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Healthy Kids: WellCare owes $2.1M

By Carol Gentry
7/23/2010 © Health News Florida

An independent audit conducted for Florida Healthy Kids, a subsidized program for uninsured children of working families, found WellCare Health Plans still owes it money for "double dipping" in the pharmacy program.

Under last year's agreement with the U.S. Attorney's Office that deferred criminal prosecution, the Tampa-based HMO -- which also contracts with the state Medicaid program -- agreed to pay $40 million in restitution, including $6.4 million to Healthy Kids.   

But an independent audit by the Buttner Hammock & Co. of Jacksonville found an additional $2.1 million in overcharges to Healthy Kids, much of it from the pharmacy program. 

"It’s unacceptable for any company to increase their bottom line profits at the expense of Florida taxpayers,” said Rich Robleto, executive director of Florida Healthy Kids. “To intentionally overcharge a program designed to help families that are already struggling is beyond comprehension.” 

WellCare, as it has done repeatedly in recent months, issued a statement saying the wrongdoing was in the past, management has changed and it's time for "closure."
Sink takes a bow

The audit was instigated at the request of Florida CFO Alex Sink, who at the time of the preliminary settlement was chair of the Healthy Kids board. A Democrat, Sink resigned from the board last year to run for governor. In a statement her office released today, Sink said she has asked that the findings be brought to the attention of the Department of Justice "to make sure that Florida Healthy Kids receives the payments it deserves and the scope of the scheme is fully understood." 

DOJ, which had already received agreement on $40 million in civil fines last year, is currently negotiating the final payout from WellCare.

The current chair-designee, Loranne Ausley, said in a statement that the organization will "hold WellCare accountable for their actions."  

Amy Knapp, communications director for WellCare Health Plans, read the following statement:

"We are pleased that this final report brings closure to yet another matter of the past. WellCare welcomes the report's recommendation to more clearly identify what should be included in medical-expense calculations. As a company that is very aware of the opportunities and challenges of the current reporting system, we stand ready to help our state customers design systems that prevent unintentional mischaracterizations and fraud."  

What they found

In their report, the auditors said WellCare intentionally inflated pharmacy costs so that medical expenses would appear higher than they actually were. In its contract with WellCare, Healthy Kids required a payback of part of the savings if spending fell below 85 percent of the premiums.

WellCare was able to get rebates from pharmaceutical companies that reduced drug costs, but did not reflect that in its cost reports to the the children's insurance program, the auditors said.

The Buttner Hammock firm is the same one that found all eight Medicaid HMOs it audited recently for one specific year owed money back to the state, as Health News Florida reported on Wednesday. Despite the extraordinary coincidence of finding underpayments by all eight, the accountants did not draw conclusions about whether the discrepancies were due to errors or wrongdoing.

Buttner Hammock referred questions to the Agency for Health Care Admininistration, which represents Medicaid; AHCA referred questions to the U.S. Attorney's Office, which said it can't discuss an ongoing investigation.

Prosecutors have reportedly been checking on whether there is evidence of deliberate misreporting.  

--Carol Gentry, Editor, can be reached at 727-410-3266 or by e-mail.