A handful of Connecticut hospitals will foot nearly half the bill under a civil fraud settlement agreement reached by Anthem Health Plans in Connecticut and the U.S. attorney's office in New Haven, Conn.
Last week, the company's Indianapolis-based parent, Anthem, agreed to pay $74 million to settle allegations of Medicare fraud at Connecticut Blue Cross and Blue Shield, which Anthem purchased in 1997.
The Connecticut Blues had been a Medicare Part A fiscal intermediary until July 1999, when its hospital oversight contract was not renewed by HCFA. The plan continues to serve as a fiscal intermediary for HMOs that have Medicare-risk contracts.
The settlement is the second-largest to date by a Medicare fiscal intermediary. The largest was the $144 million settlement in July 1998 by Illinois Blue Cross and Blue Shield.
Stephen Robinson, U.S. attorney for Connecticut, accused the Connecticut Blues of failing to correctly audit interim Medicare cost reports submitted by hospitals in the state from 1986 to 1988. The plan allegedly understated payments made to hospitals, failed to recover those overpayments and concealed their actions in order to meet government performance standards. The government said the Blues submitted falsified intermediary reports from 1989 to 1991 to cover its earlier failures.
The conduct led the government to overpay a number of Connecticut hospitals by $32 million. The U.S. attorney's office refused to say how many hospitals were overpaid but conceded it was fewer than 10 of the state's 31 acute-care hospitals.
Anthem will pay $42 million of the total settlement, while the hospitals must repay the $32 million balance.
The hospitals have paid $25 million so far, according to John Hughes, who heads the civil division for the U.S. attorney's office in New Haven. The government is negotiating a payment schedule to collect the remaining $7 million.
Because the matter is related to an ongoing investigation, the U.S. attorney's office refused to identify the overpaid hospitals.