It is not just fee-for-service providers that have audits and civil qui tam cases. Managed healthcare is facing review as well. Even providers who are paid capitation fees should be mindful of the codes submitted to managed care. A recent case illustrates why.
On April 12, 2019, Sutter Health LLC, a California-based healthcare services provider,
and affiliated entities (Sutter East Bay Medical Foundation, Sutter
Pacific Medical Foundation, Sutter Gould Medical Foundation, and Sutter Medical
Foundation) agreed to pay $30 million to resolve allegations that these affiliated entities submitted inaccurate information about the health status of
beneficiaries enrolled in Medicare Advantage Plans known as "risk scores," which allegedly resulted in the plans
and providers being overpaid. Sutter Health is headquartered in Sacramento, California.
Under Medicare Advantage, also known as the Medicare Part C program, Medicare
beneficiaries have the option of enrolling in managed healthcare insurance
plans called Medicare Advantage Plans (“MA Plans”) that are owned and operated
by private Medicare Advantage Organizations (“MAOs”). MA Plans are paid a
capitated, or per-person, amount to provide Medicare-covered benefits to
beneficiaries who enroll in one of their plans.
The Centers for Medicare
and Medicaid Services (“CMS”), which oversees the Medicare program, adjusts the
payments to MA Plans based on demographic information and the health status of
each plan beneficiary. The adjustments are commonly referred to as “risk
scores.” In general, a beneficiary with more severe diagnoses will have a
higher risk score, and CMS will make a larger risk-adjusted payment to the MA
Plan for that beneficiary.
Sutter
Health, a non-profit public benefit corporation that provides healthcare
services through its affiliates, including hospitals and medical foundations,
contracted with certain MAOs to provide healthcare services to California
beneficiaries enrolled in the MAOs’ MA Plans. In exchange, Sutter
received a share of the payments that the MAOs received from CMS for the
beneficiaries under Sutter’s care.
Sutter
submitted diagnoses to the MAOs for the MA Plan enrollees that they treated.
The MAOs, in turn, submitted the diagnosis codes to CMS from the
beneficiaries’ medical encounters, such as office visits and hospital stays.
The diagnosis codes were used in CMS’ calculation of a risk score for
each beneficiary.
The
settlement announced today resolves allegations that Sutter and its affiliates
submitted unsupported diagnosis codes for certain patient encounters of
beneficiaries under their care. These unsupported diagnosis scores
inflated the risk scores of these beneficiaries, resulting in the MAO plans
being overpaid.
In
March 2019, the government filed a separate complaint against Sutter and its
affiliated entity, Palo Alto Medical Foundation, a health care provider, alleging that they violated
the False Claims Act by knowingly submitting unsupported diagnosis scores. That
case is captioned United States ex rel. Ormsby v. Sutter Health, et al.,
Case No. 15-CV-01062-JD (N.D. Cal.), and is still ongoing. This is a whistleblower lawsuit in which the government intervened. The claims resolved by the settlement are allegations only, and there has been
no determination of liability.
Attorney Commentary: Providers should be aware that Medicare is looking at the risk scores of patients and should resist pressure to adjust those scores higher where not appropriate. As always, make sure your office understands the billing rules relating to risk scores. The law and rules are always subject to interpretation and change and therefore it is key to stay up to date on these issues.
