{"id":490,"date":"2026-01-15T17:56:00","date_gmt":"2026-01-15T18:56:00","guid":{"rendered":"http:\/\/commandcancel.com\/?p=490"},"modified":"2026-01-15T21:09:36","modified_gmt":"2026-01-15T21:09:36","slug":"kaiser-permanente-to-pay-556-million-in-record-medicare-advantage-fraud-settlement","status":"publish","type":"post","link":"http:\/\/commandcancel.com\/index.php\/2026\/01\/15\/kaiser-permanente-to-pay-556-million-in-record-medicare-advantage-fraud-settlement\/","title":{"rendered":"Kaiser Permanente To Pay $556 Million in Record Medicare Advantage Fraud Settlement"},"content":{"rendered":"

In the largest Medicare Advantage fraud settlement to date, Kaiser Permanente has agreed to pay $556 million<\/a> to settle Justice Department allegations that it billed the government for medical conditions patients didn\u2019t have.<\/p>\n

The settlement, announced Jan. 14<\/a>, resolves whistleblower lawsuits that accused the giant health insurer of mounting a years-long scheme in which it overstated how sick patients were to illegally boost revenues.<\/p>\n

\u201cMedicare Advantage is a vital program that must serve patients\u2019 needs, not corporate profits,\u201d said U.S. Attorney Craig Missakian for the Northern District of California, in announcing the settlement.<\/p>\n

\u201cFraud on Medicare costs the public billions annually, so when a health plan knowingly submits false information to obtain higher payments, everyone \u2014 from beneficiaries to taxpayers \u2014 loses,\u201d he said.<\/p>\n

Medicare Advantage plans offer seniors a private alternative to original Medicare. The insurance plans have grown dramatically in recent years and now enroll about 34 million members<\/a>, more than half of the people eligible for Medicare. About 2 million Medicare members are enrolled in KP plans.<\/p>\n

Attorney Max Voldman, who represents whistleblower James Taylor<\/a>, said the case shows the need for a \u201ccontinued effort to fight fraud in health care.\u201d<\/p>\n

\u201cIt\u2019s important to send a signal to the industry, and this number hopefully does that,\u201d he said.<\/p>\n

Taylor, a longtime Kaiser Permanente physician, filed his suit against the company in October 2014.<\/p>\n

\u201cIt was a long, hard-fought case,\u201d Voldman said.<\/p>\n

The Justice Department took over his case,<\/a> bundled with others, in July 2021. In court filings, the government argued the health plan \u201cpressured\u201d doctors<\/a> in Colorado and California to add diagnoses \u201cregardless of whether these conditions were actually considered or addressed by the physician during the patient visits,\u201d policies that violated Medicare requirements.<\/p>\n

From 2009 through 2018, KP added roughly half a million diagnoses that generated about $1 billion in improper payments to the health plan, according to the complaint.<\/p>\n

The government pays Medicare Advantage plans higher rates to cover sicker patients. But over the past decade, dozens of whistleblower lawsuits, government audits<\/a>, and other investigations have alleged that health plans exaggerate how sick patients are to pocket payments they don\u2019t deserve, a tactic known in the industry as \u201cupcoding.\u201d<\/p>\n

The Justice Department alleged that Kaiser Permanente officials knew its practices were \u201cwidespread and unlawful\u201d but that the company \u201cignored numerous red flags and internal warnings that it was violating\u201d Medicare rules. In settling the case, KP did not admit any wrongdoing.<\/p>\n

In a statement posted<\/a> on its website, the company said it settled the case \u201cto avoid the delay, uncertainty, and cost of prolonged litigation.\u201d<\/p>\n

The company noted that other health plans had \u201cfaced similar government scrutiny\u201d over Medicare Advantage billing practices. It said the whistleblower cases \u201cinvolved a dispute about how to interpret\u201d Medicare\u2019s billing requirements.<\/p>\n

The civil suits were filed under the False Claims Act, a federal law that permits private citizens to sue on behalf of the government and share any money collected as a result.<\/p>\n

In all, six whistleblowers filed cases against Kaiser Permanente. In June 2021, the District Court for the Northern District of California consolidated the cases into two, one brought by Taylor and the other by Ronda Osinek, also a former KP employee.<\/p>\n

Osinek, who trained physicians on medical coding guidelines, filed her case in August 2013. In her suit, she alleged that Kaiser Permanente inflated claims submitted to Medicare by having doctors amend medical files, often months after a patient\u2019s visit, to slap on diagnoses that were not treated at the time or didn\u2019t exist.<\/p>\n

Under the settlement, the whistleblowers, known as \u201crelators,\u201d are set to receive a combined $95 million, according to the Justice Department.<\/p>\n

The KP settlement comes on the heels of a Senate report<\/a> this month that accused UnitedHealth Group of \u201cgaming\u201d the Medicare Advantage payment system, which is called \u201crisk adjustment.\u201d<\/p>\n

\u201cMy investigation has shown UnitedHealth Group appears to be gaming the system and abusing the risk adjustment process to turn a steep profit,\u201d Sen. Chuck Grassley (R-Iowa) said in a statement accompanying the report\u2019s release.<\/p>\n

Grassley, who chairs the Senate Judiciary Committee, said his findings were based on a review of more than 50,000 pages of internal company documents. UnitedHealth Group disputed the findings and has long denied that its coding practice triggers improper payments.<\/p>\n

The report cited several medical conditions that have repeatedly been linked to overbilling by Medicare Advantage plans, such as coding for opioid dependence disorder in patients who are taking their medications as directed for pain.<\/p>\n

The Senate report also alleged that Medicare Advantage plans have improperly diagnosed dementia.<\/p>\n

The report said that Medicare removed dementia from its list of codes in 2014 partly due to concerns over upcoding. After the Centers for Medicare & Medicaid Services reintroduced the code in 2020, researchers found that \u201cannual incident dementia diagnosis rates in MA increased by 11.5%\u201d relative to traditional Medicare, the report said.<\/p>\n

\u201cMedicare Advantage is an important option for America\u2019s seniors, but as the program adds more patients and spends billions in taxpayer dollars, Congress has a responsibility to conduct aggressive oversight,\u201d Grassley said. \u201cBloated federal spending to UnitedHealth Group is not only hurting the Medicare Advantage program, it\u2019s harming the American taxpayer.\u201d<\/p>\n

\n

KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. Learn more about KFF<\/a>.<\/p>\n

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