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 False Claims Act Explained

Cutler, an attorney who is representing himself, originally filed the lawsuit under seal in 2017, in the US District Court for the Southern District of New York. An amended version was unsealed on August 4, 2020.

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.

—Stephen Beale

Related Information:

DOJ Sues Cigna, Alleging $1.4B in Medicare Advantage Fraud

Cigna Bilked Medicare Advantage For $1.4B, FCA Suit Says

Cigna Faces Whistleblower Lawsuit Over $1.4 Billion in Fraudulent Medicare Advantage Billings

Suit against Cigna is Latest Attempt by DOJ to Crack Down on Medicare Advantage Fraud

Cigna Embroiled in Lawsuit Over Wellness Program Risk Adjustment

Tex. Health Management V. HealthSpring Ins. Co.