Federal judge rejects Medicare Advantage lawsuit against UnitedHealthcare
U.S. District Judge John Walter of California's Central District said the Department of Justice (DOJ), which is taking part in the lawsuit, didn’t show the insurer knew the claims submitted were false. Walter also ruled the lawsuit doesn’t prove the CMS would not have made the payments if the agency knew of UnitedHealth’s practices, which the lawsuit alleges.
This isn’t the end of possible legal action against UnitedHealth, which is the largest MA payer. The DOJ could still amend its allegations against the insurer in this case by Oct. 13. There’s also another case pending against the insurance company involving MA payments.
The decision comes after UnitedHealth in July requested the court dismiss one of the two whistleblower lawsuits involving the False Claims Act. UnitedHealth said at the time that the suit “fails properly to plead two elemental aspects of its claims: That United knowingly submitted false attestations, and that the government would have refused to pay United’s claims if it had known the truth.”
UnitedHealth argued that it’s not MA plans’ responsibility to check whether healthcare providers are giving correct information when they submit claims. On Thursday, the court agreed and dismissed the lawsuit.
The DOJ is involved in both whistleblower lawsuits. In the other case, former UnitedHealth executive Benjamin Poehling alleged that the payer changed diagnosis codes to make patients seem sicker. That suit also alleges UnitedHealth officials received bonuses for changing the codes. These “data-mining projects” could raise MA reimbursements to UnitedHealth by nearly $3,000 for every new diagnosis.
The healthcare industry, especially MA payers, are closely watching the cases, as UnitedHealth has nearly one-quarter of MA members.
MA remains an increasingly popular program for members and payers. About one-third of Medicare members are in MA plans and that number is expected to increase next year. UnitedHealth leads the pack with about one-quarter of MA members. Only Humana is remotely close to UnitedHealth in terms of membership numbers and Humana is looking to expand MA offerings after dropping out of the ACA exchanges market in 2018.
While payers have been dropping out of Affordable Care Act (ACA) exchanges, insurers see potential in the MA market. Healthier baby boomers are joining the Medicare population each year, which helps balance the risk pool. UnitedHealth has predicted that MA membership could swell to 50% of Medicare members one day.
As more members join MA and more payers show interest in expanding its MA offerings, federal investigators have turned their attention to the program to make sure money is being spent properly. In addition to the UnitedHealth cases, the DOJ are investigating other MA payers, including Aetna, Bravo Health, Cigna, Health Net and Humana.
Federal investigators and legislators are worried about fraud in the MA program. CMS estimated that it overpaid $14.1 billion in 2013 to MA organizations. Medicare Advantage payers received about $160 billion in 2014 for approximately 16 million beneficiaries. CMS estimated about 9.5% of those payments were improper.
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