December 22, 2023 | By: Edward Baker, Of Counsel | Lieff Cabraser Heimann & Bernstein
On September 30, 2023, the U.S. Department of Justice announced a $172 million False Claims Act (FCA) settlement with Cigna relating to the submission of invalid HCC diagnosis codes to CMS in order to increase Medicare Advantage member risk scores, and therefore, risk adjustment payments.
It is one of the largest FCA settlements involving MA risk adjustment fraud to date and the third this year. Much of the settlement ($37 million) relates to invalid HCC diagnosis codes generated from in-home health risk assessments (HRAs). This is part of the case initiated by a whistleblower, Robert A. Cutler, a former service provider to a Cigna affiliate, who will receive $8.1 million for bringing these allegations to the Government’s attention.
As a former Assistant U.S. Attorney and now a private attorney for whistleblowers, one of the things that caught my attention about this particular settlement (besides the large whistleblower reward!) is that Cigna admitted engaging in fraudulent conduct in the settlement agreement itself. That doesn’t always happen. Frequently, the DOJ does not require a defendant to admit to wrongdoing to settle an FCA case. They simply let the money paid by the defendant speak for itself and impose a Corporate Integrity Agreement to deter the defendant from engaging in the misconduct again. But in this instance, Cigna admitted to some of the fraudulent conduct alleged by the Government and the whistleblower.
Most notably, Cigna admitted that it engaged in three types of wrongful conduct. First, Cigna admitted that it gave vendors (typically NPs and RNs) specific diagnostic criteria to look for when conducting in-home HRAs of MA plan members, such as major depressive disorder, but the clinical assessment for some of the diagnoses “relie[d] on laboratory evaluation, diagnostic imaging, or other diagnostic testing” when making the diagnoses for the first time.
That would have been fine, except that Cigna did not require the vendors conducting the in-home HRAs “to have the equipment available to conduct such laboratory testing, imaging, or other diagnostic testing when diagnosing these conditions.” In other words, the vendors hired by Cigna to perform the HRAs didn’t have the diagnostic equipment and test results that Cigna itself acknowledged were necessary to make the diagnoses that Cigna submitted to CMS for risk adjustment payments for the first time. Cigna knew that this was the case.
Second, Cigna admitted that in thousands of instances, the in-home assessments conducted by their vendors “resulted in diagnoses of Cigna members, and the submission to CMS of resulting risk-adjusting diagnosis codes, that had not been previously reported to CMS by Cigna from any other encounter with a healthcare provider during the year in which the home visit occurred.” In other words, the HCC diagnoses Cigna captured through the in-home HRAs were isolated, stand-alone diagnoses that no other provider, not even the MA plan members’ PCPs or specialists, had themselves diagnosed or treated during the entire service year.
Miraculously, it seems only the vendor NPs and RNs, without the necessary diagnostic equipment or lab results, were diagnosing the serious medical conditions reported by Cigna in the data sent to CMS for risk adjustment payments. DOJ likely viewed this as a red flag in the corresponding Medicare claims data and a violation of ICD-10 Guideline § IV.J, which requires that HCC diagnoses “require or affect patient care, treatment, or management.”
Third, Cigna admitted that, based on the in-home HRAs, in “many instances,” it reported to CMS diagnoses for MA plan members where the forms used to document the encounters “did not include clinical information that corroborated the diagnoses and did not reflect that the diagnostic testing necessary to make the diagnosis for the first time had been performed.”
In other words, the clinical documentation simply did not support the HCC diagnoses that Cigna submitted for risk adjustment payments through the in-home HRA program. This is a clear violation of basic coding guidelines: diagnosis codes are only valid if they are documented in the medical record due to a face-to-face encounter between a patient and a qualified provider.
Why are Cigna’s admissions important as part of this FCA settlement? One reason is that, given the tendency of defendants in FCA cases to say that they were “strong-armed” by the DOJ into a settlement, Cigna’s admissions serve as a voluntary acknowledgment of wrongdoing, which may deter others from engaging in similar misconduct. But another reason lies in the U.S. Supreme Court’s decision in the SuperValu case this past June.
As I discussed in an earlier NAMAS Auditing Tip, the U.S. Supreme Court in SuperValu held that ambiguity in Government statutes, regulations, and guidance does not by itself defeat the knowledge element in False Claims Act cases. If a defendant is “aware of a substantial and unjustifiable risk” that its interpretation of ambiguous CMS guidance is incorrect but proceeds to submit claims based on that interpretation anyway, that is sufficient to show that a defendant knowingly submitted a false claim.
Are the Government’s rules, regulations, and guidance relating to in-home HRAs and valid HCC diagnoses more generally ambiguous? In some respects, absolutely. After all, what, exactly, does the federal regulation, 42 C.F.R. § 422.504(l), mean that all diagnosis data submitted to CMS must be “accurate, truthful, and complete”? Accurate to whom, and truthful according to what standard? Is the data “complete” if diagnoses that an NP suspects an MA plan member might have based on in-home observations are not captured? And how soon after an in-home assessment must diagnoses captured from these encounters impact the care, treatment, or management of the MA plan member? DOJ clearly interprets this ICD Guideline to mean that it must impact care within the service year of the HRA encounter, but that is not what the guideline itself states.
Cigna’s admissions help resolve these and other ambiguities in CMS’s rules, regulations, and guidance because it establishes a clear industry norm for when HCC diagnoses captured from in-home HRAs, can be legitimately submitted to CMS for MA risk adjustment payments.
As the Supreme Court acknowledged in the SuperValu decision, one way to resolve ambiguities in Government guidance is to examine how the industry itself interprets that guidance. If key industry players interpret ambiguous guidance in a manner consistent with the DOJ’s own interpretation, then that interpretation is correct. And, pursuant to the Supreme Court, a defendant who is aware of this industry norm but submits claims at odds with it can be deemed to have acted with the requisite knowledge for purposes of establishing False Claims Act liability.
Therefore, Cigna’s acknowledgment of wrongdoing in the recent settlement with DOJ is significant not only because it is a rare instance of an FCA defendant publicly admitting to misconduct but also because it helps to establish an industry norm for the proper interpretation of ambiguous CMS guidance relating to in-home HRAs.
The $172 million that Cigna is paying pursuant to this settlement will, therefore, not only help replenish the public Medicare coffers but make it easier for DOJ (and whistleblower attorneys like me) to establish FCA liability against defendant MA Plans, providers, and vendors who submit claims for MA risk adjustment payments at odds with this industry norm going forward.
Your next steps:
- Contact NAMAS for full auditing, documentation, and compliance consultation.
- Read more blog posts to stay updated on the 2023 Revisions to the 2021 E&M Guidelines.
- Contact Mr. Ed Baker for more information on his services.
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