News: Insurers to pay $32.5 million for claims of risk-scoring fraud

Freedom Health and Optimum Healthcare, two large health insurers based in Florida, are paying $32.5 million to resolve a federal and state investigation into claims they defrauded CMS by submitting risk adjustment scores that improperly inflated their Medicare Advantage reimbursement, HealthLeaders Media reported.

Risk scoring, when used properly, allows CMS to make additional payments to managed-care plans based on the plan members’ health. Those scores are based on the diagnoses reported in the medical record. Higher risk scores correlate to the treatment of sicker patients, resulting in higher reimbursement to meet the increased costs associated with those patients.

According to the complaint, Freedom and Optimum reported treatment for conditions that patients either did not have or for which they were not treated.

The complaint also alleges that Freedom and Optimum induced CMS to allow them to expand their health insurance offerings into new counties in Florida, North and South Carolina by falsely asserting they had a sufficient network of doctors, clinics, and hospitals available to serve their enrollees when they had no such network in place.

The Department of Justice announced a settlement agreement in which Freedom and Optimum will pay the government $16.7 million to resolve the allegations of risk adjustment fraud and $15 million for the alleged fraudulent expansion of their service areas, for a total settlement of $31.7 million.

In addition, Freedom’s former chief operating officer was ordered to pay $750,000 to resolve the allegations regarding his role in the expansion of Freedom’s and Optimum’s service areas, HealthLeaders Media reported.

Editor’s note: To read the complete ruling from the Department of Justice, click here. To read HealthLeaders Media’s reporting of this story, click here.