Appeals court reopens whistleblower's case against Medicare Advantage orgs

(Getty/Imilian)

Photo credit: Getty/Imilian

In a newly issued opinion, a federal appeals court gives a whistleblower another chance to make his case that major health insurers inflated Medicare Advantage risk scores to collect greater government payments.

The Centers for Medicare & Medicaid Services pays Medicare Advantage organizations based on a risk score calculated by measuring a beneficiary's overall health, with higher payments for sicker patients.

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But whistleblower James Swoben claims that UnitedHealth, Aetna, WellPoint, Health Net and physician group HealthCare Partners gamed the system by conducting biased retrospective reviews of medical records already submitted to CMS. Such reviews would violate the False Claims Act.

These biased reviews, he says, are designed to identify and report only under-reported diagnosis codes, which are favorable to MA organizations, rather than over-reported codes, which would result in lower payments. Specifically, the companies concealed from their coders the diagnosis codes that had previous been submitted to the government and used a faulty template to report the results of their reviews, Swoben alleges.

In UnitedHealth’s case, he claims the insurer instructed HealthCare Partners to review the charts of selected patients in order to report additional diagnoses codes supported by the medical records--but the provider failed to report those codes that were not supported by records.

Swoben filed his initial complaint in 2009, later amending it to add claims against additional organizations. A district court had denied Swoben leave to file a fourth amended complaint, but the United States Court of Appeals for the Ninth Circuit says the lower court erred in doing so because of Swoben's “cognizable" legal theory regarding the organizations' alleged misconduct.

Swoben is not the first whistleblower to take aim at MA plan overpayments. As of April 2015, at least six suits had been filed across the country naming various insurers. The Justice Department has also previously investigated Humana's MA risk adjustment practices.

In addition, a report from the Center for Public Integrity questioned CMS’ response to MA overpayments, pointing out that the agency knew about inflated risk scores since 2008 but was slow to conduct audits.

- read the appeals court opinion