiated cases, nearly 86 percent.

As the report says, while the federal government obligated almost $40 trillion from fiscal years 2018 through 2022, no reliable estimates of fraud losses affecting the federal government previously existed. The GAO compiled this report using data from fiscal years 2018-2022 and categorizing fraud as adjudicated, detected, and undetected. 

In its investigation of undetected fraud, the GAO looked at studies from federal agencies that quantify the extent of fraud based on instances of identified fraud. For example, the Department of Labor Office of the Inspector General found there were $45.6 billion in potentially fraudulent unemployment insurance benefits paid from March 2020 to April 2022. But, as the GAO report says, some portion of fraud is never detected. Including undetected fraud, the GAO estimated that between $100 billion and $135 billion (between 11 and 15% of total spending) in fraudulent unemployment insurance payments were made between April 2020 and May 2023. 

For comparison, the GAO points out that the lower range of the estimate — $233 billion — is greater than FY 2022 obligations for all but the eight largest federal agencies. Five agencies have total annual obligations greater than the upper range of $521 billion.

The numbers don’t lie: Fraud is out there and whistleblowers are successfully helping rein in fraudulent actions. If you’ve been a witness to unlawful conduct, the attorneys at Keller Grover can help you understand the False Claims Act and other laws that help you report wrongdoing and protect your rights. For a free consultation, contact us today.

As the Department of Justice’s annual False Claims Act report shows, Medicaid fraud comprises a significant portion of all the frauds against the federal government each year. In fiscal year 2023, the DOJ reported $2.68 billion in FCA settlements and judgments. Almost half that, $1.2 billion, was recovered from Medicaid provider fraud and patient abuse or neglect.

And because California’s Medicaid program, Medi-Cal, is exponentially larger than in most other states, it’s a big target for fraud. California accounts for $1.30 of every $9 in Medicaid spending: Of the nearly $900 billion in Medicaid expenditures in FY 2023, $130 billion was spent by Medi-Cal to provide health benefits to nearly 15 million low-income Californians.

More spending means more opportunities for fraud: California accounted for $362.8 million of the $1.2 billion recovered last fiscal year from Medicaid provider fraud and patient abuse or neglect. But with $130 billion being spent on Medi-Cal annually, the amount of fraud occurring in the program is likely much higher than the $360 million-plus recovered last year, possibly in the billions.

The Federal Medical Assistance Percentage dictates how much of Medicaid is paid by the federal government, and how much by the state running the program. In California, Medi-Cal is paid with 70% federal funds and 30% from state and local sources, so fraud and wasteful spending in the program puts a higher burden on the state to maintain health insurance premiums and taxes for this and other social programs 

According to California’s Attorney General, Medi-Cal fraud is generally defined as the billing of the Medi-Cal program for services, drugs, or supplies that are:

• Unnecessary;
• Not performed;
• More costly than those actually performed.

Medi-Cal fraud also refers to paying and/or receiving kickbacks for Medi-Cal billing referrals, and violations of the California False Claims Act and other related state laws.

“Medi-Cal supports millions of Californians by providing for the critical healthcare they rely on every day,” California Attorney General Robert Bonta said. “When providers misuse Medi-Cal funding, they siphon away much-needed resources from vulnerable, deserving patients.”

When state and federal prosecutors can’t ferret out Medi-Cal fraud on their own, they often rely on whistleblowers with first-hand knowledge of illegal schemes to recover misused funds.

Last year, a whistleblower received more than $14 million after his information led to five settlements that resolved claims brought under the False Claims Act against multiple Medi-Cal providers.

In June, the Justice Department announced that a health system, hospital network, outpatient clinic and community health center agreed to pay a total of $68 million to resolve allegations that they violated the False Claims Act and the California False Claims Act. The four companies allegedly submitted false claims to Medi-Cal for “Enhanced Services” that were either not “allowed medical expenses,” did not reflect the fair market value of any Enhanced Services provided, and/or were duplicative of services already required to be rendered. In August, another health care provider agreed to pay $5 million to settle similar claims alleged by the same whistleblower, whose information also helped lead to a $22.9 million settlement in 2022.

Keller Grover has experience representing whistleblowers who work in healthcare and have information about fraud. Among other cases, we represented the whistleblower whose information led to a $90 million False Claims Act settlement by Sutter Health in 2021, one of the largest settlements ever involving a Medicare Advantage provider. 

If you suspect Medicaid fraud, including fraud in the Medi-Cal program, we provide confidential, free consultations and can help you determine the best path forward from the very beginning, helping you minimize the impact of reporting, protect your rights and achieve the best possible outcome for your situation. 

 

Weeks after a cyberattack on UnitedHeath Group’s Change Healthcare unit crippled the processing of medical claims and prescriptions nationwide — and potentially exposed patient data — some lessons have emerged.

First, the federal government and industry executives have known for years that the U.S. healthcare system was vulnerable to hacking, according to The Washington Post, but failed to make improvements that could stop attacks. Ransomware gangs like “Blackcat” (also known as ALPHV) that purportedly carried out the Change Healthcare attack see the industry as an easy target that is willing to pay ransom demands to restore operations — but only after the monetary expense, and loss of private data.

According to Reuters, Change Healthcare processes about 50% of medical claims in the U.S. for around 900,000 physicians, 33,000 pharmacies, 5,500 hospitals and 600 laboratories. The ransom attack, called the largest ever in the U.S. healthcare industry, cut off reimbursements to pharmacies, hospitals, and other providers, costing them an estimated $100 million a day. UnitedHealth said it provided up to $2 billion in advances to cover providers who couldn’t receive reimbursements while the system was down. But UnitedHealth didn’t deny reports it held out two weeks before paying the $22 million ransom, according to the Post, and a return to normal operations for providers took a month.

But whistleblowers can play an important role in ending this cycle, reporting malware and breaches so that vulnerabilities can be patched before hackers can send out a ransom demand. While not all ransomware attacks are the result of fraud, failure to report a breach in a timely matter or failing to follow cybersecurity guidelines can be violations of the law. The U.S. Department of Justice introduced the Civil Cyber-Fraud Initiative to incentivize whistleblowers to help the government pursue cybersecurity-related fraud committed by government contractors and grant recipients.

In 2022, the Justice Department announced its first resolution under the Civil Cyber-Fraud Initiative, Comprehensive Health Services LLC agreed to pay $930,000 to resolve allegations that it violated the False Claims Act by falsely representing that it complied with contract requirements relating to the provision of medical services. Under one of the contracts, CHS submitted claims for the cost of a secure electronic medical record (EMR) system to store all patients’ medical records but allegedly failed to disclose that it had not consistently stored records on that system. 

When the initiative was introduced, then-Acting Assistant Attorney General Brian M. Boynton said three common cybersecurity failures would be prime candidates for False Claims Act enforcement under the new initiative:

• The knowing failure to comply with cybersecurity standards
• The knowing misrepresentation of security controls and practices
• The knowing failure to timely report suspected breaches

Boynton said the new initiative helps hold contractors and grantees to their commitments to protect government information and infrastructure and lead to the timely identification, creation and publication of patches for vulnerabilities. 

“As they have in many other aspects of False Claims Act enforcement, we expect whistleblowers to play a significant role in bringing to light knowing failures and misconduct in the cyber arena,” he said. “False Claims Act enforcement and whistleblower reporting will help spur compliance by contractors and grantees.”   

The Department of Health and Human Services is investigating the UnitedHealth hack, seeking to determine whether protected health data was breached and if the law requiring patent notification in the event of a breach was followed. While the hackers allegedly claimed they had stolen 8 terabytes of data, including records from Medicare, Tricare, and CVS Heath, UnitedHeath has not disclosed information about what patient data may have been exposed.

Whistleblowers can play a critical role in reporting to the government when companies fail to properly report breaches and the loss of private patient data. For those who want to report such wrongdoing, it’s critical to engage a whistleblower attorney early in the process. With more than 30 years of combined experience litigating fraud and employment cases — and billions in recoveries for its clients — Keller Grover is uniquely positioned to represent whistleblowers. 

If you want to report cybersecurity fraud in your organization, we are here to help. For advice about how to handle suspected fraud, contact Keller Grover for a free and confidential consultation.