News: Kaiser Permanente to pay $556 million to resolve MA fraud allegations

Kaiser Permanente has reached a settlement agreement with the United States Department of Justice over documentation practices impacting some Medicare Advantage (MA) risk adjustment payments from 2009‒2018. According to the Office of Inspector General (OIG) press release, Kaiser Permanente has agreed to pay $556 million to resolve the claims.

The figure makes it the largest MA fraud settlement to date, KFF Health News reported.

Under the MA program, CMS pays Medicare Advantage Organizations (MAO) a fixed monthly rate, adjusted for various beneficiary risk factors, for each beneficiary enrolled in their plans. According to the OIG, Kaiser owns several MAOs and engaged in a scheme in California and Colorado to inappropriately increase its risk adjustment payments by pressuring providers to amend medical records to add diagnoses that were not addressed during the relevant patient visits.

Additionally, the U.S. Department of Justice alleged that Kaiser “developed various mechanisms to mine a patient’s past medical history to identify potential diagnoses that had not been submitted to CMS for risk adjustment. Kaiser then sent ‘queries’ to its providers urging them to add these diagnoses to medical records via addenda, often months and sometimes over a year after visits.”

“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 press release regarding the settlement said. “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.”

“Deliberately inflating diagnosis codes to boost profits is a serious violation of public trust and undermines the integrity of the Medicare Advantage program,” said Acting Deputy Inspector General for Investigations Scott J. Lampert at the U.S. Department of Health and Human Services, OIG, in the OIG press release. “This outcome demonstrates HHS-OIG’s commitment to protecting Medicare through a unified approach — leveraging the expertise of our investigators, auditors, and counsel, alongside our law enforcement partners. We will continue to hold accountable any entity that seeks to compromise the integrity of the risk adjustment program.”

Editor’s note: To read the OIG press release about the settlement, click here. To read the Kaiser Permanente press release, click here. To read the KFF Health News coverage, click here.