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Risk Fraud & Compliance

Medicare and Medicaid fraudsters continue to steal taxpayer money

Melissa D. Berry  Lead Compliance Attorney Editor / Regulatory Intelligence / Thomson Reuters

· 5 minute read

Melissa D. Berry  Lead Compliance Attorney Editor / Regulatory Intelligence / Thomson Reuters

· 5 minute read

Fiscal year 2023 proved to be a high value one for healthcare frauds and settlements, with the DOJ totaling $2 billion dollars in illicit activity

The U.S. Department of Justice (DOJ) reported civil settlements and judgments under the False Claims Act related to healthcare fraud that exceeded $1.8 billion in the fiscal year ending Sept. 30, 2023. Healthcare fraud was the leading source of False Claims Act settlements and judgments in fiscal year 2023.

In addition to recovering taxpayer funds and deterring future fraud, False Claims Act enforcement “also protects patients from medically unnecessary or potentially harmful actions,” the DOJ said in a statement.

DOJ enforcement highlights

The Cigna Group agreed to pay $172 million to resolve allegations that it used “inaccurate and untruthful diagnosis codes” for its Medicare Advantage plan enrollees to improperly increase its payments from Medicare. The government alleged that Cigna also relied on improperly reported diagnosis codes reported by vendors without performing or ordering testing to confirm those diagnoses. The Medicare program reimburses Medicare Advantage plans at a capitated rate based on the health of each member. A member with more diagnoses or more complex medical conditions nets the plans a higher reimbursement from the government.

Martin’s Point Health Care Inc. agreed to pay $22.5 million to resolve similar allegations that it had submitted inaccurate diagnosis codes for its Medicare Advantage plan enrollees in order to increase reimbursements. The diagnoses codes were not supported by member medical records.

The DOJ also litigated other cases involving the government’s Medicare Advantage program, including cases against UnitedHealth Group, Independent Health Corporation, Elevance Health (formerly Anthem), and Kaiser Permanente.

In another case involving false claims, the government alleged that former long-term care facility Cornerstone Hospital Medical Center and related entities submitted claims for “services performed by unlicensed and unauthorized students” and that the services were either not provider or were “effectively worthless.” Cornerstone and the related entities agreed to pay $21.6 million to resolve these allegations.

The DOJ also announced two resolutions involving electronic health records. In the first, Modernizing Medicine Inc. (ModMed) agreed to pay $45.4 million to resolve allegations that it solicited and received kickbacks from a lab company in exchange for recommending that its customers use the lab’s pathology services, conspired with the lab company to donate ModMed’s electronic health records technology to healthcare providers, and paid kickbacks to its customers and other influential entities to recommend its technology and refer potential customers. The government also alleged that ModMed’s electronic health record technology did not always use “required standard vocabularies” that caused providers to improperly submit claims for electronic health record incentive payments.

In the second case, NextGen Healthcare Inc. agreed to pay $31.2 million to resolve allegations that it misrepresented the capabilities of some versions its electronic health records software that were “lacking in critical functionality.” The government also alleged the NextGen offered credits worth as much as $10,000 and tickets to sporting and entertainment events to customers whose recommendation of its software led to a new sale.

In another resolution, Carter Healthcare LLC and its president and CEO agreed to pay $22.9 million to resolve allegations the company had improperly paid physicians “under the guise of medical directorships to induce referrals of home health patients.”

State Medicaid recoveries

Although the federal government often recovers Medicaid funds when pursuing Medicare fraud, states also have a separate responsibility to prosecute Medicaid fraud. Because Medicaid is a federal/state partnership, these recoveries benefit both state and federal taxpayers.

All 50 state, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands have Medicaid Fraud Control Units (MFCUs) to investigate and prosecute Medicaid provider fraud and patient abuse or neglect.

For fiscal year 2023, MFCU efforts resulted in:

      • $1.2 billion recovered;
      • 1,143 convictions (814 for provider fraud and 329 for patient abuse or neglect);
      • 850 exclusions of individuals or entities from federally funded programs; and
      • 436 civil settlements and judgments.

MFCU enforcement highlights

In California, the MFCU partnered with other state agencies in a civil investigation of allegations that managed care company Centene overcharged the California Medicaid program by “falsely reporting higher prescription drug costs” for two of its managed care plans. Centene agreed to pay more than $215 million to resolve the allegations.

In North Carolina, the MFCU investigated the owner of a laboratory for allegedly billing Medicaid for medically unnecessary testing services and providing illegal kickbacks in exchange for the testing. The owner was convicted of conspiracy to commit healthcare fraud, violations of the anti-kickback statute, conspiracy to commit money laundering, and money laundering. The scheme defrauded the North Carolina Medicaid program of more than $11 million.

In another case involving a medical device manufacturer, the National Association of MFCUs partnered with federal agencies to investigate allegations that Advanced Bionics LLC misled federal healthcare programs regarding the radio-frequency emission generated by some of its devices that could potentially interfere with other devices that use the same radio-frequency spectrum. The company agreed to pay more than $12 million to settle the allegations.

Although healthcare fraudsters continue to steal, scheme, and conspire to steal federal and state healthcare program funds, these enforcement result show that the government is also having a certain amount of success in recovering taxpayer dollars and punishing fraudsters.

For more on the impact of Government Fraud, click here.

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