In fiscal year 2023, the healthcare industry saw a significant increase in settlements and judgments under the False Claims Act (FCA), with the Department of Justice (DOJ) reporting over $2.68 billion in total, of which more than $1.8 billion were related specifically to healthcare entities like managed care providers, hospitals, pharmacies, laboratories, long-term acute care facilities, and physicians. A substantial focus of these enforcement actions was Medicare Advantage (MA) fraud, which has become a critical area of concern for the DOJ as the number of beneficiaries enrolled in these privatized insurance plans continues to rise.
Medicare Advantage, where private insurers are paid by the government to manage beneficiaries’ care, accounted for more than half of the eligible Medicare population last year. Concerns have been raised about fraud contributing significantly to overpayments to MA plans, with projections indicating that the government could pay MA plans $88 billion more this year than it would for traditional Medicare enrollees. This discrepancy is partly attributed to MA payers drawing healthier beneficiaries and engaging in aggressive coding practices to secure higher reimbursements from the government.
Notably, Cigna agreed to a $172 million settlement to resolve allegations of submitting inaccurate diagnosis codes to inflate payments, and Martin’s Point Health Care settled for $22.5 million over similar claims. The DOJ also prioritized enforcement against fraud in pandemic relief programs and violations of cybersecurity requirements, highlighting the growing concern over cybersecurity threats in the healthcare sector. For instance, Jellybean Communications Design settled for over $293,000 for failing to secure data on a federally funded children’s health insurance website in Florida, underscoring the heightened focus on protecting sensitive health information from cyber-attacks.