Medical Advantage Organization To Pay $6.3 Million To Settle Whistleblower Allegations Of Medicare Fraud

Medicare Fraud

A whistleblower lawsuit filed against a prominent Washington state health care provider, Kaiser Foundation Health Plan (formerly known as Group Health Cooperative, or GHC) was settled on November 16. GHC agreed to pay the government a total of $6.3 million to settle whistleblower allegations that they routinely overcharged Medicare by claiming that some of their patients were more critically sick than they actually were and that others had conditions that they did not have.

Teresa Ross, a former billing manager for GHC, first filed the claim in 2012. The lawsuit alleges that GHC fraudulently collected an extra $8 million in 2010. GHC provides an alternative to normal Medicare coverage, known as Medicare Advantage Organizations (MAOs). MAOs are privately operated and sometimes offer incitements for signing up for them. MAOs often provide extra benefits to clients, but with fewer options of healthcare providers for these services. Medicare pays a certain amount to the MAO, based on each patient’s “risk score” that the MAO reports to Medicare. According to a recent report, this system is ripe for abuse, overcharging taxpayers perhaps as much as $30 billion more between 2016 and 2019. 

Ross’ complaint alleges that GHC executed this scheme after having a difficult financial year in 2010. She claims that GHC hired a new consulting company that specialized in combing over patients’ medical records to bill Medicare for diseases that may have been missed. The company, DxID, was hired in November of 2011. After DxID reviewed GHC’s records for 2010, they reportedly found an extra $12 million in retroactively billable charges. Ross claims that with the help of DxID, GHC came up with a total of $35 million in new retroactive claims that GHC then billed to Medicare. DxID was incentivized to come up with new charges because they were entitled to a percentage of the money received for each of the new claims that they found. 

Ross filed the whistleblower lawsuit under the qui tam provisions of the False Claims Act. Whistleblowers who sue under these provisions, or relators as they are called, are eligible to receive a reward of between 10 and 30% of the total funds recovered by the government. For reporting the alleged fraud in this case, Ross will receive a total of $1.5 million. 

Read the Department of Justice’s press release here.

Read NPR’s article here.

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