Politics & Government

Company to pay $2 million for falsifying Kentucky Medicaid records

FRANKFORT — The company that administers Medicaid for the troubled Passport Health Plan has agreed to pay more than $2 million in damages for falsifying medical data to get a bonus payment from the state in 2009.

Attorney General Jack Conway said Wednesday at a news conference that his office was contacted by a whistle-blower at AmeriHealth Mercy nine months ago. The employee said the company was falsifying reports that said certain women received hysterectomies or Pap smears.

AmeriHealth Mercy is the third-party administrator for Passport, which manages health care for the poor and disabled in Jefferson and 15 other counties.

Passport Health Plan, in a written statement, said Wednesday it is considering changing its third-party administrator for some services.

Passport also has been the subject of a recent state audit that found questionable spending on lobbyists, travel and expenses, and multiple conflicts of interest between Passport and AmeriHealth Mercy.

The attorney general's investigation found that AmeriHealth Mercy had altered some data, upping its score for cervical cancer screenings in 2009. That higher score allowed the company to receive $677,000 in bonus money.

As part of its agreement with the attorney general's office, AmeriHealth Mercy will pay the state $2 million, or triple the $677,000 it received in bonus money. The money will be split between the federal and state governments, both of which fund the program. The federal government typically pays 70 percent to 80 percent of the cost, with the state paying the remainder.

AmeriHealth Mercy, in a written statement, said the people who were involved in altering medical data no longer work for the company. AmeriHealth Mercy, which is based in Philadelphia, did not admit any wrongdoing.

"Our agreement to a settlement, as the consent judgment states, does not in any way constitute an admission of wrongdoing and (AmeriHealth Mercy) denies any intent to misrepresent data," the company said. "We enter into this settlement in order to expeditiously resolve this dispute and to avoid the delay, expense and inconvenience of protracted litigation."

Conway said his office initially opened a criminal investigation but ultimately decided a criminal conviction might be difficult to obtain.

"There was knowledge that these scores were erroneous," he said.

But AmeriHealth Mercy and Passport worked with the attorney general's of Medicaid Fraud & Abuse Control Division to resolve questions about the bonus agreement, Conway said.

Passport's administration appeared not to know about the false information, Conway said.

Mark Carter, interim CEO of Passport Health Plan, said it is considering changing its third-party administrator for "certain administrative services."

Carter said Passport Health Plan had audited the results of some of AmeriHealth Mercy's data, but the erroneous data about pap smears and hysterectomies did not show up in the findings, he said.

"We had previously advised AmeriHealth Mercy health plans of our plan to pursue a new approach to plan management, which would include issuing a request for proposal for certain administrative functions," Carter said.

He said Passport might take further actions if requested by the Cabinet for Health and Family Services, which oversees the Passport contract.

Conway also said Wednesday his office is looking into other alleged improprieties involving Medicaid payments and Passport.

One area under investigation is whether more than $30 million in transfer payments between Passport and its initial investors was an appropriate use of Medicaid money.

Sen. Tim Shaughnessy, D-Louisville, has raised questions about whether Passport should have transferred the money to five Louisville-area health care providers that were founding members of Passport.

According to the audit, there were questions about whether $20 million of that money was used for indigent care, as it was intended, and whether the five health care organizations ever should have received the money.

"We are looking at that for potential legal action," Conway said of the transfer payments.

Since the November audit, Passport has fired two of its executives and hired an interim chief executive. It also announced this week that it was hiring an internal compliance officer, a move that will help Passport monitor AmeriHealth Mercy's contract, Conway said.

Passport is the state's only managed health care program for Medicaid. Gov. Steve Beshear announced last year that he intends to move other parts of the state to similar managed health care plans to stem ballooning costs in the health care program for the poor and disabled.