Feds sue UnitedHealth over Medicare payments

The Justice Department has filed its own lawsuit against Minnetonka-based UnitedHealth Group in a whistleblower case alleging the health insurer wrongly received Medicare payments based on inaccurate data submissions.

In a complaint filed this week in a federal court in California, the government alleges that UnitedHealth Group and its subsidiaries combed through medical records to find data that might boost payments from Medicare, but did not "look both ways" to correct earlier data submissions that also generated payments.

The lawsuit is the latest action in an ongoing dispute over how UnitedHealth Group, which is the nation's largest health insurer, and other carriers submit information to the Medicare program that is used to set payment levels.

The insurance company "knew that it was obligated to identify and delete the unsupported and invalid diagnosis codes," the lawsuit says. "Nonetheless, UnitedHealth turned a blind eye and funded and encouraged one-sided chart reviews."

UnitedHealth Group said it rejected the claims and would contest them vigorously.

"We are confident our company and its leaders complied with Medicare Advantage program rules and were transparent with [federal officials] about how we interpreted the government's murky policies," Matthew Burns, a company spokesman, said in a statement.

In February, the federal government announced it was joining a whistleblower lawsuit filed by a former UnitedHealth Group executive in Minnesota that alleged a risk adjustment scheme that could have generated hundreds of millions of dollars, if not billions, in overpayments to health plans. In March, the Justice Department said it would join a similar whistleblower lawsuit brought by a California man against UnitedHealth Group.

The lawsuit filed this week came in the context of the proceedings initiated by the California whistleblower. By mid-May, the Justice Department is expected to file its own complaint in the case brought by the Minnesota whistleblower as well.

"This action sends a warning that our office will continue to scrutinize and hold accountable Medicare Advantage insurers to safeguard the integrity of the Medicare program," Acting U.S. Attorney Sandra Brown for the Central District of California, said Tuesday in a statement about the lawsuit filed this week.

Medicare is the federal health insurance program that primarily serves Americans 65 and older. A growing share of Medicare beneficiaries opt to receive their benefits through Medicare Advantage plans sold by private insurers.

UnitedHealth Group's health insurance division, UnitedHealthcare, is the nation's largest operator of Medicare Advantage plans, according to the lawsuit. The complaint focuses on UnitedHealthcare's Medicare plan in California starting in 2005, as well as the plan's interaction with a large group of health care providers in that state.

In Medicare Advantage, the government pays health plans on a set per-member, per-month basis, and adjusts payments according to an individual's health risk. To obtain these risk adjustments for health status, Medicare Advantage plans submit diagnosis codes that the government uses to calculate a risk score, the lawsuit says, for each beneficiary.

In general, risk scores are higher — and, therefore, generate higher payments to the insurer — when more codes are submitted, particularly for more serious conditions.

The complaint involves UnitedHealth Group's funding of the cost of medical record reviews for patients treated by the large health care provider in California, the lawsuit says, as well as the conception and direction of those chart reviews.

The chart reviews "identified information leading to increased government payments … while systematically ignoring information that would have led to decreased payments," the lawsuit says. "By failing to 'look both ways,' UnitedHealth improperly generated and reported skewed data artificially inflating beneficiaries' risk scores, avoided negative payment adjustments and retained payments to which it was not entitled."

According to the lawsuit, UnitedHealth did not give health care providers a standardized process to delete or withdraw invalid diagnoses based on the results of chart reviews until 2013. The lawsuit says a 2005 audit at the California Medicare plan that UnitedHealth acquired found about 30 percent of diagnosis codes submitted by health care providers were invalid.

Earlier this year, the federal government disclosed it had ongoing investigations about risk adjustment practices at four other carriers including Aetna and a division of Cigna. Rules for how payments should be risk adjusted for patient illnesses have been controversial in the past, with UnitedHealthcare suing the federal government in January 2016 over a change in guidance on how to assess the health status of enrollees.

Last month, a federal judge ruled the UnitedHealthcare lawsuit against the government could proceed, despite efforts to have the case tossed out on procedural grounds.

Federal prosecutors have asked that the two whistleblower cases against UnitedHealth Group be consolidated, but a judge last month denied the request.

Christopher Snowbeck • 612-673-4744

Twitter: @chrissnowbeck