Government’s Crackdown on Risk Adjustment Fraud Continues

The DOJ Sept. 13 filing of a complaint in intervention in a case against Buffalo-based Independent Health (IH) and its coding consultant subsidiary, DxID is the latest example.

This summer, the U.S. Department of Justice’s (DOJ’s) enforcement in the Medicare Advantage (MA) program heated up and reached a tipping point with DOJ’s intervention in and consolidation of six whistleblower cases against Kaiser Permanente alleging risk adjustment fraud; the United States’ victory in UnitedHealthcare Ins. Co. v. Becerra, an influential case at the D.C. Circuit Court of Appeals challenging a rule that required MA organizations to return known overpayments; and Sutter Health’s agreement to a $90 million settlement in yet another MA risk adjustment fraud case.  

Now, for the third month in a row, yet another MA risk adjustment fraud case has advanced, with the government’s Sept. 13 filing of a complaint in intervention in a case against Buffalo-based  Independent Health (IH), its coding consultant subsidiary, DxID, and DxID’s former CEO, Betsy Gaffney.  Constantine Cannon whistleblower client Teresa Ross first filed the qui tam action in 2012 under the False Claims Act, which permits private parties to sue on behalf of the government for false claims and receive a share of up to 30 percent of the government recovery.

In one of the first times the federal government has targeted a coding company in its risk adjustment litigation, the government alleges that IH knowingly submitted false diagnoses to increase risk adjustment payments it received under the Medicare Advantage program – and that DxID, a coding company IH founded and then hired to conduct retrospective chart review and addenda services, mined charts for upcoding opportunities that could fraudulently increase Medicare payments. DxID, which also provided these services to other MA organizations (MAOs), billed the MAOs on a contingent basis, under which DxID would receive up to 20 percent of marginal payments the MAOs received as a result of DxID’s coding work, thereby creating perverse incentives for DxID to add new risk-adjusted diagnoses and ignore improper ones that, if corrected, would decrease Medicare payments. 

The United States further alleges that DxID, led by Ms. Gaffney, coded conditions that were not documented in the patients’ medical record, as required by Centers for Medicare & Medicaid Services (CMS) rules, and asked healthcare providers to sign addenda forms up to a year after an encounter, going back into files long after physician visits to add diagnosis codes to patient medical records that were based not on a physician’s assessment, but rather on impermissible laboratory tests, durable medical equipment claims, or diagnostic testing. IH then used the addenda, the complaint alleges, as substantiation for adding risk-adjusting diagnoses that were not documented during the patient encounter, in violation of Medicare requirements.

According to the DOJ complaint, such actions sometimes led to absurd results, citing cases in which a visit to the ophthalmologist resulted in a coding of pancreatitis. Characterizing the scope of the harm, the government alleges that DxID submitted thousands of unsupported medical condition codes on behalf of Independent Health between 2010 and 2017, resulting in “tens of millions” of dollars in overcharges. 

Next up in the case is an expected motion to dismiss, due to be filed by the defendants in mid-November. We will keep readers up to date on this case and other important developments in the government’s crackdown on risk adjustment fraud in the Medicare Advantage program.

Facebook
Twitter
LinkedIn

Mary Inman, Esq.

Mary Inman is a partner and co-founder of Whistleblower Partners LLP, a law firm dedicated to representing whistleblowers under the various U.S. whistleblower reward programs. Mary and her colleagues have pioneered a series of successful whistleblower cases against prominent health insurers, hospitals, provider groups, and vendors under the False Claims Act alleging manipulation of the risk scores of Medicare Advantage patients. Mary is a recognized expert and frequent author, commentator, and speaker on frauds in the healthcare industry, particularly those exposed by whistleblowers. Mary is a member of the RACmonitor editorial board and a popular panelist on Monitor Monday.

Related Stories

Abe Sutton and MA Reform

Abe Sutton and MA Reform

From think tanks to federal agencies, health policy in the U.S. is often shaped by voices we don’t always see in the headlines. Abe Sutton,

Read More

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

2026 IPPS Masterclass 3: Master MS-DRG Shifts and NTAPs

2026 IPPS Masterclass Day 3: MS-DRG Shifts and NTAPs

This third session in our 2026 IPPS Masterclass will feature a review of FY26 changes to the MS-DRG methodology and new technology add-on payments (NTAPs), presented by nationally recognized ICD-10 coding expert Christine Geiger, MA, RHIA, CCS, CRC, with bonus insights and analysis from Dr. James Kennedy.

August 14, 2025
2026 IPPS Masterclass Day 2: Master ICD-10-PCS Changes

2026 IPPS Masterclass Day 2: Master ICD-10-PCS Changes

This second session in our 2026 IPPS Masterclass will feature a review the FY26 changes to ICD-10-PCS codes. This information will be presented by nationally recognized ICD-10 coding expert Christine Geiger, MA, RHIA, CCS, CRC, with bonus insights and analysis from Dr. James Kennedy.

August 13, 2025
2026 IPPS Masterclass 1: Master ICD-10-CM Changes

2026 IPPS Masterclass Day 1: Master ICD-10-CM Changes

This first session in our 2026 IPPS Masterclass will feature an in-depth explanation of FY26 changes to ICD-10-CM codes and guidelines, CCs/MCCs, and revisions to the MCE, presented by presented by nationally recognized ICD-10 coding expert Christine Geiger, MA, RHIA, CCS, CRC, with bonus insights and analysis from Dr. James Kennedy.

August 12, 2025

Trending News

Featured Webcasts

The Two-Midnight Rule: New Challenges, Proven Strategies

The Two-Midnight Rule: New Challenges, Proven Strategies

RACmonitor is proud to welcome back Dr. Ronald Hirsch, one of his most requested webcasts. In this highly anticipated session, Dr. Hirsch will break down the complex Two Midnight Rule Medicare regulations, translating them into clear, actionable guidance. He’ll walk you through the basics of the rule, offer expert interpretation, and apply the rule to real-world clinical scenarios—so you leave with greater clarity, confidence, and the tools to ensure compliance.

June 19, 2025
Open Door Forum Webcast Series

Open Door Forum Webcast Series

Bring your questions and join the conversation during this open forum series, live every Wednesday at 10 a.m. EST from June 11–July 30. Hosted by Chuck Buck, these fast-paced 30-minute sessions connect you directly with top healthcare experts tackling today’s most urgent compliance and policy issues.

June 11, 2025
Open Door Forum: The Changing Face of Addiction: Coding, Compliance & Care

Open Door Forum: The Changing Face of Addiction: Coding, Compliance & Care

Substance abuse is everywhere. It’s a complicated diagnosis with wide-ranging implications well beyond acute care. The face of addiction continues to change so it’s important to remember not just the addict but the spectrum of extended victims and the other social determinants and legal ramifications. Join John K. Hall, MD, JD, MBA, FCLM, FRCPC, for a critical Q&A on navigating substance abuse in 2025.  Register today and be a part of the conversation!

July 16, 2025

Trending News

Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →

CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24