Sutter Health enters $30M settlement over upcoding allegations

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Sacramento, Calif.-based Sutter Health has agreed to pay $30 million to resolve allegations that several of its affiliates submitted diagnosis codes for certain Medicare Advantage beneficiaries that inflated their risk scores and resulted in overpayments, according to the Department of Justice.

CMS pays private insurers a capitated, or per-person, amount to administer benefits under Medicare Advantage plans, and those payments are adjusted based on the beneficiary's demographic information and health status. Generally, a beneficiary with a more severe diagnosis will have a higher risk score, and CMS will make a larger payment to the Medicare Advantage plan for that person.

Sutter Health contracted with certain private insurers to provide healthcare services to Medicare Advantage beneficiaries in exchange for a portion of the payments the insurers received from CMS for beneficiaries under Sutter's care.

The settlement resolves allegations that Sutter submitted unsupported diagnosis codes for certain Medicare Advantage beneficiaries that inflated their risk scores and resulted in overpayments to private health plans and Sutter.

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