State of Illinois Medicaid

In a settlement reached with the State of Illinois and the United States Attorney for the Northern District of Illinois, BlueCross BlueShield of Illinois (BC/BS) agreed to pay $25 million to settle allegations that BC/BS denied coverage of nursing care needed for sick children and other fragile patients, and fraudulently shifted the cost of this care to the state and federal Medicaid program.

The Illinois Attorney General and the U.S. Attorney’s office alleged that BC/BS denied patient claims based upon internal, undisclosed guidelines that were more restrictive than the policy language provide to patients. As a result of these denials, the cost of care that should have been covered by BC/BS, approximately $12 million, was shifted to the state and federal Medicaid program. In addition, BC/BS was alleged to have fraudulently contended that patients were not covered for private duty nursing care during claims review processes sought after claims were initially denied.

Under the settlement agreement, BC/BS will pay $14.25 to Illinois, and $9.5 million to the U.S. Treasury to help fund and reimburse Medicaid programs. In addition, BC/BS will pay $1.25 to Illinois consumers who were denied by BC/BS, but did not receive Medicaid coverage. BC/BS did not admit any intentional wrongdoing or liability under the settlement agreement.

For additional information, please contact Leeanne R. Coons.

Last week Illinois Governor Pat Quinn signed into law major reforms to the State’s Medicaid program. Public Act 96-1501 authorizes the Illinois Department of Healthcare and Family Services (HFS) to expand HMO-style “coordinated care” to cover at least 50% of all recipients by the year 2015. The law also changes the Illinois Medicaid eligibility process by requiring certain income verifications and annual re-determinations.

On the provider side, the law empowers HFS to impose significant Medicaid fraud penalties. HFS may now impose civil monetary penalties up to $2,000 for each fraudulent claim submitted to the Illinois Medicaid program. Providers will be able to appeal the assessment of these civil monetary penalties through an administrative process before HFS and through the Circuit Court. Pharmacy providers, meanwhile, may now promote 90-day maintenance prescriptions to Medicaid beneficiaries. The law also reduces the interest rate the State must pay to pharmacies from 2% to 1% for late reimbursement payments.

For additional information about this new law, Illinois State health care, or other issues involving Medicare or Medicaid fraud, please contact Randall Fearnow or Mark Bina in the Firm’s Chicago office at 312-423-9300.