Massachusetts sues UnitedHealth unit over alleged MassHealth fraud

Massachusetts has sued a UnitedHealth insurance unit, accusing it of siphoning at least $100 million from MassHealth by padding the health status of older members in a managed-care plan built for seniors. The complaint, filed Friday in Suffolk Superior Court, says UnitedHealthcare Insurance Company, which operates as UnitedHealthcare Community Plans of Massachusetts, manipulated diagnoses over about a decade to win higher payments from the state.

At the center of the case is MassHealth Senior Care Options, a program that combines MassHealth and Medicare benefits for eligible residents age 65 and older into one plan with one card and a care coordinator. UnitedHealthcare describes its Massachusetts Senior Care Options product as a fully integrated Medicare Advantage Special Needs Plan for members who are dually eligible for Medicare and Medicaid. That payment structure is the crux of the lawsuit: in managed care, plans are reimbursed based on how sick their members are, so documenting more serious conditions can mean more money.

The state says UnitedHealthcare crossed that line by “falsely manipulated the health status” of members to boost reimbursement. The complaint says the company ranked members’ health conditions in ways that guaranteed higher payments from MassHealth, including by asserting diagnoses such as anxiety, and by submitting assessments claiming members needed unnecessary regular skilled nursing services. If the allegations are proved, the case would show how coding decisions inside a Medicaid managed-care plan can shift public dollars away from patient care and into insurer revenue.

Attorney General Andrea Joy Campbell is leading the action, and Massachusetts is seeking more than $300 million in treble damages, which would triple the alleged overpayment. The size of the demand underscores what is at stake for a state that is already under pressure to rein in Medicaid spending amid federal cuts. For MassHealth members, especially low-income seniors with complex needs, the money at issue could have supported care coordination, medically necessary nursing services, and other benefits inside a program designed to keep older adults stable in the community.

The complaint also lands amid broader scrutiny of UnitedHealth Group and the billing practices used across public insurance programs. One report says pressure to increase revenue and profit in the Massachusetts Medicaid plan helped push the company’s top Massachusetts executive to quit, a detail that deepens the sense that the alleged overbilling was not an isolated mistake but part of a larger business model under strain.