Updated on: May 18, 2017

Former UnitedHealth Finance Director Files Bombshell Whistleblower Lawsuit as HCC Issue Looms

Original story posted on: May 17, 2017

A former high-ranking official with a health insurance industry titan has filed a whistleblower lawsuit alleging that Medicare Advantage annually made tens of billions of dollars in improper payments to insurers over the course of years, the New York Times reported last week.

Benjamin Poehling, a Minnesota resident who once worked for UnitedHealth Group, made the bombshell allegations under the False Claims Act, sparking fierce denials from the company, the report said.

“(Poehling) asserts that the big insurance companies have been systematically bilking Medicare Advantage for years, reaping billions of taxpayer dollars from the program by gaming the payment system,” the report read. “The Justice Department takes the whistleblower’s claims so seriously that it has said it intends to sue … UnitedHealth Group, even as it investigates other Medicare Advantage participants.”

Poehling granted the Times his first interview since his allegations were made public, describing how finance directors like him allegedly monitored projects UnitedHealth and other insurers had designed to make patients look sicker than they were by scouring patients’ health records electronically and finding ways to manipulate diagnosis codes.

The sicker the patient, the more UnitedHealth was paid by Medicare Advantage, Times reporter Mary Williams Walsh wrote, and the bigger the bonuses that were doled out. Earlier this year a federal judge unsealed the lawsuit that Poehling filed against UnitedHealth and 14 other companies involved in Medicare Advantage, the popular health plan utilized by about a third of all Medicare beneficiaries under Part C.

“They’ve set up a perfect scheme here,” the Times quoted Poehling as saying. “It was rigged so there was no way they could lose.”

Walsh also quoted a spokesman for UnitedHealth, Matthew A. Burns, who denied any wrongdoing.

“We are confident our company and our employees complied with the government’s Medicare Advantage program rules, and we have been transparent with CMS (the Centers for Medicare & Medicaid Services) about our approach under its murky policies,” Burns was quoted as saying.

As a whistleblower, under federal law Poehling would earn a percentage of any funds recovered should his lawsuit prevail. Much of the remainder would be returned to CMS.

An email included in the complaint from Jerry J. Knutson, the chief financial officer of the division Poehling once worked for, certainly sounded damning.

“You mentioned vasculatory disease opportunities, screening opportunities, etc., with huge $ opportunities,” Knutson wrote, according to the Times. “Let’s turn on the gas!”

The report also indicated that bonuses were issued when Poehling and his team hit their revenue targets – but not when patients saw better health outcomes or the accuracy of patient charts improved.

Walsh further noted that the Justice Department has said it is investigating four other Medicare Advantage insurers: Aetna, Humana, Health Net, and Cigna’s Bravo Health, potentially meaning that more whistleblowers could come forward –and possibly jeopardizing the solvency of the Medicare Advantage program altogether.

“Auditors and analysts have warned for at least a decade that Medicare Advantage has been vulnerable to cheating since risk scoring was phased in, from 2004 to 2008. The inspector general of the Department of Health and Human Services, where the Centers reside, audited a small sample of Medicare Advantage plans early on and found overpayments of up to $650 million in 2007. It predicted even more in 2008, but then came budget cuts, and those audits stopped,” Walsh wrote. “The Government Accountability Office reported last year that the Centers for Medicare and Medicaid Services had identified $14.1 billion of overpayments to insurers in 2013 and did not have a clear plan for recovering the money. It also faulted the agency’s auditing methods.”

Underlying the issue are hierarchical condition categories (HCCs).

“Medicare relies on HCC codes to risk-adjust Medicare Advantage beneficiaries,” healthcare consultant Frank Cohen said in an email to RACmonitor. “The higher the HCC codes, the more money allocated to the plan.”

Cohen said that HCC coding, while quite complex, is in large part tied to diagnoses codes (ICD-9 and ICD-10) as well as the patient’s age. 

“The ICD codes help to define co-morbidities or associated health issues, and the more, the merrier (at least as it is related to payments from CMS,” Cohen said. “So, what insurers do, as the article said, is a deep dive into the patients’ records to make sure they capture every conceivable problem and work to convert that into another ICD code – which in turn increases the risk value, which in turn increases what they get paid.”

Cohen noted that this has created a niche market of consultants that contract with the insurers to both scour medical records and teach physicians how to code everything and anything related to the patient’s health. 

“I agree that the chart should be accurate and should reflect the patient’s health issues, and I also agree that the higher the acuity (or risk), the more should be allocated for care,” Cohen said. “But there is a point of diminishing returns where documenting more does not improve quality of care – only (raising) the cost.”

In a posting on the website of the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) was a reaction by Scott J. Lampert, special agent in charge of the OIG’s New York regional office.

“With approximately one third of Medicare beneficiaries enrolled in Medicare Advantage plans, careful investigation of charges is more important than ever,” said Lampert. “People receiving health care through these programs and taxpayers deserve nothing less.”


If your organization participates in Medicare Advantage, you need to know whether your Medicare overpayments, as well as underpayments, are accurate. To do so you need to know the process used when Medicare audits claims. Register now to hear the RACmonitor two-part webcast series on Medicare Advantage featuring noted author and educator Duane Abbey, PhD, May 25 and June 15, 2017 at 1:30 p.m. ET. 

Contact the Authors:



Chuck Buck and Mark Spivey

Chuck Buck is the publisher of RACmonitor and is the executive producer and program host of Monitor Mondays.

Mark Spivey roundMark Spivey is a national correspondent for RACmonitor.com who has been writing on numerous topics facing the nation’s healthcare system (and federal oversight of it) for five years.

This email address is being protected from spambots. You need JavaScript enabled to view it.

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