California Healthline Daily Edition

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Federal, State Officials Investigate SCAN Health Plan for Overbilling

State and federal authorities are investigating whether California's SCAN Health Plan drew funds from both Medi-Cal and Medicare to treat the same pool of patients and purposefully concealed its actions from regulators, California Watch reports. Medi-Cal is California's Medicaid program.

SCAN -- based in Long Beach -- serves 54,000 low-income seniors living in Southern California. The health plan is being investigated by federal officials from HHS and the Department of Justice, as well as by the state attorney general's office.

SCAN has set aside $125 million for resolving overbilling claims. According to applications that the health plan submitted to the state, the civil and criminal investigations could require "substantial financial payments."


In August 2011, California Watch reported that SCAN was being investigated as the result of an audit by State Controller John Chiang (D). Chiang said the health plan "fleeced the state" out of a possible $339 million.

Medi-Cal in a financial evaluation confirmed that SCAN drew profit margins of at least 80%, compared with rates of 4% to 5% earned by similar plans.

The Medi-Cal Fraud Control Unit said in an April 2011 report, "It is alleged that SCAN intentionally withheld relevant cost report information from the government to hide the enormous profits SCAN was making." The fraud control unit said the case has the "potential for obtaining one of the largest" financial recoveries from a false-claims lawsuit by the unit.

SCAN Response

Alan Maltun, a SCAN spokesperson, said, "Substantial progress has been made in working through these issues with the state and federal governments, and we believe we will be able to resolve their concerns in a manner that is fair to all parties."

SCAN disclosed to Medi-Cal authorities last month that when its board of directors learned about the allegations, it appointed a special committee to conduct an internal probe. SCAN said that it has not yet found any evidence suggesting intentional misconduct by employees (Jewett, California Watch, 4/4).

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