It’s long been common knowledge that Medicare Advantage, the privatized version of insurance for older Americans, uses the practice of “upcoding” to make more money. But it hasn’t been so clear how that works — until now.
A whistleblower lawsuit filed by a former employee of a Maryland management company that oversees a big network of primary care practices describes the steps the doctors can take to increase their payments from Medicare Advantage by this practice of upcoding — essentially using medical billing codes to ascribe more and more serious ailments to patients by this practice.
The suit was filed in Western District Court in Seattle in February 2021 against Aledade, the management company, and a group of practices associated with it by a former employee, Khushwinder Singh, U.S. ex rel. Khushwinder Singh v. Aledade, Inc. et al. The whistleblower lawsuit procedures include an initial filing, followed by a conversation with the government to see if it wants to join the suit. Any monetary rewards can then be shared by the government with the initial complainant.
While the U.S. government declined to join this whistleblower in the “qui tam” lawsuit seeking to stop the practice and thereby save tax dollars (and also perhaps reward the whistleblower), that doesn’t necessarily mean the government doesn’t believe this is happening. The case was filed as a sealed case, but was unsealed when the government chose not to take part. (See court documents below.)
Aledade, a public benefit corporation, is the largest network of independent primary care practices in the country, helping independent practices, health centers and clinics deliver care to their patients in value-based care. It works with more than 1,500 practices and community health centers in 46 states and the District of Columbia.
Aledade, which was founded by and is still headed by Farzad Mostashari, former national coordinator for health information technology within the Office of the National Coordinator for Health Information, has denied any wrongdoing. The company has a lot of connections inside and outside of government; for example, Mandy Cohen, the current head of the Centers for Disease Control and Prevention, was executive vice president at Aledade Inc. from March 2022 to Dec 2023, according to her LinkedIn profile.
The suit says Singh, the complainant, was employed at Aledade as a senior director of risk and wellness product from Jan. 24, 2021, through May 10, 2021, when he was terminated. The suit says he was terminated “in retaliation for his investigation and opposition activities following a hostile working environment which Aledade had created because of these same retaliatory and discriminatory actions. Aledade’s purported reasons for terminating [Singh] are pretextual.”
How did it work?
In traditional Medicare, doctors are paid for what they do. Do a colonoscopy, get paid for a colonoscopy. Do a sore-throat visit, get paid for a sore-throat visit.
But Medicare Advantage pays on what is called a capitated rate, per patient. The doctors get a predictable, up-front amount per patient per time period (often, over a year of a contract) from the government to provide needed care. It’s calculated on a risk score — a formula that has to do with, among other things, age, gender and what the patient’s ailments are. It can be paid monthly or annually, depending on the contract. Essentially, “We, here at Medicare, think that patients with these ailments at this age will cost xx dollars to treat over the year — so here’s money in advance, and we trust you to spend it to the best advantage of your patient, your business, and the taxpayer.”
The more illnesses, the more money. As an example, a patient diagnosed with hypertension brings a lower rate than a patient with hypertension, diabetes, substance use disorders and chronic obstructive pulmonary disease.
So the system encourages clinicians to document higher numbers of ailments; this is the way it has always worked. It’s arguably bad policy, but there you have it.
The suite alleges that Aledade made up or exaggerated the number of ailments, and their severity, costing the government unnecessary money. This has been whispered about for Medicare Advantage forever, as pretty much every Medicare Advantage clinician and insurer plays by these rules.
What’s newly visible here is the level of detail, and the accusation that this is fraud.
“Aledade recognized that Medicare Advantage created opportunities to ‘game’ this risk adjustment system,” the suit says. “Aledade exploited these opportunities. Aledade did whatever it took to make patients appear sicker than they were. Sicker-appearing patients who did not actually require more services made Aledade more money. So, Aledade manipulated high value … diagnoses to attach higher risk scores for Medicare patients.”
“Its scheme worked like this. Aledade instructed its Providers to schedule Medicare patients for Annual Wellness Visits (AWVs) and Chronic Care Management (CCM) visits as vehicles to diagnosis patients with high value [hierarchical condition category or HCC] diagnoses.
‘Faulty guidance’ and ‘cheat sheets’
“Aledade knowingly produced faulty coding guidance such as cheat sheets, PowerPoints, and other coding reference materials to guide Aledade Providers to use selective high value HCC diagnoses when submitting claims to Medicare and MA Plans.“
The company’s software defaulted to these higher value diagnoses, the suit says. Retrospective chart reviews were used to assign such diagnoses after the visit in some cases, the suit says. “Aledade called these high value diagnoses the ‘gravy sitting in the chart.’
“Some Aledade Providers were unwitting participants while others were complicit. …
‘Rethinking drinking’
“Through its fraudulent course of conduct, Defendants knowingly submitted or caused the submission of thousands of false or fraudulent claims to the Government, in violation of the False Claims Acts, and the Government paid those claims.”
In one example, Exhibit A, the suit says that under “rethinking drinking,” coding alcohol use as dependence would reap rewards. If a patient over 65 has more than one drink a day, the guidance suggests, the clinician should remind them not to drink in excess during the holidays. Then the conversation — either during a wellness visit or a sick-person visit — can be tagged with the medical billing code F10.99 “for alcohol use unspecified with unspecified alcohol-use disorder” to claim credit. (See documents below.)
In the example given, for one particular practice, the guidance says each new code in this category reaps $3,600 per patient — and over a 43-patient panel, that is “$160,470 Available Risk.”
The practices named, besides the parent organzation, are based in various states — Delaware, West Virginia, Kansas, Louisiana, North Carolina and Pennsylvania.
In another example, Exhibit B, the suit says that episodes of depression need to carry a modifier of mild, moderate or severe, and say if it is in partial remission or full remission (whether it’s a single episode or a series of episodes). This earns significant amounts of money, the exhibit says Aledade tells its clinicians.
Other behavioral issues like anxiety, bipolar disorder, psychotic disorders and personality disorders also can pay more if they are coded for severity, the guidance explains.
Exhibit C is a “coding master sheet” and says “Licensed clinicians should rely on their independent medical judgment to decide whether suggested diagnoses are relevant.”
The revolving door
The revolving door between industry and government has long been a topic of concern in healthcare. Government officials develop knowledge of systems, and then depart to private industry, where their knowledge of the complicated and arcane systems are pure gold.
This excellent piece from the American Prospect describes how a government guy shaped systems and regulations, then departed for private industry.
‘”One reading of the history of health care over the past half-century, as the profit motive was gradually introduced into insurance and delivery systems, is that little niches have sprung up, and people with capital have taken advantage. That would include Tom Scully,” David Dayen writes.
“At the Office of Management and Budget (OMB) in the first Bush administration and CMS under Bush II, Scully played a major role in many of the defining features of health care today, from Medicare Advantage and the privatized Part D prescription drug benefit to risk adjustment and the physician payment schedule. He wasn’t responsible for Obamacare, but the program closely follows his desire to solve problems through the private sector.” Scully left government for a private equity firm in 2003, taking part in the gold rush of private equity investing in healthcare.
Medicare Advantage is increasingly feeding the bottom lines of insurers and clinicians. Medicare Advantage was designed by Congress 20 years ago as an effort to save money over traditional Medicare. The New York Times recently did an analysis of fraud in Medicare Advantage plans, noting that Medicare Advantage is significantly more expensive for the government than regular Medicare.
Company denials
The company, Aledade, has denied any wrongdoing. They did not respond to our request for comment, but in a statement to KFF Health News, Aledade said its software offers doctors a range of data and guidance that helps them evaluate and treat patients.
“Aledade’s independent physicians remain solely responsible for all medical decision-making for their patients,” the statement read.
The company said it will “continue to advocate for changes to improve Medicare’s risk adjustment process to promote accuracy while also reducing unnecessary administrative burdens.”
In a message to employees and partner practices on its website dated Feb. 29, Mostashari noted that the Justice Department had declined to take part in the False Claims Act case.
“We recently learned that the federal government has declined to join the case U.S. ex rel. Khushwinder Singh v. Aledade, Inc. et al. That’s good news, and a decision we wholeheartedly applaud given the baseless allegations about improper coding practices and wrongful termination brought by a former Aledade employee three years ago. We do not yet know how the full legal situation will play out but will defend ourselves vigorously if needed in a court of law,” the statement said. “We therefore will not address any individual allegations.
“We remain focused on our top priority of supporting our physician partners in their delivery of outstanding primary care, and this is an opportunity to reaffirm our ongoing commitment to compliance in all aspects of our business. We take seriously our responsibility to maintain high standards and to educate clinicians about value-based care.”
