DaVita Pays $270M For Inflating Medicare Advantage Bills
Health care giant DaVita Inc. will pay $270 million to resolve allegations that one of its divisions defrauded Medicare Advantage through deliberate ignorance of unsubstantiated diagnoses and manipulation of billing codes, the U.S. Department of Justice said Monday.
The payout stems partly from a long-running whistleblower suit alleging “one-way” reviews of patient medical records. In the reviews, DaVita unit HealthCare Partners LLC would search for overlooked diagnoses on behalf of Medicare Advantage insurers but turn a blind eye to unsupported diagnoses, according to the Justice Department.
Billing codes for the unsupported diagnoses “should have been deleted, and that would have decreased Medicare reimbursement or required the [Medicare Advantage insurers] to repay money to Medicare,” the department said.
The whistleblower, James Swoben, was formerly employed by Medicare Advantage insurer SCAN Health Plan. He will receive more than $10 million as a reward under Monday’s settlement.
Patient diagnoses determine how much “risk adjustment” money goes to Medicare Advantage insurers. Monday’s settlement is especially notable because the Justice Department previously joined part of Swoben’s suit targeting UnitedHealth Group Inc. — its first such intervention in a Medicare Advantage FCA suit — but ultimately saw its case rejected.
“I’m glad that we were able to get a recovery … for risk adjustment fraud, which is in my opinion the main way in which Medicare Advantage [insurers] and their contracted medical groups defraud the Medicare Advantage program,” William Hanagami, counsel for Swoben, told Law360 on Monday.
HealthCare Partners is a large physician group that contracts with Medicare Advantage insurers in several states to provide care to certain patient populations. DaVita acquired HealthCare Partners in 2012.
Monday’s settlement also covers HealthCare Partners’ misconduct that DaVita reported voluntarily. According to the Justice Department, HealthCare Partners — which gets a share of the payments received by Medicare Advantage insurers — “disseminated improper medical coding guidance” that caused the insurers to overbill the government.
“Based on these self-disclosures, and DaVita’s cooperation with the government’s subsequent investigation, the United States agreed to a favorable resolution of potential claims arising from the conduct,” the Justice Department said Monday.
DaVita late last year agreed to sell HealthCare Partners to UnitedHealth division Optum Inc. as part of a $4.9 billion deal. In a statement on Monday, DaVita said that the settlement “reflects close cooperation with the government to address practices largely originating with HealthCare Partners.”