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After adult day care cut, state turns to troubled firms

California Watch
Christina Jewett
August 29, 2011

California Medi-Cal officials are planning to rely on a second firm that has drawn scrutiny from the U.S. Justice Department to coordinate care for those who will no longer be served by the Adult Day Health Care program, which was eliminated in this year’s state budget.

APS Healthcare, based in White Plains, N.Y., paid $13 million to the Justice Department earlier this year to settle claims that it failed to provide services to hundreds of Georgia seniors on Medicaid. APS denies the allegations.

The state currently has a $12 million contract with APS and is in negotiations for a contract to serve some of the 35,000 seniors who rely on the Adult Day Health Care program. The seniors visit adult day care centers for meals, companionship and health care coordination.

Earlier this month, California Watch reported that the Medi-Cal program also plans to increasingly rely on the SCAN Health Plan to coordinate care for those who will no longer be served by the adult day care program. After the program was eliminated amid sweeping state budget cuts, Gov. Jerry Brown vetoed a replacement plan.

State Controller John Chiang has contended that SCAN “fleeced the state” when it received roughly $330 million in overpayments. Chiang issued a second request last week to state authorities to recoup the funds. The SCAN Health Plan is in talks with the state attorney general's office and U.S. attorney’s office over the matter.

Assemblywoman Mariko Yamada, D-Vacaville, has joined 35 lawmakers to call on the Brown administration to postpone the end of the day care program from December of this year to March 31, 2012. She questions whether the current strategy to move 35,000 people from day care centers to managed care rolls will be meaningful.
“I think it’s ill-advised and will cost the state more financially,” she said. “Beside the higher financial cost, I think the moral costs are yet to be seen.”

The Medi-Cal agency plans to rely on APS Inc. to provide care coordination for seniors in counties that do not have managed care plans such as SCAN.

APS says it helps states save money in caring for patients with chronic medical conditions by educating them about those conditions and creating strong links between patients and primary care providers.

However, according to an October 2009 whistleblower lawsuit, APS charged the state of Georgia for care for thousands of seniors who went months or more than a year without hearing from the firm.

Michael Claeys, a 10-year APS employee who was executive director of the firm’s Georgia program, contended that APS had a contract with the state to provide services to 230,000 Medicaid recipients and earned $1.5 million to $2 million per month. Claeys claimed the firm billed for every member “without having any reliable way of knowing” whether the people with asthma, diabetes and other chronic conditions got any service at all.

APS earned $597,000 from Georgia to render services to Medicaid recipients who didn’t hear from the firm for 16 months, Claeys contended.

And billing continued despite major problems. Each nurse working for the program had a caseload of 400 to 600 patients. And when a nurse resigned, the APS computer system failed to assign the patients to another nurse, the lawsuit claims.

Claeys claimed APS also billed the state for dead and ineligible members. In 2007 and 2008, he claimed, APS billed the state for 12,000 people who “fell through the cracks of the inadequate tracking system.”

Claeys recounted that the issue was raised with APS' chief legal officer, who concluded that APS was not obligated to follow the terms laid out in an initial request to provide services to the government.

Claeys said he repeatedly asked APS executives about repaying Georgia’s Medicaid program for services that were not delivered. He says his requests created mounting tension until he was dismissed from his job in June 2009.

Claeys’ lawsuit triggered a civil investigation by the FBI and U.S. Department of Health and Human Services Inspector General's Office. Ultimately, APS reached the $13 million settlement with the U.S. attorney’s office in Georgia and entered into a phase of compliance monitoring and oversight [PDF].

In a statement, U.S. Attorney Sally Quillian Yates said Georgia tried to improve services to Medicaid recipients by contracting with APS, but “instead of providing improved efficiency and effectiveness the company billed for, APS Healthcare took Medicaid’s money for itself and left some of our most vulnerable citizens without the aid they deserved.”

APS issued its own statement at the time of the settlement, saying it strongly denies the allegations about its Georgia subsidiary. APS chief executive Greg Scott said the firm had notified Georgia Medicaid about ambiguities with the contract “and had worked to clarify and address them.”

“At all times we operated within the terms of the contract," Scott said in a press release. "Despite these challenges, we are proud that we accomplished many of the goals of the program and provided valuable disease management services to the State of Georgia’s most needy citizens. In doing so, we significantly improved the health status of many participants in the program.”

California Medi-Cal officials say they are aware of the Georgia settlement, and the agency “has been closely monitoring APS’ reports in the normal course of business,” according to Norman Williams, a spokesman for the Department of Health Care Services, which administers the Medi-Cal program.

California’s current contract with APS is for $12.15 million from August 2009 to March 2013. The contract requires APS to provide coordinated care management services to Medi-Cal beneficiaries who have disabilities, mental illnesses or chronic medical conditions such as diabetes or cancer.

The Department of Health Care Services declined to comment on the current negotiations with APS to serve seniors who previously relied on Adult Day Health Care centers.

However, Williams said the agency is committed to seeing that “ADHC beneficiaries will have a smooth transition to appropriate services and case management, with the goal of helping them access services that will help them remain in the community and avoid unnecessary institutionalization.”

According to the Department of Health Care Services, APS Healthcare currently holds contracts to coordinate mental health care in Kern, Kings, Madera, Stanislaus, Tulare and San Diego counties. The firm has a contract to coordinate chronic care services for Medi-Cal beneficiaries in Butte, Shasta, Contra Costa, Sutter, El Dorado, Tehama, Placer, Yuba, Humboldt and Sacramento counties.