The United States Department of Justice (DOJ) recently announced a settlement of up to $98 million with Independent Health Association and its affiliate, Independent Health Corporation (collectively, Independent Health). The settlement resolves allegations that Independent Health violated the False Claims Act by knowingly submitting – or causing the submission of – invalid diagnosis codes to Medicare for Medicare Advantage Plan enrollees.
Independent Health operates Medicare Advantage plans for beneficiaries living in western New York state. The United States alleges that Independent Health created a wholly owned subsidiary, DxID LLC, to retrospectively search medical records for information that would support additional diagnoses to generate higher risk scores. DxID allegedly provided such services to Independent Health (and other Medicare Advantage plans). The United States alleged that DxID and Independent Health, along with DxID founder and chief executive Betsy Gaffney, knowingly submitted diagnoses to the Centers for Medicare and Medicaid Services (CMS) that were not supported by the beneficiaries’ medical records to inflate Medicare payments to Independent Health, from 2011 through at least 2017.
Under the settlement, Independent Health will make guaranteed payments totaling $34,500,000 and contingent payments of up to $63,500,000 on behalf of itself and DxID, which ceased operations in 2021. Gaffney will also pay $2,000,000.
The claim against Independent Health started as a qui tam claim brought by a former employee of Group Health Cooperative (now known as Kaiser Foundation Health Plan of Washington). For her role in the settlement, the whistleblower will receive at least $8,212,500 of the settlement. The whistleblower also alleged that Kaiser was one of the companies that hired DxID to identify additional diagnoses to submit for risk adjustment and those claims have previously been resolved.
In addition to the settlement, Independent Health entered into a five-year corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS OIG). The CIA requires that Independent Health hire an Independent Review Organization to perform an annual review of a sample of Independent Health’s Medicare Advantage patients’ medical records and associated internal controls, to ensure appropriate risk adjustment payments.
“The government expects those who participate in Medicare Advantage to provide accurate information to ensure that proper payments are made for the care received by enrolled beneficiaries,” said Deputy Assistant Attorney General Michael Granston of the Justice Department’s Civil Division. “Today’s result sends a clear message to the Medicare Advantage community that the United States will take appropriate action against those who knowingly submit inflated claims for reimbursement.”
As is typical, there has been no determination of liability as part of the settlement and the claims are allegations only.
Other Upcoding Lawsuits
Over the past several years, various insurance companies have reached multi-million-dollar settlements with the DOJ over upcoding claims for Medicare Advantage patients, including Cigna and Freedom Health. There are also ongoing cases regarding alleged upcoding, an indication that HHS and DOJ will continue to work together to root out alleged fraud that takes place around upcoding. “Medicare Advantage Plans that attempt to game federal programs for profit must be held accountable through rigorous oversight and enforcement,” said Deputy Inspector General Christian J. Schrank of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG will continue to work with our law enforcement partners to root out fraud, waste and abuse in federal health care programs.”