Understanding Why Accusations Are not Always Accurate

Humana recently settled a whistleblower lawsuit and agreed to pay $90 million. One of its former actuaries had accused the health insurer of overcharging the U.S. government for prescription drugs.

Whenever I read stories about matters like this, I wonder, who was their lawyer? Because I can attest, and I bet you a dollar, that David Glaser has never counseled a client to pay the government $90 million.

Humana itself is not a direct provider of medical services. Instead, Humana is a health insurance company that offers various health plans, including Medicare Advantage (MA), Medicaid, and individual health insurance plans. It also contracts with Medicare to provide Medicare Part D Prescription Drug Plans.

This brings up a relevant point.

Healthcare providers are not the only target of Medicare and Medicaid audits. In the past, I have discussed why electronic medical biller systems should be held accountable for alleged overpayments of providers if their electronic medical record (EMR) system is programmed to upcode. And case law has agreed. Along with EMR companies, there are private insurance companies that manage tax dollars.

Private companies deal with Medicaid and Medicare funds. BCBS, Humana, Aetna – they’re all private companies that have, historically, been private. However, when a private company such as Humana contracts with the federal or a state government to manage Medicare or Medicaid dollars, they are subject to fiscal scrutiny, as in, audits.

The Humana settlement of $90 million was a False Claims Act (FCA) accusation. The accusation was that Humana was purposely overcharging for prescription medicine. This is the first case of its kind to resolve allegations of fraud in the Part D contracting process.

Private companies involved in providing services to Medicare and Medicaid beneficiaries are increasingly finding themselves under the microscope. This surge in audits is driven by several factors:

1. Increased Scrutiny: The federal government has been ramping up its efforts to detect and prevent fraud. Agencies like the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS) are investing in more advanced auditing technologies and methodologies to identify overpayments.

2. Complex Billing Practices: The complexity of healthcare billing and coding provides ample opportunities for mistakes. With numerous codes and billing regulations, even well-intentioned providers can inadvertently make errors that result in overpayments.

3. Whistleblower Actions: The qui tam provisions of the FCA empower insiders to report fraudulent activities. As whistleblowers come forward, more audits are triggered to investigate and address these claims.

4. Higher Penalties: Recent legislative changes have increased the penalties for FCA violations, which serves as a deterrent, but also intensifies the pressure on companies to ensure compliance.

For example, in February 2023, CMS issued a Rule titled “Medicare and Medicaid Programs; Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Program of All-Inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021.” In the language, the government stated:

“Contract-level Risk Adjustment Data Validation (RADV) audits are our main corrective action for overpayments made to Medicare Advantage organizations (MAOs) when there is a lack of documentation in the medical record to support the diagnoses reported for risk adjustment.”

This rule made it easier for audits, like the one Humana encountered. The RADV audits are conducted pursuant to regulations under 42 CFR § 422.310 – Risk adjustment data, section 422.310(e): “MA organizations and their providers and practitioners will be required to submit a sample of medical records for the validation of risk adjustment data.”

RADV audits are extrapolated, which is why the settlement number was so high for Humana. If you are the target of an extrapolated audit, you have two avenues of defense: fight the statistics or fight the clinical determinations.