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Medicare Advantage: “Termination At Will” Clauses Legal?

Providers who contract with Medicare Advantage Organizations (“MAO”) need to know that even though the MAO is a private company, because it manages federal Medicare money, the Medicare regulations are applicable – and, possibly, not the contract that you were forced to sign. When any entity accepts the responsibility of getting tax dollars – a firehose of tax dollars, no less – prepaid – then that entity answers to all tax payers for their actions and that entity must follow the Medicare regulations.

Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by MAOs that must follow rules set by Medicare. Most Medicare Advantage Plans include drug coverage (Part D). Health care providers can contract to be in the plan’s network. MAOs include BCBS, Humana, Anthem, UnitedHealthcare, Cigna, and Aetna.

Just for an example, I pulled up the provider agreement for BCBS. Section 6.2 allows termination by either party with 60 days notice; this is the “termination at will” clause. Theoretically, BCBS or any MAO could terminate contracts with small providers and decide to contract only with larger providers. Or contract with only African-American providers. Or contract with only female-owned companies. Or contract with the providers that the CEO likes. I disagree with a termination at will clause that allows a company with so much Medicare money at its fingertips the authority to only contract with whom it wants or likes. In fact, I believe a termination at will clause violates the law.

The Courts are split on this issue. See blog.

42 CFR Section 422, et al, outlines the regulations for Medicare Advantage.

According to CMS, in order for a MAO to “Suspend, Terminate, or Not-renew Physician Contracts” specific requirements for an MA organization that operates a coordinated care plan or network MSA plan providing benefits through contracting physicians and that suspends, terminates, or non-renews a physician’s contract are as follows:

  1. The MA organization must give the affected physician written notice of the reasons for the action, including, if relevant, the standards and profiling data used to evaluate the physician and the numbers and mix of physicians needed by the MA organization.
  2. The MA organization must allow the physician to appeal the action, and give the physician written notice of his/her right to a hearing and the process and timing for requesting a hearing.
  3. The MA organization must ensure that the majority of the hearing panel members are peers of the affected physician.

42 CFR 422.202(c) and (d) and preamble of February 17, 1999, rule.

In sum, MAOs are required to provide appeal rights for any Medicare contract that is terminated. But, doesn’t that contradict with a “termination at will” clause?

Medicare Fraud: Do MCOs Have Accountability Too?

Dr. Isaac Kojo Anakwah Thompson, a Florida primary care physician, was sentenced in July 2016 to 4 years in prison and a subsequent two years of supervised release. Dr. Thompson pled guilty to health care fraud.  He was further ordered to pay restitution in the amount of $2,114,332.33. Ouch!! What did he do?

According to the Department of Justice, Dr. Thompson falsely reported that 387 of his clients suffered from ankylosing spondylitis when they did not.

Question: How does faking a patient’s disease make a physician money???

Answer: Hierarchal condition category (HCC) coding. Wait, what?

Basically, Medicare Advantage assigns HCC coding to each patient depending on the severity of their illnesses. Higher HCC scores equals substantially higher monthly capitation payments from Medicare to the managed care organization (MCO). In turn, the MCO will pay physicians more who have more extremely sick patients (higher HCC codes).

Ankylosing spondylitis is a form of arthritis that causes inflammation and damage at the joints; eventually, the inflamed spinal joints can become fused, or joined together so they can’t move independently. It’s a rare disease, affecting 1 in 1000 people. And, importantly, it sports a high HCC code.

In this case, the Office of Inspector General (OIG) found it odd that, between 2006-2010, Dr. Thompson diagnosed 387 Medicare Advantage beneficiaries with ankylosing spondylitis and treated them with such rare disease. To which, I say, if you’re going to defraud the Medicare system, choose common, fabricated diseases (kidding – it’s called sarcasm – I always have to add a disclaimer for people with no humor).

According to the Department of Justice, none or very few of Dr. Thompson’s 387 consumers actually had ankylosing spondylitis.

My issue is as follows: Doesn’t the managed care organization (MCO) share in some of the punishment? Shouldn’t the MCO have to repay the financial benefit it reaped from Dr. Thompson?? Shouldn’t the MCO have a duty to report such oddities?

Let me explain:

In Florida, Humana acted as the MCO. Every dollar that Dr. Thompson received was funneled through Humana. Humana would pay Dr. Thompson a monthly capitation fee from Medicare Advantage based on his patient’s hierarchal condition category (HCC) coding. Increasing even just one patient’s HCC code means more bucks for Dr. Thompson. Remember, according to the DOJ, he increased 387 patients’ HCC codes.

Dr. Thompson reported these diagnoses to Humana, which in turn reported them to Medicare. Consequently, Medicare paid approximately $2.1 million in excess capitation fees to Humana, approximately 80% of which went to Dr. Thompson.

In this case, it is reasonable to expect that Humana had knowledge that Dr. Thompson reported abnormally high HCCs for his patients. For comparison, ankylosing spondylitis has an HCC score of 0.364, which is more than an aortic aneurysm and three times as high as diabetes. Plus, look at the amount of money that the MCO paid Dr. Thompson. Surely, it appeared irregular.

What, if anything, is the MCO’s duty to report physicians with an abnormally high number of high HCC codes? If you have knowledge of someone committing a crime and you do nothing, isn’t that called aiding and abetting?

With the publication of the Yates memo, I expect to see CMS holding MCOs and other state agencies accountable for the actions of its providers. Not to say that the MCOs should actively, independently investigate Medicare/caid fraud, but to notify the Human Services Department (HSD) if abnormalities exist, especially if as blatant as one doctor with 387 patients suffering from ankylosing spondylitis.