False Claims Act (“FCA”) settlements reached record-breaking numbers in fiscal year 2023. The majority of the settled FCA actions involved the healthcare industry, with $1.8 billion attributed to settlements related to managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities and physicians.
2023 Medicare Advantage Case Resolutions
Based on the 2023 FCA results, the Department of Justice (“DOJ”) is now emphasizing the “critical importance” of Medicare Advantage enforcement. As the number of beneficiaries enrolled in privatized insurance rises, stakeholders have raised concerns about fraud contributing to overpayments to Medicare Advantage (“MA”) plans, wherein the government pays private insurers to manage beneficiaries’ care.
More than half of the eligible Medicare population was enrolled in MA plans last year. Due to the swelling costs, the government could pay MA plan $88 billion more in 2024 than it would have spent if those enrollees were in traditional Medicare, according to data published by the congressional advisory group MedPAC. MedPAC says this is due to the fact that MA payers attract healthier beneficiaries and code them aggressively to acquire increased reimbursement from the government. In January, the Office of Inspector General (OIG) said it must “hold MA organizations and MCOs accountable.” It also found that 13% of cases result in denied prior authorization requests. The OIG said it would be expanding its engagement with plans and their special investigation units to find fraud.
Upcoding through MA plans was also a large part of FCA settlements in 2023. Cigna, which recently announced plans to sell its Medicare business, agreed to pay $172 million to settle allegations that it submitted inaccurate diagnosis codes for its MA enrollees. Cigna engaged in this behavior to boost reimbursements from the government. Maine-based Point Health Care also agreed to pay $22.5 million to resolve allegations it had entered false diagnosis codes to increase reimbursements.
Other Areas of FCA Focus for 2024
According to DOJ, other immediate enforcement priorities for the current year include fraud perpetrated through pandemic relief programs and violations of cybersecurity requirements, especially among government contracts and grants. Cybersecurity has also been increasing as a concern in the healthcare sector, as organizations are frequently targeted by attackers, which has the potential to lead to disruptions in care and leaking sensitive health information. For example, last year, Jelly Bean Communications Design and its manager agreed to pay more than $293,000 to settle allegations that it failed to secure data on a federally funded children’s health insurance website. DOJ also noted the following areas of focus for fraud in the coming year: unlawful kickbacks, the California Medicaid Program and skin graft reimbursements.
