The good news is that fraudsters settled with the United States. The bad news is the United States noted that healthcare fraud was the top source of False Claims Act violations in 2021. Five billion of the $5.6 billion total False Claims Act settlements and judgments of 2021 were related primarily to Medicare and Medicaid fraud. Of the $5.6 billion in settlements and judgments reported by the government in fiscal year 2021, over $1.6 billion arose from lawsuits filed under the qui tam provisions of the False Claims Act. During the same period, the government paid out $237 million to the individuals who exposed fraud and false claims by filing these actions.

The industries, programs, and fraud tactics which the DOJ pursued most intensely encompassed prescription opioid manufacturers, Medicare Advantage Plans (Medicare Part C), unlawful kickbacks, and unnecessary medical services.

As previously reported on this blog, Medicare Part C fraud is particularly harmful to Medicare beneficiary care, medical professional trustworthiness, Medicare Advantage Plan reputation, and taxpayer investment in the social safety net that is government-funded health insurance.

How Do Medicare Part C/Medicare Advantage Plans Work?

Original Medicare, or Medicare Parts A and B, consists of hospital insurance (inpatient care) and outpatient physician care, preventives services, and durable medical equipment. Medicare Part D covers prescription medications. Medicare Advantage plans are government-approved and standardized across states. Health insurance carriers administer Medicare Advantage plans, which “bundle” services covered by Medicare parts A, B, and D. Private health insurance carriers are paid on a capitated basis, which means that they are paid “per head,” a fixed amount per enrollee. These capitated payments only vary based on a patient’s “risk” factors; more complicated medical conditions merit higher risk adjustment payments.

Unscrupulous actors were caught using this payment structure to their advantage in 2021 in the following ways.

California-based Sutter Health and affiliated entities settled with the DOJ for $90 million to resolve allegations that it knowingly added unsupported diagnosis codes to Medicare patients’ records, resulting in false claims and improper payments. A former employee of one of the affiliated healthcare companies blew the whistle on the companies adding nonexistent or exaggerated diagnoses to patients’ records in order to garner higher payments from CMS.

The government intervened in the following cases:

Whistleblowers from various Kaiser Permanente consortium units across California and Colorado reported Kaiser leadership’s push for physicians to misrepresent patients’ diagnoses as those that qualify for higher risk adjustment payments from Medicare Advantage plans.

Retrospective chart review: a former employee of another Medicare Advantage Organization (MAO) reported New York-based Independent Health and its subsidiary DxID for upcoding. As one U.S. Attorney said, “The defendants are alleged to have submitted unsupported diagnosis codes to inflate reimbursements, which enabled them to receive payments from Medicare that were greater than they were entitled.”

The whistleblowers who reported these fraudulent acts to the government are entitled to receive 15-25% of the government’s recovery. The Department of Justice needs whistleblowers to report fraud involving Medicare Advantage. Healthcare spending is no joke; according to sources collected by Taxpayers Against Fraud, healthcare spending is projected to make up 37% of the GDP by 2050. The Congressional Budget Office “projected that CMS would pay more than $343 billion to private carriers who offered [Medicare Advantage] plans” in 2021. As the population ages and healthcare costs increase Medicare Advantage plans will only become more popular, and medical billing specialists and others must stay vigilant to false claims.