Sutter Health Medicare Advantage Scam, California 2023

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Sutter Health Pays $90M for Medicare Advantage Scam

Sutter Health, a California-based healthcare services provider, has agreed to pay $90 million to resolve allegations that it knowingly submitted inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans.

The government alleged that Sutter Health, headquartered in Sacramento, knowingly submitted unsupported diagnosis codes for certain patient encounters for beneficiaries under its care. These unsupported diagnosis codes caused inflated payments to be made to the plans and to Sutter Health.

“The government relies on healthcare providers, including those furnishing services to Medicare Part C beneficiaries, to submit accurate information to ensure proper payment,” said Deputy Assistant Attorney General Sarah E. Harrington of the Justice Department’s Civil Division. “Today’s result sends a clear message that we will hold healthcare providers responsible if they knowingly provide or fail to correct information that is untruthful.”

“Today’s settlement exemplifies our commitment to fighting fraud in the Medicare program,” said Acting U.S. Attorney Stephanie M. Hinds for the Northern District of California. “Healthcare providers who flout the law need to know that my office will hold accountable those who pad their bottom line at taxpayer expense.”

In connection with the settlement, Sutter Health, Sutter Bay Medical Foundation, and Sutter Valley Medical Foundation entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). The CIA requires, among other things, that Sutter Health implement a centralized risk assessment program as part of its compliance program and hire an Independent Review Organization to annually review a sample of Sutter Health’s Medicare Advantage patients’ medical records and associated diagnoses data.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Kathleen Ormsby, a former employee of Palo Alto Medical Foundation. Under those provisions, a private party can file an action on behalf of the United States.

Sutter Health and its affiliates will pay the $90 million settlement over the next two years, with payments due on June 15, 2024, and December 15, 2024.