Medicaid agencies continue using problematic providers

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In Florida, a national managed-care company's former top executives were convicted in a scheme to rip off Medicaid. In Illinois, a state official concluded two Medicaid plans were providing "abysmal" care. In Ohio, a nonprofit paid millions to settle civil fraud allegations that it failed to screen special needs children and faked data.

Despite these problems, state health agencies in these and other states continued to contract with the companies to provide services to patients on Medicaid, the federal-state program for the poor and disabled.

Health care experts say that's because states are reluctant to drop Medicaid plans out of fear of leaving patients in a bind.

"You probably won't find many examples of states flat-out pulling the plug. That's sort of the nuclear option," said James Verdier, a senior fellow at Mathematica Policy Research, a nonpartisan think tank. "There are all sorts of sanctions you can impose -- financial penalties, limitations on enrolling new beneficiaries."

States are increasingly turning to insurance companies to provide coverage for people on Medicaid in hopes of saving money and improving care. About 30 million Americans on Medicaid now belong to a managed-care plan, and beginning in January, millions more will become eligible for Medicaid under the federal health law. Many will be placed in managed care. States give managed-care plans a fixed amount per member each month to set up networks of doctors and hospitals that provide care to members.

Thirty-six states and the District of Columbia have enrolled some or all of their Medicaid population in private health plans, many of them owned by major insurers that operate in multiple states.

State health officials are responsible not only for monitoring and oversight, but for enforcing contracts and cracking down on plans that violate the rules or perform poorly.

Advocates say states need to do a better job of policing problem plans and not wait until a contract is up for renewal to pull the plug.

Occasionally, a state does force out a plan, but it's usually insurance regulators acting because of money issues.

In the District of Columbia, the insurance department took control of the nonprofit D.C. Chartered Health Plan last year after an internal audit found financial irregularities. Its founder is under federal investigation in a political corruption case. Another plan assumed its operations this spring.

Another nonprofit Medicaid plan got into trouble with government officials, but the issue wasn't about quality.

CareSource, a Dayton, Ohio-based plan, agreed in 2011 to pay the federal government and the state $26 million to settle civil fraud allegations that it failed to provide screenings and other services for adults and special needs children and submitted false data to the state. The company denied the allegations, but said it settled to bring the matter to a close.

Ohio Medicaid spokesman Sam Rossi wrote in an email that the settlement "did not include any actual finding of wrongdoing, and there was never an allegation of consumer harm." He said CareSource has taken steps in recent years "to better document the services it provides."

CareSource remains Ohio's largest Medicaid managed-care plan.

In Florida, WellCare never lost its contract after FBI agents raided the company's Tampa headquarters in 2007, which led to criminal charges and convictions of former top executives this year for scheming to defraud the state.

The company agreed to pay more than $200 million to settle criminal and civil fraud allegations. It did not admit wrongdoing in the civil case. Today, it runs the largest Medicaid plan in Florida.

Mr. Maurer said in a statement that a new leadership team appointed in 2008 "has set an exemplary 'tone at the top' by emphasizing integrity, personal accountability, ethical business practices, regularly compliance and transparency."

Florida Medicaid director Justin Senior said the state decided not to drop WellCare's contract largely out of concern it would have caused chaos for patients. He said the company's new leadership has made a difference.

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