A major hospital chain is accusing Tampa-based insurance carrier WellCare of holding back and reducing millions of dollars in reimbursements, essentially gaming the system by inflating its bottom line.
WellCare is a Medicare and Medicaid provider co-founded in 1985 by philanthropist Kiran Patel and his brother Pradip, who later sold the company. WellCare, headquartered at 8725 Henderson Road in Tampa, offers Medicaid managed care health plans to more than 3.9 million members through a network of 91,000 physicians and over 6,000 employees.
As of 2016, WellCare had revenues of $14.2-billion; as of this week, its stock was trading at more than 56 percent over its price at the same point last year.
Kindred Healthcare, a privately-held Fortune 500 company, owns Transitional Hospitals Corporation with annual revenues of $7.2-billion for 2016, 100,100 employees at 2,654 locations across 46 states. Kindred runs 82 long-term acute care hospitals, as well as hundreds of affiliated medical sites.
In a lawsuit filed March 6 in Hillsborough County Circuit Court, Kindred Hospitals claim that in multiple contracts with WellCare, the insurer gets discounted rates in exchange for promises of 30-day payments for Medicare and Medicaid clients.
However, although WellCare received monthly payments from the Medicare and Medicaid programs, the insurer has delayed reimbursements to medical providers such as Kindred. Instead, the company invests the government funds for longer periods, as a way of gaming the system to profit on the “float.”
WellCare is also accused of reimbursing Kindred for less than its contracted amount.
Kindred says WellCare has repeatedly promised to pay the full amounts allegedly owed and then broken those promises. In some cases, WellCare allegedly has devised ploys to buy time. For example, according to the lawsuit, WellCare told Kindred at times to submit claims in hard form rather than electronically, and then “underpay claims because all the codes that could fit on an electronic form could not fit on a hard form.”
Kindred says WellCare owes more than $3.2-million plus interest for care provided to a group of 69 WellCare policyholders.
This is not the first time WellCare has been under scrutiny for Medicaid improprieties.
On Oct. 24, 2007, law-enforcement officials, joined by FBI agents, raided the company’s Tampa headquarters for allegedly defrauding Florida’s Medicaid system.
WellCare eventually paid millions of dollars to the government, whistleblowers and other shareholders. Todd Farha, WellCare’s president and CEO, faced criminal charges. In May 2014, he was sentenced to serve 36 months in federal prison and pay a $50,000 fine.
In 2016, Farha sued WellCare to allow him to sell restricted shares of stock – worth nearly $30 million.
Court records suggest the 69 policyholders named in the case live in Florida, New Jersey and Kentucky.