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Humana to repay government $14.5 million for double-dipping Medicare fees

Humana Inc. will pay $14.5 million to the federal government for what investigators allege was the HMO's deliberate scheme to defraud the Medicare system.

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"We cannot tolerate misuse of the reimbursement system for financial gain."

Officials with the U.S. Attorney's Office in Miami, which investigated the HMO's payment records, accuse Humana of double-billing the government over an eight-year period by classifying thousands of its patients as eligible for both Medicare and Medicaid. That so-called dual eligibility allowed Humana to collect higher payments, officials contend.

Humana, based in Louisville, Ky., admits no wrongdoing and says there was no deliberate attempt to double-dip on its government reimbursements. Humana is one of the nation's largest publicly traded managed care companies, with about 6.2 million customers.

The $14.5 million settlement, reached on June 5 and announced the next day, is the first in the nation involving a Medicare HMO. A tentative settlement was actually reached a year ago but not finalized until now.

"The Medicare system operates on the good faith and honesty of its providers, and we cannot tolerate misuse of the reimbursement system for financial gain," says Eric Holder, deputy attorney general in the U.S. Attorney's Office for the Southern District of Florida.

Medicare fraud

Government officials have stepped up their campaign to encourage consumers to report suspected Medicare fraud. For more information, read about fraud and abuse on the federal Medicare Web site.

Investigators say the HMO classified customers in Arizona, Florida, Illinois, Kentucky, and Missouri as eligible for Medicare and Medicaid. The Centers for Medicare & Medicaid Services, formerly HCFA, which administers the programs, pays HMOs a set monthly fee to provide care for Medicare patients. But HMOs are reimbursed a higher monthly fee if the patients are eligible for both Medicare and Medicaid, and officials say Humana intentionally submitted false information to obtain the inflated reimbursements.

A CMS, formerly HCFA, spokesman referred calls to the Miami investigators' office.

Humana promises "corporate integrity"

Under the settlement, Humana must repay $7.5 million that it allegedly overcharged the government, plus a penalty for what officials say were its deliberate efforts from 1990 to 1999 to defraud Medicare. Humana also entered into a five-year "corporate integrity agreement" with the Office of Inspector General of the U.S. Department of Health and Human Services.

The 48-page corporate integrity agreement spells out in great detail what Humana's obligations are to ensure that its managers and employees comply with federal health care law. Humana must review, and if necessary revise, its internal "code of conduct," which is distributed to all of the HMO's employees. Among other things, the code requires Humana's "full compliance" with all federal health care laws. Employees must certify in writing that they've received a copy of the code of conduct, read it, and understand it.

In addition, each employee must receive special training that will explain the HMO's code of conduct, the corporate integrity agreement, and compliance with federal law. Humana also must submit to independent audits each year and provide government officials with annual reports outlining its compliance activities for the year, employee training, changes to its internal policies, and corrective actions to address any violations of the law.

The corporate integrity agreement also gives federal officals the right to examine Humana's books, documents, and other records to verify the HMO's compliance with the settlement. If it fails to comply, Humana will be hit with a penalty as high as $2,500 per violation per day.

Tarnished past

Documents posted on the CMS, formerly HCFA, Web site point to prior problems with Humana and conclude that the agency should take stronger actions against HMOs that violate federal standards. A report from the General Accounting Office, dated on the site March 29, 2000, accuses CMS of "deficiencies" in establishing regulations and policies for sanctioning HMOs. The report also says that when Humana was found to be in violation of Medicare laws in the early 1990s, CMS, formerly HCFA, took no action because it did not have appropriate regulations in place.

Medicare HMOs, sometimes known as Medicare+Choice, are an alternative to the traditional indemnity-style Medicare plans. HMOs can contract with CMS to provide medical services to beneficiaries. Customers receive all the services covered by Medicare parts A and B, and they often get extra benefits, such as limited prescription drugs.

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