The U.S. Justice Department has sued national health insurer Anthem for fraudulently collecting hundreds of millions of dollars from the Medicare program by exaggerating the illnesses of its members.
The lawsuit, filed Thursday by the U.S. attorney for the Southern District of New York, alleged that Anthem combed patient medical charts to find additional diagnosis codes to submit to the CMS for higher Medicare Advantage payments. But in the process, Anthem chose not to delete thousands of inaccurate diagnosis codes because that would have reduced its revenue, according to the complaint.
This practice, which generated about $100 million a year in additional revenue for Anthem, allowed Anthem to improperly obtain taxpayer funded dollars in violation of the False Claims Act.
"Ultimately, the extraordinary profits that Anthem obtained through its one-sided chart review program came at the expense of the public fisc," the complaint said.
In a statement, Anthem said it complied with Medicare Advantage regulations and would "vigorously defend" its practices. The insurer also accused the CMS of attempting to hold health plans to a standard without providing clear guidance.
"This litigation is the latest in a series of investigations on Medicare Advantage plans. The government is trying to hold Anthem and other Medicare Advantage plans to payment standards that CMS does not apply to original Medicare, and those inconsistent standards violate the law," the company said.
Payments to Medicare Advantage plans, which enroll about 24 million seniors and people with disabilities, are based in part on the medical conditions of the enrollees. Insurers ultimately are paid more for sicker members with multiple diagnoses and are paid less for healthier members because they use fewer resources. The payment methodology creates a strong incentive for health insurers to submit as many diagnosis codes as possible to drive up payments. The traditional fee-for-service Medicare program does not have the same incentive.
Diagnosis codes are supposed to be backed up by the patient's medical record, but the federal government has in recent years accused several insurers of disregarding that rule. The Justice Department has also sued UnitedHealth Group over its Medicare Advantage billing practices but so far has been unsuccessful in court.
According to the lawsuit against Anthem, knowingly submitted inaccurate diagnosis codes between 2014 and 2018 despite attesting to the CMS that its data submissions were accurate.
One Anthem executive called the program a "cash cow," the complaint states. The insurer's retrospective chart review program produced a return-on-investment of up to 7 to 1. In 2015, for example, the program generated $112 million in additional revenue while costing Anthem under $19 million in expenses.
According to the lawsuit, one Anthem finance vice president estimated in 2017 that switching from a one-sided chart review to a program that deleted inaccurate codes would reduce the value of chart review for Anthem by 72% or $86 million that year.
"As Anthem knew, identifying and deleting such inaccuracies in its diagnosis code submissions could lead CMS to calculate lower risk adjustment payments to Anthem. So it did not make an effort to do so," the complaint said.