On October 24, 2023, an Indictment[1] was unsealed against the former Medicare Risk Adjustment (“MRA”) Director for HealthSun, a Medicare Advantage Organization (“MAO”). The Indictment alleges a familiar fraudulent scheme to artificially inflate the risk adjustment factor or “score” of the MAO’s patients. Under the CMS-HCC actuarial model, increased risk scores generally cause the Centers for Medicare & Medicaid Services (“CMS”) to upwardly adjust the MA per member per month premiums (“PMPM”) paid to MAOs – and this is precisely what is alleged to have occurred as a result of HealthSun’s allegedly fraudulently inflated patient risk scores.
The Indictment alleged several interesting twists and turns, particularly noteworthy for providers: First, it is alleged that HealthSun owned
“Pasteur Medical Center, Inc. and [its affiliated entities (“Pasteur”),]” which “operated several medical clinics in Miami-Dade and Broward Counties . . . and contracted with HealthSun to provide health care services to beneficiaries enrolled in HealthSun’s Medicare Advantage Plans. Pasteur, in turn, contracted with primary care and other physicians to provide health care services to beneficiaries enrolled in HealthSun’s Medicare Advantage Plans.”
[ Id. ]
HealthSun’s former MRA Director is alleged to have used Pasteur’s in-house coders to input false or unsupported diagnosis codes directly into the medical records of HealthSun MA enrollees. Further, Pasteur physician electronic medical records (“EMR”) credentials were allegedly used to access the EMR system when the coders input the diagnosis codes at issue, making it appear as though the providers had entered the false diagnosis codes into the system when, in fact, they had not. Id.
Second, by all appearances, when HealthSun became aware of the alleged scheme, it rapidly, through legal counsel, engaged in self-disclosure protocols to mitigate the scope of risk and liability to the MAO caused by the accused. This self-disclosure ultimately paid significant dividends. Specifically, the government, by its own admission, declined to pursue charges against the MAO “after considering the factors set forth in the department’s Principles of Federal Prosecution of Business Organizations and the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy, including HealthSun’s prompt voluntary self-disclosure, cooperation, and mediation, as well as HealthSun’s agreement to repay” the government roughly $53 million received by the MAO in overpayments as a result of the alleged scheme[2].
There are lessons to be learned from this case for providers and warnings to heed, especially those providers in so-called global risk or percent of premium style arrangements with MAOs. First, know who can access and manipulate your practice’s EMR risk adjustment data. Providers should be wary of any MAO MRA department that is able to gain backdoor access to such highly sensitive records. Access to medical records – and especially access that allows for the addition of diagnosis codes – could permit an MAO’s MRA department to perpetrate a fraud by proxy against CMS, which, in turn, could create the appearance of impropriety on the part of the providers themselves – even though they are innocent of any wrongdoing. Secondly, providers must understand their self-disclosure options – both civil and criminal. Proceeding with appropriate civil or criminal self-disclosure protocols can mean the difference between criminal prosecution – along with crippling fines and even prison time – and a more palatable, “single-damages[3]” civil settlement. (as distinct from “double” or “triple damages” judgment). Self-disclosure is thus a potentially highly effective means of preempting/precluding future False Claims Act whistleblower suits by employees or contractors who have knowledge of the fraud, which could save your practice millions of dollars in judgments, fines and/or settlements.
How Frier Levitt Can Help
Frier Levitt has significant experience in both the Medicare Advantage risk adjustment space and in counseling and shepherding clients through the self-disclosure process. If you are concerned that your Medicare Advantage risk adjustment program may be tainted by fraud, take proactive steps to address the issue. Contact Frier Levitt to explore potential self-disclosure and other risk-mitigating legal measures.
[1] A copy of the Indictment may be found here: https://www.justice.gov/media/1321301/dl?inline The accused, of course, is presumed innocent until proven guilty in a court of law.
[2] See https://www.justice.gov/opa/pr/former-executive-medicare-advantage-organization-charged-multimillion-dollar-medicare-fraud
[3] Note that, in practice, many if not most settlements arising out of a OIG Self-Disclosures will generally apply a 1.5X multiplier to the value of the alleged “single damages” caused by the fraud – though this can vary on a case-by-case basis. See, e.g., https://oig.hhs.gov/documents/self-disclosure-info/1006/Self-Disclosure-Protocol-2021.pdf at 2.
