Medicare Advantage plans offer seniors an alternative to standard Medicare, which pays doctors for each service they render. By contrast, the health plans are paid a set fee monthly for each patient based on a complex formula known as a risk score. Essentially, the government pays higher rates for sicker patients and less for those in good health.
But overcharges, intentional or not, have cost taxpayers billions of dollars in recent years, as the Center for Public Integrity reported in a series published last year.
The Florida indictment comes as the Medicare Advantage industry mounts a major advocacy and public relations offensive in Washington to stave off proposed budget cuts. The Centers for Medicare and Medicaid Services, or CMS, is set to propose rates that the health plans will be paid for next year on Feb. 20. The Obama administration’s 2016 budget seeks to cut some $36 billion from Medicare Advantage plans over the next decade related to oversized risk scores.
Two advocacy groups are leading the charge to nullify the proposed cuts, including the Better Medicare Alliance,which calls itself “the leading advocacy organization” for Medicare Advantage. Its sponsors include Humana and UnitedHealth Group, which together cover about 40 per cent of the 16 million people on Medicare Advantage.
Interim executive director Krista Drobac said the alliance “was launched to focus on the value proposition of Medicare Advantage and to build support for protecting and strengthening the program. With 16 million seniors (one third of Medicare beneficiaries) now in Medicare Advantage, we think this effort is timely and needed,” she wrote in an email.
Drobac added that the group “focuses on research, communications, social media, alliance building and grassroots. We have no plans to lobby,” she said.
A second group called the Coalition for Medicare Choices, which was set up by the insurance industry trade association America’s Health Insurance Plans and boasts 1.8 million members, also is “mobilizing” to pressure Congress and the White House to back off. It pleads its case in a video ad.
The insurance industry trade group also has held briefings on Capitol Hill designed to tout the benefits of Medicare Advantage and solidify support in Congress. In the past, the group has persuaded many lawmakers to call for a roll back of funding cuts mandated by the Affordable Care Act.
While the industry fights to preserve its funding, there’s growing concern over risk score abuse and resulting overpayments.
CMS officials concede that billions of tax dollars are misspent every year when Medicare Advantage plans exaggerate how sick their patients are, a practice known as “upcoding.” The Government Accountability Office, the watchdog arm of Congress, also is auditing Medicare Advantage billing practices. Results are due later this year.
And some members of the Medicare Payment Advisory Commission or MedPac, which advises Congress on eldercare issues, have suggested the Medicare Advantage risk scoring system triggers overcharges the federal treasury can ill afford. At a December 2014 meeting MedPac chairman Glenn M. Hackbarth said the group had seen “empircal evidence” of upcoding by some Medicare Advantage plans.
The Center for Public Integrity has previously reported on several of the whistleblower lawsuits, including one filed by a Miami doctor against Humana, that allege upcoding. In that case, Olivia Graves alleges that a Humana medical center had diagnosed abnormally high numbers of patients with diseases such as diabetes with complications that boosted Medicare payments — diagnoses that “were not supported by medical records.” Graves alleges that Humana knew about the overcharges but took no action to stop them. Humana has denied the allegations in the civil suit.
In a second case, a former manager at a California firm that does medical home visits alleges that the process was abused to inflate risk scores. A third case brought by a former Bush administration health official accuses a Medicare health plan in Puerto Rico of cheating Medicare out of hundreds of millions of dollars through diagnoses that were not backed up by medical records. All of the companies have denied the allegations.
These civil cases, even if they result in large judgments, may have minimal impact. Bringing criminal charges, as prosecutors in Miami have done for the first time, raises the stakes dramatically because convictions could bring maximum prison terms of up to ten years. Though South Florida has long been a hotbed of health care fraud, officials said the Thompson case is their first criminal action related to Medicare Advantage billing.
“We believe it is the first case of its kind to be prosecuted in the Southern District of Florida,” Marlene A. Fernandez-Karavetsos, a spokeswoman for the U.S. Attorney’s Office in Miami, wrote in an email.
According to the grand jury, Humana paid Thompson, who ran medical centers in Delray Beach and Boynton Beach, about 80 percent of the money it received from CMS for treating patients. In exchange, the medical center was responsible for paying for all of the members’ medical care. Many Medicare Advantage plans sign similar contracts with community physicians who treat their patients.
Humana used records coded by its doctors to justify each patient’s risk score. Certain medical conditions deemed expensive to treat raise the score and thus the government payment for that patient. How accurate those scores were is at the heart of the case against Thompson.
Thompson allegedly reported “false and fraudulent” diagnoses to Humana, which then passed them on to Medicare for payment. The indictment cites eight patients with three medical conditions, including four people said to have “ankylosing spondylitis,” a disease of the spine that can cause abnormal bone growth.
The indictment states that from January 2006 through February of 2010 Thompson submitted to Humana “false and fraudulent diagnoses of Medicare beneficiaries enrolled in Humana Medicare Advantage plans, when in truth and fact the beneficiaries did not suffer from the diagnosed conditions.”
According to the grand jury, other phony diagnoses included “inflammatory polyarthropathy,” in which five or more joints in the body are inflamed or swollen, and “major depressive affective disorder.” That’s a severe form of depression that involves a “loss of contact with reality,” according to the indictment.
The indictment states that as a result of the inflated risk scores Medicare made “excessive payments” of at least $2,114,332.33. Humana passed about 80 percent of that amount to Thompson’s medical center. The grand jury did not say what happened to the remaining money.
But Humana spokesman Noland wrote in an email: “Humana has reimbursed the government to ensure that both the 20 percent and the 80 percent were paid back in full, thus making the government whole.”
Congress created Medicare Advantage in 2003 to encourage private insurance companies to jump into the senior care market without hesitation. Since then, the program has proven popular with seniors because it can cost them less out of pocket than original Medicare. Patients generally have no way of finding out what their risk scores are because neither health plans nor the government tells them. The Center for Public Integrity has sued CMS under the Freedom of Information Act to make public a wide range of agency records on risk scores.
CMS expects to propose 2016 payment rates on Feb. 20 and then give the industry 45 days to make its case to roll back any cuts.
Drobac said that’s a goal of the Better Medicare Alliance: “We will be working in support of stable funding for MA (Medicare Advantage) because we believe more cuts will harm beneficiaries,” she said.