In a landmark settlement highlighting the critical importance of accurate healthcare billing, DaVita Medical Holdings LLC, operating as DaVita, has agreed to pay a staggering $270 million. This settlement resolves allegations under the False Claims Act, accusing DaVita of providing misleading information that led to inflated Medicare payments for Medicare Advantage Plans. The case specifically brings to light practices initiated by HealthCare Partners, a significant California-based physician group acquired by DaVita in 2012, and now known as Healthcare Partners Affiliates Medical Group and its network of medical groups.
The Department of Justice made the announcement, underscoring the government’s commitment to safeguarding federal healthcare programs. Assistant Attorney General Joseph H. Hunt of the Civil Division stated, “Federal healthcare programs rely on the accuracy of information submitted by healthcare providers to ensure that managed care plans receive the appropriate compensation.” He emphasized the Department’s dedication to pursuing those who compromise the integrity of Medicare and praised healthcare organizations that voluntarily disclose potential false claims.
The core of the issue lies within the Medicare Advantage (MA) program, also known as Medicare Part C. This program allows beneficiaries to enroll in private Medicare Advantage Plans (MA Plans) managed by Medicare Advantage Organizations (MAOs). Unlike traditional Medicare, which reimburses providers based on services rendered, MA Plans receive a fixed monthly payment per enrolled beneficiary. To account for varying patient health needs, these payments are “risk adjusted.” This means MAOs receive higher payments for patients diagnosed with conditions requiring more extensive medical care.
MAOs often contract with Medical Services Organizations (MSOs), like the Healthcare Partners Affiliates Medical Group, to provide patient care. These MSOs, in turn, employ or contract with physicians and other healthcare providers. The diagnoses provided by these healthcare professionals are crucial as they are submitted by MAOs to Medicare to justify risk-adjusted payments from the Centers for Medicare & Medicaid Services (CMS).
DaVita, through its MSO operations, contracted with MAOs across several states, including California, Nevada, and Florida. Crucially, HealthCare Partners, prior to its acquisition and now operating as Healthcare Partners Affiliates Medical Group, played a central role in the practices under scrutiny. DaVita voluntarily disclosed to the government certain practices inherited from HealthCare Partners. These practices involved the dissemination of improper medical coding guidance to physicians. For instance, physicians were instructed to use an incorrect diagnosis code for a specific spinal condition, which resulted in increased reimbursements from CMS. These self-disclosures, coupled with DaVita’s cooperation during the subsequent government investigation, led to a favorable resolution regarding potential claims arising from these actions.
Adding to the severity of the allegations, the settlement also addresses claims brought forward by a whistleblower. These claims detailed “one-way” chart reviews conducted by HealthCare Partners. This practice involved a retrospective search of patient medical records to identify and submit “missed” diagnoses to MAOs, aiming to inflate Medicare payments. Simultaneously, and critically, HealthCare Partners allegedly disregarded inaccurate diagnosis codes that should have been removed, as these corrections would have decreased Medicare reimbursement or necessitated repayments to Medicare.
United States Attorney Nick Hanna condemned such practices, stating, “This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare.” He described the illegal conduct as improperly reporting and failing to correct patient medical conditions, all to illegally boost revenue, emphasizing the commitment to holding accountable entities that prioritize profit over program integrity.
Special Agent in Charge Scott J. Lampert of the HHS-OIG echoed these sentiments, labeling DaVita’s alleged conduct as “irresponsible and compromised the integrity of the Medicare program.” He affirmed HHS-OIG’s dedication to ensuring honesty from companies engaged with federally funded healthcare programs.
The whistleblower, James Swoben, a former employee of an MAO that partnered with DaVita, will receive $10,199,100 for his role in bringing the “one-way” chart review allegations to light.
The corporate affiliates connected to Health Care Partners and included in this settlement are: DaVita Medical Group Nevada (Coats), Ltd; DaVita Medical Group California, P.C.; DaVita Medical Group Associates California, Inc.; HealthCare Partners Affiliates Medical Group and its subsidiary medical groups; DaVita Medical Group ARTA Health Network California, P.C.; and DaVita Medical Group ARTA Western California, Inc.
This settlement is the result of collaborative efforts from the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California, and HHS-OIG. It is important to note that the claims resolved are allegations, and there has been no determination of liability. The case is formally captioned United States ex rel. Swoben v. Secure Horizons, et al., 09-5013 (C.D. Cal.).
This case serves as a stark reminder of the ongoing vigilance required to maintain the integrity of the Medicare program and the critical role of entities like Healthcare Partners Affiliates Medical Group in ensuring accurate and ethical billing practices within the healthcare system.
