Whistleblower: Medicare Advantage Plans Padded Charges on Texas Home Visits

A new whistleblower case accuses a Texas medical consulting firm and more than two dozen health plans for the elderly of ripping off Medicare by conducting in-home patient exams that allegedly overstated how much the plans should be paid.

The Texas litigation is just the latest of at least a half-dozen whistleblower cases that have been filed in  the past five years alleging billing fraud and lax government oversight of privately-run Medicare Advantage plans that have proven increasingly popular with senior citizens.    

The latest lawsuit was filed in federal court in Dallas by Becky Ramsey-Ledesma, a medical billing coder, against her former employer, CenseoHealth, LLC. The Dallas-based firm has contracted with thousands of doctors who visit elderly people in their homes and evaluate their health on behalf of Medicare Advantage plans.

But the health assessments exaggerated how ill patients were, which in turn inflated Medicare payments to the health plans, according to the allegations in the suit. The suit names 30 Medicare Advantage plans in 15 states, including several Blue Cross plans and other industry stalwarts, such as Humana Inc. Humana has more than 3 million Medicare members.

The private insurance plans offer seniors an alternative to standard Medicare, which pays doctors for each service they render. Medicare Advantage plans receive a set fee monthly for each patient based on a risk score that pays higher rates for sicker people and less for those in good health. Medicare essentially trusts health plans to report these risk scores accurately. The Medicare Advantage plans have grown rapidly in recent years, and now cover almost 17 million people.

The Texas suit was filed last year, but stayed under court seal until mid-June. It is the second whistleblower action to target Medicare Advantage home visits, which account for billions of dollars in annual revenues for health plans.

A 2014 Center for Public Integrity investigation found that home visits skyrocketed as federal officials struggled to prevent health plans from overcharging Medicare by tens of billions of dollars every year. Federal officials as early as 2013 were concerned the home visits could be a factor in jacking up risk scores improperly and wasting tax dollars. But they backed off a proposal to limit their use when the industry objected, the investigation found.

CenseoHealth’s home visits collect data on the health status of patients, which the private health plans then use to bill Medicare. The company had no comment on the lawsuit.

The Centers for Medicare and Medicaid Services press office declined to answer written questions seeking comment on its home visit policy. The agency instead issued a statement that said the home exams can have “significant value.” That opinion is shared by the health insurance industry trade group, America’s Health Insurance Plans. A spokesperson for AHIP called the visits “an important component of disease management activities.”

Medicare Advantage is enjoying robust growth and firm political support in Congress. The industry has beaten back several attempts by the Obama administration to cut its rates as enrollment has grown to encompass about one in three people on Medicare. In June, the House passed a bill sponsored by Rep. Vern Buchanan, R-Florida, that appears to prevent federal officials from halting the home health assessments.

At the same time, the Centers for Medicare and Medicaid Services is drawing scrutiny over top manager Andy Slavitt’s former ties to UnitedHealth Group, which runs the nation’s biggest Medicare Advantage plan. Senate Finance Chairman Orrin Hatch criticized Slavitt’s “conflicted history” in a statement issued after President Obama nominated him for the top CMS job in July.  

Bringing Back House Calls

CenseoHealth has emerged as a leader in a growing market for in-home health assessments.

Formed in 2009 by two Texans, CenseoHealth grew from four employees to 325 workers by 2013, according to its website. It has built a network of nearly 5,000 doctors whom it says are “uniquely qualified to identify and diagnose health conditions.” CenseoHealth-affiliated doctors have done more than a million home visits, and in 2013 forecast revenue would reach $120 million, according to its website.

CenseoHealth’s investors include private equity firm Health Evolution Partners, headed by David Brailer, a physician and former health information technology czar under President George W. Bush. In March, Brailer was named chairman of CenseoHealth’s board of directors. Brailer could not be reached for comment.

According to the suit, CenseoHealth used an algorithm to identify patients who might have undetected medical conditions that could raise their risk scores. The company uses marketers to contact patients and schedule doctor visits to their homes.

The suit alleges that the doctors don’t provide any medical treatment. Other than taking vital signs and weight, listening to heart and lungs and checking reflexes, no physical exam in involved and no lab tests are performed, according to the suit. The doctors ask the patient a series of questions on a checklist during the visit, which takes about an hour.

“In other words, the conditions reflected on the evaluation forms are not medical diagnoses derived from a medical examination, but instead, are self-reported conditions captured from the medical history and verbally confirmed” by the patient, according to the suit.

Some of the doctors lacked medical licenses, according to the suit, and others were assigned as many as ten visits a day for a flat fee of $100 each. Some faked results, according to the suit. The suit cited a test for Alzheimer’s disease in which each patient was asked to draw hands on a clock to indicate the correct time of day. “In some cases it was obvious that the same person had drawn the clock on multiple forms,” according to the suit.

Some of the diagnoses could not be made reliably through a home visit, according to the suit. Others were based on medications patients took, even when those medications could be taken for more than one condition, according to the suit.

These practices inflated risk scores, according to the suit, triggering “substantial overpayments” to the health plans.

Ramsey-Ledesma claims she was fired in August 2013, the day after she objected to the practices. According to the suit, her manager told her, “we can no longer trust you.”

The other whistleblower case that targeted home visits was unsealed in 2014. It was filed by Anita Silingo, a former compliance officer for Mobile Medical Examination Services, Inc., or MedXM.  The company, based in Santa Ana, Ca., has denied the allegations. The case is pending.

The Department of Justice declined to join either case, which may make it more difficult for the whistleblowers to proceed with their cases and collect a large award. However, lawyers who handle these cases say more of them are moving ahead without the government.

Other whistleblower cases involving Medicare Advantage have been filed in the past five years in California, Florida and South Carolina, among other locales. These cases also allege that Medicare Advantage plans inflated risk scores and as a result were overpaid by Medicare.

Friends in High Places

As early as 2013, CMS officials said they suspected home visits improperly raise risk scores and waste tax dollars. But as the visits became standard procedure for more and more health plans, CMS lost its appetite for tightening oversight.

CMS officials wrote in February 2013 that they were concerned that the primary objective of the visits was to raise risk scores and revenues “without follow up care or treatment being provided.”

In April 2013 though, officials bowed to industry pressure and backed off their proposal to collect data on the home visits with an eye to excluding their use in setting rates.

The following year, CMS again backed down from a proposal to exclude the visits after meeting with the industry. That decision came even though CMS said “there appears to be little evidence” that the visits led to any improvement in patient care. The insurance industry estimated that cutting out the visits would have cost Medicare Advantage plans nearly $3 billion a year.

Earlier this year, CMS handed the industry a major victory and ruled out excluding the home visits. Instead, CMS urged the industry to adopt a set of “best practices” for the visits. The new policy “enhances the value of in-home assessments so they are used to support care planning and care coordination and improve enrollee health outcomes.”

The press release quoted then-CMS deputy administrator Slavitt saying the proposals “would reward providers of high quality, consumer-friendly care” for Medicare Advantage.

Slavitt is a former executive of Optum, a subsidiary of UnitedHealth Group. In July, President Obama nominated him to take over CMS permanently.

CMS officials declined to answer questions about Slavitt’s role in the decision making process for home assessments, but said:

“CMS believes that in-home assessments can have significant value as care planning and care coordination tools. In the home setting, the provider has access to more information than is available in a clinical setting.” 

This piece comes from the Center for Public Integrity, a nonpartisan, nonprofit investigative news organization. To follow CPI's investigations into Medicare and Medicare Advantage waste, fraud and abuse, go here. Or follow the organization on Twitter: @Publici.