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Risk Adjustment Fraud

Medicare Risk Adjustment Fraud

Medicare risk adjustment fraud is a complex and serious federal crime involving manipulating Medicare beneficiaries' risk scores to receive higher payments from the Centers for Medicare & Medicaid Services (CMS). 

This type of fraud can take on several forms, but at its core, it revolves around intentionally misrepresenting a patient's health condition to exploit government-funded healthcare programs

Medicare Risk Adjustment Fraud
Medicare risk adjustment fraud involves manipulating risk scores to receive higher payments.

In other words, risk adjustment is a type of Medicare fraud involving intentionally manipulating or misrepresenting patient data to obtain higher reimbursements from healthcare programs, such as Medicare Advantage and Medicaid, that adjust payments based on a patient's health and risk status.

This type of fraud can include practices like upcoding or unsupported diagnoses, which can make patients appear sicker than they are, which can lead to greater payments to healthcare providers.

Healthcare providers could be incentivized to engage in this fraudulent behavior to increase revenue, especially in systems where payments are determined by the severity or number of diagnoses rather than services rendered.

Whistleblowers often identify Medicare risk adjustment fraud by observing and documenting cases where diagnostic data is manipulated to augment risk adjustment payments unjustifiably.

Some red flags include unsupported risk adjustment claims that lack backing when submitted to the government for payment and fabrication of supporting documents that appear to be created or altered to justify unsupported claims.

Another indicator includes failure to correct false claims previously submitted that the plan does not remedy even when they should have recognized its unsupported nature.

If you are suspected of committing this form of fraud, you could face extensive civil fines and, in some cases, criminal charges and prison time.

Medicare Risk Adjustment - Explained

Risk adjustment is a mechanism designed to allocate resources more effectively within the Medicare Advantage (Part C) program. The system adjusts payments to Medicare Advantage plans based on the health status and demographic information of their enrollees. 

Essentially, plans receive higher payments to cover beneficiaries with more severe health conditions because these individuals will incur higher healthcare costs.

Medicare Risk Adjustment

This adjustment process is crucial for ensuring that Medicare Advantage plans have the financial incentive to enroll and care for sicker patients, not just the healthy ones. 

It relies on accurate and honest diagnoses and health status reporting by healthcare providers and plans. However, the complexity and reliance on provider-reported data create vulnerabilities to fraud, where providers may inflate diagnoses or report conditions patients do not have to increase reimbursement rates.

In the risk adjustment model, healthier patients have lower risk scores, while those with more severe health conditions have higher scores. Fraud occurs when healthcare providers inflate these risk scores dishonestly. 

This could involve coding diseases that patients do not have, exaggerating the severity of their conditions, or even refusing to correct previous errors in the risk scores. This fraudulent activity is not only unethical but also illegal. It amounts to stealing taxpayer dollars and undermines the integrity of our healthcare system. 

How Is Medicare Risk Adjustment Fraud Identified?

In the risk adjustment model, healthier patients have lower risk scores, while those with more severe health conditions have higher scores. Fraud occurs when healthcare providers inflate these risk scores dishonestly. Standard fraudulent practices include the following:

  • Upcoding: Reporting a more severe condition than the patient's.
  • Unbundling: Submitting separate bills for procedures that should be billed together at a reduced cost.
  • Phantom Billing: Charging for medical services not rendered.
  • Inflating Risk Scores: Manipulating patient risk scores to appear to require more costly care.
  • Misrepresentation of treatment history: Presenting claims as if a condition is currently being treated when it's only a history, commonly with conditions like a stroke.
  • Inadequate documents: This infers diagnoses from insufficient medical record documentation, such as patient histories or prescription lists, without evidence the condition leads to the treatment on the visit.
  • Incentive structures: This means incentivizing individuals, vendors, or providers based on increasing the risk scores, which can motivate inappropriate upcoding.
  • Chart reviews: This is conducting reviews of patient charts primarily to find additional risk-adjustment diagnoses while neglecting to remove unsupported codes.
  • Home visits: This occurs by sending professionals for home assessments to record more diagnoses rather than provide genuine patient care.

What are the Federal Charges and Legal Implications?

Committing Medicare risk adjustment fraud is considered a federal crime and is typically prosecuted under the False Claims Act (FCA)

The FCA imposes liability on individuals or entities knowingly submitting false claims to the government for payment. The term “knowingly” covers actual knowledge, deliberate ignorance, or reckless disregard of the truth or falsity of the information.

Violations can lead to investigations by the Department of Justice (DOJ), potentially in collaboration with the Department of Health and Human Services Office of Inspector General (HHS-OIG) and the Federal Bureau of Investigation (FBI). These investigations can result in civil or criminal charges, depending on the nature and extent of the fraud.

What are the Possible Penalties for a Conviction?

The penalties for Medicare risk adjustment fraud can be severe and extensive. You may be fined and criminally charged under the FCA and other federal statutes. Penalties may include, but are not limited to:

  • Civil fines of up to three times the amount of loss incurred by the government.
  • Extensive statutory penalties, which, as of 2023, adjusted for inflation, may be up to $27,894 per violation and
  • If criminal charges are filed, you could face additional fines and up to 5 years imprisonment.

What are the Possible Defenses to Fraud Accusations?

Being suspected of, or charged with, Medicare adjustment fraud can be disconcerting given the possible penalties; however, a skilled federal criminal defense attorney can still implement various defense strategies to counter the charges. Common defenses include, but are not limited to the following:

  • Showing Adequate Compliance Programs: Demonstrating the existence of a robust and effective compliance program that provides regular training to staff on correct coding procedures can serve as a defense.
  • Corrective Actions Taken: If errors were made but corrected promptly upon discovery, it shows a proactive approach to maintaining compliance with Medicare's rules and regulations.
  • Lack of Intent: Fraud requires intent to deceive or knowingly participate in dishonest activities. If it can be shown that any misrepresentation was unintentional or due to an honest mistake, it could serve as a defense.
  • Whistleblower Credibility: If the accusations originated from a whistleblower, their credibility and motivations can be questioned. For instance, if they're a disgruntled employee or have a history of dishonesty, it may weaken the prosecution's case.
  • Expert Testimony: Engaging medical coding experts who can testify that the coding practices were correct, or at least within a reasonable interpretation of the coding rules, can be a helpful defense.

Contact our federal criminal defense law firm for more information. We represent clients throughout the United States on federal criminal matters. Eisner Gorin LLP has offices in Los Angeles. California.

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