U.S Department of Justice

Independence Blue Cross (IBX), an insurance company incorporated under the laws of Pennsylvania, has agreed to pay $22.5 million to resolve allegations that it violated the False Claims Act by failing to withdraw inaccurate and untruthful diagnosis codes for its Medicare Advantage Plan enrollees in order to improperly retain overpayments from Medicare.

Under the Medicare Advantage (MA) Program, also known as Medicare Part C, Medicare beneficiaries may opt out of traditional Medicare and enroll in private health plans offered by insurance companies known as Medicare Advantage Organizations, or MAOs. The Centers for Medicare & Medicaid Services (CMS) pays MAOs a fixed monthly amount adjusted for various risk factors that affect expected health expenditures for the beneficiary. In general, CMS pays MAOs more for sicker beneficiaries expected to incur higher healthcare costs. To make these “risk adjustments,” CMS collects medical diagnosis codes from the MAOs.

The United States alleges that IBX submitted inaccurate and untruthful patient diagnosis data to CMS that inflated the risk adjustment payments it received from CMS, knowingly failed to withdraw the inaccurate and untruthful diagnosis data and repay CMS, and falsely certified in writing to CMS that the data was accurate and truthful. The settlement announced today resolves these allegations.

“The government pays private insurers over $530 billion each year to care for Americans enrolled in...

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