Calif.-Based Sutter Health Agrees To $30M Settlement Over Allegations Of Submitting Inflated Diagnosis Codes To CMS

The Department of Justice alleged that Sutter and its affiliates had submitted diagnosis codes that inflated the risk scores for certain beneficiaries in their care. “With some one-third of people in Medicare now enrolled in managed care...plans, large health care systems such as Sutter can expect a thorough investigation of claimed enrollees’ health status,” said Steven J. Ryan, special agent in charge with the Office of Inspector General for the U.S. Department of Health and Human Services.

Modern Healthcare: Sutter Health To Pay $30M To Settle Upcoding Allegations
Sutter Health agreed to pay $30 million to settle allegations that the Sacramento, Calif.-based health system submitted inflated diagnosis codes to the CMS for Medicare Advantage beneficiaries, the Justice Department announced Friday. The CMS pays private insurers a set amount per person to administer program benefits under Advantage plans and adjusts the payments based on "risk scores," calculated using demographic information and health status data. Sutter and its affiliates contracted with certain Medicare Advantage organizations and received a share of the reimbursement for the beneficiaries under Sutter's care. (Kacik, 4/12)

Sacramento Bee: Sutter To Pay $30 Million To Settle Medicare Allegations
The managed care plan, known as Medicare Advantage, pays a per-person fee to health insurance plans to provide care to enrolled beneficiaries. The U.S. Centers for Medicare and Medicaid Services adjusts those capitation fees based on the health status and demographic information of each enrollee. Commonly referred to as risk scores, these adjustments pay more for patients who have a more severe diagnosis. Sutter and its affiliates — Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation, Sutter Gould Medical Foundation, and the Sacramento region’s Sutter Medical Foundation — contract with the health insurance plans to care for Medicare Advantage beneficiaries. In exchange, the health plans paid Sutter a portion of the payments received from CMS. (Anderson, 4/13)

San Francisco Chronicle: Sutter Health Accused Of Inflating Medicare Costs, Agrees To $30 Million Settlement
Sutter Health, a nonprofit organization that runs several medical foundations and hospitals, has contracts with Medicare Advantage private plans. It collects part of the Medicare payments for patients it treats. According to the allegations, the Sutter affiliates submitted unsubstantiated diagnoses for certain patients that elevated their risk score, which meant the private plans and Sutter collected more money. Among the Sutter affiliates named in the complaint were Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation in San Francisco and the North Bay, Sutter Gould Medical Foundation in the Central Valley, and Sutter Medical Foundation in Northern California. (Allday, 4/12)

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