Investigation sought over Medicaid plans’ costs

The U.S. Attorney’s Office has been asked to investigate the findings of an internal health department review of two D.C. Medicaid health plans that found more than $15 million in excessive costs.

The D.C. government’s Medicaid director, Robert Maruca, made the request in a recent letter obtained by The Washington Times to the U.S. Attorney for the District, Jeffrey A. Taylor.

Mr. Maruca expressed concern in the letter about inflated costs, lack of arms-length transactions and undisclosed profits.

Mr. Maruca questioned whether D.C. Chartered Health Plan Inc. and Amerigroup Inc. “greatly enhance the profits of the parent company or other businesses of the parent company, thus improperly hiding the large profits that would have been made,” according to the letter.

A spokeswoman for the D.C. Department of Health declined to comment, saying neither Mr. Maruca nor any other city health officials would discuss the letter. The U.S. Attorney’s Office did not comment on whether it is conducting a probe as a result of the request.

According to Mr. Maruca’s letter, auditors hired by the city’s health department found $7.7 million in “potentially excessive or unsupported” costs by Chartered Health.

“We have not had an opportunity to review the letter, so it’s something we’d certainly like to look into,” said Tamara Smith, chief executive for Chartered Health.

Miss Smith also said the health department, which oversees the city’s Medicaid program, gave the company no indication of any concerns about its cost reporting.

In addition, Mr. Maruca stated an internal audit of Virginia-based Amerigroup found “improperly” charged fees that added $8.1 million in costs to the District.

“Because of the potential for fraud in those two cases, I request that you review them to determine whether the U.S. Attorney’s Office sees sufficient justification in the audit results to pursue this matter,” Mr. Maruca wrote.

Amerigroup officials sharply disputed the findings of the audit, which Mr. Maruca referred to in his letter to the U.S. Attorney’s Office.

In a written response to the audit, the company said D.C. insurance regulators approved of its profit margins and administrative costs.

A spokesman for the company said the $8.1 million actually covered administrative-support costs provided by Amerigroup to all of its health plan subsidiaries, not only the one based in the District.

“The administrative fees in question have been examined in multiple audits, including one commissioned by the D.C. Department of Insurance Securities and Banking,” said Amerigroup spokesman Kent Jenkins.

“We’re surprised that this information was leaked without a final audit report or exit interview in which these misperceptions could have been corrected. It’s unprofessional, incomplete and harmful to Amerigroup and to the reputation of the D.C. government.

“We are very confident that a review of these documents will clear up any question of this very quickly,” he said.

Last week, D.C. Council member David Catania, at-large independent, told WAMU Radio (88.5 FM) the U.S. Attorney’s Office was looking into audits of the city’s Medicaid managed-care organizations, though he did not identify the organizations by name.

According to city records, the audits of the managed-care organizations were funded through a $2 million request by the D.C. Council’s Committee on Health in the city’s 2006 budget.

Mr. Maruca’s request for investigation comes as the city’s Medicaid office has come under increasing scrutiny in recent months.

A recent audit by the D.C. Office of Inspector General found the city’s Medicaid office had erred in overpaying the city’s three managed-care organizations tens of millions of dollars over several years.

In addition, The Washington Times reported last month that four of the top 10 medical equipment suppliers to the D.C. Medicaid program are under investigation, not including another company whose offices were raided by the FBI.