Nursing Home Medicare Advantage Disenrollment Fraud: When the Facility Profits From the Switch

Nursing home Medicare Advantage disenrollment fraud involves moving residents to Original Medicare without their consent to increase the facility’s reimbursement. Plaza Rehab and Nursing Center and Citadel Consulting Group admitted a practice that included a monthly disenrollment quota. Morris Park Nursing Home admitted changing coverage even after residents or their families objected. For someone in admissions, billing or social work, the revealing comparison is between what the resident wanted, what staff were told to do and which payer appeared on the next claim.

These Medicare Advantage fraud cases put the nursing home’s financial interest at the center of the story. Both were New York cases, and in both the nursing home admitted what it did. Their lesson reaches any facility where a reimbursement target starts directing residents’ insurance choices.

Why Moving a Resident Out Can Pay the Facility More

Original Medicare was usually more profitable for the facilities than Medicare Advantage, according to the Justice Department’s accounts of both cases. The Morris Park admissions described both a higher daily reimbursement rate and approval for longer stays. The financial incentive pointed toward the exit.

Under Medicare Advantage’s payment system, Medicare pays a private plan a monthly amount for each member’s coverage. Providers then submit their claims to the plan. The plan bears the cost of covered health care, while the facility receives payment for the services it supplies. A change that improves the facility’s revenue can therefore work against the insurer’s interest in controlling spending.

Plans also control access to paid skilled care through prior authorization. In its June 2026 report on skilled-nursing admissions, the Office of Inspector General at the Department of Health and Human Services found that the organizations reviewed and their contractors denied requests for skilled-nursing care from nursing-home residents 40% of the time, compared with 11% for other enrollees, in June 2024.

Long-term residence adds another division. Managed Care for Long-Stay Nursing Home Residents: An Evaluation of Institutional Special Needs Plans, published in The American Journal of Managed Care in 2019, explains how the bills are divided:

The paper explains why a facility has little incentive to fund additional on-site clinical care when the savings from fewer hospital visits go to Medicare.

The nursing home, the health plan and Medicare can see different financial results from decisions about the same resident. That division helps explain why the payer mattered so much in the disenrollment cases.

Plaza and Citadel Turned Disenrollment Into a Monthly Target

Citadel pressured Plaza staff to increase the number of residents enrolled in Original Medicare to increase Medicare reimbursements. The Justice Department’s June 29, 2022 announcement described a $7.85 million settlement over coverage changes that staff often made without residents’ or authorized representatives’ consent. Plaza and Citadel admitted that conduct.

From September 2016 to February 2019, Citadel set a monthly disenrollment quota and identified potential candidates. Plaza staff made coverage changes by logging into the federal Medicare website with residents’ personal information. Residents lost their chosen coverage so the facility could collect more. Their insurance had become a monthly target.

A resident’s personal information supplied the means to make the change. The resident’s request was supposed to supply the reason. The staff member who received the instruction can explain who actually wanted the switch.

Morris Park Changed Coverage Despite Objections

Morris Park admitted disenrolling residents even after they or their family members said they did not want to switch Medicare coverage. The May 17, 2023 settlement announcement described changes intended to increase the Medicare payments the facility received.

An expressed objection gives the comparison particular force. A social-work note or a conversation with a family can explain what the resident wanted before the coverage changed. The later enrollment record shows what happened instead. Someone who heard the objection and saw the instruction to proceed can connect those events in a way the transaction alone cannot.

The admissions also put a price on each switch. Morris Park paid an outside nursing-home worker $1,000 for each resident he helped move to Original Medicare. The worker and the administrator agreed to split that payment, with $500 going to the administrator in an arrangement they did not disclose to the facility.

Morris Park paid the administrator monthly cash bonuses tied to maintaining its Original Medicare census, and paid marketing and admissions staff bonuses tied to new Original Medicare admissions. Staff also offered to reduce or waive residents’ copayments to persuade them to switch. The financial pressure reached the people carrying out the changes.

The settlement called for $2.85 million from the estate of the facility’s owner at the time of the conduct. It covered both the coverage-switching scheme and a separate referral arrangement.

Hospital Referral Payments Bought a Different Decision

Morris Park’s referral scheme involved cash payments to a nearby hospital supervisor for sending patients to the nursing home. The payment was $150 for each referral. That arrangement bought referrals to the facility. The disenrollment scheme changed residents’ coverage after they arrived.

The referral cash and the coverage switch leave separate trails.

Can a Nursing Home Disenroll a Resident From Medicare Advantage?

The decision belongs to the resident or someone authorized to act for the resident. The Centers for Medicare & Medicaid Services’ October 2021 guidance to long-term-care facilities says only the beneficiary or an authorized representative can request enrollment or voluntary disenrollment. It describes facility assistance beginning when the resident or representative asks for help changing coverage.

The guidance calls for a signed acknowledgment that the resident or representative received and understood an explanation of the coverage change, and a signed staff statement confirming that the change was requested. Those documents identify both the person making the choice and the employee representing that the choice was made.

The First Bill Can Reveal the Coverage Change

The agency reported complaints from residents who learned about disenrollment after leaving the facility, when they sought services or received bills they expected their plan to cover.

The memo calls for an explanation of who will pay medical claims, changes to out-of-pocket costs and supplemental coverage, and which prescription drug plan will cover medications. The resident’s healthcare arrangements extend beyond the nursing home’s bill. A facility’s gain from a different payer can arrive alongside costs and coverage changes the resident never agreed to accept.

What the Resident’s Reason for Leaving Can Explain

Disenrollment data can reveal problems with access to care as well as changes in who pays for it. The Government Accountability Office’s April 2017 report, Medicare Advantage: CMS Should Use Data on Disenrollment and Beneficiary Health Status to Strengthen Oversight, examined Medicare Advantage contracts with relatively high disenrollment, using data from 2014. In some, people in poor health were more likely to leave than healthier members.

People leaving those contracts tended to report reasons involving preferred providers and access to care. People leaving the other high-disenrollment contracts tended to cite the cost of care. A coverage record shows a departure. The resident’s account and the facility’s instructions can explain whose decision it was.

What a Nursing-Home Insider Can Connect

The useful account connects the resident’s choice, the staff instruction and the facility’s payment. A recorded refusal can put a later staff statement in a very different light. The coverage history and subsequent billing can show when the payer changed and who benefited.

Reimbursement comparisons explain why management wanted Original Medicare residents. A quota, candidate list or instruction shows how that preference reached staff. The employee who knows how residents were selected can explain something a payer’s enrollment file never contains.

A risk adjustment fraud inquiry follows diagnoses into plan payments. These cases turn on instructions, consent and the facility’s reimbursement instead.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When You Know Who Ordered the Switch

If you saw a disenrollment quota, an ignored refusal or instructions to change residents’ coverage for better reimbursement, speak with our whistleblower experts about what happened inside the facility. We build a case strategy around the decisions and payments you can explain and bring in nursing-home Medicare fraud whistleblower lawyers who understand those connections. We stay beside you throughout the case, working to build your strongest nursing-home whistleblower case.