What Cigna’s FCA Settlement Means for Other Medicare Advantage Plans

October 24, 2023 - Cigna’s recent brush with False Claims Act violations serves as a reminder that Medicare Advantage organizations should be routinely assessing their risk and compliance activities.

The Department of Justice (DOJ) announced in September that the major payer reached a settlement of $172 million to resolve allegations that it violated the False Claims Act.

The United States alleged that Cigna submitted inaccurate and untruthful patient diagnosis data to receive additional payments from CMS and did not withdraw the inaccurate data or repay CMS. In addition, the lawsuit alleged that the payer provided a false statement to CMS that the data was accurate and truthful.

“This case is capturing a lot of attention for two reasons,” Jolie Apicella, partner in Wiggin and Dana’s Litigation Department and Health Care Practice Group, told HealthPayerIntelligence. “One, it’s a large settlement. The other reason is that Medicare Part C itself is big. It’s a large portion of what the government is paying now.”

“We’ve already seen how litigation relating to Medicare Advantage plans in the last two years has increased dramatically, and Medicare Part C [spending] is going to exceed traditional Medicare in the next five years or so,” Apicella continued. “Wherever there are lots of dollars going out, that’s where the government will turn its attention to try and investigate fraud and capture back some of that money that shouldn’t have gone out.”

According to the DOJ’s press release, the government pays Medicare Advantage plans over $450 billion each year.

As Medicare Advantage enrollment grows, overpayments have become a significant issue in the private payer program. The USC Schaeffer Center for Health Policy & Economics estimated that Medicare Advantage overpayments may exceed $75 billion in 2023.

CMS uses the Medicare Risk Adjustment Data Validation (RADV) program to identify improper overpayments by confirming that diagnoses submitted by Medicare Advantage plans for risk adjustment accurately reflect beneficiaries’ health statuses.

When done correctly, risk adjustment can benefit beneficiaries, Medicare Advantage organizations, and CMS.

“It’s good for the beneficiary to have these capitated payments in terms of making sure there is enough money to provide for their care. It can be good for CMS to have the right amount of risk for each [beneficiary] and a more personalized solution,” Apicella said.

“If you can anticipate what’s going to be the expected expenditure, then you’re not overpaying—if it’s correctly allocated. It’s also an advantage for Medicare Advantage organizations, as they should be getting paid more for sicker enrollees because they’ll be incurring higher healthcare costs.”

In Cigna’s case, the payer submitted diagnosis codes for risk adjustment based on forms completed by vendors that Cigna retained. The forms attested to in-home assessments of plan members. The nurse practitioners who conducted the home visits did not perform or order the diagnostic testing or imaging required to diagnose the conditions that were reported, according to the lawsuit.

Cigna submitted the diagnoses to CMS even though they were not supported by information documented on the vendors’ forms, nor were they reported to Cigna by other healthcare providers who saw the patient during the year the home visits occurred.

The DOJ also alleged that Cigna used results from past chart reviews to identify instances where it could seek additional payments from CMS.

Further allegations centered around diagnosis codes for morbidly obese patients.

“The medical records did not validate that there were morbidly obese patients, but it was coded that way. [Cigna] was billing for individuals with a Body Mass Index (BMI) below 35 and claiming that these were diagnostic codes for morbidly obese people,” Apicella explained.

Cigna allegedly submitted or failed to withdraw these inaccurate codes, leading to increased payments from CMS.

Medicare Advantage is a top priority for the government when it comes to detecting fraud, as highlighted by the case against Cigna. Other Medicare Advantage plans should focus on risk mitigation assessments to avoid similar situations, according to Apicella.

“One way to avoid risk is to ensure your documentation looks good. Make sure if you’re doing these retrospective reviews of patient charts, you’re not just adding codes, but also making sure that if any of the codes needed to be downgraded, you’re deleting those extra codes,” she shared.

Additionally, Medicare Advantage organizations should look at their data and imagine how it would appear to an objective third party. Plans should ensure they are identifying the correct codes and that any in-home assessments are complete.

As part of its five-year Corporate Integrity Agreement with the HHS Office of Inspector General (OIG) included in the settlement, Cigna must conduct annual risk assessments and other monitoring. Cigna’s top executives and Board of Directors must also certify the payer’s compliance measures, while a third-party review organization will conduct audits focused on risk adjustment data.

Cigna sees the settlement agreement as a path to move forward and improve care for its members.

“These agreements fully resolve long-running legal matters, enabling us to focus our resources on all those we serve and avoiding the uncertainty and further expense of protracted litigation,” Chris DeRosa, president of Cigna Healthcare's US government business, said in a press release.

“This resolution provides us another important tool to gain insights and further improve our support for beneficiaries and we look forward to continuing our collaborative and constructive relationship with the government,” DeRosa continued. “Above all, our focus remains on improving the health and vitality of all those we serve.”

Cigna is required to complete these compliance actions, but all Medicare Advantage organizations would benefit from proactively assessing their data on a routine basis, Apicella indicated. That way, if there is an investigation into a payer, they are ahead of it.

“It can be even worse if you identify an overpayment or there is an internal red flag, like a submitted claim or diagnosis code that probably shouldn’t have been used, and you think, ‘Well, we’re just going to ignore it,’” Apicella said.

“That’s where a lot of payers get into trouble because there’s the 60-day rule, which is a requirement under the [False Claims Act], and there’s liability if the payers do not return an overpayment within 60 days of identifying it.”

Some organizations may be able to monitor their documentation and conduct risk adjustments with their current staff. However, partnering with outside companies may be helpful for others. Hiring a vendor, law firm, or outside compliance company can help catch inconsistencies and can also be useful if payers face an investigation, Apicella concluded.