Community Care Health Network LLC, doing business as Matrix Medical Network, DPN USA, doing business as HealthFair, and Shahriah ‘James’ Ekbatani have agreed to pay a total of $56.5 million to resolve allegations that they violated the False Claims Act by causing the submission of false or invalid diagnosis codes to the Medicare Advantage programme.

Matrix will pay $36.5 million to resolve claims in a qui tam action filed in the Southern District of New York. HealthFair, which was acquired by Matrix, will pay $5 million, and Mr Ekbatani will pay $15 million to resolve claims in a qui tam action filed in the Eastern District of Texas.

The Medicare Advantage programme, also known as Medicare Part C, allows Medicare beneficiaries to opt out of traditional Medicare and enrol in health plans administered by private insurance companies known as Medicare Advantage Organisations.

The MAOs contract with the Centres for Medicare and Medicaid Services to provide traditional Medicare coverage to beneficiaries enrolled in their plans in exchange for capitated payments. CMS adjusts these capitated payments based on each beneficiary’s health status, as determined by diagnoses submitted by the MAOs.

In general, CMS pays more for sicker beneficiaries, who are likely to incur higher healthcare expenses, and less for healthier beneficiaries. Diagnosis codes submitted to CMS must be supported by the beneficiaries’ medical records and be accurate, complete, and truthful, based on the best knowledge, information, and belief of the MAO making the submission.

Matrix, headquartered in Nashville, Tennessee, is a health services company that contracts with MAOs to provide in-home assessments to MA plan beneficiaries. HealthFair, a company founded and managed by Mr Ekbatani, operated mobile health care buses staffed by nurse practitioners and medical technicians, and equipped with specific medical equipment.

It contracted with MAOs in several states to provide health assessments to MA plan beneficiaries on HealthFair buses. Matrix acquired HealthFair in 2018 and shut down its operations by 2020.

The United States alleged that during the period from 2014 to 2019, Matrix caused MAOs to submit false and invalid diagnoses of the following chronic medical conditions to CMS for risk adjustment purposes: proliferative diabetic retinopathy, drug-induced polyneuropathy, rheumatoid polyneuropathy, atrial fibrillation, rheumatoid arthritis, chronic obstructive pulmonary disease, and simple chronic bronchitis.

Matrix reported the invalid diagnoses to MAOs based on its in-home assessments even though there was not sufficient information to support the diagnoses; the diagnoses did not conform with the guidelines for coding and reporting diagnoses as required by CMS; and the conditions were frequently not diagnosed by any other healthcare provider who saw the beneficiary during the year in which the home visit occurred or in the preceding two years or subsequent two years.

As a result of the reporting of these Invalid Diagnoses, the MAOs obtained inflated risk adjustment payments from CMS to which they were not entitled.

As to HealthFair and Mr Ekbatani, the U.S. contended that HealthFair knowingly reported certain diagnoses to MAOs that were unsupported, unsubstantiated, and/or invalid.

Specifically, from 2015 to 2017, HealthFair providers made certain diagnoses (including but not limited to HIV/AIDS, metastatic cancer, and Myasthenia Gravis) without documentation establishing or confirming the existence of the condition; made certain diagnoses (including but not limited to morbid obesity, rheumatoid arthritis, coagulation defect, drug dependence, major depressive disorder, and chronic obstructive pulmonary disease) solely based on patient attestation, claims history, past medical history, or medication; diagnosed congestive heart failure and heart arrhythmia despite contradiction by electrocardiogram and echocardiogram results; and diagnosed thrombophilia solely based on separate diagnoses of atrial fibrillation.

HealthFair, which acted at Mr Ekbatani’s direction, submitted the diagnoses to its MAO customers, and the MAOs often submitted them to CMS for risk-adjusted payments.