ST. LOUIS – In lots of ways, Essence Group Holdings Corp. is a homegrown healthcare success story.
Founded locally, it has grown into a broader company backed with a major Silicon Valley investor. Essence now boasts Medicare Advantage plans for seniors with some 60,000 members in Missouri and over the Mississippi River in Illinois. It ranks one of the city's top 35 privately owned companies, based on the St. Louis Business Journal. And researching the market firm PitchBook Data values the organization in excess of $1.64 billion.
But a recent audit by the federal Health and Human Services inspector general, plus a whistleblower lawsuit, have put the St. Louis health care standout under scrutiny. Medicare officials also are performing a separate audit vital.
The same growth and employ of massive data that attracted venture capital cash are becoming a renewed look from government officials who estimate that Medicare Advantage plans nationwide overcharge taxpayers nearly $10 billion annually.
The April audit vital – the first inside a number of upcoming audits scrutinizing some Medicare Advantage plans across the United States – revealed that the St. Louis company could not substantiate fees for a large number of patients identified as having stroke or depression.
The government pays privately run insurance plans like Essence using a formula called a “risk score” that is made to pay higher rates for sicker clients and less for patients who're in good condition.
“There's great temptation to push the envelope on risk scores without the supporting documentation within the medical files, specifically for despression symptoms,” said former Sen. Claire McCaskill, a Missouri Democrat who now works as a political analyst. During office, McCaskill in 2021 required an investigation into overbilling practices by insurers running Medicare Advantage plans.
In the Essence audit of 218 cases, HHS found dozens of instances in which the health plan reported patients had an acute stroke – meaning the patients had strokes that year – when they actually had suffered strokes only in past years. HHS also learned that Essence had charged Medicare for major depressive disorder diagnoses for many enrollees, but that the doctors had not recommended cure plan, indicating the patients likely had a more gentle type of depression. In five cases, HHS couldn't find any medical records to support payments for any diagnosis of acute stroke or major depressive disorder diagnoses.
Essence denied wrongdoing but agreed to refund $158,904 that Medicare paid for those patients who have been reviewed in the audit and committed to correcting any other errors.
Medicare Advantage: The Next Silicon Valley Frontier
Essence is part of the Medicare Advantage boom – such plans now treat more than 22.6 million U.S. seniors, about One in three people on Medicare. And knowning that growth, the money has followed – top investors, including Google, have poured a lot more than $1 billion dollars into health care companies that have Medicare Advantage aspirations.
Essence's medical technology arm, Lumeris, which will help power its Medicare Advantage plans, is essential to people ambitions. And, last year, Lumeris received a $266 million investment and signed a collaborative agreement for the following Ten years with Cerner, a leading emr firm. Cerner declined to comment prior to the publication of this story on its investment.
Essence, and companies enjoy it, are investment capital darlings simply because they draw deeply on data mining by entities such as Lumeris to hone healthcare delivery and cut costs.
But Essence now finds itself in the middle of a national reckoning with the government, which is attempting to reduce overbilling by the Medicare Advantage industry that it says costs taxpayers as much as $10 billion a year. Previous efforts to claw back such overpayments have been delayed by an onslaught of lobbying efforts by private insurers.
More Overcharging Alleged In Lawsuit
The Missouri whistleblower suit alleges Essence, Lumeris and its local partner, Lester E. Cox Medical Centers, used loading=”lazy” src=”https://khn.org/wp-content/uploads/sites/2/2021/07/John-Doerr_GettyImages-476907496.jpg?w=370&h=247&crop=1″ width=”400″ height=”267″ />
Essence grew in 2007 after St. Louis physician and software designer Dr. Thomas Doerr and his venture capitalist brother, John Doerr, an earlier backer of Amazon and Google, invested in the organization.
Good national press followed, much of it noting the business's resolve for developing innovative medical software to enhance patient care and cut costs. Neither of the Doerr brothers would comment for this article.
In December 2021, Medicare awarded Essence a 5-star rating, a coveted indicator of high-quality medical care.
That helped to make the plans popular for customers in Missouri, said Stacey Childs, the regional liaison for CLAIM, the state's health insurance assistance program. She credited its A+ ranking with the Better Business Bureau and star rankings year after year for helping create a swell of excitement when Essence expanded towards the Springfield section of Missouri in 2021.
And its Lumeris-powered technology is growing nationally, including partnerships with Stanford Healthcare in California and medical groups in Florida and Louisiana. Additionally, it continues to be deployed with other regions, bolstered by Cerner's investment for a joint program managing Medicare Advantage plans called the “Maestro Advantage,” according to the partnership's website.
But Rasmussen, the Missouri whistleblower, alleges that Lumeris software played a role in overcharging Medicare.
The lawsuit alleges physicians were asked to examine high-risk patients the medical software identified for “Enhanced Encounter” appointments – even sending strategies for some patients who have been in hospice – to re-evaluate their risk scores.
Physicians were paid $100 to examine patients for each of these encounters, according to the suit. On its website, Lumeris has said those appointments create “new cash flows to boost physician incentives and increase the degree of physician engagement.”
In an argument to KHN, Taylor Griffin, a spokesman for Essence, said: “We compensate physicians for that substantial extra time and energy to satisfy with our members and gather information essential to delivering better care. It's a program designed around capturing the status from the member and never on capturing codes.”
At least one Essence-affiliated doctor has questioned the ethics from the initiative, based on court documents. “All I have heard about since we signed on with Essence is about coding to get paid more,” the unidentified doctor alleged within an email to Cox officials. “This does little to boost these patients' care.”