On Wednesday, February 15, the Department of Justice (DOJ) joined an ongoing False Claims Act (FCA) lawsuit where 15 health plans are the defendants.
Five years after the initial lawsuit was filed by Benjamin Poehling, the DOJ is only intervening against the UnitedHealth Group defendants and WellMed Medicam Management Inc., which UnitedHealth acquired in 2011.
The overall whistleblower lawsuit alleges that 15 health plans exaggerated the illnesses of numerous members and overcharged Medicare hundreds of millions—if not billions—of dollars.
The False Claims Act is a federal law allowing private citizens like Poehling to pursue legal action when they think government programs are being defrauded, Mesa attorneys help with these kind of problems.
Additional defendants include Aetna, Inc., Arcadian Management Services Inc., Blue Cross Blue Shield of Florida Inc. and Blue Cross Blue Shield of Michigan (BCBS is considered a single defendant), Bravo Health, Inc., Emblemhealth Inc., Healthfirst New York, Health Net Inc., Humana Inc., Managed Health Inc., Medassurant, Medica Holding Company, Tufts Associated Health Plans Inc., and WellCare Health Plans Inc.
Poehling initially filed the complaint in 2011 when he was serving as UnitedHealth’s director of finance. One of his attorneys, Mary A. Inman, says, “The federal government’s decision to join this case after a five-year investigation demonstrates the gravity of the allegations.” Poehling’s complaint was sealed for the past five years, finally released by Judge Michael W. Fitzgerald when the DOJ joined the lawsuit on February 15.
Typically, such lawsuits are sealed until federal and/or state agencies have the time to analyze documents and decide whether to join litigation or not. When lawsuits are successful, the whistleblower (Poehling in this case) usually receives a portion of the funds recovered by the government.
Attorney Chad Readler announced the DOJ’s joining of the UnitedHealth-specific lawsuit. Readler joined the DOJ’s civil decision with the Trump administration. Although the DOJ has thus far chosen to only intervene with the UnitedHealth and WellMed lawsuits, it has the right to join the other cases in the future.
According to Poehling, UnitedHealth promotes a “corporate culture that demands and rewards financial success from its employees,” which has led to inflated and exaggerated risk adjustment practices.
Risky Business
Inman notes that this is the first lawsuit filed by a director whistleblower against a company of such massive size regarding so-called “risk adjuster” claims. According to Poehling, UnitedHealth sent a number of false risk adjustments to Centers for Medicare and Medicaid Services (CMS), claiming patients were more ill than they actually were. In turn, he alleges that CMS overpaid health plans, which proceeded to pocket the money. Specifically, Poehling says UnitedHealth focused on Medicare Advantage (MA), a CMS program designed for patients 65+ who join private health maintenance organizations (HMOs), organizations which get costs reimbursed by the government.
Under Medicare, the federal program pays monthly for every enrolled beneficiary in a private insurer managed care plan (such as a UnitedHealth plan). These plans are meant to use the monthly funds to pay healthcare providers for healthcare received. Adjustments to these monthly rates are common, and based on every insured member’s health needs. To get an adjustment, the plan must show that the member had an in-person visit with a qualified healthcare provider in the last 12 months regarding a “qualified ailment.” The visit must also be documented. On average, CMS pays $3,000 per year for each patient requiring a risk adjustment payment.
Poehling claims that some of the defendants (UnitedHealth and WellMed) have been regularly “upcoding risk adjustments” since at least 2006. “Upcoding” a risk adjustment works by documenting diagnoses that members didn’t have and/or weren’t treated for during the coverage timeframe. Upcoding can also include claims that a member received treatment for a condition or illness more serious than what they really had.
According to his complaint, he talked to UnitedHealth senior executives about the supposed fraudulent risk practices, but nobody would fix them. In UnitedHealth’s practices, Poehling also says the company overstated risk assessment with a “one-way look” at diagnoses records that were undercoded, which led to ignoring invalid and upcoded claims.
Poehling alleges the defendants upcoded claims personally, or persuaded providers to upcode for them and then submitted the exaggerated claims. When CMS received the upcoded claims, they sent an inflated payment to health plans like UnitedHealth. Poehler claims the health plans pocketed the remainder. He began working at UnitedHealth in 2002 and has served in a number of financial department roles.
Another attorney for Poehling, Tim McCormack, says, “That money would have been far better used to provide care for our nation’s seniors rather than simply padding UnitedHealth’s bottom line.” Inman says UnitedHealth was also specifically seeking out claims that would benefit the company. She says they were “playing a game of heads I win, tails you lose, in that they were only collecting claims that helped them and not the ones that would’ve required them to pay the government.”
As for WellMed, the health plan acquired by UnitedHealth in 2011, Poehling says the company has policies crafted to optimize risk assessment submissions without actually abiding by eligibility or accuracy standards. UnitedHealth has stayed largely quiet on the matter, although spokesperson Matthew A. Burns has said, “we reject these more than five-year-old claims and will contest them vigorously.” After pointing out that UnitedHealth has served millions on the Medicare Advantage plan, he said the company is “proud of the access to quality health care we provided, and confident we complied with the program rules.”
A Veritable Gold Mine
UnitedHealth and other insurers lobbied in 2003 for the Medicare Advantage program, saying that “managed care” would help keep overall Medicare costs better controlled. At the time, the costs were choking the federal budget and rising faster than the overall rate of inflation. Medicare Advantage, however, hasn’t actually kept Medicare costs down—at least according to Poehling. He alleges that over a decade of excess costs were filed by health plans like UnitedHealth and cost taxpayers billions of excess payments.
Prior to 2003, Medicare paid HMOs a fixed rate for every member, regardless of condition. This approach let the HMOs bypass the signing up of “unhealthy patients.” Such cherry picking, say critics, allowed HMOs to report higher profits.
When CMS added the “risk adjustment factor” in 2003, things changed. HMOs became more willing to sign up unhealthy members, but with a catch.
Poehling points out that if the HMO made the patients seem more ill than they were, they could charge Medicare more and keep the difference. Many plans, including UnitedHealth, have departments devoted exclusively to helping insurance companies and subsidiaries navigate the complex risk adjustment calculations.
Poehling says that he and other UnitedHealth employees had “risk adjustment targets” and that these performance metrics were used as part of their job evaluations. In 2008, he says his overall performance was based on whether or not his risk scores increased by at least three percent. In other words, he claims he was being rewarded (or disciplined) based on how well his risk adjustments benefited the company.
Poehling says in his complaint, “There were no similar performance goals for the overall accuracy of risk adjustment submissions. Nor was there any accountability assigned for reducing the number of false claims.” He attached a 2008 email he received from Jerry Knutson, UnitedHealth’s Chief Financial Officer of Poehling’s division, in which Knutson encouraged UnitedHealth staff to “really go after the potential risk scoring that you have consistently indicated is out there. Let’s turn on the gas! What can we do to make sure we are being reimbursed fairly for the members and risk we take on more than what we are currently doing?” Knutson’s email went on to say, “When we meet next on our steering committee, I’d like to see what it would take to add another $100M to our 2008 revenue from where we are. What would be doable? What resources would you need? What technology would you need?”
According to Poehling, coding specialists would “mine” the patient records, digging for any clues to a long-term, chronic condition. When uncovered, the specialists would immediately request higher payment without abiding by the in-person evaluation requirement. Mining medical records for more cash has led to a number of “consulting firms” popping up around the country. These firms specialize in screening patient histories to pick out any tip-offs of long-term health conditions that might be used to get more from Medicare reimbursements.
Federal auditors have combed through Medicare Advantage and suggested that HMOs reimbursement requests have skyrocketed.
In the November 22, 2016 first amended complaint for violation of False Claims Act filing of Poehling vs. the 15 health plans, Poehling is asking for a judgment against the defendants “in an amount equal to three times the amount of damages the United States has sustained,” which could conceivable rise into the hundreds of millions, possibly billions of dollars.
Stay tuned, for sure.
