UnitedHealth fudged Medicare claims, overbilled by $1 billion, feds say

Tuesday’s court filing argues that UnitedHealth repeatedly ignored findings from its own auditors that risk scores were often inflated, as well as warnings by officials from the Centers for Medicare & Medicaid Services (CMS) that the firm was responsible for ensuring the billings it submitted were accurate.

UnitedHealth argued that it had done nothing wrong, and said it would aggressively contest the case.

“We are confident our company and our employees complied with the government’s Medicare Advantage program rules, and we have been transparent with CMS about our approach under its unclear policies,” UnitedHealth spokesman Matt Burns said in a statement.

Burns went on to say that the Justice Department “fundamentally misunderstands or is deliberately ignoring how the Medicare Advantage program works. We reject these claims and will contest them vigorously.”

A spokesman for CMS, which has recently faced congressional criticism for lax oversight of the program, declined comment.

Central to the government’s case is UnitedHealth’s aggressive effort, starting in 2005, to review millions of patient records to search for missed revenue. These reviews often uncovered payment errors, sometimes too much and sometimes too little. The Justice Department contends that UnitedHealth typically notified Medicare only when it was owed money.

UnitedHealth “turned a blind eye to the negative results of those reviews showing hundreds of thousands of unsupported diagnoses that it had previously submitted to Medicare,” according to the suit.

Justice lawyers also argue that UnitedHealth executives knew as far back as 2007 that they could not produce medical records to validate about one in three medical conditions Medicare paid UnitedHealth’s California plans to cover. In 2009, federal auditors found about half the diagnoses were invalid at one of its plans.

The lawsuit cites more than a dozen examples of undocumented medical conditions, from chronic hepatitis to spinal cord injuries. At one medical group, auditors reviewed records of 126 patients diagnosed with spinal injuries. Only two were verified, according to the complaint.

The Justice Department contends that invalid diagnoses can cause huge losses to Medicare. For instance, UnitedHealth allegedly failed to notify the government of at least 100,000 diagnoses it knew were unsupported based on reviews in 2011 and 2012. Those cases alone generated $190 million in overpayments, according to the suit.

While Medicare Advantage has grown in popularity and now treats nearly 1 in 3 elderly and disabled Medicare patients, its inner workings have remained largely opaque.

CMS officials for years have refused to make public financial audits of Medicare Advantage insurers, even as they have released similar reviews of payments made to doctors, hospitals and other medical suppliers participating in traditional Medicare.

But Medicare Advantage audits obtained by the Center for Public Integrity through a court order in a Freedom of Information Act lawsuit show that payment errors — typically overpayments — are common.

All but two of 37 Medicare Advantage plans examined in a 2007 audit were overpaid — often by thousands of dollars per patient. Overall, just 60 percent of the medical conditions health plans were paid to cover could be verified. The 2007 audits are the only ones that have been made public.

CMS officials are conducting more of these audits, called Risk Adjustment Data Validation, or RADV. But results are years overdue.

This story was produced by Kaiser Health News, a nonprofit health newsroom whose stories appear in news outlets nationwide, is an editorially independent part of the Kaiser Family Foundation.