SCAN Pays $323.7 Million To Settle Suit

Long Beach-based Medicare Advantage insurer SCAN Health Plan has agreed to pay $323.7 million to state and federal regulators to settle claims of overpayments for care provided to dual-eligible seniors.

The settlement is the largest ever involving overpayments for dual-eligibles, who are simultaneously enrolled in the Medicare and Medi-Cal programs.

The overpayments occurred between 2001 and 2008. 

According to a statement issued by SCAN, the state of California mistakenly calculated payment rates for dual-eligible care during that period.

“We played no role in how the state set rates for the population at issue, and we were previously unaware of the mistake the state made,” SCAN Chief Executive Officer Chris Wing said in the statement. “Once we learned that the State made errors, we decided to refund all the money mistakenly paid. This is the right thing to do and is in the best interests of the thousands of senior citizens we serve.”

However, state and federal regulators claimed SCAN did not provide the appropriate financial information in order for it to properly set payment rates, and may have inflated the risk scores of its dual-eligible enrollees to obtain higher payments.

“This settlement is a victory for the Medi-Cal beneficiaries we serve,” said Toby Douglas, director of the Department of Health Care Services, which administers the Medi-Cal program. Much of SCAN’s settlement – $320 million – is to settle the Medi-Cal portion of overpayments. It will be split between the state and the federal government.

The remainder of the settlement, about $3.8 million, covers overpayments from the Medicare program.

The settlements stem from a 2009 federal whistleblower suit filed by a former SCAN consultant. He claimed the plan was closely analyzing patient data and systematically upcoding the medical conditions of its enrollees.

In settling the claims, SCAN did not admit any wrongdoing. It has about 120,000 Medicare Advantage enrollees in California.