WellCare: We have a deal, $137.5M

By Mike Wells
6/25/2010 © Health News Florida 

WellCare Health Plans has announced a preliminary $137.5 million settlement with the federal government that, if executed, would halt investigations into allegations of accounting fraud. 

The Tampa-based provider of Medicaid and Medicare services has been under official investigation since October 2007.

WellCare made the settlement announcement on Thursday in an SEC filing, which outlined its agreement with the civil divisions of the U.S. Department of Justice and the U.S. Attorney’s Offices for the Middle District of Florida and Connecticut. 

The preliminary settlement is subject to approval of an executed written agreement. Upon its execution, the company would pay the government over a period of up to 36 months, plus interest at the prevailing Medicare Trust Fund rate. 

The settlement includes an acceleration clause that requires immediate payment of any remaining balance in the event WellCare is purchased or experiences a change in control during the payment period. If such a transition occurs within three years of the signing of the agreement, and the associated costs exceed certain thresholds, the company would have to pay another $35 million. 

The filing states that the settlement would include about $23 million owed to the Florida Agency for Health Care Administration as a result of Medicaid overpayments WellCare received between August and October 2005.
 
These overpayments were the result of a change that AHCA made in its pay structure on medical benefits for newborns. WellCare said it previously had recorded this liability and that it had been in discussions with AHCA about the overpayment for some time.
 
WellCare previously paid $80 million to settle federal and state criminal probes into allegations that it had defrauded Florida benefits programs for low-income adults and children of $40 million by misstating what it actually spent on care.

After 200 state and federal agents raided its Tampa headquarters in the fall of 2007, WellCare fired its top three executives, restated more than three years of earnings to correct payment errors and blamed the accounting problems on its former executives. They have not been criminally charged. 

The newly announced $137.5 million settlement is separate from the $80 million payment, said WellCare spokeswoman Amy Knapp. She declined to discuss the agreement beyond that.

WellCare is a major player in Florida's Medicaid system. The company's 2009 annual report says that almost one-fourth of its members are from Florida: 425,000 on Medicaid and 114,000 on Medicare.
 
As of April, WellCare's Healthease and Staywell HMOs combined to enroll nearly 355,000 Medicaid recipients — or about one-third of all enrolled in such plans, according to a state report. AHCA said WellCare received $914.5 million from Florida Medicaid last year. 

--Mike Wells is an independent journalist in Tampa. Questions or comments may be sent to Editor Carol Gentry.