Summary
Independence Blue Cross (IBX), a Pennsylvania-incorporated insurance company, has agreed to pay $22.5 million to resolve allegations that it violated the False Claims Act (FCA) by failing to withdraw inaccurate and untruthful diagnosis codes submitted for Medicare Advantage Plan enrollees.
The United States alleged that IBX knowingly retained Medicare overpayments resulting from unsupported diagnosis data that inflated risk-adjustment payments. The settlement resolves these allegations without changing the underlying allegations into a finding of liability.
Key Case Details
| Category | Details |
|---|---|
| Company | Independence Blue Cross (IBX) |
| Industry | Health insurance |
| Program involved | Medicare Advantage (Medicare Part C) |
| Settlement amount | $22.5 million |
| Alleged conduct | Submission and retention of inaccurate and untruthful diagnosis codes |
| Government agency involved | Centers for Medicare & Medicaid Services (CMS) |
| Other enforcement agency | U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) |
| Relevant payment years | 2017–2021 |
| Legal framework | False Claims Act |
| Case type | Qui tam lawsuit |
| Court | U.S. District Court for the Eastern District of Pennsylvania |
| Case caption | United States ex rel. Independence Blue Cross, No. 20-cv-5818 |
| Whistleblower share | $3,825,000 |
| Whistleblower | Former IBX employee |
What the Independence Blue Cross Settlement Involves
Medicare Advantage Risk-Adjustment Payments
The Medicare Advantage (MA) Program, also known as Medicare Part C, allows Medicare beneficiaries to enroll in private health plans offered by insurance companies known as Medicare Advantage Organizations (MAOs), instead of traditional Medicare.
Under the program, the Centers for Medicare & Medicaid Services (CMS) pays MAOs a fixed monthly amount that is adjusted for risk factors affecting a beneficiary’s expected healthcare expenditures.
Generally, CMS pays MAOs more for beneficiaries who are expected to have higher healthcare costs because of their medical conditions. CMS uses medical diagnosis codes submitted by MAOs to make these risk adjustments.
Allegations Against IBX
The United States alleged that IBX submitted inaccurate and untruthful patient diagnosis data to CMS, resulting in inflated risk-adjustment payments.
According to the allegations, IBX then knowingly failed to withdraw diagnosis data that was inaccurate or unsupported and did not repay the resulting overpayments to CMS.
The United States further alleged that IBX falsely certified in writing to CMS that the diagnosis data it submitted was accurate and truthful. The $22.5 million civil settlement resolves these allegations.
IBX’s Alleged Chart Review Program
Review of Medical Records
For payment years 2017 through 2021, the United States contends that IBX operated a “chart review” program.
Under this program, IBX nurse reviewers examined medical records, also known as “charts,” and identified medical conditions supported by those records.
IBX used the results of these chart reviews to submit additional diagnosis codes to CMS and seek additional Medicare Advantage payments.
Alleged Failure to Correct Unsupported Diagnoses
The United States alleged that IBX’s chart reviews also identified instances in which diagnosis codes previously reported by IBX to CMS were not substantiated by the medical records.
According to the allegations, IBX did not delete or withdraw those unsupported diagnosis codes, even though doing so would have required IBX to reimburse CMS for resulting overpayments.
The government therefore alleged that IBX used chart-review results when they identified opportunities to obtain additional payments while disregarding the same review results when they indicated that IBX had received excessive payments.
False Claims Act Enforcement
Qui Tam Lawsuit
The civil settlement resolves a lawsuit brought under the whistleblower provisions of the False Claims Act.
The FCA‘s qui tam provisions permit private parties to bring lawsuits on behalf of the government when they believe a defendant has submitted false claims for government funds. A successful whistleblower may receive a share of the government’s recovery.
The case is captioned United States ex rel. Independence Blue Cross, No. 20-cv-5818, and was filed in the U.S. District Court for the Eastern District of Pennsylvania.
Whistleblower Receives $3.825 Million
Under the settlement, the former IBX employee who brought the qui tam case will receive $3,825,000 as a share of the settlement amount.
The whistleblower provision is an important element of the resolution because the lawsuit originated from allegations brought under the FCA’s mechanism for private parties to pursue claims involving alleged fraud against the government.
Government Statements on the Settlement
Justice Department Statement
Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division stated that the government pays private insurers more than $530 billion each year to care for Americans enrolled in Medicare Advantage.
He emphasized that insurers that knowingly and improperly retain inflated payments based on inaccurate and untruthful diagnoses can face accountability, whether they are regional plans or nationwide organizations.
Eastern District of Pennsylvania Statement
U.S. Attorney David Metcalf for the Eastern District of Pennsylvania said that the Medicare Advantage program depends on accurate information concerning patients’ health.
He stated that the office would continue to pursue accountability when insurers allegedly inflate profits and government costs by submitting or failing to correct unsupported diagnoses.
HHS-OIG Statement
Acting Deputy Inspector General for Investigations Miranda L. Bennett of the U.S. Department of Health and Human Services, Office of Inspector General, emphasized that providing medical services to Americans is a privilege that requires adherence to applicable rules and accountability when those rules are not followed.
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Government’s Position on Medicare Advantage Fraud
Protecting Program Integrity
The government stated that private insurers participating in Medicare Part C that purposely inflate diagnoses for financial gain are unacceptable.
The settlement was presented as demonstrating the government’s commitment to protecting the integrity of the Medicare program and working with the Department of Justice to pursue allegations involving risk-adjustment fraud.
The case also reflects the government’s broader focus on fraud involving federal healthcare programs and payments.
Broader Federal Fraud Enforcement
The administration launched the Task Force to Eliminate Fraud and the National Fraud Enforcement Division to strengthen efforts against fraud, waste and abuse in federal programs.
According to the statements provided in connection with the settlement, fraudulent conduct involving federal programs can result in financial harm to the government, harm to the people those programs are intended to assist, and disadvantages for American businesses that comply with the rules.
Investigation and Enforcement Agencies
Coordinated Federal Investigation
The resolution resulted from a coordinated effort involving multiple federal enforcement authorities.
The investigation and resolution involved:
- Justice Department Civil Division
- Commercial Litigation Branch
- Fraud Section
- U.S. Attorney’s Office for the Eastern District of Pennsylvania
- U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG)
The coordinated effort illustrates the government’s emphasis on identifying and addressing alleged healthcare fraud involving federal programs.
Why the IBX Case Matters
The Independence Blue Cross settlement centers on the accuracy of medical diagnosis information used to calculate Medicare Advantage risk-adjustment payments.
The allegations specifically concern the treatment of diagnosis codes that were not supported by subsequent chart reviews. According to the United States, IBX allegedly used chart-review findings to pursue additional payments while failing to act on findings that could have required repayment to CMS.
The $22.5 million settlement, together with the $3.825 million whistleblower award, represents the resolution of those allegations under the False Claims Act.
To read the original order please visit DOJ (Department of Justice) website