A False Claims Act lawsuit filed against HealthCare Partners Holdings LLC (now DaVita) settled this week for $270 million. Filed by the Department of Justice, the lawsuit alleged that HealthCare Partners, which was acquired by DaVita Medical Holdings LLC in 2012, coded patients enrolled in Medicare Advantage Organizations (MAO) to receive increased Medicare payments.

James Swoben, a former employer of an MAO that conducted business with DaVita, brought some of the Medicare fraud allegations to the Justice Department’s attention. Swoben will receive a whistleblower reward worth more than $10 million. His willingness to expose the alleged fraud highlights the vital role whistleblowers play in holding healthcare companies accountable for their wrongdoing.

HealthCare Partners Allegedly Miscoded Patients to Increase Medicare Payments

DaVita Medical Holdings operated a Medicare Services Organization (MSO) that worked with MAOs. In 2012, DaVita acquired HealthCare Partners, an independent physician association in California. As part of its role as an MSO, DaVita was responsible for collecting participant diagnoses from physicians and submitting them to MAOs. For its efforts, DaVita received a small portion of the Medicare reimbursements.

The allegations raised by the Justice Department include incorrectly coding patients to increase Medicare payments. According to the lawsuit, HealthCare Partners gave inaccurate diagnosis codes that artificially increased the amount Medicare reimbursed its MAOs. For example, HealthCare Partners allegedly gave an incorrect code for a spinal condition that resulted in higher reimbursement than the correct code would have obtained. As DaVita was the MSO involved, it received a portion of the inflated payments.

The settlement will see DaVita pay $270 million to resolve the allegations.

While DaVita did not admit to any liability, the settlement also resolves allegations that HealthCare Partners was involved in “one-way” chart reviews.

In “one-way” chart reviews, patients’ medical records are combed through to find diagnoses that were missed by providers and can then be submitted to the Centers for Medicare and Medicaid Services (CMS) to increase reimbursements. At the same time, inaccurate diagnoses that should have been deleted, resulting in decreased reimbursement or paying back CMS, were simply ignored. In other words, the MAO reviews the medical records to increase reimbursement but does not review in a way that could reduce reimbursement or require the MAO to repay Medicare.

It was Swoben who brought the “one-way” chart review allegations to the government’s attention. In the end, DaVita voluntarily informed the government of HealthCare Partners’ alleged activities, paving the way for a “favorable resolution of potential claims arising from the conduct.”

Medicare Advantage Under Spotlight for Increased Reimbursements

DaVita is not the only organization under scrutiny for their coding practices. According to reports, UnitedHealth, Aetna, Anthem, Centene, Cigna, and Humana also face probes linked to Medicare Advantage plans. UnitedHealth allegedly exaggerated participant diagnoses and concealed complaints concerning enrollment fraud.

Medicare Advantage provides approximately 19 million Americans with Medicare services. To be eligible for Medicare Advantage, the participant must be a Medicare beneficiary who lives in a Medicare Advantage service area and does not have end-stage renal failure. Medicare Advantage is offered by private organizations and covers the services provided by Medicare Parts A, B, with some additional benefits such as dental and vision care. The main difference to participants is that with Medicare Advantage there is a limit to out-of-pocket payments, whereas Medicare itself has no such limits. For participants with Medicare Advantage, once the limit has been reached, the participant no longer pays for covered services.

There is also a financial difference for the organizations involved. Under Medicare, reimbursement depends on the specific services an organization offers. Under Medicare Advantage, MAOs—the organizations that own the Medicare Advantage Plans—are given a fixed monthly amount to cover the participant’s medical costs. These payments are adjusted based on the beneficiary’s health. Patients with conditions that require increased medical care result in higher payments to the MAO. MAOs receive the patient’s diagnoses from healthcare providers and forward those to Medicare so CMS can send the appropriate reimbursement.

If incorrect diagnoses are sent to Medicare, the MAO and the Medical Services Organizations that provide Medicare services could receive higher reimbursement than they are eligible to receive. In such situations, taxpayer dollars are misused and taken from the people who need them most.

Whistleblowers Vital to Fighting Medicare Advantage Fraud

With 19 million Americans relying on Medicare Advantage to cover their medical needs, it is critical that taxpayer dollars are used to cover legitimate medical expenses, not to line the pockets of people who take advantage of the system. That is why the government relies on whistleblowers to fight against fraud and ensure government funding is used appropriately. Whistleblowers who have inside knowledge of fraud can bring lawsuits forward and, if the lawsuit is successful, share in a portion of the recovery.

The decision to bring a whistleblower lawsuit forward is not an easy one, with many factors to consider. Our experienced whistleblower attorneys can answer your questions and help you make the decision that is best for you and your family. If you have inside knowledge of Medicare fraud or any other fraud, we encourage you to speak to one of our attorneys to discuss your options.

Contact a whistleblower lawyer at Baum, Hedlund, Aristei & Goldman today.