Illinois Hospitals Likely Victims of Amerigroup?s Discriminatory Enrollment Practices

Amerigroup agreed last week to pay $225 million to settle allegations it defrauded the federal government and the state of Illinois by systematically denying coverage to Medicaid-eligible pregnant women and Illinois’ unhealthiest residents ("Amerigroup Settles Federal and State Medicaid Fraud Claims for $225 Million," Aug. 15). 

Besides the patients who were denied coverage and possibly delayed treatment, and taxpayers who didn’t get what they paid for, the other victims of Amerigroup’s policies may have been the state’s hospital system which may have suffered higher bad debt expense or lower reimbursement. 

According to Robin Ziegler, spokeswoman for the Illinois Attorney General’s Office, some Medicaid- eligible patients denied coverage by the Virginia Beach, Va.-based health care insurer may have been enrolled in the state’s regular Medicaid program.  And industry experts say some low-income patients may have had their medical bills paid through a hospital’s charity care program. In the end, however, payment to the hospitals may have been lower than cost, and many payments were likely delayed.

Without a special assessment tax on Illinois hospitals that generates matching federal dollars, Illinois hospitals are reimbursed just 65 percent of cost from the state’s Medicaid program, said Danny Chun, spokesman for the Illinois Hospital Association.

“Medicaid doesn’t pay well in this state to begin with,” Chun said. “It also doesn’t pay on time. Some hospitals don’t get paid for six months after providing service.”

No funds from the settlement appear to have been set aside specifically for the hospitals, although they could receive some settlement money earmarked for the general fund.  Under the terms of the settlement, $56.25 million will go to Cleveland Tyson, a former executive at Amerigroup’s Illinois subsidiary and the whistleblower who claimed the company cherry-picked patients to reduce spending and maximize profits.

The U.S. Justice and Illinois Attorney General’s office, which later joined Tyson’s federal lawsuit, will split the remaining $200 million.  Ziegler said Illinois will divvy up its share among the state attorney general’s office and state police, which will receive $16.6 million each, and the general revenue fund, which will receive about $67 million.

Illinois hospitals have averaged about $1 billion annually in bad debt expense over the last several years, Chun said. The latest charity care figures came in around $400 million, while Illinois hospital’s Medicaid and Medicare shortfall reached $1.9 billion last year, he said.

Last year, the court entered a $334 million judgment against Amerigroup after a jury found the company liable under the federal False Claims Act as well as the Illinois Whistleblower Reward and Protection Act.  Amerigroup filed an appeal with the U.S. Court of Appeals in Chicago, which it agreed to withdraw and agreed to enter into a Corporate Integrity Agreement with the Office of the Inspector General of the U.S. Department of Health and Human Services.

The agreement requires Amerigroup to “adopt policies and procedures, and a code of conduct designed to prevent improper discrimination against federal health care program beneficiaries in its marketing and enrollment practices.”

Amerigroup manages Medicare and Medicaid HMO’s in Florida, Georgia, Maryland, New Jersey, New Mexico, New York, Ohio, South Carolina, Tennessee and Texas. According to its website, the company serves more than 1.7 million people.