As the percentage of Medicare beneficiaries enrolled in Medicare Advantage (MA) has grown, the government increasingly has raised concerns regarding MA program administration. In addition to the recent scrutiny of the prior authorization and marketing practices of MA organizations (MAOs), the government has contended for years that certain MA risk adjustment (or RA) practices violate the civil False Claims Act (FCA).
While there have been a number of RA settlements between the government and providers, MAOs largely have chosen to litigate these cases rather than settle. Recently, however, the Cigna Group (Cigna) agreed to pay $172 million in a series of settlements to resolve claims relating to certain RA practices that the government claimed resulted in the submission of false and inaccurate diagnosis codes;1 specifically, the government’s allegations related to Cigna’s:
- use of one-way, retrospective chart reviews,
- submission of unsubstantiated diagnosis codes for morbid obesity, and
- implementation of an in-home assessment program that collected diagnostic information for MA enrollees.2
The alleged conduct giving rise to these settlements—which is similar to the conduct underlying several other ongoing FCA cases against MAOs—showcases the government’s heightened scrutiny of certain RA practices and provides guidance to MAOs with respect to compliant chart review and health assessment programs.
Risk Adjustment Background
CMS pays MAOs a fixed, monthly amount intended to cover the healthcare expenses of MA enrollees. To ensure MAOs are not incentivized to enroll only healthy, less costly members (i.e., to “cherry-pick”), payments to MAOs are risk-adjusted to take into account each beneficiary’s health status (as well as certain other factors). Toward this end, MAOs submit a member’s diagnosis codes from the preceding year to help the agency determine an individual member’s “risk score” (and, therefore, the member’s expected costs). Certain diagnosis codes will result in a higher risk score and, in turn, a higher capitation payment to the MAO. The diagnosis codes that are submitted for RA purposes must be based on a face-to-face visit and documented appropriately in the patient’s medical record, and MAOs must certify that this “encounter data” is accurate, complete, and truthful.
Allegations
The government’s allegations in the Cigna case principally relate to the use of one-way retrospective chart reviews, the submission of diagnosis codes for morbid obesity, and in-home risk assessments. Specifically
- One-Way Retrospective Chart Reviews. The government alleged that from 2014 to 2019 Cigna (i) paid professional coders to conduct retrospective reviews of MA member medical records to identify “all risk-adjusting medical conditions that the charts supported” and (ii) used the results of these reviews to submit additional diagnosis codes—i.e., codes that the member’s healthcare providers had not previously reported—to “obtain additional payments from CMS.” According to the government, while the chart reviews also identified diagnosis codes that (i) previously were submitted to CMS (ii) but were not supported or substantiated in the medical record, Cigna did not investigate or withdraw such diagnosis codes. The government asserted that because Cigna operated a “one-way” retrospective chart review program that ignored the codes that should have been deleted, Cigna’s certifications that its data was “accurate complete and truthful” were false.
- Morbid Obesity Codes. The government further claimed that Cigna knowingly submitted and/or failed to delete inaccurate diagnosis codes for morbid obesity from 2016 to 2021. While some of these codes resulted from Cigna’s chart review program, the government alleges that others were inaccurately reported, not properly documented by the member’s healthcare provider in the patient’s medical records, or not properly investigated by Cigna to identify discrepancies between the diagnosis code submitted and the MA enrollee’s medical record.
- In-Home Risk Assessments (360 Program). The government also alleged that from 2012-2019, Cigna hired providers to conduct in-home health assessments of MA enrollees. Cigna’s coding team then pulled diagnosis codes from the providers’ assessment forms and submitted the codes to CMS as part of the risk-adjustment process. According to the government, a number of features of the 360 Program led to the submission of false claims, including that:
- while the clinical assessment of certain diagnoses requires laboratory evaluation, diagnostic imaging, or other testing, the providers did not have the necessary equipment to reliably conduct such evaluation, imaging, or testing;
- in many instances, the providers’ assessment forms did not include clinical information necessary to corroborate the diagnoses at issue; and
- the 360 Program resulted in the submission of diagnosis codes that (i) were based only on the home visits, (ii) had not been reported to CMS by Cigna for any other encounter between the member and a healthcare provider, and (iii) failed to conform with International Classification of Diseases Official Guidelines for Coding and Reporting, as required by applicable federal regulation.
Implications for MAOs
Because nearly 50 percent of Medicare beneficiaries are now enrolled in the MA program,3 and DOJ takes the position that the MA program “relies on the integrity of its insurers and the accuracy of the diagnosis code information they provide,”4 we anticipate the federal government will continue to closely scrutinize MAOs’ risk adjustment practices and compliance programs through FCA litigation and other regulatory mechanisms. The OIG, for example, has conducted a series of audits of MAOs’ submission of diagnoses at higher risk for being miscoded.5 And in January 2023, CMS issued a final rule finalizing changes to the MA Risk Adjustment Data Validation (RADV) Program—the agency’s “primary audit and oversight tool of MA program payments.”6
The government’s allegations in the Cigna cases are not new, and MAOs are not without significant legal defenses. What is new, however, is that a major MAO has chosen to settle, rather than to continue to battle the government’s interpretation of the practices at issue. While Cigna’s decision may have been spurred by business considerations, as the first significant MAO domino to fall, the decision is nonetheless significant. MAOs should evaluate their RA programs against the allegations in the Cigna settlement and other RA pending cases—particularly those relating to in-home health assessments and one-way retrospective reviews—to determine if refinements or adjustments might be advisable in order to mitigate potential FCA or other liability.
- See Dep’t of Justice, “Cigna Group to Pay $172 Million to Resolve False Claims Act Allegations” (Sept. 30, 2023), https://www.justice.gov/opa/pr/cigna-group-pay-172-million-resolve-false-claims-act-allegations; Dep’t of Justice, “United States Reaches $37 Million Settlement Of Fraud Lawsuit Against Cigna For Submitting False And Invalid Diagnosis Codes To Artificially Inflate Its Medicare Advantage Payments” (Sept. 30, 2023), https://www.justice.gov/usao-sdny/pr/united-states-reaches-37-million-settlement-fraud-lawsuit-against-cigna-submitting [collectively, hereinafter, “DOJ Press Releases”]. Of the total $172 million, Cigna paid $37 million to resolve the claims relating to its 360 Program, approximately $115.8 million to resolve the chart review claims, and $19.5 million to resolve the morbid obesity coding claims. ↩︎
- The Settlement Agreement relating to the chart review and morbid obesity diagnosis code claims is available here. The Stipulation and Order of Settlement and Dismissal relating to the in-home risk assessment claims is available here. ↩︎
- See HHS-OIG, “Managed Care” (last updated Dec. 5, 2023), https://oig.hhs.gov/reports-and-publications/featured-topics/managed-care/?hero=managed-care-ft (reporting that, in 2022, 50% of Medicare enrollees received care through MA and government spending on MA accounted for 50% of Medicare spending). ↩︎
- See DOJ Press Releases. ↩︎
- See, e.g., HHS-OIG, Medicare Advantage Compliance Audit of Specific Diagnosis Codes That Aetna, Inc. (Contract H5521) Submitted to CMS (Oct. 2, 2023), https://oig.hhs.gov/oas/reports/region1/11800504.asp. ↩︎
- See CMS, “CMS Issues Final Rule to Protect Medicare, Strengthen Medicare Advantage, and Hold Insurers Accountable” (Jan. 30, 2023), https://www.cms.gov/newsroom/press-releases/cms-issues-final-rule-protect-medicare-strengthen-medicare-advantage-and-hold-insurers-accountable ↩︎
