- The Washington Times - Friday, August 3, 2007

The U.S. Attorney's Office has been asked to investigate the findings of an internal health department review of two D.C. Medicaid health plans that found more than $15 million in excessive costs.

The D.C. government’s Medicaid director, Robert Maruca, made the request in a recent letter obtained by The Washington Times to the U.S. Attorney for the District, Jeffrey A. Taylor.

Mr. Maruca expressed concern in the letter about inflated costs, lack of arms-length transactions and undisclosed profits.

Mr. Maruca questioned whether D.C. Chartered Health Plan Inc. and Amerigroup Inc. “greatly enhance the profits of the parent company or other businesses of the parent company, thus improperly hiding the large profits that would have been made,” according to the letter.

A spokeswoman for the D.C. Department of Health declined to comment, saying neither Mr. Maruca nor any other city health officials would discuss the letter. The U.S. Attorney's Office did not comment on whether it is conducting a probe as a result of the request.

According to Mr. Maruca’s letter, auditors hired by the city's health department found $7.7 million in “potentially excessive or unsupported” costs by Chartered Health.

“We have not had an opportunity to review the letter, so it’s something we’d certainly like to look into,” said Tamara Smith, chief executive for Chartered Health.

Miss Smith also said the health department, which oversees the city’s Medicaid program, gave the company no indication of any concerns about its cost reporting.

In addition, Mr. Maruca stated an internal audit of Virginia-based Amerigroup found “improperly” charged fees that added $8.1 million in costs to the District.

“Because of the potential for fraud in those two cases, I request that you review them to determine whether the U.S. Attorney's Office sees sufficient justification in the audit results to pursue this matter,” Mr. Maruca wrote.

Amerigroup officials sharply disputed the findings of the audit, which Mr. Maruca referred to in his letter to the U.S. Attorney's Office.

In a written response to the audit, the company said D.C. insurance regulators approved of its profit margins and administrative costs.

A spokesman for the company said the $8.1 million actually covered administrative-support costs provided by Amerigroup to all of its health plan subsidiaries, not only the one based in the District.

“The administrative fees in question have been examined in multiple audits, including one commissioned by the D.C. Department of Insurance Securities and Banking,” said Amerigroup spokesman Kent Jenkins.

“We’re surprised that this information was leaked without a final audit report or exit interview in which these misperceptions could have been corrected. It’s unprofessional, incomplete and harmful to Amerigroup and to the reputation of the D.C. government.

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