Kaiser allegedly pressured doctors to add false diagnoses to patient records, boosting federal Medicare payments by about $1 billion over nine years.
Kaiser Permanente, a health care system headquartered in Oakland, California, has agreed to pay $556 million to resolve allegations that it submitted invalid diagnosis codes for Medicare Advantage Plan enrollees, thereby receiving higher federal government payments.
The case started because two former Kaiser employees, Ronda Osinek and James M. Taylor, acted as whistleblowers and sued on behalf of the government.
In 2021, the United States filed a complaint in the Northern District of California, alleging Kaiser engaged in a scheme in California and Colorado to make false claims for risk adjustment payments.
From 2009 to 2018, Kaiser added roughly half a million extra diagnoses and received additional Medicare payments in the range of $1 billion, according to the lawsuit.
Kaiser did not admit liability in the settlement announced Jan. 14.
Alleged Conduct
The United States alleged that Kaiser systematically pressured its physicians to retrospectively add diagnoses to patient medical records.
Kaiser allegedly added notes to patients’ files after their visits to make it appear that certain health conditions were addressed during the appointment, when they had not.
The government alleged that the diagnosis codes submitted were false in two primary ways.
In some cases, Kaiser allegedly added diagnoses for conditions that did not require or affect patient care during that visit, which violates Medicare rules.
In others, Kaiser allegedly submitted codes for conditions the patient did not actually have at the time of the visit and contradicted medical records.
Kaiser implemented automated algorithms and human reviews to mine old medical records for potential diagnoses that had not been submitted to Medicare for that year, the lawsuit alleged.
Once identified, Kaiser allegedly sent queries to doctors urging them to add these diagnoses, often months or even a year after the patient’s visit. These “leading” queries directed the doctor to a specific diagnosis rather than asking for a neutral medical opinion, according to the lawsuit.
Kaiser allegedly targeted certain lucrative conditions to capture more revenue, such as aortic atherosclerosis (AA) and cachexia.
Northern California Medical Group internal documents described an AA diagnosis as a “$40 [million] opportunity.” Each AA diagnosis is worth roughly $2,500 to $3,000 per patient in additional risk-adjustment payments, according to the lawsuit.
By Sylvia Xu
