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Large dialysis provider settles whistleblower claim for $270M

Commentators believe that many health care companies and medical providers exaggerate the severity of medical conditions of patients who receive Medicare benefits -- including participants of Medicare Advantage Plans - to increase company profits. Health care fraud depletes resources, and taxpayer money, effectively harming taxpayers and patients alike. Federal law allows individuals with knowledge of fraudulent practices to bring forth lawsuits on behalf of the government to recover taxpayer money that is obtained through fraudulent practices related to government programs or contracts.

The Department of Justice says that HealthCare Partners Holdings LLC, which is now a division of the well-known dialysis company, DaVita Inc., has agreed to settle a whistleblower lawsuit for $270 million. The settlement may be the largest to date among False Claims Act cases related to Medicare Advantage plans. The company does not admit any fault in settling the allegations. However, taxpayers and patients benefit when whistleblower cases recover funds to support our health care systems.

Upcoding At The Heart Of The Allegations

Authorities say that the company submitted unsubstantiated claims for Medicare reimbursement using medical billing codes that did not match the severity of conditions of many patients. We have discussed upcoding in prior posts. Authorities believe that HealthCare Partners Holdings used improper medical codes to boost profits from sometime in 2007 through 2014 to obtain higher reimbursements than medically necessary.

For instance, patients were allegedly systemically improperly diagnosed with spinal enthesopathy during a period of slightly more than three years in three states. Among other allegations, the government believes that the health care company sent medical professionals to the homes of patients for more than five years in one state to inflate Medicare reimbursements.

Federal officials say that one-third of all seniors in the United States are enrolled in Medicare Advantage plans. Billing practices in these plans have received increased government scrutiny in recent years. Davita reportedly self-disclosed improper billing practices that HealthCare Partners Holdings allegedly used when Davita bought the company in 2012. Federal officials say that the self-disclosure was factored in to the ultimate settlement. 

It is important to note, however, that a whistleblower played a vital role in bringing forth the lawsuit. A former employer of a separate business that conducted business with Davita filed a lawsuit that alleged HealthCare Partners knowingly submitted false codes without reporting them to the government. The whistleblower's lawsuit says that while the company self-reported some billing code mistakes, they involved those that involve a practice known as one-way chart reviews.

Whistleblower To Receive Roughly $10M

The whistleblower's case says that the company reported improper codes that that justified higher reimbursements than the company was entitled to receive--while ignoring improper codes that were used to actually obtain higher reimbursements than were medically justified. The whistleblower is expected to receive roughly $10 million for the portion of the overall settlement that relates to the evidence he brought forth.

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