DOJ Announces $24 Million False Claims Act Settlement with Monogram Health Over Medicare Advantage Upcoding

What this means for your practice

This settlement serves as a critical reminder for all healthcare businesses, including telehealth, medspas, dental practices, and chiropractic offices, about the stringent requirements for accurate diagnosis coding, especially when participating in federal programs like Medicare Advantage. Practices that contract with Medicare Advantage Organizations (MAOs) or participate in risk-sharing arrangements must ensure that all submitted diagnosis codes are clinically accurate, fully supported by comprehensive medical documentation from face-to-face visits, and genuinely reflect care, treatment, or management provided. The DOJ and HHS-OIG are vigilant in scrutinizing billing practices that could inflate risk scores, and the False Claims Act carries substantial penalties for non-compliance. Establishing robust compliance programs and conducting regular internal audits are essential to mitigate the significant financial and reputational risks associated with inaccurate coding and documentation.

Washington, D.C. – The U.S. Department of Justice (DOJ) today announced a significant $24 million settlement with Monogram Health Professional Services PC and Monogram Health Inc. (Monogram Health), a Tennessee-headquartered provider of in-home care services. The settlement resolves allegations that Monogram Health violated the False Claims Act by causing the submission of false diagnosis codes, which led to inflated payments from the Medicare Advantage (MA) program.

The Core of the Allegations: Inflated Risk Scores and False Claims

According to the settlement, Monogram Health was alleged to have knowingly submitted diagnosis codes that were not clinically accurate, lacked support from documentation in beneficiaries’ medical records, or did not require or affect patient care, treatment, or management. These alleged false submissions occurred between January 1, 2021, and December 31, 2023. The specific Hierarchical Conditions Categories (HCCs) implicated in the allegations include:

• HCC 21: Protein-Calorie Malnutrition
• HCC 55: Substance Use Disorder
• HCC 48: Coagulation Defects and Other Specified Hematological Disorders
• HCC 88: Angina Pectoris

The submission of these inaccurate codes allegedly resulted in inflated risk scores for Medicare Advantage beneficiaries, which, in turn, caused the Centers for Medicare & Medicaid Services (CMS) to make higher capitated payments to Medicare Advantage Organizations (MAOs) than would have been paid otherwise.

Understanding the Medicare Advantage Program and Risk Adjustment

The Medicare Advantage (MA) Program, also known as Medicare Part C, allows Medicare beneficiaries to choose private health plans offered by MAOs instead of traditional Medicare. CMS pays these MAOs a fixed monthly amount for each enrolled beneficiary. Crucially, these payments are adjusted based on various “risk” factors that predict expected health expenditures for the beneficiary. The health-based risk adjustment model used by CMS is known as the Hierarchical Conditions Category (HCC) model.

Under the HCC model, CMS generally pays MAOs more for sicker beneficiaries expected to incur higher healthcare costs and less for healthier beneficiaries expected to incur lower costs. The risk scores, and thus the payment amounts, are calculated based on diagnoses reported by healthcare providers. A more severe diagnosis or one requiring more costly treatment typically leads to a higher risk score and consequently higher payments to the MAO.

A foundational requirement for these diagnoses is that they must be supported by the medical record of a face-to-face visit between a patient and a provider. Furthermore, for outpatient visits, the diagnosis must have required or affected patient care, treatment, or management at that specific visit.

Monogram Health's Role and Financial Incentives

Monogram Health provides in-home care and related services to Medicare beneficiaries enrolled in MA Plans through contracts with various MAOs. These contracts often include risk-sharing arrangements, wherein Monogram Health could receive higher payments from the MAOs if the beneficiaries under its care had higher risk scores. This structure created a financial incentive for Monogram Health to submit additional diagnosis codes to increase patients’ risk scores and the corresponding payments received by the MAO from CMS.

Enforcement Officials Emphasize Accountability

Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division underscored the Department’s commitment to safeguarding taxpayer funds. “When companies submit false diagnosis codes, they unlawfully exploit a system built to support vulnerable seniors,” Shumate stated. “This settlement reinforces the Department’s commitment to protecting taxpayer money and ensuring that Medicare Advantage payments are based on accurate information.”

First Assistant U.S. Attorney Bill Essayli for the Central District of California reiterated the DOJ's dedication to taxpayers. “When it comes to how federal money is being spent, taxpayers deserve to know that this Justice Department is looking out for them,” Essayli commented. “My office will continue to work to ensure that money for public health programs is spent how it’s intended, as today’s settlement shows.”

Acting Deputy Inspector General for Investigations Miranda L. Bennett of the Department of Health and Human Services Office of Inspector General (HHS-OIG) also highlighted the broader implications for program integrity. “Health care companies that seek to inflate profits by inaccurately reporting the medical conditions of Medicare Advantage enrollees will be held accountable,” Bennett said. “This settlement underscores HHS-OIG’s commitment to protecting the integrity of taxpayer-funded federal health care programs. Medicare Advantage exists to deliver medically necessary care to beneficiaries, not to serve as a vehicle for improper financial gain.”

Implications for Healthcare Providers

This resolution underscores the federal government’s rigorous oversight of Medicare Advantage programs and its enforcement of the False Claims Act. Healthcare providers participating in MA plans, directly or indirectly through contracts with MAOs, must prioritize accurate and compliant medical record documentation and coding practices. The financial incentives inherent in risk-adjusted payment models necessitate strict internal controls and comprehensive training to ensure that all reported diagnoses accurately reflect the patient’s condition and meet all regulatory requirements for documentation and clinical relevance.

All healthcare entities, regardless of specialty or delivery method, that submit claims to federal healthcare programs should consider this settlement a call to action to review and strengthen their compliance frameworks to prevent similar issues. The penalties for non-compliance with the False Claims Act can be severe, extending beyond financial settlements to potential program exclusions and criminal charges.

Key Facts

| Detail | Value | |---|---| | Settlement Amount | $24 million | | Alleged Conduct | Submitted false diagnosis codes to improperly increase Medicare Advantage payments | | Affected Program | Medicare Advantage (Part C) | | Involved HCCs | HCC 21 (Protein-Calorie Malnutrition), HCC 55 (Substance Use Disorder), HCC 48 (Coagulation Defects and Other Specified Hematological Disorders), HCC 88 (Angina Pectoris) | | Period of Allegations | January 1, 2021 through December 31, 2023 | | Enforcing Agencies | U.S. Department of Justice (DOJ) and Department of Health and Human Services Office of Inspector General (HHS-OIG) |

Frequently Asked Questions

What is the False Claims Act?

The False Claims Act is a federal law that imposes liability on persons and companies who defraud governmental programs. In this case, it applies to submitting false claims to federal healthcare programs like Medicare Advantage.

What is Medicare Advantage (MA)?

Medicare Advantage, also known as Medicare Part C, allows Medicare beneficiaries to opt for private health plans offered by insurance companies (Medicare Advantage Organizations) instead of traditional Medicare. CMS pays these organizations a fixed monthly amount per beneficiary.

What are HCCs and how do they relate to payments?

HCCs (Hierarchical Conditions Categories) are a health-based risk adjustment model used by CMS. They take into account diagnoses reported by healthcare providers to adjust monthly payments to MAOs. Sicker beneficiaries with higher risk scores generally result in higher payments to the MAO.

What was Monogram Health accused of doing wrong?

Monogram Health was accused of knowingly submitting diagnosis codes for specific HCCs (including Protein-Calorie Malnutrition, Substance Use Disorder, Coagulation Defects, and Angina Pectoris) that were not clinically accurate, lacked proper medical record documentation, or did not impact patient care or treatment, thereby inflating beneficiary risk scores and MAO payments.

What does this mean for my practice, especially if I provide telehealth services?

This settlement emphasizes that all healthcare providers, including telehealth, must ensure diagnosis codes submitted for federal programs like Medicare Advantage are clinically accurate, fully supported by medical records from face-to-face visits, and relevant to the patient's care. False or unsupported coding can lead to significant False Claims Act violations and penalties.

Source: justice.gov — Monogram Health Settles False Claims Act Allegations for $24 Million