Frier Levitt Secures Near Eight-Figure Settlement In Connection with Value-Based Care Contract Dispute

Physician groups contracting with government-regulated health plans such as Medicare-Advantage Organizations, Medicaid Managed Care Organizations, or ACA Marketplace Individual/Small Group Issuers often enter into capitated payment models with “per member per month” payment terms that must be periodically “risk adjusted” based on the relative health of the group’s patient population. 

Risk adjustment, particularly in Medicare Advantage, is complex and opaque.  The opportunities for a Medicare Advantage Organization (“MAO”) to take advantage of providers in capitated models is substantial because providers have no visibility into the risk adjustment data moving between the Center for Medicare and Medicaid Services (“CMS”) and the MAO.  Providers rely blindly on the good faith honesty of MAOs. 

Frier Levitt’s Medicare Advantage Risk Adjustment Litigation Group was created to protect providers from MAO abuse.  We are proud to have recently secured a near eight-figure settlement on behalf of a technology company that rendered consulting services to a very large provider group.  That provider group, in turn, had a capitated payment arrangement with an MAO.  The consultant’s job was to analyze the provider group and MAO’s data; it should have been paid a percentage of the increase in capitated payments paid by the provider’s MAO resulting from its work.

The matter centered principally around two agreements.  The first was a capitated population-health-centered value-based care contract.  This contract tied the value of the “per member per month” capitated payments from the MAO to the provider-submitted risk adjustment data (such as ICD diagnosis codes), which, modified each of the provider’s patient’s risk adjusted (prospective) risk scores upwards or downwards.  The second agreement was a kind of contingency agreement between the technology company and the provider, where the provider was required to pay the technology company a percentage of an increase in capitated payments resulting from the technology company’s identification of submittable risk adjustment data through a complex risk adjustment data leakage analysis. The technology company contended that it had, in fact, identified many millions of dollars’ worth of risk adjustment data, but the MAO vigorously denied this. The settlement was reached only after significant discovery (involving uncooperative but well-funded third parties) forced the production of the MAO’s fiercely protected raw risk adjustment data.  The firm and its experts provided a high-level analysis of that data. All parties have denied wrongdoing and the settlement is confidential.

How Frier Levitt Can Help

The case is a cautionary tale and provides a wakeup call for providers (and their vendors) working under value-based care payment models (particularly in the Medicare Advantage space) that tie compensation to patient risk adjustment data and risk scores. If you are simply taking your MAO (or other payer) at its word that it is correctly compensating you based on all of the patient data that you have submitted, you may unknowingly be leaving millions of dollars on the table. Retaining a team of healthcare trial lawyers experienced in the risk adjustment space together with actuarial or data scientists support is a highly effective means of determining your rights and the true value of the compensation owed your practice. And, should it turn out that money has been left on the table, that same team can be used to bring legal and technical expertise to bear on a payer to leverage an appropriate accommodation, both in terms of securing monies owed to your practice and in terms of ensuring fair payment prospectively, whether through leveraged contract negotiation and modification, the creation of an in-house data warehouse for the practice, or, if need be, through the vindication of your rights in a court of law. Contact our team to learn more.