Skip to main content
Sister Publication Links
  • ESG: THE NEW IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Digital Health
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE +
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Insurance
September 14, 2021 05:27 PM

DOJ intervenes in False Claims Act suit against Medicare Advantage insurer

Tara Bannow
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    gavel and money

    The federal government is suing a New York Medicare Advantage insurer under the False Claims Act, accusing it of bilking the government for millions of dollars by making its members appear sicker than they were.

    The Justice Department is intervening in a whistleblower lawsuit against Buffalo-based Independent Health, its now-defunct risk adjustment subsidiary, DxID, and DxID's former CEO. The government won a $6.4 million settlement against Seattle-based Group Health Cooperative, another defendant in the original case, last year. Kaiser Permanente acquired the company in 2017, five years after prosecutors began their case against Group Health Cooperative.

    The Justice Department has made Medicare Advantage fraud a major area of focus as enrollment continues to grow, said Dayna LaPlante, a member of the law firm Polsinelli's healthcare litigation group, who is not involved in the case. More than 26 million people are enrolled in Medicare Advantage plans this year, or about 42% of the Medicare population, according to the Kaiser Family Foundation.

    "As we're seeing increasing enforcement in this space, Medicare Advantage plans and contracting health providers certainly are not immune to scrutiny anymore," LaPlante said. "That's not a low-risk space anymore in the healthcare world."

    The government alleges the defendants ran a scheme from 2010 until at least 2017 to artificially inflate Centers for Medicare and Medicaid Services payments to Independent Health, which offers two Medicare Advantage plans in New York. DxID, which shuttered in June, provided risk adjustment and chart review services for Medicare Advantage plans, including Independent Health and Group Health Cooperative. The defendants made tens of million dollars as a result, and a precise number will be revealed when the Justice Department collects more evidence, said Max Voldman, the whistleblower's attorney.

    Prosecutors say the scheme relied on two programs: retrospective medical records reviews and addenda. DxID would allegedly analyze patients' medical records and "capture" conditions purportedly missed, which Independent Health and Group Health would submit to CMS to increase their monthly per-member, per-month payments. CMS reimburses more for sicker patients with costly conditions, and diagnosis codes directly affect how much Medicare Advantage plans get paid to manage their care.

    DxID "recklessly" disregarded the requirement that a condition must be relevant to patient care and treatment during a specific visit that year, not merely mentioned in records from prior years, suggested by a computer algorithm or inferred from the medical record, the complaint alleges. As examples, prosecutors cite an ophthalmology visit resulting in a pancreatitis diagnosis and a dermatology visit leading to a diabetes diagnosis.

    Further, the addenda process allegedly nudged providers to retroactively add diagnoses to medical records they purportedly missed during visits. For instance, the complaint says DxID's CEO and founder, Betsy Gaffney, advocated for adding chronic kidney disease to most requests for addenda to providers regardless of whether there was any indication because "pretty much everyone over age 70 has some level of CKD."

    This case is unique in that the CEO of the vendor company is being sued in her personal capacity, said Voldman, an associate attorney with Constantine Cannon. That's because the government has a collection of emails that show Gaffney's role in orchestrating the alleged fraud, he said. "It's not super common to have one person really encapsulate all of that," Voldman said.

    Gaffney's attorney, Timothy Hoover, wrote in an email that his client has done nothing wrong.

    "She is the unfortunate victim of an ancient lawsuit premised on inaccurate allegations leveled by a disgruntled ex-employee of an entirely different company," Hoover said. "Courts routinely dismiss lawsuits like this and we expect the same result here."

    Independent Health and DxID denied all allegations of wrongdoing in a joint statement. The entities will defend themselves vigorously as they believe the coding policies being challenged were lawful and proper, they said.

    "Independent Health and DxID diligently navigate complex and vague coding criteria to ensure that all diagnosis and billing codes properly reflect our members' medical conditions and are supported with documentation in the members' medical records," the statement said.

    Retrospective chart reviews by Medicare Advantage plans aren't inherently illegal, Voldman said. "This case isn't even necessarily attacking chart review as a concept. It's just that when you do chart review, you have to stay in bounds of the program rules," he said, "The government's allegation is that DxID didn't."

    Medicare Advantage insurers have a responsibility to audit their providers to ensure the information they pass along to CMS is accurate, LaPlante said. In this case, the auditors were adding extra steps that typically would not be taken, she said.

    Independent Health had ample warning about the "impropriety" of the coding and knew the approach would cause the submission of unsupported diagnosis codes, the Justice Department says. The addenda process allegedly resulted in more than 125,000 diagnosis codes being added and CMS paying tens of millions of dollars more to Independent Health than it otherwise would have. Group Health Cooperative refused to participate in that part of the scheme, according to the Justice Department.

    In exchange for its work, DxID received up to 20% of the additional revenue.

    Teresa Ross, a Group Health employee for more than 14 years, filed the original whistleblower case in April 2012. At the end of her employment there, she was director of risk adjustment services. Ross is entitled to $1.5 million of the Group Health settlement reached in late 2020, and stands to collect up to 25% of the settlement against the remaining defendants.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    medicare-advantage-CMS-audits
    More MA insurer audits mean more scrutiny on providers
    medicare advantage directories
    Provider directories are a mess. CMS' plan to fix them has few fans
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Digital Health
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE +
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing