Kaiser Permanente hit with record-setting $556M Medicare Advantage fraud settlement
Multiple affiliates of California-based Kaiser Permanente have agreed to a $556 million settlement to resolve allegations they violated the False Claims Act and defrauded the government by submitting invalid diagnosis codes for Medicare Advantage enrollees.
The U.S. Department of Justice (DOJ) announced the agreement Jan. 14, noting that five organizations associated with the Oakland-based health system were receiving higher payments from the Centers for Medicare & Medicaid Services (CMS) as a result of alleged “systemic” fraud. The DOJ said providers were pressured to add invalid diagnostic codes to medical records—incidents of upcoding that would earn higher risk-adjusted reimbursement.
According to authorities, the settlement is the largest in history for a fraud case related to Medicare Advantage. However, the health system does not have to admit to wrongdoing, despite agreeing to loss-recovery payment.
“More than half of our nation’s Medicare beneficiaries are enrolled in Medicare Advantage plans, and the government expects those who participate in the program to provide truthful and accurate information,” Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division said in a statement. “Today’s resolution sends the clear message that the United States holds healthcare providers and plans accountable when they knowingly submit or cause to be submitted false information to CMS to obtain inflated Medicare payments.”
$1 billion in dubious payments
Despite the over half-a-billion settlement, the DOJ maintains that Kaiser Permanente earned “in the range of $1 billion” from 2009 to 2018, when the alleged upcoding took place. The department said roughly a half a million diagnosis codes were invalid.
The investigation dates back to October 2021. The initial complaint was filed against the Kaiser Foundation Health Plan, and it additionally implicated the Kaiser Foundation Health Plan of Colorado, the Permanente Medical Group, the Southern California Permanente Medical Group and the Colorado Permanente Medical Group.
The claims were brought by two medical coders, who will receive $95 million between them per terms of the False Claims Act that allow whistleblowers to benefit from settlements and judgments.
Multiple agencies worked on the investigation, including the U.S. Attorneys’ Offices for the Northern District of California and the District of Colorado, the U.S. Department of Health and Human Services Office of the Inspector General and the Federal Bureau of Investigation.
In a statement to multiple media outlets, Kaiser Permanente denied any wrongdoing and said it agreed to the settlement to avoid costly litigation.
“Multiple major health plans have faced similar government scrutiny over Medicare Advantage risk adjustment standards and practices, reflecting industry-wide challenges in applying these requirements,” the health system said.
All allegations stemming from these incidents are considered officially resolved.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.