New Jersey Medicare Contractor Settles Health Care Fraud Case under False Claims Act

The Medicare program depends on the integrity of “trusted contractors” to process and pay Medicare claims. This past week, one of those “trusted contractors” operating in New Jersey, BlueCross BlueShield of Tennessee, agreed to pay the federal government $2.1 million to resolve allegations that it violated the False Claims Act.

BlueCross BlueShield of Tennessee operated as the primary Medicare Part A Fiscal Intermediary for New Jersey, under the name “Riverbend Government Benefit Administrators.”

The government had alleged that BlueCross BlueShield of Tennessee “failed to adjust the cost-to-charge ratios for many New Jersey hospitals in a timely manner between 2000 and 2002 that resulted in the payment of excessive ‘outlier payments’ by Medicare program to those medical facilities.” The “outlier payments” are supplemental reimbursements to hospitals in situations when the cost of care is unusually high, which are paid “to ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs,” as described in the government’s announcement.

The Justice Department’s announcement took aim at “contractors that falsely bill for crucial tasks that they do not perform,” in the words of Gregory G. Katsas, Assistant Attorney General of the Civil Division.

We congratulate the coordinated efforts of the various agencies that brought about this result: the Justice Department’s Civil Division’s Commercial Litigation Branch; the U.S. Attorney’s Office for the District of New Jersey, Affirmative Civil Enforcement Unit; the Department of Health and Human Services, Office of Inspector General and Office of Counsel to the Inspector General; the Centers for Medicare and Medicaid Services; and the FBI.