CA Healthcare Organizations Settle False Claims Act Violations

Organizations Settle False Claims Act Violations

The False Claims Act settlements alleged that the healthcare organizations knowingly submitted improper Medicaid claims for services provided to California’s Medicaid expansion population.

A California county organized health system and three healthcare providers have reached a $70.7 million settlement to resolve allegations that they violated the False Claims Act by submitting fraudulent claims to California’s Medicaid program, Medi-Cal.

California expanded Medicaid under the Affordable Care Act in January 2014. This extended Medi-Cal coverage to adults between 19 and 64 with incomes up to 133 percent of the federal poverty level.

The federal government funded the program’s expansion for the first three years. Per contracts with California’s Department of Health Care Services (DHCS), California county organization health systems were required to spend at least 85 percent of the federal funds on “allowed medical expenses” for its adult expansion population.

If a county organized health system did not spend at least 85 percent of the funds, it was required to pay the state the difference between 85 percent and what it spent. The state would then have to return that amount to the federal government.

Three separate settlements have been reached to resolve allegations that Gold Cost, Ventura County, Dignity Health, and Clinicas submitted false claims to Medi-Cal for additional services provided to adult expansion members between January 1, 2014, and May 31, 2015.

According to the United States and California, the payments were not considered “allowed medical expenses” under Gold Coast’s contract with DHCS. Additionally, they alleged that the payments were pre-determined amounts that did not reflect the fair market value of the additional services provided and that the additional services were duplicative of services already required to be rendered.

The settlement also alleged that the payments were unlawful gifts of public funds that violated Article IV, section 17 of the California Constitution.

Gold Coast has agreed to pay $17.2 million to the United States and Ventura County will pay $29 million to the United States. Dignity Health has agreed to pay $10.8 million to the United States and $1.2 million to the state of California, while Clinicas will pay $11.25 million to the United States and $1.25 million to the state of California.

The money at issue in this case was designated by the federal government to pay for services to treat Medicaid expansion patients, and it never should have been used to double-pay for services that already had been reimbursed or to pay for services that simply were never provided.

Medicaid is a taxpayer-funded program that exists to help patients afford healthcare, and it never should be used to line the pockets of healthcare providers through fraudulent schemes.

In addition to the settlement amounts, Gold Coast and Ventura County have agreed to enter into five-year corporate integrity agreements (CIAs) in exchange for HHS releasing its right to exclude the organizations from participating in Medicaid.

The CIAs require Gold Coast and Ventura County to implement centralized risk assessment programs and hire an independent review organization to complete annual reviews. Gold Coast’s reviews will focus on its calculation and reporting of medical loss ratio data in Medi-Cal. Ventura County’s reviews will assess hospital claims submitted to Medicare, Medicaid, and managed care organizations

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