UnitedHealth Group Inc. was sued by the Trump Administration, which claims the insurer’s California Medicare program made false or fraudulent claims for payments after failing to adjust for the health risk of patients enrolled in its plan.

The Justice Department said Tuesday that it joined an eight-year-old whistle-blower lawsuit filed under the False Claims Act that focused on payments made to the company for its Medicare Advantage Plan. Medicare Advantage organizations, like the one UnitedHealth runs in California, receive fixed monthly payments for each enrollee. Those payments are based, in part, on patient-risk scores that weigh their medical conditions in the previous year.

Medicare Advantage organizations generally receive higher payments from the Centers for Medicare & Medicaid Services if they submit diagnoses showing more severe conditions for patients, which must be supported by medical records, according to the complaint. Since 2005, UnitedHealth has turned a “blind eye” to reviews of patient charts by one of its largest health-care providers, the U.S. alleged.

“Since 2005, UnitedHealth knew that many diagnosis codes that it submitted to the Medicare Program for risk adjustment were not supported and validated by the medical records of its enrolled beneficiaries,” according to the complaint filed Monday in federal court in Los Angeles. In February, the U.S. joined a related lawsuit filed by a whistle-blower in California alleging that UnitedHealth defrauded the Medicare program.

UnitedHealth shares fell 45 cents to $174.14 in New York Stock Exchange trading Tuesday, after earlier declining as much as 2.5 percent.

UnitedHealth rejected the U.S. claims, with spokesman Matt Burns saying in an emailed statement that the company and its leaders are confident they complied with Medicare Advantage rules and were transparent in how they interpreted the government’s “murky policies.”

Private Alternative

The Medicare Advantage program is a privately run alternative to the traditional U.S. Medicare program for the elderly and disabled. About a third of Medicare beneficiaries are now covered by Medicare Advantage, in which private insurers provide coverage in return for contractual monthly payments.

Last year, Medicare Advantage units of UnitedHealth sued CMS and the Department of Health and Human Services over 2014 regulations on when insurers must return risk-adjusted overpayments. Lawmakers require CMS to adjust monthly payments to Medicare Advantage plans to account for risk factors such as age or health status, to ensure “actuarial equivalence” between traditional Medicare and Medicare Advantage plans, according to the complaint.

The complaint, which seeks to block the regulations, alleges that CMS unfairly requires Medicare Advantage insurers to confirm diagnostic codes by reviewing underlying medical charts, while not conducting such reviews under traditional Medicare. Under this standard CMS underpays for care by Medicare Advantage plans compared to payments for the same patient under Medicare, UnitedHealth claims.

On March 31, a federal judge in Washington refused the government’s request to dismiss the lawsuit.

The False Claims Act allows whistle-blowers to sue companies on behalf of the government and share in any recovery. The lawsuits, which are filed under court seal, are given to the Justice Department, which may investigate for years before deciding whether to intervene.

The cases are U.S. ex rel. Swoben v. Secure Horizons, 09-cv-5013, U.S. District Court, Central District of California (Los Angeles); U.S. ex rel. Poehling v. UnitedHealth Group, 16-cv-8697, Central District of California (Los Angeles); and UnitedHealth v. Price, 16-cv-157, U.S. District Court, District of Columbia.


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