Whistleblowers Claim Dialysis Company Deliberately Wasted Hundreds of Millions of Dollars in Medicine to Collect Medicare Overpayment

Jul 28, 2011   

Earlier this week, a pair of whistleblowers filed an amended complaint in United States District Court in Atlanta alleging that DaVita, a kidney dialysis clinic, intentionally wasted medicine to collect Medicare drug overpayments. The plaintiffs claim that DaVita changed how it dispensed dialysis medication in order to inflate their Medicare reimbursement return. The original complaint, which was filed in October of 2007, was unsealed this past week. After two years of investigating the claim, the federal government decided in April that it did not intend to join the lawsuit.

DaVita, the second largest independent provider of dialysis services for patients with chronic kidney failure, is responsible for treating nearly one-third of the nations dialysis patients. The complaint against DaVita alleges that the company designed multiple sets of conflicting internal protocols and “dosing grids” that dictated how each drug should be administered to patients, based on the cost of the drug and Medicare reimbursement. Prior to January 2011, Medicare paid dialysis centers separately for dialysis procedures and medication. Dialysis centers often made a profit from these Medicare reimbursements because Medicare reimbursed more than the centers paid for the medicine. Earlier this year, however, Medicare changed its payment plan in an attempt to curb overuse of dialysis drugs. In January, Medicare transitioned to a bundled-payment system, where payments are fixed per treatment and include the cost of drugs. Under this system, Medicare reimburses dialysis centers for the total amount of medicine contained in the vial, not the amount of medicine administered to the patient

In response to this new reimbursement system, DaVita adjusted the way it ordered and administered medication. Under the old system, for example, DaVitas dialysis treatment consisted of a six-microgram dose, which was administered in three vials of two-micrograms each. After Medicare shifted to the bundled-payment system, DaVita used the same six-microgram therapy program but administered the therapy from a single 10-microgram vial instead. According to the whistleblowers, the excess four-micrograms were not used in therapy and were simply wasted. The dialysis treatment remained the same, except DaVita charged Medicare for four extra micrograms of medication it did not actually administer to patients. A similar sequence of events was reported for DaVitas administration of Venofer, where approximately 75 milligrams of medication was wasted each therapy session. These examples are contrasted with DaVitas use of Epogen, an anemia drug that is paid for based on the amount actually used, not the amount per vial. The lawsuit alleges that DaVita did not waste any Epogen medication. The allegations against DaVita have been supported by other physicians and nurses working in dialysis clinics around the nation.

DaVita denies that it overused pharmaceuticals in return for financial incentives. A representative of DaVita claims that the changes in its administration of dialysis therapy have been dictated by physicians, not DaVitas own drug protocol.

Fuerst Ittleman will continue to monitor the progress of this whistleblower lawsuit For additional information, please contact us at contact@fidjlaw.com.