Medicare Advantage Upcoding: When Cancer History Becomes an Active Diagnosis

Medicare Advantage upcoding can turn a history of cancer into a payment for active disease. The clinical record says the cancer is past, but the diagnosis sent for payment says it is present. The complaints against Sutter Health and Martin’s Point describe that contradiction surviving both prostate surgery and later reviews. For the coder who sees it, the question is what happened after the company knew.

Medicare Advantage Coding Fraud: Active Cancer or History?

Active cancer and a personal history of cancer can produce different Medicare Advantage payments. The distinction rests on the patient’s documented condition at the encounter, including treatment and evidence of remaining or recurrent disease.

Medicare Advantage pays private plans by capitation, a monthly payment per enrollee adjusted for expected health care costs. Eligible diagnoses map to Hierarchical Condition Categories, or HCCs, which contribute to the risk score. The plan’s base payment is multiplied by that score.

The Department of Health and Human Services’ Office of Inspector General report explains that diagnoses from the service year determine risk scores for the following payment year. It ties submitted diagnoses to medical records from face-to-face encounters. A diagnosis can therefore affect a full year’s payments. The money follows the code even when there is no separate charge for treating that condition.

For the cancer histories examined in that audit, a personal-history code did not generate a cancer HCC. An active-cancer code did. That is the financial hinge in these risk adjustment allegations. Medicare pays more for cancer the record says is past, and taxpayers carry the bill.

Sutter’s Patients Had a Surgical History and an Active Cancer Code

Sutter’s position in the payment chain matters. It provided healthcare through contracting Medicare Advantage plans and received a share of their payments. Its diagnoses went to those plans, which submitted the codes to Medicare. The provider supplying the code had a financial stake in the result.

The whistleblower’s complaint describes three patients at Palo Alto Medical Foundation whose records, it alleges, supported personal history rather than active prostate cancer:

• Patient one: prostate removed in 2002, with unsupported active-cancer encounters submitted for 2011, 2012 and 2013.
• Patient two: prostate removed in 2002, with unsupported encounters submitted for 2009, 2010 and 2014.
• Patient three: prostate removed in 1995, with unsupported encounters submitted for 2012, 2013 and 2014.

The complaint pairs the surgical history with the absence of treatment directed to cancer. For the third patient, it also describes a record of no recurrence, then states the coding consequence:

Using the area’s 2013 risk-adjustment rates, the complaint estimated an additional $2,033 per year for each patient’s unsupported submissions. The same unsupported condition returned in later years’ submissions.

An Internal Audit Found the Errors

The complaint says the internal team reviewed cancer-coded encounters in the records of 182 patients. Only 18 patients had documentation supporting the submitted category.

The partial audit found errors across cancer, stroke and fractures. The complaint says the team submitted refunds before management directed it to discontinue the audit process. The alleged failure was what happened to the rest of the problem once the company had seen it.

The same filing describes a separate defect in the correction workflow: removing a code from the billing file left it in the medical record used for risk-adjustment submissions. A correction could exist inside the organization while the diagnosis still traveled to Medicare. That is why what compliance did with the finding matters as much as the finding itself.

The Justice Department announced a $30 million Sutter settlement in April 2019 over unsupported diagnosis codes. Its later $90 million settlement in August 2021 addressed allegations of knowingly submitting unsupported codes and failing to take sufficient corrective action to identify and delete others after learning of the problem. The whistleblower brought the case, and the government joined the claims involving Palo Alto Medical Foundation.

Martin’s Point Had the Record and Kept the Code

Martin’s Point occupied the plan side of the same payment chain. Its former risk-adjustment operations manager alleged that Patient E underwent a radical prostatectomy in 2014 and had no evidence of recurrent prostate cancer in his record. Yet the plan submitted an active prostate-cancer diagnosis for payment year 2016 and failed to delete it when retrospective chart review exposed the error. The same complaint describes a past stroke coded as a stroke during a later office visit.

The patient example sits inside a detailed allegation about chart review that added codes without removing known errors. Retrospective reviewers search existing medical records for diagnoses. The complaint says Martin’s Point evaluated reviewers on the volume of their work and the accuracy of codes they added, while leaving provider-coding errors outside that evaluation. Its chart-review system had no process for deleting those discovered errors.

The filing alleges a $26 million chart-review revenue goal for 2017. Its account of management’s answer to proposed deletions is unusually direct: management refused to build deletions of erroneous codes into the program, though staff said Medicare’s obligations required them, because deletions would have kept the program from its revenue goal.

A Missing Diagnosis Became a Revenue Problem

The plan’s own audit, according to the complaint, started with conditions for which Medicare had paid in an earlier year but was no longer paying. Management wanted to understand why chart review was falling short of its revenue goal. An old diagnosis that had been wrong in the first place offered reviewers nothing valid to add back.

In that selected sample, the complaint says 28 of 48 submitted codes were incorrect. It alleges that the plan neither broadened the review nor returned the resulting overpayments. At the meeting where the findings reached executives, the discussion turned to generating more revenue. The audit had found a reason the diagnosis should disappear. Management allegedly treated its disappearance as a problem to solve.

The July 2023 settlement was $22,485,000. The Justice Department alleged that Martin’s Point submitted unsupported diagnoses identified through chart reviews from 2016 to 2019. It announced approximately $3.8 million for the whistleblower.

Cancer History Can Disappear Between the Note and the Submission

Sutter and Martin’s Point supply the prostatectomy examples. Kaiser’s cancer-history allegations describe another way for a resolved condition to survive in payment data.

The Colorado whistleblower’s amended complaint alleges that Kaiser Permanente’s electronic record initially made a history-of-cancer diagnosis difficult to enter. Physicians selected active cancer and put the history qualification in the comments. When the information went to Medicare, the code traveled and the qualification stayed behind.

The complaint also says an internal cancer-code audit led Kaiser to delete the identified false claims and refund the overpayments.

The Government’s Cancer Audit Found the Same Mismatch

The inspector general’s November 2022 audit of Blue Cross & Blue Shield of Rhode Island found past cancer reported through codes for current disease. Across the high-risk diagnosis groups it examined for payment years 2016 and 2017, the report estimated at least $4.8 million in net overpayments.

The auditors selected cancer diagnoses for review when a single claim in the service year lacked corresponding surgery, radiation or chemotherapy within six months before or after the diagnosis. The prostate-cancer selection also required the enrollee to be 74 or younger.

In 16 sampled enrollee-years, the records showed previous prostate cancer but did not justify that diagnosis at the physician’s service. The report identified similar history-versus-current-disease problems for lung, breast and colon cancer.

It also shows why the actual record matters. Some unsupported lung-cancer submissions had documentation for a less severe cancer category, which supported a smaller payment. The audit worked through the diagnosis and its payment consequence, patient by patient.

The report recommended repayment, a search for similar errors outside the audit period and stronger coding controls.

The complaints add the company decisions that an audit total cannot explain: who saw the contradiction, what reviewers were told to do with it and whether the payment submission changed. The Centers for Medicare & Medicaid Services’ Risk Adjustment Data Validation audits likewise compare submitted diagnoses with medical records to identify and recover overpayments.

Why the Business Rewards More Diagnoses

A 2015 working paper hosted by Duke University, Upcoding or Selection? Evidence from Medicare on Squishy Risk Adjustment, estimates that private Medicare plans generated diagnosis-based risk scores 6% to 16% higher than the same enrollees would generate under fee-for-service Medicare. It also finds greater coding intensity with closer ownership integration between insurers and providers.

The paper puts the business relationship plainly: an insurer can reward physicians for the diagnoses they code instead of the visits and procedures they perform.

The patient-level evidence in the complaints supplies the sharper question: did the company receive information contradicting a paid diagnosis and keep submitting or retaining it anyway?

The Evidence Is in What Happened to the Diagnosis

For a clinician, the decisive detail may be the note recording no recurrence. For a coder, it may be the review showing that active disease lacked support. For a compliance employee, it may be the audit finding and the decision that followed. The submission history connects those records to the money.

The Sutter and Martin’s Point allegations join those pieces. They describe companies learning why a code should change, alongside systems or instructions that kept the correction from reaching the payment. That is the part an insider can explain from inside the business.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When the Chart and the Payment Tell Different Stories

If your work shows cancer history turning into active diagnoses, speak with our whistleblower experts about the codes and the decisions behind them. We connect clinical records, coding instructions and payment evidence to build your strongest Medicare Advantage whistleblower case, and bring in whistleblower lawyers who understand risk adjustment. We stay on your side from the first conversation through the case.