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Analysis

Sutter Health, Affiliates to Pay Back $30M for Medicare Advantage Overpayments

By John Commins  
   April 15, 2019

Federal prosecutors allege that the Sacramento-based health system and its affiliates submitted unsupported diagnosis codes for patient encounters with Medicare Advantage beneficiaries.  

Sutter Health LLC and several affiliates will pay $30 million to settle allegations that they were overpaid after submitting inflated information about the dire health status of Medicare Advantage beneficiaries, the Department of Justice said.

Federal prosecutors allege that Sacramento-based Sutter and its affiliates submitted unsupported diagnosis codes for patient encounters with beneficiaries. These unsupported diagnosis scores inflated the risk scores of these beneficiaries, resulting in the Medicare Advantage Organization plans being overpaid.  

Related: DOJ Takes Aim at Sutter Health, Claiming Inflated MA Risk Scores

Sutter submitted diagnoses to the MAOs for the MA Plan enrollees they treated. The MAOs submitted the diagnosis codes to CMS from the beneficiaries' medical encounters, such as office visits and hospital stays. The diagnosis codes were used in CMS' calculation of a risk score for each beneficiary, DOJ said.  

Affiliates named in the settlement are Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation, Sutter Gould Medical Foundation, and Sutter Medical Foundation.    

"Misrepresenting patients' risk results in higher payments and wasted Medicare funds," said Steven J. Ryan, Special Agent in Charge with the Office of Inspector General for the Department of Health and Human Services.

"With some one-third of people in Medicare now enrolled in managed care Advantage plans, large health systems such as Sutter can expect a thorough investigation of claimed enrollees' health status," Ryan said.    

Earlier this month, DOJ filed a complaint against Sutter and a separate affiliated entity, Palo Alto Medical Foundation, alleging that they violated the False Claims Act by knowingly submitting unsupported diagnosis scores. 

Sutter Responds

Lisa Page, vice president of communications and public relations at Sutter Health, said the "settlement reflects our decision to resolve a dispute with the federal government over whether Sutter Health and certain affiliated medical foundations received overpayments after submitting claims for reimbursement through the Medicare Advantage program."

"As the Department of Justice noted in its press release, the claims being resolved are allegations only, and neither Sutter nor its affiliated medical foundations admit any liability. With respect to the reimbursement claims at issue in the pending litigation, we look forward to the opportunity to explain why neither Sutter Health nor Palo Alto Medical Foundation violated the False Claims Act," Page said.  

Related: Sutter Elevates Population Health With C-Suite Role

“With some one-third of people in Medicare now enrolled in managed care Advantage plans, large health systems such as Sutter can expect a thorough investigation of claimed enrollees' health status.”

John Commins is a senior editor at HealthLeaders.

Photo credit: Mark Van Scyoc / Shutterstock.com


KEY TAKEAWAYS

Affiliates named in the settlement are Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation, Sutter Gould Medical Foundation, and Sutter Medical Foundation.   

Earlier this month, DOJ filed a complaint against Sutter and Palo Alto Medical Foundation alleging that they violated the False Claims Act by knowingly submitting unsupported diagnosis scores.


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