MedPage today story.
A Western New York seniors' health insurance provider and the CEO of its health analytics unit have agreed to pay a total of up to $100 million to settle Justice Department allegations of fraudulent health billings that were inflated or non-existent.
The Buffalo Independent Health Care Association, which operates two Medicare Advantage plans, will pay up to $98 million. Under the settlement, Betsy Gaffney, CEO of medical records analytics company DxID, will pay $2 million. None of them admitted their guilt.
“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 reimbursement claims,” said Michael Granston, Deputy Assistant Attorney General for the Department of Justice (DOJ). announcing the settlement December 20.
Frank Sawa, a spokesman for Independent Health, said in a statement: “The DOJ's allegations are allegations only and there has been no determination of liability. This agreement is not an admission of any wrongdoing; instead, it allows us to avoid further disruption, expense and uncertainty of litigation in a case that has dragged on for more than a decade.”
Under the agreement, Independent Health will make “guaranteed payments” of $34.5 million in installments from 2024 to 2028. Whether the company pays the maximum amount in a settlement will depend on the health plan's financial performance.
Michael Ronikher, an attorney for whistleblower Teresa Ross, called the settlement “historic,” saying it was the largest payout by a health plan based solely on the whistleblower's allegations of fraud. He was also one of the first to accuse the data firm of helping inflate insurance plan prices.
The settlement is the latest in a swirl of whistleblower actions accusing the Medicare Advantage insurer of billing fraud. Medicare Advantage plans are private health insurance plans that cover more than 33 million members, more than half of all people eligible for Medicare. They are further growth expected under the new Trump administration.
But as Medicare Advantage gains popularity, CMS regulators are struggling to stop health plans from exaggerating how sick patients are to boost their profits.
Whistleblowers like Ross, a former medical coding specialist, have helped the government recover hundreds of millions of dollars in overpayments related to alleged coding abuses. Ross will receive at least $8.2 million, according to the Justice Department.
Ross said CMS “created a reward” for health plans that added medical diagnosis codes when reviewing patient records — and whether those codes were accurate or not “didn't seem to bother some people.”
“CMS is paying out billions of dollars for diagnoses that don’t exist,” Ross said. KFF health news in an interview.
Data Mining
Ministry of Justice civil complaintfiled in September 2021, was unusual in that it went after a data analytics business and its top executive for allegedly arranging fictitious payments.
DxID specialized in analyzing electronic medical records to collect new patient diagnoses while pocketing up to 20% of the money it made for the health plan, according to the lawsuit, which said Independent Health used the firm from 2010 to 2017. DxID closed in 2021.
According to the Justice Department's complaint, Gaffney marketed its services to Medicare Advantage plans as “too good to pass up.”
“There is no upfront fee, we don’t get paid until you pay, and we work out a percentage of the refunds that are actually approved,” Gaffney said, according to the complaint. Timothy Hoover, Gaffney's lawyer, said in a statement that the settlement “is not an admission of any liability on the part of Ms. Gaffney. The settlement simply resolves the dispute and provides closure to the parties.”
“Ton of Money”
CMS uses a complex formula that pays health plans higher rates for sicker patients and lower rates for people in good health. Health plans must maintain medical records documenting all diagnoses they identify for reimbursement purposes.
Independent Health violated those rules by billing Medicare for a number of conditions that were either exaggerated or not supported by patients' medical records, such as bills for treatment of chronic depression that were resolved, according to the complaint. In one case, according to the complaint, an 87-year-old man was coded for “major depressive disorder” even though his medical records indicated the problem was “transient.”
DxID also cited chronic kidney disease or kidney failure “in the absence of any documentation indicating that the patient suffered from these conditions,” according to the complaint. Past conditions such as heart attacks that did not require current treatment were also coded, according to the Justice Department.
The lawsuit alleges that Gaffney said the kidney failure diagnosis “cost a lot of money for IH.” [Independent Health] and most people (over) 70 have it to some degree.”
Ross filed a whistleblower case in 2012 against Group Health Cooperative in Seattle, one of the nation's oldest managed care groups.
Ross, a former medical coding manager there, alleged that DxID filed more than $30 million in disease claims (many of which were invalid) on behalf of Group Health in 2010 and 2011. For example, Ross alleged that the plan billed for “major depression” in a patient his doctor described as having a “remarkably sunny disposition.”
The health care group, now known as the Kaiser Foundation Health Plan in Washington, denies wrongdoing. But everything is decided civil case in November 2020, agreeing to pay $6.3 million. In 2021, the Department of Justice filed a second complaint against Independent Health, which also used DxID's services.
Ross said she lost her job after her lawsuit became public in 2019 and was unable to get another job in medical coding.
“It was hard at times, but we made it through,” she said. Ross, 60, said she is now “happily retired.”
False statements
The whistleblowers are suing under the False Claims Act, a federal law passed during the Civil War that allows private citizens to expose fraud against the government and share in damages.
At least two dozen such lawsuits, some dating back to 2009, have targeted Medicare Advantage plans for exaggerating the severity of illnesses, a practice known in the industry as “upcoding.” Previous settlements from such claims have totaled more than $600 million.
Whistleblowers have played a key role in holding health insurers accountable.
While dozens of CMS audits have concluded that health plans inflate government costs, the agency did little to recoup money for the US Treasury.
Unexpectedly at the end of January 2023 CMS announced that it would agree to share some of the estimated tens of millions of dollars in overpayments identified in its audits dating back to 2011 and would not impose significant financial penalties on health plans until a round of 2018 payment audits that have yet to be conducted. It's unclear exactly how much the plans will pay for themselves.
“I think CMS should do more,” said Max Waldman, an attorney representing Ross.
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