Whistleblower suit alleges UnitedHealth defrauded Medicare

A whistleblower lawsuit alleges that UnitedHealth Group and health plans that hired a subsidiary of the Minnetonka-based insurer have submitted false information about patient conditions to boost payment rates from the federal Medicare program.

If true, the scheme could have generated hundreds of millions, if not billions, of dollars in government overpayments to health plans, according to a lawsuit unsealed this week after the U.S. Department of Justice said it would join the case.

Matthew Burns, a spokesman for UnitedHealth, denied the allegations, saying in a statement: "We reject these more than 5-year-old claims and will contest them vigorously."

The whistleblower case focuses on "Medicare Advantage" health plans that are operated by private insurance companies to manage care for people covered by the government insurance program.

Medicare health plans make payments to doctors and hospitals when enrollees use services. The government, in turn, pays the health plans a set per-member, per-month rate that's meant to cover health care costs plus the insurance company's overhead.

At issue in the lawsuit are the government payments, which are adjusted upward for insurers that happen to cover patients with more costly health problems. Rules for this "risk adjustment" have been controversial in the past, with UnitedHealth suing the federal government in January 2016 over a change in guidance on how to assess the health status of enrollees.

The lawsuit that the feds joined alleges that insurers boosted risk adjustment claims by submitting forms for diagnoses that health plan members didn't have or for which members weren't treated in the relevant year. Insurers also claimed that members were treated for more serious conditions than they actually had, according to the lawsuit.

Finally, health plans refused to correct claims submitted to the government, the lawsuit says, and reimburse Medicare.

Other health plans hired a UnitedHealth subsidiary called Ingenix for risk adjustment services, the lawsuit says. It claims that Ingenix also provided the service to UnitedHealthcare's Medicare Advantage plans, which cover about 2.2 million people.

Ingenix, which is now called OptumInsight, is UnitedHealth's business for health care data analytics. Through the subsidiary, UnitedHealth "engaged in systematic fraud by assisting and causing [Medicare Advantage] organizations ... to submit fraudulent risk adjustment claims," the lawsuit states. "Through this fraudulent scheme, defendants have defrauded the United States of hundreds of millions — and likely billions — of dollars."

Burns, the UnitedHealth Group spokesman, countered that his company is "honored to serve millions of seniors through Medicare Advantage, proud of the access to quality health care we provided, and confident we complied with the program rules."

Over the years, the federal government has joined whistleblower cases that have gone after hospital chains on allegations they upcoded patient cases to maximize reimbursement, said Patrick Burns, acting executive director of Taxpayers Against Fraud, a Washington, D.C., group that follows whistleblower litigation.

What's new in the case against UnitedHealth Group, he said, is the target — a Medicare Advantage insurer — and the administration bringing the case.

"It is the first big false claims case that the Trump administration has joined, and it's one of the very first Medicare Advantage cases that the Justice Department has joined," said Burns, who is not related to the UnitedHealth Group spokesman. "This is a very big case. It could result in north of a billion dollars in recovery."

Federal auditors have reported in the past on the potential for errors with payments to Medicare Advantage plans, with a study estimating $11.8 billion in improper payments during fiscal 2013.

In whistleblower cases that allege false claims, lawsuits are filed by "relators" on behalf of the federal government. In the UnitedHealth case, the relator is Benjamin Poehling, a director of finance who started working for the company in Minnesota in 2004, according to the lawsuit.

False claim cases are filed to recover funds for the government, with relators receiving a portion of any recoveries.

The lawsuit says the alleged boosting of risk adjustment stems from a corporate culture at UnitedHealth that "demands and rewards financial success from its employees."

Until recently, the company evaluated employees, including Poehling, on their success at maximizing revenue through risk adjustment, according to the lawsuit.

There were no similar performance goals for the overall accuracy of risk adjustment submissions, the suit states, nor was there any accountability assigned for reducing the number of false claims submitted.

UnitedHealth's attitude about the possibilities with risk adjustment is summarized, the lawsuit says, by an internal e-mail between executives with the subject line "Step on the Gas" that stated: "You mentioned vasculatory disease opportunities, screening opportunities, etc., with huge $ opportunities. Lets turn on the gas!"

The lawsuit alleges that UnitedHealth reviewed medical charts and paid bonuses to physicians to find evidence that might justify higher risk adjustment scores. While chart reviews aggressively looked for ways to assign "incremental," or newly found, diagnosis codes to patient cases, the lawsuit states, the insurer didn't stop errant codes that could boost payments from being factored into the risk score.

At one point, UnitedHealth officials launched initiatives under the code word "Project 7" to describe strategies for boosting risk adjustment payments, according to the lawsuit. The company used a code word "because it did not want CMS or other investigatory government agencies to know it had a campaign to claim an additional $100 million through risk score increases," the lawsuit states.

In a filing with the court this week, the Justice Department said it would intervene with portions of the lawsuit dealing with chart reviews, claims verification, a coding compliance program and risk adjustment attestations.

When the initial lawsuit was filed in 2011, it named 15 health care companies including Minnetonka-based Medica. The government said it would move forward on claims against just two defendants — UnitedHealth and a Texas company called WellMed, which UnitedHealth acquired about five years ago. A spokesman said Medica would have no comment on the lawsuit.

On Friday, UnitedHealth Group shares closed at $157.62, off nearly 4 percent for the day.

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck