During his March 14th Senate confirmation hearing, Dr. Mehmet Oz, nominated to lead the Centers for Medicare & Medicaid Services (CMS), addressed critical issues surrounding fraud and Medicare Advantage (MA) plans, particularly the practice of risk adjustment fraud, a type of upcoding. Risk adjustment fraud involves insurers inflating the severity of patients’ medical conditions to receive higher payments from Medicare, a practice that costs the federal government billions of dollars in losses each year.
Oz expressed concern about these practices, noting that the government has “numerous tools” to police misconduct in Medicare and “there’s a new sheriff in town.” He emphasized that actions like risk adjustment fraud not only misappropriate taxpayer funds but also undermine the integrity of programs designed to support vulnerable populations. Highlighting the severity of the issue, Oz noted that risk adjustment upcoding allows unscrupulous entities to exploit the system, thereby diverting resources away from patients genuinely in need.
The financial implications are substantial. An investigation led by the Department of Health and Human Services Inspector General revealed that private insurers raked in billions in risk-adjusted payments in 2023 that lacked any other follow-up visits, procedures, tests, or supplies for diagnoses. The Medicare Payment Advisory Committee (MedPAC) projects that CMS will overpay MA private insurers by $83 billion in 2024 alone, largely due to upcoding and favorable selection tactics by the insurers.
Oz’s commitment to addressing risk adjustment fraud was evident during his exchanges with both Republican and Democratic senators. When Senator Elizabeth Warren raised questions about the fraudulent nature of risk adjustment upcoding practices, Oz concurred, stating that such actions constitute cheating that “actually hurting the people trying to take care of those vulnerable populations.”
Senator Chuck Grassley, a longstanding advocate for government accountability and a principal architect of the modern False Claims Act (FCA), highlighted that improper payments in major healthcare programs have averaged $122 billion annually over the past five years. He lauded the effectiveness of the FCA in recovering more than $78 billion lost to fraud since its reform and underscored the importance of empowering whistleblowers in this process.
Grassley told Oz, “I want you to listen to whistleblowers” and “pay attention to things that are brought to [CMS’] attention by whistleblowers and get things corrected.” Grassley also urged CMS, in collaboration with the Justice Department, to aggressively pursue waste, fraud, and abuse within the system. In response, Oz acknowledged the role of whistleblowers, noting “the biggest advice that I might take from you is look down in the depth . . . for the people who are willing to tell you the truth about what’s going on.”
Beyond risk adjustment fraud, Oz addressed broader concerns about the financial dynamics between MA and traditional Medicare. He observed that, paradoxically, the current system results in higher payments for MA than for regular Medicare, a situation he described as “upside down.”
Oz’s stance on MA and upcoding reflects a commitment to combating risk adjustment fraud by MA plans, as well as a recognition of the crucial role whistleblowers play in bringing such frauds to light.
Phillips & Cohen protects healthcare whistleblowers
If you are aware of risk adjustment upcoding or other healthcare fraud and would like to discuss the matter with experienced and successful whistleblower attorneys, contact Phillips & Cohen for a free, confidential case review.
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