In a 79-page lawsuit filed this week, the Justice Department alleged that the UnitedHealth made patients appear sicker than they actually were in order to collect higher Medicare payments than the company deserved. The government said it had “conservatively estimated” that the company “knowingly and improperly avoided repaying Medicare” for more than a billion dollars over the course of the alleged decade-long scheme.
UnitedHealth denied the allegations. Spokesman Matt Burns said in a statement that the Justice Department “fundamentally misunderstands or is deliberately ignoring how the Medicare Advantage program works. We reject these claims and will contest them vigorously.”
The case that the feds effectively joined on Tuesday was first filed in 2011 by Benjamin Poehling, a former finance director for the UnitedHealth division that oversees Medicare Advantage Plans. Under the False Claims Act, private parties can sue on behalf of the federal government and receive a share of any money recovered.
Medicare pays the private health plans using a complex formula called a risk score, which is supposed to pay higher rates for sicker patients than for those in good health. But waste and overspending tied to inflated risk scores has repeatedly been cited by government auditors, including the Government Accountability Office.
The court filing argues that UnitedHealth repeatedly ignored findings from its own auditors that risk scores were often inflated, as well as warnings by officials from the Centers for Medicare & Medicaid Services (CMS) that the firm was responsible for ensuring the billings it submitted were accurate.
Central to the government’s case is UnitedHealth’s aggressive effort, starting in 2005, to review millions of patient records to search for missed revenue. These reviews often uncovered payment errors, sometimes too much and sometimes too little. The Justice Department contends that UnitedHealth typically notified Medicare only when it was owed money.
CMS officials for years have refused to make public financial audits of Medicare Advantage insurers, even as they have released similar reviews of payments made to doctors, hospitals and other medical suppliers participating in traditional Medicare.
All but two of 37 Medicare Advantage plans examined in a 2007 audit were overpaid — often by thousands of dollars per patient. Overall, just 60 percent of the medical conditions health plans were paid to cover could be verified.
CMS officials are conducting more of these audits, called Risk Adjustment Data Validation, or RADV, but results are years overdue. A spokesman for CMS, which has recently faced congressional criticism for lax oversight of the program, declined comment.