Medicare Advantage Risk Adjustment Fraud: The IBX Settlement

What the Independence Blue Cross Settlement Reveals About Medicare Advantage Risk Adjustment Fraud

On September 30, 2026, Independence Blue Cross (IBX) agreed to pay $22,500,000 to resolve False Claims Act allegations that it submitted and failed to withdraw inaccurate and untruthful diagnosis codes for its Medicare Advantage Plan enrollees in order to increase its payments from Medicare. The case originated as a qui tam lawsuit filed by a former IBX employee and offers a concrete illustration of how Medicare Advantage risk adjustment fraud can arise — and what people working inside these organizations may recognize. Every False Claims Act matter is different; results depend on the specific facts of each case, and no similar outcome is implied.

Under the Medicare Advantage (MA) Program, also known as Medicare Part C, the Centers for Medicare & Medicaid Services (CMS) pays Medicare Advantage Organizations (MAOs) a fixed monthly amount adjusted for various risk factors that affect expected health expenditures for the beneficiary. In general, CMS pays MAOs more for sicker beneficiaries expected to incur higher healthcare costs. To make these risk adjustments, CMS collects medical diagnosis codes from the MAOs — meaning that more and more serious diagnoses translate directly into higher payments. The government’s allegations against IBX covered payment years 2017 through 2021.

How the Alleged Fraud Worked: Diagnosis Codes and the Chart Review Program

According to the government’s allegations, IBX submitted inaccurate and untruthful patient diagnosis data to CMS that inflated the risk adjustment payments it received, knowingly failed to withdraw that data and repay CMS, and falsely certified in writing to CMS that the data was accurate and truthful. Three interlocking practices are at the center of those allegations.

Submitting Inaccurate Diagnosis Codes to Inflate Risk Scores

The government alleges that IBX submitted inaccurate and untruthful patient diagnosis codes to CMS in order to inflate the risk adjustment payments it received. Because more and more serious diagnoses translate directly into higher payments from CMS, MAOs face a financial incentive to overstate patient illness — and the government contends IBX acted on that incentive.

The Asymmetric Use of Chart Reviews

The government contends that, for payment years 2017–2021, IBX operated a “chart review” program in which its nurse reviewers reviewed medical records and identified all medical conditions that the charts supported. IBX relied on the results of those chart reviews to submit additional diagnosis codes to CMS to obtain additional payments. However, IBX’s chart reviews did not substantiate some diagnosis codes previously reported by IBX to CMS. IBX did not delete or withdraw those diagnosis codes, which would have required IBX to reimburse CMS. The United States alleges that IBX used the results of its chart reviews to identify instances where IBX could seek additional payments from CMS while ignoring those same results when they indicated IBX was overpaid.

False Certifications to CMS

The government further alleges that IBX falsely certified in writing to CMS that the submitted data was accurate and truthful — even when internal chart reviews had already flagged inaccuracies. Under 31 U.S.C. § 3729, any person who knowingly presents, or causes to be presented, a false or fraudulent claim for payment to the government, or knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim, is liable to the United States Government for a civil penalty plus three times the amount of damages the Government sustains.

What Insiders at Medicare Advantage Organizations May Recognize

Employees working inside a Medicare Advantage Organization — as nurse reviewers, coders, compliance officers, data analysts, or billing personnel — may encounter conduct similar to what was alleged here. The IBX settlement illustrates patterns that an informed insider could be positioned to identify and report.

Specifically, an insider may recognize:

• A chart review or retrospective coding program that systematically adds diagnosis codes to raise risk scores but applies no comparable rigor to removing codes that reviews show are unsupported;
• Internal policies or instructions directing staff to use chart review results selectively — capturing upside revenue while ignoring findings that would require repayment to CMS;
• Written certifications submitted to CMS attesting to data accuracy when internal reviews have already flagged inaccuracies;
• Management pressure to maximize risk adjustment revenue without corresponding processes to identify and return overpayments.

This pattern of conduct — asymmetric use of chart reviews combined with false certifications — is the focus of active government enforcement and is the kind of matter addressed in our work on Medicare Advantage risk adjustment fraud. Insiders who observe these practices may have information that forms the basis of a viable qui tam action.

Why DOJ Enforcement in This Area Is Expanding

Assistant Attorney General Brett A. Shumate stated: “The government pays private insurers over $530 billion each year to care for Americans enrolled in Medicare Advantage. When insurers knowingly and improperly retain inflated payments based on inaccurate and untruthful diagnoses, we will hold them accountable whether they are a small regional plan or a large nationwide organization.” That statement may signal that enforcement is not limited to the largest national carriers. Every False Claims Act matter is different; results depend on the specific facts of each case, and no similar outcome is implied.

The DOJ press release also references the launch of the Task Force to Eliminate Fraud and the National Fraud Enforcement Division, described as part of the administration’s effort to combat fraud, waste, and abuse in federal programs. These developments may indicate increased investigative resources directed at Medicare Advantage risk adjustment practices across the industry.

Acting Deputy Inspector General for Investigations Miranda L. Bennett of HHS-OIG added: “Private insurers enrolled in the Part C program purposely inflating diagnoses for financial gain is unacceptable. Today’s settlement demonstrates our commitment to ensuring the integrity of the Medicare program and to partnering with the Department of Justice to pursue allegations of risk adjustment fraud.”

How the False Claims Act Protects and Rewards Whistleblowers

The IBX settlement was made possible by a former IBX employee who filed a qui tam complaint under the False Claims Act. Under 31 U.S.C. § 3730(b), a person may bring a civil action for a violation of section 3729 for the person and for the United States Government. The case is captioned United States ex rel. Crawford v. Independence Blue Cross, No. 20-cv-5818, in the U.S. District Court for the Eastern District of Pennsylvania. The whistleblower, a former IBX employee, is set to receive $3,825,000 as a relator’s share of the settlement. Every False Claims Act matter is different; results depend on the specific facts of each case, and no similar outcome is implied.

Under 31 U.S.C. § 3730(d)(1), if the government proceeds with an action, the person bringing the action shall receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action. In the IBX matter, the whistleblower is set to receive $3,825,000 from the $22,500,000 settlement. Every False Claims Act matter is different; results depend on the specific facts of each case, and no similar outcome is implied.

The False Claims Act also provides retaliation protections. Under 31 U.S.C. § 3730(h), any employee, contractor, or agent who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done in furtherance of an action under the False Claims Act shall be entitled to all relief necessary to make that person whole.

If practices like these look familiar from your own workplace, you can discuss what you have seen with a Price Armstrong attorney confidentially and at no cost. Call (888) 670-9542 or use the secure evaluation form below.

If practices like these look familiar from your own workplace, you can discuss what you have seen with a Price Armstrong attorney confidentially and at no cost. Call (888) 670-9542 or use the secure evaluation form below.

Frequently Asked Questions

What is Medicare Advantage risk adjustment fraud?

Medicare Advantage risk adjustment fraud refers to conduct in which a Medicare Advantage Organization submits inaccurate or unsupported diagnosis codes to CMS to inflate the risk-adjusted payments it receives, or fails to withdraw such codes after internal reviews reveal they are unsupported. As the IBX settlement illustrates, this can involve a chart review program used asymmetrically — adding codes to seek more payment while ignoring findings that would require repayment — combined with false written certifications to CMS that the submitted data is accurate and truthful.

Who can file a qui tam lawsuit under the False Claims Act?

Under 31 U.S.C. § 3730(b), a person may bring a civil action for a violation of section 3729 for the person and for the United States Government. In practice, insiders such as nurse reviewers, coders, compliance officers, data analysts, and billing personnel who observe improper risk adjustment practices may be well-positioned to bring such an action, as the former IBX employee who filed United States ex rel. Crawford v. Independence Blue Cross demonstrated.

How much could a whistleblower receive from a Medicare Advantage fraud settlement?

Under 31 U.S.C. § 3730(d)(1), if the government proceeds with the action, the relator shall receive at least 15 percent but not more than 25 percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the person substantially contributed to the prosecution of the action. In the IBX matter, the whistleblower is set to receive $3,825,000 from the $22,500,000 settlement. Every case is different, and no assurance can be given about the outcome of any particular matter. Every False Claims Act matter is different; results depend on the specific facts of each case, and no similar outcome is implied.