HMO pays record-high $320M to settle Medicaid overpayment charges


An HMO insurer in California has agreed to pay a largest-of-its-kind settlement of $320 million to resolve allegations that it received overpayments from the state's Medicaid program.

A state and federal investigation of Long Beach-based SCAN Health Plan revealed the insurer was overpaid by Medi-Cal, and it didn't provide necessary financial documents to the California Department of Health Care Services, reported California Watch.

In some cases, Medi-Cal reimbursed SCAN for long-term care members receiving nursing home treatments even though those treatments were provided at the patients' homes, where the cost of care is lower. Medi-Cal also paid SCAN for some nursing home patients although the insurer wasn't obligated to continue providing such services, the Los Angeles Times reported.

The U.S. Department of Justice, which conducted the federal investigation, determined that SCAN wasn't aware of Medi-Cal's overpayments. Assistant U.S. Attorney Susan Hershman said Medi-Cal was responsible for the payment errors. "We did not develop any evidence that SCAN participated in the setting of the rate or that SCAN ever knew the rates exceeded the legal cap set by state statute and regulations," she said.

But state officials disagreed, claiming SCAN's failure to provide financial information hinders its ability to identify the errors, noted the Times.

SCAN said it voluntarily refunded the overpayments and emphasized that no misconduct on its part was found, according to the Associated Press. "We're pleased that we can now focus our undivided attention on our core mission and passion: serving our members," SCAN CEO Chris Wing said in a statement. "We played no role in how the state set rates for the population at issue, and we were previously unaware of the mistake the state made."

To learn more:
- read the California Watch article
- check out the Los Angeles Times article