Sacramento-based Sutter Health will ‘Cough-Up’ $30 Million to Settle Fraud Claims

By Crescenzo Vellucci
Vanguard Sacramento Bureau

SACRAMENTO – Sacramento-based Sutter Health has agreed to cough-up $30 million to settle alleged Medicare fraud, according to a statement by the U.S. Justice Dept. Friday.

Sutter Health LLC and affiliated entities, Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation, Sutter Gould Medical Foundation, and Sutter Medical Foundation will pay the multi-million settlement to “resolve” claims they submitted “inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans, which resulted in the plans and providers being overpaid,” said the Justice Dept. announcement.

Sutter Health, which admitted no guilt, could not be reached for comment Friday.

But the U.S. Justice Dept. had a lot to say.

In short, private Medicare Advantage supplement plans provide additional coverage for those on Medicare, and managed-care providers like Sutter Health are paid to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans.

The government pays plans based on the “risk scores” – and a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary, said the Justice Dept. statement.

Sutter Health was accused of inflating risk scores, which resulted in higher payouts to Sutter Health.

According to Justice Dept.., the settlement resolves allegations that Sutter and its affiliates submitted unsupported diagnosis codes for certain patient encounters of beneficiaries under their care. These unsupported diagnosis scores inflated the risk scores of these beneficiaries, resulting in the MAO plans being overpaid.

“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 U.S. 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,” he added.

“The Medicare Advantage Program provides benefits to a significant portion of federal health care beneficiaries,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.

“The Department of Justice will help ensure that accurate information is supplied to the Medicare Advantage Program by plans and providers, and to pursue appropriate remedies when it is not,” Hunt added.

The Justice Dept. said the settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Northern District of California, and HHS-OIG.

The government last week also filed a complaint against Sutter and another affiliated entity, Palo Alto Medical Foundation, alleging they violated the False Claims Act by knowingly submitting unsupported diagnosis scores. United States ex rel. Ormsby v. Sutter Health, et al., Case No. 15-CV-01062-JD (N.D. Cal.), is ongoing.

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