National Headlines

Healthy Kids cuts 22,000 from WellCare, stiffens penalties

By Carol Gentry
8/21/2008 © Florida Health News

Florida's Healthy Kids Corp. is cutting back its business with WellCare Health Plans Inc. in the contract year that begins Oct. 1, offering the company's HMOs in 11 fewer counties and reducing enrollment by 22,000, WellCare disclosed in a filing on Wednesday to the Securities and Exchange Commission. 

Robleto
Rich Robleto, executive director of Healthy Kids, said his current enrollment in WellCare plans is about 78,000. He said it's just a coincidence that the drop-off in business with WellCare is becoming public knowledge within weeks of WellCare's acknowledgement that it owes millions of dollars to both Healthy Kids and the Florida Medicaid program because of what it calls "accounting errors." The recontracting started even before federal and state authorities raided the WellCare campus last October after receiving a whistleblower complaint.

"Our reduction in the number of counties is not that we're punishing them," Robleto said. "We don't have any details on their overcharging us."

Those details are still to come through an audit that will begin as soon as Healthy Kids chooses a vendor, Robleto said. Alex Sink, Healthy Kids' board chair and the state's chief financial officer, ordered the audit after WellCare divulged that it failed to spend as much on patient care as required under its mental-health and substance-abuse contracts with Medicaid.

Earlier this week, as Florida Health News reported, WellCare filed an SEC statement saying it would send $35.2 million to the U.S. Attorney's Office in Tampa to cover underpayments to Florida Medicaid for the years 2002 through 2006. WellCare said $24.5 million would be made available to federal and state authorities immediately, while another $10.7 will be held in escrow while the amount due is calculated. The company said further payments could be required and that the $35 million doesn't include any fees or fines that may be imposed.

Florida law requires Medicaid HMOs to spend at least 80 percent of their mental-health and substance-abuse payments on services to patients. Healthy Kids' current contract with HMOs requires that 85 percent of payments go to patient care, with a refund of 50 percent of anything less than that.

The Healthy Kids contract that begins Oct. 1 will make under-spending on patient services more painful for the companies. It calls for a 100 percent refund of anything under 82 percent that doesn't go to patient care.  If the spending amount -- called the "medical loss ratio" -- is between 82 and 85 percent, the HMOs have to give back 50 percent.

The Healthy Kids Corp. is a public-private partnership that provides coverage to 205,000 children of working families on a sliding scale.

WellCare, based in Tampa, has been under a federal and state Medicaid fraud investigation since last fall. No charges have been filed, but the company's top three executives have been replaced.