The government has intervened in False Claims Act lawsuits against Kaiser Permanente affiliates for submitting inaccurate diagnosis codes for risk-adjusted payments to the Medicare Advantage (MA) program. Mary A. Inman, a partner in the whistleblower practice group at Constantine Cannon, which is representing one of the whistleblowers, will take a deeper look at the case as part of a RISE West session on lessons learned from whistleblower-litigated False Claims Act cases.

The Department of Justice (DOJ)  announced it has joined six lawsuits filed by 10 whistleblowers alleging that members of the Kaiser Permanente consortium violated the False Claims Act by submitting inaccurate diagnosis codes for its MA plan enrollees in order to receive higher reimbursements.

The lawsuits, which will now be consolidated into one matter in the Northern District of California, involve consortium members of the Oakland-Calif.-based integrated health system: Kaiser Foundation Health Plan Inc., Kaiser Foundation Health Plan of Colorado, The Permanente Medical Group Inc., Southern California Permanente Medical Group Inc., and Colorado Permanente Medical Group P.C.

The complaints claim that Kaiser pressured its physicians to add diagnoses to patient medical records often months or a year after the patient encounter to raise patient risk scores. The patients did not actually have the diagnoses, or they weren’t considered or addressed during the outpatient encounter, the whistleblower lawsuits allege. The Centers for Medicare & Medicaid Services (CMS) requires that, for outpatient medical encounters, MA plans submit diagnoses to CMS only for conditions that required or affected patient care, treatment, or management during an in-person encounter in the service year.

CMS adjusts payments to MA plans based on demographic information and the diagnoses of each plan beneficiary. In general, more severe diagnoses will have a higher risk score and CMS will reimburse the MA plan at a higher rate.

“Medicare’s managed care program relies on the accuracy of information submitted by health care providers and plans to ensure that patients receive the appropriate level of care, and that plans receive the appropriate compensation,” said Deputy Assistant Attorney General Sarah E. Harrington of the Justice Department’s Civil Division in the announcement. “Today’s action sends a clear message that we will hold health care providers and plans accountable if they seek to game the system by submitting false information.”

The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery.

But Kaiser disputes the allegations, and said in a statement that it is confident it has complied with the MA risk-adjustment program requirements and will mount a defense against the lawsuits. “Our policies and practices represent well-reasoned and good-faith interpretations of sometimes vague and incomplete guidance from CMS," the organization said in the statement. “For nearly a decade, Kaiser Permanente has achieved consistently strong performance on Risk Adjustment Data Validation audits conducted by CMS. With such a strong track record with CMS, we are disappointed the Department of Justice would pursue this path.”

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RISE West will take a deeper look into the Government’s case against Kaiser as part of a session on lessons learned from this and other whistleblower-litigated False Claims Act cases. Mary A. Inman, a partner in the whistleblower practice group at Constantine Cannon, which has represented the whistleblowers behind the Government’s most significant risk-adjustment cases against major players in the MA industry, including Kaiser, UHG, Sutter, Independent Health and Freedom Health, will lead the discussion.

Constantine Cannon is representing James M. Taylor, M.D., a highly placed physician and health care coding expert, in the group of 10 whistleblowers who accuse Kaiser Permanente of defrauding the United States government since at least 2004.

The law firm said in a statement that the recently unsealed whistleblower complaint also alleges numerous additional examples of fraudulent conduct by Kaiser, including that Kaiser obtained false risk-adjustment payments by using datamining to make patient diagnoses seem more numerous or more severe (a practice  known as “upcoding”), pressuring physicians to improperly code diagnoses, ignoring internal audit results, and using chart reviews of external providers to add new diagnoses but not delete unsupported ones. Similar one-way chart reviews are at the core of the United States’ massive lawsuit against UnitedHealth Group (UHG), in which Constantine Cannon represents the whistleblower. Inman will be discussing the UHG case in the RISE West session.

Dr. Taylor served as the medical director of revenue cycle/claims and physician director of coding at Kaiser’s Colorado Permanente Medical Group (CPMG). He  received RISE’s most prestigious award, the Martin L. Block Award for Clinical Excellence and Innovation in 2015.  The award is presented each year to an individual who has made a significant impact in the lives of America’s seniors through clinical leadership, policy vision, and through superior example of the RISE mission to promote continuous improvement in the health care system.

Dr. Taylor was elected to the board of CPMG and was also chairman of the entity for two years. He also served as national co-chair of the Kaiser Permanente’s ICD-10 Compliance Committee, was the delegate representing all physicians in the regions outside of California in Kaiser’s national Coding Governance Group, and was selected to complete Harvard’s Executive Leadership Program. At the time he filed his suit, he was the only physician to have received Kaiser’s National Revenue Cycle “Distinguished Leadership” award.

While a Kaiser employee, Dr. Taylor repeatedly proposed solutions internally to address the issues outlined in his whistleblower case, but corrective action was either ignored by the organizations or only briefly implemented before Kaiser would return to prior behavior.

“The scale of this case, and the number of whistleblowers who have come forward, shows how serious the claims are,” said Michael Ronickher, a partner in Constantine Cannon’s Washington, D.C., office, and co-lead counsel on the case. “Dr. Taylor’s unique position within Kaiser, along with his deep knowledge of Medicare Advantage compliance, will be key in helping the Department of Justice recover for the frauds he and the other whistleblowers allege.”

Dr. Taylor’s complaint, originally filed in 2014, had been kept under seal to allow the government time to investigate, and is now public due to the DOJ’s decision to partially intervene.

Constantine Cannon said in a blog post that the DOJ is expected to file a complaint-in-intervention by late October.