Kaiser Foundation Health Plan Inc., part of Kaiser Permanente, has agreed to pay $556 million to settle allegations of violating the False Claims Act by submitting invalid diagnosis codes for Medicare Advantage plans, leading to inflated government payments. The case, initiated by the U.S. government in October 2021, accused Kaiser of pressuring physicians to alter medical records post-visit to include diagnoses not initially considered, violating regulations set by the Centers for Medicare and Medicaid Services (CMS).
The Medicare Advantage program allows beneficiaries to choose private health plans, with payments adjusted based on beneficiaries’ health risks. The government alleged that from 2009 to 2018, Kaiser improperly incentivized doctors to add diagnoses, targeting those who did not meet ambitious goals for risk adjustments. This practice resulted in financial bonuses tied to inflated diagnostic goals, despite internal warnings about the legality of these actions.
The settlement includes claims from former employees who acted as whistleblowers. The resolution reflects ongoing efforts by the Department of Justice, HHS, and the FBI to combat healthcare fraud, emphasizing the importance of accurate information in public-funded programs. Importantly, the settlement does not constitute an admission of liability by Kaiser.
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