A Chicago-based insurance company will pay $25 million to settle claims that it illegally terminated insurance coverage to sick children in need of in-home nursing care to shift the costs of their treatment to Medicaid.
The U.S. Attorney’s office and Illinois Attorney General’s office on Thursday announced the settlement with BlueCross BlueShield of Illinois over allegations that it fraudulently denied coverage for nursing care to children and other technologically-dependent patients to shift the high cost of their care to the program funded by the state and federal governments.
As a result of the fraud, children whose specialized care should have been covered by BCBS under existing policies were shifted to the government-funded Home and Community Based Services Medicaid program, according to the U.S. Attorney’s office. The fraud cost the program more than $12 million, according to the attorney general’s office.
“BlueCross BlueShield’s inappropriate denial of legitimate claims placed an undue burden on the state’s finances,” Atty. Gen. Lisa Madigan said. “My office is committed to holding health care insurers accountable ... for this type of deception and fraud.”
The settlement resolves allegations that BCBS denied claims based on internal, undisclosed guidelines that were more restrictive than language provided to beneficiaries in policy materials, the U.S. Attorney’s office said. The government also alleged the company fraudulently told policy holders that children were not covered for private nursing during a claims review process requested after initial denials.
Under the agreement, BCBS of Illinois, a division of Health Care Service Corp., will pay $14.25 million to the state and $9.5 million to the U.S. government. The company will also pay $1.25 million to consumers who were denied by BCBS and did not receive Medicaid coverage.
BlueCross BlueShield did not admit liability, saying it agreed to the settlement to avoid the delay, uncertainty and expense of protracted litigation.