COURT FINDS ANTHEM SHOULD TESTIFY ABOUT ITS PROCESSES FOR DETERMINING DIAGNOSIS CODES IN MEDICARE ADVANTAGE FALSE CLAIMS ACT SUIT

            On November 13, 2018, Magistrate Judge Fox of the United States District Court for the Southern District of New York recommended that the Court grant the Department of Justice’s petition to enforce a Civil Investigative Demand in a False Claims Act suit involving Medicare Advantage.  The Report and Recommendation found that Anthem should be ordered to produce testimony on the procedures it used to determine the diagnosis codes it submitted to CMS and testimony on the “policies, procedures and training” it expected its “employees and contractors to follow in ensuring that the diagnosis codes” submitted “were valid and supported by medical records.” 

            At issue in the False Claims Act case is whether Anthem knowingly submitted invalid provider supplied diagnosis codes that enabled Anthem to obtain higher Medicare Advantage payments. Under Medicare Advantage (Part C), the government pays health plans such as Anthem on a capitated basis, but makes risk adjustments to these payments based in part on a beneficiary’s health status.  Medicare Advantage plans are required to certify the accuracy of the diagnosis codes used to determine risk adjustments. The government is also involved in litigation with UnitedHealthcare regarding these adjustments.

            Anthem argued that responding to the CID would “pose a substantial burden on Anthem….”  The Court disagreed, finding that “[i]n light of Anthem’s annual certification obligation, Anthem’s argument, that identifying the relevant policies and processes and preparing witness testimony is overly burdensome, is meritless.”  Anthem had also argued that the proposed topics were not proportional to the needs of the investigation. The Court was likewise not persuaded “especially in light of Anthem’s annual certification obligation concerning the accuracy and truthfulness of its risk-adjustment diagnosis data to CMS…and the economic impact of the potential fraud that is being investigated.”

            Anthem has 14 days to file objections to the Magistrate Judge’s Report and Recommendations.

            This case is of interest to providers who participate in Medicare Advantage programs because it could shed light on how Medicare Advantage plans evaluate and change provider-submitted diagnosis codes.  The Court’s Report and Recommendations is attached here.