Congress acts on Medicare cuts & Aledade allegedly commits Medicare Fraud

Episode 81 Recap of the FLATLINING Podcast

After taking a week off from the FLATLINING Podcast, Ron and Matthew update us with some good news for physicians with Congress making some adjustments to the Medicare Fee Schedule that will help physicians’ reimbursements. Also, our team seemed to strike a nerve last week with the leaders at Aledade as Ron and Matthew discussed an article from Modern Healthcare about a former employee whistleblower who alleges Aledade committed fraud. We heard from the folks at Aledade, and they requested us to remove the podcast and not publish a recap. We pulled down the podcast and reviewed it. We did correct two factual inaccuracies, one in the title and one in the description of a former Aledade executive. We then updated the episode and included a statement from Aledade in the articles section of the podcast show notes and republished it. This recap is of the republished podcast.

In this episode, Matthew and Ron started off discussing the U.S. Congress reduction in the cut to the Medicare Fee schedule, realizing as Ron said, that the “proposed cuts were too much.”  The reduction in the cut is roughly about half of what it was when the fee schedule cut was enacted for this fiscal year. Ron explained that comes out to about a 1.6% increase from where it started. Although that is good news for physicians, Ron said he wished it was fully eliminated and physicians had received an increase from last year given the inflationary environment. The result of all these machinations is that the new fee schedule, with a start date of March 9^th, will still be about 1.7% less than it was last year.

Matthew brings up that his clients are asking what this means for practices with contracts tied to Medicare rates. Ron explained that it depends on how the contract is written. He said that if the language says something akin to “‘The then current’ [rate], at which point I would argue it needs to adjust to the new fee schedule, or does the language have some other policy tied to it? Some plans say, ‘We pay according to the rate on January 1^st’ at which point that won’t change the rate at all.”  Ron concluded that it is very contract and situationally dependent.

Matthew and Ron wrap up by explaining how Blue Cross Blue Shield of N.C. handles the Medicare fee schedule basing it on the rate on January 1^st but implementing it on April 1^st. Ron explained the delay then allows for their systems to be loaded with the new rates.

Matthew kicks off the next segment mentioning past investigations and cases of Medicare fraud and segues into a recent Modern Healthcare article on a civil lawsuit that alleges Aledade “Improperly boosted revenues by adding overstated medical diagnoses to patients’ electronic medical records.” He asked Ron how big a deal this was and what it all means. Ron first makes clear that these are allegations and “everyone is innocent until proven guilty” but if they are found to have done what is alleged, it could be costly.  He also explained that it would “add more fuel to the fire of those people that are opposed to these for-profit Medicare Advantage plans.”  He said this opposition is born out of the significant financial incentive for companies to up-code and make people look more ill than they potentially are because they can make more money if they do so.

Ron said that this lawsuit may be the first of these cases where it is not an insurance company that is doing this, but an Accountable Care Organization (ACO), and the allegation here is that Aledade profited in helping physicians do the up-coding. Matthew pulled some quotes from the Modern Healthcare article that referenced the allegations against Aledade that they “’conflated’ anxiety into depression” which according to the article could increase payments by $3,300 a year per patient. According to the article, the suit also said that “Aledade decided that patients over 65 years old and who said they had more than one drink a day had substance abuse issues, which could bring in $3,680 extra per patient.”

Matthew reported that the case was filed in 2021 and was recently unsealed by the U.S. Department of Justice (DOJ) who decided not to pursue it, but that doesn’t mean it is going away, he said. Ron agreed and explained that the DOJ does a good job of keeping investigations sealed until such time that they decide what they are going to do with a case. He said in this instance it became public when the DOJ said they were not going to intervene. Ron said that the DOJ stated that they were not going to intervene “at this time.” He continued by saying that the DOJ theoretically could go back to it if they wanted to. The DOJ did not state the reasons for declining the case, which is typical, Ron said. But in other cases, he said, they have said that their declination to pursue a case has no bearing on the merits of the case or similar language.  The case will continue, Ron said, because under the False Claims Law, whistleblowers can proceed on their own and it is his understanding that the individual that came forward is proceeding with the litigation.

Matthew asked Ron how common whistleblower cases regarding Medicare fraud are. He said that they are not common, but when they happen, they tend to involve large sums of money.

Ron explained that Medicare Advantage plans tend to be involved in these types of cases because as the program was being developed, insurance companies explained to Congress that they needed additional payments because they were taking on a population that would cost them more money. In short, they convinced Congress they required additional payments when they could show that they had taken on a more severe patient population.  

Ron said that Cigna was recently hit with a large fine for “up-coding”, i.e. falsely reporting patients sicker than they are, explaining that “There is a lot of money at stake here.”  He said when this happens it tends to roll downhill. For example, a payer might go to an ACO and ask for the “right coding” or might use phrases like “accurately coding” or “fully coded.” The payer then might offer to share the additional payments with the ACO. Ron explained that this is what in essence is alleged to have happened here, where Aledade, using their sophisticated coding software, did this but with the physicians in their network.  The people that get hurt, Ron said, are the taxpayers, and according to some studies, Medicare Advantage may be being overpaid to the tune of something like 25% due to this kind of activity.

Matthew pointed out that Aledade denies any wrongdoing and read directly from their statement, “We do not yet know how the full legal situation will play out but will defend ourselves vigorously if needed in a court of law. We therefore will not address any individual allegations.” Matthew explained that Fulcrum Strategies and the FLATLINING Podcast have invited representatives from Aledade to appear on the FLATLINING Podcast in a future episode.

Matthew asked if this kind of scrutiny on coding could become a slippery slope for physicians, with the government consistently checking their coding practices and this hurting the private practice of medicine. Ron stated that in many ways it is already being done, but by the carriers, where they compare like practices to look for trends and question doctors’ actions in their billing activity that might trigger an audit. Ron said he looks at this issue like income taxes, if I am cheating on my taxes, I should get punished, if doctors and others are blatantly upcoding, they should get punished too.  He goes on to say that when anomalies catch someone’s attention, it is generally not something minuscule or some small error, it is generally a significant amount.

Matthew brought up a 2022 Government Accountability Office (GAO) study that stated that Medicare was paying out around 47 billion dollars in improper payments. He asked Ron what could be done. Ron said the first thing is to make sure you penalize offenders. Much like the reason most people don’t cheat on their taxes, he said, was because they don’t want to get fined. In the Medicare Advantage world, he said, there is so much money flowing through it, we are getting the results we are incentivizing. So, a serious look at how that can be addressed is needed he said. Simultaneously, he said, physicians are getting hurt by the reduction in Medicare reimbursements, and most physicians probably don’t want to take part in this activity but might feel they don’t have a choice.

Matthew said some of the accusations from lawmakers in the discussions of the GAO report, stated that it appeared CMS’s safeguards for preventing fraud were not adequate. Matthew said CMS responded by saying “They are committed to preventing fraud and protecting people with Medicare from falling victim to fraud.” Matthew asked Ron how effective is CMS at preventing fraud. Ron said like other federal agencies that have an enforcement responsibility, CMS catches a lot, but the sheer volume of money flowing through they can’t catch it all without increasing funding to their enforcement division by possibly a factor of five or ten.  Ron then referred to a study that said if the estimated additional costs for up-coding are accurate, it could cost the U.S. Taxpayer over a trillion dollars in the next ten years.

Matthew suggested that if the government could recoup that money, they should put it back in the Medicare Fee Schedule for physicians. Ron said those that oppose this Medicare Advantage program, point to these numbers and the fact that insurance companies are making huge profits and ask if the quality of care has increased.  Ron pointed out that measuring that sort of thing is always challenging, but he said its a valid question.

Matthew brought up the final topic about paying a flat rate for Medicare payments, kind of like the idea of a Flat Tax rate for income taxes to reduce fraud, and asks if this is a good idea. Ron said, like anything, there are winners and losers. Kind of like any prescription drug, there are side effects, he said. The single payment could get rid of some of the fraud, he explained, but there are practices out there that serve predominantly a Medicare/Medicaid population and their businesses survive on those additional Medicare payments, he explained. The result, he said, is some practices might go out of business or those physicians may start refusing to see Medicare and Medicaid patients, the very population some might argue that needs the care the most. Ron closed by reminding us there is no silver bullet to these problems and no easy answer and there is no prescription for the solution without some negative side effects.  

This week be sure to catch FLATLINING, we will feature Dr. Matt Stephens, a radiologist from Radiology of Indiana, talking about artificial intelligence in the practice of radiology.

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