business
Illinois Blues settles charges of passing costs to Medicaid
■ An investigation finds the plan had internal guidelines for coverage that were stricter than those given to members.
By Emily Berry — Posted March 16, 2011
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Blue Cross Blue Shield of Illinois has agreed to pay $25 million to settle allegations that the company deliberately denied coverage for private duty nursing for severely ill adults and children in order to shift the cost of care to Medicaid.
A government investigation showed that Illinois Blues had internal standards for coverage that were stricter than the rules given to members, according to Chicago-based U.S. Attorney Patrick Fitzgerald and Illinois State Attorney General Lisa Madigan. The plan also is accused of fraudulently denying coverage when members appealed the initial denials.
The plan, owned by Health Care Service Corp., disputes the government's claims and said it settled to avoid more costly litigation. In the settlement, the Illinois Blues did not admit wrongdoing.
"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," a company statement said. "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."
The insurer passed on $12 million in expenses to the state that should have been paid under members' coverage, according to the attorney general and the U.S. attorney's office.
The company will pay $14.25 million to Illinois, $9.5 million to the U.S. government and $1.25 million to consumers the government says were denied coverage by Blue Cross Blue Shield but were not covered by Medicaid.
"Blue Cross Blue Shield's inappropriate denial of legitimate claims placed an undue burden on the state's finances," Madigan said in a statement. "My office is committed to holding health care insurers accountable on behalf of the people of Illinois for this type of deception and fraud."