PENNSYLVANIA — Independence Blue Cross agreed to pay $22.5 million to resolve allegations it violated the False Claims Act. The settlement addresses claims that the insurer failed to withdraw inaccurate diagnosis codes for Medicare Advantage Plan enrollees to retain overpayments from Medicare.

A former Independence Blue Cross employee who acted as a whistleblower will receive $3,825,000 from the settlement. The agreement resolves the qui tam case United States ex rel. Crawford v. Independence Blue Cross, No. 20-cv-5818, in the U.S. District Court for the Eastern District of Pennsylvania.

The government further alleges that Independence Blue Cross knowingly failed to withdraw inaccurate diagnosis data and repay the agency. The United States also alleges that Independence Blue Cross falsely certified in writing to the agency that the submitted data was accurate and truthful.

Under the Medicare Advantage Program, the Centers for Medicare & Medicaid Services pays private health plans a fixed monthly amount adjusted for risk factors affecting expected health expenditures. The agency collects medical diagnosis codes from Medicare Advantage Organizations to make these risk adjustments.

Independence Blue Cross operated a chart review program in which nurse reviewers reviewed medical records to identify supported medical conditions. The insurer relied on chart review results to submit additional diagnosis codes to obtain additional payments.

"The Medicare Advantage program depends on accurate data about patient health," U.S. Attorney David Metcalf said. "When insurers inflate their profits and the government’s costs by submitting or failing to correct unsupported diagnoses, my office will continue to hold them accountable."

Miranda L. Bennett, Acting Deputy Inspector General for Investigations, emphasized the obligations of participating insurers. "Providing medical services to Americans is a privilege that requires strict adherence to the rules and accountability when they are not followed," Bennett said. "Private insurers enrolled in the Part C program purposely inflating diagnoses for financial gain is unacceptable."

Why It Matters

The settlement involves the financial stakes in Medicare Advantage risk adjustment, with the government paying private insurers over $530 billion annually for this care. Inaccurate diagnosis coding poses a financial risk to the program, as payments are tied directly to the reported health status of enrollees.

Under the Medicare Advantage Program, MA organizations are required to certify that their submitted diagnosis codes are accurate, complete, and truthful. Violations of these requirements can lead to financial penalties, as demonstrated by the $22.5 million resolution in this case.

Timeline

Officials issued statements regarding the resolution on the same date. "Today’s settlement demonstrates our commitment to ensuring the integrity of the Medicare program and to partnering with the Department of Justice to pursue allegations of risk adjustment fraud," Miranda L. Bennett said. Assistant Attorney General Brett A. Shumate stated, "When insurers knowingly and improperly retain inflated payments based on inaccurate and untruthful diagnoses, we will hold them accountable whether they are a small regional plan or a large nationwide organization." U.S. Attorney Metcalf added, "The Medicare Advantage program depends on accurate data about patient health."

What's New

Additional reporting provides context on prior compliance issues involving Independence Blue Cross. In 2014, the Centers for Medicare & Medicaid Services (CMS) imposed a $50,000 civil money penalty on Independence Blue Cross for violations in the Medicare Advantage - Prescription Drug program, indicating prior compliance issues with CMS regulations.

In 2017, CMS identified that Independence Blue Cross had overpaid by nearly $34 million due to inaccurate diagnosis codes submitted for risk adjustment purposes, as part of a broader audit of Medicare Advantage plans. Independence Blue Cross has had multiple compliance issues, including this 2017 audit that found significant overpayments due to inaccurate diagnosis codes.

In 2020, Independence Blue Cross subsidiaries, Keystone Health Plan East, Inc. and QCC Insurance Company, Inc. agreed to pay $2.25 million plus interest to resolve False Claims Act allegations of incorrectly calculating anticipated plan costs, resulting in inflated Medicare Advantage plan bids to the Centers for Medicare and Medicaid Services. Independence Blue Cross (IBC) previously paid $2.25 million in 2020 to resolve allegations of inflating Medicare Advantage plan bids, revealing a history of regulatory violations tied to its operations under the Medicare Advantage program. In 2020, Independence Blue Cross and its affiliates agreed to pay $2.25 million to resolve False Claims Act allegations related to incorrect calculation of anticipated plan costs, which led to inflated Medicare Advantage bids to CMS.

In 2022, the Office of Inspector General (OIG) conducted an audit of Independence Blue Cross's FEHBP operations and reviewed approximately $6.8 million in claim payments from a universe of $721 million in health benefit charges. The Centers for Medicare & Medicaid Services (CMS) pays private insurers over $530 billion annually for Medicare Advantage care, reflecting the scale of financial risk associated with inaccurate diagnosis coding.

How Sources Differ

Sources present different details regarding Independence Blue Cross. Oig.hhs.gov states that in 2020, Independence Blue Cross subsidiaries, Keystone Health Plan East, Inc. and QCC Insurance Company, Inc. agreed to pay $2.25 million plus interest to resolve False Claims Act allegations of incorrectly calculating anticipated plan costs.

The U.S. Department of Justice press release 26-1120 states that the United States alleges that Independence Blue Cross submitted inaccurate patient diagnosis data to the Centers for Medicare & Medicaid Services that inflated risk adjustment payments.

The U.S. Department of Justice press release 26-1120 states that the United States alleges that Independence Blue Cross knowingly failed to withdraw inaccurate diagnosis data and repay the Centers for Medicare & Medicaid Services.

The U.S. Department of Justice press release 26-1120 states that Independence Blue Cross relied on chart review results to submit additional diagnosis codes to the Centers for Medicare & Medicaid Services to obtain additional payments.

The U.S. Department of Justice press release 26-1120 states that the United States alleges that Independence Blue Cross falsely certified in writing to the Centers for Medicare & Medicaid Services that the submitted data was accurate and truthful.