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DOJ accuses Anthem of fraud in risk adjustment payments for its Medicare Advantage plans

Anthem claims the DOJ has violated the law in holding Medicare Advantage plans to payment standards that are not applied to regular Medicare.

Susan Morse, Managing Editor

The Department of Justice is charging Anthem with fraud for getting millions of dollars in risk-adjustment payments by inflating the severity of illness for beneficiaries in its Medicare Advantage plans.

The civil lawsuit was filed Friday in the U.S. District Court in the Southern District of New York. The government wants a jury trial to determine financial damages and to recover restitution.

However, Anthem contends it has done nothing wrong and said it intends to "vigorously defend our Medicare risk adjustment practices." The DOJ has violated the law in holding Medicare Advantage plans to payment standards that are not applied to regular Medicare, the company said by statement.

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"This litigation is the latest in a series of investigations on Medicare Advantage plans," Anthem said. "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 DOJ has accused Anthem of one-sided review of a beneficiary's medical chart to find additional codes to submit to CMS to gain revenue, without also identifying and deleting inaccurate diagnostic codes.

This generated $100 million or more a year in additional revenue for Anthem, the DOJ said.

The Medicare Revenue and Reconciliation group at Anthem could have readily written a computer algorithm to find inaccurately reported diagnosis codes by comparing previously submitted codes against chart review results, the DOJ said, but Anthem made no effort to do so.

"Indeed, as the head of the Medicare R&R (Revenue and Reconciliation) group at Anthem recognized, the one-sided chart review program was 'a cash cow' for Anthem because it consistently produced a 'return on investment' of up to 7:1," the lawsuit said. "Anthem made 'revenue enhancement' the sole purpose of its chart review program, while disregarding its obligation to find and delete inaccurate diagnosis codes, because Anthem prioritized profits over compliance."


Regular Medicare is still a fee-for-service payment system. Providers submit claims to CMS for medical services rendered and CMS pays the providers based on established payment rates.

Medicare Advantage plans are operated and managed by Medicare Advantage Organizations, which are private insurers. When a provider furnishes medical services to a Medicare beneficiary enrolled in an MA plan, the provider submits the claims and encounter data to the MAO and receives payment from the MAO, instead of CMS.

MA plans receive a monthly, capitated payment from CMS to cover enrollees. Risk adjustment allows insurers to get a greater payment for sicker patients.


"... Anthem knowingly disregarded its duty to ensure the accuracy of the risk adjustment diagnosis data that it submitted to the Centers for Medicare and Medicaid Services for hundreds of thousands of Medicare beneficiaries covered by the Medicare Part C plans operated by Anthem," the lawsuit said. "By ignoring its duty to delete thousands of inaccurate diagnoses, Anthem unlawfully obtained and retained from CMS millions of dollars in payments under the risk adjustment payment system for Medicare Part C."

Anthem said, "The suit is another in a pattern that attempts to hold Anthem and other plans to a standard on risk adjustment practices, without providing clear guidance. Where regulations have not been clear, Anthem has been transparent with CMS about its business practices and good faith efforts to comply with program rules. We think the agency should update regulations if it would like to change how it reimburses plans for services delivered."

Twitter: @SusanJMorse
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