A former officer of a Cigna contractor claims the insurer hatched a scheme to submit invalid diagnostic codes and filed the now-unsealed qui tam action in 2017
In a case that could provide a cautionary tale for clinical laboratories, a federal whistleblower lawsuit alleges that Cigna, through its HealthSpring subsidiary, “received billions in overpayments from the federal government” in a scheme involving the insurer’s Medicare Advantage plans. The Qui tam (whistleblower) lawsuit was filed by Robert A. Cutler, a former officer of Cigna contractor Texas Health Management LLC (THM), under the federal False Claims Act.
Cutler alleged that “Cigna-HealthSpring has knowingly defrauded the United States through an intentional and systematic pattern and practice of submitting to CMS invalid diagnosis codes derived from in-home health assessments.” He claimed this took place “from at least 2012 until at least 2017,” and likely thereafter.
Cigna has denied the allegations. “We are proud of our industry-leading Medicare Advantage program and the manner in which we conduct our business,” the insurer stated in an email to HealthPayerIntelligence. “We will vigorously defend Cigna against all unjustified allegations,” Cigna stated.
As the lawsuit explains, Medicare Advantage (MA) plans are administered by private insurers under Medicare Part C. “Rather than pay providers directly based on the medical services provided, Medicare Part C pays MA Organizations a monthly capitated rate for each covered beneficiary, and tasks the MA Plan with paying providers for services rendered to plan members,” the lawsuit states. “MA insurers are generally paid more for providing benefits to beneficiaries with higher-risk scores—generally older and sicker people—and less for beneficiaries with lower-risk scores, who tend to be younger and healthier.”
The lawsuit notes that CMS relies on information—specifically ICD codes—from the insurers to calculate the risk scores.
Cigna’s 360 Program as Described in Lawsuit
Cutler alleged that Cigna defrauded CMS through its “360 Program,” in which primary care providers (PCPs) were encouraged to perform enhanced annual wellness visits that included routine physical exams. He claimed that “Cigna-HealthSpring designed the program so that, in practice, the 360 assessment was a mere data-gathering exercise used to improperly record lucrative diagnoses to fraudulently raise risk scores and increase payments from CMS.”
Cigna-HealthSpring, he alleged in the court documents, offered PCPs financial bonuses to perform the 360 program exams, especially on patients deemed most likely to yield high-risk scores. However, many clinicians declined, so the insurer recruited third-party contract providers, including THM, to send nurse practitioners (NPs) or registered nurses (RNs) to the homes of MA plan members.
For each visit, the NPs and RNs were given health reports listing the beneficiary’s previous diagnoses. “Cigna-HealthSpring intended the document to serve as a ‘cheat-sheet’ list of conditions and diagnoses it expected 360 contractors to capture during the in-home visit,” Cutler alleges. “The list of diagnoses did not indicate the date they were reported or any other information concerning their status.”
During each visit, which typically lasted 30-60 minutes, “NPs and RNs relied primarily on the patient’s self-assessment, i.e., subjectively reported information, as well as current medications to the extent available and, during certain time periods and for certain plan members, limited [clinical] laboratory findings,” Cutler alleged.
NPs were expected to record 20 or more diagnoses per visit, he wrote, including diagnoses based on “weak links” involving medications. “For example, Cigna-HealthSpring encouraged contractors to record atrial fibrillation, deep vein thrombosis, and pulmonary embolus based on the presence of certain classes of anti-coagulation medications on members’ medication lists or in their homes,” he stated.
He also alleged that “Cigna-HealthSpring, in purposeful violation of CMS rules, designed its 360 form to force NPs to capture diagnoses that were uncertain, probable, or merely suspected.”
These diagnoses were subsequently submitted as risk-adjustment data to CMS, he alleged, adding up to “hundreds of thousands of false claims from its six contractors during the relevant period. Although the exact amount will be proven at trial, the United States has paid billions of dollars in improper, inflated payments to Defendants under the MA Plan as a result of this scheme.”
The graphic above is taken from an AARP article, titled, “Medicare Under Assault from Fraudsters,” which states, “The amount of tax dollars that are lost each year to Medicare fraud and waste is greater than the entire annual budget of some of the federal government’s most important programs and departments.” Clinical laboratories also are in danger of being drawn into the federal government’s fraud investigations which can be disruptive to business and revenues. (Graphic copyright: AARP.)
The Federal False Claims Act “allows a private citizen to step into the shoes of and pursue a claim on behalf of the government,” explained the Boyers Law Group of Coral Gables, Fla., in an article for HG.org, which states, the lawsuit “may proceed with or without the assistance of the government.”
If the government chooses to intervene, the whistleblower, known formally as the “relator,” can receive 15% to 25% of the proceeds recovered in the action, the law firm explained in another article for HG.org, adding that, in most cases, the government does not intervene, which increases the potential award to 30%.
In the Cigna case, the US Attorney’s office notified the court on Feb. 25, 2020, that the government had decided not to intervene “at this time.”
Significance for Clinical Laboratories
Regardless of how this case proceeds, medical laboratory managers should remember that they are subject to legal action if internal whistleblowers identify policies or procedures that violate federal fraud and abuse laws. And because it involves coding, it is also a reminder of the importance of documenting diagnoses and clinical laboratory test orders as protection against fraud allegations.
Another benefit of carefully documenting each lab test order is that labs can make the information available when auditors from government or private payers show up and want documentation on the medical necessity of each lab test claim.
Charges against this life science company executive include healthcare fraud as well as the first COVID-19 related securities fraud
In the first securities fraud prosecution involving clinical laboratory COVID-19 testing, the US federal Department of Justice (DOJ) charged the president of a Sunnyvale, Calif., life sciences biotechnology company with participating in a scheme to mislead investors and also to commit healthcare fraud, stated a DOJ press release.
The DOJ charged Mark Schena, PhD, president of Arrayit Corporation, with one count of securities fraud and one count of conspiracy to commit healthcare fraud related to submissions of more than $69 million in claims for allegedly unnecessary medical laboratory allergy and COVID-19 tests, the Associated Press (AP) reported.
“The defendant allegedly defrauded Medicare through illegal kickbacks and bribes, and then turned to exploiting the pandemic by fraudulently promoting an unproven COVID-19 test to the market,” said Brian Benczkowski, DOJ Assistant Attorney General, Criminal Division, in the DOJ press release.
According to the Washington Post, Arrayit allegedly bundled its finger-stick allergy test with the COVID-19 test kit.
Authorities Question Bundling of Tests, Claims
An affidavit in support of the criminal complaint stated that Arrayit was promoting “‘microarray technology’ for allergy and COVID-19 testing that allows for laboratory testing on a finger prick drop of blood that is placed on a paper card and sent by mail to Arrayit’s laboratory.”
The government’s investigation actually goes back two years to a time when Arrayit allegedly submitted or caused submission of $5.9 million in Medicare lab test claims and $63 million in lab test claims to private insurers through bribes and kickbacks, MedTech Dive reported.
The company’s clinical laboratory test for COVID-19 failed to receive US Food and Drug Administration Emergency Use Authorization (EUA), because it did not have the level of specificity and sensitivity required, MedTech Dive noted.
“Schena offered an Arrayit COVID-19 test in order to obtain Medicare beneficiary information that then was used to submit false and fraudulent claims for an unrelated and far more expensive allergy test for 120 allergens,” the DOJ complaint stated, adding, “Schena and others transmitted false and fraudulent e-mail communications and marketing materials about the Arrayit COVID-19 test and purported need to bundle the COVID-19 test with Arrayit’s allergy test, while never disclosing there were substantial questions about the accuracy of Arrayit’s COVID-19 test.”
Highlights of DOJ Charges
According to the DOJ press release:
Schena and others from 2018 through February allegedly “paid kickbacks and bribes” to recruiters and doctors to run a medical laboratory test for allergy screening (with 120 allergens) on patients “regardless of medical necessity and then make numerous misrepresentations to potential investors.”
News releases and social media promoted partnerships with companies and government agencies that either “did not exist” or were minor.
As the pandemic heated up, Arrayit representatives “made false claims concerning Arrayit’s ability to provide accurate, fast, reliable and cheap COVID-19 tests in compliance with state and federal regulations,” prosecutors said.
According to the DOJ’s complaint, Schena told investigators developing a test for COVID-19 was “like a pastry chef” who switches from selling “strawberry pies” to selling “rhubarb and strawberry pies.”
“The allure of cheap reliable alternatives to today’s standard blood tests panels has captured the imagination of the healthcare industry, making such alternatives a prime subject for fraudsters,” said David Anderson (above), US Attorney for the Northern District of California, in the DOJ press release, adding, “The scheme described in the complaint, in which the defendant allegedly leveraged this allure by appending the fear of the COVID-19 pandemic, amounts to a cynical multi-million-dollar hoax.” (Photo copyright: San Francisco Examiner.)
DOJ Prioritizing Coronavirus Fraud
US Attorney General William Barr earlier this year called for prioritization of investigation and prosecution of coronavirus fraud schemes, noted a DOJ statement, which pointed out that these types of fraud schemes leverage COVID-19 testing information generated by healthcare providers to fraudulently bill Medicare for other tests and procedures.
In April, Dark Daily’s sister publication, The Dark Report (TDR), covered one such kickback scheme in Georgia the DOJ was investigating. In that case, a Georgia man allegedly participated in a fraudulent kickback scheme in which clinical laboratory companies paid him on a per-test basis for referring cancer genetic, coronavirus, and respiratory pathogen panel tests to labs, TDR noted.
Clearly, the DOJ is stepping up its investigation into COVID-19 test fraud. Thus, medical laboratory leaders and pathologists should remain vigilant, as they are likely to observe more enforcement activity as the pandemic persists.
Medical laboratory leaders need to take opportunities to stay abreast of government and payer activity, particularly as payer audits become tougher, say legal experts
Even compliant clinical laboratories and anatomic pathology groups are reporting tougher audits and closer scrutiny of the medical lab test claims they submit for payment. This is an unwelcome development at a time when falling lab test prices, narrowing networks, and more prior-authorization requirements are already making it tough for labs to get paid for the tests they perform.
Clinical laboratory leaders can expect continued scrutiny of
their labs’ operations and financials as government and commercial payers move
forward with invasive programs and policies designed to ferret out fraud and
bad actors.
Federal officials are focusing their investigations on healthcare providers who mismanage or inappropriately use Medicare and Medicaid programs, while commercial payers are closely scrutinizing areas such as genetic testing prior authorization, say healthcare attorneys with Cleveland Ohio-based McDonald Hopkins, LLC.
“The government is looking at fraud, waste, and abuse, and all the different ways they come into play,” said Elizabeth Sullivan, Esq., a Member and Co-Chair of the firm’s Healthcare Practice Group, in an exclusive interview with Dark Daily. “We anticipate there will be more enforcement [of fraud and abuse laws] centered around different issues—anything that can be a false claim.”
Specifically, government officials will key in on violations of the Stark Law, EKRA (the Eliminating Kickback in Recovery Act of 2018), and other anti-kickback statutes and laws, Sullivan said.
“And clinical laboratories, by virtue of the type of
services and service arrangements they offer, will continue to be a target,” she
added.
Medical laboratory leaders also must prepare for aggressive tactics by insurance companies. “On the commercial side, payers are getting more aggressive and more willing to take things to ligation if they don’t get what they want and don’t see a settlement that satisfies their concerns over issues,” said Courtney Tito, Esq., also a Member with McDonald Hopkins, in the Dark Daily interview.
Current Investigations Likely to Impact Clinical
Laboratories
Sullivan and Tito advise clinical labs to be aware of the
following issues being fast-tracked by government and private payers:
EKRA (Eliminating Kickback in Recovery Act of 2018).
The TPE audits program, according to CMS, is focused on providers with high claim error rates or unusual billing practices. During a TPE, a Medicare administrative contractor (MAC) works with a provider to identify and correct errors.
“The TPE audits are real hot right now. We are seeing a lot
of clients go through this,” Tito said.
Feds Crack Down on Genetic Testing Fraud Schemes
Genetic testing is another “hot button” issue for
enforcement by government and private payers, Sullivan and Tito state.
CMS is taking action against testing companies and
practitioners who submitted more than $1.7 billion in claims to Medicare, the
statement added.
The scheme involved medical laboratories conducting the genetic tests, McDonald Hopkins noted in an Alert about the DOJ investigation. The alert described how the scam operated:
Scam recruiters approached Medicare
beneficiaries at health fairs;
In exchange for a DNA sample (in the form of a
cheek swab) and a copy of the victim’s driver’s license, the “representative”
offered a free genetic test;
Representatives allegedly asked the seniors’
doctors to sign-off on test orders. If the seniors’ physicians refused, the
scammers offered kickbacks to doctors already in their group;
Clinical laboratories that performed the tests
were reimbursed from Medicare and, allegedly, shared the proceeds with the scammers.
“Although these opportunities may seem appealing as an
additional revenue source for providers, it is always important to review the
regulatory requirements as well as the potential anti-kickback statute and
Stark implications for any new arrangement,” Sullivan and Tito wrote in the McDonald
Hopkins Alert article.
Criminal Behavior in CMS Programs
Effective Nov. 4, 2019, CMS issued a final rule intended to stop fraud before it happens by keeping “unscrupulous providers” out of the federal healthcare programs in the first place, states a CMS news release.
Additionally, EKRA establishes “criminal penalties for unlawful payments for referrals to recovery homes and clinical treatment facilities,” Dark Daily recently reported. However, as the e-briefing points out, it is unclear whether EKRA applies to clinical laboratories.
Nevertheless, Sullivan points out that, “Even without EKRA,
the anti-kickback statute applies to any arrangement between individuals. And,
it is good to have an attorney look at those arrangements. What your sales reps
are doing in the field, how they are communicating, and their practices warrant
oversight. EKRA just makes it all the more important.”
During an upcoming Dark Daily webinar, attorneys Elizabeth Sullivan (left) and Courtney Tito (right) of McDonald Hopkins, LLC, will advise clinical laboratory leaders and financial staff on how to prepare for future aggressive payer audits, rigid enforcement of fraud and abuse laws, and more. (Photos copyright: LinkedIn/Dark Daily.)
Clinical Laboratories Need Compliance Plan, Focus on
Payers
With so many legal requirements and payer programs, Sullivan
advises medical labs and pathology group practices to work with resources they
trust and to have a compliance plan at the ready. “Have resources in place,
including but not limited to a compliance officer, a committee, and someone who
is spending time on these issues. Monitoring government enforcement and payer
activity is the most critical,” she said.
To assist labs in remaining fully informed on these critical
compliance topics, and the federal government’s latest legislation to combat
fraud, Dark Daily is offering a webinar on November 20th at 1pm Eastern
time. Sullivan and Tito will offer their insights and advice on how labs should
prepare for CMS’ battle to reign in fraud and commercial payers’ increased
scrutiny into prior authorizations.
Clinical laboratory leaders, compliance officers, and
finance staff will benefit greatly from this crucial resource.
Could local and federal prosecutors ask clinical laboratories to disclose information on their client physicians’ test-ordering activities when investigating medical errors?
Are physicians facing greater risk of criminal indictments when one of their patients dies, and investigators find that physician impairment or inappropriate medical treatments contributed to the patient’s death? Could clinical laboratories be drawn into federal investigations of their client physicians?
The healthcare industry is responding to often highly-publicized
accusations of alleged wrongful care with extensive investigations of the
doctors involved. And following suit, local and federal prosecutors increasingly
seem willing to bring criminal charges against those physicians.
Thus, it behooves clinical laboratories to be aware of client physicians who may be over-ordering lab tests or regularly ordering inappropriate tests for their patients. At what point might criminal investigators hold medical laboratories accountable for not notifying authorities about lab test utilization patterns by physicians who could be reasonably understood to be putting their patients at risk of harm?
Doctors Charged in Three Cases Involving Deaths of
Patients
In two separate reports, Fierce Healthcare covered three pending cases in which doctors are being charged in the deaths of their patients: article one covers a case is in Ohio; and article two covers cases in Arkansas and California. Charges were filed against:
William Husel, DO, an Ohio critical care specialist who was indicted for 25 counts of murder for allegedly intentionally ordering fatal drug overdoses, according to a statement by the Franklin County Prosecuting Attorney. He pleaded not guilty, the Associated Press reported.
Robert Levy, MD, an Arkansas pathologist who was indicted by a federal grand jury on “three counts of involuntary manslaughter” in the deaths of three patients, according to a statement by the US Attorney’s Office for the Western District of Arkansas. Levy pleaded not guilty at an arraignment in August, the Washington Post reported.
Thomas Keller, MD, a California neurosurgeon who was indicted in the deaths of five patients, which allegedly resulted from his overprescribing opioids and narcotics, according to a statement from the State of California Department of Justice. Keller pleaded not guilty to second-degree murder charges in Sonoma County Court, according to the Press Democrat.
US Representative Bruce Westerman, R-Ark. (above) told the Washington Post, “Of all the medical professionals, the person you really don’t want messing up is a pathologist. If you have cancer, you want to know about it. If you don’t have it, you don’t want to be treated for it.” (Photo copyright: United States Congress.)
Dark Daily’s sister publication The Dark Report (TDR) covered the year-long investigation of Arkansas Pathologist Robert Levy, MD, by the US Attorney’s Office for the Western District of Arkansas. (See TDR, “Arkansas Pathologist Faces Three Manslaughter Charges,” September 30, 2019.)
Levy served as the Chief of Pathology and Laboratory Medical Services for the Veterans Health Care System of the Ozarks in Fayetteville, Ark., from 2005 through 2018.
In a statement, the US Attorney’s Office Western District of
Arkansas said, “A federal grand jury … indicted Levy on twelve counts of wire
fraud, twelve counts of mail fraud, four counts of making false statements in
certain matters, and three counts of involuntary manslaughter.”
A fact-finding panel interviewed Levy in 2015 after reports
that he was under the influence of alcohol while on duty, stated the US
Attorney Arkansas, adding that Levy denied the allegations.
In addition to other charges, the US Attorney Arkansas
statement said, “The indictment charges Levy with three counts of involuntary manslaughter
for causing the death of three patients through entering incorrect and
misleading diagnoses and, on two occasions, by falsifying entries in the
patients’ medical records to state that a second pathologist concurred with the
diagnosis Levy had made. The indictment alleges that the incorrect and
misleading diagnoses rendered by Levy caused the deaths of three veterans.”
In a news conference covered by the Washington Post, Duane Kees, US Attorney for the Western District of Arkansas, Department of Justice (DOJ), said, “I don’t think anyone would ever have imagined that a pathologist would use his knowledge and expertise to do something like this.”
Clinical laboratory leaders know how important it is to have
quality processes to prevent misdiagnosis, mistakes, and inappropriate test
utilization. Now, lab leaders may want to be aware of the activities of their
client physicians as well.
During investigations involving harm to patients allegedly
at the hands of healthcare providers, information kept by medical laboratories
about the lab test ordering practices of their client physicians may become an
important resource to officials conducting inquiries.
This is important for clinical laboratory leaders to watch, because medical labs often interface with hospital EHRs to exchange vital patient data, a key component of complying with Medicare’s EHR incentive programs. If claims of interoperability are shown to be false, could labs engaged with those hospital systems under scrutiny be drawn into the DOJ’s investigations?
Violating the False Claims Act
In May, Coffey Health System (CHS), which includes Coffey County Hospital, a 25-bed critical access hospital located in Burlington, Kan., agreed to pay the US government a total of $250,000 to settle a claim that it violated the False Claims Act.
CHS’ former CIO filed the qui tam (aka, whistleblower) lawsuit, which allows individuals to sue on behalf of the government and share in monetary recovery. He alleged that CHS provided false information to the government about being in compliance with security standards to receive incentive payments under the EHR Incentive Program.
According to a DOJ press release, “the United States alleged that Coffey Health System falsely attested that it conducted and/or reviewed security risk analyses in accordance with requirements under a federal incentive program for the reporting periods of 2012 and 2013. The government contended that the hospital submitted false claims to the Medicare and Medicaid Programs pursuant the Electronic Health Records (EHR) Incentive Program.”
“Medicare and Medicaid beneficiaries expect that providers ensure the accuracy and security of their electronic health records,” said Stephen McAllister (above), United States Attorney for the District of Kansas, in the DOJ press release. “This office remains committed to protecting the federal health programs and to hold accountable those whose conduct results in improper payments.” (Photo copyright: US Department of Justice.)
The Recovery Act allocated $25 billion to incentivize healthcare professionals and facilities to adopt and demonstrate meaningful use (MU) of electronic health records by January 1, 2014. The federal Centers for Medicare and Medicaid Services (CMS) released the incentive funds when providers attested to accomplishing specific goals set by the program.
The website of the Office of the National Coordinator for Health Information Technology (ONC), HealthIt.gov, defines “meaningful use” as the use of digital medical and health records to:
Improve quality, safety, efficiency, and reduce
health disparities;
Engage patients and their families;
Improve care coordination and population and
public health; and
Maintain privacy and security of patient health
information.
The purpose of the HITECH Act was to address privacy and security concerns linked to electronic storage and transference of protected health information (PHI). HITECH encourages healthcare organizations to update their health records and record systems, and it offers financial incentives to institutions that are in compliance with the requirements of the program.
When eligible professionals or eligible hospitals attest to being in compliance with Medicare’s EHR incentive program requirements, they can file claims for federal funds, which are paid and audited by the Department of Health and Human Services (HHS) through Medicare and Medicaid.
Institutions receiving funds must demonstrate meaningful use
of EHR records or risk potential penalties, including the delay or cancellation
of future payments and full reimbursement of payments already received. In
addition, false statements submitted in filed documents are subject to criminal
laws and civil penalties at both the state and federal levels.
EHR Developers Under Scrutiny by DOJ
EHR vendors also have been investigated and ordered to make
restitutions by the DOJ.
In February, Greenway Health, a Tampa-based EHR developer, agree to pay $57.25 million to resolve allegations related to the False Claims Act. In this case, the government contended that Greenway obtained certification for its “Prime Suite” EHR even though the technology did not meet the requirements for meaningful use.
And EHR vendor eClinicalWorks paid the government $155 million to settle allegations under the False Claims Act. The government maintained that eClinicalWorks misrepresented the capabilities of their software and provided $392,000 in kickbacks to customers who promoted its product.
Legal cases such as these demonstrate that the DOJ will
pursue both vendors and healthcare organizations that misrepresent their
products or falsely attest to interoperability under the terms laid out by
Medicare’s EHR Incentive Program.
Clinical laboratory leaders and pathology groups should carefully
study these cases. This knowledge may be helpful when they are asked to create
and maintain interfaces to exchange patient data with client EHRs.
