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Cigna Settles FCA Allegations for $172 Million, Demonstrating DOJ’s Part C Focus

On Saturday, the DOJ announced a settlement with Cigna Group (“Cigna”), where Cigna agreed to pay $172 Million to resolve allegations that it violated the False Claims Act (“FCA”) by submitting and failing to withdraw inaccurate diagnosis codes for its Medicare Advantage Plan enrollees in order to increase reimbursements from Medicare.

Medicare Advantage, also known as Medicare Part C, allows Medicare beneficiaries to obtain health care coverage through private insurance plans (“MA Plans”) that are owned and operated by private insurers. To incentivize private insurers to participate as an MAO, CMS provides MAOs with capitated, monthly risk-adjusted payments. The risk-adjusted payments are adjusted to reflect the health status of the beneficiary, which is determined by the beneficiary’s demographic information and clinical diagnoses from the prior year. As a result, MAOs receive larger payments for sicker beneficiaries.

Here, Cigna operates MAOs that offer MA Plans to beneficiaries throughout the U.S. The United States alleges, among other things, that from 2014 to 2019, Cigna engaged in chart reviews, where it retrieved medical records and reviewed those charts to identify all medical conditions that the charts supported and assigned diagnosis codes for those conditions. Similar to the allegations set forth in the Martin’s Point resolution, DOJ alleges that Cigna identified additional diagnosis codes in some instances, but failed to delete or withdraw inaccurate diagnosis codes which would have required Cigna to reimburse CMS. In short, allegedly, Cigna used the chart reviews to identify instances where Cigna could seek additional payments, yet Cigna maintained the untruthful submissions in instances where Cigna was overpaid.

This resolution presents a few key takeaways. First, the resolution reinforces the DOJ’s focus on Part C fraud. As you may recall, two months ago, Martin’s Point paid $22.5 Million to resolve similar allegations that it violated the FCA by submitting inaccurate diagnosis codes for its MA Plan enrollees in order to increase reimbursements from Medicare. Second, as with the Martin’s Point resolution, here, chart reviews were vital to the Government’s underlying allegations, which highlights the importance of the “reverse false claims” cause of action under the FCA. Under § 3729(a)(1)(G), liability can attach for knowingly concealing, avoiding or decreasing an obligation to pay the government. Once a company is made aware of an obligation to the Government, if it does not repay that obligation, reverse false claims exposure may accrue. Further, evidence indicating that a company sought reimbursement for other codes associated with the chart review where it was underpaid, but not those resulting in an obligation to repay the Government, may demonstrate both scienter and materiality. 

Third, it is also important to highlight that, in connection with this settlement, Cigna also entered into five-year Corporate Integrity Agreement (“CIA”) with U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”) wherein Cigna reportedly agreed to various auditing and compliance requirements including conducting annual risk assessments. Generally, an entity agrees to a CIA in exchange for the OIG’s agreement that it will not seek to exclude the entity from participation in the federal healthcare programs. Exclusion would often mean bankruptcy or corporate death for most of these organizations, so a CIA, while at times cumbersome, is an opportunity for entities to continue to participate in the federal healthcare programs despite past conduct.

The full post is included in the link to the blog. Also, the link to the press release is provided below.

  • Denise M. Barnes

    Denise Barnes is a former U.S. Department of Justice (“DOJ”) Trial Attorney who focuses her practice on compliance, white collar and regulatory investigations, and complex commercial litigation.  She represents clients in ...

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