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Tuesday, June 25, 2024 | Back issues
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Claims that Kaiser Permanente defrauded the feds will move forward

A federal judge allowed a case involving Kaiser Permanente misdiagnosing healthcare cases to goose revenue reimbursements.

(CN) — A federal judge allowed some claims that the largest non-profit healthcare defrauded Medicare by encouraging physicians to exaggerate patient conditions in order to goose reimbursements, but the majority of the claims were denied. 

U.S. District Court Judge Edward Chen said that plaintiffs plausibly alleged that Kaiser Permanente knew through the audit process that doctors were improperly diagnosing certain conditions but let the errors persist for financial gain. 

“Kaiser knew there were high error rates in risk adjustment claims in certain areas but failed to take action to find the false claims retroactively – and thus improperly retained the government’s overpayment for those false claims,” Chen wrote in the decision. 

Some of the claims were dismissed because they were germane only to California and did not require the jurisdiction of the federal courts. 

“Defendants contend that just because the Osinek Complaint gave California examples does not mean that the pleading is limited in scope to California,” Chen wrote. “But there must be some indication in the pleading that the problem extends outside of California.”

The Medicare Advantage program, otherwise known as Medicare Part C, allows beneficiaries to enroll in its managed care insurance plans. Participating health plans are paid a per-person fee based on services provided and on the health status of its individual enrollees.

Enrollees receive a “risk assessment score” by the Centers for Medicare and Medicaid Services (CMS), essentially grading them based on demographic data and their own health diagnoses. The higher a person’s risk score, the more a given health plan gets paid to insure them.

It’s that risk score that Kaiser is accused of ginning up to increase its Medicare payouts.

“The integrity of government health care programs must be protected,” Acting U.S. Attorney Stephanie Hinds of the Northern District of California said in a statement on the government’s motion to intervene. “The Medicare Advantage program maintains the health of millions, and wrongful acts that defraud the program cannot continue and will be pursued.”

According to Medicare rules, participating plans must submit diagnoses for outpatient care to CMS only for conditions requiring or affecting patient care or treatment during in-person encounters that occurred during the service year. The lawsuits accuse Kaiser of pressuring its physicians to add information to patient records long after their visit or treatment took place, sometimes over a year later, to inflate patients’ risk scores through new diagnoses that were never presented to the patients or addressed during their visit in violation of Medicare rules.

“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 in the statement. “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 six original lawsuits the feds want consolidated were filed under the whistleblower provisions of the False Claims Act, which allows private individuals to sue an entity on behalf of the federal government for fraudulent activity and to collect a share of any money recovered. The government is also permitted under the act to intervene, as it has, at least partially, in this instance by consolidating the original cases in the Northern District of California.

The health care giant added its 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.”

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Categories / Business, Government, Health

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