The Wall Street Journal has an exclusive report that UnitedHealth is being investigated by the Department of Justice for criminal fraud with respect to Medicare Advantage claims. Note that this is not a Trump Administration initiative per se; UnitedHealth has been subject to civil whistleblower filings where the DoJ joined the whistleblower case as it often does in fraud cases involving government contracts. Nor does this means that the DoJ will actually move forward with a criminal case, particularly since past fraud cases against UnitedHealth have lost in court.
What the article does not make clear enough is that the practice that the DoJ is targeting is upcoding. That is reviewing a patient’s records before a claim is submitted to see if either the classification of the ailment (the diagnosis codes) or the services provided (the procedure codes) can be revised so as to result in a larger insurance claim.
If the DoJ lodges and wins this case, it has the potential to shake up the medical grifting adminisphere in a big way. It would lay the foundations for other criminal cases as well as for private actions. For starters, CalPERS runs a large in-house health insurance program. Similarly, state-run Medicaid programs could pursue hospital system and other large claimants.
What I fail to understand, and hopefully expert readers can explain, is why repeated efforts to target this abuse have not already drawn blood. The very fact that this practice is called “upcoding” as opposed to something more neutral, like “code review,” which could be argued to signify that the intent is merely to correct doctor errors and not to squeeze more money from payors like the government. For instance, how often do these “upcoding” reviews result in claim reclassification so as to lower the amount charged in comparison to how the doctor or hospital originally wrote up the patient care? Similarly, the language I’ve seen in sales pitches for software vendors offering upcoding products to medical practices makes it uncomfortably obvious that the aim is to squeeze more money from insurers, and not give the most accurate presentation possible of the patient’s condition and the services rendered.
This failure, at least with respect to Medicare Advantage to score even a partial win on upcoding absubes, leads me to wonder if the insurer contracts with the government have unusually permissive language which authorizes what on a common-sense basis would seem to be a fraud.
Consider this section of the Journal’s account:
The healthcare-fraud unit of the Justice Department’s criminal division is overseeing the investigation, the people said, and it has been an active probe since at least last summer.
While the exact nature of the potential criminal allegations against UnitedHealth is unclear, the people said the federal investigation is focusing on the company’s Medicare Advantage business practices….
The probe adds to a list of government inquiries into the company, including investigations of potential antitrust violations and a civil investigation of its Medicare billing practices, including at its doctors offices….
The Justice Department’s criminal healthcare fraud unit focuses on crimes such as kickbacks that trigger higher Medicare or Medicaid payments….the unit has turned its focus to insurers in the Medicare Advantage system, where they now oversee taxpayer-funded benefits for more than half the seniors and disabled people in the broader Medicare program….
Medicare Advantage insurers are paid extra for covering sicker patients, creating an incentive to document diagnoses for patients they cover. In some cases, the Journal’s reporting has shown, questionable diagnoses by UnitedHealth added billions to taxpayers’ costs….
The DOJ has struggled to make its case in fraud claims against UnitedHealth in the past. In March, a court-appointed special master recommended that a judge effectively dismiss a whistleblower case against UnitedHealth after concluding the government hadn’t presented evidence that patient diagnoses submitted for payment were inaccurate. The judge in the case hasn’t yet ruled on the recommendation.
That civil case, brought by a former UnitedHealth employee turned whistleblower in 2011 and joined by the government in 2017, concerned claims that UnitedHealth submitted $2 billion worth of diagnoses recorded by doctors that its own reviewers determined weren’t supported by patients’ medical charts.
The DoJ has petitioned the court to reject the special master’s findings. Regardless, this seems like an astonishing outcome. The whistleblower had what sure sounds like a smoking gun, and the special master rejected it? Not having reviewed the case. the only explanations I can fathom are either that the internal reviewers were somehow wrong (then why have them?) or that “mistakes were made” and these claims were submitted in error. But in the latter case, UnitedHealth should still have to pay back the overbilling, even if it is deemed innocent of fraud.
Of course, it could be that the government was overly confident of the strength of the whistleblower evidence, and did not seek to engage in much/any additional discovery. It may be that the prosecutors need evidence of pattern and practice, such as e-mails, PowerPoints or better yet, training documents, that show that upcoding abuses are well institutionalized and the top brass at a minimum knows and approves, and most likely is actively driving this process. That evidence proved to be rampant in the Wells Fargo upselling/upcharging scam, but that got traction because Wells Fargo was so bold as to steal from sacrosanct deposits by dinging customers for services the customer never authorized. Much more so than banks, insurers are run by lawyers. So even if UnitedHealth’s behavior is as bad as one suspects, its executives and relevant staffers have no doubt been very well instructed on internal messaging discipline, so that internal records maintain the party line as to why this upcoding is kosher.
Of course, there is a more mundane explanation for the DoJ’s failure so far to make much progress: they are outmatched. Recall, in an analogous situation, the big reason why the IRS has largely punted on going after the super-rich. It is not for want of trying. But the IRS has lost every large estate case since Newhouse v. Commissioner of Internal Revenue (In re Estate of Newhouse) in 1991. Large estates often involve the valuation of private assets. In private equity, where multiple private equity funds sometimes wind up investing in the same portfolio company, it is not unheard of for their valuations to range from X to 3X, with each investor having a credible case as to why his mark is correct.
To compensate for shortcomings in its own bench, attorneys general sometimes engage private counsel to lead or supplement their team. A high profile example was star litigator and anti-trust expert David Boies leading the government anti-trust case against Microsoft.
So perhaps the DoJ has learned from its past disappointments on these big insurer Medicare Advantage fraud cases and will up its game. One can only hope.
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Thank you, Yves.
United Health has been a big donor to some leading Labour politicians since Corbyn resigned as leader. In addition to money, it provides staff and, ahem, research.
Some tidbits: https://www.thecanary.co/uk/analysis/2025/04/22/labour-private-health-donations/ and
https://privatisation.everydoctor.org.uk/revealed-labour-ministers-took-donations-from-big-pharma-and-us-healthcare-lobbyists/.
Thank you, Yves.
Further to my comment, when out of moderation: https://skwawkbox.org/2025/05/05/retired-gp-describes-former-nhs-ceo-stevens-and-his-changes-as-nhs-public-enemy-1/. Some NHS executives are either recruited from or seconded from United Health.
So UnitedHealth denies services for which people have paid while demanding payment for services never rendered… nice.
I am glad to see these cons getting the exposure that they are. Thanks for the reporting.
The legal difficulties described here raise the following question: wouldn’t it be better to eliminate private sector from offering Advantage services and analyzing codes for reimbursements, and assorted other practices by health care providers that inflate health care costs? The vaunted efficiency of unleashed free market spirit is working in anti-social direction in those areas. Perhaps more measured language is needed like “inherent conflict of interests” to discuss it in Congress etc.
(Not defending the current system)
if one draws a spectrum of bureaucratic efficiency, competence, non-grift, political neutrality (IMO), Singapore would be one pole….Ukraine one the other. the US would be on the Ukraine side.
Americans just can’t do bureaucracy unless it’s hyper-local (like my park district, lol)…we are a nation of grifters.
So for people, they know the current system is awful….but don’t trust Republicans or Democrats to build a new system
And hearing how the NHS has *allegedly* degenerated, the western world is turning American
Hyper local grift is alive and well in America’s small towns.
To understand upcoding as a way to game the system and even commit fraud, it is necessary to understand the CPT (Current Procedural Terminology) system. CPT was devised by the AMA and is used by Medicare for reimbursement. Upcoding occurs throughout Medicare. ProPublica did a 2017 article about upcoding for doctor office visits, that includes a brief useful description of how CPT is used for office visits that is applicable to other services https://www.propublica.org/article/some-doctors-still-billing-medicare-for-the-most-complicated-expensive-office-visits . The article mentions that electronic medical records using information provided a doctor can be used to determine the appropriate CPT billing code. Certain comments and phrases can be manipulated to obtain a higher CPT billing code. It appears that this may have been used by United Health to coach providers to use key phrases. Reviewing my elder mother’s Medicare statements and comparing what I observed during office encounters, I recognized what appeared to be examples of fraudulent upcoding. An example is a podiatrist observing that there was an ingrown toenail that required a simple clip as part of nail cutting ended up been coded and reimbursed as removal of the nail plate, a surgical procedure. A small toe, periungual bruise was described as a hematoma which resulted in reimbursement for drainage of a hematoma.
Should we assume the main thing AI has been trained to do is upcode when preparing notes from recordings?
Of course. It is trained on the body of previously prepared notes. Notes which were subject to upcoding. What else would the AI learn? It’s just matching what it gets as an input to the most likely best match in what it saw in its training.
Also:
If I understand this correctly:
In order to use the CPT codes, a medical entity (hospital, physician, insurance company,…) must receive a license from the AMA and pay “royalties” for using the codes.
https://www.ama-assn.org/practice-management/cpt/cpt-licensing-frequently-asked-questions-faqs
The answer to Judith’s question is yes. CPT licensing royalties are a major source of revenue for the AMA and their use was mandated a decree of Donna Shalala. Recently as much as $300 M a year. To learn all about the CPT monopoly and renterism see from March of this year, all about CPT and the AMA https://www.the big newsletter .com/p/how-the-american-medical-association . This is a good article for Yves to use.
It is worth noting that HCA has form. In 1997 Columbia/HCA was charged with 14 felonies related to billing/coding fraud in connection with payments by Medicard/Medicid. The company settled out of court for 1,7 Billion (with a B) dollars. The CEO of that company, one Rick Scott who was born in Illinois and educated in Missouri and Texas, subsequently left the company and moved to Florida. He was elected governor of that state in 2011, and currently is a US Senator from that state. Who says crime doesn´t pay?
Oh don’t downplay his part. Scott and a partner bought two hospitals in Texas and in little more than a decade parlayed that through purchases and mergers to the largest healthcare company in the country. After the investigation was serious he was forced to step down, and as per Wikipedia Scott was paid $9.88 million in a settlement, and left owning 10 million shares of stock then worth more than $350 million. The kicker was there was proof that the directors were warned there was a problem. Also from Wikipedia from Politifact : During Scott’s 2000 deposition, he pleaded the Fifth Amendment 75 times.
I think it is safe to assume that kind of fraud was a major factor in Scott’s rise to wealth and power.
You guys are confusing upcoding with risk-adjustment fraud. Upcoding is when docs & hosps exaggerate diagnoses & procedures to rip off insurance companies like United. Risk-adjustment fraud (what United is doing) is when insurers lie abour how sick members are to book inflated risk-adjusted premiums from Medicare Advantage.
While the nomenclature distinction may seem useful, I don’t see how you can to risk-adjustment fraud (which UnitedHealth has allegedly done and it has survived initial scrutiny, per the special master) without cooking the diagnosis codes over quite a few patients to have the level of ill health, based on sampling or other tests of claims about the population, align with the claims about the health condition of Medicare Advantage plan members. In other words, you’d have to also engage in clearly fraudulent upcoding on a widespread basis to support the risk-adjustment fraud.
Nowhere in the WSJ reporting do they refer to the alleged fraud by United Healthcare as “upcoding.” I spent several years at the end of my career investigating health care fraud, and it’s correct that “upcoding” refers to fraud by providers. It’s technically correct that the “risk-adjustment fraud” being committed by insurers is a different practice than “upcoding” by providers.
However, it does appear from the WSJ reporting that insurers, including United Healthcare, also created incentives for providers to “upcode” diagnoses. I suspect that the problem is “connecting the dots” between the incentives and “upcoding” by providers as a quid-pro-quo.
In my brief professional exposure, I found that medical billing coding is an imprecise and error-prone system rife with the potential for fraud and abuse.
Interesting case here on upcoding and overcharging. I review all my EOBs in detail. I joined Medicare A&B on 1 March, and saw my doc on 3rd March. Due to a clerical error, I was still shown as having my wife’s employer-based insurance, so when the provider submitted the bill, it went to Premera first.
One line item on the EOB had the CPT code G2211. This code is supposed to be used for a detailed discussion of possibly intersecting problems. It’s actually arguable whether this was appropriate for my visit as the discussion with my PCP was basically
her “Any changes?”
me “No”.
I challenged it and lost, but hey. The interesting thing was that because they submitted to Premera, NOT Medicare because of the mix-up in coverage, the provider billed $83 for a procedure whose Medicare rate is $16, or more than five times as much.
So it’s an example of grift all the way down.
Anyway, I got the insurance coverage fixed, and when they re-billed, the amount for the G2211 was just $16.83.
This is kind of off topic, but I did receive approximately $70 from Wells Fargo on account of the class action lawsuit that implicated Wells Fargo in that fake account and fraudulent services scandal. Wells Fargo had opened accounts under my name without my consent, and nobody was held accountable for this wrongdoing.
Paging Mssrs. Sarbanes and Oxley in the afterlife. wowsers, that was 25-ish years ago.
yes kids, there was a time when DC at least feigned interest in reining-in and punishing malfeasance—before our current era of “ask for forgiveness, don’t ask for permission” (which went parabolic in 2007-2010)
Thanks Obama!
Sounds like another flavor of Cost Plus.
If you have zero insurance, like an artist friend of mine, it’s so interesting what the bill looks like – much less. Complicating the fraud issues, which are rampant and real under United Healthcare, (and remember the data breach) is the hospitals and doctors themselves getting involved in scamming the system, at patient’s and the government’s expense. I have evidence of this with the same friend who was fraudulently added to Medicaid, by his doctor, Where did the doc get the idea he could get away with that? My friend is not eligible for that and while in the hospital was trying to sign up for Obamacare. On top of that, either his records were mixed with someone else’s mistakenly, or on purpose to steal from Medicaid. He literally had surgery he did not need and now will try to sue. My point is, the American health system is horribly broken in so many aspects that it is truly scary. With our government in the process of being dismantled, there is no way any of this will ever get fixed. The idea of universal healthcare seems as likely as the tooth fairy and Santa Claus being real.
Ross Ashby’s Law Of Requisite Variety in action. Whenever you create a formal system of rules to manage or regulate a complex system (medical coding), the number of states of the system under regulation (the real world of healthcare) are much much greater than the number of states of the regulatory processes. The doctors and hospitals and administrators–the real humans–can always run circles around the rules. The system with the greatest number of states will always win. The same applies to the legal system. Real human lawyers will always be able to find an abundance of loopholes in the law codes. The tendency is to blame corruption or bad apples. Time for a witch hunt. This is always the reaction in the Judeo-Christian tradition: blame human nature.
The administrative systems we build are bad not the humans. These formal systems are guaranteed to produce corruption and disastrous outcomes. They have fundamentally escaped from control. No one understands what is going on. In many cases we get behaviors that No One Wants.