A Maryland firm that oversees the nation鈥檚 largest independent network of primary care medical practices is facing a whistleblower lawsuit alleging it cheated Medicare out of millions of dollars using billing software 鈥渞igged鈥 to make patients appear sicker than they were.
The civil suit alleges that Aledade Inc.鈥檚 billing apps and other software and guidance provided to doctors improperly boosted revenues by adding overstated medical diagnoses to patients鈥 electronic medical records.
鈥淎ledade did whatever it took to make patients appear sicker than they were,鈥 according to the suit.
For example, the suit alleges that Aledade 鈥渃onflated鈥 anxiety into depression, which could boost payments by $3,300 a year per patient. And Aledade decided that patients over 65 years old who said they had more than one drink per day had substance use issues, which could bring in $3,680 extra per patient, the suit says.
The whistleblower case was filed by Khushwinder Singh in federal court in Seattle in 2021 but remained under seal until January of this year. Singh, a 鈥渟enior medical director of risk and wellness product鈥 at Aledade from January 2021 through May 2021, alleges the company fired him after he objected to its 鈥渇raudulent course of conduct,鈥 according to the suit. He declined to comment on the suit.
The case is pending and Aledade has yet to file a legal response in court. Julie Bataille, Aledade鈥檚 senior vice president for communications, denied the allegations, saying in an interview that 鈥渢he whole case is totally baseless and meritless.鈥
Based in Bethesda, Maryland, Aledade helps manage independent primary care clinics and medical offices in more than 40 states, serving some 2 million people.
Aledade is one of hundreds of groups known as accountable care organizations. ACOs enjoy from federal health officials who hope they can keep people healthier and achieve measurable cost savings.
Aledade was co-founded in 2014 by Farzad Mostashari, a former health information technology chief in the Obama administration, and has welcomed other ex-government health figures into its ranks. In June 2023, President Joe Biden , then executive vice president at Aledade, to head the Centers for Disease Control and Prevention in Atlanta.
Aledade has grown rapidly behind hundreds of millions of dollars in venture capital financing and was in 2023.
Mostashari, Aledade鈥檚 chief executive officer, declined to be interviewed on the record.
鈥淎s this is an active legal matter, we will not respond to individual allegations in the complaint,鈥 Aledade said in a statement to 蘑菇影院 Health News. 鈥淲e 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.鈥
The lawsuit also names as defendants 19 independent physician practices, many in small cities in Delaware, Kansas, Louisiana, North Carolina, Pennsylvania, and West Virginia. According to the suit, the doctors knowingly used Aledade software to trigger illegal billings, a practice known in the medical industry as 鈥渦pcoding.鈥 None has filed an answer in court.
More than two dozen whistleblower lawsuits, some dating back more than a decade, have accused Medicare health plans of overcharging the government by billing for medical conditions not supported by patient medical records. These cases have resulted in hundreds of millions of dollars in penalties. In September 2023, Cigna to settle one such case, for instance.
But the whistleblower suit filed against Aledade appears to be the first to allege upcoding within accountable care organizations, which describe part of as foiling wasteful spending. ACOs including Aledade recently for helping to expose an alleged massive Medicare fraud involving urinary catheters, for instance.
Finding the 鈥楪ravy鈥
Singh鈥檚 suit targets Aledade鈥檚 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 suit.
is a privately run alternative to standard Medicare that has surged in popularity and now cares for more than 30 million people. Aledade its services to Medicare Advantage enrollees.
The lawsuit alleges Aledade encouraged doctors to tack on suspect medical diagnoses that paid extra money. Aledade called it finding 鈥渢he gravy sitting in the [patient鈥檚] chart,鈥 according to the suit.
The company 鈥渋nstructed鈥 providers to diagnose diabetes with complications, 鈥渆ven if the patient’s diabetes was under control or the complicating factor no longer existed,鈥 according to the suit.
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 suit.
The lawsuit also alleges that Aledade 鈥渞igged鈥 the software to change a diagnosis of overweight to 鈥渕orbid obesity,鈥 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 suit.
鈥淭his fraudulent coding guidance was known as 鈥楢ledade gospel,鈥欌 according to the suit, and following it 鈥減aid dividends in the form of millions of dollars in increased revenue.鈥
These tactics 鈥渦surped鈥 the clinical judgment of doctors, according to the suit.
鈥楴o Diagnosis Left Behind鈥
In its statement to 蘑菇影院 Health News, Aledade said its software offers doctors a range of data and guidance that helps them evaluate and treat patients.
鈥淎ledade’s independent physicians remain solely responsible for all medical decision-making for their patients,鈥 the statement read.
The company said it will 鈥渃ontinue to advocate for changes to improve Medicare鈥檚 risk adjustment process to promote accuracy while also reducing unnecessary administrative burdens.鈥
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.
鈥淲e recently learned that the federal government has declined to join the case U.S. ex rel. Khushwinder Singh v. Aledade, Inc. et al. That鈥檚 good news, and a decision we wholeheartedly applaud given the baseless allegations about improper coding practices and wrongful termination brought 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 needed in a court of law,鈥 the statement said.
The Justice Department advised the Seattle court on Jan. 9 that it would not intervene in the case 鈥渁t this time,鈥 which prompted an order to unseal it, court records show. Under the false claims law, whistleblowers can proceed with the case on their own. The Justice Department does not state a reason for declining a case but has said in other court cases that doing so has no bearing on its merits.
Singh argues in his complaint that many 鈥渦nsupported鈥 diagnosis codes were added during annual 鈥渨ellness visits,鈥 and that they did not result in the patients receiving 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 suit.
The company also closely monitored how doctors coded as part of an initiative dubbed 鈥渘o diagnosis left behind,鈥 according to the suit.
