- The Department of Justice has intervened in a False Claims Act lawsuit against Sutter Health and its affiliate Palo Alto Medical Foundation alleging mischarges to Medicare Advantage plans.
- According to the complaint, filed in a federal court in northern California, Sutter manipulated diagnosis codes by inflating risk scores for MA plan beneficiaries, leading to higher payments. The suit also alleges that Sutter failed to take adequate steps to address the issue after learning of the unsupported diagnosis codes.
- The whistleblower lawsuit, United States ex rel. Ormsby v. Sutter Health, et al., was filed by Kathleen Ormsby, a former PAMF employee.
MA has seen significant growth over the past decade, with premiums totaling $202.7 billion last year, up from $69.9 billion in 2007. A total of 19 million beneficiaries enrolled in MA plans in 2017. As more payers and beneficiaries opt for the program, fraud investigators will be on the lookout for false and unsupported claims.
"It is critically important that the data submitted to the Medicare Advantage program is truthful, because the government relies on this information to set payment levels," Alex Tse, U.S. attorney for the Northern District of California, said in a statement. "We will continue to guard government health programs from companies that improperly maximize their bottom line at taxpayer expense."
Under a proposed rule issued by CMS last month, MA payers would be audited to confirm they are providing supported medical record documentation for what they claim they are owed. The plan for Risk Adjustment Data Validation (RADV) audits could save the government $4.5 billion in recovered payments over a decade, according to CMS. The agency claims more than 8% of MA payments in fiscal 2017 were incorrect, including underpayments.
The lawsuit adds to Sutter's legal woes. California Attorney General Xavier Becerra sued the Sacramento-based system earlier this year, alleging it wielded its market heft in Northern California to charge higher prices. In response, Sutter subpoenaed pricing information from 50 hospitals in the state.