Affiliates of Kaiser Permanente have agreed to pay $556 million to settle allegations that they violated the False Claims Act by submitting invalid diagnosis codes for their Medicare Advantage Plan enrollees. The settlement involves several Kaiser Permanente entities, including those operating in California and Colorado.
The United States alleged that from 2009 to 2018, Kaiser pressured physicians to add diagnoses to medical records after patient visits, which were not considered or addressed during those visits. This practice was said to be in violation of Centers for Medicare & Medicaid Services (CMS) rules. According to the government’s complaint, Kaiser developed methods to search patient histories for potential diagnoses that had not been submitted for risk adjustment and then encouraged providers to update records through “addenda,” sometimes months or over a year after the visit.
“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,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “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.”
U.S. Attorney Craig H. Missakian for the Northern District of California stated: “Medicare Advantage is a vital program that must serve patients’ needs, not corporate profits. Fraud on Medicare costs the public billions annually, so when a health plan knowingly submits false information to obtain higher payments, everyone — from beneficiaries to taxpayers — loses. We have an obligation to protect the American taxpayer from waste, fraud, and abuse and we will relentlessly pursue individuals and organizations that compromise the integrity of the Medicare program.”
Peter McNeilly, U.S. Attorney for the District of Colorado added: “The federal government supports the health care of millions of beneficiaries by paying hundreds of billions of dollars every year to Medicare Advantage Plans. Medicare relies on the accuracy of the information submitted by those plans. This resolution sends a clear message that we will hold health care plans accountable if they seek to game the system and pad their profits by submitting false information.”
Scott J. Lampert, Acting Deputy Inspector General for Investigations at HHS-OIG commented: “Deliberately inflating diagnosis codes to boost profits is a serious violation of public trust and undermines the integrity of the Medicare Advantage program. 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.”
Special Agent in Charge Sanjay Virmani from FBI San Francisco Field Office said: “Healthcare programs funded by the public are meant to support patients, not pad corporate bottom lines. False claims and submission of fraudulent information weaken the Medicare system and place an unfair cost on American taxpayers who expect honesty and accountability,” he stated. “This settlement reflects FBI’s continued commitment to holding accountable those who put profits over patients and abuse federal healthcare programs.”
The civil settlement also resolves claims brought under whistleblower provisions by two former Kaiser employees—Ronda Osinek and Dr. James M. Taylor—who will share $95 million as part of this recovery.
Federal authorities noted that these claims remain allegations only; there has been no determination regarding liability.
The investigation was carried out with collaboration among multiple agencies including attorneys from both California’s Northern District and Colorado’s District offices as well as units within HHS-OIG and FBI.
