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The federal False Claims Act (FCA) has long been a threat to Medicare Advantage organizations (MAOs) and Medicaid managed care organizations (Medicaid MCOs) due to the nature of the business. Historically, however, health plans were not primary targets as the government and relators’ counsel focused on providers. Medicare Advantage Risk Adjustment (MA RA) shifted that landscape, with Department of Justice (DOJ) and whistleblowers bringing numerous cases against MAOs for the alleged submission of false MA RA data. While those MA RA cases create significant risk, they are just the tip of the iceberg as the government and relators’ counsel now have plans directly in their crosshairs. Other emerging areas of FCA risk include:
- Federal Anti-Kickback Statute (AKS). The AKS comes into play for MAOs, Medicare Part D plans and Medicaid MCOs in many ways. A kickback violation creates FCA liability, and the AKS will almost certainly fuel new and evolving FCA claims against health plans. One area of particular concern is Medicare Advantage (MA) marketing, where improper payments to providers or others involved in the marketing and enrollment process can create FCA liability. As an example, in July 2022, an MCO agreed to pay the government $4.2 million to settle FCA allegations that it implemented a gift card incentive program in violation of the AKS. As MA marketing heats up and the industry becomes more competitive, plans must closely analyze marketing programs to ensure that improper payments are not being made for referrals.
Another area of increasing importance for health plans – and potential AKS liability – is provider relationships such as investments, loans, exclusivity deals, joint ventures and other non-traditional collaborations. These arrangements present potential AKS risk especially when they involve providers that are in a position to refer members to Medicare or Medicaid health plans, such as primary care physicians. In order to mitigate potential FCA risk, health plan lawyers must consider the facts and circumstances surrounding the relationship, most importantly understanding the parties’ intent as to the purpose of the payments, and ensure that they are implemented in a way that is not perceived to be a means to refer members to the Medicare or Medicaid plan. - Medical loss ratio (MLR). MAOs and most Medicaid MCOs have an MLR requirement with refunds required if the plan does not meet the MLR. However, if the MLR is incorrectly calculated or money is shifted from one business line to another to manipulate the MLR – either knowingly or recklessly – that can trigger potential FCA liability. Similar to MA RA, scrutiny of MLRs has increased. For instance, a project that is currently on the Office of the Inspector General’s (OIG) Work Plan is to examine states’ oversight of Medicaid MCO MLRs, including analyzing whether states have received all appropriate data and whether Medicaid MCOs are complying with MLR requirements. Similarly, in August 2022, the DOJ announced a $70 million settlement with Gold Coast Health Plan in California. In that case, a whistleblower and DOJ alleged that Gold Coast and two providers improperly included in their MLR dollars for services that were billed as “Additional Services” and which were provided to Adult Expansion Medi-Cal members, but those services were not allowed medical expenses under Gold Coast’s contract with the California Medicaid agency. Plans often operate through inter-company agreements to perform services, have risk-based contracts with providers, and are often vertically integrated with health systems, and each of these arrangements creates the opportunity to shift dollars for MLR purposes.
Key takeaways
- New and evolving FCA cases will arise against plans based upon alleged Anti-Kickback Statute violations.
- Data submissions leading to payment (beyond risk adjustment) and medical loss ratios will create additional FCA risk.
- Program non-compliance such as marketing, enrollment and claims denials can create FCA liability.