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Whistleblower lawsuit accuses Cigna of Medicare Advantage fraud

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A whistleblower lawsuit accuses Cigna of receiving “billions” in overpayments for its Medicare Advantage plans. The amended complaint, filed by the Department of Justice in the U.S. District Court for the Southern District of New York a year ago, was unsealed on Wednesday.

A former service provider for Cigna’s Medicare Advantage subsidiary alleged that the company sent providers to patients’ homes to conduct a health assessment, which was then improperly submitted to the Centers for Medicare and Medicaid Services for risk adjustment. The whistleblower was a former officer for Texas Health Management, a now-defunct company that worked with Cigna-Healthspring between 2012 and 2017.

Cigna acquired HealthSpring in 2012, and currently offers Medicare Advantage plans in 17 states under this brand.

Commercial insurers who offer Medicare Advantage plans receive a monthly capitated rate from CMS for each of their covered members, which they use to cover the cost of care. For older and sicker patients — who have higher risk scores — they receive a higher rate.

A patient’s risk score is based on diagnoses assigned to the patient in the prior year. To be submitted, a patient must have had a face-to-face encounter with a provider, and the patient must be cared for or assessed.

According to the plaintiff, Cigna ran an assessment program that sent nurses and nurse-practitioners to patients’ homes, where they were expected to see 35 patients per week and generate 20 or more diagnoses per visit. They were reportedly not allowed to provide care, prescribe medications or make referrals to specialists.

The complaint described the program as “…a  data-gathering exercise used to improperly record lucrative diagnoses to fraudulently raise risk cores and increase payments from CMS.”

According to court documents, Cigna-HealthSpring used analytics to sort members into different priority categories based on their medical histories. The company also reportedly sought to recruit primary care physicians to complete the assessments, at one point offering a $150 bonus per completed exam to provider who performed a certain volume of assessments each year

The Department of Justice decided not to intervene in the case in February. Specifically, the government declined to claim that Cigna violated the False Claims Act by conducting nurse home visits that did not involve providing medical treatment.

Cigna did not respond to requests for comment at the time of publication.

This isn’t the first time a Medicare Advantage plan has come under scrutiny for payments.

Last year, the Office of Inspector General reviewed “billions” in estimated Medicare Advantage payments that raised concerns. Looking at 2016 encounter data, the OIG found that Medicare Advantage Organizations almost always used chart reviews to add diagnoses, and that diagnoses reported only on chart reviews — without any service records — resulted in roughly $6.7 billion in risk-adjusted payments for 2017.

Of that, an estimated $2.7 billion in payments were based on diagnoses that did not link to a specific service provided to the member.

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Judge rules against hospitals in price transparency lawsuit

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A federal judge ruled against hospital groups in their lawsuit challenging new price transparency rules. The American Hospital Association and other hospital groups filed suit in December after the Department of Health and Humans Services finalized a rule that would require hospitals to disclose price information, including negotiated prices with insurers.

Hospitals claimed that the regulation was beyond HHS’ authority, that it was a violation of commercial speech, and that disclosing price information would actually lead to higher costs. Insurers also pushed back against the regulation, though none joined the lawsuit.

U.S. District Judge Carl Nichols dismissed these arguments, ruling in favor of HHS. He also dispelled concerns that disclosing negotiated prices could chill negotiations between hospitals and insurers, pointing out that patients still see those prices in their explanation of benefits.

“Plaintiffs are essentially attacking transparency measures generally, which are intended to enable consumers to make informed decisions; naturally, once consumers have certain information, their purchasing habits may change, and suppliers of items and services may have to adapt accordingly,” he wrote in his decision.

Regulators have been pushing for greater transparency since the Bush administration. A portion of the Affordable Care Act required hospitals publish a list of standard charges for items and services. States also pushed hospitals to publish these chargemasters, which provide list prices for each service.

But while chargemaster prices may be useful for negotiating with insurers, the listed prices bear little resemblance to what patients actually pay — or should pay.

When the Centers for Medicare and Medicaid Services revisited pricing rules, it added that not only must hospitals publish list prices, but they must also post negotiated rates with insurers, cash discount prices, as well as the minimum and maximum negotiated charges for 300 “shoppable” services.

The American Hospital Association said it will appeal the case and seek expedited review.

“We are disappointed in today’s decision in favor of the administration’s flawed proposal to mandate disclosure of privately negotiated rates,” the AHA said in a statement. “The proposal does nothing to help patients understand their out-of-pockets costs. It also imposes significant burdens on hospitals at a time when resources are stretched thin and need to be devoted to patient care.”

The new requirements are slated to go into effect in January.

The case, The American Hospital Association et al v. Alex M. Azar II, Secretary of Health and Human Services, was filed in the U.S. District Court for the District of Columbia.

 

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Sutter Health settles for $575M in antitrust lawsuit

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Sutter Health will pay $575 million to settle allegations that the Sacramento-based health system engaged in anticompetitive practices that led to higher costs for patients.

One of Northern California’s largest health systems, Sutter Health employs roughly 12,000 physicians, and has 24 hospitals and 36 surgery centers in its network.

Though the California Attorney General and Sutter Health previously announced the settlement in October, they did not disclose the terms until Dec. 20. If approved by the court, the sweeping terms of the settlement may set a tone for other large health systems across the state.

“This first-in-the-nation comprehensive settlement should send a clear message to the markets: if you’re looking to consolidate for any reason other than efficiency that delivers better quality for a lower price, think again,” California Attorney General Xavier Becerra said in a news release.

Per the terms, Sutter Health must pay $575 million to cover class action compensation and legal costs. The health system must also cease all-or-nothing contracting deals with payers, limit what it charges for out-of-network services, work with a court-approved compliance monitor for at least 10 years, and must allow insurers to provide plan members with information on pricing, quality and cost. The nonprofit must also meet clearly set definitions of clinical integration, meaning “…it must meet strict standards beyond regional similarities or the mere sharing of an electronic health record, and must be integrating care in a manner that takes into consideration the quality of care to the patient population,” according to the settlement.

Flo De Benedetto, Sutter Health’s general counsel, said in a statement that the organization was “committed to keeping our care connected so patients continue to receive affordable, high-quality, personalized and coordinated care. Despite the increasing cost of care and operating in high-wage markets, we remain focused on making healthcare more affordable for our patients.

“We were able to resolve this matter in a way that enables Sutter Health to maintain our integrated network and ability to provide patients with access to affordable, high-quality care. Together with the Attorney General, the parties selected an experienced monitor who will oversee the agreement, which specifies parameters for contracting between Sutter Health and insurance companies going forward,” Di Benedetto stated.

In the future, Sutter Health will have to evaluate future capital investments based on the impact of the settlement, she added. According to Sutter Health’s unaudited financial statements, the nonprofit finished the quarter ending Sept. 30 with an operating loss of $613 million, down from a net profit of $49 million during the third quarter last year.

The suit, originally brought against Sutter Health by the United Food and Commercial Workers International Union and Employers Benefit Trust in 2014, alleged that Sutter Health used its market dominance to prevent insurers from carving out narrower networks that would exclude some of its facilities. The case was later consolidated with a separate lawsuit filed by California Attorney General Xavier Becerra in 2018.

According to the complaint, Sutter Health acquired significant market concentration after its acquisition of Summit Medical Center in 2000.  The California Attorney General’s complaint alleged that shortly after, Sutter Health began bundling together its providers, requiring payers to contract for them on a system-wide basis.

Sutter also allegedly used other measures to prevent the formation of narrow networks that might exclude some of its providers, including high out-of-network costs and provisions that restricted health plans from putting its providers in any tier other than the most favored benefit tier. The health system also used confidentiality provisions that restricted health plans’ ability to provide comparisons about price and quality to plan members, according to the complaint.

The settlement must be approved by the court before it goes into effect, with a hearing set for Feb. 25.

 

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Johnson & Johnson ordered to pay $572M in Oklahoma opioid lawsuit

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A court in Oklahoma has ordered Johnson & Johnson to pay more than half a billion dollars over allegations that it helped to fuel the opioid crisis.

The Cleveland County District Court in Norman, Oklahoma, issued a civil judgment requiring the drugmaker to pay $572 million. Judge Thad Balkman ruled that J&J had created a “public nuisance” in the state.

The company said it plans to appeal the decision, which it called “flawed.”

“Janssen did not cause the opioid crisis in Oklahoma, and neither the facts or the law support this outcome,” J&J general counsel Michael Ullman said in a statement, referring to the drugmaker’s Janssen Pharmaceutical Companies subsidiary. “We recognize the opioid crisis is a tremendously complex public health issue, and we have deep sympathy for everyone affected.”

Shares of J&J were up nearly 2 percent in after-hours trading on the New York Stock Exchange following the ruling.

In a note to investors, SVB Leerink analyst Ami Fadia wrote that although the amount is higher than the $270 million that Purdue Pharma had to pay, or the $85 million judgment against Teva Pharmaceutical Industries, it is still much lower than the $17.2 billion that Oklahoma Attorney General Mike Hunter had been seeking. Moreover, citing numbers from IQVIA, Fadia wrote that J&J’s opioid sales historically were lower than those of Purdue and Teva.

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With recusal, judge in proton beam therapy class action lawsuit shames UHC

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In the court of public opinion, health insurance companies rank poorly. And now in a Florida court, the nation’s largest health insurance company — UnitedHealthcare — isn’t faring that well either.

Last week, the founder of a Miami-based law firm filed a class-action lawsuit against the Minnesota insurer alleging that UHC has denied covering proton beam radiation therapy treatment for prostate cancer patients in the past even though the therapy has been proven to be effective. On Monday, the judge assigned to the case issued a rather interesting recusal that appears to buffet the position of the plaintiff in the case. He called the decision to deny proton therapy treatment to patients “immoral and barbaric.”

The plaintiff in the case is Richard Cole, an attorney who is being represented by Colson Hicks Eidson, which filed the lawsuit.  The complaint alleges that until Jan. 1, UHC had a policy of blanket denial of coverage for proton beam radiation therapy treatment for prostate cancer patients irrespective of an individual patient’s situation or medical need — this applied to any patient 19 or older. UHC called the treatment experimental and unproven and so excluded it for coverage – the FDA approved protom beam radiation therapy back in 1988.

The complaint also alleges the insurer’s past policy of denial was based not on evidence — given that there are multiple clinical studies to prove the therapy’s efficacy — but because proton beam therapy treatment is more expensive than traditional radiation therapy. It notes that the the reversal of UHC’s policy on the therapy happened without any significant clinical developments between late May 2018 when Cole, the plaintiff’s application for pre-authorization was denied and Jan. 1 when UHC began to cover proton beam therapy treatment for patients 19 and older.

Thus, the lawsuit seeks to retroactively win back reimbursement for Cole and other patients who were denied coverage until UHC’s policy changed.

On Monday, the judge assigned to the case — U.S. District Judge Robert Scola Jr. — announced that he cannot fairly judge the case given that he himself availed of proton beam radiation therapy as a prostate cancer patient.

“It is undisputed among legitimate medical experts that proton radiation therapy is not experimental and causes much less collateral damage than traditional radiation,” the judge wrote in the recusal. “To deny a patient this treatment, if it is available, is immoral and barbaric.”

The recusal also provides a personal example of UHC doing exactly what the plaintiff alleges — deny covering the therapy for a patient who sought it. The judge writes,

Further, a very close friend of the Court was diagnosed with cancer in 2015. He opted to have proton radiation treatment at M.D. Anderson in Houston. His health care provider, United Healthcare, refused to pay for the treatment. Fortunately, he had the resources to pay $150,000 for the treatment and only upon threat of litigation did United Healthcare agree to reimburse him.

 

 

 

 

 

Whatever the ultimate outcome is in the case, it’s clear that the judge’s recusal itself delivers a really strong message. When asked to comment on the lawsuit and the recusal, a UHC spokeswoman offered up only this in an email:

UnitedHealthcare bases its medical policies and coverage decisions – including for proton beam therapy – on the prevailing published clinical and scientific evidence.

It goes without saying that the response — more of a non sequitur — didn’t really answer the question raised by the lawsuit or even Judge Scola’s recusal.

The judge originally assigned to the case — U.S. District Judge Federico Moreno — previously recused himself citing his friendship with Cole, the plaintiff, making Scola Jr. the second judge to recuse.

Cole has pledged to donate his portion of any potential proceeds he receives — as an individual in the class action should a favorable verdict be handed down — to the Miami Cancer Institute.

“My hope is that this lawsuit will provide relief to thousands of patients nationwide who are battling prostate cancer and were denied benefits they were rightly entitled to,” Cole stated in a news release last week that accompanied the filing of the lawsuit.

The complaint couldn’t specifically say how many patients were denied coverage but believes it could be in the thousands given UHC provides coverage for many employer-sponsored health plans in the U.S..

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