Humana fined $3.4 million for failing to report fraud

Florida's Agency for Health Care Administration has fined Humana $3.4 million for failing to report suspected or confirmed Medicaid fraud to the state within 15 days as required under state law.

The agency informed the Louisville, Ky.-based company of two separate penalties -- one for $660,400, a rate of $200 per day for violating its contract with the state, and another for $2,732,000, a rate of $1,000 per day as prescribed by state law. The two letters were dated Aug. 9.

According to the state's records, Humana had discovered the instances of suspected fraud as long ago as September 2009 and as recently as January 2010 before reporting them to the state. The longest violation was 536 days past the 15-day requirement.

Agency spokeswoman Shelisha Coleman said the fines related to 16 suspected fraud cases, 12 of which were investigated but then closed with no findings of fraud, and the other four remained under investigation by Humana. The state was not investigating, she said. "This was not the first fine under the statute, but it is the most significant as far as the amount of the fine."

Of the 16 suspected cases, Coleman said, one involved "provider shopping," five were suspected upcoding, three were over "questionable charges," one was over "services not rendered," and the remaining six were investigations of "excessive services."

Neither Humana nor AHCA would confirm whether the cases were related, but the fine followed an Aug. 1 filing with the Securities and Exchange Commission in which Humana disclosed that it was conducting an internal investigation "related to certain aspects of our Florida subsidiary operations." It said the company "voluntarily self-reported the existence of the investigation to [the Centers for Medicare & Medicaid Services], the U.S. Dept. of Justice and the Florida Agency for Health Care Administration."

The disclosure said the investigation included "the relationships between certain of our Florida-based employees and providers in our Medicaid and/or Medicare networks, practices related to the financial support of nonprofit or provider access centers for Medicaid enrollment and related enrollment processes, and loans to, or other financial support of, physician practices."

Materials on the AHCA website indicate that fraud-reporting requirements for Medicaid contractors were strengthened in the current round of contracts covering 2009-12.

Humana said in a statement that it was "reviewing the letters we received from the state of Florida which relate to Humana's timely reporting as required by our Florida Medicaid contract. After completing the review, Humana will determine its next steps, including whether to appeal the fine."

As of Aug. 1, Humana administered Medicaid managed care for 48,104 members in Florida.

According to SEC filings, the company's Medicaid business accounts for just 2% of its revenue, coming from contracts in Florida and Puerto Rico, with the "vast majority" in Puerto Rico.