Kaiser Permanente’s Hand in the Cookie Jar

In February 17, 1971, President Nixon’s domestic advisor, John Erlichman, briefed President Nixon on a conversation he had with Edgar Kaiser, the founder of Kaiser Permanente (KP). Erlichman was describing KP to the President as an example of the newly emerging Health Maintenance Organizations (HMO). They were considering whether the HMO model was a possible alternative to the call for nationalized healthcare. Erlichman told the President, “All the incentives are toward less medical care, because…the less care they give them the more money they make.” Nixon responded, “Fine."

Flash forward 50-plus years. A New York Times (NYT) article written by Reed Abelson and Margot Sanger-Katz, published on January 14, 2026, revealed that KP had reached a very large settlement with the Department of Justice (DOJ) concerning Medicare fraud claims amounting to an estimated one billion dollars. The settlement was for $556 million to be paid to the federal government and two whistle blowers for overbilling by KP’s Medicare Advantage plan.

The lawsuit dated back more than 12 years and asserted that KP affiliates in California and Colorado reported their patients were sicker than they actually were. Medicare Advantage (MA) insurers are paid a certain amount per patient (capitated payment) based on the individual’s health-related risk factors rather than Original Medicare’s fee for service.

The NYT article explains what the whistleblowers exposed. “One of the whistleblowers, Dr. James Taylor, a physician and coding expert, who worked for Kaiser in Colorado, described meetings in which he was told to find additional diagnoses that could be worth millions of dollars. ‘The cash monster was insatiable,’ he said."

According to the NYT article, “In the Kaiser case, executives routinely pressured doctors to add thousands of diagnoses, sometimes weeks or months after the patients had been treated, according to the Justice Department, which joined the lawsuits in 2021. The extra diagnoses helped the company earn bonus funds from the government. MA insurers are paid higher insurance premiums when plans cover sicker patients.”

The NYT article went on to say “The Justice Department lawsuit stated ‘The doctors would sometimes sit together at lunch or after work, with food and drinks provided by Kaiser, to code their visits with additional diagnoses...the insurer linked doctor and facility pay bonuses to adding more diagnoses.'

“According to the lawsuit, the government estimated that Kaiser received one billion dollars from 2009 to 2018 from additional diagnoses, including roughly 100,000 findings of aortic atherosclerosis, or hardening of the arteries. But because its doctors would be forced to follow up on too many people, the organization stopped automatically enrolling those patients in a heart attack prevention program.”

KP indicated. when they reached this settlement, that they decided to settle the lawsuit “to avoid prolonged litigation.” The settlement allowed KP to state that they never did anything wrong. Had the settlement required KP to admit wrongdoing, they could have been excluded from the MA program.

KP is not alone in this practice. MedPAC, an independent congressional agency, created in 1997, analyzes and provides policy advice to Congress regarding the Medicare program. They issued reports in March, 2025, and January, 2026, indicating that MA insurers were overcharging the Medicare Trust Fund by $85 billion in 2025 and are projected to overcharge by $76 billion in 2026.

Instead of profits (because KP is a “nonprofit”), Kaiser has extensive “reserves," supposedly to cover times when costs exceed revenues. As of the beginning of 2026, KP’s estimated financial reserves were estimated at $67 billion held in cash and investments. Here is an example of KP’s investments. Innovaccer, Inc. is the company that has been selected by CMS/CMMI to implement the WISeR program in Ohio. WISeR is the newest privatization attack on Original Medicare. Created and overseen by CMS/CMMI, WISeR expands the use of prior authorization in Original Medicare, using artificial intelligence as a tool for determining if certain procedures recommended by a Medicare beneficiary’s physician will be covered by Medicare. Innovaccer receives a higher reimbursement rate for denying coverage for these procedures.

A leading investor in the funding of Innovaccer Corporation is Kaiser Permanente. Evidently, they hope to receive significant returns from the reserve funds invested in Innovaccer.

In 2024, KP’s top nine executives were paid, according to their Form 990 filed with the IRS, approximately $56 million in salaries, with CEO Greg Adams’ salary close to $13 million (one million+ per month)! The salary numbers do not include additional perks that add significantly to the total compensation package. While Kaiser’s executives may earn less than executives of for-profit Medicare Advantage corporations, KP executives and the KP system are a part of overcharging our worker-funded Medicare Trust Fund by Medicare Advantage. We, the people who paid into the Medicare Trust Fund, are learning that our hard-earned wages are being fleeced by both for-profit and not-for-profit insurance corporations.

After knowledge comes action. CMS has issued a 2027 Advanced Rate Notice related to reimbursement rates for MA insurers. There is an opportunity for public comment with a deadline of February 25th. The CMS proposal of an increase of 0.9 of 1% is meeting stiff resistance from the insurers who received an outrageous 5% increase in 2026.

Our voices will need to weigh in. Please look for a PSARA email with instructions on how to register a comment and suggested language for a message.