In summary
The Department of Justice claims Inland Empire Health Plan committed fraud by using funds meant to expand the program for non-medical expenses.
The Inland Empire Health Plan kept $320 million that it should have given back to the federal government, a federal lawsuit claims.
IEHP is responsible for providing Medi-Cal to 1.6 million people throughout the Inland Empire—35% of Riverside and San Bernardino Counties’ combined population.
The complaint claims that IEHP committed fraud by putting money for the medical care of new Medi-Cal patients towards non-medical expenses or the care of existing patients.
The suit also alleges that IEHP created bonus programs for regional health systems using the Medi-Cal expansion money, and used the federal money as a bargaining chip to negotiate better care rates for people with IEHP insurance.
The agency ended up giving the federal government $30 million back. The complaint charges the final sum of falling $320 million short.
“Today’s lawsuit against IEHP shows our steadfast commitment to hold accountable insurers that brazenly compromise the Medicaid system,” said Acting United States Attorney Bill Essayli. “We will take every measure to restore integrity and accountability to the Medicaid system and ensure that patient care – not financial gain – is the primary focus of our health care system.”
The agency’s attorney, Winston Chan of Gibson, Dunn & Crutcher, wrote in an emailed statement that the benefits paid through the program were already approved by regulators.
“The allegations are a brazen attempt at revisionist history that is not only wrong as to the facts and law, but also particularly galling in light of the federal government’s wider attacks on state Medicaid funding,” he wrote.
The federal government gave IEHP funds to expand Medi-Cal from Jan. 1, 2014 to June 30, 2016, according to the suit. At least 85% of the funding was intended to pay for the initially high costs of providing healthcare to the newly insured. Any funding from the program not used for those medical costs would have to be paid back to the federal government, the suit says. The complaint claims that IEHP committed fraud by putting the money towards non-medical expenses or the care of people already covered by Medi-Cal.
“Every MCE dollar that IEHP improperly spent on ineligible expenses—such as other patient populations, consultants, or lawyers—was effectively an extra dollar in IEHP’s pocket because IEHP did not have to spend money from its general budget,” the suit says.
The agency spent $50 million of the funds to attempt to create a health record system for the geographic area served by the IEHP, the suit said. Instead of paying the company, Huron Consulting Group, directly with the funds, IEHP administrators paid providers, who then paid Huron, the complaint said.
The complaint cited an email from former IEHP’s Chief Executive Officer Bradley Gilbert:
“The funds have to flow through the two county hospitals from IEHP so I can get credit for them as medical costs or the dollars go back to the state. So we will have to set it up so that IEHP pays the hospitals and then the money is used for the data integration effort,” the email said.
A June 3, 2015, email from Gilbert, included in the complaint, discussed the difficulty of spending all the money from the government.
“I will have to distribute hundreds of millions of dollars beyond actual medical costs,” the complaint quotes Gilbert.
