A federal judge ruled late last week that Elevance Health must face a lawsuit the federal government filed that alleges the insurer submitted inaccurate diagnostic data to juice its reimbursement in Medicare Advantage (MA).
The suit alleges that the payer, formerly Anthem, failed to identify and remove inaccurate codes as part of its charge review program between 2014 and 2018. The lawsuit was initially filed in March 2020, and Elevance Health requested that the New York District Court move the case to Ohio or dismiss the charges.
However, Judge Andrew Carter said in a ruling Sept. 30 that was made public earlier this week that if the charges prove true, the financial cost to the government was well over $100 million and potentially tens of millions per year.
"The financial costs to the Government here are substantial and not merely administrative costs," Carter wrote.
In terms of Elevance Health's reason for requesting the suit move to Ohio, the payer argued that it was employees in that state who submitted the data at the center of the suit to the Centers for Medicare & Medicaid Services (CMS). Carter said there are likely to be witnesses called in the case who are based elsewhere, so it makes sense to keep the proceedings in the northeast rather than relocate them to Ohio.
Insurers are paid a flat fee from the federal government for members they cover in MA, which the CMS sets based on how many services a patient needs. Risk adjustment in the program has been under the microscope, with critics alleging insurers have an incentive to capture as many diagnostic codes as possible to drive up reimbursement.
The Trump administration proposed changes to its risk adjustment data validation (RADV) audit process, the key method used to hold insurers accountable for risk adjustment practices. But the payer industry has significantly pushed back on that move. So far, however, CMS has not finalized regulatory updates to RADV audits.
Despite concerns about risk adjustment and other aspects of MA, enrollment in the program has risen substantially and is on the cusp of reaching 50% of Medicare beneficiaries. The program is also popular with legislators, and insurers argue MA can provide better care than traditional Medicare, as it has greater flexibility to address seniors' needs through supplemental benefits, social needs supports and other avenues.
Open enrollment for Medicare begins Oct.15.