Five affiliates of Kaiser Permanente have agreed to pay $556 million to the Department of Justice to resolve allegations under the False Claims Act that they improperly boosted payments from the Medicare Advantage program.
The affiliates involved in the settlement, which was announced January 14, are 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. From 2009 to 2018, these affiliates were accused of submitting invalid or unsupported diagnosis codes for patients in its Medicare Advantage plans to secure higher payments from the government.
The Department of Justice alleged that Kaiser pressured physicians to add diagnoses to medical records after patient visits that were unrelated to the original encounter, which is in violation of CMS’ risk-adjustment rules.
Medicare Advantage payments are risk-adjusted — meaning plans receive more compensation for sicker patients — so inaccurate coding can inflate federal payments.
“Medicare Advantage is a vital program that must serve patients’ needs, not corporate profits,” said Craig Missakian, U.S. attorney for the northern district of California, in a statement. “Fraud on Medicare costs the public billions annually, so when a health plan knowingly submits false information to obtain higher payments, everyone — from beneficiaries to taxpayers — loses.”
The complaint also claimed that Kaiser set targets and incentives tied to coding performance, as well as ignored internal warnings about these practices.
Kaiser has not admitted wrongdoing but said it is settling to avoid prolonged litigation.
“Multiple major health plans have faced similar government scrutiny over Medicare Advantage risk adjustment standards and practices, reflecting industrywide challenges in applying these requirements. The Kaiser Permanente case was not about the quality of care our members received. It involved a dispute about how to interpret the Medicare risk adjustment program’s documentation requirements,” the health system said in a statement sent to MedCity News.
This settlement is one of the largest Medicare Advantage risk-adjustment cases to date, which highlights heightened federal scrutiny of the program.
The Department of Justice appears to be increasingly targeting health plans over coding practices that it says improperly drive up taxpayer costs — signaling that enforcement in this area is likely to continue.
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