Does HHS have a handle on climbing medicare payments?

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Medicare Advantage was established to make health care delivery more efficient. Nowadays, nearly half of all Medicare recipients are part of a Medicare Advantage plan. Unfortunately, the Medicare Advantage payment model is subject to fraud. The Federal Drive with Tom Temin spoke with someone who has studied the problem in detail: Molly Knobler, senior counsel at the law firm DiCello-Levitt.

Interview transcript:

Tom Temin
Just briefly give us the layman’s background or on the difference between Medicare and Medicare advantage in terms of the payment model?

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Molly Knobler
Sure. So under the traditional Medicare model, also known as Medicare Parts A and B, federal beneficiaries, Medicare beneficiaries are covered directly by the government plan. So they choose their doctor, they go to see their doctor, doctor bills a Medicare administrator and receives payment in exchange for their services. Under the Medicare Advantage Program, also known as part C, Medicare beneficiaries choose a Medicare Advantage plan are also known as a Part C plan. That plan receives money from the government, what’s known as a capitated model, so they receive a set amount of money per member per month, based on that member’s demographics. So there are certain health conditions they have their age, income considerations, geographic considerations, but not based on the type or amount of services they provide.

Tom Temin
And the person that has that plan also pays a premium on their end, also. So it’s almost like a subsidized type of plan.

Molly Knobler
Yes.

Tom Temin
What’s the issue here?

Molly Knobler
I would say there are two issues. The first is that, you know, we’ve seen for decades, right? There’s fraud by medical providers, right? Hospitals, drug manufacturers, all sorts of providers who are incentivized and, unfortunately decide to take advantage of the program and bill for services that they don’t provide or that are defective in some way. And that continues to happen with Medicare Advantage, as well. And it still costs the government money, even though it’s not a direct fee for service. Those costs are taken into consideration when the rates are built for the following year.

Tom Temin
Because under Medicare Advantage, I mean, you buy the plan from some very big name national carriers that are the agents of this. And then, of course, they have people in their network, doctors, dentists, whatever it might be surgeons that they then pay and that you pay if there’s a copay in all of this, how can there be fraud with that level of scrutiny? And in-network types of providers?

Molly Knobler
So it’s a good question. And, you know, one of the purposes for the Medicare Advantage model is that the government can sort of outsource some of these responsibilities for looking for fraud and abuse and waste. But unfortunately, what we’ve seen is that the plans aren’t necessarily doing a good job at finding that and because they are passing their costs along to the government, you know, they don’t have as much of an incentive to look for it.

Tom Temin
So the capitated costs then are reflective of the costs of the intermediaries in the Advantage Program. And therefore, it’s an indirect way that the government is covering the cost of fraud is that right?

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Molly Knobler
That’s right, exactly.

Tom Temin
And do we know the extent of this, is there any quantity in terms of dollars? Because, you know, periodically, you do hear these Justice Department releases when they found a Medicare or Medicaid fraudster. And, you know, they know how much they bilked. Is it possible to quantify what’s going on in Medicare Advantage?

Molly Knobler
It’s a great question. And I think something that we’re going to have to come to terms with and really start to deal with as Medicare Advantage becomes a larger portion of the population. I think, to some extent, because it is more complicated, and there are these, you know, additional layers, folks haven’t looked at it as much.

Tom Temin
Because over the years, CMS, the Centers for Medicare and Medicaid Services has gotten better at using data analytics and pattern matching and lots of techniques they have to detect fraud, or at least know where it might be occurring. But it sounds like it’s more difficult for them to do that, when the whole thing is offset by a couple of different middle people, between them and the actual patient.

Molly Knobler
Yes, absolutely. And one of the things that we’ve seen is there’s another layer of fraud, right, which we haven’t talked about yet, which is the Medicare Advantage plans themselves committing fraud by making patients pure sicker than they are not providing services.

Tom Temin
So this could be unknown to the patient. Oh, I didn’t know I had two eyeballs with problems as well as three kidneys.

Molly Knobler
That’s right. That’s right.

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Tom Temin
We’re speaking with Molly Knobler, she’s a and this is the key point, we are going to get to you’re a whistleblower attorney at DiCello-Levitt. And so your model may be for bringing this type of fraud to light is the whistleblower model?

Molly Knobler
That’s right. That’s right. As you said, the government has gotten better at looking at data. Absolutely. But in our experience, whistleblowers are really the ones with the best suited and, you know, best situated to see what’s really happening.

Tom Temin
And where might these whistleblowers lie, you have the Aetnas and the Blue Crosses that are the big national carriers that have these, offer these plans. And then you have below them, the providers and most providers today are part of large networks, it might say Dr. Jones and Company Ear, Nose and Throat people, but they could be part of 100 member Ear, Nose and Throat conglomerate in a distant city that they share billing and medical records with and so forth consolidated, that’s a different level.

Molly Knobler
Absolutely.

Tom Temin
Then you’ve got the patient. So where do the whistleblowers most likely lie in who do they report to?

Molly Knobler
Well, they come from everywhere, actually, they come from all of those layers, right? They come from the insurance companies, they come from the providers, the hospitals, the EMR systems, right, the medical records and patients even, you know, with the if you see something on your, your EOB form, and you say, “Well, I didn’t get that service, or I don’t have that, you know, that condition.” And then oftentimes, our experience has been the whistleblowers who are part of these companies, they report internally, right, they will generally go to their managers, and frequently they are pushed aside, retaliated against. And that’s when they generally find a whistleblower lawyer like me.

Tom Temin
It sounds like the most likely location for the whistleblower would be at the provider level. Because the big carriers, they’re traded or public, in some cases, and they have large compliance departments and legal staff and all of this more of those people than people considering who’s sick or not. So am I correct in assuming that most of discovery would lie at the provider level?

Molly Knobler
Not necessarily, especially with these sorts of plan driven frauds, I would say where you’re talking about, you know, systematic ways of trying to make patients appear sicker or deny services, inappropriately those are things where plan level folks are going to be involved and aware of the

Tom Temin
right it’s like corporations that used to provide on the job life insurance, you know, people would say, “Well, if I drop dead, drag me to the office, so we get the payout,” that kind of mechanism.

Molly Knobler
Right.

Tom Temin
And also in the latest blog post that you’ve written, you’re noting that the government is aware of this possibility?

Molly Knobler
Yes, absolutely. And they’ve actually been quite aggressive, particularly on this issue about what’s called risk adjustment fraud. Where so as we were discussing, the plans receive, Medicare Advantage Plans receive more money if their patients are sicker, which is a great policy, right? You don’t want plans to be avoiding sick patients who actually need health care, but it’s been subjected to substantial abuse.

Tom Temin
Got it. And have you represented any whistleblowers for this particular situation?

Molly Knobler
I have. I have, actually, a couple of them have been, have come out from under seal. So these cases are usually filed under seal while the government investigates often for many years. But I had a client who filed suit against a group called Group Health Cooperative and another who filed suit on these issues against Kaiser.

Tom Temin
Right, and what was the mechanism that they brought to light?

Molly Knobler
Again, these issues about risk adjustment fraud, so basically, you know, mining in patient’s medical records to look for diagnoses that weren’t necessarily actually there or being treated.

Tom Temin
Right, it could be that the provider would just add that to everybody’s record, and suddenly a pattern would emerge. Gee everybody that comes to this practice has the same problem with their liver.

Molly Knobler
Right, right, or looking for things that anyone over the age of 75 has, even though it’s not really clinically significant, or actually being treated, or, looking at people’s problem lists, things like that, where perhaps it’s resolved, but picking that up anyway.

Tom Temin
And so far as we know, CMS probably doesn’t have the mechanisms to go that deep into the system to be able to discover for themselves?

Molly Knobler
No, and in fact, I’m not sure they’re even looking at that or even have access to that sort of data, because they are, part of what they’ve outsourced is to the plans to manage this care and keep an eye out for fraud, waste and abuse.

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