BCBS IL to Pay $25M to Settle Medicaid False Claims Allegations

John Commins, February 25, 2011

BlueCross BlueShield of Illinois will pay the federal government and the state of Illinois $25 million to settle False Claims Act allegations, the Justice Department has announced.

The settlement resolves claims that BCBS IL illegally terminated coverage for private duty skilled nursing care for medically fragile, technologically dependent children, which shifted the cost of the care onto Medicaid, DOJ said in a statement.

Under the alleged scheme, children whose specialized care should have been covered by BlueCross BlueShield of Illinois were shifted to the government-funded Home and Community Based Services Medicaid program, operated by the Illinois Division of Specialized Care for Children.

The settlement also resolves claims that BCBSI denied patient claims based on internal, undisclosed guidelines that were more restrictive than the language provided to beneficiaries in plan policy materials. Additionally, the DOJ claimed that BCBSI improperly told policy holders that children were not covered for private duty nursing during the claims review process sought after denials.

Under the agreement, BlueCross BlueShield of Illinois will pay $14.25 million to Illinois and $9.5 million to the federal government. The insurer, a division of Health Care Service Corp., will also pay $1.25 million to Illinois under the state consumer fraud statute.

"It is appalling for a major insurance company to terminate medical services coverage for sick children in need just to boost their bottom line at taxpayers' expense, as we've alleged here," said Tony West, Assistant Attorney General for the Justice Department's Civil Division. "When private insurance companies improperly force patients to turn to Medicaid for medical coverage those companies should be providing, we will hold them accountable."

John Commins

John Commins is a senior editor at HealthLeaders Media.

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