Viewpoint

Medicare Advantage Fraud: Temptation, Consequence, and Protection

Knowing the law and keeping careful records may head off fraud and significant legal expenses.

Merle DeLancey
Lyndsay Gorton

Medicare Advantage delivers Medicare Parts A and B coverage through a private insurer. To encourage companies to participate in Medicare Advantage, CMS uses risk scores to determine how much a sponsor will be paid for each member of a plan. Risk scores assign a value to determine how much a plan member may cost the plan. For example, an individual whose family has a history of cancer would have a higher risk score than an identical individual without a family history. The higher the risk score of a plan member, the more the company is paid for that member’s plan.

Federal government payments to Medicare Advantage plans are based solely on the number of members enrolled at each risk score—not on the services received by the beneficiaries. That payment arrangement creates two temptations: to inflate risk scores and to sign up as many members as possible.

Recently, several whistleblower suits have shown that people do succumb to these temptations. One of those lawsuits revealed the existence of a memo­randum allegedly sent to physician practices encouraging doctors to bring in elderly patients to sign up for Medicare Advantage by promising the patients complimentary parking and waiving their copayments. Justice Department officials ultimately determined that there was no wrongdoing and didn’t intervene. But this case and others like it show that Medicare Advantage is coming under heightened scrutiny, and health plans need to be ready for it.

Legal consequences

Medicare Advantage fraud enforcement comes in two basic flavors: CMS enforcement actions and whistleblower lawsuits. CMS initiates an enforcement action when officials decide a plan sponsor is in substantial or repeated noncompliance with its contract with the agency. Enforcement actions range from civil monetary penalties to terminating the plan’s contract. Intermediate sanctions may include suspended plan payments or the removal of the company’s ability to enroll new beneficiaries into its Medicare Advantage programs. Because Medicare Advantage has been under heightened scrutiny from Congress and the media, CMS may step up the number and severity of its enforcement actions.

Whistleblowers may bring actions under the False Claims Act on behalf of the government if they find evidence of fraud. As more sealed cases are made public, more whistleblowers could come forward with greater confidence that they will not suffer retaliation. Whistleblower lawsuits can mean millions of dollars in litigation costs, even when the lawsuit proves to be frivolous or off-base.

Four protective steps

What can health plan executives do to head off any problems with fraud? First and most fundamentally, know the law and abide by it. It is impossible for a plan sponsor that does not know what is legal and illegal to administer its plan legally. The leaders at a health plan must ensure that all employees of the company understand what constitutes fraudulent activity and how to prevent any such activity. They should avail themselves of any available resources to help them understand the requirements by which they must abide. That could mean discussions with an attorney or using free publicly available resources, such as the guidances posted on the HHS website.

Second, confirm that all required information, including billing information, is correct and complete. If an issue arises, accurate records will be key to demonstrating the legality of the provider’s policies. Third, implement a compliance program to ensure that the plan sponsor is fulfilling the required competencies for Medicare Advantage providers. Finally, report any violations promptly. All Medicare Advantage plan sponsors are required to have a mechanism to report abuses. No one may retaliate against an employee for making a report. Finding and actively resolving any violations could save millions of dollars in litigation costs years in the future.

Merle DeLancey is a partner in Dickstein Shapiro LLP’s Government Contracts Practice (delanceym@dicksteinshapiro.com). Lyndsay Gorton is an associate in the practice (gortonl@dicksteinshapiro.com).

UP NEXT

Managed Care
By Peter Wehrwein
Managed Care
By Peter Wehrwein
2019 Year in Preview
By Richard Mark Kirkner