In October 2021, the United States Department of Justice (DOJ) intervened in a False Claims Act case against Kaiser Permanente, Kaiser Foundation Health Plan Inc., and certain other Permanente Medical Groups (collectively, “Kaiser”).
The complaint stems from six different whistleblower lawsuits, with the first of those filed in 2013.
In its complaint, DOJ alleges that Kaiser defrauded Medicare out of roughly $1 billion by “systematically altering” Medicare Advantage patient records to include diagnoses that “either did not exist or were unrelated to the patient’s visit with the Kaiser physician” after the patient medical visits, via an addendum. The DOJ alleged that the addenda were often added months (or years) after the initial visit and many patients were not even told by the doctors “that they supposedly had the diagnoses that Kaiser had added to their medical records.”
According to the complaint, from 2009 to 2018, Kaiser added approximately half a million diagnoses via addenda submitted to CMS, resulting in approximately $1 billion in Medicare payments.
In the complaint, the DOJ outlines that activities that Kaiser is alleged to have engaged in, including “data mining” and “chart review,” where Kaiser would use automated algorithms and/or human reviewers to identify new diagnoses for the patients. DOJ further alleges that Kaiser egregiously focused its efforts on “diagnoses it knew were lucrative” and “routinely ignored” the requirement that each diagnosis needs to have either required or affected patient care, treatment, or management at the visit in order to validly be submitted to the Centers for Medicare and Medicaid Services (CMS) for payment. The DOJ notes that the added diagnoses should not have even resulted in addenda because they were not relevant to the visit.
The DOJ further alleges that Kaiser also used a related data-mining program called “refresh,” where Kaiser would mine patient medical files to find old diagnoses that had not yet been diagnosed in the current service year. If a physician failed to address any of these old diagnoses at a patient visit, the physician would be provided a list of these “missed opportunities”—i.e., opportunities for risk-adjustment payment—to create an addendum to retrospectively add these diagnoses to the medical record.
The complaint states that Kaiser knew that the addenda practices were widespread and unlawful. Kaiser ignored numerous red flags and internal warnings that it was violating Medicare rules, including concerns raised by its own physicians that these were false claims and audits by its own compliance office identifying the issue of inappropriate addenda. Relator Randi Osinek, a Kaiser certified medical coder, reported to several Kaiser executives in 2011, “over 50% of the physicians tell me they feel that they are being ‘forced’ to add diagnoses that they did not consider[], evaluate[], and/or treat. Especially since they feel their bonuses are being impacted.”
Kaiser Statement
Kaiser has insisted on its compliance, releasing a statement 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.” Kaiser went on to say, “Our policies and practices represent well-reasoned and good-faith interpretations of sometimes vague and incomplete guidance from CMS. For 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.”