DaVita Receives U.S. Civil Subpoena Amid Medicare Probe

Updated on

DaVita HealthCare Partners Inc. received a subpoena from U.S. authorities seeking patient-diagnosis documents from the past seven years as part of what the company said is a broader probe into abuses in Medicare.

The Department of Health and Human Services requested paperwork dating back to January 2008 relating to diagnosis coding, risk adjustments and payments, the Denver-based provider of health services said Wednesday in a regulatory filing. Some of the data requested is tied to a “potentially improper” practice by HealthCare Partners that ended after DaVita acquired that company in late 2012.

As disclosed in financial statements this year, “we notified the U.S. Center for Medicare & Medicaid Services of the legacy coding practice and potential overpayments,” DaVita said. “The company is cooperating with the government and will gather and produce the requested information.”

The U.S. has embarked on a wide-ranging investigation of fraudulent practices tied to Medicare, which in 2013 spent about $583 billion to care for the country’s elderly and disabled. It also covers many kidney dialysis services, like those offered by DaVita. Pharmacists, doctors and other caretakers have been arrested in the crackdown, and insurer Humana Inc. has also received demands for documents.

“We believe that the request is part of a broader industry investigation into Medicare Advantage patient diagnosis coding and risk adjustment practices and potential overpayments by the government,” DaVita said in Wednesday’s filing. Medicare Advantage is a version of the program administered by private insurers and paid for by the government.

Company Scrutiny

DaVita has drawn scrutiny before. The company is operating under a corporate integrity agreement with the U.S. after a 2014 settlement in which the company paid $406 million. DaVita earlier this year said it settled a civil suit over allegations that it was billing the U.S. for wasted medications.

Skip Thurman, a DaVita spokesman, said the company has “invested significantly” in accurate patient diagnosis and coding. “We look forward to working transparently and cooperatively with the government to resolve and help clarify coding-related issues,” he said by e-mail.

DaVita also said that Robert Margolis, the former chief executive officer of HealthCare Partners, was removed from his post as co-chairman before DaVita’s annual meeting on June 16.

“It is difficult to say why Dr. Margolis was not reelected but we expect that the investigation into HCP’s coding practices as well as the disappointing financing results of HCP following the acquisition may have played a role,” Chris Rigg, an analyst at Susquehanna International Group, said in a note to clients Wednesday.

DaVita provides dialysis to patients with kidney disease, while the HealthCare Partners business manages medical groups. The shares fell less than 1 percent to $81.06 at 10:07 a.m. in New York.

Peter Grauer, chairman of Bloomberg News’s parent company Bloomberg LP, is lead independent director on DaVita’s board.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE