The Department of Justice last week announced that DaVita Medical Group agreed to pay $270 million to the Centers for Medicare & Medicaid Services to settle False Claim Act allegations over questionable billing practices that led Medicare Advantage plans to receive inflated Medicare Part C risk adjustment payments. The improper billing activity pertained to HealthCare Partners Holdings LLC, a large independent physician association that DaVita acquired in 2012. RISE Executive Director Kevin Mowll and Jason Christ, a member of Epstein Becker Green in the health care and life sciences practice, and one of the scheduled speakers at the 13th Annual RISE Nashville Summit in March 2019, talk about the broader implications of the case.
A $270 million settlement agreement between a large independent medical group and the federal government may have ripple effects across the health care industry, according to one health care attorney.
The Department of Justice recently announced that DaVita, which manages and operates medical groups and affiliated physician networks in several states, had voluntarily disclosed problematic risk adjustment practices undertaken by HealthCare Partners, which it acquired in 2012, that caused Medicare Advantage Organizations (MAOs) to submit incorrect diagnosis codes to the Centers for Medicare & Medicaid Services (CMS) and obtain inflated payments, which DaVita and HealthCare Partners shared.
For example, the Justice Department said that HealthCare Partners disseminated improper medical coding guidance that instructed its physicians to use an improper diagnosis code for a spinal condition that yielded increased reimbursement from CMS.
The settlement also resolves allegations made by a whistleblower, James Swoben, a former employee of an MAO that did business with DaVita. Swoben said that HealthCare Partners engaged in “one-way” chart reviews. DaVita used a vendor to scour its patients’ medical records for diagnoses its providers may have failed to record, according to Swoben. It then submitted these “missed” diagnoses to MAOs to obtain increased Medicare payments while allegedly ignoring potentially inaccurate diagnosis codes that should have been deleted and that would have decreased Medicare reimbursement or required repayment. As part of the settlement, Swoben will receive $10 million.
“This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare,” said United States Attorney Nick Hanna in the announcement. “This case involved illegal conduct in which patients’ medical conditions were improperly reported and were not corrected after further review–all for the purpose of boosting the bottom line. We will continue to pursue and hold accountable any entity that seeks to illegally increase revenue at the expense of the Medicare Advantage so that the program may continue to remain viable for all who need it.”
Industry-wide implications
The case illustrates the government’s aggressive and increasing focus on risk adjustment enforcement, says Jason E. Christ, a member of Epstein Becker Green’s health care and life sciences practice in Washington, D.C., and one of the scheduled speakers at the 13th Annual RISE Nashville Summit in March 2019. The firm served as indemnity-escrow counsel on behalf of the former owners of HealthCare Partners.
Although, by now, most health plans have an awareness and understanding of risk adjustment issues, the settlement should serve as a particular wake up call to Medicare Advantage downstream entities, particularly IPAs, MSOs, physician practices, and vendors, he says.
CMS uses a health-based risk adjustment model (the Hierarchical Conditions Category model) to determine payments made to MAOs. The model considers diagnoses from inpatient hospital stays, outpatient encounters, physician office visits, and certain demographic factors. The higher the overall risk scores, the higher the payment to the MA plan and potentially its downstream entities.
Christ says that given the structure of Medicare Part C, CMS focuses its risk adjustment guidance on its contracted plans. The government does not, however, provide much guidance to downstream entities.
Downstream contractors under Medicare Part C—such as MSOs, IPAs, physician groups, and vendors—can and should report incorrect codes or other potential overpayments to their plans. But, unlike plans, they cannot themselves effectuate the return of the money to the government outside of a Department of Health and Human Services-Office of Inspector General, or similar, self-disclosure.
CMS’ remedy ticket process for reporting ICD/HCC coding errors is solely a plan function, Christ notes. Given the False Claims Act’s ability to attach to not just entities that directly submit claims, but more broadly to entities that “cause” a claim to be submitted, providers at times can find themselves in an uncomfortable regulatory vacuum, he says.
Given potential exposure, one critically important practice, he says, is that entities should carefully maintain records of self-policing, such as identifying and deleting unsupported codes. Again, he notes, unlike plans that directly interface with CMS and exchange data through a mechanical process that creates at least some record of code deletions, providers must decide how they would like to track and maintain evidence of their attempts to correct codes.
Because of this case, Christ says he expects that more organizations will prioritize work to review their own processes around coding guidance, in-home assessments, retrospective reviews, and their code retraction processes.
Kevin Mowll, executive director of RISE, agrees, noting that it is impossible to overstate the importance of looking both ways when you do retrospective reviews and adding qualified diagnoses and deleting ones that failed to make the cut from a documentation perspective.
“The MAO has an obligation to provide oversight and audit the information submitted by the subcontracted providers, first, and second, to submit the findings to CMS to correct any errors included in previous submissions,” Mowll says. “There is a joint effort required between providers and plans, therefore, particularly when the providers are working under a risk-based capitation model. Otherwise, mistakes made anywhere along the data chain can exaggerate revenues in unintended ways through a lack of careful coordination and diligence.”
“The OIG and CMS have a reasonable expectation that this is the rigorous manner in which business is being conducted,” Mowll says. “Otherwise, the compliance risks are just too great.”
Christ will be part of a panel discussion on recent risk adjustment government enforcement actions at the 13th Annual RISE Nashville Summit in March 2019. Click here for more information or to register for the event. RISE will also explore risk adjustment issues during The 12th Annual Risk Adjustment Forum, Nov. 11-13, in Marco Island, Fla.