Fred Schulte | (TNS) KFF Health News
A company in Maryland that supervises the biggest independent network of primary care medical practices in the US is dealing with a legal case from someone who exposes wrongdoing, claiming that it unlawfully obtained money from Medicare by using billing software that was set up to make patients seem sicker than they actually were.
The legal case claims that Aledade Inc.'s billing applications, other software, and guidance for doctors unlawfully increased revenues by adding exaggerated medical diagnoses to patients' electronic medical records.
According to the legal case, Aledade did whatever was necessary to make patients seem sicker than they actually were.
For example, the lawsuit alleges that Aledade equated anxiety with depression, which could lead to higher payments of $3,300 per patient annually. Additionally, Aledade determined that patients over 65 years old who reported consuming more than one alcoholic drink daily had substance use issues, which could result in an extra $3,680 per patient, as per the lawsuit.
The case was brought by Khushwinder Singh in federal court in Seattle in 2021 but was not made public until January of this year. Singh, who worked as a senior medical director at Aledade from January 2021 to May 2021, alleges that the company terminated his employment after he objected to its fraudulent activities.
The lawsuit is ongoing and Aledade has not yet responded in court. Julie Bataille, Aledade’s senior vice president for communications, rejected the accusations, stating in an interview that the entire case is completely without merit.
Located in Bethesda, Maryland, Aledade aids in overseeing independent primary care clinics and medical offices in over 40 states, catering to around 2 million individuals.
Aledade is among the numerous groups referred to as accountable care organizations. These organizations have substantial backing from federal health officials who desire to improve people's health and achieve tangible cost savings. strong support from federal health officials who hope they can keep people healthier and achieve measurable cost savings.
Aledade was established in 2014 by Farzad Mostashari, a former health information technology chief in the Obama administration. In June 2023, President Joe Biden appointed Mandy Cohen, who was previously the executive vice president at Aledade, to lead the Centers for Disease Control and Prevention in Atlanta. appointed Mandy Cohen, then executive vice president at Aledade, to head the Centers for Disease Control and Prevention in Atlanta.
Aledade has rapidly expanded with the help of hundreds of millions of dollars in venture capital financing and was valued at $3.5 billion. Mostashari, Aledade’s chief executive officer, declined to be interviewed on the record. valued at $3.5 billion in 2023.
Mostashari, Aledade’s chief executive officer, declined to be interviewed on the record.
“As this is an active legal matter, we will not respond to individual allegations in the complaint,” Aledade said in a statement to KFF Health News. “We remain focused on our top priority of delivering high-quality, value-based care with our physician partners and will defend ourselves vigorously if needed in a court of law.”
The lawsuit also names 19 independent physician practices in small cities in Delaware, Kansas, Louisiana, North Carolina, Pennsylvania, and West Virginia as defendants. According to the lawsuit, the doctors knowingly used Aledade software to trigger illegal billings, a practice known in the medical industry as “upcoding.” None of them has responded in court.
More than 25 whistleblower lawsuits have accused Medicare health plans of overcharging by billing for medical conditions that are not supported by patient medical records. These lawsuits have led to millions of dollars in penalties. In September 2023, Cigna agreed to pay $37 million to settle one of these cases. agreed to pay $37 million to settle one such case, for instance.
But the whistleblower suit filed against Aledade seems to be the first to claim upcoding within accountable care organizations, which describe part of their mission as preventing wasteful spending. ACOs including Aledade have recently made headlines for helping uncover an alleged massive Medicare fraud involving urinary catheters, for example. their mission as preventing wasteful spending. ACOs including Aledade made headlines recently for helping reveal an alleged massive Medicare fraud involving urinary catheters, for example.
Finding the ‘Gravy’
Singh’s lawsuit targets Aledade’s use of coding software and guidance to medical practices that joined its network. Some doctors treated patients on standard Medicare through the ACO networks, while others cared for seniors enrolled in Medicare Advantage plans, according to the lawsuit.
Medicare Advantage is a privately run alternative to standard Medicare that has become increasingly popular and now serves over 30 million people. Aledade has sought to expand its services to Medicare Advantage enrollees.
The lawsuit alleges that Aledade encouraged doctors to add suspicious medical diagnoses that resulted in extra payments. Aledade referred to this as finding “the gravy sitting in the [patient’s] chart,” according to the lawsuit.
The company “instructed” providers to diagnose diabetes with complications, “even if the patient’s diabetes was under control or the complicating factor no longer existed,” according to the lawsuit.
Some medical practices in Delaware, North Carolina, and West Virginia billed the inflated code for more than 90% of their Medicare Advantage patients with diabetes, according to the lawsuit.
The lawsuit also alleges that Aledade “rigged” the software to change a diagnosis of overweight to “morbid obesity,” which could pay about $2,500 more per patient. Some providers coded morbid obesity for patients on traditional Medicare at 10 times the national average, according to the lawsuit.
“This fraudulent coding guidance was known as ‘Aledade gospel,’” according to the lawsuit, and following it “paid dividends in the form of millions of dollars in increased revenue.”
These tactics “usurped” the clinical judgment of doctors, according to the lawsuit.
‘No Diagnosis Left Behind’
In its statement to KFF Health News, Aledade said its software offers doctors a range of data and guidance that helps them evaluate and treat patients.
“Aledade’s independent physicians remain solely responsible for all medical decision-making for their patients,” the statement read.
The company said it will “continue to advocate for changes to improve Medicare’s risk adjustment process to promote accuracy while also reducing unnecessary administrative burdens.”
In a message to employees and partner practices sent on Feb. 29, Mostashari noted that the Justice Department had declined to take over the False Claims Act case.
“We recently learned that the federal government has declined to join the case The case of Khushwinder Singh against Aledade, Inc. and others in the United StatesThat’s positive news, and a decision we fully support given the unfounded claims about improper coding practices and wrongful termination made by a former Aledade employee three years ago. We do not yet know how the full legal situation will play out but will defend ourselves vigorously if necessary in a court of law,” the statement said.
The Justice Department informed the Seattle court on Jan. 9 that it would not get involved in the case “at this time,” which led to an order to reveal it, court records show. Under the false claims law, whistleblowers can proceed with the case on their own. The Justice Department does not give a reason for refusing a case but has stated in other court cases that doing so has no impact on its merits.
In his complaint, Singh argues that many “unsupported” diagnosis codes were added during yearly “wellness visits,” and that they did not lead to the patients getting any additional medical care.
Aledade maintained Slack channels in which doctors could discuss the financial incentives for adding higher-paying diagnostic codes, according to the lawsuit.
The company also closely monitored how doctors coded as part of an initiative called “no diagnosis left behind,” according to the lawsuit.
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(KFF Health News, previously known as Kaiser Health News (KHN), is a national newsroom that produces comprehensive journalism about health issues and is one of the core operating programs of KFF — the independent source for health policy research, polling and journalism.)
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