Managed care is a form of health insurance that aims to reduce costs and improve quality of care by leveraging contracts with care providers and medical facilities to increase efficiency of coordinated patient care. Within the system, federal and state governments contract private insurers, also known as Managed Care Organizations (MCO), to provide health insurance benefits to government beneficiaries enrolled in Medicare and Medicaid plans. The plans are paid a capitated, or per-person, amount to provide benefits to beneficiaries who enroll in one of their plans. Payments to plans are based on demographic information and the health status (also known as risk scores) of each plan beneficiary. In general, plans receive larger payments for beneficiaries with more severe diagnoses.

Unfortunately, corrupt MCOs involved in managed care fraud will often game the reimbursement system to retain more than their fair share of government funds by miscoding patient diagnoses and inflating risk scores. In this article, we take a look at one of the most common ways dishonest organizations commit fraud in managed care insurance and its massive chain of impact.

What Is Risk Adjustment Fraud and What Does It Look Like in Managed Care?

Risk adjustment fraud occurs when MCOs, coding companies, 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 by the MCOs. 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.

Let’s take a look at an example.

In July of 2021, the federal government intervened in six complaints alleging Kaiser Permanente violated the False Claims Act by submitting inaccurate diagnosis codes for its Medicare Advantage Plan enrollees in order to receive higher reimbursements. According to the DOJ, Kaiser allegedly pressured its physicians to add risk-adjusting diagnoses that patients did not actually have and/or were not considered or addressed during the encounter in order to increase Kaiser’s Medicare reimbursements.

Impact of Risk Adjustment Fraud

Risk adjustment fraud has a massive chain of impact that affects not only the millions who rely on these health programs for care but also the American taxpayers. When dishonest providers commit fraud, it siphons money from legitimate government-funded programs and contributes to rising healthcare costs. It’s a crime against you, the government, and all the other honest medical professionals.

Speak Out Against Risk Adjustment Fraud

Whistleblowers play a major role in the fight against corruption, fraud, and wrongdoing in managed care. These brave individuals have helped save millions in public funds and the integrity of our healthcare system.

For those considering blowing the whistle, consulting the right fraud attorney is an important first step. The right law group can help keep you protected, guide you through the entire process, and help you earn a potential reward for doing the right thing.

Our team at DJO consists of highly experienced whistleblower experts, lawyers, and even former whistleblowers, who strive to deliver the highest monetary reward for brave individuals with valuable information that can bring fraud to light.

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.

DJO will be there every step of the way to ensure you are safe and your information is confidential, so you will have confidence knowing you’re doing the right thing. If you have valuable information that can help expose fraud, we encourage you to speak to our experts today.

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