Giant health insurer Humana, Inc. faces new scrutiny from the Justice Department over allegations it has overcharged the government by claiming some elderly patients enrolled in its popular Medicare plans are sicker than they actually are.
The Louisville, Kentucky-based company disclosed the Justice Department’s recent civil “information request” in an annual report filed with the Securities and Exchange Commission on Feb. 18. The company noted that it is cooperating with authorities.
“We continue to cooperate with and voluntarily respond to the information requests from the Department of Justice and the U.S. Attorney’s Office,” Humana wrote.
The privately run Medicare Advantage plans offer seniors an alternative to standard Medicare, which pays doctors for each service they render. By contrast, under Medicare Advantage, 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 related to inflated risk scores, 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 Center first disclosed multiple investigations of the Humana Medicare Advantage plan last May based on records filed by the U.S. Attorney’s Office in a Miami civil suit.
But Humana’s SEC disclosure offers fresh details into the wide scope of the Justice review, indicating it is taking aim at a range of common Medicare Advantage billing practices and fraud controls, as well as Humana’s use of home health assessments of patients in its plans. The industry argues these “house calls” improve the health of elderly patients, but federal officials have been concerned that the primary objective is to raise risk scores and revenues.
Humana said the Justice Department had requested a range of records about “our business and compliance practices related to risk adjustment data generated by our providers and by us, including medical record reviews conducted as part of our data and payment accuracy compliance efforts, the use of health and well-being assessments, and our fraud detection efforts.”
The disclosure drew attention on Capitol Hill.
"I'll watch this investigation to see if it might result in ways to improve risk adjustment policy, either through [Centers for Medicare and Medicaid Services] action on its own or legislation if necessary," said Senate Judiciary Committee chairman Chuck Grassley (R-Iowa). "If the policy drives over-billing, it should be fixed."
The government probe comes at an inopportune time for the burgeoning Medicare Advantage industry, which is mounting an intense lobbying and advocacy effort to stave off proposed government funding cuts.
The Centers for Medicare and Medicaid Services is set to release proposed funding levels for 2016 on Friday. More than 16 million seniors have joined these private health plans. Humana has enrolled about 3.2 million people in Medicare Advantage plans.
What will happen to the rates is not yet clear. But 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.
Allegations that some Medicare Advantage plans manipulate risk scores, a process known in the industry as “upcoding,” have been surfacing over the past year in the federal courts.
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.
And in early February, a federal grand jury in West Palm Beach, Fl. indicted Dr. Isaac Kojo Anakwah Thompson on eight counts of health care fraud. He’s accused of cheating Medicare out of about $2.1 million by inflating risk scores of some Humana-enrolled patients. Thompson, 55, is free on a $1 million bond and has declined comment through his lawyer.
The Florida indictment did not accuse Humana of wrongdoing, but company spokesman Tom Noland said that it had repaid the government. He declined to say how much.
New scrutiny of home visits also could prove troublesome for the industry. At least one whistleblower, a former manager at a California firm that does medical home visits, has alleged that the process was abused to inflate risk scores.
Humana has been a major promoter of these home assessments. In an email to the Center today, Noland wrote: “We believe in continuing to do in-home assessments as we see this as an important step in establishing care management plans for our members living with multiple chronic conditions.”
Noland declined to say how many of the home assessments Humana has performed. But the company has previously said that it conducted the assessments for about 531,000 members in the first three months of 2014.