New Medicare Advantage fraud case targets data mining: shots


A civil lawsuit filed by the US Department of Justice this week links exaggerated patient bills to “tens of millions” of overcharges through Medicare Advantage plans. A data analysis team facilitated the fraud, according to the lawsuit.

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A civil lawsuit filed by the US Department of Justice this week links exaggerated patient bills to “tens of millions” of overcharges through Medicare Advantage plans. A data analysis team facilitated the fraud, according to the lawsuit.

John Lund / Getty Images

The Justice Department has charged an upstate New York State Medicare Plan for the Elderly, as well as a medical analysis company with which the insurer is affiliated, to deceive the government of tens of millions of dollars.

The civil fraud complaint, filed this week, is the first by the federal government to target a data mining company for allegedly helping a Medicare Advantage program comply with federal billing regulations in a way that allows the plan to overcharge the treatment of patients.

The lawsuit names Buffalo-based medical records review company DxID and Independent Health Association, which operates two Medicare Advantage plans, as defendants. Betsy Gaffney, founder and CEO of DxID, is also named in the lawsuit. DxID, which closed in August, is owned by Independent Health through another subsidiary.

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The Centers for Medicare & Medicaid Services, or CMS, pays health plans using a complex formula called a “risk score,” which aims to make the rates higher for sicker patients and lower for healthy ones. The data mining company combed through electronic medical records to identify missed diagnoses, pocketing up to 20% of the new revenue it generated for the health plan.

But the DOJ alleges that the DxID exams triggered “tens of millions” of overheads when those missing diagnoses were filled, exaggerating the patients’ degree of illness or including charges for medical conditions the patients did not have.

In an email, Independent Health spokesperson Frank Sava told us: “We are aware of the DOJ complaint filed last night and will continue to vigorously defend ourselves against the allegations. this is an open case, I cannot comment further. “

Gaffney’s lawyer did not respond to requests for comment.

The DOJ complaint expands on a 2012 whistleblower complaint filed by Teresa Ross, a former medical coding manager at Group Health Cooperative in Seattle, one of the nation’s oldest and most prestigious health plans.

Ross alleged that Group Health hired DxID in 2011 to boost revenue. The company submitted more than $ 30 million in new Medicare claims on behalf of Group Health for 2010 and 2011, many of which were invalid, according to Ross.

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For example, she alleged that the plan was billed for “major depression” in a patient described by her doctor as having an “incredibly sunny disposition.” Group Health, now known as the Kaiser Foundation Health Plan of Washington (an independent company of Kaiser Health News or the Kaiser Family Foundation), has denied any wrongdoing. But in November 2020, the insurer installed the case by paying $ 6.3 million.

Now the DOJ is taking the case and targeting DxID for its work on behalf of Group Health and Independent Health. The DOJ alleges that DxID submitted thousands of “unsupported” health status codes on behalf of Independent Health from 2010 to 2017.

“I hope the case sends a message that coding companies that exist only to make money by breaking so many CMS rules will suffer the consequences,” said Max Voldman, an attorney representing Ross.

Timothy Layton, an associate professor of health care policy at Harvard Medical School who has studied Medicare Advantage payment policy, said he had never seen the government take legal action against medical analysis companies. data previously.

“They are often the ones who do the most scraping for [billing] codes, so I wouldn’t be surprised if they received more scrutiny, ”Layton said.

“Trolling the medical records of patients to establish …” new “diagnoses”

In the complaint filed on Monday, the DOJ alleged that Gaffney presented DxID’s revenue generation tools as “too attractive to be left out.”

“There are no upfront charges, we only get paid when you get paid and we are working on a percentage of the actual proven recoveries,” she wrote, according to the complaint.

The 102-page lawsuit describes DxID’s file review process as “fraudulent” and says it “relied on ‘tracking’ patient medical records to establish, in many cases,” new »Diagnostics exclusively based on information from unauthorized sources. “

The complaint cites medical conditions that it said were either exaggerated or not supported by medical records, such as billing for treatment for chronic depression that had been resolved. He also cites allegedly unsubstantiated claims for kidney failure, the most serious form of chronic kidney disease. The lawsuit alleges that Gaffney said these cases “were worth a ton of money at IH [Independent Health] and the majority of people (over 70) have it at some level. “

The complaint states that CMS would have attempted to recover the money paid to the health plan inappropriately had it been made aware of DxID’s tactics and “has now done so through this lawsuit.”

The DOJ seeks treble damages under the False Claims Act lawsuit, as well as an unspecified civil penalty for each violation of the law.

Medicare Advantage, A Fast Growing Private Alternative To Original Medicare, To registered more than 26 million people, according to AHIP, an industry trading group.

Although popular with the elderly, Medicare Advantage has been the target of several governments surveys, Department of Justice and whistleblower lawsuits and health insurance audits. A 2020 report estimated abusive payments to plans exceeded $ 16 billion in the previous year.

At least two dozen whistleblower cases, some dating from 2009, have alleged fraud by Medicare Advantage plans related to manipulating patient risk scores to increase income.

In July, the DOJ consolidated six such cases against Kaiser Permanente health plans ;. in August, Sutter Health, based in California agreed to pay $ 90 million to settle a similar fraud case. Previous settlements totaled over $ 300 million.

Kaiser Santé news is a national and editorial independent newsroom and program of the Kaiser Family Foundation. KHN is not affiliated with Kaiser Permanente.

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