New Caution About Risk Adjustment After United Whistleblower Lawsuit

UnitedHealthcare has denied allegations that it gamed Medicare Advantage risk adjustment, but other insurers are taking note and might be more cautious.

Here’s the $1 billion question hanging over Medicare Advantage plans: Did UnitedHealthcare’s risk adjustment department actually “turn on the gas,” as one executive put it, in an illegal effort to increase revenue?

That’s the claim at the heart of two cases the federal Department of Justice brought this spring against UnitedHealthcare, the nation’s largest health insurer. In May, the DOJ intervened in two cases brought by whistleblowers against UnitedHealth Group. Taken together, damages in the two cases could total more than $1 billion, Kaiser Health News reported.

Paul von Ebers

To stay in compliance, MA plans raise and lower risk scores in equal amounts, says Paul von Ebers, a former Blues CEO.

Following the government’s intervention in the second case, the New York Times published a must-read story, quoting from an interview it had with Benjamin Poehling, a former UHC finance director turned whistleblower. Poehling told the Times’s reporter that Jerry J. Knutson, the CFO in Poehling’s division, advised Poehling and colleagues, “to really go after the potential risk scoring you have consistently indicated is out there.” Poehling quoted Knutson as writing in an email, “Let’s turn on the gas!”

It could be several years before these cases emerge from the court system, and settlements with no admission of guilt are fairly common. So far, United has adamantly denied it did anything wrong.

Payment for diabetes

For several years now, Kaiser and the Center for Public Integrity, a not-for-profit investigative journalism organization, have been reporting on how Medicare Advantage plans manipulate risk adjustment to their advantage. The Government Accountability Office has investigated inflated risk scores.

The DOJ alleges that United made patients appear sicker than they were in an effort to collect higher payments than deserved and then avoided repaying Medicare for those payments for more than a decade. The Times reported that United allegedly gave patients with diabetes extra scrutiny to see if their diabetes caused other conditions as a way of bumping up Medicare payments. For example, Medicare would pay $9,580 per year for a 76-year-old woman who has diabetes and kidney failure. But if the company claimed the diabetes caused the kidney failure, the payment would rise to $12,902, the newspaper reported. United wouldn’t look for members who had high blood pressure because such a diagnosis does not raise risk scores, the Times added.

All of this attention on United’s risk-­adjustment practices could cause health insurers to rethink their approach to risk scoring.

“Any plans that are playing on the edge are likely to pull back,” says Paul von Ebers, the founder of Prospective Health, a consulting firm in Fargo, N.D. “There’s a lot of discussion about these cases in the health insurance industry, and health plans are taking the issue very seriously.”

A former CEO of Blue Cross Blue Shield of North Dakota, von Ebers has extensive experience working in and managing risk adjustment departments. Most health plans that have high star ratings tend to comply with CMS’s risk-adjustment rules, he says.

To demonstrate a high level of compliance, the best Medicare Advantage plans pay as much attention to adjusting patients’ risk scores down as up, he says. “They have to adjust their risk scores both ways to make sure that they remain compliant.”

The problem for many insurers is that physicians often don’t document all of the illnesses of every patient, said a case manager for a national health insurer. The case manager asked not to be named.

Von Ebers agrees that recording information accurately on each patient’s illness is a challenge. What’s more, risk adjustment itself is full of gray areas, he says. “There’s a debate about whether the risk-adjustment process appropriately accounts for a patient’s level of illness,” he adds. “Some people feel the CMS process overadjusts for disease, and some people feel it’s not capturing everything. It’s probably a little of both.”

In court, United is likely to argue that the risk adjustment system is fundamentally flawed. In news reports, the company has said the justice department misunderstands or is ignoring how the Medicare Advantage program works.

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