Cigna and it’s Fraudulent Home Care Program

This Monday, the Justice Department announced a civil lawsuit against the large private health insurer Cigna. According to the lawsuit, Cigna reported patients to be significantly sicker than they actually were to get millions in additional federal dollars.

Let’s dive into how exactly Cigna pulled this off, and the healthcare industry problems it underscores.

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What’s Medicare Advantage

Medicare is the federal healthcare coverage plan intended mostly for individuals over the age of 65. It’s run by the Centers for Medicare and Medicaid Services (CMS).

The Original or Traditional Medicare program operates directly with CMS. However, in Part C Medicare, also known as Medicare Advantage (MA), private insurers are contractors to administer Medicare benefits on top of other benefits.

According to a calculated risk score that the private insurer takes on for each member, CMS pays a certain amount of money to cover the cost of medical services. Recall, insurers take on a risk of having to pay for medical services by giving someone health insurance. Sicker members mean higher CMS payments to offset health costs the insurer covers.

The premise of MA is that a private insurer may be able to coordinate care more specific to patients in certain geographies and demographics to reduce the costs on the entire Medicare system.

Cigna and 360 Health

Cigna, one of the largest private insurers in the US, operates multiple MA plans across the country. Many of these MA plans take part in a 360 comprehensive health assessment, which is essentially a Cigna-created physical to assess the wellness of MA plan members.

For those receiving home care services, Cigna contracted vendor healthcare providers (VHCPs) to send staff like nurses and physician assistants to help complete the 360 form.

Typically, the VHCPs fill out the 360 form, and Cigna’s teams identify corresponding diagnosis codes using the ICD-10 medical classification list. These diagnosis codes can be used to determine risk scores which can be submitted to CMS for determining payment rates to the insurer.

Yet, the Justice Department, after being tipped off by a whistleblower in Cigna, alleges that Cigna pressured VHCPs to make home care patients appear sicker than they actually were.

VHCPs were instructed to prioritize capturing diagnoses and discouraged actual treatment of what these supposed conditions were. That’s not just the department… it’s from an internal Cigna document:

“[t]the primary goal of a 360 visit is administrative code capture and not chronic care or acute care management.”

The lawsuit further details that thousands of  360 home visit programs featured diagnoses where only the VHCP reported it without another doctor seeing the patient for the same condition and without necessary diagnostic equipment.

One case highlights a VHCP diagnosing a patient with congestive heart failure when the same document noted the patient’s heart to seem “normal”.

Internally, Cigna also tracked the volume of diagnoses these VHCPs sent back, and for those providing insufficient diagnoses, Cigna required them to complete "performance improvement plans".

during the first nine months of 2014, one vendor’s 6,658 in-home visits resulted in more than an additional $14 million in Medicare payments, which dwarfed the approximately $2.13 million that CIGNA paid to the vendor

Does MA have a Fraud Problem?

Recently, the New York Times published an article called "How Insurers Exploited Medicare for Billions", and it features a jarring chart showing the top MA providers and stakeholders claiming that they have engaged in fraudulent practices.

The same article highlights how MA overbilling the government amounts to extra government spending that exceeds the budgets of federal programs like NASA or the FBI. In the next few years, most of Medicare beneficiaries will be on MA plans, and it's expected that the share of members on MA will only grow.

When the top MA insurers have such a bad track record of fraud, it seems inevitable that wastage will continue due not only to less-than-ideal enforcement but also a misalignment of incentives.

These firms get paid an amount to cover each member based on how sick they appear. At that point, the math is simple... spend as little as possible on covering medical services for each member and make them look sicker to get the greatest profit. It's a no-brainer that alternative payment structures that truly incentivize cost-effective and quality healthcare must be figured out quickly before already out-of-control fraud worsens the burden on the taxpayer at the expense of America's seniors.