Is Coding Based on Addendums or Late Entries Putting You At Risk of Audit Failure?

by  Aimee Wilcox, CPMA, CCS-P, CST, MA, MT
September 30th, 2021

Independent Health began in 1980 as a not-for-profit organization located in Buffalo, NY providing health insurance and a range of related products, including Medicare Advantage plans, to over 380,000 members. Their Star Rating in 2021 was 4.5 and they were recognized by the U.S. News and World Report as the 2021 Best Medicare Advantage plan in New York. With these sterling credentials, how do they find themselves named in a Department of Justice (DOJ) False Claims Act (FCA) lawsuit for submitting unsupported diagnoses to the Medicare Advantage Program?

We have seen other FCA cases pursued by the DOJ against other Medicare Advantage Organizations (MAOs) such as Kaiser, United Healthcare, and Sutter Health, bringing acute awareness to a serious problem with the way that MAOs interpret the risk adjustment coding guidelines which results in padded risk scores and incorrect reimbursement. 

On Tuesday, September 14, 2021, the DOJ announced its intent to join the suit against Independent Health, DxID, LLC, and Betsy Gaffney, the former CEO of DxID. DxID is a subsidiary of Independent Health founded as a coding consulting company and used to identify risk-adjustable diagnoses for reporting purposes. DxID has all been identified as performing similar services retrospectively for other MAOs like Group Health Cooperative (GHC).

The DOJ alleges that Independent Health contracted with DxID to perform retrospective medical chart reviews in order to identify risk-adjustable diagnoses that could increase the beneficiary's risk score and result in increased MA reimbursements., DxID was to be paid at a rate of 20% of the marginal increase in MA reimbursements received based on their coding work. DxID reviewed beneficiary medical records, retrospectively up to a year, and requested providers provide an addendum to the medical records where the additional diagnoses had been identified. Once the addenda was completed, the data was forwarded to the payer who proceeded to report the additional diagnoses based on the provider addenda and receive additional reimbursement for them. Independent Health was aware of the process and chose not to self-report or return the payments received.

So what is wrong with this scenario?

While payers have the ability to review medical records to identify and report all supported diagnoses, there are rules that must be followed. Dismissing these rules for the purpose of increasing reimbursement from a federal payer is considered fraud and is subject to review and can result in heavy fines or worse. One such rule on medical record amendments, taken from the Contract-Leel RADV Medical Record Reviewer Guidance (page 60), states: 

"Acceptable Amendment: An amendment must be based on an observation of the patient on the date of service and signed by the physician. Only the attending or treating physician can amend the medical record. The most common example is for follow-up notes based on a diagnostic test ordered and related test results received subsequent to the patient visit. Sufficient information must be contained in the amendment to verify the documentation was completed in a timely manner by the attending or treating physician. For RADV "timely manner" generally means up to 90 days from the encounter but there could be exceptions such as extended specialized or revised lab/path results or autopsies, legal cases sequestered before completing record, natural disasters, or delays due to physicians called to military service.

Unacceptable Amendment – It is unacceptable for a third party that was not involved in the treatment and evaluation of the patient (e.g., coder, reviewer) to amend the medical record or query the provider for additional diagnoses or clarifications not documented in the original medical record."

Because this case was initiated as a qui tam (whistleblower) lawsuit, the whistleblower, a former employee of Group Health Cooperative (GHC), another MAO who used DxID's chart review services, will be eligible to share in a percentage of the monies recovered. Qui tam lawsuits are on the rise and we have seen a number of these suits joined by the DOJ, as the evidence of payers not adhering to the rules is almost blatantly obvious. It is definitely interesting to see payers disregard the very same types of coding and reporting policies they demand their own contracted providers adhere to. 


Is Coding Based on Addendums or Late Entries Putting You At Risk of Audit Failure?. (2021, September 30). Find-A-Code Articles. Retrieved from

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