Kaiser Permanente California Affiliates Settle False Claims Act Allegations for $556 Million

An integrated healthcare consortium based in Oakland, California, affiliated with Kaiser Permanente, has agreed to pay $556 million to settle allegations of violating the False Claims Act. The allegations stem from the submission of invalid diagnosis codes for enrollees in their Medicare Advantage Plan.

The U.S. Department of Justice claims that these invalid diagnosis codes were submitted to secure higher payments from the government. The settlement involves several Kaiser Permanente affiliates, including Kaiser Foundation Health Plan Inc., Kaiser Foundation Health Plan of Colorado, The Permanente Medical Group Inc., Southern California Permanente Medical Group, and Colorado Permanente Medical Group P.C.

Under the Medicare Advantage Program (MA), beneficiaries can choose to opt out of traditional Medicare and enroll in private health plans offered by insurance companies known as Medicare Advantage Organizations (MAOs). The Centers for Medicare & Medicaid Services (CMS) pays these MAOs a fixed monthly amount for each Medicare beneficiary enrolled in their plans. Payments are adjusted based on various risk factors that influence expected healthcare expenditures for each beneficiary. Generally, CMS pays MAOs more for sicker beneficiaries who are expected to incur higher healthcare costs and less for healthier individuals.

To facilitate these risk adjustments, CMS collects medical diagnosis codes from MAOs. These diagnoses must be substantiated by medical records from face-to-face visits between patients and providers. For outpatient visits, the diagnoses must have been necessary or relevant to patient care, treatment, or management during the visit.

Kaiser operates MAOs that provide Medicare Advantage plans to beneficiaries nationwide. In a complaint filed in the Northern District of California in 2021, the U.S. government accused Kaiser of engaging in a scheme in California and Colorado aimed at improperly increasing its risk adjustment payments. Specifically, the government alleged that Kaiser pressured physicians to modify medical records after patient visits to include diagnoses that had not been considered or addressed during those visits.

The allegations assert that from 2009 to 2018, Kaiser implemented a scheme to boost its Medicare reimbursements by pressuring physicians to append diagnoses to medical records through addenda following patient visits. The government contended that Kaiser developed various methods to analyze a patient’s medical history to identify potential diagnoses that had not been submitted to CMS for risk adjustment. Kaiser then sent queries to its providers, urging them to add these diagnoses to medical records via addenda. In many cases, the U.S. alleged that the diagnoses added by the providers were unrelated to the patient visit in question.

Topics
California
Claims

An integrated healthcare consortium based in Oakland, California, affiliated with Kaiser Permanente, has agreed to pay $556 million to settle allegations of violating the False Claims Act. The allegations stem from the submission of invalid diagnosis codes for enrollees in their Medicare Advantage Plan.

The U.S. Department of Justice claims that these invalid diagnosis codes were submitted to secure higher payments from the government. The settlement involves several Kaiser Permanente affiliates, including Kaiser Foundation Health Plan Inc., Kaiser Foundation Health Plan of Colorado, The Permanente Medical Group Inc., Southern California Permanente Medical Group, and Colorado Permanente Medical Group P.C.

Under the Medicare Advantage Program (MA), beneficiaries can choose to opt out of traditional Medicare and enroll in private health plans offered by insurance companies known as Medicare Advantage Organizations (MAOs). The Centers for Medicare & Medicaid Services (CMS) pays these MAOs a fixed monthly amount for each Medicare beneficiary enrolled in their plans. Payments are adjusted based on various risk factors that influence expected healthcare expenditures for each beneficiary. Generally, CMS pays MAOs more for sicker beneficiaries who are expected to incur higher healthcare costs and less for healthier individuals.

To facilitate these risk adjustments, CMS collects medical diagnosis codes from MAOs. These diagnoses must be substantiated by medical records from face-to-face visits between patients and providers. For outpatient visits, the diagnoses must have been necessary or relevant to patient care, treatment, or management during the visit.

Kaiser operates MAOs that provide Medicare Advantage plans to beneficiaries nationwide. In a complaint filed in the Northern District of California in 2021, the U.S. government accused Kaiser of engaging in a scheme in California and Colorado aimed at improperly increasing its risk adjustment payments. Specifically, the government alleged that Kaiser pressured physicians to modify medical records after patient visits to include diagnoses that had not been considered or addressed during those visits.

The allegations assert that from 2009 to 2018, Kaiser implemented a scheme to boost its Medicare reimbursements by pressuring physicians to append diagnoses to medical records through addenda following patient visits. The government contended that Kaiser developed various methods to analyze a patient’s medical history to identify potential diagnoses that had not been submitted to CMS for risk adjustment. Kaiser then sent queries to its providers, urging them to add these diagnoses to medical records via addenda. In many cases, the U.S. alleged that the diagnoses added by the providers were unrelated to the patient visit in question.

Topics
California
Claims