WellCare kept 50% of Medicaid mental-health money, records show
By Carol Gentry
8/1/2008 © Florida Health News
Florida’s two largest Medicaid HMOs kept 50 percent of the state money they received last year for mental health care, even though they were supposed to spend at least 80 percent on patients, new state records show.
HealthEase and Staywell -- both subsidiaries of WellCare Health Plans Inc. – recently refunded a combined $9.5 million to the state to cover the lapse, according to records provided to Florida Health News by the Agency for Health Care Administration.
If the two plans skimped in a similar fashion in prior years and hid their excess profits from authorities, it would explain why WellCare says it faces repayments to Florida of about $45 million, not counting any fines that may be imposed for having turned in erroneous reports.
Bob Sharpe, a former Florida Medicaid director who now directs a statewide group of mental health centers, called WellCare’s actions “unconscionable.” But then, he added, “WellCare has never played it straight.”
Amy Knapp, spokeswoman for Tampa-based WellCare, had no immediate comment. In a news release last week, the company said it would revise its financial statements from 2004, 2005, and 2006 and the first half of 2007 to redress what it called “accounting errors.”
In a press release, Executive Chairman Charles Berg said, “The Board of Directors and the entire management team are committed to the highest standards of business conduct, compliance and financial reporting and controls."
The repayment for last year -- $4.5 million for HealthEase and $4.9 million for Staywell – could do some good if it were funneled into community mental health programs that treat low-income patients, Sharpe said. Unfortunately, repayments tend to go back into general revenue. Sharpe called on public officials to send the money back into mental health.
In taking the money intended for mental health treatment, Sharpe said, WellCare shortchanged the most disabled group of Medicaid patients in the state. Florida spends less per patient on mental health than almost any other state, past reports have found.
WellCare has been under investigation by the U.S. Attorney’s Office since October for suspected Medicaid fraud, after a whistleblower filed suit. No criminal or civil charges have been filed, but the top three executives at the company have been replaced. Analysts who follow WellCare say that talks are underway with the U.S. attorney’s office in Tampa that could lead to a settlement.
The behavioral health program – mental health and substance abuse – is the only part of Florida Medicaid that requires plans to spend a certain percentage of the money on services to patients, AHCA spokesman Fernando Senra said. The state allows plans to use 20 percent for other things, including administration, marketing and profits.
The Legislature created the reporting requirement in 2002 and told HMOs they would have to refund some of the money to the state if they spent less than 80 percent on patient services. Last year, WellCare and other health plans quietly but successfully lobbied for a provision attached to a budget bill that eliminated the 80-percent spending requirement.
But reporters found out about it and exposed what was happening. Gov. Charlie Crist vetoed the provision, which reinstated the 80-percent spending requirement.
Florida Healthy Kids Corp. also may be due repayment from WellCare because its contract with the company requires a spending ratio of 85 percent. Chief Financial Officer Alex Sink, who chairs the Healthy Kids board of directors, announced last week that she asked the program’s director to obtain an independent audit.
“It is essential that we recover every last dime that WellCare owes the Florida Healthy Kids program,” Sink said in a release.
It's not impossible to hold administrative and other non-treatment costs to 20 percent, as the AHCA information shows. The third-largest Medicaid HMO, Amerigroup Florida, came within a whisker of making the 80-percent ratio and had to repay only a little over $16,000 out of $13.7 million it received in state premiums.
United, the fourth largest Medicaid contractor in behavioral health, marked a ratio of only about 65 percent. It had to repay almost $1.2 million out of its $7 million in premiums.
Since the FBI and other law-enforcement authorities raided WellCare’s Tampa headquarters Oct. 24, the company’s senior management has been overhauled. In addition to appointing Berg as executive chairman, the company named Heath Schiesser as president and chief executive officer; Thomas O'Neil as senior vice president, general counsel and secretary; Jonathan Rich as senior vice president and chief compliance officer; and Thomas Tran as senior vice president and chief financial officer.
In addition, WellCare says in its SEC filings, the Board has formed a regulatory compliance committee. The chief compliance officer now reports to the CEO and to the committee.
