WASHINGTON – Group Health Cooperative in Seattle, one of the nation's oldest and most respected nonprofit health insurance plans, is accused of bilking Medicare out of millions of dollars in a federal whistleblower case.
Teresa Ross, a former medical billing manager at the insurer, alleges that it sought to reverse financial losses in 2010 by claiming some patients were sicker than they were, or by billing for medical conditions that patients didn't actually have. As a result, the insurer retroactively collected an estimated $8 million from Medicare for 2010 services, according to the suit.
Ross filed suit in federal court in Buffalo, N.Y., in 2012, but it remained under a court seal until July and is in the initial stages. The suit also names as defendants two medical coding consultants, consulting business DxID of East Rochester, N.Y., and Independent Health Association, an affiliated health plan in Buffalo. All denied wrongdoing in separate court motions filed last week to dismiss the suit.
The Justice Department has thus far declined to take over the case but said in a June 21 court filing that "an active investigation is ongoing."
The whistleblower suit is one of at least 18 such cases documented by Kaiser Health News that accuse Medicare Advantage managed-care plans of ripping off the government by exaggerating how sick its patients were. The whistleblower cases have emerged as a primary tool for clawing back overpayments. While many of the cases are pending in courts, five have recovered a total of nearly $360 million.
"The fraudulent practices described in this complaint are a product of the belief, common among MA organizations, that the law can be violated without meaningful consequence," Ross alleges.
Medicare Advantage plans are a privately run alternative to traditional Medicare that often offer extra benefits such as dental and vision coverage but limit choice of medical providers. They have exploded in popularity in recent years, enrolling more than 22 million people, just over 1 in 3 of those eligible for Medicare.
Word of another whistleblower alleging Medicare Advantage billing fraud comes as the White House is pushing to expand enrollment in the plans. On Oct. 3, President Donald Trump issued an executive order that permits the plans to offer a range of new benefits to attract patients. One, for instance, is partly covering the cost of Apple Watches as an inducement.
Group Health opened for business more than seven decades ago and was among the first managed-care plans to contract with Medicare. Formed by a coalition of unions, farmers and local activists, the HMO grew from just a few hundred families to more than 600,000 patients before its members agreed to join California-based Kaiser Permanente. That happened in early 2017, and the plan is now called Kaiser Foundation Health Plan of Washington. (Kaiser Health News is not affiliated with Kaiser Permanente).
A Kaiser Permanente spokesperson said: "We believe that Group Health complied with the law by submitting its data in good faith, relying on the recommendations of the vendor as well as communications with the federal government, which has not intervened in the case at this time."