Independence Blue Cross to pay $22.5 million to settle Medicare Advantage fraud claims

Independence Blue Cross (IBX) has agreed to pay $22.5 million to resolve allegations that it violated the False Claims Act by failing to withdraw inaccurate diagnosis codes for its Medicare Advantage enrollees and improperly retaining Medicare overpayments, the Justice Department announced.

Under Medicare Advantage, also known as Medicare Part C, beneficiaries can leave traditional Medicare and enroll in private plans offered by insurers. The Centers for Medicare & Medicaid Services (CMS) pays those insurers a fixed monthly amount adjusted for risk, generally paying more for sicker beneficiaries who are expected to cost more to treat. To make those adjustments, CMS collects diagnosis codes from the insurers.

The government alleges that IBX, which is incorporated in Pennsylvania, submitted inaccurate and untruthful diagnosis data that inflated its payments. It also alleges the company knowingly failed to withdraw that data and repay CMS, and falsely certified in writing that the data was accurate and truthful.

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According to the Justice Department, IBX ran a “chart review” program for payment years 2017 through 2021. Nurse reviewers examined medical records to identify all conditions the charts supported. The United States contends IBX used those results to submit additional diagnosis codes and obtain additional payments. It allegedly did not delete or withdraw previously reported codes that the reviews failed to substantiate, which would have required reimbursing CMS.

“The government pays private insurers over $530 billion each year to care for Americans enrolled in Medicare Advantage,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. Shumate said insurers that knowingly and improperly retain inflated payments based on inaccurate diagnoses will be held accountable, whether they are small regional plans or large national organizations.

U.S. Attorney David Metcalf for the Eastern District of Pennsylvania said the program depends on accurate patient health data. He said his office will continue holding insurers accountable for submitting or failing to correct unsupported diagnoses.

Miranda L. Bennett, acting deputy inspector general for investigations at the Department of Health and Human Services Office of Inspector General, said the settlement reflects a commitment to protecting Medicare’s integrity and partnering with the Justice Department to pursue allegations of risk adjustment fraud.

The settlement resolves a whistleblower lawsuit filed under the False Claims Act, which lets private parties sue on the government’s behalf and share in any recovery. The case is captioned United States ex rel. Crawford v. Independence Blue Cross, No. 20-cv-5818, in U.S. District Court for the Eastern District of Pennsylvania. The whistleblower, a former IBX employee, will receive $3,825,000.

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The Justice Department said the Civil Division’s False Claims Act enforcement work will support the administration’s Task Force to Eliminate Fraud and the National Fraud Enforcement Division.

The claims are allegations only, and there has been no determination of liability. Tips about suspected fraud can be reported to HHS at www.oig.hhs.gov/fraud/report-fraud or 800-447-8477.

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