The AIDS Healthcare Foundation has agreed to pay $1.44 million to resolve allegations that it violated the False Claims Act by submitting or failing to delete false or invalid diagnosis codes in order to increase payments it received from the Medicare Advantage program, the Justice Department announced.
AHF is a non-profit organization based in Los Angeles, California. Its Managed Care Division, doing business as Positive Healthcare Partners, operated special needs Medicare Advantage plans for Medicare beneficiaries who have HIV and lived in Florida, Georgia, or California.
Under the Medicare Advantage program, also known as Medicare Part C, beneficiaries may opt out of traditional Medicare and enroll in private health plans offered by insurance companies known as Medicare Advantage Organizations. The Centers for Medicare & Medicaid Services pays MAOs a fixed monthly amount for each Medicare beneficiary enrolled in their plans, adjusted for various “risk” factors that affect expected health expenditures.
In general, CMS pays MAOs more for sicker beneficiaries expected to incur higher healthcare costs and less for healthier beneficiaries expected to incur lower costs. The agency uses a health-based risk adjustment model — the Hierarchical Conditions Category model — that takes into account diagnoses reported by healthcare providers. The more severe the diagnosis or costly the associated treatment, the higher the risk score and the higher the corresponding payments to the MAO.
Diagnosis codes submitted to CMS must be supported by beneficiaries’ medical records and be accurate, complete, and truthful, based on the best knowledge, information, and belief of the MAO making the submission.
The settlement resolves allegations that, for payment years 2017 to 2023, AHF failed to timely investigate and delete diagnosis codes that were either inaccurate or not documented in medical records.
Beginning in around 2017, AHF’s risk adjustment coders conducted chart reviews to identify inaccurate or unsupported diagnosis codes for deletion. As part of this process, the coders maintained “Delete Research” spreadsheets, which listed diagnosis codes they identified as potentially lacking support in the medical record but needing further research.
Although AHF knew it was required to investigate and delete inaccurate and unsupported diagnosis codes within 60 days, AHF failed to timely investigate and delete the codes. AHF did not delete most of the inaccurate or unsupported diagnosis codes in the “Delete Research” spreadsheets until 2024 or 2025 — well after AHF was on notice that the codes potentially lacked support and only after being notified of the United States’ investigation.
The United States further alleges that, for payment year 2017, AHF knowingly submitted diagnosis codes for HIV (ICD-10 B20) where the diagnosis was not documented in any medical record for a face-to-face visit, in violation of CMS requirements that all diagnosis code submissions must be documented as a result of a face-to-face visit.
“The government relies on Medicare Advantage participants to submit accurate, substantiated diagnosis codes that are adequately documented in a medical record to ensure proper payment,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Justice Department will continue to protect the public fisc and hold accountable those who receive inflated payments by knowingly providing or failing to correct false information.”
“The integrity of our federal healthcare programs, including Medicare Advantage, must be preserved,” said First Assistant U.S. Attorney Bill Essayli for the Central District of California. “We will not tolerate companies undermining the interests of Medicare patients for financial gain.”
“Medicare Advantage organizations have a responsibility to ensure the accuracy of diagnosis codes they submit for payment. When entities fail to correct information they know is wrong, they undermine the integrity of a program millions of seniors rely on,” said Acting Deputy Inspector General for Investigations Miranda L. Bennett of the U.S. Department of Health and Human Services Office of Inspector General. “HHS-OIG will continue to safeguard taxpayer funds by holding organizations accountable when their failures inflate federal payments and compromise program trust.”
The civil settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by Donna Irons, a former risk adjustment coder at AHF. Under the qui tam provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The case is captioned United States ex rel. Irons v. AIDS Healthcare Foundation d/b/a Positive Healthcare Partners, Civil Action No. 23-cv-2160 (C.D. Cal.). Irons will receive $259,200 as her share of the federal recovery.
AHF received credit under the Department of Justice’s guidelines for taking disclosure, cooperation, and remediation into account in False Claims Act resolutions. In addition to cooperating in the government’s investigation and enhancing its compliance program, AHF proactively remediated its conduct during the course of the department’s investigation by submitting deletes for diagnosis codes that, based on review of medical records, were not supported.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
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