Lawsuits Allege Inflated Risk Adjustment Scores, Resulting in False Claims

When a healthcare facility submits inflated risk assessment information, the resulting request for reimbursement could amount to a false claim under the False Claims Act.

In yesterday’s post, we introduced the concept of risk assessment scores, and how the Center for Medicaid and Medicare Services (CMS) relies on information reported by healthcare facilities to adjust reimbursement rates [1. Medicare Managed Care Manual, Chapter 7. http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/mc86c07.pdf] for certain demographics and regional areas. As a review, certain patients are considered at a higher risk and need further insurance coverage, and CMS determined that implementing an “average” reimbursement rate for the treatment of a certain condition or disease may not be fitting in all situations.

Accordingly, it devised a risk assessment system wherein practitioners may enter additional data and factors about a patient in order to procure a higher rate of reimbursement to treat a certain illness or condition. This has resulted in the onset of increased fraud within the healthcare industry, and several whistleblowers have filed lawsuits alleging as much.

South Carolina case

In a recent whistleblower case [2. Gutman, James, “Whistleblower Allege MA Overcharges; S.C. Lawsuit Targets Blue Plan, Clients.” May 21, 2015. http://aishealth.com/archive/nman052115-02] docketed in U.S. District Court for the District of South Carolina, a relator has alleged that its Medicare Advantage plan provider – Blue Cross and Blue Shield – has been engaging in the consistent practice of inflating risk assessment data in order to obtain a higher rate of reimbursement from Medicare. According to the relator’s accusations, BCBS inflated risk assessment data to the tune of millions of dollars, amounting to actionable false claims under the False Claims Act.

In its response, BCBS admitted there may have been certain “accounting errors,” but certainly nothing that amounted to an intentional false claim that would trigger liability. Nonetheless, relators filed an amended complaint, adding several additional claim processors as defendants, and asserted “BCBS knew that the [risk assessment] process was sending incorrect data to CMS, which would inflate the risk-adjustment scores for each Plan….” This then led CMS to assign higher risk adjustment factors to the plans, resulting in “much higher government payments” than they were “entitled to receive….”

Over the past four years, the case has volleyed through procedural matters, and a subsequent amended complaint was filed by the plaintiffs in September 2014.  Nonetheless, BCBS et al. maintain their position that they did nothing wrong, and accidental accounting errors caused the alleged inflated risk assessment submissions. BCBS said in a statement, “We discovered some errors in the [risk assessment] process, notified CMS and worked with CMS to identify and correct those errors…. In early 2014, we were contacted by the U.S. Attorney’s office in connection with its investigation of this matter. We cooperated fully with the government’s investigation and the government subsequently declined to take the case.”

Of course, it is not uncommon for the government to decline to intervene, as it often does even in high-profile false claims matters. Fortunately, the qui tam provisions of the False Claims Act allow a private plaintiff to continue independently on behalf of taxpayers, and it will be interesting to see how this case concludes.

Currently, the case is embroiled in the discovery process, and is set for a trial beginning in January, 2016.

Contact Berger Montague today

If you are aware of suspicious accounting or billing practices in your healthcare-related position, please do not hesitate to contact Berger Montague for a confidential review of your information.