Justice Department sues Cigna over Medicare fraud

Cigna was sued by the Justice Department for allegedly receiving tens of millions of dollars in additional Medicare payments by exaggerating participants’ illnesses.

The U.S. Attorney for the Southern District of New York sued Cigna on Friday in the U.S. District Court for the Middle District of Tennessee and alleges that Cigna violated the False Claims Act by saying its Medicare Advantage members were sicker than they were. The lawsuit alleges that from 2012 to 2019, Cigna hired medical professionals to visit patients’ homes and falsely document health conditions in order to increase taxpayer revenue.

The Justice Department announced that it plans to intervene in an ongoing whistleblower lawsuit in August regarding Cigna Medicare Advantage operations. Many, but not all, of the allegations in the Justice Department lawsuit reflect those in the whistleblower case, which was filed in 2017 in the U.S. District Court for the Southern District of New York. The whistleblower claims that Cigna incorrectly billed the federal government for $1.4 billion. The federal prosecutor’s office claims that the insurance company inflated the cost of Medicare and Medicaid services by “tens of millions” of dollars.

“Cigna received tens of millions of dollars in Medicare funding by providing the government with false and invalid diagnoses for Medicare Advantage Plan members,” U.S. Attorney Damian Williams said in a press release. “Cigna knew she would be paid more under the Medicare Advantage reimbursement system if plan members were sicker.” The government did not specify how much it is seeking damages.

Cigna will vigorously defend its Medicare Advantage business against the allegations, a spokesperson wrote in an email.

CMS pays insurance companies a flat fee to manage care for people enrolled in Medicare Advantage. CMS determines this fee based in part on the number and severity of illnesses patients suffer from. Regulators have developed this methodology to discourage insurers from choosing healthy Medicare members. But the policy also creates incentives for carriers to capture as many patient conditions as possible through card reviews, home health assessments, primary care visits, and other methods.

According to an analysis by the Kaiser Family Foundation, CMS spent $321 more per Medicare Advantage member than if the same beneficiary was covered by Medicare Fee-for-Service in 2019.

According to the Justice Department, Cigna hired nurse practitioners to visit members’ homes with the primary goal of collecting and recording lucrative diagnosis codes to increase payouts. The government claims that Cigna banned these doctors from providing care to patients. As such, they did not conduct or order the testing or imaging that would be necessary to reliably diagnose the reported conditions, prosecutors charge.

According to the lawsuit, these doctors diagnosed common conditions such as chronic kidney disease, congestive heart failure and rheumatoid arthritis. The government claims that other doctors who saw these patients in the same year did not report the same illnesses.

Medicare Advantage Carriers are under scrutiny for this practice across the board. The federal authorities also sued Elevance Health, formerly Anthem, and UnitedHealth Group for allegedly inflating the cost of Medicare Advantage. These things are ongoing.