Independence Blue Cross to Pay $22.5 Million Over Medicare Advantage Diagnosis Allegations

Key Takeaways

• $22.5 Million Settlement: Independence Blue Cross agreed to pay $22.5 million to resolve False Claims Act allegations involving Medicare Advantage risk-adjustment payments.
• Chart Reviews Cut Both Ways: The government alleges IBX used chart reviews to identify diagnoses supporting additional payments but did not withdraw previously reported diagnoses when those reviews failed to substantiate them.
• 2017 Through 2021 at Issue: The allegations concern Medicare Advantage payment years 2017 through 2021 and include claims that IBX knowingly retained overpayments and falsely certified diagnosis data as accurate and truthful.
• Whistleblower Receives $3.825 Million: A former IBX employee brought the case under the False Claims Act’s qui tam provisions and will receive $3.825 million of the settlement.

Deep Dive

Independence Blue Cross has agreed to pay $22.5 million to settle allegations that it kept Medicare money tied to diagnosis codes that its own medical-record reviews did not support. The Justice Department announced the settlement Wednesday, bringing a civil False Claims Act case against the Pennsylvania insurer to a close without a determination of liability. The allegations concern Independence Blue Cross, or IBX, and its Medicare Advantage business during payment years 2017 through 2021.

According to the United States, IBX acted on the first finding and not the second. Medicare Advantage, also known as Medicare Part C, allows Medicare beneficiaries to receive coverage through private health plans. The Centers for Medicare & Medicaid Services pays those insurers a fixed monthly amount for each enrollee, with the payment adjusted according to factors affecting the beneficiary's expected healthcare costs. Generally, an insurer receives more for a beneficiary whose diagnoses indicate that person is likely to require more expensive care. CMS relies on diagnosis codes submitted by Medicare Advantage organizations to calculate those adjustments.

For payment years 2017 through 2021, IBX operated a chart-review program in which nurses examined enrollees' medical records and identified the conditions those records supported. When the reviews uncovered diagnoses that could support additional payments, IBX used the findings to submit additional diagnosis codes to CMS, according to the government. But those reviews also found something less profitable. Some diagnosis codes that IBX had previously reported to CMS were not substantiated by the medical records.

The government says that IBX did not delete or withdraw those codes. Doing so would have required the insurer to reimburse CMS. Instead, federal officials contend, IBX used its chart reviews to identify opportunities to seek additional Medicare payments while failing to act on the same reviews when they indicated that Medicare had overpaid the company.

The United States further alleges that IBX submitted inaccurate and untruthful patient diagnosis data that inflated its risk-adjustment payments, knowingly failed to withdraw inaccurate and untruthful diagnosis data and repay CMS, and falsely certified in writing that the data it submitted was accurate and truthful.

“The Medicare Advantage program depends on accurate data about patient health,” U.S. Attorney David Metcalf for the Eastern District of Pennsylvania said in announcing the settlement. He said his office would continue pursuing insurers that submit or fail to correct unsupported diagnoses in ways that increase government costs.

The money at stake across the program is considerably larger than the settlement announced Wednesday. Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division said the federal government pays private insurers more than $530 billion each year to provide care to Americans enrolled in Medicare Advantage.

The case did not begin inside the Justice Department. It was brought by a former IBX employee under the False Claims Act's whistleblower provisions, which allow private parties to sue on behalf of the federal government when they believe false claims for government funds have been submitted. Whistleblowers can receive a portion of the government's recovery.

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