Aug 2, 2021 - Health

Justice Department goes after Kaiser Permanente's Medicare Advantage plans

A white Kaiser Permanente logo on top of a gray medical office building.
Kaiser Permanente has 1.7 million Medicare Advantage members. Photo: AaronP/Bauer-Griffin/GC Images via Getty Images

The Department of Justice has joined whistleblower complaints that allege Kaiser Permanente knowingly made its Medicare Advantage patients look sicker than they were, as a way to obtain more money from the federal government.

Why it matters: For years now the federal government has cracked down on fraudulent coding in Medicare Advantage. But going after Kaiser Permanente, a company that many view as the gold standard for Medicare Advantage, indicates the problem may touch almost every corner of the industry.

What they're saying: Kaiser knew many of its patients had inordinately high "risk scores," which help determine how much the federal government pays them, according to one of the unsealed lawsuits. But the company didn't fix the mistakes.

  • "The most significant and consistent error is that Kaiser providers submit diagnosis codes representing active, current treatment of cancer when, in fact, the patient's cancer is cured, in remission, or otherwise irrelevant to the services provided to the patient," the lawsuit alleges.
  • "Kaiser's reaction, on a national and regional level, has been to (except in isolated instances) avoid conducting retrospective audits to correct previously submitted false data."

The other side: "We are confident that Kaiser Permanente is compliant with Medicare Advantage program requirements, and we intend to strongly defend against the lawsuits alleging otherwise," the company said in a statement.

The big picture: These allegations, which come against a consistent "five-out-five-star" plan, reinforce longtime expert warnings that Medicare Advantage insurers are bilking money by "upcoding" people's diseases.

  • For some insurers, risk scores were 20% above what they would normally be for similar patients who are enrolled in traditional Medicare "due to coding practices," the Medicare Advisory Payment Commission wrote in 2020.
  • "After accounting for all coding adjustments, payments to MA plans in 2018 were between 2% and 3% higher than Medicare payments would have been if MA enrollees had been treated in [traditional] Medicare and generated about $6 billion in additional payments to MA plans," MedPAC wrote.

The bottom line: Health insurers have railed against audits of their Medicare offerings, but increased DOJ involvement makes it appear there is continued gaming of this program.

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