DOJ Launches Lawsuit Against Anthem for Risk Adjustment Fraud

March 30, 2020 - The Department of Justice (DOJ) has initiated a lawsuit against the major payer Anthem for allegedly submitting inaccurate Medicare Advantage chart reviews to CMS for risk adjustment.

“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 (‘CMS’) for hundreds of thousands of Medicare beneficiaries covered by the Medicare Part C plans operated by Anthem,” the court documents explained.

“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.”

The Anthem Medicare Advantage plan initiated a new process with a third-party vendor which included a “retrospective chart review.” This review would collect documentation on provider-reported services over several months after the date that the services were provided. The vendor then assigned a diagnosis code to the documentation.

By the time the retrospective chart review was completed, the payer had already submitted the data to receive payment from CMS. This happened months prior to the chart review, meaning any inaccuracies discovered in the retrospective chart review could not be rectified.

Anthem knew that the initial data which the payer sent to CMS could be flawed, DOJ said.

The payer furthermore misled providers into submitting the information, the DOJ also alleged.

The payer said it asked the providers to submit the information for the sake of “oversight activity” which would help Anthem assess the accuracy of their coding information.

“That was not true,” the lawsuit stated. “Instead, Anthem used chart reviews only to submit additional diagnosis codes to CMS while turning a blind eye to negative results where chart reviews could not substantiate the diagnosis codes that Anthem had previously submitted to CMS.”

The payer’s Medicare Revenue and Reconciliation group had the means to design an algorithm explicitly for that purpose, but it chose not to do so, said the court document. Instead, the payer developed new codes to receive higher Medicare payments.

Anthem made $100 million or more each year based on this practice from 2014 to 2018 with a return on investment as high as seven to one.

“By knowingly breaching its promises and attestations to CMS, and by knowingly disregarding its regulatory and contractual obligation to correct inaccuracies in its diagnosis data submissions, Anthem improperly obtained or retained millions of dollars from CMS in violation of three FCA provisions and under the common law,” the DOJ stated.

Anthem has denied that any of its risk adjustment practices were unlawful. Instead, the payer blamed CMS and the federal government for vague risk adjustment reimbursement policies.

“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,” Anthem rebutted in a written statement which the payer emailed to HealthPayerIntelligence.

“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.”

Anthem is right to say that this case has precedent.

Another recent Medicare Advantage risk adjustment court battle occurred in early 2019 between the DOJ and Sutter Health. The DOJ said that Sutter Health had used risk scores to gain higher payments.

That legal battle ended with Sutter Health paying out $30 million in settlement.

This will not be Anthem’s first day in court against the DOJ.

In 2016, the payer began to pursue a merger with Cigna, a major competitor. The federal government intervened and the DOJ filed an antitrust lawsuit.

The payer argued that the merger would increase both quality and cost for members, with savings as high as $2.4 billion.

Ultimately, the DOJ won in that case, bringing the merger to an end.