Medicare Advantage insurer accused of upcoding by a whistleblower settles False Claims Act lawsuit for $22.5M
Pennsylvania-based healthcare insurer Independence Blue Cross has agreed to pay $22.5 million to resolve allegations that it submitted inaccurate diagnosis codes for reimbursement for members covered by its Medicare Advantage plan.
According to a statement from the U.S. Department of Justice, this resulted in the company receiving increased payments from Medicare, in violation of federal law. The complaint was made by a whistleblower suing under protections of the False Claims Act.
Through this alleged act of upcoding, Independence Blue Cross received more in risk-adjusted payments, designed to offset the high costs of chronic illnesses, than it was owed, effectively reporting to the Centers for Medicare & Medicaid Services (CMS) that patients were sicker and more vulnerable than they were in reality.
Part of the complaint made against the insurer was that it failed to withdraw these allegedly inaccurate claims on its own accord, instead certifying to CMS that its determinations were accurate and truthful.
Medicare Advantage, also known as Medicare Part C, is a privatized version of the insurance program, subsidized by the federal government.
“The government pays private insurers over $530 billion each year to care for Americans enrolled in Medicare Advantage,” Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division, said in a statement. “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.”
Independence Blue Cross primarily serves the Philadelphia area, serving 7 million patients with its network, which includes 180 hospitals and 60,000 physicians, making it the largest insurer in the region.
Chart review failure
The alleged incidents of upcoding happened between 2017 and 2021, during which time Independence Blue Cross had a chart review program, in which nurses would review diagnosis and medical conditions associated with patients, confirming they were correct.
While the company relied on those chart reviews to double-check accuracy, ultimately the program “did not substantiate some diagnosis codes previously reported by IBX to CMS,” the DOJ said.
Nurses were either failing to withdraw or delete erroneous codes, or the company was not following recommendations from the review program, as authorities and the whistleblower alleged.
“The U.S. alleges that IBX used the results of its chart reviews to identify instances where IBX could seek additional payments from CMS while ignoring those same results when they indicated IBX was overpaid,” the DOJ wrote.
The name of the private party, typically an employee or insider within the company, who brought the initial claim under the False Claims Act was not revealed in the DOJ’s statement.
With the $22.5 million settlement in place, the allegations are considered resolved. The insurer does not admit to wrongdoing, and no determination of the facts was made, per the terms of the agreement.
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