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El Segundo-based DaVita Medical Holdings has agreed to pay $270 million to resolve allegations it provided inaccurate information to Medicare, the U.S. Department of Justice announced Monday, Oct. 1.
The settlement involves coding practices by a physician network, formerly called HealthCare Partners, that DaVita bought in 2012 for $4.42 billion. DaVita is selling the network, which was renamed DaVita Medical Group, to Optum, a health services company that is part of UnitedHealth Group, for $4.9 billion.
HealthCare Partners, according to the DOJ, instructed its physicians to use an improper diagnosis code for a particular spinal condition that yielded increased reimbursement. Based on those self-disclosures, and DaVita’s cooperation with the government’s subsequent investigation, the DOJ agreed to a favorable resolution of potential claims arising from the conduct, the agency said.
The parent company, DaVita Inc. in Denver, said it will pay the settlement with escrow funds the company had the former owners of HealthCare Partners set aside during the acquisition six years ago.
The settlement also resolves allegations made by a whistleblower that HealthCare Partners engaged in “one-way” chart reviews in which it scoured patients’ medical records for diagnoses its providers may have failed to record. It then submitted those “missed” diagnoses to obtain increased Medicare payments, and at the same time, ignored inaccurate diagnosis codes that should have been deleted and would have decreased Medicare reimbursement or required repayment, according to the DOJ.
“This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare,” said U.S. Attorney Nick Hanna.
“This case involved illegal conduct in which patients’ medical conditions were improperly reported and were not corrected after further review — all for the purpose of boosting the bottom line,” Hanna said. “We will continue to pursue and hold accountable any entity that seeks to illegally increase revenue at the expense of the Medicare Advantage so that the program may continue to remain viable for all who need it.”
DaVita is known for providing dialysis services.
In June, a federal jury ordered DaVita to pay the families of three dead patients a combined $385.5 million after hearing testimony the company did not adequately warn kidney doctors that a product that saved the company money put patients at risk of cardiac arrests.
The Denver Post, a sister paper of the Southern California News Group, contributed to this report.
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