Health Insurance Provider and CEO Agree to Pay Massive Settlement
Fraudulent activity charges brought against a health insurance organization in western New York and the CEO of its medical analytics division will be settled with a combined payout of up to $100 million. The massive settlement will resolve the Justice Department’s accusations of fake medical claims, including the overstatement or non-existence of certain health conditions.
Who Will Pay What – The Breakdown
The Independent Health Association of Buffalo and Betsy Gaffney, CEO of the medical records firm DxID, have both agreed to make payments. The health organization, which runs two Medicare Advantage plans, will shoulder most of the cost, agreeing to pay up to $98 million. Gaffney has agreed to cough up $2 million, according to the agreed settlement. It is noteworthy to mention that neither party has admitted any wrongdoing.
The Severity of the Matter in Government’s Eyes
Michael Granston, a deputy assistant attorney general for the DOJ, announced the settlement on Dec. 20. He emphasized that this outcome sends a stern warning to the Medicare Advantage community, making it clear that inflated claims for reimbursement will not be tolerated.
Independent Health’s Reaction
Independent Health provided assurance that the settlement is not an acknowledgement of guilt. The organization views it as a means to avoid further disruption, expense, and uncertainty related to ongoing litigation. The case in question has been ongoing for over a decade.
The Payment Plan
Independent Health has agreed to make “guaranteed payments” of $34.5 million in installments from 2024 through 2028. If the health plan’s financial performance wavers, it would affect whether they have to pay the maximum settlement amount.
Reviewing a Historic Settlement
Michael Ronickher, attorney for whistleblower Teresa Ross, applauded the settlement as historic. Notably, it represents the highest amount ever levied against a health plan based on a whistleblower’s fraud allegations. The charges also included accusing a data mining firm of aiding a health plan in overcharging, a first for the industry.
Allegations of Billing Fraud on the Rise
This case is not an isolated incident. There have been several whistleblower actions of late alleging billing fraud by a Medicare Advantage insurer. As these private health plans expand to cover over half of all eligible people for Medicare, the issue is likely to become more prominent.
Tackling Fraud on a Broader Scale
The growth of Medicare Advantage has resulted in difficulties in preventing fraudulent billing, particularly with health organizations potentially over-emphasizing the severity of patients’ conditions to boost their revenues.
Ross, who used to be a medical coding professional, has helped the government claw back hundreds of millions through her efforts to expose these coding abuses. Ross is set to receive $8.2 million for her role in this case, according to the Justice Department.
The Role of Data Mining Firms
To fight this fraud, the Civil Complaint filed by the DOJ in September 2021 targeted not only the health insurance provider but also a data analytics venture — and its top executive. Betsy Gaffney and her firm, DxID, allegedly exploited electronic medical records to generate fraudulent payments.
What Happens Next?
Today’s settlement sends a profound message to health insurers and data analytics firms that their actions have severe consequences. The fight against fraud in Medicare Advantage plans is far from over, and this settlement marks one of the first victories for those fighting for transparency and fairness in healthcare.