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Managed Care Fraud: Schemes That Can Lead to FCA Liability

Managed care fraud is an unfortunate reality that costs the government and taxpayers billions of dollars each year. Managed Care Organizations (MCO) involved in managed care fraud game the system by falsifying patient records and miscoding patient diagnoses in order to qualify for additional funds. This type of fraud takes money away from legitimate government healthcare programs and is a contributing factor to the rising healthcare costs in the United States.

Exposing the organizations and individuals committing these crimes is the best way to fight managed care fraud. Individuals with knowledge of fraud committed by MCOs can report wrongdoing under the False Claims Act and receive a percentage of the government’s recovery as an incentive for their information.

Let’s take a look at some common examples of managed care schemes and how whistleblowers can help stop fraud.

Common Managed Care Fraud Schemes

Whistleblowers and the government have uncovered several schemes MCOs and others in business with MCOs, have used to defraud the healthcare system. Here are some examples of fraudulent schemes in managed care:

  • Medical Loss Ratio (MLR) Fraud occurs when plans knowingly misrepresent a proportion of funds spent on patient care and quality improvement measures as opposed to administrative expenses and profits. The MLR rule, implemented by the Patient Protection and Affordable Care Act (ACA), mandates that funds are spent primarily on healthcare, effectively limiting the ratio of funds that can be allocated to the profit of the insurance companies.
  • Healthcare Effectiveness Data & Information Set (HEDIS) Fraud occurs when plans manipulate their quality and effectiveness metrics to enhance their ratings and receive unearned benefits from the ACAs quality incentive program. By falsifying a higher rating, plans receive Quality Bonus Payments (QBP) to which they are not entitled.
  • Risk Adjustment Fraud occurs when MCOs and others contracted to work with other government insurers seek to game the healthcare system by inflating the risk profile of patients. This can involve a physician IPA or even a third party medical coding company that is contracted to the MCO’s. Because risk adjustment payments are calculated based on members’ diagnoses, plans have developed a number of schemes aimed at “upcoding” or exaggerating the severity of members’ diagnoses or medical conditions to cause the government to pay out more risk adjustment reimbursement than is warranted.
  • Enrollment Fraud occurs when MCO’s enroll members outside of the established pre-approved periods using false data to qualify the member.
  • Adverse Selection occurs when operators of managed care plans try to minimize risk by choosing to enroll a larger pool of healthy people choosing managed care and avoiding less healthy people choosing more generous plans.

Help Blow the Whistle on Managed Care Fraud

These are only a few examples of the schemes that occur in managed care. Whistleblowers play an important role in exposing fraud and holding organizations and wrongdoers accountable.

Our goal at DJO Law Group is to expose managed care fraud wherever and whenever possible. We work with individuals to gain information, build a case, and fight for taxpayers’ justice. In doing so, we can protect the vulnerable and make the world a safer place.

If you suspect fraud in your organization, please contact us. DJO is comprised of a highly experienced team of whistleblower experts, lawyers, and even former whistleblowers, who strive to deliver the highest monetary reward for brave individuals who have valuable information that can expose fraud. If a whistleblower’s lawsuit is successful, the reward can be up to 25% of the funds recovered. The False Claims Act also offers whistleblowers protection against job retaliation or wrongful termination.

Do you have valuable information that can help bring fraud to light? Speak to our experts today.