In a significant legal development, SCAN Health Plan, a managed care organization based in Long Beach, California, has agreed to pay a substantial sum of $323.67 million to resolve allegations of overpayments from both Medi-Cal and Medicare. This case throws a spotlight on the complexities of healthcare reimbursements, particularly concerning California Long Term Care Scan processes and risk adjustment in Medicare programs. The settlement, one of the largest ever recovered from a single Medi-Cal provider, underscores the government’s commitment to combating fraud and ensuring appropriate use of taxpayer funds within public health initiatives.
The core of the issue revolves around two separate, yet equally critical, aspects of healthcare finance: Medi-Cal overpayments related to long-term care services and inflated risk adjustment scores within Medicare Part C. The Medi-Cal portion of the settlement, amounting to a staggering $319.85 million, addresses errors in California’s rate-setting process for long-term care patients. These errors, dating back to 1985, resulted in SCAN Health Plan receiving inflated payments for long-term care services. Specifically, the investigation revealed that SCAN was being compensated at rates intended for patients in nursing homes – a higher cost care setting – even for patients receiving care at home, which is typically less expensive. Furthermore, a second error failed to account for contract provisions allowing SCAN to terminate services for long-term care patients after two months in a nursing home, yet payments continued. This situation highlights potential flaws in the California long term care scan and oversight mechanisms that are supposed to ensure accurate allocation of resources.
Adding to the financial penalties, SCAN Health Plan also paid an additional $3.82 million to settle allegations concerning Medicare Part C. This part of the settlement stemmed from a whistleblower lawsuit filed by a former SCAN employee, James M. Swoben. The lawsuit alleged that SCAN improperly inflated patients’ “risk adjustment scores,” leading to increased Medicare payments. Risk adjustment scores are crucial in Medicare Part C as they determine the monthly payments health plans receive for each enrollee, based on the patient’s health status. The process involves physicians reporting diagnosis codes, which are then used to calculate these risk scores. Mr. Swoben’s complaint detailed how SCAN allegedly used external companies to review patient medical charts, seeking additional diagnosis codes to report, potentially inflating risk scores without properly informing CMS about potential deletions of original codes. This practice, while not inherently illegal, became problematic when SCAN allegedly prioritized increasing risk scores without ensuring the accuracy and completeness of the reported data, raising serious questions about the integrity of the California long term care scan data and reporting practices within Medicare Advantage plans.
While SCAN Health Plan cooperated with the investigations and settled both allegations without admitting wrongdoing, the sheer size of the settlement sends a clear message. Authorities are vigilant in monitoring healthcare providers and will aggressively pursue cases of potential fraud and abuse within programs like Medi-Cal and Medicare. Glenn R. Ferry, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health & Human Services, emphasized this point, stating the OIG’s commitment to investigating and prosecuting attempts to “game evolving government payment systems.” The resolution of this case serves as a stark reminder of the importance of accurate coding, transparent billing practices, and robust oversight to safeguard public healthcare funds and maintain the integrity of programs designed to support vulnerable populations, particularly those in need of California long term care scan services and broader healthcare support. The case also underscores the vital role of whistleblowers in bringing potential misconduct to light and ensuring accountability within the healthcare industry.
