LSHC Horizons Brochure 2024 - Flipbook - Page 51
Hogan Lovells | 2024 Life Sciences and Health Care Horizons | Litigation
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Managed care in the cross-hairs
As enrollment in Medicare Advantage and
Medicaid Managed Care programs has grown
over the past decade, so too has the flow of
federal health care dollars. This transition
away from traditional, fee-for-service (FFS)
reimbursement models to more complex,
risk-based payment systems is giving rise to
intricate legal issues, including in the realm
of government enforcement. One challenge
facing regulators and companies alike is
that traditional badges of fraud associated
with FFS reimbursement frequently do not
apply in managed care, where systems are
constructed to shift economic risk away from
the government.
The increased enrollment and associated cost
of Medicare Advantage and Medicaid Managed
Care plans has heightened the government’s
interest in these programs. Most overt
Department of Justice (DOJ) enforcement
in the space has focused on the submission
of false diagnosis codes, in cases against
both plans and providers. But managed care
payment systems pose unique issues under the
False Claims Act (FCA), including because: (1)
a private insurer sits between the government
and health care services providers; and (2) the
amount the insurer is paid is decoupled from
the amount or type of health care services
provided to federal health care program
beneficiaries. Thus, although the government
undoubtedly is putting money into the system,
it is more difficult to trace the flow of funds in
relation to individual items or services.
James Huang
Partner
Washington, D.C.
These factors can make it more difficult for
the government—as well as private relators
litigating FCA cases—to carry the burden of
proving all elements necessary to prevail under
the FCA. Among other challenges, capitated
payment systems obscure the nexus between
the government’s payment decision and any
alleged false statement or claim linked to
individual items, services, or diagnoses. As a
result, in such cases the government may face
obstacles to establishing the submission of a
materially false claim. In addition, capitated
payment systems can make it inherently
difficult to prove damages, including in cases
when a provider is paid by a capitated plan on a
FFS basis. Importantly, this has not prevented
the government from securing multiple
settlements in the Medicare Advantage context,
particularly in the risk-adjustment space.
In 2024 and moving forward, we anticipate
that the government will continue efforts to
use the False Claims Act as an enforcement
tool to target alleged fraud involving Medicare
Advantage and Managed Medicaid programs.
Companies and providers operating in this
space would be well-advised to monitor
developments in this evolving area of
government regulation and enforcement.
Matthew C. Sullivan
Partner
New York
Rachel Stuckey
Associate
Washington, D.C.
