1. Health

Saying it's changed, WellCare wants in on state Medicaid contracts

Published Jun. 11, 2012

TALLAHASSEE — A Tampa-based health insurer with a checkered past is preparing to bid on billions of dollars in state government contracts to serve Florida's poor and disabled.

And it stands a better-than-even chance of winning at least some of that business.

As Florida embarks on its plan to move 1.2 million Medicaid patients into private health plans, WellCare Health Plans of Tampa is widely expected to secure state contracts that will shift health care for the poor into managed care programs. The move is an early stage in the Medicaid reform approved by the Legislature in 2011, pending a green light from the federal government .

The decision for WellCare to bid, though not unexpected, has sparked an outcry from critics who wonder how badly a company must act before it's banned from government contracts — and from the right to serve the state's most vulnerable.

But WellCare officials say the company has changed in the two years since it agreed to pay a $137.5 million fraud settlement amid accusations that the company bilked money from the state's Medicaid and Healthy Kids programs, and that it systematically dumped patients with expensive health needs.

"I think we have a highly competent and ethical group now running the company," said former U.S. Sen. Bob Graham, who serves as a paid director on the company's board and chairs a committee to ensure the company is ethical and complies with regulations. "Our service will be our best evidence of our corporate integrity."

The company's service, however, is what has some health advocates worried. Case in point: In 2009, WellCare withdrew from a five-county Medicaid pilot that served as the model for the statewide business WellCare is now seeking.

WellCare's decision disrupted care in some cases for patients with long-term health problems, disabilities and mental illnesses.

Critics also slam the federal settlement, finalized in April, which requires the company to repay less than half of the alleged $400 million to $600 million it siphoned from taxpayers.

Five former executives — including CEO Todd Farha, CFO Paul Behrens and general counsel Thaddeus Bereday — were indicted in March 2011 and are awaiting trial.

Evidence against them includes taped conversations between executives discussing how they could duplicate their bills to the state. The executives also discussed plans to save money by terminating coverage for neonatal babies and terminally ill patients, and throwing parties to reward employees who ousted expensive enrollees, according to whistle-blower documents.

"The violations of WellCare were only made known because an employee from the inside told the story," said Laura Goodhue, executive director of the health advocacy group Florida CHAIN. "How can the state make sure it doesn't happen again?"

Allan Bergman, a national Medicaid and managed care consultant for people with disabilities and chronic conditions, isn't sure the state can.

The stampede to privatize Medicaid programs — Florida hopes to have nearly all of its 3 million Medicaid beneficiaries in HMOs or HMO-like companies by 2015 — is based on promises to shrink government costs, not bulk up auditing and compliance offices, Bergman said.

"It's not the same as outsourcing a contract to clean a building," he said. "The oversight of these big contracts is critical for the state maintaining accountability. It worries me in many cases because I think legislatures are passing Medicaid managed care budgets thinking they're going to outsource the program and be done."

Michelle Dahnke, a spokeswoman with the Florida Agency for Health Care Administration, said that, among other measures, the agency will inspect company offices and require health plans to report their finances and outline how they will prevent fraud.

State law also requires that if a company stops providing service in one area, it must forfeit all of its other contracts. It would then pay a penalty plus the cost to transfer affected patients to another plan.

Tom Arnold, a health care lobbyist and head of the Medicaid program from 2004 to 2007, said the state has access to its historical dealings with health plans and has the authority to get more information as needed.

"I don't think anyone has a reason to believe (WellCare) or any other entity in the state is doing anything inappropriate," he said. "I don't mean nothing bad will ever happen again, but the state has very strong tools to measure the appropriateness of care."

But Sean Hellein, the WellCare financial analyst who blew the whistle on the company's fraudulent bookkeeping in 2007, said the company previously had no problem evading the state's effort to audit its activities. During one on-site visit by state officials, Hellein said, "The idea was that as long as we could keep them in the dark, everything would be perfect."

If a particularly smart state worker started asking too many questions, Hellein said, WellCare had a remedy: It would simply hire the person away from the state at a much higher salary.

The strategy worked. It took the agency several years to catch on to the company's strategy of double-billing the state for patient services.

WellCare — which through the company and its executives has contributed at least $2 million to state political campaigns since 1997 — has advantages in the bidding process.

It is one of the few companies that specialize in covering Medicaid and Medicare patients, and serves 400,000 Medicaid patients who have already opted for managed care.

The 2011 law that mandated the Medicaid changes also gives preference to Florida-based companies, such as WellCare.

Times staff writer Kris Hundley contributed to this report. Brittany Alana Davis can be reached at (850) 224-7263 or