“Everyone Over 70 Has Kidney Failure”: How Independent Health’s Risk Adjustment Scheme Went Off the Rails
- Jessica Zeff
- 2 days ago
- 4 min read
It was one of those cases you read through once and then have to go back and read again—just to make sure you’re not imagining it.
Yes, a Medicare Advantage plan executive really suggested that.Yes, the same health plan paid out nearly $100 million to resolve the allegations.And yes, it all came to light because a single whistleblower couldn’t stay silent.
Let’s get into it.
The Backstory: One Whistleblower, One Lawsuit, One Domino Effect
Teresa Ross, a former employee of Independent Health, filed a qui tam lawsuit under the False Claims Act. What she uncovered was staggering—and ultimately led to a $17 million settlement to resolve liability and another $81 million returned to the Medicare program. This wasn’t just a blip of coding confusion. This was systemic.
Independent Health, a New York-based Medicare Advantage Organization, had created a subsidiary called DxID. The ostensible purpose? Conduct chart reviews to improve risk adjustment documentation. The actual result? Fraud.
The "Everyone Has Kidney Failure" Philosophy
One of the most jaw-dropping moments in the complaint came when a DxID executive (with no clinical training) claimed that everyone over 70 has kidney failure, using that justification to code all elderly patients with CKD—even without evaluation or clinical support.
No labs. No clinical assessment. Just a blanket assumption that aging equals disease.
Using this logic, DxID went on to code beneficiaries for CKD using only lab values. No chart confirmation, no evaluation by a provider, no context.
An Addendum by Any Other Name…
And then there’s the abuse of the provider addendum process. Independent Health and DxID paid providers $25 to sign diagnostic addenda forms. But these weren't real corrections or clarifications. Providers weren’t asked to review the chart. They were just asked to attest—sometimes to conditions that weren’t even present.
As one former manager at DxID explained to Ross:
“If a [provider] won’t sign the form, we use a different form to tell the same lie.”
That quote alone encapsulates how distorted things became.
From Mock Audits to Ignored Red Flags
In a moment that would make any compliance officer’s heart stop, Independent Health actually conducted a mock RADV audit—and still ignored the results.
The audit revealed widespread issues with unsupported diagnoses, use of impermissible sources (more on that in a second), and indications that many risk scores were inflated. Instead of implementing corrective action, leadership dismissed it. Full stop.
Problem Lists, Past History, and a Coding Manual That Should Never Have Existed
One of the most troubling elements of this case was DxID’s internal coding manual. According to the complaint, coders were trained to pull diagnoses from sources CMS explicitly forbids—problem lists, diagnostic test reports, historical notations, and lab values.
“The manual instructed coders to extract diagnoses for risk adjustment from problem lists, past medical history, radiology reports, and labs—even if the condition wasn’t treated or evaluated during the visit.”
This was not ignorance. It was instruction. Documented. Institutionalized.
When Compliance is an Afterthought—and Ethics Are Optional
Even when providers hesitated to sign suspicious forms or questioned the validity of the diagnoses, Independent Health and DxID didn’t pull back. They doubled down.
They closed down their first chart review vendor and… opened a second one. With the same leadership. Using the same flawed processes.
Despite widespread concern internally, there was no effective due diligence on vendor operations. DxID staff had no clinical qualifications and no formal training in coding or risk adjustment. And no one—not the compliance team, not the board, not CMS—put the brakes on.
So What Can We Learn?
This case is a masterclass in how not to run a risk adjustment program. But it’s also a wake-up call to every compliance officer in Medicare Advantage. Ask yourself:
Do I know what sources our coders are using for HCCs?
Are our vendors clinically qualified and fully vetted?
Do we pay providers for documentation—and if so, how do we ensure it’s legitimate?
Have we ever ignored audit results that raised uncomfortable truths?
Because what happened at Independent Health didn’t happen in a vacuum. It happened in boardrooms and cubicles where people convinced themselves that coding was just a numbers game. That more HCCs meant better documentation. That older adults must probably have chronic diseases, so why not code them?
This wasn’t just a fraud case. It was a story of what happens when ethical boundaries are erased by profit motives.
A Final Word on Whistleblowers
Ms. Ross saw what was happening and refused to stay quiet. Thanks to her, a nearly $100 million restitution was secured for Medicare—and one of the more elaborate risk adjustment fraud schemes in recent history was brought to light.
She’s a powerful reminder of why qui tam provisions matter. And why compliance professionals must remain vigilant—not just for what’s documented in audits, but for what’s whispered in hallways and buried in coding manuals.
Let’s hope we’re all listening.
For more detailed information about the case, see
United States ex rel. Ross v. Independent Health Association et al., No. 12-CV-0299(S) (W.D.N.Y.).