Federal government joins overbilling lawsuits against Kaiser Permanente

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A Kaiser Permanente health clinic opens up inside a Target retail department store in San Diego. REUTERS/Mike Blake

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(Reuters) - The federal government has intervened in six whistleblower lawsuits accusing healthcare giant Kaiser Permanente of overbilling Medicare by using improper diagnosis codes for patients enrolled in its Medicare Advantage managed-care plans.

The whistleblower lawsuits, all filed since 2013 in the Northern District of California, say Kaiser Permanente doctors were pressured to submit diagnosis codes that increased patients' so-called risk scores, used by the Centers for Medicare & Medicaid Services (CMS) to calculate payments to Medicare Advantage plans.

"We are confident that Kaiser Permanente is compliant with Medicare Advantage program requirements and we intend to strongly defend against the lawsuits alleging otherwise," the company, which is represented by David Deaton of O'Melveny & Myers, said in a statement. "Our policies and practices represent well-reasoned and good-faith interpretations of sometimes vague and incomplete guidance from CMS."

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"The scale of this case, and the number of whistleblowers who have come forward, shows how serious the claims are," Michael Ronickher, a lawyer for whistleblower James Taylor, said in a statement. Taylor was physician director of coding at Kaiser's Colorado Permanente Medical Group.

Medicare Advantage, also known as Medicare Part C, is a program under which patients enroll in privately run managed care plans to receive benefits. CMS pays those plans a fixed per-patient fee, adjusted based on each patients' demographic information and diagnoses, known as risk scores.

Kaiser Permanente offers Medicare Advantage plans to patients.

The government alleges that Kaiser Permanente pushed its doctors to create addenda to patient reports months or even more than a year after patient visits to add diagnoses that would boost risk scores. Those added diagnoses were for conditions that patients did not actually have or that were not addressed at their visits, the government said.

Each diagnosis code resulting in an upward adjustment of a patient's risk score results in additional payment of about $3,000 per year, according to Taylor's complaint. Diagnoses that yield increased payments include chronic kidney disease, diabetes and congestive heart failure.

Under the False Claims Act, the whistleblowers will be eligible to receive a share of any money recovered by the government in the lawsuits.

The case is United States ex rel Osinek v. Kaiser Permanente, U.S. District Court, Northern District of California, No. 13-cv-03891, as well as other consolidated cases.

For the government: Deputy Assistant Attorney General Sarah Harrington of the U.S. Justice Department Civil Division, Assistant U.S. Attorney Benjamin Wolinsky of the Northern District of California and others

For relators: Mike Ronickher and Ed Baker of Constantine Cannon, Eric Gibbs of Gibbs Law Group, Mark Hardiman of Nelson Hardiman, William Hanagami of The Hanagami Law Firm, Roger Lewis of Goldberg Kohn, J. Bernard Alexander of Alexander Morrison + Fehr, R. Scott Oswald of The Employment Law Group, Daniel Twetten of Loevy & Loevy and others

For Kaiser Permanente: David Deaton of O'Melveny & Myers

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.