Independent Health Association agreed to pay up to $98 million to settle allegations that they violated the False Claims Act by knowingly submitting invalid diagnosis codes to Medicare for Medicare Advantage Plan enrollees in order to increase payments that Independent Health received from Medicare.
Medicare Advantage, also known as Medicare Part C, allows Medicare beneficiaries to enroll in managed care insurance plans called Medicare Advantage Plans (MA Plans). These plans receive a per-person payment to provide Medicare-covered benefits to their enrollees. The Centers for Medicare and Medicaid Services (CMS), which administers the Medicare program, adjusts these payments based on demographic data and the medical diagnoses of each enrollee. These adjustments, referred to as “risk scores,” ensure that beneficiaries with more costly medical needs receive higher risk-adjusted payments to their MA Plan.
Independent Health operates MA plans for beneficiaries living in western New York. As alleged by the United States, Independent Health created a wholly owned subsidiary, DxID LLC, to retrospectively search medical records and query physicians for information that would support additional diagnoses that could be used to generate higher risk scores, and DxID provided these services to Independent Health and other MA Plans.
The United States filed a complaint alleging that, from 2011 through at least 2017, Independent Health, with the help of DxID and its founder and chief executive, Betsy Gaffney, knowingly submitted diagnoses to CMS that were not supported by the beneficiaries’ medical records in order to inflate Medicare’s payments to Independent Health.
“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.”
“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 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.”
As part of the settlement agreement, Independent Health will pay $34,500,000 upfront, along with contingent payments of up to $63,500,000 on behalf of itself and DxID, which ceased to exist in 2021. The settlement amount was determined based on Independent Health’s financial capacity. Additionally, Gaffney will make a separate payment of $2,000,000.
In connection with the settlement, Independent Health entered into a five-year corporate integrity agreement (CIA) with HHS-OIG. The CIA requires, among other things, that Independent Health hire an Independent Review Organization to annually review a sample of Independent Health’s Medicare Advantage patients’ medical records and internal controls to verify the accuracy of risk adjustment payments. 