Kaiser Permanente affiliates will pay $556 million to settle a federal lawsuit that alleged the health care provider committed Medicare fraud and pressured doctors to add incorrect diagnoses to medical records, federal prosecutors said.
The settlement, announced Wednesday, came more than four years after the U.S. Department of Justice filed the legal claim in San Francisco that consolidated allegations from six whistleblower complaints.
Federal prosecutors alleged that Kaiser entities “gamed” the Medicare Advantage Plan system, also known as the Medicare Part C program, which gives beneficiaries the option to enroll in managed-care insurance plans.
Prosecutors contended that Kaiser pressured its physicians to create addenda to medical records months or more than a year after an initial consultation with an enrollee, and that more severe diagnoses generally resulted in larger payments to the plan.
The settlement covers several affiliates, including the Kaiser Foundation Health Plan, Kaiser Foundation Health Plan of Colorado, The Permanente Medical Group, Southern California Permanente Medical Group, and Colorado Permanente Medical Group P.C.
Kaiser, which is based in Oakland, California, is a consortium of entities that together form one of the largest nonprofit health care plans in the United States, with more than 12 million members and dozens of medical centers.
In a statement Wednesday, Assistant Attorney General Brett A. Shumate said: “More than half of our nation’s Medicare beneficiaries are enrolled in Medicare Advantage plans, and the government expects those who participate in the program to provide truthful and accurate information.”
Kaiser said the settlement includes no admission of wrongdoing or liability. The company said it chose to settle to avoid “the delay, uncertainty, and cost” of a trial.
In its statement, Kaiser said “multiple major health plans have faced similar government scrutiny over Medicare Advantage risk adjustment standards and practices,” and said the dispute in its case “was not about the quality of care our members received.”
Kaiser added that it “involved a dispute about how to interpret the Medicare risk adjustment program’s documentation requirements.”