Independent Health Association and its affiliate, Independent Health Corporation (collectively, Independent Health) have agreed to pay up to $98 mn to resolve allegations that they violated the False Claims Act by knowingly submitting or causing the submission of invalid diagnosis codes to Medicare for Medicare Advantage Plan enrollees to increase payments that Independent Health received from Medicare. Independent Health is headquartered in Buffalo, New York., according to the U.S. Department of Justice.
The case centers on practices between 2011 and 2017. Independent Health and its affiliate, Independent Health Corp., allegedly submitted unsupported diagnoses through DxID, a data company founded by CEO Betsy Gaffney.
DxID retrospectively searched medical records and queried doctors to find additional diagnoses that would inflate patient risk scores, the DOJ said. Higher risk scores increase payments from the Centers for Medicare & Medicaid Services to Medicare Advantage (MA) plans.
Independent Health operates MA plans in western New York. The DOJ said DxID was created as a wholly owned subsidiary to manage risk adjustment efforts. The firm was used to identify diagnoses that could generate larger Medicare 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.”
To protect the integrity of Medicare and other federal health care programs, my office is committed to ensuring that each and every dollar meant for Medicare beneficiaries is spent appropriately and in accordance with the law
U.S. Attorney Trini E. Ross for the Western District of New York
“As this settlement makes clear, we will diligently pursue those who defraud government programs.”
“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.”
The settlement includes guaranteed payments of $34.5 mn and contingency payments of up to $63.5 mn from Independent Health and its affiliate.
DxID, which ceased operations in 2021, is included in the agreement. Gaffney, the company’s CEO, will pay an additional $2 mn.
Beyond financial penalties, Independent Health must now undergo annual third-party reviews of patient records and internal controls to ensure compliance with risk adjustment practices.
The case was initiated by a whistleblower, a former Group Health Cooperative employee. The whistleblower, now tied to Kaiser Foundation Health Plan of Washington, will receive at least $8.21 mn from the settlement, the DOJ confirmed.
The United States’ intervention in this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to HHS, at 800-HHS-TIPS (800-447-8477).
Attorneys Samson Asiyanbi and David Wiseman of the Civil Division’s Fraud Section and Assistant U.S. Attorney David Coriell and investigator Peggy McFarland for the Western District of New York handled the matter, with assistance from the HHS-OIG Buffalo Regional Office.
