AIDS Healthcare Foundation Agrees to $1.44 Million False Claims Act Settlement

Summary

AIDS Healthcare Foundation (AHF), a Los Angeles, California-based nonprofit organization, 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 unsupported diagnosis codes to increase payments received through the Medicare Advantage program.

The allegations concern payment years 2017 through 2023 and AHF’s Managed Care Division, doing business as Positive Healthcare Partners, which operated Medicare Advantage special needs plans for HIV patients in Florida, Georgia, and California.

The United States alleged that AHF failed to timely investigate and delete diagnosis codes that were inaccurate or not supported by beneficiaries’ medical records. The settlement also resolves a whistleblower lawsuit brought by former AHF risk adjustment coder Donna Irons, who will receive $259,200 from the federal recovery.

Key Details of the AHF False Claims Act Case

How Medicare Advantage Risk Adjustment Payments Work

Under the Medicare Advantage (MA) Program, also known as Medicare Part C, beneficiaries may choose private health plans offered by Medicare Advantage Organizations (MAOs) instead of traditional Medicare.

The Centers for Medicare & Medicaid Services (CMS) pays MAOs a fixed monthly amount for each Medicare beneficiary enrolled in their plans.

CMS adjusts these payments according to risk factors that affect a beneficiary’s expected healthcare expenditures. Generally, MAOs receive higher payments for beneficiaries expected to have greater healthcare costs and lower payments for healthier beneficiaries.

Role of Diagnosis Codes and the HCC Model

CMS uses a health-based risk adjustment model to calculate payment amounts. The Hierarchical Conditions Category (HCC) model considers diagnoses reported by healthcare providers.

Generally:

• More severe diagnoses or conditions associated with higher treatment costs can produce higher risk scores.
• Higher risk scores can result in higher payments to MAOs.
• Diagnosis codes submitted to CMS must be supported by beneficiaries’ medical records.
• Submitted diagnoses must be accurate, complete, and truthful based on the MAO’s best knowledge, information, and belief.

The government emphasized that accurate and adequately documented diagnosis codes are necessary to ensure proper Medicare Advantage payments.

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Allegations Against AIDS Healthcare Foundation

AHF provides care and services to HIV patients in the United States and other countries. Its Managed Care Division, doing business as Positive Healthcare Partners, operated special needs Medicare Advantage plans for beneficiaries with HIV living in Florida, Georgia, and California.

The settlement resolves allegations that, during payment years 2017 to 2023, AHF failed to timely investigate and delete diagnosis codes that were inaccurate or not documented in medical records.

Beginning around 2017, AHF’s risk adjustment coders conducted chart reviews to identify inaccurate or unsupported diagnosis codes that needed to be deleted.

“Delete Research” Spreadsheets

As part of the chart-review process, AHF’s risk adjustment coders maintained spreadsheets called “Delete Research” spreadsheets.

These spreadsheets listed diagnosis codes that the coders identified as potentially lacking support in the medical record and requiring further research.

The United States alleged that:

1. AHF knew it was required to investigate and delete inaccurate or unsupported diagnosis codes within 60 days.
2. AHF failed to timely investigate and delete the identified codes.
3. AHF did not delete most of the inaccurate or unsupported codes listed in the spreadsheets until 2024 or 2025.
4. The deletions occurred well after AHF was on notice that the codes potentially lacked supporting documentation.
5. Many of the codes were deleted only after AHF was notified of the United States’ investigation.

Alleged Unsupported HIV Diagnosis Codes

The United States further alleged that, for payment year 2017, AHF knowingly submitted diagnosis codes for HIV, specifically ICD-10 B20, when the diagnosis was not documented in any medical record for a face-to-face visit.

According to the allegations, this violated CMS requirements that diagnosis code submissions be documented as the result of a face-to-face visit.

The allegations therefore focused not only on the submission of potentially unsupported diagnoses but also on AHF’s alleged failure to remove diagnosis codes after its own risk adjustment process identified potential deficiencies.

Whistleblower Lawsuit and Recovery

The civil settlement also resolves claims brought under the qui tam provisions of the False Claims Act by Donna Irons, a former risk adjustment coder at AHF.

Under the False Claims Act’s qui tam provisions, a private party may file an action on behalf of the United States and receive a portion of the government’s recovery.

The case is captioned:

United States ex rel. AIDS Healthcare Foundation d/b/a Positive Healthcare Partners, Civil Action No. 23-cv-2160 (C.D. Cal.)

As part of the resolution, Donna Irons will receive $259,200 as her share of the federal recovery.

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AHF’s Cooperation and Remediation

AHF received credit under the Department of Justice’s guidelines for its disclosure, cooperation, and remediation in connection with the False Claims Act resolution.

The organization cooperated with the government’s investigation and enhanced its compliance program.

Proactive Remediation

During the Department of Justice’s investigation, AHF also proactively remediated its conduct by submitting deletes for diagnosis codes that, following review of medical records, were determined not to be supported.

The resolution therefore took into account AHF’s cooperation and remediation under Justice Manual § 4-4.112, which addresses cooperation and remediation considerations in False Claims Act resolutions.

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DOJ and HHS-OIG Enforcement Statements

Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division emphasized the importance of accurate and adequately documented diagnosis codes in the Medicare Advantage program.

First Assistant U.S. Attorney Bill Essayli for the Central District of California stated that the government would continue protecting public funds and holding accountable entities that knowingly provide or fail to correct false information resulting in inflated payments.

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) emphasized that Medicare Advantage organizations have a responsibility to ensure the accuracy of diagnosis codes submitted for payment.

The officials’ statements highlighted three central enforcement priorities:

• Protecting federal healthcare program funds.
• Ensuring Medicare Advantage diagnosis codes are accurate and supported.
• Holding organizations accountable when failures inflate federal payments.

Agencies Involved in the Investigation

The resolution resulted from a coordinated effort involving:

• Justice Department Civil Division
• Commercial Litigation Branch
• Fraud Section
• U.S. Attorney’s Office for the Central District of California
• Department of Health and Human Services Office of Inspector General (HHS-OIG)

The coordinated enforcement effort focused on allegations involving Medicare Advantage risk adjustment payments and the accuracy and documentation of diagnosis codes.

To read the original order please visit DOJ (Department of Justice) website.