Major Settlements for Kaiser Permanente and Aetna Over Medicare Advantage Coding
The U.S. Department of Justice (DOJ) has announced substantial settlements with Kaiser Permanente and Aetna, two major players in the Medicare Advantage (MA) market. Kaiser Permanente agreed to a $556 million settlement, while Aetna settled for $117.7 million. These cases addressed allegations of False Claims Act violations by both companies, who were accused of practices leading to artificially inflated MA reimbursements.
The MA program calculates reimbursements based on diagnosis and billing codes, which insurers submit according to patient medical records. Higher reimbursement rates are often aligned with more severe health conditions, purportedly requiring more costly treatments. The DOJ has highlighted these settlements as indicative of an enforcement focus on MA risk-adjustment coding practices.
The allegations against Kaiser Permanente centered on their use of follow-up chart reviews and addenda, which were allegedly used to introduce new diagnosis codes after patient visits occurred. The DOJ claimed that Kaiser exerted pressure on their medical personnel to add unsupported codes, leveraging incentive programs tied to increased risk scores and Medicare payments. Allegedly, data-mining tools were used to propose diagnoses not addressed during patient visits, raising concerns about the accuracy of these added codes.
Concerning Aetna, the allegations pointed to a systematic use of chart review programs initiated in 2015. These reviews sought new diagnosis codes without concurrently rectifying incorrect or unsupported codes. From 2018 to 2023, Aetna was reported to have submitted diagnoses, including morbid obesity, that were not substantiated by medical records. Aetna allegedly failed to adequately address overpayments when internal audits identified discrepancies in coding practices.
These situations highlight broader concerns about MA plans potentially employing systems to generate diagnosis codes with insufficient oversight mechanisms to ensure accuracy. Both settlements demonstrate the DOJ's scrutiny of organizational processes that might increase MA payments without proper checks. The focus for insurers should not only be on identifying codes that maximize reimbursements but also ensuring processes are robust enough to eliminate errors and maintain compliance with regulatory standards.
Medicare Advantage plans face increasing pressure to align their coding practices with regulatory requirements, ensuring they accurately reflect medical necessity and are supported by patient records. Organizations are advised to establish transparent, rigorous procedures for claims coding and reviews. Physicians should also be wary of obligating diagnoses that are not clearly substantiated in a patient’s medical records to avoid potential FCA risks.
While the DOJ’s enforcement strategy poses challenges predominantly for insurers, it may provide certain leverage for providers engaged in disputes with MA plans over payment denials or documentation discrepancies. Legal proceedings and arbitrations could benefit from highlighting the reliance of MA plans on medical records to substantiate reimbursement requests. The DOJ’s focus on the practices of MA insurers signifies an ongoing commitment to monitoring and enforcing accurate coding practices across the industry. Organizations that illustrate a stringent adherence to compliant and precise coding will likely be better positioned in the regulatory landscape.