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United HealthCare of Illinois settles Medicare overbilling charges for $2.9 million

United HealthCare of Illinois has agreed to pay the federal government $2.9 million to settle allegations that its Medicare HMO overbilled for seniors' health care.

United incorrectly listed some Illinois seniors as being institutionalized when they were not.

Federal auditors say United identified nearly one-third of 100 randomly chosen Medicare beneficiaries as living in nursing homes when they weren't, according to the U.S. attorney's office in Chicago. Attorneys say this mistake in some instances allowed the HMO to bill the government nearly double what it would have if the seniors' level of care had been listed correctly.

The federal government pays Medicare HMOs fixed monthly fees per patient to provide seniors with roughly the same level of care as traditional fee-for-service Medicare. Payments are higher for seniors who are institutionalized in nursing homes or long term care facilities.

According to the settlement, in 1996, United HealthCare received approximately $583 a month for a female Medicare beneficiary, age 85 and older, who was not institutionalized, while it received about $1,020 for a similar beneficiary who was residing in a nursing home or other qualified long term care facility.

United, the state's second-largest HMO and a subsidiary of UnitedHealth Group of Minn., denies any wrongdoing. The insurer has agreed to settle to avoid the "expense, burden, and uncertainty of litigation," according to the settlement. As part of the deal, the company has also entered into a corporate integrity agreement, which allows periodic audits by federal regulators to ensure the insurer submits accurate Medicare claims.

United maintains it inherited the billing problems when it acquired Share Health Plan, a Chicago-based HMO, in 1995. "Following the 1995 merger, the Illinois process for gathering and reporting data to the government was inadequate," says William Whitely, United's chief executive officer. "This agreement is part of the plan we put in place to fix past problems."

The allegations arose from a 1998 audit by the U.S. Department of Health and Human Services' Office of Inspector General. According to the settlement, United incorrectly listed Illinois seniors in Cook, DuPage, Kankakee, Lake, McHenry, and Will counties as being institutionalized between Oct. 1, 1995, and Sept. 30, 1997, when they were not.

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