In late July 2021, the Department of Justice announced that the federal government had decided to intervene in six pending False Claims Act (“FCA”) actions against Kaiser Permanente (“Kaiser”)[1] for alleged Medicare Advantage risk adjustment diagnosis code “chasing.” Under Medicare Advantage (MA), the CMS-payor payment model is centered around per member per month payments from CMS to Medicare Advantage Organizations (“MAO”) for each of a given MAO’s enrollees, and these PMPM payments are risk adjusted upwardly or downwardly depending upon their health status – the sicker the enrollee, the higher the PMPM payment made to the MAO. The health status of MA enrollees is, in turn, based largely on diagnosis codes submitted by providers who attend to them. Per the allegations in the consolidated action, Kaiser attempted to game this model by strong-arming and incentivizing its physicians to, among other things, retroactively submit “addenda” diagnosis codes for a patient, even many months after the physician-patient encounter had occurred. To further inflate PMPM payments, Kaiser allegedly used sophisticated data mining and analytics to determine the optimal types of diagnosis codes for its physicians to use in documenting physician-patient encounters. Such diagnosis chasing activities allegedly hit such a fever pitch that Kaiser would hold yearly “coding parties”, where physicians were “gathered in a single room with computers and asked to review past progress notes for addenda related to revised medical diagnoses.”[2]
While the focus of the consolidated action is on Kaiser, it is a cautionary tale for physicians who may have arrangements with payors or healthcare systems that incentivize risk adjustment diagnosis code “chasing,” as liability could easily roll downhill from MAOs to providers, leading to significant civil, regulatory and even criminal liability.
How Frier Levitt Can Help
Frier Levitt has attorneys with extensive experience in handling Medicare Advantage risk adjustment-related matters and is equipped to assist you and your practice in this and other areas within the value-based care space, including litigating against MAOs for Medicare Advantage risk adjustment related issues, negotiating shared savings agreements, white collar defense of False Claims Act investigations and lawsuits by the government, and medical practice compliance audits with respect to the capture and accurate submission of diagnosis codes to MAOs and CMS. Contact us to discuss your practice’s value-based care related questions.
[1] The six actions, now consolidated, include United States ex rel. Osinek v. Kaiser Permanente, 3:13-cv-03891 (N.D. Cal.); United States ex rel. Taylor v. Kaiser Permanente, et al., 3:21-cv-03894 (N.D. Cal.); United States ex rel. Arefi, et al. v. Kaiser Foundation Health Plan, Inc., et al., 3:16-cv-01558 (N.D. Cal.); United States ex rel. Stein, et al. v. Kaiser Foundation Health Plan, Inc., et al., 3:16-cv-05337 (N.D. Cal.); United States ex rel. Bryant v. Kaiser Permanente, et al., 3:18-cv-01347 (N.D. Cal.); and United States ex rel. Bicocca v. Permanente Med. Group, Inc., et al., No. 3:21-cv-03124 (N.D. Cal.).
[2] See Complaint for United States ex rel. Osinek v. Kaiser Permanente, 3:13-cv-03891 (N.D. Cal.) at ¶35.
