Payer to Fork Over $6.3M For Medicare Advantage Fraud Allegations

Kaiser Foundation Health Plan of Washington will pay over $6.3 million for submitting invalid Medicare Advantage diagnoses, according to the Department of Justice (DOJ).

“When insurance providers take advantage of Medicare and falsely claim that they are entitled to repayment for unsupported diagnoses, American taxpayers suffer in the form of higher costs,” said US Attorney James P. Kennedy, Jr. “We will continue to work to ensure that these programs are not defrauded and that monies are not paid for unwarranted claims.”

A whistleblower, Teresa Ross—a former employee of Group Health Cooperative in Washington—filed the lawsuit.

Kaiser Permanente acquired Group Health Cooperative in 2017 after a two-year acquisition process. In so doing, Group Health Cooperative became Kaiser Foundation Health Plan of Washington and Kaiser added 6,000 employees to its company and increased its membership by 651,000.

However, before this happened, Group Health Cooperative submitted diagnoses that did not have proper clinical evidence, Ross said.

As part of the settlement and in accordance with the False Claims Act, Ross will receive $1.5 million.

“The United States relies on Medicare Advantage organizations to submit accurate diagnosis data to Medicare to ensure that the compensation they receive is appropriate,” added Jeffrey Bossert Clark, assistant attorney general of the Department of Justice’s civil division. “We will continue to pursue those who undermine the integrity of the Medicare program and the data it relies upon.”

Kaiser Foundation Health Plan of Washington received a five-star rating from CMS for 2020 Medicare Advantage Star Ratings. But it was missing from the list in 2021 Medicare Advantage Star Ratings.

Kaiser Foundation Health Plan of Washington never admitted to boosting its risk adjustment payments using false or unsubstantiated claims.

"Kaiser Permanente, which acquired Group Health in 2017 after this investigation was launched and conducted, has a history of commitment to compliance in this area," Kris Greco Thompson, vice president of public relations, communications, and brand management for Kaiser Permanente, told HealthPayerIntelligence in a written statement.

"We’ve fully cooperated with the Department of Justice throughout this entire process and have agreed to a settlement to resolve the outstanding civil claims, as we believe Group Health submitted its data in good faith and in reliance on recommendations by its contracted risk adjustment vendor, which purported to be an expert in this area. Under the settlement, Kaiser Foundation Health Plan of Washington has made no admission of liability and denies the allegations."

Despite the US attorney’s and assistant attorney general’s strong words against invalid risk adjustment, the Department of Justice was careful to add that there was no judgment pronounced against the payer.

“The claims resolved by the settlement are allegations only; there has been no determination of liability,” DOJ concluded.

"As a leading healthcare provider and insurer for over 700,000 Washingtonians, we remain committed to providing our members with high quality care," Thompson added.

Kaiser Foundation Health Plan of Washington is not the only payer to be accused of submitting invalid claims for reimbursement in 2020.

First, the DOJ launched a lawsuit against Anthem in March 2020. The DOJ stated that Anthem submitted inaccurate chart reviews as claims for risk adjustment.

Anthem, however, denied any wrongdoing.

“The suit is another in a pattern that attempts to hold Anthem and other plans to a standard on risk adjustment practices, without providing clear guidance,” Anthem rebutted in a written statement which the payer emailed to HealthPayerIntelligence.

“Where regulations have not been clear, Anthem has been transparent with CMS about its business practices and good faith efforts to comply with program rules. We think the agency should update regulations if it would like to change how it reimburses plans for services delivered.”

Then, a third-party vendor sued Cigna in early August 2020 for false and fraudulent risk adjustment claims from 2012 through 2017.

The third-party vendor asserted that the major payer used a wellness program, the 360 Program, to develop false ICD codes. The payer submitted these false codes to receive risk adjustment. Cigna received $1.4 billion in fraudulent claim reimbursement, the lawsuit stated.

The ICD Codes that Cigna submitted were not for existing Medicare beneficiaries, were not recorded, and did not use clinically reliable data, the lawsuit stated.

Cigna denied having submitted false claims.

In the case against Kaiser Foundation Health Plan of Washington, the DOJ noted that the False Claims Act is key to tracking down healthcare fraud and holding companies accountable. The Act allows private parties, in this case Ross, to sue on behalf of the government. HHS also has a tip line for complaints about fraud, abuse, waste, and mismanagement, DOJ reminded.