5 things about DOJ’s upcoding allegations against Kaiser


Kaiser Permanente allegedly coerced employees to upcode claims for Medicare Advantage beneficiaries, resulting in an estimated 75% error rate, according to a new complaint from the U.S. Justice Department.

The federal government intervened in six related lawsuits in July and filed a complaint Monday, outlining how Kaiser physicians allegedly changed medical records often months after care was provided to boost the Oakland, California-based integrated health system’s Medicare Advantage reimbursement. More than half of Kaiser physicians said they were forced to add diagnoses they did not consider, evaluate or treat, according to one of the whistleblowers and former Kaiser medical coder, Randi Osinek.

Kaiser officials said the system is compliant with MA requirements and will defend itself against the lawsuits alleging otherwise, noting nearly a decade of “strong performance” on CMS’ risk adjustment audits.

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“Our policies and practices represent well-reasoned and good-faith interpretations of sometimes vague and incomplete guidance from CMS,” Kaiser said in a statement.

Here are five things to know about the DOJ’s complaint:

1. Kaiser allegedly targeted atherosclerosis of the aorta, or hardening of the arteries, as a potential area with a “high rate of reimbursement.” The Permanente Medical Group in Northern California allegedly told facilities that beginning in 2012, 40% of their bonuses would be based on how well they coded these conditions. An email cited in the complaint between executives reads: “We are missing a $40M opportunity. In the current reality of contracting revenue stream, this would become devastating to us. What are our steps to improve? How can we tweak the environment or create habits to take us to 100%? Can we find out from the bright spots on how they do it? How do we rally the herd. Everybody join in the discussion. $40M is no chump change.”

2. Some employees allegedly referred to Kaiser’s rush to capture as many diagnoses as possible as the “dash for cash.” Kaiser would orchestrate “coding parties,” where physicians would scan lists of diagnoses and add them to their patient visit records, according to the complaint.

3. Insurers have been known to perform retrospective chart reviews for Medicare Advantage cases to maximize reimbursement, court documents show. Identifying and documenting additional diagnosis codes to send to CMS for risk-adjustment payment is legal, as long as there is supporting documentation. Providers claim that they are appropriately coding after years of “under-coding,” while critics argue that they are bilking the system.

4. Kaiser allegedly did not conduct chart reviews for patients for whom they could not receive risk-adjustment payments. According to the complaint, Dr. Teresa Welsh, the medical director of coding for Kaiser’s Colorado medical group, allegedly wrote to clinician supervisors that physicians should not “spend more than one minute a query” because responding to queries was “like doing a refill request” and that she could do “two a minute.” Each added diagnosis was allegedly worth approximately $3,000 to Kaiser.

5. Some of the diagnoses that Kaiser allegedly added via the chart reviews did not even exist; many allegedly did not require or affect patient care or treatment. These chart reviews were often added months or even a year or more after the visit so that Kaiser could get risk-adjusted payments for the newly added diagnoses, according to the complaint.



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