The whistleblowersuit is one of at least 18 cases that accuse Medicare Advantagemanaged-care plans of ripping off the government by exaggeratinghow sick its patients were.

Group Health Cooperative in Seattle, one of the nation's oldestand most respected nonprofit health insurance plans, is accused ofbilking Medicare out of millions of dollars ina federal whistleblower case.

Teresa Ross, a former medical billing manager at the insurer,alleges that it sought to reverse financial losses in 2010 byclaiming some patients were sicker than they were, or by billingfor medical conditions that patients didn't actually have. As aresult, the insurer retroactively collected an estimated $8 millionfrom Medicare for 2010 services, according to the suit.

Ross filed suit in federal court in Buffalo, N.Y., in 2012, butit remained under a court seal until July and is in the initialstages. The suit also names as defendants two medical codingconsultants, consulting firm DxID of East Rochester, N.Y., andIndependent Health Association, an affiliated health plan inBuffalo, N.Y. All denied wrongdoing in separate court motions filedlate Wednesday to dismiss the suit.

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The Justice Department has thus far declined to take over thecase, but said in a June 21 court filing that "an activeinvestigation is ongoing."

The whistleblower suit is one of at least 18 such casesdocumented by KHN that accuse Medicare Advantage managed-care plansof ripping off the government by exaggerating how sick its patientswere. The whistleblower cases have emerged as a primary tool forclawing back overpayments. While many of the cases are pending incourts, five have recovered a total of nearly $360 million.

"The fraudulent practices described in this complaint are aproduct of the belief, common among MA organizations, that the lawcan be violated without meaningful consequence," Ross alleges.

Medicare Advantage plans are a privately run alternative totraditional Medicare that often offer extra benefits such as dentaland vision coverage, but limit choice of medical providers. Theyhave exploded in popularity in recent years, enrolling more than 22million people, just over 1 in 3 of those eligible forMedicare.

Word of another whistleblower alleging Medicare Advantagebilling fraud comes as the White House is pushing to expandenrollment in the plans. On Oct. 3, President Donald Trump issuedan executive order that permits the plans to offer a range of newbenefits to attract patients. One, for instance, is partly covering the cost of Apple Watches as an inducement.

Group Health opened for business more than seven decades ago andwas among the first managed-care plans to contract with Medicare.Formed by a coalition of unions, farmers and local activists, theHMO grew from just a few hundred families to more than 600,000patients before its members agreed to join California-based Kaiser Permanente. Thathappened in early 2017, and the plan is now called KaiserFoundation Health Plan of Washington. (Kaiser Health News is notaffiliated with Kaiser Permanente.)

In an emailed statement, a Kaiser Permanente spokespersonsaid: "We believe that Group Health complied with the lawby submitting its data in good faith, relying on therecommendations of the vendor as well as communications with thefederal government, which has not intervened in the case at thistime."

Ross nods to the plan's history, saying it has "traditionallycatered to the public interest, often highlighting its efforts tosupport low-income patients and provide affordable, qualitycare."

The insurer's Medicare Advantage plans "have also traditionallybeen well regarded, receiving accolades from industry groups andMedicare itself," according to the suit.

But Ross, who worked at Group Health for more than 14 years injobs involving billing and coding, said that from 2008 through 2010GHC "went from an operating income of almost $57 million to anoperating loss of $60 million. Ross said the losses were "duelargely to poor business decisions by company management."

The lawsuit alleges that the insurer manipulated a Medicarebilling formula known as a risk score. The formula is supposed topay health plans higher rates for sicker patients, but Medicareestimates that overpayments triggered by inflated risk scoreshave cost taxpayers $30 billion over the past three yearsalone.

According to Ross, a GHC executive attended a meeting of theAlliance of Community Health Plans in 2011 where he heard from acolleague at Independent Health about an "exciting opportunity" toincrease risk scores and revenue. The colleague said IndependentHealth "had made a lot of money" using its consulting company,which specializes in combing patient charts to find overlookeddiseases that health plans can bill for retroactively.

In November 2011, Group Health hired the East Rochester firmDxID to review medical charts for 2010. The review resulted in $12million in new claims, according to the suit. Under the deal, DxIDtook a percentage of the claims revenue it generated, which came toabout $1.5 million that year, the suit says.

Ross said she and a doctor who later reviewed the charts found"systematic" problems with the firm's coding practices. In onecase, the plan billed for "major depression" in a patient describedby his doctor as having an "amazingly sunny disposition." Overall,about three-quarters of its claims for higher charges in 2010 werenot justified, according to the suit. Ross estimated that theconsultants submitted some $35 million in new claims to Medicare onbehalf of GHC for 2010 and 2011.

In its motion to dismiss Ross' case, GHC called the matter a"difference of opinion between her allegedly 'conservative' methodfor evaluating the underlying documentation for certain medicalconditions and her perception of an 'aggressive' approach taken byDefendants."

Independent Health and the DxID consultants took a similarposition in their court motion, arguing that Ross "seeks tomanufacture a fraud case out of an honest disagreement about themeaning and applicability of unclear, complex, and oftenconflicting industry-wide coding criteria."

In a statement, Independent Health spokesman Frank Sava added:"We believe the coding policies being challenged here were lawfuland proper and all parties were paid appropriately.

Whistleblowers sue on behalf of the federal government and canshare in any money recovered. Typically, the cases remain under acourt seal for years while the Justice Department investigates.

Kaiser HealthNews (KHN) is a national health policy news service. It is aneditorially independent program of the Henry J. Kaiser Family Foundation whichis not affiliated with Kaiser Permanente.

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