Cigna to pay $172M to settle claims it overcharged Medicare Advantage program

Cigna will pay $172 million to settle allegations brought by a whistleblower and the U.S. government that it submitted false and inaccurate Medicare Advantage diagnostic codes in a bid to boost its reimbursement.

The settlement, reached on Friday, resolved a False Claims Act lawsuit and an investigation related to past risk adjustment submissions from certain types of patient records, some dating back more than a decade, Cigna executives said in an announcement.

As part of the settlement, Cigna Group will enter into a five-year corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services.

"These agreements fully resolve long-running legal matters, enabling us to focus our resources on all those we serve and avoiding the uncertainty and further expense of protracted litigation," said Chris DeRosa, president of Cigna Healthcare's U.S. government business in a statement. "We are pleased to move beyond industry-wide legal disputes related to past risk adjustment practices, and we look forward to continuing to provide high-quality, affordable Medicare Advantage coverage to our customers and delivering value to the taxpayers in the years ahead."

Under the Medicare Advantage program, also known as Medicare Part C, Medicare beneficiaries have the option of obtaining their Medicare-covered benefits through private insurance plans called MA plans. The Centers for Medicare and Medicaid Services (CMS) pays the MA plans a fixed monthly amount for each beneficiary who enrolls. CMS adjusts these monthly payments to account for various “risk” factors that affect expected health expenditures for the beneficiary, to ensure that MA plans are paid more for those beneficiaries expected to incur higher healthcare costs and less for healthier beneficiaries expected to incur lower costs. To make these adjustments, CMS collects “risk adjustment” data, including medical diagnosis codes, from the MA plans.

Last year, the federal government joined a whistleblower lawsuit against the health insurer that claimed that the diagnostic codes in question were based on forms submitted by contracted vendors who conducted in-home assessments of Cigna members. The providers conducting those assessments, typically nurse practitioners, would not perform or order the types of tests or imaging services needed to diagnose serious illnesses and were barred by the insurer from providing treatment for those diagnoses during the visit, DOJ said.

The lawsuit alleged that Cigna's home care visit program submitted "inaccurate and untruthful patient diagnosis data to CMS [the Centers for Medicare and Medicaid Services] in order to inflate the payments it received from CMS, failed to withdraw the inaccurate and untruthful diagnosis data and repay CMS, and falsely certified in writing to CMS that the data was accurate and truthful," the Department of Justice wrote in a press release.

The suit claims that the diagnostic codes in question were based on forms submitted by contracted vendors who conducted in-home assessments of Cigna members. The providers conducting those assessments, typically nurse practitioners, would not perform or order the types of tests or imaging services needed to diagnose serious illnesses and were barred by the insurer from providing treatment for those diagnoses during the visit, DOJ said.

The diagnoses in question were not supported in either the home visit form or in other documentation submitted by providers the patient may have seen throughout the year, but they were submitted to the federal government to secure higher payments, DOJ said.

“For years, Cigna submitted to the Government false and invalid diagnosis information for its Medicare Advantage plan members. The reported diagnoses of serious and complex conditions were based solely on cursory in-home assessments by providers who did not perform necessary diagnostic testing and imaging. Cigna knew that these diagnoses would increase its Medicare Advantage payments by making its plan members appear sicker,” said Damian Williams, United States Attorney for the Southern District of New York in a statement. “This Office is committed to holding insurers accountable if they seek to manipulate the Medicare Advantage Program and

The civil settlement of the home visit allegations includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Robert A. Cutler, a former part-owner of a vendor retained by Cigna to conduct home visits. In qui tam cases, whistleblowers receive a portion of any recovery. Cutler will receive $8.1 million from the settlement of the home visit allegations. 

Risk adjustment, and the likelihood that insurers use it to juice MA payments, has been a hot topic among policymakers and industry critics, with legislators saying they were "disheartened" by CMS' oversight of MA. The Office of Inspector General has flagged home assessments like those at the center of this latest lawsuit as a potential source of overpayment, estimating that Medicare paid out $2.6 billion in 2017 for diagnoses related only to these home visits.