Medicaid Fraud Suit Could Hurt Aetna’s Future Bid Chances
By: Peter Johnson, AIS Health.
Reprinted with permission from AIS Health. View the original article here.
Editor’s note: This article has been updated to include a statement from Aetna.
A recently unsealed whistleblower lawsuit accuses CVS Health Corp.’s Aetna of defrauding the Commonwealth of Pennsylvania and the federal Medicaid program by knowingly misrepresenting the number of pediatricians in Aetna’s Medicaid network. While the outcome of the suit is far from certain, and the Dept. of Justice opted not to intervene in the matter, legal experts say the case may have merit — and Medicaid insiders say that Aetna’s reputation may take a hit.
Carol Wessner, a nurse and former Early and Periodic Screening, Diagnostic and Treatment consultant for Aetna, alleges in a recently unsealed lawsuit that pediatric primary care was practically inaccessible to Aetna’s Medicaid members because of its incorrect provider directory. The insurer covered 265,868 Medicaid lives in 2020 under the Aetna Better Health of Pennsylvania brand, according to Pennsylvania’s Dept. of Human Services (DHS). Wessner’s suit claims that, in fraudulently exaggerating the amount of pediatric primary care doctors and the number of patients they served, Aetna was able to pocket an excessive margin of its capitated payments from the Medicaid program.
In a court filing, Wessner also claims that she made Aetna executives including Aetna Better Health CEO Jason Rottman and Director of Quality Management Alice Jefferson aware of the network’s shortcomings — and that they retaliated against Wessner by terminating her. In 2017, Wessner first filed a qui tam whistleblower complaint under the False Claims Act of 1863, which means that she would be entitled to a large portion of any settlement or damages Aetna might pay. During that time, federal prosecutors considered whether to join the case against Aetna.
Wessner’s suit was sealed until Sept. 14, 2021, when the DOJ informed the court it would not join the suit against Aetna. Federal prosecutors likely investigated the matter during the intervening years, but on Aug. 25, the office of Stephen Kaufman, the acting U.S. attorney for the Western District of Pennsylvania, declined to prosecute the case. However, in its filing, the DOJ “reserve[d] its right to…intervene in this action, for good cause, at a later date.”
When asked for comment on the lawsuit, an Aetna spokesperson tells AIS Health, a division of MMIT, via email that “Aetna places the highest priority on the health and wellbeing of its members, and we provide access to quality care through a comprehensive provider network, including in Pennsylvania. Plaintiff’s allegation that Aetna has network adequacy deficiencies across the country is irresponsible and unrelated to the DOJ’s investigation. Aetna denies the allegations in the complaint, and intends to vigorously defend itself should the [plaintiff] choose to move forward….Aetna is pleased that after reviewing all of the evidence, the government chose not to participate in the lawsuit.”
Why Didn’t DOJ Intervene?
David Kaufman, a health care attorney and partner at Laurus Law Group LLC, tells AIS Health, a division of MMIT, that “it’s hard to speculate” why the DOJ didn’t intervene in the case. “They probably did their own investigation,” Kaufman says. “There are many factors that they would consider. They might say, ‘We have limited resources, is this something we want to spend our time doing? Is the amount of money involved in this case worth it? Is this going to be a really hard case to prove, and take a long time for us to get to resolution?’ When the government does intervene, they feel that it’s a really strong case” — which might not be true of this suit.
That said, “it seems like you could look at the network, and the facts could be shown whether [Wessner’s] claims are accurate. It’s pretty egregious if they are including doctors that aren’t alive in their network — or if they’re out of state, or they aren’t accepting patients. It doesn’t seem like it would be that tremendously difficult to, through discovery, determine whether or not the allegations are accurate. But at this point, all we have is the complaint — we don’t have the answer.”
Another unanswered question is what the Commonwealth knew about the matter.
“What was the state’s role in this?” Kaufman asks. “What was the regulator doing? What kind of complaints were coming in? There are a lot of questions that need to be answered that are certainly worth the investigation.”
“Our state Medicaid agency has limited staff and resources; we rely on Medicaid MCOs to be truthful about their networks,” Kyle Fisher, a managing attorney at the Pennsylvania Health Law Project (PHLP), tells AIS Health. PHLP is a legal aid organization that provides free legal services in health care matters.
State Could Conduct Its Own Audit
Fisher explains that Medicaid MCOs operating in Pennsylvania must file a corrective action plan during the bidding process for a Medicaid contract. If the MCO is acts improperly, the state can require the carrier to implement the corrective action plan.
“The Department of Human Services, our state Medicaid agency, should do its own audit of Aetna’s reported provider networks. If the alleged misrepresentations are confirmed, DHS should issue corrective action. Being put in corrective action would appropriately hinder Aetna’s ability to gain future Medicaid business, either in Pennsylvania or elsewhere.”
“The allegations against Aetna are highly concerning,” Fisher adds. “Families on Medicaid already face enough barriers to accessing care, such as the daily struggle of living in poverty or raising a child with medical complexities. They should not have to also worry about their insurance company lying about its provider networks or purposefully contracting with too few doctors.”
While Pennsylvania’s next move isn’t clear, one Medicaid official from another state — who asked to remain anonymous — says that state’s agency now will take a hard look at their Aetna contracts.
“[The suit] is going to jeopardize their contract with the Commonwealth right now,” the official tells AIS Health. “It also puts [Aetna] under significant scrutiny in any other state where they hold contracts. I’m sure every state, having read that this might be an issue, is now looking at their network adequacy. We decided to start doing that.”
The official says that, regardless of the outcome of the suit, Aetna is now at a severe disadvantage in bidding going forward — and the firm is already in a legal fight with Pennsylvania over Medicaid contract awards that didn’t go Aetna’s way.
“It definitely doesn’t help [Aetna],” the official says. “Anyone else who’s bidding is probably salivating at the prospect that they actually did this. If they are out, it opens up a huge hole for large plans that have not been in the Commonwealth.”
Network Adequacy Is an Ongoing Issue
Wayne Turner, senior attorney at the National Health Law Program, a Medicaid advocacy group, tells AIS Health that network adequacy challenges are a consistent problem nationwide, though he is not familiar with the specifics in Pennsylvania.
“It’s a large and ongoing problem,” Turner says. “In many states that have Medicaid managed care programs, the managed care organizations are required to provide access to a broad array of providers to meet the needs of the enrolled population. Time and time again, when Medicaid enrollees are trying to access primary care or specialty care, they’re finding that those provider directories are outdated, that the providers are not accepting new patients or don’t even exist.”
In 2014, Turner adds, the HHS Office of Inspector General (OIG) “found that nearly half of the providers listed in the MCO directories were no longer there or not accepting Medicaid patients.”
He says that states need to take an active role in ensuring network adequacy. OIG also found, Turner says, that “not surprisingly, states that conducted direct testing and monitoring discovered that MCOs violated state standards, whereas states that did not test and relied on the MCO’s certification had no violations of state standards.”
“This is ultimately the responsibility of the state Medicaid agency, because that is what’s built into the federal Medicaid Act,” Turner says. “The state Medicaid agency is responsible for the whole operation. So when it contracts with a for-profit company to run a portion of its Medicaid program, it has to do the oversight.”
Jeff Myers, senior vice president at Catalyst Healthcare Consulting, Inc. and former CEO of Medicaid Health Plans of America, tells AIS Health that the health metrics Aetna reports to the Commonwealth “stayed relatively static, which probably means they weren’t investing in the network, or they were underpaying their providers.”
In 2020, Aetna Better Health did not meet an overwhelming majority of Medicaid MCO performance standards tracked by the Pennsylvania DHS.
Nationally, Aetna has “had challenges in the management of their Medicaid program for several years,” Meyers observes. “I think they’ve had four or five different Medicaid CEOs in the last six years or so. [For] some of their top people, Medicare was really their expertise. So I think in an organization like that, it would not surprise me to find out that there were, at a state level, some lapses in network management skills, because that is a relatively expensive and challenging thing to do well across multiple states.
“If you contrast that with a company like Centene or United[Health Group], their top, national Medicaid people are relatively static,” he continues. “In those cases, you tend to get more stable state management [locally] because you have more stable management at the corporate level.”
While Myers thinks that the “contention that regional players tend to have more robust networks is partially true,” he says that “the large national players tend to be able to manage their networks more effectively, because they have a giant commercial arm. If you think about it, United very rarely has network issues, because they go to providers and say, ‘Here’s the deal. We have these commercial plans. And if you wish to be in our network, you’re going to take 15% Medicaid — or maybe you find you’re not in our network.’”
In any case, Myers says Aetna has a lot of explaining to do.
“I kind of understand why it takes a little time to ramp up [a network]. There’s always some confusion about what the payment terms are. But that wasn’t the case [with Aetna in Pennsylvania.] This was a multi-year contract where they were not meeting certain clear contractual requirements,” Myers says. “I would like more information to see whether this was a corporate, systemic problem that they could not manage…[versus] knowing that their network was well under the requirements, and that’s the way they were going to marginalize profit incentive.”
“Was this a wholesale fraud, starting at the very top?” Myers wonders. “I guess we’ll see.”
Contact Fisher at firstname.lastname@example.org, Kaufman at email@example.com, Myers via Joe Reblando at firstname.lastname@example.org and Turner at email@example.com.