Sutter Health Settles Medicare Fraud Case For $90 Million

Monday, September 13, 2021

A key California-based overall health care procedure, Sutter Wellbeing, and many of its healthcare observe foundation affiliate marketers have agreed to fork out a whole of $90 million to settle allegations that they violated the Phony Claims Act (“FCA”) by knowingly publishing inaccurate data about the well being standing of beneficiaries enrolled in Sutter Health’s contracted Medicare Advantage (“MA”) Plans.[1] The Sutter Wellbeing settlement is the largest FCA settlement at any time compensated by a health and fitness care company for alleged MA fraud.

The lawsuit, which was initially submitted in 2015 by a previous worker whistleblower, alleged that Sutter Wellness knowingly submitted prognosis codes to its contracted MA Designs that have been unsupported by the patients’ healthcare history in buy to raise its reimbursement for providers provided by Sutter Well being to its MA Prepare enrollees.[2] In announcing the settlement, the U.S.. Division of Justice (“DOJ”) has shined a spotlight on its ongoing FCA enforcement initiatives in the MA plan to control health care fraud within the MA method – which include fraud relating to upcoding in the submission of unsupported analysis codes to increase MA System and provider reimbursement below the MA possibility adjustment application.

To provide solutions to Medicare beneficiaries who elect to receive their Medicare advantages via MA Options – Medicare’s managed care solution – MA Programs are compensated by the MA method dependent on a capitated (for every-enrollee) every month volume. The capitated payments to MA Plans are threat-adjusted for affected individual health and complexity by way of “Risk Adjustment Factors” (“RAF”) that reflect fiscal utilization and possibility.[3] Because of the RAF changes, MA Programs obtain improved reimbursement for the procedure of sicker people, i.e., people who expense more to address. In this situation, Sutter Wellbeing shared in this improved reimbursement for the cure of sicker patients pursuant to the phrases of its MA Strategy contracts.

The accommodate alleges that by generating beneficiaries look sicker than they truly had been, Sutter Health’s contracted MA Ideas gained larger sized – and improperly inflated – MA payments and, in turn, Sutter Well being been given inflated payments by way of its MA Approach contracts. The DOJ – which intervened on behalf of the whistleblower – additional alleged that, as soon as Sutter Wellbeing turned informed of these unsupported analysis codes, Sutter Health and fitness unsuccessful to choose sufficient correction action to determine and delete additional unsupported diagnosis codes.

In addition to the $90 million payment, as aspect of the settlement, Sutter Health and fitness and a number of related entities entered into a Corporate Integrity Arrangement (“CIA”) with the Office of Wellbeing and Human Services.[4] CIAs are a widespread element of FCA settlements and permit the settling entities to proceed participation in federal overall health care courses, but only underneath specific situations. The Sutter Wellness CIA, which has a 5-calendar year expression, involves, amid other items, that Sutter Well being implement a centralized danger evaluation application and retain the services of an Impartial Assessment Corporation to annually critique a sample of Sutter Health’s MA patients’ health care information and affiliated prognosis codes.

Though MA Options have normally been viewed as presenting much less of a fraud hazard than their rate-for-company counterparts, that has been switching speedily. Both of those personal whistleblowers and the authorities have been significantly filing and pursing lawsuits in this area. This development is unsurprising. As cited in a Kaiser Household Basis examine dated June 21, 2021,[5] MA Approach enrollment has exploded about the past 20 a long time. The Facilities for Medicare & Medicaid Solutions (CMS) estimates that over 26 million Individuals are enrolled in MA ideas for 2021, which would account for more than 44% of all beneficiaries and above $335 billion in whole investing.

Last December, Deputy Assistant Legal professional Typical Michael Granston specially singled out MA fraud as an vital priority for the Department, particularly in cases like Sutter Well being, where the allegations concern unsupported prognosis codes intended to make patients appear sicker.[6] It is extra vital now more than ever for MA plans to be diligent about their documentation methods – which are remaining meticulously scrutinized by the Office of Justice in these situations – and instantly address and remediate any identified overpayments.

We will continue to watch and report on noteworthy MA FCA scenarios and settlements.