Feds Sue UnitedHealth, Alleging $1B In False Risk Adjustment Payments

May 17--The federal government sued UnitedHealth Group on Tuesday alleging the Minnetonka-based health care company wrongly received from Medicare at least $1 billion in "risk adjustment" payments based on inaccurate data submissions.

The government took issue with what it called "one-sided" chart reviews that focused on maximizing taxpayer dollars to the nation's largest health insurer, but didn't correct errors that allegedly inflated the company's revenue, according to the lawsuit filed in the U.S. District Court for the Central District of California.

Risk adjustment payments are made to private insurers that operate "Medicare Advantage" plans, which are an increasingly popular way for beneficiaries to obtain their government health insurance benefits. Tuesday marked the second time in a few weeks that the Justice Department filed a complaint against UnitedHealth over allegations of inflated risk adjustment payments.

"The primary goal of publicly funded health care programs like Medicare is to provide high-quality medical services to those in need -- not to line the pockets of participants willing to abuse the system," said acting U.S. Attorney Sandra R. Brown in a news release.

In an earlier statement, United Health spokesman Matthew Burns said, "we are confident our company and our employees complied with the government's Medicare Advantage program rules, and we have been transparent with [Centers for Medicare and Medicaid Services] about our approach under its unclear policies. We reject these claims and will contest them vigorously."

UnitedHealthcare, which is the company's health insurance division, is the nation's largest provider of Medicare Advantage plans.

The federal government's civil fraud action comes in a whistleblower case first brought by a former UnitedHealth Group employee named Benjamin Poehling who worked for the company in the Twin Cities. The government said it would join the case in February, at which point Poehling's initial lawsuit was made public.

In March, the federal government said it would join a second whistleblower case against UnitedHealth that raised similar allegations about risk adjustment payments in Medicare, which is the massive federal health insurance program covering Americans age 65 and older.

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.

In Medicare Advantage plans, the government pays health insurers a per-member per-month payment for enrollees. The government says the fees can be increased when health plans submit information about an enrollee's health that justifies a higher "risk score" for the patient.

The adjustments are meant to make sure Medicare Advantage plans are paid more for enrollees expected to incur higher health care costs.

To make sure Medicare doesn't make erroneous payments to health plans, the government says information about diagnoses must be supported by the patient's medical records.

The federal lawsuit filed Tuesday highlighted UnitedHealth's program to review charts, calling it a "one-sided revenue-generating program."

The insurer collected "millions of medical records" and employed chart reviewers "in order to mine for diagnoses that the providers themselves did not report to United for their patients," the lawsuit states. "United used the results of the chart reviews to only increase government payments ... while in bad faith systematically ignoring other information from the chart reviews which would have led to decreased payments."

It goes on to say: "Since at least 2005, United has known that a significant percentage of diagnoses reported by providers to it ... are invalid because the beneficiaries' medical records do not substantiate that the beneficiaries had the medical conditions identified by the diagnosis codes reported by the providers."

The claims asserted against UnitedHealth are allegations only, the federal government said in a statement, adding that there has been no determination of liability.

Whistleblower cases alleging false claims are brought by "relators" such as Poehling, the former UnitedHealth employee, on behalf of the federal government. They are designed to recover funds for the government, with relators receiving a portion of the recoveries.

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