Most people understand that spending in the medical industry is out of control. Health care spending represents an astonishing figure, something like 17% of the value of the U.S. economy, an amount almost impossible to comprehend. With so much money on the line, it’s not surprising that some bad actors would move to take advantage of the system, attempting to secure as much as possible for themselves, even if they have to cut corners to do so.
Based on recent actions by the Department of Justice, it appears that may have been what happened with several major insurance companies, most especially, UnitedHealth Group. The Department of Justice recently announced that it would intervene in two major False Claims Act cases that have been brought against the insurer. In both cases, whistleblowers allege that UnitedHealth implemented an illegal process to game the Medicare system by falsely representing the health of some of its insured patients.
The issue involves a subset of the Medicare program, known as Medicare Advantage. Medicare Advantage refers to a program that allows private insurance companies to administer health care rather than directly involving the Centers for Medicare and Medicaid Services (“CMS”), the government entity. Though the hope was that involving private insurance companies would lead to efficiencies, critics say that a lack of oversight has contributed to the private insurers bilking the public system of billions of dollars.
The most recently filed case that the Justice Department announced it would participate in was filed by a whistleblower named Benjamin Poehling. Poehling spent years as a financial director of UnitedHealth and was intimately familiar with how the insurance company operated. According to Poehling, UnitedHealth had implemented sophisticated systems to scan patients’ medical records and search for ways to make them seem sicker than they were.
Why would an insurance company want to do this? The reason is that more than a decade ago, the Medicare Advantage program was changed to offer incentives to insurance companies to take sicker patients, an attempt to avoid having the companies cherry pick only the healthiest individuals for coverage. Sicker patients were given higher risk ratings which translated directly into higher payouts from the government. By monkeying with diagnoses, insurance companies could extract thousands more dollars per patient per year, something that experts say many insurance companies, not just UnitedHealth, may have been involved in.
Thanks to Poehling and another False Claims Act lawsuit filed against UnitedHealth by another concerned former employee, the hope is the fraud that has been going on for years may soon be exposed. One of the lawsuits estimates that improper billing could be costing Medicare Advantage around $10 billion a year, a huge problem that deserves serious attention.
One vigilant watchdog, Senator Chuck Grassley, has also focused on the Medicare Advantage program, saying that federal officials need to more carefully examine the system, especially as it relates to overbilling. Grassley’s concern reached a peak after reading press coverage trumpeting CMS’ efforts to recover $3.4 million in fines from the health care industry related to overcharging. Though this initially seemed like a success worthy of congratulations, Senator Grassley soon learned the truth. Though CMS had extracted $3.4 million, they failed to collect the full $128 million in overcharges that had been identified. CMS supposedly agreed to settle for dramatically less after being subjected to intense pressure from the health care industry.
Now that the Justice Department is involved, the likelihood of success for these two False Claims Act cases has increased. The hope is by making an example out of one insurer, regulators will have an easier time going after any others involved in similar misdeeds.
Source: “United States Intervenes in Second False Claims Act Lawsuit Alleging that UnitedHealth Group Inc. Mischarged the Medicare Advantage and Prescription Drug Programs,” published at Justice.gov on May 16, 2017
Source: “A Whistle-Blower Tells of Health Insurers Bilking Medicare,” by Mary Williams Walsh, published at NYTimes.com on May 15, 2017