California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

SCAN To Pay $327M in Medi-Cal Overpayment Settlement

On Thursday, state and federal authorities announced that they have recouped $327 million in excess Medi-Cal payments from a settlement with SCAN Health Plan, California Watch reports. Medi-Cal is California's Medicaid program (Jewett, California Watch, 8/23).

Federal officials said that the settlement is the largest of its kind from a single Medi-Cal provider.

Under the terms of the settlement, California will receive $190.5 million and the federal government will receive $129.4 million.

SCAN did not admit wrongdoing in the settlement.

Meanwhile, the U.S. attorney's office in Los Angeles said that SCAN paid $3.8 million to settle separate allegations by a whistleblower that the health plan was overpaid by Medicare because it withheld information about patients' diagnosis codes (Terhune, Los Angeles Times, 8/24).


SCAN -- based in Long Beach -- serves 54,000 low-income seniors living in Southern California.

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 (California Healthline, 4/4).

Investigators Determine SCAN Not at Fault for Overpayments

Susan Hershman -- assistant U.S. attorney on the case -- said prosecutors found no evidence that SCAN "participated in the setting of the rate or that SCAN ever knew the rates exceeded the legal cap set by state statute and regulations," adding, "It was a mistake by the state of California."

Federal officials said that California mistakenly reimbursed SCAN for long-term care patients treated at their homes as though the patients were in a nursing home, where care costs are higher.

In addition, Medi-Cal reimbursed SCAN for certain nursing home patients even though the health plan was not obligated to continue providing services to the patients, according to officials.

SCAN said it decided to refund the overpayments once the health plan learned of the state's mistake.

California officials argued that SCAN did not provide contractually required financial information to the Department of Health Care Services, which hindered the state's ability to identify payment errors and adjust rates.

Attorney Says SCAN Knew About Overpayments

William Hanagami -- an attorney representing the whistleblower -- said he disagreed that SCAN was not aware of the Medi-Cal overpayments.

Hanagami said, "SCAN knew about the excessive profits and failed to provide data to Medi-Cal," adding, "Had they done that, the state would have seen these rates are too high" (Los Angeles Time, 8/24). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.