FEHBP: TO RECEIVE $12 MILLION IN FRAUD CASE
FHP Inc., an HMO serving more than 150,000 federal employeesThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
through the Federal Employees Health Benefits Program (FEHBP),
has agreed to pay the government $12 million "to resolve claims
that it overcharged the employees for their health care benefits
between 1987 and 1991." WASHINGTON POST reports that the HMO
charged the Office of Personnel Management (OPM), which
administers FEHBP, "higher rates for the health benefits than it
charged other subscribers," according to a statement released by
U.S. Attorney Eric Holder Jr. and OPM Inspector General Patrick
McFarland. According to the statement, the settlement is "the
largest civil recovery this year by the U.S. Attorney's Office
... in an ongoing initiative against health care overbilling,
fraud and other abuses."
UNEQUAL RATES: POST reports that the OPM "requires
insurance companies to provide a certification that the rate
provided to the government is equal to the lowest rate charged to
other subscribers for the same contract period for the same level
of benefits." An OPM audit showed that FHP charged higher rates
in Arizona, Guam, California, New Mexico and Utah. Ria Carlson,
spokesperson for FHP, said the company "disagreed with the
government 'over what the actual rate would be,'" noting that
rates are influenced by demographics, price competition and
geographic locations. "It was really a disagreement over what
determines the prices. We disagreed with federal government
about that lowest possible rate, but in order to save our
shareholders the cost of a lawsuit, we decided to settle," she
said (10/11).
DETAILS: POST reports that under the settlement, "most of
the $12 million ... will be placed in a reserve fund that may be
used by OPM to reduce" its rates in the future. Carlson added
that the company had set aside $45 million to cover the
settlement and to "provide a cushion against any future
government claims" (Barr, 10/11).