Health Headlines – March 16

OIG Audit Alleges $15 Million in Provider Billing Errors for Emergency Services with Improper Site of Service Codes

An HHS Office of Inspector General (OIG) audit identified over $15 million in Medicare payments for emergency department services that were allegedly billed with incorrect billing codes during 2021 and 2022. OIG alleges that claims were billed using emergency department procedure codes, but the place of service code (for physician claims) or revenue center code (for hospital claims) was billed as a nonemergency setting. While CMS concurred with OIG’s recommendation to direct the Medicare contractors to recover the approximately $1 million of physician claims at issue, CMS did not agree with OIG’s recommendation to direct the Medicare contractors to assess and potentially recoup approximately $14 million in payments to hospitals, because of, among other things, flexibilities available to providers during the audit period due to the COVID-19 Public Health Emergency.

CMS’s Medicare Claims Processing Manual (the Manual) requires physicians and hospitals to bill Medicare for emergency department services using emergency department procedure codes. Typically, emergency department CPT codes include 99281 through 99285 and HCPCS Codes G0380 through G0384. For hospitals, revenue center codes that identify emergency department services are codes 0450 through 0459 and 0981. According to the Manual, emergency department coding is not appropriate for physicians if the site of service is an office or outpatient setting or any setting other than an emergency department.

In its audit, OIG reviewed Medicare claims payment data associated with the 121,454 emergency department procedures and determined whether each emergency department procedure was billed to Medicare using nonemergency place of service or revenue center codes. OIG’s audit found $15,132,429 in Medicare payments to providers for 121,454 claims for emergency department procedures that were billed with either nonemergency place of service codes for physician claims or nonemergency revenue center codes for hospital claims between January 1, 2021, and December 31, 2022.

The most frequently billed nonemergency place of service codes identified in the audit were the inpatient hospital, on-campus outpatient hospital, freestanding clinic, and physician office settings. The most frequently billed nonemergency revenue codes included clinics, urgent care clinics, and professional fees.

OIG issued five recommendations to CMS: (1) directing Medicare contractors to recover the $922,524 in confirmed improper physician payments; (2) assessing the $14.2 million in potentially improper hospital payments; (3) implementing or refining claims processing controls; (4) updating the Medicare Claims Processing Manual to require hospitals to use emergency revenue center codes; and (5) reviewing claims submitted after the audit period.

CMS only agreed with OIG’s first recommendation – recovery of improper physician payments. CMS did not concur with the remaining four recommendations due to, among other things, flexibilities implemented during the COVID-19 Public Health Emergency such as the “Hospitals Without Walls” initiative, which allowed providers to furnish hospital services in alternative locations. CMS added that it does not believe that it is in its best interest to direct the Medicare contractors to assess the potentially improper payments identified, “as it does not represent a rational investment of CMS’s limited resources.”

The OIG Audit Report is available here.

Reporter Michael L. LaBattaglia, Washington, D.C., +1 202 626 5579, mlabattaglia@kslaw.com

Medicare Advantage Settlements Continue: Aetna Pays $117.7 Million to Resolve FCA Allegations

On March 1, 2026, the Department of Justice issued a press release announcing that Aetna Inc., a national health insurer, settled a False Claims Act (FCA) case for $117.7 million. This settlement resolved allegations that Aetna violated the FCA by submitting untruthful diagnosis codes for its Medicare Advantage Plan beneficiaries to increase payments from Medicare.

According to the press release, in the underlying qui tam case captioned United States ex rel. Mary Mellete Thomas v. Aetna Inc., et al, no. 24-cv-339, the whistleblower, a former Aetna risk-adjustment coding auditor, and the United States contend that, dating back to 2015, Aetna operated a “chart review” program through which it paid coders to review medical records to identify all medical conditions that could be supported from the records. Further, the case involved allegations that the coders did not substantiate all of the diagnosis codes, which led to improper codes being submitted to CMS for reimbursement. Additionally, from 2018-2023, it is alleged that Aetna knowingly submitted inaccurate and untruthful diagnosis codes for morbid obesity to increase reimbursement for beneficiaries enrolled in its Medicare Advantage Plan.

The press release indicated that FCA enforcement of Medicare Advantage Plans will only continue. Assistant Attorney General Brett Shumate of the Civil Division emphasized that the “government pays private insurers over $530 billion each year to care for Americans enrolled in Medicare Advantage” and the DOJ “will continue to hold accountable insurers that knowingly submit inaccurate or unsupported diagnoses to improperly inflate reimbursement.” Scott J. Lampert, Acting Deputy Inspector General for Investigations at HHS-OIG stated that this settlement “makes clear that no company is beyond accountability, no matter how large or well known. Those who seek to exploit Medicare Advantage should expect to be identified and held responsible, and HHS-OIG will continue to protect taxpayer funds and the integrity of this vital program.”

This settlement illustrates the confluence of multiple enforcement trends, including two enforcement priority areas for the DOJ-HHS False Claims Act Working Group: Medicare Advantage and the “manipulation of Electronic Health Records systems to drive inappropriate utilization of Medicare covered products and services.” More information about the Working Group can be found here.

The full press release is available here.

Reporter, Morgan Cronin, Atlanta, +1 404-572-2795, mcronin@kslaw.com

CMS Issues Updated Interpretative Guidance on Organ Procurement Organizations in the State Operations Manual

On March 6, 2026, CMS issued a Quality, Safety & Oversight (QSO) memorandum to State Survey Agency Directors with updates to the State Operations Manual (SOM) Appendix Y – Organ Procurement Organization (OPO) Interpretive Guidance. CMS has updated the OPO interpretive guidance to incorporate the regulations from the 2020 OPO final rule, including the outcome metrics at 42 C.F.R §486.318(d-f) and directions for inclusion of outcomes in the OPO’s quality assurance and program improvement (QAPI) plan and processes. CMS then subsequently published on March 11 a QSO memorandum on Organ Procurement Organizations and Donor Hospitals’ Responsibilities. While the combined updated guidance largely reiterates existing regulatory requirements and guidance, CMS also emphasizes family decision-making around organ donation decisions, the limited influence OPO representatives may have in clinical decision making and strengthening oversight of OPOs for compliance with the requirements, including additional direction, context, and guidance for OPO surveyors. The guidance is intended to align with CMS’s broader efforts to review oversight of the organ donation and transplantation system. In January 2026, CMS issued a proposed rule to significantly revise the OPO Conditions for Coverage (CfCs). The recent QSO memoranda and SOM interpretative guidance reflect the agency’s ongoing regulatory focus on OPOs.

Organ procurement and transplantation services are overseen by CMS and the Health Resources & Services Administration (HRSA). Under HRSA’s oversight, the Organ Procurement and Transplantation Network (OPTN) fulfill responsibilities set forth in the National Organ Transplant Act (1984). This includes the maintenance of a waitlist of individuals who need organs and a computer system to match those individuals with donated organs. OPOs must comply with the Medicare CfCs for Medicare certification, including adhering to OPTN policies and requirements. OPOs are inspected for compliance by federal surveyors every four years. Failure to comply with Medicare CfCs can result in termination of an OPO’s participation in the Medicare program.

On March 6 and 11, 2026, CMS published QSO memoranda and updated SOM interpretive guidance addressing several operational and compliance areas for OPOs, including the roles and responsibilities of OPOs and donor hospitals and updated guidance for surveyors to support the identification of OPO noncompliance. The March 6 memorandum and SOM interpretive guidance focus largely on providing additional direction, context, and guidance for state surveyors and clarifying survey procedures and expectations. The March 6 updates to OPO surveyor training are also included on CMS’ Quality, Safety and Enforcement Portal (QSEP).

The updated SOM guidance includes the following OPO survey protocol:

• Task 1–Pre-survey Prep: Pre-survey review now includes additional sources for review and describes the appropriate size and composition of the survey team.
• Task 2–Entrance Conference: Provide clarification on the OPO documents required during the survey, including the rationale for each, and direct the survey team to identify an OPO point of contact to assist with the medical record review.
• Task 3–Information Gathering: Summarized elements for surveyor review to improve surveyor understanding of and access to the information needed for their compliance investigation.
• Task 4– Quality Assurance and Performance Improvement (QAPI): New guidance for documents to review, including death records.
• Task 5–Determination of Compliance: Enhanced explanation of the Determination of Compliance to align with CMS policy across provider types, and clarification that non-compliance should be cited at the condition-level when the failures are either systemic, serious, or widespread.

The SOM interpretative guidance also generally updates definitions to align with the 2020 OPO final rule, and contains updated guidance for OPO performance metrics. The SOM interpretative guidance also clarifies that consent may be requested only by qualified, specifically trained personnel and emphasizes that consent must be approached with sensitivity and respect. In concert with the March 11 QSO memorandum, the SOM guidance highlights the “independent but coordinated policy that hospitals have for the pronouncement of death, the mandatory waiting period before an OPO may begin recovering organs per the agreement between the OPO and hospital, and the importance of alignment between the hospital and OPO’s policies to avoid contradictory or unclear actions.” The SOM guidance also updates QAPI guidance with examples of objective measures for the evaluations of improved performance with regard to OPO activities, including “hospital development, designated requestor training, donor management, and timeliness of OPO’s response to hospital referrals, consent practices, organ recovery and placement, and organ packaging and transport.”

The March 11 QSO memorandum reiterates CMS’s longstanding requirement that donor hospitals continue to provide full, life-saving medical care to all patients, regardless of whether the patient may be a potential organ donor. CMS stresses that patient care obligations are not affected by donor status, and donation-related considerations cannot influence the provision of medical care. The memorandum also emphasizes family-based decision making in the organ donation context, and that informed consent requires that families have sufficient time to process information regarding organ donations and must not be pressured into making decisions.

CMS also reiterates that OPO representatives may not influence the timing of withdrawal of life-sustaining treatment or declarations of death. Consistent with longstanding guidance and practice, the treating medical team maintains the responsibility for clinical decisions related to end-of-life care, including the declaration of death. “The OPO can prepare the patient for procurement, including draping the patient and monitoring the patient’s status to protect organs for potential recovery; however, per OPTN Policy 2.15.F, no recovery staff should be present during the withdrawal of support, but should be immediately available following the declaration of death.” The guidance reaffirms that clinical staff make death determinations in accordance with accepted medical standards before initiating any organ recovery procedures.

CMS noted that it was aware of situations in which organ donors have shown unexpected signs of life after declaration of death. According to the March 11 QSO memorandum, “[i]f signs of life are observed before or during the recovery of an organ, OPOs are expected to immediately stop the procurement process. A prior declaration of death by the attending hospital physician does not permit OPOs to continue to pursue donation if signs of life are subsequently detected. Since in this situation the person is no longer a potential donor, the hospital should follow its plan for continued patient care and appropriate communication with the potential donor’s family/LAR.” CMS directs surveyors to cite noncompliance with these OPO requirements once identified, even if the OPO corrects the deficiency before the conclusion of the survey. The QSO memorandum states that, for example, “[s]urveyors should be looking for time of death versus recovery time and the vital signs to support compliance with waiting period identified in OPO’s written protocol.”

This guidance coincides with CMS’s recent broader efforts to review the organ donation and transplantation regulatory framework and revise regulations and issued guidance consistent with the agency’s policy aims, updating and clarifying oversight expectations for OPOs and donor hospitals.

CMS’s press release regarding the QSO memorandum is available here, the QSO memorandum is available here, and the updates to the SOM OPO interpretative guidance are available here.

Reporter Robert Stenzel, Washington, D.C., +1 202 626 2643, rstenzel@kslaw.com

Federal Court Orders Discovery Into UnitedHealth’s Alleged AI-Driven Denials of Medicare Advantage Coverage

On March 9, 2026, a federal magistrate judge in Minnesota ordered UnitedHealth to produce documents related to its use of an artificial intelligence tool in Medicare Advantage coverage decisions, allowing plaintiffs to examine how the technology was developed, implemented, and overseen.

This order by U.S. Magistrate Judge Shannon G. Elkins arises from a putative class action brought by the estates of Medicare Advantage enrollees who allege that UnitedHealth Group and its subsidiary, naviHealth, relied on an AI tool, known as nH Predict, in ways that violated the terms of their insurance contracts. The plaintiffs contend that nH Predict played a role in denying coverage for post-acute care despite the recommendations of treating providers.

Earlier in the case, U.S. District Judge John R. Tunheim allowed claims for breach of contract and breach of the implied covenant of good faith and fair dealing to proceed, while dismissing other claims as preempted by federal law. Those surviving claims focus on whether UnitedHealth complied with representations in its Medicare Advantage Evidence of Coverage documents—that coverage decisions would be made by clinical staff and physicians.

Judge Elkins rejected UnitedHealth’s effort to narrow discovery to a short time frame or to the named plaintiffs alone. She ruled that documents dating back to the beginning of 2017 may be relevant to understanding whether UnitedHealth’s policies, training, and incentives changed after nH Predict was introduced, and whether those changes bear on the contract claims. She cited a United States Senate investigation report from October 2024, confirming that UnitedHealth’s claim denial rate for post-acute care claims more than doubled after it began using naviHealth and nH Predict in 2019.

Under the order, UnitedHealth must produce:

• Documents concerning the development, design, approval, and use of nH Predict, including materials addressing whether the tool was intended to supplement or replace physician judgment;
• Policies and training materials related to post‑acute care coverage decisions at skilled nursing facilities;
• Documents tied to its acquisition of naviHealth that relate to post‑acute care claims or projected cost savings;
• Records of governmental or regulatory investigations into its use of AI in post‑acute care claim determinations;
• Documents related to employee incentives and evaluations for post‑acute care coordinators and medical directors involved in making post‑acute care recommendations; and
• Information about UnitedHealth’s internal oversight of AI use, including its AI Review Board and those responsible for training staff on nH Predict.

Reasoning that discovery must remain proportional and tied to the specific contract claims at issue, Judge Elkins declined to order production of: the source code, underlying data, rules, or medical guidelines used by nH Predict; broad financial information about UnitedHealth’s overall valuation, revenue, or profitability; internal investigations unrelated to government or regulatory inquiries; and documents related to facilities where nH Predict is not used, such as inpatient rehabilitation facilities or long‑term acute care hospitals.

The case is The Estate of Gene B. Lokken et al. v. UnitedHealth Group Inc. et al., case number 0:23-cv-03514, in the U.S. District Court for the District of Minnesota. A copy of the Court’s order is available here.

Reporter, Jenna M. Anderson, Palo Alto, CA, +1 650 422 6719, janderson@kslaw.com.

Upcoming Events

King & Spalding Reception at the AHLA Institute on Medicare and Medicaid Payment Issues

• Thursday, March 19, 6:00 – 8:00 P.M. ET
• Baltimore Marriott Waterfront
  700 Aliceanna Street
  Baltimore
  Laurel Room, 4th Floor

Join us for cocktails and conversation at AHLA’s Institute on Medicare and Medicaid Payment Issues.

For questions and to RSVP by March 12, contact Monique Wharton.

Editors: Chris Kenny and Ahsin Azim

Issue Editors: Doug Comin and David Tassa