Nov 192021

Medicare Advantage Enforcement: DOJ Advances New Theories Based on Retrospective Chart Reviews

Jaime L.M. Jones, Brenna E. Jenny and Krystalyn K. Weaver
,

Over the past two months, DOJ has filed complaints-in-intervention in two FCA cases premised on allegedly fraudulent diagnosis codes submitted to CMS as a result of retrospective chart reviews.  These cases demonstrate how DOJ has begun to explore new legal theories that articulate a narrower view on the legality of retrospective chart reviews designed to add diagnosis codes.

CMS has repeatedly reiterated, as recently as August 2021, that adding codes through retrospective chart reviews is permissible in certain circumstances.  See Letter from Chiquita Brooks-LaSure, Administrator, CMS, to Christi Grimm, Principal Deputy Inspector General, OIG (Aug. 20, 2021) reprinted in HHS-OIG, Some Medicare Advantage Companies Leveraged Chart Reviews and Health Risk Assessments to Disproportionately Drive Payments, at 21. However, CMS regulations provide only high-level parameters for how chart reviews should be structured, and CMS has never issued any clear sub-regulatory guidance.  As a result, Medicare Advantage Organizations (“MAOs”) and Medicare Advantage (“MA”) providers have been left to piece together the government’s expectations by looking to DOJ’s ongoing enforcement actions.

Over the past few years, DOJ’s litigation against alleged MA upcoding has focused on diagnosis codes that are not adequately supported in medical records.  One type of retrospective chart review that has drawn DOJ’s ire in particular are so-called “one-way” chart reviews.  According to DOJ, these reviews are problematic because they are designed to allow MAOs and MA providers to identify and submit previously unsubmitted diagnosis codes, but they do not test the sufficiency of documentation for codes already submitted.  DOJ views these chart reviews as a violation of the obligation to report and return identified overpayments.

But more recently, in complaints-in-intervention filed against two MAOs, DOJ raised broader concerns about codes added through chart reviews, even when they are not “one-way.”  As explained in a press release announcing DOJ’s intervention in multiple qui tams against Kaiser Permanente, for example, DOJ explains that MAOs may “submit diagnoses to CMS only for conditions that required or affected patient care, treatment or management during an in-person encounter in the service year.  In order to increase its Medicare reimbursements, Kaiser allegedly pressured its physicians to create addenda to medical records after the patient encounter, often months or over a year later, to add risk-adjusting diagnoses that patients did not actually have and/or were not actually considered or addressed during the encounter, in violation of Medicare requirements.”  DOJ appears skeptical that a treating practitioner could have sufficiently documented a condition affecting patient care, treatment, or management while contemporaneous coding practices did not result in the submission of an associated diagnosis code.

In light of DOJ’s newly articulated concerns over the extent to which retrospectively abstracted codes are lawful because they may not have affected patient care, treatment, or management at the time of the encounter, MAOs and MA providers should consider reassessing the scope of their retrospective chart reviews to conform with DOJ’s evolving expectations.

A copy of the Kaiser complaint in intervention can be found here.

A copy of the Independent Health complaint in intervention can be found here.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

Jaime L.M. Jones

Chicago

jaimejones@sidley.com

Brenna E. Jenny

Washington, D.C.

bjenny@sidley.com

Krystalyn K. Weaver

You might also like
HHS-OIG Releases Medicare Advantage Toolkit to Guide Internal Auditing

As discussed here, the Department of Justice (“DOJ”) has prioritized investigating whether Medicare Advantage (“MA”) plans and providers have submitted unsupported risk-adjusting diagnosis codes, in violation of the False Claims Act.  The U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”) has also been active in this space and issued a number of audits of MA plans within the past few years, often focusing on diagnosis codes it characterizes as “high risk.”  HHS-OIG acknowledged that stakeholders “have asked us to share with them how we decided which diagnosis codes were at high risk for being miscoded,” and in response, HHS-OIG issued this toolkit detailing how it has used data analytics to guide its work.  The toolkit offers compliance functions at MA plans and providers a path to assessing whether their coding puts them at risk of government scrutiny.

Second Circuit Leaves Open Novel Legal Theory that Flawed AI is a “Worthless Service”

In a decision issued last week, the Second Circuit was faced with the novel legal theory that use of flawed artificial intelligence systems can constitute a “worthless service” for purposes of FCA liability.  See Doe v. eviCore Healthcare MSI, LLC, No. 22-530-CV, 2023 WL 2249577 (2d Cir. Feb. 28, 2023).  The Second Circuit affirmed the district court’s dismissal for failure to satisfy the heightened Rule 9(b) pleading standard but did not reach the merits, leaving open the question of whether such a theory is viable under the FCA.