DaVita Medical Holdings, a subsidiary of the dialysis giant DaVita, will pay the federal government $270 million in a settlement over allegations that the company incorrectly inflated certain Medicare Advantage reimbursements above the fixed, risk-adjusted rate owed for care.
The settlement, announced on Monday, stems from improper medical coding guidance from DaVita's subsidiary group HealthCare Partners that drew CMS payments higher than what was owed. DaVita voluntarily disclosed these billing practices and cooperated with the federal investigation, the Justice Department said, leading to "favorable resolution of potential claims arising from the conduct."
The allegations stemmed from DaVita's 2012 acquisition of the California-based physicians' group HealthCare Partners, now doing business as DaVita Medical Holdings. DaVita and HealthCare Partners contracted with private Medicare Advantage organizations to bill the CMS, and HealthCare Partners told the organizations how it wanted them to bill the CMS for certain services.
According to the Justice Department, HealthCare Partners disseminated the incorrect billing codes that led to the inflated payments that DaVita then shared with HealthCare Partners.
The Justice Department settlement also included resolution of a second allegation lodged by a whistle-blower. According to the complaint, HealthCare Partners searched patient medical records for diagnoses that providers may not have listed and submitted them to the Medicare Advantage organizations for Medicare payments. HealthCare Partners excluded inaccurate diagnosis codes that would have lowered reimbursements.
This practice is known as "one-way" chart reading. A former Medicare Advantage organization employee who worked with DaVita filed a lawsuit under the False Claims Act and will receive more than $10 million from the settlement.
"DaVita's alleged conduct was irresponsible and compromised the integrity of the Medicare program," said Scott J. Lampert, special agent in charge of HHS' Office of Inspector General for the New York region. "HHS OIG will continue to ensure that companies that do business with federally funded healthcare programs do so in an honest fashion."