- The U.S. Department of Justice is intervening in a Medicare Advantage fraud case alleging payer Independent Health and its medical analytics subsidiary DxID submitted inaccurate information about their beneficiaries' health, cheating the U.S. government out of tens of millions of dollars.
- Regulators filed a complaint late Monday in the U.S. District Court for the Western District of New York under the False Claims Act against the two Buffalo, New York-based companies and Betsy Gaffney, the former CEO of DxID, which ceased operations in August.
- In a joint statement to Healthcare Dive, Independent Health and the now-defunct DxID denied all allegations of wrongdoing and said they planned to defend themselves "vigorously" in court.
In the privately run MA program, CMS pays plans on a per-member basis, then adjusts payments based on the acuity or severity of their member's health status, as supported by provider data like diagnostic codes. Generally, the sicker the member, the higher the plan's reimbursement.
In the 102-page complaint, the DOJ alleges that Independent Health, which offers two MA plans in New York, and its subsidiary DxID, which provided chart review and addenda services to plans, knowingly swindled the government out of "tens of millions" of dollars by hiking the severity of its beneficiaries' health statuses and submitting charges for medical conditions its patients didn't have from 2010 to 2017.
Whistleblower Teresa Ross formerly worked as a medical coding official at Group Health Cooperative, a Seattle-based MA payer offering plans in Washington state that used DxID's chart review services from 2011 to 2012. Allegedly, Group Health hired DxID to boost revenues before submitting more than $30 million in new disease claims for 2010 and 2011, many of which were unsupported, Ross said.
Group Health Cooperative, now known as Kaiser Foundation Health Plan of Washington after being acquired by Kaiser Permanente in 2017, settled with the government and Ross in November for $6.3 million to resolve the claims.
Ross, who worked at Group Health for more than 14 years, received $1.5 million from that settlement, and stands to collect up to 25% of the settlement against the remaining defendants.
Now, DOJ has joined the case and — in a rare move — is coming directly after data mining company DxID for its part in allegedly submitting thousands of unsupported medical condition codes on behalf of Independent Health.
According to the DOJ, DxID retroactively combed EHRs to identify missed diagnoses and asked providers to sign addenda forms up to a year after a patient visit, using those addenda to justify adding risk-adjusting diagnoses that weren't documented during the visit, in violation of Medicare rules.
DxID then pocketed up to 20% of the new revenue received by the MA plans based on the new diagnoses.
The complaint cites numerous medical conditions that were either exaggerated or completely made up, including billing for treating depression that had been resolved, cases where a visit to the ophthalmologist resulted in a coding of pancreatitis or a visit to a dermatologist resulted in a coding of diabetes, and unsupported claims for chronic kidney disease.
The suit alleges that Gaffney justified adding chronic kidney disease to most requests for addenda, as she said the cases were "worth a ton of money to [Independent Health]" and "pretty much everyone over age 70 has some level of CKD."
DOJ further alleges that once Independent Health became aware the diagnosis codes were unsupported, the payer failed to take corrective action. The addenda process allegedly resulted in more than 125,000 diagnosis codes being added, resulting in tens of millions of dollars in overpayments from CMS.
For their part, "Independent Health and DxID deny all allegations of wrongdoing in this lawsuit. We will continue defending ourselves vigorously in Court as we believe the coding policies being challenged here were lawful and proper and all parties were paid appropriately," a spokesperson for the companies said.
The suit is the latest in a recent string of crackdowns on fraud in the increasingly popular MA program. More than 26 million people enrolled in MA plans this year, swelling the program to roughly 42% of the entire Medicare population, per a Kaiser Family Foundation tracker.
In late August, Sutter Health paid $90 million in the biggest False Claims Act settlement against a health system for alleged MA fraud. Earlier the same month, CVS Health reported in a financial filing that HHS OIG is auditing its MA plans, while other insurers that have come under fire in the past year or so with audits, whistleblower lawsuits and major settlements for alleged overbilling include UnitedHealthcare, Cigna, Humana, Anthem and integrated system Kaiser Permanente.