On July 30, 2021, the United States Department of Justice (DOJ) announced that it was intervening in six complaints against Kaiser Permanente consortium members – Kaiser Foundation Health Plan Inc., Kaiser Foundation Health Plan of Colorado, The Permanente Medical Group Inc., Southern California Permanente Medical Group Inc., and Colorado Permanent Medical Group P.C. – collectively, Kaiser.
According to the complaints, Kaiser violated the False Claims Act by submitting inaccurate diagnosis codes for Medicare Advantage Plan enrollees that allowed the consortium to receive higher reimbursements for services provided.
Under the Medicare Advantage (MA) program, when it comes to outpatient medical visits, the plans must submit diagnoses to Centers for Medicare and Medicaid Services (CMS) only for conditions that required or affected patient care, treatment, or management during an in-person encounter. Generally, beneficiaries with more significant or severe diagnoses will have a higher risk score and CMS will make a larger risk-adjusted payment to the MA plan for that beneficiary. To increase Medicare reimbursements, Kaiser allegedly pressured physicians to create addenda to medical records after the patient encounter (even as far out as a year after the visit) to add risk-adjusting diagnoses that patients did not actually have and/or were not actually considered or addressed during the encounter. Such actions are in direct violation of Medicare requirements.
The lawsuits were filed under the qui tam provisions of the False Claims Act and are consolidated in the Northern District of California and captioned United States ex rel. Osinek v. Kaiser Permanente, 3:13-cv-03891 (N.D. Cal.); United States ex rel. Taylor v. Kaiser Permanente, et al., 3:21-cv-03894 (N.D. Cal.); United States ex rel. Arefi, et al. v. Kaiser Foundation Health Plan, Inc., et al., 3:16-cv-01558 (N.D. Cal.); United States ex rel. Stein, et al. v. Kaiser Foundation Health Plan, Inc., et al., 3:16-cv-05337 (N.D. Cal.); United States ex rel. Bryant v. Kaiser Permanente, et al., 3:18-cv-01347 (N.D. Cal.); and United States ex rel. Bicocca v. Permanente Med. Group, Inc., et al., No. 3:21-cv-03124 (N.D. Cal.).The complaint in one of the cases has been unsealed and can be seen here.
Statements from Involved Parties
“Medicare’s managed care program relies on the accuracy of information submitted by health care providers and plans to ensure that patients receive the appropriate level of care, and that plans receive the appropriate compensation,” said Deputy Assistant Attorney General Sarah E. Harrington of the Justice Department’s Civil Division. “Today’s action sends a clear message that we will hold health care providers and plans accountable if they seek to game the system by submitting false information...”
“The scale of this case, and the number of whistleblowers who have come forward, shows how serious the claims are,” Michael Ronickher, a lawyer for one of the whistleblowers, said in a statement.
Kaiser Permanente responded in a statement, defending actions taken by the company, saying, “We are confident that Kaiser Permanente is compliant with Medicare Advantage program requirements and we intend to strongly defend against the lawsuits alleging otherwise.” The company further notes that “[f]or nearly a decade, Kaiser Permanente has achieved consistently strong performance on Risk Adjustment Data Validation audits conducted by CMS. With such a strong track record with CMS, we are disappointed the Department of Justice would pursue this path.” Kaiser also struck a defiant tone in a statement made to Reuters, saying “our policies and practices represent well-reasoned and good-faith interpretations of sometimes vague and incomplete guidance from CMS.”