Justice Department cracking down on fraudulent Medicare Advantage coding, billing

The Justice Department is pursuing legal action against several major Medicare Advantage payers and providers for alleged fraudulent risk adjustment coding practices, according to The Washington Post.

Physicians told the publication it is common practice for payers and health systems to "data mine" a patient's medical history if that individual is covered by Medicare Advantage. That data is then used to encourage physicians to maximize profit through such practices as documenting the maximum number of diagnoses or ranking physicians by how they code patients compared to their colleagues.

One Justice Department lawsuit against Palo Alto Medical Foundation, a subsidiary of Sacramento, Calif.-based Sutter Health, alleges the provider altered medical records to make patients seem sicker than they were. By adding risk adjustment codes to the Medicare Advantage patient's file, the provider could pocket additional reimbursement— equating to millions of dollars in overinflated bills.

The lawsuit alleges an outside consultant found Palo Alto Medical Foundation submitted 8,000 false codes in 2012 and 2013. The provider settled the case in August 2021 for $90 million and admitted no wrongdoing or liability.

"The agreement brought closure to a long-running dispute and enabled Sutter to avoid the uncertainty and expense of protracted litigation," a Sutter spokesperson told The Post.

Another lawsuit brought by six whistleblower complaints alleges Oakland, Calif.-based payer-provider Kaiser Permanente used similar billing tactics to make $1 billion from 2009 to 2018.

"We are confident that Kaiser Permanente is compliant with Medicare Advantage program requirements, and we intend to strongly defend against the lawsuits alleging otherwise," a Kaiser spokesperson told The Post. "Our medical record documentation and risk adjustment diagnosis data submitted to CMS comply with applicable laws and Medicare Advantage program requirements. Our policies and practices represent well-reasoned and good-faith interpretations of sometimes vague and incomplete guidance from CMS."

Justice Department whistleblower allegations and similar lawsuits also exist against UnitedHealth Group, Cigna and Anthem. The HHS Office of Inspector General previously audited Humana and found it had overbilled the federal government. UnitedHealthcare denied any improper conduct to The Post, and Cigna, Anthem and Humana did not respond to requests for comment.

"Simply stated, compared to fee-for-service Medicare, Medicare Advantage costs less [for beneficiaries], is more equitable, has better quality, access and outcomes with greater coverage and benefits and nearly 100 percent consumer satisfaction," a UnitedHealthcare spokesperson told The Post.

America's Health Insurance Plans did not comment on the allegations.

"The Medicare Advantage system is designed to promote accurate coding and support integrated care," Mark Hamelburg, AHIP senior vice president for federal programs, told The Post. "Plans have to consider the entire patient and know all their conditions and how their conditions interact."

None of the allegations have gone to court, either because they were settled or are pending.

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