United States Announces $36.5 Million Settlement Of Medicare Fraud Lawsuit Against Matrix Medical Network

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of Inspector General ("HHS-OIG"), Naomi Gruchacz, announced that the United States has settled a civil healthcare fraud lawsuit against COMMUNITY CARE HEALTH NETWORK, LLC, D/B/A MATRIX MEDICAL NETWORK ("MATRIX"), a health services company headquartered in Nashville, Tennessee, that contracts with Medicare Advantage Organizations ("MAOs") to perform in-home health assessments of Medicare patients. The settlement resolves claims that MATRIX violated the False Claim Act by causing the MAOs to submit to the Government false and invalid patient diagnoses for certain chronic conditions, thereby artificially inflating the Medicare payments the MAOs received for providing insurance coverage to patients enrolled in their plans. The Government alleges that MATRIX focused on reporting diagnoses that could lead to higher payments for its client MAOs, instead of ensuring that all of its diagnoses were appropriate and well-supported.

Under the settlement, which was approved by U.S. District Judge Andrew L. Carter, MATRIX will pay the United States a total sum of $36.5 million. MATRIX made extensive factual admissions in the settlement regarding its conduct, including that in numerous instances MATRIX reported certain conditions where its health assessment forms did not contain sufficient clinical information to support the diagnosis. In connection with the settlement, MATRIX also entered into a five-year Corporate Integrity Agreement ("CIA") with HHS-OIG. The CIA requires MATRIX to implement numerous accountability and auditing measures. In particular, MATRIX must conduct annual risk assessments and other monitoring, and an independent review organization will conduct compliance reviews focused on MATRIX's systems, processes, and procedures relating to MATRIX's risk adjustment activities and MATRIX's services provided to Medicare Advantage plan enrollees.

"For years, Matrix generated false and invalid diagnoses for patients enrolled in Medicare Advantage plans that were later reported to the Government," said U.S. Attorney Jay Clayton. "Matrix advertised its ability to identify new diagnosis codes that would boost Medicare Advantage insurers' payments, and it delivered on that promise by reporting lucrative diagnoses that frequently fell well short of meeting recognized clinical criteria. Matrix did so to generate business for itself, at the expense of the public fisc. New Yorkers hate fraud that drains public funds. Why? Because New Yorkers are smart and they know fraud involving taxpayer-funded programs costs all New Yorkers. This Office is proud to join with the rest of the Department, including the National Fraud Enforcement Division, to hold perpetrators of fraud accountable in Medicare and other contexts."

"Matrix manipulated Medicare managed care's reimbursement structure for financial gain," said HHS-OIG Special Agent in Charge Naomi Gruchacz. "By generating unsupported and clinically invalid diagnoses, Matrix undermined the integrity of federal health care programs and put profits above patients. This settlement demonstrates our unwavering commitment to holding entities accountable when they inflate Medicare payments through improper practices and fail to uphold the standards beneficiaries deserve."

The Medicare Advantage program, also known as Medicare Part C, allows Medicare beneficiaries to opt out of traditional Medicare and enroll in health plans that are administered by private insurance companies known as MAOs. The MAOs contract with the Centers for Medicare and Medicaid Services ("CMS") to provide traditional Medicare coverage to beneficiaries enrolled in their plans in exchange for capitated payments. CMS adjusts these capitated payments based on the health status of each beneficiary as determined through diagnoses submitted by the MAOs. Specifically, CMS uses these diagnoses, along with demographic factors, to calculate a Risk Adjustment Factor ("RAF") score for each member and, in turn, the amount of the monthly payment it will pay the MAO for covering that member, pursuant to the Hierarchical Condition Category ("HCC") model. In general, CMS pays insurers more for sicker beneficiaries 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.

As alleged in the Government's Complaint:

MATRIX contracts with MAOs to conduct health assessments of Medicare Advantage plan members in their homes. Based on these in-home assessments, MATRIX provides diagnosis codes to the MAOs for ultimate submission to CMS as part of the MAOs' risk adjustment data. The MAOs paid MATRIX a fee, generally in the range of $350 to $450, for each assessment. CMS relies on this risk adjustment data, including the medical diagnosis codes, to determine the payments paid to the MAOs for each beneficiary. As a "first-tier entity" that contracts with MAOs, MATRIX is required to certify the accuracy and truthfulness of the data it generates relating to claims for payment submitted by MAOs.

During the period from 2014 to 2019, MATRIX knowingly 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 (the "Invalid Diagnoses"). MATRIX reported the Invalid Diagnoses to MAOs based on its in-home assessments even though: (a) there was not sufficient information to support the diagnoses; (b) the diagnoses did not conform with the guidelines for coding and reporting diagnoses as required by CMS; and (c) 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.

MATRIX's home visit program was designed in large part to identify additional diagnosis codes that could be reported to CMS to increase patient risk scores, and therefore the capitated payments that the MAOs received for their plan members. MATRIX regularly recorded Invalid Diagnoses for complex conditions without performing the testing, imaging, or other diagnostic clinical steps necessary to establish those diagnoses. The purpose of the home visits was not to treat patients' medical conditions; indeed, MATRIX did not provide medical treatment or prescribe medications as part of the home visits. Nor did it refer the patients to specialists for follow-up care, other than generalized suggestions that the patient follow up with their doctors.

MATRIX marketed its services to MAOs in part by representing that the in-home assessments would allow MAOs to capture diagnoses for use in the risk adjustment process that had not been reported by the plan members' other providers. In marketing and other materials provided to MAOs, MATRIX advertised its ability to find and document diagnoses that were not otherwise reported by a patient's primary care physicians and would therefore increase a patient's risk adjustment score and the MAOs' payments. For example, Matrix advertised its ability to secure HCC "Lift," meaning to make diagnoses that resulted in higher HCC disease scores and, thus, higher risk adjustment payments. MATRIX also advertised and calculated the "increase in RAF score" from MATRIX's assessments and estimated the amount by which the diagnoses MATRIX identified increased the risk adjustment payments received by the MAOs.

MATRIX's in-home assessments were typically conducted by nurse practitioners. Based on the visit, the nurse practitioner completed an electronic, check-the-box form concerning the individual's reported medical history and the results of a basic physical assessment. MATRIX's coding teams later reviewed the assessment forms and diagnoses listed and identified the applicable diagnosis codes to be sent to the MAOs for ultimate submission to CMS as part of their risk adjustment data. Additionally, after the visits, MATRIX's "Quality Improvement" staff reviewed the diagnoses entered to assess whether the nurse practitioner had any "missed" diagnoses, which they then urged the nurse practitioner to add. At times, MATRIX even added diagnoses without the nurse practitioner's signoff.

The Invalid Diagnoses generated by the MATRIX home visits did not conform to the International Classification of Diseases ("ICD") Official Guidelines for Coding and Reporting (the "ICD Guidelines"), as required by applicable federal regulations. The diagnoses did not affect patient care, treatment, or management during the home visit, as required under the ICD Guidelines, and thus were ineligible for risk adjustment. In addition, the Invalid Diagnoses were not supported by the minimal information recorded on the MATRIX assessment forms, in violation of the ICD Guidelines' medical record documentation requirement.

Through the operation of its home assessment program, MATRIX reported codes for thousands of Invalid Diagnoses to MAOs, which in turn submitted those codes to CMS. Based on these unlawful false claims, the MAOs improperly received millions of dollars in risk adjustment payments from CMS, in violation of the False Claims Act.

As part of the settlement, MATRIX admitted and accepted responsibility for certain conduct alleged by the Government including the following:

• MATRIX contracted with over 30 MAOs to conduct health assessments of Medicare Part C plan members in their homes.
• The in-home assessments were typically performed by nurse practitioners, who collected health histories and medication information, conducted physical exams, and documented diagnostic information on electronic health assessment forms. The nurse practitioners did not provide clinical medical treatment to the plan members or prescribe medications.
• Certain contracts with MAOs required MATRIX to, among other things, assist the MAO in "capturing Member diagnoses for use in [MAO's] risk adjustment process" and report on the MAO's "ROI," or return on investment. MATRIX calculated an MAO's ROI based, in part, on the estimated increase in Medicare Part C reimbursements received by the MAO that was attributable to risk score increases resulting from Matrix assessments.
• MATRIX's in-home assessments resulted in diagnoses of plan members, and the submission to CMS of resulting risk-adjusting diagnosis codes, that frequently had not been reported by any other healthcare provider who treated the plan member during the year in which the home visit occurred or during the two years before and after the calendar year in which the home visit occurred.
• In numerous instances, MATRIX reported the following conditions to MAOs where the health assessment forms did not contain sufficient clinical information to support the diagnosis: proliferative diabetic retinopathy; drug-induced polyneuropathy; rheumatoid polyneuropathy; atrial fibrillation; rheumatoid arthritis; chronic obstructive pulmonary disease; and simple chronic bronchitis. The MAOs in turn frequently submitted the diagnosis codes corresponding to those conditions to CMS for risk adjustment purposes, which often resulted in the MAOs receiving higher Medicare Part C reimbursements.

In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act.

In a separate settlement announced today by the Civil Division of the Department of Justice and the United States Attorney's Office for the Eastern District of Texas, DPN USA d/b/a HealthFair ("HealthFair"), a company acquired by MATRIX in 2018 that performed health assessments on mobile health care buses, and HealthFair's prior owner Shahriah "James" Ekbatani, are agreeing to resolve separate allegations that HealthFair knowingly reported certain diagnoses to MAOs that were unsupported, unsubstantiated, and/or invalid on the basis of these mobile assessments.

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Mr. Clayton thanked HHS-OIG for its assistance with this case.

This case is being handled by the Civil Frauds Unit within the U.S. Attorney's Office for the Southern District of New York. Assistant U.S. Attorneys Rachael Doud and Ilan Stein are in charge of the case.