An integrated healthcare consortium headquartered in Oakland, California, that are affiliates of Kaiser Permanente ag
reed to pay $556 million to resolve allegations that they violated the False Claims Act by submitting invalid diagnosis codes for their Medicare Advantage Plan enrollees.
The invalid diagnosis codes, which the U.S. Department of Justice says w
as to receive higher payments from the government, resulted in settlements from Kaiser Permanente affiliates: Kaiser Fou
ndation Health Plan Inc.; Kaiser Foundation Health Plan of Colorado; The Perm
anente Medical Group Inc.; Southern California Permanente Medical Group; and Colorado Permanente Medical Group P.C.
Under the Medicare Advantage Program (MA), Medicare beneficiaries may opt out of traditional Medicare and enroll in private
health plans offered by insurance companies known as Medicare Adva
ntage Organizations, or MAOs. The Centers for Medicare & Medicaid Services (CMS) pays the MAOs a fixed monthly amount for each Medicare beneficiary enrolled in their pla
ns. CMS adjusts these payments to account for various risk factors that affect expected health expenditur
es for the beneficiary. CMS generally pays MAOs more for sicker beneficiaries expected to incur higher healthcare costs and less for healthier beneficiaries expected to incur low
er costs. To make these risk adjustments, CMS collects medical diagnosis codes from the MAOs. The diagnoses must be
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supported by the medical record of a face-to-face visit between a patient and a provider, and for outpatient visits, must have required or affected patient care, treatment, or management at the visit.
Kaiser owns and operates MAOs that offer MA plans to beneficiaries acro
ss the country. In a complaint filed in the Northern District of California in 2021, the U.S. government alleged that Kaiser engaged in a scheme in California and Colorado to i
mproperly increase its risk adjustment payments. Specifically, the government alleged that Kaiser pressured physician
s to alter medical records after patient visits to add diagnoses that the physicians had not considered or addressed at those visits.
The resolves allegations that from 2009 to 2018, Kaiser engaged in a scheme to increase its Medicare reimbursements by pressuring physicians to add diagnoses after
patient visits through addenda to medical records. The government alleged that Kaiser developed various mechanisms to m
ine a patient’s past medical history to identify potential diagnoses that had not b
een submitted to CMS for risk adjustment. Kaiser then sent queries to its providers urging them to ad
d these diagnoses to medical records via addenda. In many instances, the United States alleged, the diagnoses added by the providers had nothing to do with the patient visit in question.