U.S. Attorney Trini E. Ross announced that Independent Health Association and its affiliate, Independent Health Corporation, have agreed to pay up to $98 million to settle allegations of violating the False Claims Act. The accusations involve submitting invalid diagnosis codes to Medicare for Medicare Advantage Plan enrollees, leading to increased payments from Medicare. Independent Health is based in Buffalo, New York.
Medicare Advantage Plans (MA Plans) allow beneficiaries to enroll in managed care insurance plans under the Medicare Part C program. Payments to these plans are adjusted based on demographic information and diagnoses of each beneficiary, commonly referred to as "risk scores." Higher risk scores result in larger payments.
The United States alleged that Independent Health created a subsidiary, DxID LLC, which retrospectively searched medical records and queried physicians for additional diagnoses supporting higher risk scores. This allegedly led to unsupported diagnoses being submitted from 2011 through at least 2017 with the assistance of DxID's founder and chief executive, Betsy Gaffney.
U.S. Attorney Trini E. Ross stated, “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.” Deputy Assistant Attorney General Michael Granston added that this settlement sends a message against inflated claims for reimbursement.
Deputy Inspector General Christian J. Schrank emphasized accountability through oversight and enforcement against those gaming federal programs for profit.
Independent Health will make guaranteed payments of $34.5 million and contingent payments up to $63.5 million on behalf of itself and DxID, which ceased operations in 2021. Gaffney will separately pay $2 million.
As part of the settlement, Independent Health entered into a five-year corporate integrity agreement with HHS-OIG requiring an independent review organization annually review samples of medical records related to risk adjustment payments.
The settlement resolves claims brought under the qui tam provisions by Teresa Ross, who will receive at least $8,212,500 from this settlement. She also alleged similar actions by Kaiser Foundation Health Plan of Washington involving DxID.
Assistant U.S. Attorney David Coriell along with investigator Peggy McFarland handled the case alongside attorneys Samson Asiyanbi and David Wiseman from the Civil Division’s Fraud Section with support from HHS-OIG Buffalo Regional Office.
The case titled United States ex rel. Ross v. Independent Health Association et al., No. 12-CV-0299(S) (WDNY), resolves allegations without determining liability.