Attorney General Sam Olens announced today that Georgia is one of nine states that, along with the federal government, have settled allegations against WellCare, a health maintenance organization. WellCare had entered into contracts with various States’ Medicaid programs, including Georgia, to provide managed care services to enrolled program beneficiaries. This settlement resolves allegations of accounting fraud, falsification of records and other reports, including number manipulation, and manipulation of the enrollment of covered recipients by selective marketing and related misconduct.
Under the Agreement, WellCare agreed to pay the participating States and the United States $137.5 million, plus interest, in four installments over a period not to exceed three years. Georgia Medicaid’s portion of the settlement is $33 million in state and federal dollars. Medicaid is funded jointly by the federal and state governments.
Examples of the alleged accounting fraud include improper acts such as inflating expenses that serve as the basis for setting capitated rates -- in one allegation, counting reinsurance profit as an expense. Examples of alleged falsification of records and manipulation of numbers include falsifying encounter data, and manipulating the Incurred but Not Reported numbers (an actuarial estimate of claims not yet reported or paid) and the Medical Loss Ratio (which reflects the percentage of every premium dollar spent directly on the provision of health care). Examples of alleged manipulation of the enrollment of covered recipients include targeting desirable recipients (low-cost, healthy) for enrollment, while discouraging, failing to enroll, or disenrolling undesirable recipients (high-cost, chronically ill).
As part of the settlement, WellCare has entered into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. This Agreement provides for on-going oversight of the corporation’s rehabilitation for three years.
The investigation involved five whistleblower lawsuits filed under the quitam provisions of the Federal and certain State False Claims Act. These actions are pending in the United States District Court for the District of Connecticut, the Middle District of Florida and the State of Florida Second Circuit.
There is also a criminal component to this case. In March of 2011, five former executives were charged with conspiracy to commit Medicaid fraud and making false statements. This is in addition to an information and plea agreement by a former executive entered into in 2009.