Sutter Health to Pay $30M in Medicare Advantage Settlement
Sutter Health has decided to settle allegations that it submitted false diagnosis codes about its Medicare Advantage members.
Source: Thinkstock
By Jessica Kent
- Sutter Health, a California-based, non-profit benefit organization, has agreed to pay $30 million to settle allegations that its affiliated entities submitted false information about the health status of beneficiaries enrolled in Medicare Advantage plans.
Medicare Advantage plans are owned and operated by private Medicare Advantage Organizations (MAOs). MA plans are paid a certain amount per person to provide Medicare-covered benefits to enrolled beneficiaries, and CMS adjusts payments to MA plans based on demographic information and the health status of each member.
Generally, CMS will make a larger risk-adjusted payment to the MA plan if a beneficiary has a more severe diagnosis.
Sutter Health contracted with certain MAOs to provide healthcare services to members in California, and the organization received a share of the payments that CMS made to the MAOs for the beneficiaries under Sutter’s care. Sutter submitted diagnoses to the MAOs for the MA beneficiaries they treated, and the MAOs submitted the diagnosis codes to CMS. CMS then used these diagnosis codes to calculate a risk score for each beneficiary.
DOJ alleges that these diagnosis codes may not have been entirely accurate, resulting in improper overpayments.
“The settlement announced today resolves allegations that Sutter and its affiliates submitted unsupported diagnosis codes for certain patient encounters of beneficiaries under their care. These unsupported diagnosis scores inflated the risk scores of these beneficiaries, resulting in the MAO plans being overpaid,” DOJ said.
In December 2018, the government filed a complaint against Sutter Health and a separate affiliated entity, Palo Alto Medical Foundation, alleging that they had violated the False Claims Act by knowingly submitting unsupported diagnosis scores.
“Federal healthcare programs rely on the accuracy of information submitted by healthcare providers to ensure that patients are afforded the appropriate level of care and that managed care plans receive appropriate compensation,” Jody Hunt, Assistant Attorney General of the Civil Division, said at the time.
“Today’s action sends a clear message that we will seek to hold healthcare providers responsible if they fail to ensure that the information they submit is truthful.”
The action emphasizes the government’s commitment to ensuring the accuracy of Medicare Advantage information.
“The Medicare Advantage Program provides benefits to a significant portion of federal health care beneficiaries,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.
“The Department of Justice will help ensure that accurate information is supplied to the Medicare Advantage Program by plans and providers, and to pursue appropriate remedies when it is not.”
DOJ and other government officials will continue to eliminate false information from Medicare Advantage plans and reduce program waste.
“Misrepresenting patients’ risk results in higher payments and wasted Medicare funds,” said Steven J. Ryan, Special Agent in Charge with the Office of Inspector General for the U.S. Department of Health and Human Services.
“With some one-third of people in Medicare now enrolled in managed care Advantage plans, large health systems such as Sutter can expect a thorough investigation of claimed enrollees’ health status.”
