DaVita Settles Medicare Payments Probe For $270M – DOJ

by Ike Obudulu Posted on October 1st, 2018

Washington D.C., USA : DaVita (DVA.N) subsidiary DaVita Medical Holdings LLC has agreed to pay $270M to settle charges that it provided inaccurate information that caused Medicare Advantage (MA) Plans to receive inflated payments from Medicare.

MA plans pay a fixed risk-adjusted monthly amount for beneficiaries to account fo the higher costs of caring for people requiring greater care. DaVita operated a medical services organization (MSO) that contracted with MA organizations and received a share of Medicare payments.

DaVita voluntarily reported to the government certain practices by a California-based independent physician association that it acquired in 2012 that caused the group to submit incorrect diagnostic codes to CMS which inflated reimbursement payments. The U.S. Justice Department (DOJ) says it agreed to a favorable settlement in light of DaVita’s cooperation in the matter.

The civil settlement with HealthCare Partners Holdings, which Denver-based DaVita acquired in 2012 and is in the process of selling to UnitedHealth Group Inc (UNH.N), was announced on Monday by the U.S. Justice Department (DOJ).

HealthCare Partners did not admit wrongdoing. DaVita in a statement said the $270 million will be paid for out of escrow funds that it required HealthCare Partners’ former owners to set aside when DaVita acquired it in 2012.

According to court papers, HealthCare Partners, a California-based independent physician association, contracted with insurers to provide medical services to Medicare Advantage patients.

More than one-third of Medicare recipients receive benefits through Medicare Advantage plans run by private insurers, who the government pays a predetermined monthly sum for each person they cover based on individual diagnostic traits.

Under this part of Medicare, the healthcare program for the elderly, the government makes so-called “risk adjustment” payments based on data it receives regarding the health status of a patient covered by a Medicare Advantage plan.

The case stemmed from a broader investigation into data that insurers who operate Medicare Advantage plans submit to receive “risk adjustment” payments. The probe has already led to the U.S. Justice Department suing UnitedHealth in a similar case.

The Justice Departments said HealthCare Partners instituted practices that led insurers operating Medicare Advantage plans to submit incorrect information about patients’ diagnoses and obtain inflated payments, which the company shared in.

HealthCare Partners also scoured patients’ records for diagnoses its medical providers failed to record which it then submitted to the insurers for use in obtaining increased Medicare payments, the Justice Department said.

Those allegations stemmed from a whistleblower lawsuit filed in 2009 against various insurers and, later, HealthCare Partners by James Swoben, a former employee of an insurer that did business with DaVita, the Justice Department said.

His lawsuit, pending in federal court in Los Angeles, was filed under the False Claims Act, which allows whistleblowers to sue companies on the government’s behalf to recover funds paid out based on fraudulent claims.

The government may intervene in such cases. For his role in bringing the case, Swoben will receive nearly $10.2 million, the Justice Department said.

The case is U.S. ex rel. Swoben v. Secure Horizons, et al, U.S. District Court, Central District of California, No. 09-5013.

DaVita shares rise after Gov. Brown Vetoes California bill capping dialysis payments

In other Davita news, shares of dialysis clinic operator DaVita rose more than 3 percent on Monday after California’s governor vetoed a bill that would have cut into its sales.

The bill, which was vetoed by Gov. Jerry Brown on Sunday, would have limited reimbursements for financial assistance to dialysis patients. That assistance is used by companies to maximize their reimbursements and can drive up premium costs.

CEO Javier Rodriguez said in a statement the bill “would have harmed thousands of dialysis patients in California by allowing health plans to discriminate against low-income dialysis patients who rely on charitable assistance to pay their insurance premiums.” He also noted the company was “deeply relieved” the bill was vetoed.

Though this is seemingly a win for DaVita, one of the largest kidney care provider in the U.S., but it all depends on what happens next month. California voters will have a chance to vote on a ballot that would limit how much revenue dialysis providers can earn from commercially insured individuals.

Prior to Monday, the stock was flat for the year. However, the stock has surged more than 12 percent in the past six months, outpacing the S&P 500 in that time.

Gov. Jerry Brown  rejected a bill that would have given survivors of childhood s****l assault in California more time to file suits against those who could have stopped their abuse.

The bill, written by Assemblywoman Lorena Gonzalez Fletcher (D-San Diego), would have allowed victims to file abuse claims until they are 40 years old. It also would have permitted those who have repressed memories of abuse to sue within five years of unearthing the cause of their trauma.

On Monday, victims advocates said they felt defeated by Brown’s decision.

“I’m exceptionally disappointed that even after the #MeToo movement, after the [Brett] Kavanaugh hearings, that the governor isn’t doing what he can to reduce harm caused by s****l abuse,” said Tim Lennon, president of the Survivors Network of those Abused by Priests.

Under current law, victims can sue a third party that may have ignored or covered up abuse — such as a private school or a church — until they are 26 years old or three years after coming to terms with repressed memories, whichever occurs later.

Advocates say the proposed law would have given survivors more time to process their abuse — memories of which can be repressed for decades — and to seek damages for their trauma when they finally feel comfortable coming forward.

The bill also would have expanded a victim’s ability to sue public institutions, including schools, that might have been aware of the abuse. Current law requires such a claim to be filed within six months of the alleged incident if it occurred before 2009. The proposal would have lifted that requirement entirely.

Brown vetoed a similar bill in 2013 that would have extended the statute of limitations for some victims of childhood s****l abuse. In a veto message Sunday, Brown said his stance on the issue has not changed, and he referenced the letter he wrote on the other bill presented five years ago.

“There comes a time when an individual or organization should be secure in the reasonable expectation that past acts are indeed in the past and not subject to further lawsuits,” Brown wrote in the 2013 memo. “With the passage of time, evidence may be lost of disposed of, memories fade and witnesses move away or die.”

The California Catholic Conference, which represents the California Catholic Conference of Bishops, said it opposed both bills. The organization contends that such laws place an unfair burden on the accused, who, decades after any alleged abuse, may be unable to furnish witnesses or records to defend themselves.

The California Catholic Conference spent more than $86,000 to fight the bill, according to state records.

Davita clinic in Longview, Texas shut down after CMS cites ‘immediate jeopardy’ to patient health

In more Davita news, the Davita Dialysis Center on Fredonia Street in Longview, Texas is temporarily shut down after receiving a letter from a federal agency warning that they would no longer receive Medicare payments unless issues which “represent immediate jeopardy to patient health and safety” are addressed.

According to a representative with Texas Health and Human Services Commission, staff at DaVita chose to close the center temporarily after a recertification survey on Aug. 31.

A letter from Centers for Medicare & Medicaid Services (CMS) to the Longview center’s facility administrator states the center “no longer meets the requirements for participation in the Medicare program because of deficiencies that represent immediate jeopardy to patient health and safety.”

The plan of correction shows the center is out of compliance with infection control and physical environment.

Officials conducted an unannounced onsite re-certification survey on Aug. 27 and conducted an exit conference on Aug. 31.

The 59-page report cites numerous issues with flooring, ceiling tiles, countertops, doors, missing rails, cleanliness and many other problems with the physical building.

The report also states the facility’s dietitian did not exceed the patient ratio for three of the three months which were audited. The state requirement is 125 patients per dietitian. However, the dietitian served 137 patients.

The report also states the facility did not follow its own policies to ensure prevention of cross-contamination between patients and staff. Issues with lack of handwashing sinks, staff chewing gum in patient treatment and failing to clean sharps containers are among the problems listed.

The letter states DaVita had until Monday to come up with an acceptable plan off correction to “ensure a timely revisit.” The completion for the plan can be no later than Oct. 11. If the plan is not executed by then, termination from the Medicare program will come on Oct. 19.

Author

Ike Obudulu

Ike Obudulu

Versatile Certified Fraud Examiner, Chartered Accountant, Certified Internal Auditor with an MBA in Finance And Investments who has both worked for and consulted with some of the world's largest companies on main street and wall street in over 20 countries, Ike brings his extensive reporting and investigations experience to bear on his role as Chief Editor.
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