Though the Department of Justice has now filed two fraud lawsuits against UnitedHealth within the space of a month, the country’s largest health insurer may not ultimately feel much pain from the litigation.
On Tuesday, the DOJ officially announced that it had joined a lawsuit filed by whistleblower Benjamin Poehling, which accuses UnitedHealth and 14 other insurers of gaming the Medicare Advantage risk adjustment system to maximize reimbursement. The DOJ’s complaint, however, only names UnitedHealth, accusing the company of overbilling the government by more than $1 billion.
“The primary goal of publicly funded healthcare programs like Medicare is to provide high-quality medical services to those in need—not to line the pockets of participants willing to abuse the system,” Acting U.S. Attorney Sandra R. Brown for the Central District of California said in the announcement.
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The news comes on the heels of the DOJ’s decision to officially join another suit against UnitedHealth, that one filed by whistleblower James Swoben. The government attempted to consolidate the cases, but a judge denied that motion.
The DOJ’s intervention in both cases has generated plenty of bad press for UnitedHealth, and it increases the likelihood that the government will ultimately recover past overpayments from the insurer. Even so, that may not do much damage to UnitedHealth’s bottom line.
As Leerink Partners analyst Ana Gupte, Ph.D., points out, back payments on litigation settlements can take as much as a decade to materialize and even then may not matter much given UnitedHealth’s otherwise strong financial performance.
Furthermore, Leerink doesn’t see any future risk to the margins of Medicare Advantage plans, as the industry generally has become more conservative with its coding practices after issues with past practices surfaced multiple times. Gupte also noted that the Trump administration is “poised to favor the private MA plans through deregulation and more industry-friendly policy.”
In fact, even the Obama administration struggled mightily to recoup past overpayments from Medicare Advantage plans, a fact that drew scrutiny from some lawmakers.
UnitedHealth, meanwhile, maintains that it did nothing wrong and has said it will “vigorously” contest the claims against it.
“We are confident our company and our employees complied with the government’s Medicare Advantage program rules, and we have been transparent with CMS about our approach under its murky policies,” company spokesman Matthew Burns wrote in an emailed statement this week.
“These claims are simply the latest development in a decade-old policy discussion between health plans and the federal government about the Medicare Advantage program,” he added.
To that end, UnitedHealth recently scored one legal victory when a judge ruled that it can move forward with a lawsuit against the Centers for Medicare & Medicaid Services, which challenges a federal rule concerning Medicare Advantage overpayments.