Health plan trained physicians to overbill Medicare, lawsuit alleges

Essence Group Holdings, a St. Louis-based health plan with 60,000 members in Missouri and Illinois, is facing a whistleblower lawsuit and is under scrutiny due to a recent audit by HHS' Office of Inspector General.

In April, the OIG audited diagnosis codes that Essence submitted for use in CMS' risk adjustment program to determine whether the codes complied with federal requirements. The audit revealed dozens of instances in which the health plan improperly reported patients had an acute stroke, meaning they suffered strokes that year. In these cases, the patients actually had strokes in past years, and the physicians should have documented a history of stroke, according to Kaiser Health News, which cited the OIG report.

Essence also submitted diagnosis codes for major depressive disorder when the medical records did not support these diagnosis codes, according to the OIG.

The OIG concluded the errors occurred because the policies and procedures Essence used to detect and correct noncompliance with CMS' program requirements were not effective.

The OIG said Essence received $158,905 in overpayments due to the errors. The company denied any wrongdoing but agreed to refund the alleged overpayment, according to Kaiser Health News.

Essence is also named as a defendant in a whistleblower lawsuit filed in 2017 and unsealed in January. The lawsuit alleges Essence, its medical technology arm Lumeris, and Lester E. Cox Medical Centers engaged in a scheme to boost Medicare payments, according to Kaiser Health News.

"The basic scheme is to upcode patients with needless diagnoses to falsely enhance the RAF [risk adjustment factor] score, and thereby receive millions of dollars more from CMS," states the complaint, which was filed by a physician who worked for Cox from 2013 through August 2017.

According to the lawsuit, physicians who worked for Cox went through "Enhanced Encounter Training." In an email to hospital officials after one of the training sessions, a physician described how Essence's "enhanced" coding techniques could "capture around $11,000 from Medicare" for one patient's care when the man's care actually cost less than $2,000, according to Kaiser Health News.

In a statement to Kaiser Health News, a Cox spokesperson denied the allegations and said Cox officials believe the organization is "fully compliant with the law." Essence and Lumeris also denied the allegations. The companies will "continue to vigorously defend against these baseless claims," a Lumeris spokesperson told Kaiser Health News.

Access the full OIG report here.

Access the full Kaiser Health News article here.

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