UNITED STATES - Henry C. Leventis, the United States Attorney for the Middle District of Tennessee, Damian Williams, the United States Attorney for the Southern District of New York, and Naomi Gruchacz, the Special Agent in Charge of the New York Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced today that the United States has settled a civil healthcare fraud lawsuit against THE CIGNA GROUP and its subsidiary Medicare Advantage Organizations (collectively, “CIGNA”).  The $37 million settlement resolves claims that CIGNA submitted to the Government false and invalid patient diagnosis codes to artificially inflate the payments CIGNA received for providing insurance coverage to its Medicare Advantage plan members.  The lawsuit was originally filed by a whistleblower in the U.S. District Court for the Southern District of New York and later transferred to the Middle District of Tennessee.

The Government’s Complaint alleged that the invalid diagnosis codes were based solely on forms completed by vendors retained and paid by CIGNA to conduct in-home assessments of plan members.  The healthcare providers (typically nurse practitioners) who conducted these home visits did not perform or order the diagnostic testing or imaging that would have been necessary to reliably diagnose the serious, complex conditions reported and were in many cases prohibited by CIGNA from providing any treatment during the home visits for the medical conditions they purportedly found.  The diagnoses at issue were not supported by the information documented on the forms completed by the vendors and were not reported to CIGNA by any other healthcare provider who saw the patient during the year in which the home visits occurred.  Nevertheless, CIGNA submitted these diagnoses to the Government to claim increased payments, and falsely certified each year that the diagnosis data it submitted was “accurate, complete, and truthful.”

As part of the settlement approved yesterday by U.S. District Judge Eli Richardson CIGNA will pay the United States a total of $37 million.  CIGNA also made extensive factual admissions in the settlement regarding the conduct alleged in the Government’s Complaint.  In connection with this settlement, CIGNA entered into a five-year Corporate Integrity Agreement (“CIA”) with HHS-OIG.  The CIA requires CIGNA to implement numerous accountability and auditing measures.  In particular, CIGNA must conduct annual risk assessments and other monitoring, and an independent review organization will conduct multi-faceted audits focused on risk adjustment data.  In separate settlements announced today by the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, CIGNA is also agreeing to resolve separate allegations that CIGNA submitted invalid beneficiary diagnoses to inflate Medicare Advantage payments.

“Medicare Advantage relies on the integrity of its insurers and the accuracy of the diagnosis code information they provide, since it has an outsize effect on Medicare payments,” said Henry C. Leventis, United States Attorney for the Middle District of Tennessee. “We will continue to vigorously pursue fraud in this increasingly important program.”

U.S. Attorney Damian Williams for the Southern District of New York said: “For years, Cigna submitted to the Government false and invalid diagnosis information for its Medicare Advantage plan members.  The reported diagnoses of serious and complex conditions were based solely on cursory in-home assessments by providers who did not perform necessary diagnostic testing and imaging.  Cigna knew that these diagnoses would increase its Medicare Advantage payments by making its plan members appear sicker.  This Office is committed to holding insurers accountable if they seek to manipulate the Medicare Advantage Program and boost their profits by submitting false information to the Government.”

“Managed care plans’ primary responsibility is to ensure the health coordination and appropriate benefits for the beneficiaries they have enrolled, not focus on profits,” stated Special Agent in Charge Naomi Gruchacz with the U.S. Department of Health and Human Services Office of Inspector General. “HHS-OIG will work with our partners at the U.S. Attorney’s Office to ensure the integrity of federal healthcare program funds and the provision of appropriate, quality services to patients.”

Medicare Advantage, also known as the Medicare Part C program, provides health insurance coverage for tens of millions of Americans who opt out of traditional Medicare.  Under Medicare Part C, Medicare Advantage Organizations (“MAOs”), typically operated by private insurers like CIGNA, provide coverage for Medicare Advantage plan members.  In return, MAOs receive monthly payments from the Centers for Medicare and Medicaid Services (“CMS”) that vary based on each member’s demographic information and medical diagnoses.  MAOs submit diagnoses for their plan members, usually provided by the plan members’ healthcare providers, to CMS.  CMS then uses those diagnoses, along with demographic factors, to calculate a “risk score” for each member and, in turn, the amount of the monthly payment it will pay the MAO for covering that member.  The Medicare Advantage payment model is intended to pay MAOs more to cover healthcare expenses for sicker plan members (who are expected to incur higher healthcare costs) and less for healthier plan members (who are expected to incur lower costs).

As alleged in the Government’s Complaint: CIGNA, through its subsidiaries and affiliates, owns and operates numerous MAOs that administer Medicare Advantage Plans.  CIGNA contracted with several vendors to conduct home visits of Medicare Advantage plan members across the country as part of its broader so-called “360 comprehensive assessment” program.  The home visits were typically conducted by nurse practitioners and, on occasion, by other non-physician healthcare providers such as registered nurses and physician assistants (the “Vendor HCPs”).  Based on the visit, the Vendor HCPs completed a CIGNA-created form (“360 form”) that included a check-the-box multi-page list of a wide range of medical conditions.  CIGNA had its coding teams identify diagnosis codes that corresponded to the recorded medical conditions and then submitted those to CMS for risk adjustment payment purposes.

CIGNA structured the 360 home visits for the primary purpose of capturing and recording lucrative diagnosis codes that would significantly increase the monthly capitated payments it received from CMS.  The purpose of the visits was not to treat patients’ medical conditions, and CIGNA explicitly prohibited the Vendor HCPs from providing actual patient treatment or care.  As CIGNA acknowledged in an internal document discussing the program, “[t]the primary goal of a 360 visit is administrative code capture and not chronic care or acute care management.”  But this was not disclosed to CIGNA’s plan members when the home visit was scheduled or during the actual visit.  When identifying plan members to receive home visits, CIGNA targeted individuals who were likely to yield the greatest risk score increases and thus the greatest increased payment. 

The Vendor HCPs spent limited time with the patients and did not conduct a comprehensive physical examination.  When completing the assessments and recording the diagnoses, the Vendor HCPs relied largely on the patient’s own self-assessment and their responses to various basic screening questions.  Vendor HCPs did not have access to the patient’s full medical history and typically did not obtain or review relevant records from the patient’s primary care physician in advance of the visit.

CIGNA’s 360 home visit program regularly generated false and invalid diagnosis codes for certain serious, complex conditions that cannot be reliably diagnosed in a home setting and without extensive diagnostic testing or imaging.  In tens of thousands of instances, CIGNA submitted diagnosis codes that represent serious, complex medical conditions that (i) were based only on the home visits conducted by the Vendor HCPs; (ii)  require specific testing or imaging to be reliably diagnosed, which was not performed; (iii) were not supported by the information documented on the 360 form completed by the Vendor HCPs; and (iv) were not reported by any other healthcare provider who saw the plan member during the year in which the home visit occurred (the "Invalid Diagnoses").  The Invalid Diagnoses included, but are not limited to, diagnoses for complex medical conditions such as chronic kidney disease, congestive heart failure, rheumatoid arthritis, and diabetes with renal complications.  According to CIGNA’s own clinical guidelines, accurately diagnosing these conditions requires specialized testing.

CIGNA exerted pressure on Vendor HCPs to record high-value diagnoses that significantly increased risk adjustment payments.  CIGNA management identified at least 12 classes of generic chronic diagnoses that they thought were “often underdiagnosed” among its Plan members and, through trainings and seminars, encouraged the Vendor HCPs to make these diagnoses during the home visits.  CIGNA also closely tracked the volume and nature of the diagnoses generated by each vendor’s home visits, as well as how the diagnoses affected risk-adjusted payments.  CIGNA provided trainings to vendors to improve their “performance” when they failed to deliver the expected level of high-value diagnosis codes.

Indeed, CIGNA tracked the return on investment of the 360 home visit program by comparing the costs of the in-home visits (i.e., payments to vendors) against the additional Part C payments generated by increased risk scores.  For example, according to an internal report, CIGNA determined that, during the first nine months of 2014, one vendor’s 6,658 in-home visits resulted in more than an additional $14 million in Medicare payments, which dwarfed the approximately $2.13 million that CIGNA paid to the vendor.  When specific providers were found to have captured fewer diagnoses than expected, CIGNA asked the vendor to prepare a “performance improvement plan” for the provider.

The Invalid Diagnoses generated by the 360 home visits also did not conform with the International Classification of Diseases (“ICD”) Office Guidelines for Coding and Reporting (the “ICD Guidelines”), as required by applicable federal regulations.  The Invalid Diagnoses did not affect patient care, treatment, or management during the home visit, as required under the ICD Guidelines, and thus were ineligible for risk adjustment.  In addition, the Invalid Diagnoses were not supported by the minimal information recorded on the 360 forms, in violation of the ICD Guidelines’ medical record documentation requirement.  In fact, in some cases, the 360 forms include clinical exam findings that contradict the supposed diagnosis.  For example, one patient received a congestive heart failure diagnosis from a home visit even though the 360 form explicitly noted that physical exam results found her heart to be “regular” and “normal,” and stated, “cardiac reviewed and unremarkable.”

As part of the settlement, CIGNA admitted and accepted responsibility for certain conduct alleged by the Government including the following:

• As part of the 360 Program, CIGNA contracted with vendors who employed nurse practitioners or other licensed healthcare providers to conduct assessments of Part C members in their homes.  The vendor healthcare providers, among other things, performed physical exams and documented diagnostic information on standardized forms provided or approved by CIGNA but in many cases were not permitted to provide treatment or prescriptions for medications. 
• CIGNA’s medical coding team reviewed the completed “360” forms and, based on that review, identified diagnosis codes that corresponded to the medical conditions checked off on the forms, which were then submitted to CMS as part of CIGNA’s risk adjustment data.  The forms utilized by CIGNA’s vendors listed a wide range of diagnoses, including complex medical conditions.
• CIGNA tracked the volume and nature of the diagnoses generated by vendors’ home visits.  CIGNA also tracked how the diagnoses affected risk-adjusted payments. 
• According to diagnostic criteria disseminated by CIGNA to the vendors, the clinical assessment of some of these diagnoses relies on laboratory evaluation, diagnostic imaging, or other diagnostic testing when making a particular diagnosis for the first time.  In many cases, CIGNA did not require 360 Program vendors conducting in-home assessments to have the equipment available to conduct such laboratory testing, imaging, or other diagnostic testing when diagnosing these conditions. 
• In thousands of instances, the in-home assessments conducted by 360 Program vendors resulted in diagnoses of CIGNA members and the submission to CMS of resulting risk-adjusting diagnosis codes that had not been previously reported to CMS by CIGNA from any other encounter with a healthcare provider during the year in which the home visit occurred.
• Based on the in-home assessments of members completed by vendors pursuant to the 360 Program, in many instances, CIGNA reported to CMS diagnoses for Medicare Advantage Plan members where the 360 forms did not include clinical information that corroborated the diagnoses and did not reflect that the diagnostic testing necessary to make the diagnosis for the first time had been performed.

This case is being handled by Assistant U.S. Attorney Ellen Bowden McIntyre of the Middle District of Tennessee and Assistant U.S. Attorneys Jeffrey Powell, Peter Aronoff, Jean-David Barnea, and Samuel Dolinger of the Civil Frauds Unit within the U.S. Attorney’s Office for the Southern District of New York.