The U.S. government's anti-fraud efforts have extended beyond physicians and hospitals to managed-care plans, a leading federal investigator disclosed last week.
In a year in which Congress and state legislatures have regulation of managed care in mind, the news drew somber responses from health plan representatives.
Among the areas being investigated are whether Medicare health plans scrimp on medically necessary services and weed out unhealthy seniors to improve their profitability, said D. McCarty Thornton, chief counsel to HHS' inspector general's office. Thornton spoke last week at a healthcare fraud symposium in Washington.
Industry sources say investigators also have questioned plans about their use of nursing homes and home health agencies, but the sources didn't know what the inspector general was looking for.
Thornton said the investigations and settlement talks won't be completed for several months.
Although he declined to speak about any cases in particular, Thornton said the investigations may involve criminal charges. "The (U.S.) Justice Department is very involved in the issue," he said.
An unpublished inspector general's office report found that 18% of all Medicare beneficiaries surveyed had experienced some questionable managed-care marketing practices. Thornton called the problem "widespread, both geographically and in the number of companies involved."
Thornton added that his office also is looking at whether HMOs make a stronger effort to re-sign healthy seniors who disenroll than sick ones.
In a move sure to strike fear into the heart of every HMO, Thornton said the federal government is considering imposing sanctions under the federal False Claims Act in some HMO cases. The False Claims Act allows the federal government to collect triple damages on each fraudulent Medicare claim. Hospitals are currently embroiled in a fight with the Justice Department over the application of the law in cases hospitals say were simple mistakes. A coalition of hospital groups is seeking congressional support for a bill to curb the use of the law to investigate hospital billing activities.
According to Thornton, if an HMO illegally enrolls a Medicare beneficiary, then each monthly capitated payment the plan receives from Medicare could be actionable under the False Claims Act.
And that may be just the beginning. Bruce Fried, a partner with the Washington law firm of Shaw, Pittman, Potts & Trowbridge, said a number of other issues could trigger use of the False Claims Act.
For example, if an HMO knowingly submitted incorrect enrollment or disenrollment data to HCFA, it could be considered a false claim, Fried said. This also applies to the information on the age and health status of beneficiaries that all Medicare HMOs submit. Such information affects the amount of Medicare reimbursements a plan receives and therefore could fall under the False Claims Act.
Fried, who until last December was head of HCFA's managed-care operations, said he was not aware of any problems with "cherrypicking" of enrollees among managed-care plans.
A spokesman for the American Association of Health Plans said, "AAHP member companies have established internal programs to ensure that they are meeting HCFA standards for participation in the Medicare program." He added that the AAHP "is not aware of any government investigation initiatives focusing on HMOs."
However, industry sources who asked not to be identified said last week that they knew of several HMOs that already had been contacted by the inspector general's office and that the probe appeared to be widespread.