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

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."

BCBS IL issued the following statement: "Our agreement with the state attorney general and the federal government resolves a long-standing dispute concerning certain claims involving private duty nursing benefits. While we disagree with the allegations and deny any inappropriate conduct at any time, we are pleased to put this matter behind us and focus on serving the needs of our policyholders. This dispute began many years ago when we reviewed certain claims and determined that the benefits sought were not covered by the applicable insurance plans and policies. These plans and polices determine which benefits are covered and which are not. Several years ago, in cooperation with the state attorney general, we expanded our explanation of benefits to ensure that our members understood what nursing benefits are covered under their plans. That action, coupled with today's agreement, are in the best interests of our members."

DOJ has used the False Claims Act to recover more than $5.5 billion since January 2009 in cases involving fraud against federal healthcare programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are nearly $7 billion.