HealthCare Partners: A Chart Review That Only Raised the Payment

In the DaVita HealthCare Partners risk adjustment settlement, HealthCare Partners Holdings, doing business as DaVita Medical Holdings, agreed to pay $270 million over allegations that inaccurate diagnosis information inflated Medicare Advantage payments. The case reached two places an insider might recognize: coding instructions sent to physicians and chart reviews that allegedly found diagnoses to add while ignoring codes that should come out.

The Justice Department announced the settlement on October 1, 2018. It combined practices DaVita voluntarily disclosed with one-way chart-review allegations brought by a former employee of a health plan that did business with the company. That employee’s view from the plan side mattered: the diagnosis, the review and the payment passed through different businesses.

How Diagnosis Codes Became DaVita Revenue

Medicare Advantage plans receive a fixed monthly payment for each enrolled beneficiary, adjusted in significant part for that person’s health status. Diagnosis codes contribute to a patient’s risk score, which adjusts the base payment rate. A diagnosis indicating a condition that requires greater care can increase the payment. The office visit need not cost more for the diagnosis to change the plan’s revenue.

DaVita operated a medical services organization that contracted with Medicare Advantage organizations in states including California, Nevada and Florida. It collected diagnoses from the care provided to those beneficiaries and sent them to the plans, which submitted them to Medicare. DaVita then received a share of the payments those plans received for patients under its care.

The management and payment arrangements matter because clinical work, administrative control and receipt of revenue can sit in different hands. A practice’s fee, capitation or risk-sharing contract determines how it participates in the plan’s diagnosis-driven revenue. Here, the government’s announcement identifies the financial connection directly: DaVita shared in the plan payments that the diagnosis information helped determine.

For a coding or finance employee, that gives the same diagnosis several places to be understood. The chart shows its clinical support, the submission shows what the plan received, and the contract explains how the resulting money reached the medical group. We connect those records because each answers a different part of the payment question.

The Spinal-Condition Guidance DaVita Disclosed

DaVita voluntarily disclosed practices instituted by HealthCare Partners, the California-based independent physician association it acquired in 2012. According to the Justice Department, those practices caused health plans to submit incorrect diagnosis codes and receive inflated payments that DaVita and HealthCare Partners shared.

One example was coding guidance sent to physicians. The government said HealthCare Partners instructed them to use an improper diagnosis code for a particular spinal condition, yielding increased Medicare reimbursement.

The Justice Department said DaVita’s disclosures and cooperation with the subsequent investigation led to a favorable resolution of potential claims arising from that conduct. The whistleblower’s allegations concerned a separate way diagnosis information could keep payments inflated: what happened when the organization went back through the charts.

The One-Way Chart Reviews

The whistleblower alleged that HealthCare Partners searched patient records for diagnoses its providers had missed and sent those additions to health plans to increase Medicare payments. At the same time, it allegedly ignored inaccurate codes that should have been deleted, which would have reduced reimbursement or required the plans to repay Medicare.

The Ninth Circuit’s amended opinion gives the allegation a recognizable workflow. It recounts the whistleblower’s claim that United Healthcare, operating as Secure Horizons, used software to generate lists of patients and potentially unreported diagnoses. HealthCare Partners allegedly had coders check those patients’ charts for support for the listed diagnoses, then reported supported additions without trying to identify or report previously submitted codes that lacked support.

The coders were allegedly looking for support for particular additions, while the previously reported diagnoses escaped the same scrutiny. We call that a search for revenue dressed as a search for accuracy. Under the alleged design, an error that paid the company more was welcome to stay.

The Software Warning and the Missing Withdrawal Field

The opinion also quotes the whistleblower’s proposed complaint describing HealthCare Partners’ use of HCC Manager to evaluate claims data and review earlier medical charts. The allegation included a warning from the software’s manufacturer:

The whistleblower alleged that HealthCare Partners used the software’s data for both prospective care and retrospective reviews of previous years’ submissions. The manufacturer warned against that use, and the company allegedly did it anyway.

The opinion describes another alleged constraint across the defendants’ reviews: a reporting template allowed additional diagnosis codes but did not permit information identifying previously submitted codes that should be withdrawn. The whistleblower alleged that the defendants helped develop that template and knew about its shortcomings. The missing withdrawal field made the alleged bias part of the reporting process itself.

The Settlement and the Whistleblower’s Share

The former health-plan employee was to receive about $10.2 million for settling the one-way chart-review allegations, according to the announcement. The award was for that part of a settlement that also covered the company’s disclosures. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What a Plan-Side Insider Can Connect

A plan-side employee can know how diagnoses arrived from a medical group, what a review was asked to find and where corrections stopped. In this case, that vantage point brought the one-way review allegations into a qui tam case. For an insider who saw the instructions or the reporting template, the useful account reaches beyond a finished list of diagnosis codes.

The 2020 paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud, published in the Journal of Forensic and Investigative Accounting, identifies two strengths of whistleblower cases: they bring inside information to light and supplement strained government resources. Here, the inside knowledge concerned how a review was designed, including what its reporting template could not send back.

The plan-side perspective also appears in Complete Health’s risk-adjustment case, where the whistleblower had worked in a health plan’s risk-adjustment department. The Justice Department alleged that the provider organization used incorrect coding guidance and prompts for physicians to add unsubstantiated chronic diagnoses. That parallel shows how someone outside the practice can understand the instructions affecting its diagnosis submissions.

We examine the records connecting the clinical chart, the submitted code and the internal decision. In a one-way review case, that includes what reviewers could see, what the reporting form allowed and what happened to findings that would lower payment. The plan contract and payment records then connect those choices to the government money at issue.

You Saw What the Review Left Out

If you saw coding guidance push an unsupported diagnosis or a review process leave payment-reducing corrections behind, tell our whistleblower experts how the review worked. We bring in Medicare Advantage whistleblower lawyers who know how provider coding reaches health-plan payments. We stay with you through the process, connecting your inside knowledge to the government money to build your strongest Medicare Advantage whistleblower case.