DOJ: Independent Health, DxID allegedly inflated MA reimbursement through unsupported diagnosis codes
The DOJ alleges the entities submitted inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage plans.
Photo: Blanchi Costela/Getty Images
Insurer Independent Health and a subsidiary, DxID, are under fire from the U.S. Department of Justice for allegedly submitting unsupported diagnosis codes to inflate Medicare Advantage reimbursements.
The alleged violation of the federal False Claims Act would have enabled the companies to receive payments from Medicare greater than to what they were entitled.
The U.S. filed a complaint in the U.S. District Court for the Western District of New York this week against Independent Health Association, Independent Health Corporation and DxID, as well as former DxID CEO Betsy Gaffney.
The DOJ alleges that these entities submitted inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage plans in order to increase Independent Health's reimbursement.
Independent Health is headquartered in Buffalo, New York. DxID was headquartered in Buffalo until it ceased operations in August.
WHAT'S THE IMPACT?
Under Medicare Advantage, also known as Medicare Part C, Medicare beneficiaries have the option to enroll in managed health insurance plans that are owned and operated by private Medicare Advantage Organizations (MAOs). MA Plans are paid a fixed amount per enrollee to provide benefits covered by traditional Medicare to beneficiaries who enroll in their MA Plan.
The Centers for Medicare and Medicaid Services, which oversees the Medicare program, makes upward payment adjustments to MA Plans based on demographic information and the health status of each plan beneficiary. The adjustments are made using what are commonly referred to as "risk scores." In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.
Independent Health offers two MA Plans in New York State. Its wholly owned subsidiary, DxID, provided retrospective chart review and addenda services to Independent Health and other MA Plans.
Specifically, the DOJ alleged that DxID coded conditions that were not documented in the patient's medical record during a visit or encounter. The government also alleged that DxID asked healthcare providers to sign addenda forms up to a year after a visit or an encounter, and then used the addenda as justification for adding risk-adjusting diagnoses that were not documented during the patient encounter, in violation of Medicare requirements.
DxID operated on a contingency fee of up to 20% of the additional recovery that the MA Plans received based on diagnoses it captured.
The complaint alleged that these unsupported diagnoses inflated the risk scores of beneficiaries, resulting in inflated payments to Independent Health and other MA Plans. The lawsuit also alleged that once Independent Health became aware of these unsupported diagnosis codes, it failed to take corrective action to identify and delete them.
THE LARGER TREND
The lawsuit was filed under the whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits.
Although the United States initially advised the court that it was not intervening in this case, the court subsequently granted the United States' motion to intervene for good cause.
The whistleblower, Teresa Ross, is a former employee of Group Health Cooperative (GHC). GHC was an MAO that offered MA Plans in Washington State. From 2011 to 2012, GHC used DxID's chart review services. In November 2020, GHC entered into a settlement with the United States and Ross to resolve the claims against it.
In January, electronic health record vendor athenahealth agreed to pay $18.25 million to resolve False Claims Act violation allegations after the DOJ alleged the company had paid illegal kickbacks – including inviting prospects and customers to all-expense-paid sporting and entertainment events – to generate sales of its EHR product.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
