Webinar Recap: "A Cautionary Risk Adjustment Tale: Swoben v. United Healthcare"
Posted by Claire Egan on Feb 07, 2017

Operating and maintaining a high performing, engaged and compliant risk adjustment program is no easy feat. Health plans and health systems with delegated risk have undoubtedly noticed a heightened level of scrutiny on their program due to headlines of upcoding and over-reporting. This scrutiny only increased when a federal appeals court resurrected the Swoben case against a number of larger insurers.

With the Swoben case back in the spotlight, more and more questions are being asked about the possible implications. To answer these questions and share best practices that can be implemented immediately, we co-hosted a webinar with one of the top thought leaders in the health care legal space. Eric Klein, partner and team leader at SheppardMullin, shared his take on the Swoben case and why it’s important to understand the impact of its outcome, while Mike Lee, Regional General Manager of Risk Adjustment here at Evolent Health, highlighted some best practices we have employed for our partners that can be implemented into your program today. Click here to view the webinar recording, or read on for a recap of what was covered.

But first, some context:

In 2009, James Swoben filed a whistleblower complaint against his employer, SCAN Health Plan, which he amended over subsequent years to include claims against other prominent payers like UnitedHealthcare, Aetna and WellPoint. His case alleged that the risk adjustment infrastructure in place at these payer organizations implemented a “one-way” coding process that skewed the Medicare Advantage data reported to CMS. The result was government-funded financial windfalls. Swoben alleged that the insurers were aware of the issues at hand but did nothing to solve them.

The defendants’ rebuttal centered on the fact that providers themselves enter in the codes that result in government reimbursement, and so attempted to lay the blame at their feet. An appeals court eventually struck this down, stating that CMS has always required insurers an “obligation to undertake ‘due diligence’ to ensure the accuracy, completeness and truthfulness of the encounter data” submitted.

What do you need to know?

  • While there is no clear legal standard for reasonable due diligence, there are a few guardrails: if given notice, there is a higher burden for a retrospective review process, but on the other hand, a lower error rate relaxes the review standard to some degree – regardless as Eric said, you “cannot act like an ostrich” and expect to remain in good standing
  • That said, it is possible to prove knowledge, or scienter, in multiple ways from a legal perspective; including interpretation of the disconnect between internal audit and compliance oversight functions in an organization, internal emails encouraging increased Hierarchical Condition Categories-Risk Adjustment Factor (HCC-RAF) scores and higher financial outcomes, and bonus programs for retrospective review coders – all of which can be misconstrued against the company to prove awareness
  • Due to methodology issued by CMS that allows for multiple year look-backs of member coding, extrapolation from a smaller membership sample can lead to huge repayments, the allocation of which most payer contracts do not address and therefore opens the door to litigation and liability

Mike then used the remainder of the webinar to highlight a list of five best practices that we have implemented or seen in practice at a number of the leading health plans and systems we partner with across the country.

So, what can you do today to keep your organization’s name out of the headlines?

  • An ounce of prevention is worth a pound of cure.

Organizations should proactively invest in software and infrastructure that will ensure compliance and reduce errors. Additionally, it is essential to have a thorough understanding of your own operations – this includes everything from mapping out your processes, enabling governance checks and balances, and holding mock risk adjustment data validation audits to ensure that you are continuing to run a tight ship.

  • Accountability is key.

All stakeholders – including employees, partners and vendors – must be aligned and held accountable. Consider your options when it comes to confirming adherence. Can you implement periodic audits? Have you examined the quality of your QA reviews, and are they based on statistically meaningful samples? Ensure governance is in place to monitor for the right (or wrong) behavior.

  • Trust, but verify.

Keep in mind all of the moving pieces required to effectively run your risk adjustment program – know which pieces are handled internally, which are handled by vendors, and where handoffs from both sides occur. Go through your contracts with all of your vendors who touch your risk adjustment infrastructure with a fine-tooth comb. That bargain vendor that seemed like a great idea at the time could very well introduce high-cost regulatory risk, so make sure you are confident in any outsourced relationships.

  • Look both ways.

Although already the standard for Affordable Care Act chart reviews, ensure accuracy by confirming support for already submitted diagnoses. Medical coders must properly document submitted HCCs along with identifying new submissions, and should maintain a record of all deleted submissions for audit and reporting purposes.

  • Mind your manners.

Encourage a culture at your organization that reinforces that risk adjustment is an essential program that centers on accurate documentation, which improves reimbursement accuracy. Avoid upcoding behaviors by providing additional training to staff about etiquette and communication.

Check out the full recording of the webinar here.

For more information on Evolent’s Risk Adjustment solution, contact us at