BlueCross and BlueShield Pays $25 Million to Settle Medicaid Fraud Claims

On February 24, 2011, the United States Attorney for the Northern District of Illinois announced a $25 million settlement agreement with BlueCross and BlueShield of Illinois (BCBS) regarding alleged Medicaid fraud under the False Claims Act.  The government, according to the agreement, alleged that BCBS wrongfully terminated insurance coverage for private duty, skilled nursing  for children needing complex care, in order to shift them to a federal and state funded Medicaid program that provided home care for children at risk of institutionalization.

Specifically, the settlement agreement alleges that BCBS:

  • fraudulently denied private duty skilled nursing care to eligible beneficiaries by using more restrictive internal guidelines than the language in the beneficiaries’ benefit plans;
  • improperly influenced the outcome of appeals and external reviews related to the denials;
  • knowingly submitted false and/or fraudulent claims to the Medicaid program in order to get claims paid;
  • caused the State of Illinois to present fraudulent claims to the United States when Illinois sought matching funds; and
  • continued to confirm that private duty skilled nursing care was not available to beneficiaries shifted to Medicaid.

Pursuant to the settlement agreement, BCBS will pay $9.5 million to the United States, $14.25 million to the State of Illinois, and $1.25 million to Illinois consumers.

BCBS, released from civil liability under the False Claims Act, is still subject to administrative sanctions by the Office of the Inspector General.

The settlement agreement is available here.
The press release announcing the settlement is available here.