The recent settlement between a western New York health insurance provider for seniors and the CEO of its medical analytics arm has raised eyebrows in the healthcare industry. The agreement, which totals up to $100 million, is the result of Justice Department allegations of fraudulent billing for health conditions that were exaggerated or didn’t even exist.
Independent Health Association of Buffalo, the health insurance provider in question, will pay up to $98 million. Betsy Gaffney, the CEO of DxID, the medical records review company involved, will pay $2 million as part of the settlement. Despite the settlement, neither party admitted to any wrongdoing.
In a statement released by the DOJ, Deputy Assistant Attorney General Michael Granston emphasized the importance of holding Medicare Advantage providers accountable for submitting inflated claims for reimbursement. Independent Health’s spokesperson, Frank Sava, reiterated that the settlement does not imply any admission of liability but is instead a means to avoid further litigation in a matter that has been ongoing for over a decade.
As part of the settlement, Independent Health will make guaranteed payments of $34.5 million in installments from 2024 through 2028. The total amount paid will depend on the health plan’s financial performance in the coming years.
The settlement is significant for several reasons. It marks one of the largest payments made by a health plan based solely on a whistleblower’s fraud allegations. It also highlights the role of data mining firms in helping health plans overcharge for services. DxID, the data analytics venture involved in this case, specialized in mining electronic medical records to identify new diagnoses for patients, receiving a percentage of the generated revenue in return.
The DOJ’s civil complaint, filed in September 2021, accused Independent Health of billing Medicare for medical conditions that were either exaggerated or not supported by patient medical files. This included billing for chronic conditions that had been resolved and coding for conditions that patients did not actually have. The complaint also highlighted instances where patients were inaccurately diagnosed with certain conditions, leading to overbilling by the health plan.
Whistleblower Teresa Ross, a former medical coding professional, played a crucial role in bringing the fraudulent billing practices to light. Ross, who will receive at least $8.2 million as part of the settlement, raised concerns about the lack of oversight in Medicare Advantage plans and the billions of dollars being paid out for non-existent diagnoses.
The settlement underscores the challenges faced by regulators in preventing health plans from inflating patient diagnoses to increase revenue. As Medicare Advantage plans continue to grow in popularity, it is essential to ensure that billing practices are transparent and accurate to protect both patients and the integrity of the healthcare system. The Department of Justice (DOJ) has filed a second complaint in 2021 against Independent Health, a healthcare provider that also utilized DxID’s services. This legal action comes on the heels of a previous lawsuit filed by whistleblower Ross, who alleged fraudulent billing practices by the company.
Ross, who lost her job after her initial lawsuit went public in 2019, was unable to secure another position in the medical coding field. Despite the challenges she faced, Ross, now 60, has found solace in retirement.
The lawsuits against Independent Health and other Medicare Advantage plans fall under the False Claims Act, a federal law that empowers private citizens to expose fraud against the government. These legal actions have shed light on the practice of “upcoding,” where healthcare providers overstate the severity of medical conditions to receive higher reimbursements from the government.
Numerous whistleblower suits have targeted Medicare Advantage plans for overcharging the government, resulting in settlements exceeding $600 million. These whistleblowers have played a crucial role in holding health insurers accountable for their billing practices.
While CMS audits have confirmed instances of overcharging by health plans, the agency has been criticized for not aggressively pursuing reimbursement for the U.S. Treasury. In a recent development, CMS announced a settlement with health plans for a fraction of the estimated overpayments uncovered in audits dating back to 2011. The exact amount that plans will be required to repay remains unclear.
Attorney Max Voldman, representing Ross, believes that CMS should take stronger action to recoup funds from health plans found to have engaged in fraudulent billing practices. The legal battles against healthcare providers like Independent Health underscore the importance of whistleblowers in exposing fraud and ensuring accountability in the healthcare industry.
