Five Kaiser Permanente affiliates have agreed to pay $556 million to resolve allegations that they improperly boosted Medicare Advantage payments by submitting unsupported medical diagnoses, the U.S. Department of Justice said Wednesday.
The settlement resolves claims that several Kaiser health plans and regional medical groups violated the False Claims Act by submitting diagnoses that were not supported by patient records and were later used to inflate risk-adjustment payments under the Medicare Advantage program.
Federal prosecutors alleged the Kaiser entities pressured physicians to add diagnoses to patient records after visits had already concluded, even when those conditions were not evaluated, treated, or discussed during the original encounter.
In a statement announcing the resolution, Assistant Attorney General Brett A. Shumate of the DOJ’s Civil Division said the agreement reinforces the government’s expectation that healthcare providers submit accurate and truthful information to the Centers for Medicare and Medicaid Services.
“More than half of Medicare beneficiaries are enrolled in Medicare Advantage plans,” Shumate said. “The United States will hold healthcare providers accountable when they knowingly submit or cause false information to be submitted to obtain inflated payments.”
Kaiser said the settlement includes no admission of wrongdoing or liability and that it agreed to resolve the matter to avoid the expense and uncertainty of prolonged litigation.
“This matter was not about the quality of care our members received,” Kaiser said in a statement. “It involved a dispute over documentation requirements under the Medicare risk-adjustment program.”
The case originated from whistleblower lawsuits filed in 2013 and 2014 by former Kaiser medical coder Ronda Osinek and physician James M. Taylor under the qui tam provisions of the False Claims Act. Their suits were later consolidated with four additional actions in the Northern District of California. The federal government formally intervened in 2021.
According to the government’s amended complaint, between 2009 and 2018 Kaiser engaged in a coordinated practice of retrospectively adding diagnoses to medical records to increase Medicare Advantage reimbursement.
Prosecutors alleged Kaiser systematically reviewed patient files to identify potential additional diagnoses and then encouraged physicians to add those conditions through record addenda, sometimes months or years after the original visit. In many instances, the government alleged, patients were not informed that new diagnoses had been added to their records.
The government claims Kaiser added roughly 500,000 diagnoses during the period at issue and received approximately $1 billion in additional Medicare payments as a result.
Under the settlement, whistleblowers will collectively receive $95 million as their share of the recovery. The DOJ emphasized that the claims resolved by the agreement remain allegations and were not adjudicated.
Kaiser did not respond to additional requests for comment Wednesday.
The federal government was represented by attorneys from the DOJ’s Fraud Section and U.S. attorney’s offices in California and Colorado. The whistleblowers were represented by counsel from Gibbs Mura and Whistleblower Partners LLP. Kaiser was represented by O’Melveny & Myers LLP.
The consolidated cases are pending in the U.S. District Court for the Northern District of California.
