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By: Joyce Varughese, Esq.

Praxis Healthcare Solutions, Staff Attorney

UnitedHealth Group Inc., the nation’s largest Medicare Advantage Organization (MAO), has been under fire with allegations of overbilling Medicare since February 2017. The Justice Department of the United States filed a complaint against the major insurance conglomerate in May alleging that “United Health routinely combed through millions of patients’ medical charts searching for data it could use to make patients look sicker than they really were” in what the government deems a “strictly one-sided revenue generating program.”[1] It is paramount for health care facilities to comprehend the ins and outs of Medicare, especially in regards to the fundamentals of Medicare payments, to avoid a quandary with the federal government.

Traditional Medicare

The traditional Medicare program reimburses doctors directly for procedures they perform. Traditional Medicare members pay a monthly premium to the Centers for Medicare and Medicaid Services (C.M.S.), whether or not they visit a doctor. C.M.S. also receives funding from U.S. taxpayers. If members see a doctor, the doctor sends a copy of their medical report to C.M.S. to get paid and C.M.S. then pays the doctor. Traditional Medicare compensates doctors according to the procedures they perform, i.e. lab tests, scans, operations, etc.[2]

Medicare Advantage

With Medicare Advantage, the government contracts with for-profit insurers to manage health care policies and pays insurers a yearly fee for each member they enroll. Essentially, Medicare Advantage permits Medicare beneficiaries to obtain health care coverage from private insurers rather than from the government. Medicare Advantage members pay a monthly premium to C.M.S. and often a separate premium to a private insurance company. If members see a doctor, the doctor sends a copy of the medical report to the private insurer, who then pays the doctor. C.M.S. pays the private insurer a base rate for each member. If the private insurer tells C.M.S. that the member required treatment for certain conditions, then C.M.S. pays the insurer more. Per acting U.S. Attorney Sandra R. Brown for the Central District of California, “Medicare Advantage plans not only receive taxpayer-funded payments, but are intended for the health and welfare of the beneficiaries.”[3]

The Issue with Medicare Advantage

The government pays insurers a predetermined amount for each person they enroll in Medicare Advantage, rather than paying doctors and hospitals a fee for every service provided. In order to prevent insurers from only enrolling healthy people, the government agreed to pay them more for unhealthy enrollees. How much more depends on a complex “risk scoring” system established by Medicare.[4] Regrettably, some insurers are underhandedly profiting from the government’s respectable aim to assist those who need health care coverage. The government has alleged United Health benefited by $3 billion from 2010 to 2015 alone.[5] In essence, insurers benefit from having “sicker” members due to the larger payout. The Medicare Advantage model creates a perverse incentive to “exaggerate the health care costs for their enrollees.”[6]

What to Watch Out For 

Misrepresenting a patient’s health is civil fraud under the False Claims Act. Health care facilities must ensure they are not requesting obscure treatments and procedures or augmenting diagnoses for an increased payout. In the same way insurers benefit from adding diagnoses, providers also benefit, as they will be reimbursed at a higher rate. Your facility must avoid the enticing temptation to enhance patient charts and thereby claims to the insurers must be avoided at all costs. This is not to say providers should not ensure patients obtain the best treatment, as eluding appropriate treatment is another legal detriment in itself. It is only to caution opportunistic treatment and inaccurate billing for purposes of an inflated payment. The bottom line is to have a system in place to ensure claims are continuously audited and not being overbilled. For future reference, tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services at 1-800-HHS-TIPS.[7]

 

[1] Affairs, U. D. (2017, May 2). United States Intervenes in False Claims Act lawsuit Against UnitedHealth Group Inc. for Mischarging the Medicare Advantage and Prescription Drug Programs. Retrieved from U.S. Department of Justice: https://www.justice.gov/opa/pr/united-states-intervenes-false-claims-act-lawsuit-against-unitedhealth-group-inc-mischarging 

[2] Services, U. C. (2017). How Original Medicare Works. Retrieved from U.S. Centers for Medicare & Medicaid        Services: https://www.medicare.gov/sign-up-change-plans/decide-how-to-get-medicare/original medicare/how-original-medicare-works.html

[3] Id.

[4] Walsh, M. W. (2017, May 19). UnitedHealth Overbilled Medicare by Billions, U.S. Says in Suit. Retrieved from New York Times: https://www.nytimes.com/2017/05/19/business/dealbook/unitedhealth-sued-medicare

overbilling.html

[5] Id.

[6] Affairs, U. D. (2017, May 2). United States Intervenes in False Claims Act lawsuit Against UnitedHealth Group Inc. for Mischarging the Medicare Advantage and Prescription Drug Programs. Retrieved from U.S. Department of Justice: https://www.justice.gov/opa/pr/united-states-intervenes-false-claims-act-lawsuit-against-unitedhealth-group-inc-mischarging

[7] Walsh, M. W. (2017, May 19). UnitedHealth Overbilled Medicare by Billions, U.S. Says in Suit. Retrieved from New York Times: https://www.nytimes.com/2017/05/19/business/dealbook/unitedhealth-sued-medicare-overbilling.html