While the Biden administration, Congress and private insurers argue about proposed cuts to Medicare Advantage and ways to shore up its financial future, another law that’s been in place for more than a century has proven to be the most effective way to reduce fraud in the system.

The False Claims Act, which allows whistleblowers, people who’ve witnessed or have information about a fraud upon the federal government who are also known as relators, to sue companies for fraudulent activity. Also: If stolen funds are successfully returned to the government, whistleblowers can receive up to 30% of that money.

Medicare Advantage, also known as Part C or managed care, is an alternative to traditional Medicare that is managed by private insurers. In 2022, the federal government spent $755 billion on the estimated 65 million people enrolled in Medicare, with $339.27 billion going to Part C. In 2023, more people are expected to be enrolled in Part C than traditional Medicare, making Medicare Advantage the largest taxpayer-funded health insurance program.

But Part C spending also includes billions in waste and fraud. According to a New York Times report last year, 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.

There have been other FCA whistleblower cases against private Medicare providers as well. Keller Grover represented whistleblower Kathy Ormsby, whose evidence led to the recovery of $90 million for the federal government in the settlement of a False Claims Act allegations against Sutter Health, the second-largest reported Medicare Advantage fraud settlement ever.

A Times story last month noted that without reforms, taxpayers will spend about $25 billion in 2024 in “excess” payments to Part C, according to the Medicare Payment Advisory Commission, a nonpartisan research group that advises Congress. According to the Centers for Medicare and Medicaid Services, the 2022 Medicare Part C estimated improper payment rate was 5.42%, which includes fraud and billing errors.

So what is the federal government doing to stop wasteful spending and fraud in Medicare Advantage? 

In February, partisan bickering ensued after the Biden administration planned to change Medicare Advantage payment formulas — a cut to a popular constituent program, some Republican senators argued — to tamp down overbilling and fraud by private insurers. Large Medicare Part C insurers UnitedHealth Group and Humana opposed the changes.

Earlier this month, CMS announced a 1.12% average cut in 2024 reimbursement rates for Medicare Advantage providers, less than a proposed 2.3% drop. The lobbying and protests by insurers led to CMS reducing the cut and also phasing in changes aimed at reducing overbilling over three years.

While these moves can help, there is much more fraud in private Medicare to uncover.

An Inspector General report titled “The Inability To Identify Denied Claims in Medicare Advantage Hinders Fraud Oversight” shows how private insurers are exploiting Part C for financial gain. But the OIG also found that without information concerning specifics about the services for which they are denying payment, the office cannot effectively understand, identify and address waste, fraud and abuse.

Whistleblowers can play a crucial role in exposing and stopping Medicare Advantage fraud in situations where the federal government can’t, as Keller Grover’s case with Ms. Ormsby shows. If you have information regarding Medicare Part C fraud, contact us for a confidential, free consultation. Keller Grover 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.