[author: Kelley Tran]

On October 25, 2021, DOJ intervened in a False Claims Act (FCA) case against Kaiser Permanente, Kaiser Foundation Health Plan, Inc., and certain Permanente Medical Groups (Kaiser). In its complaint, DOJ contends that Kaiser defrauded Medicare out of approximately $1 billion through “systematically altering” Medicare Advantage patient medical records “to add diagnoses that either did not exist or were unrelated to the patient’s visit with the Kaiser physician.” The DOJ claims Kaiser added these diagnoses after the patient medical visit using a mechanism called an addendum. Alleging that these addenda were often added months or even a year or more after the visit, DOJ states that many patients “were not even told that they supposedly had the diagnoses that Kaiser had added to their medical records.”

According to the DOJ complaint, Kaiser engaged in initiatives called “data mining” and “chart review” where Kaiser would utilize automated algorithms and/or human reviewers to identify new diagnoses for the patients. DOJ asserts that Kaiser focused its efforts “especially on diagnoses it knew were lucrative,” and “routinely ignored” the requirement that every diagnosis must have required or affected patient care, treatment, or management at the visit in order to be submitted to CMS for payment. According to the DOJ complaint, these added diagnoses should not have resulted in addenda because they “were, almost by definition, not relevant to the visit.”

Beginning in 2007, shortly after the risk adjustment’s full implementation went into effect, whistleblowers started filing FCA complaints against Kaiser alleging Medicare Advantage fraud. According to the DOJ complaint, between 2009 and 2018, Kaiser added roughly half-a-million diagnoses using addenda submitted to CMS and received Medicare payments in the range of $1 billion from these additional diagnoses.

Kaiser released a statement on October 25, 2021, announcing, “We are confident that Kaiser Permanente is compliant with Medicare Advantage program requirements and we intend to strongly defend against the lawsuits alleging otherwise.” Kaiser further claims, “Our policies and practices represent well-reasoned and good-faith interpretations of sometimes vague and incomplete guidance from CMS.”

A copy of the complaint-in-intervention filed by the U.S. in U.S. ex rel. Osinek, et al. v. Kaiser Permanente, et al., U.S. District Court, Northern District of California, Case No. 3:13-cv-03891, is available here.