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DOJ Allegations Illustrate Issues in Coding

Recent allegations by the Department of Justice (DOJ) against Kaiser Permanente (Kaiser) highlight some of the tensions in proper medical coding and in internal documentation review. DOJ recently intervened in a series of whistleblower lawsuits that alleged that internal chart reviews and amendment of medical records by Kaiser constituted improper upcoding of claims for Medicare Advantage beneficiaries. DOJ accused Kaiser of coercing its employees to retroactively change or add codes in order to increase reimbursement rates. Ultimately, DOJ claimed that the alleged upcoding resulted in an estimated 75% error rate.

DOJ alleged that Kaiser physicians changed medical records often months after care was provided in order to increase Medicare Advantage reimbursement. A whistleblower claimed that more than 50% of Kaiser physicians said that they were coerced to add diagnoses that they never considered, let alone evaluated or treated. Specifically, the lawsuit alleges that Kaiser targeted codes for atherosclerosis of the aorta as having a “high rate of reimbursement.” The whistleblower claimed that Kaiser told its facilities that 40% of their bonuses would be based on how often they coded atherosclerosis of the aorta, pointing to an email between executives that identified this upcoding as a “$40M opportunity.”

The lawsuit focuses on retroactive additions and changes to patients’ medical records. These retroactive changes are usually done during retrospective chart reviews, which are typically used promote proper coding and reimbursement for services performed. Although the practice of internally reviewing charts to identify and address documentation or coding issues is common and generally permissible, the changes should be supported by proper documentation and some documentation elements must be documented at the time of service. In this case, DOJ alleged that Kaiser’s changes were not supported by documentation and that Kaiser only performed retroactive chart reviews on patients that could receive risk-adjustment payments.

The lawsuit serves as a cautionary tale for providers, emphasizing the importance of careful chart review and diligent documenting during patient care. First, physicians and other providers should take care to document all relevant steps in the diagnostic process, including those that may be rudimentary or obvious to a physician, but may not be obvious to a non-physician review at an insurer or Medicare contractor. This added information will help support the various diagnoses and services that are coded. Second, special care must be taken when reviewing charts. As the Kaiser lawsuit shows, providers who amend charts after the fact or in response to certain stimuli may find themselves in compliance hot water. One such stimuli is amending records in response to an audit or request for records.

In general, diagnoses and services coded on the charts should correspond to supporting documentation during the patient’s evaluation and treatment. Ultimately, diligent documentation combined with careful chart review will help healthcare facilities promote Medicare compliance while still receiving the reimbursements they deserve.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in responding to audits and understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney  at 248-544-0888 or

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