Kaiser Permanente agreed to pay $556 million to the federal government and whistle-blowers to settle civil claims that it overbilled Medicare Advantage, according to a recent New York Times article. The Justice Department and relators alleged Kaiser inflated patient diagnoses to secure higher risk-adjusted payments from Medicare. The lawsuits date back more than a decade, and the government joined them in 2021.
Under the settlement, Kaiser did not admit wrongdoing. In a statement on its website, the organization said it settled to avoid protracted litigation and that the dispute centered on interpreting documentation requirements under the Medicare risk adjustment program.
The Justice Department said Kaiser clinicians were routinely urged to add diagnoses, sometimes long after treatment, to increase risk scores and corresponding government payments. The government estimated these practices generated about $1 billion for Kaiser from 2009 to 2018. The complaint also described group coding sessions and alleged links between added diagnoses and clinician compensation.
One whistle-blower, Dr. James Taylor, a physician and coding expert, helped expose the practices. He described being directed to uncover diagnoses worth millions in additional payments.
The settlement covers Kaiser-affiliated organizations in California and Colorado. Industry oversight of Medicare Advantage coding practices has grown, with multiple large insurers facing similar government suits or settlements. A separate whistle-blower case against UnitedHealth Group is ongoing. UnitedHealth has maintained its coding practices to comply with the Centers for Medicare and Medicaid Services rules.
Regulators have sought to adjust Medicare Advantage payment policies to reduce overbilling, but industry pushback has affected the pace of changes, the Times reported. The Justice Department continues to pursue False Claims Act cases in this area. (Based on reporting by Reed Abelson and Margot Sanger-Katz, The New York Times, Jan. 14, 2026.)
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