Independence Blue Cross has agreed to pay $22.5 million to settle U.S. Justice Department allegations that it knowingly submitted diagnosis codes that made Medicare Advantage enrollees appear sicker than they were. The insurer did not admit wrongdoing, saying it settled to avoid prolonged litigation and that the dispute involved differing views on documentation and reporting requirements.
The DOJ said IBX ran a retrospective review program from 2016 to 2020 that identified additional diagnosis codes to submit to Medicare. Nurses reviewed medical charts, but the company allegedly failed to investigate or withdraw inaccurate or unsubstantiated codes found during the review, despite being legally obligated to do so. The case began with a whistleblower complaint filed in 2020 by a former IBX employee.
Medicare Advantage payments are risk-adjusted: the government pays more for sicker enrollees, and insurers are responsible for submitting accurate diagnosis codes. The DOJ's civil division chief noted that the government pays private insurers over $530 billion annually for Medicare Advantage and said the department will hold insurers accountable for retaining inflated payments. The settlement is part of a broader enforcement pattern: Kaiser Permanente affiliates paid $556 million in January, and UnitedHealth and Humana have also faced scrutiny over upcoding.