With Medicaid managed care contracts looming, one potential provider faces additional fraud questioning

by | Mar 20, 2024

A federal judge has ordered further testimony from Sentara executives amidst a Department of Justice probe into allegations of inflated premiums and $665 million in undue profits, as the company bids for a Florida Medicaid contract.

A federal judge has ordered additional testimony from executives of Sentara — a potential recipient of a Florida Medicaid managed care contract — as part of an ongoing Department of Justice investigation.

Plaintiffs in the case allege that Sentara, formerly known as Optima Health, unfairly raised insurance premiums in 2018 and 2019, resulting in excess profit of $665 million. The investigation is primarily focused on whether the company misled federal regulators about insurance rates after it became a primary insurer in Virginia’s Affordable Care Act (ACA) marketplace, following the exit of other insurers in 2017.

Sentara is alleged to have withheld 8,000 pages of relevant information until after key testimonies were given. While the company claims these documents did not contain new information, federal attorneys argue they were essential to case deliberations and should have been shared earlier. According to court documents, Judge Elizabeth K. Dillon in Roanoke, Virginia ordered former Optima CEO Michael Dudley and Optima chief actuary James Juillerat to provide sworn testimony in the case within 60 days of the ruling.

“In June 2023, the United States noticed that Sentara was relying upon documents that had not been previously produced to the government,” reads Dillon’s order. “According to the government, the new records contain “important details requiring further investigation,” including additional sworn testimony from Dudley and Juillerat.”

In 2018, Virginia’s health insurance market saw substantial rate increases by Optima Health (now Sentara) and Anthem, two major insurers, influenced by uncertainties in federal healthcare policies. Optima Health, particularly, increased its rates by 81 percent, sparking public criticism and the formation of consumer advocacy groups.

In response to changing market conditions and competitor rates, Optima later sought to adjust its rates, but was denied by Virginia’s Bureau of Insurance and the State Corporation Commission due to non-compliance with established deadlines.

In 2023, a federal lawsuit was filed against Sentara alleging that false statements were made in their 2018 and 2019 rate filings for ACA plans in Virginia. The legal action is contingent on whether the alleged misrepresentations led to improper federal payments to Optima in the form of subsidies. The case, which is part of an ongoing federal investigation, seeks to determine the legitimacy of the rate filings under the regulations of the False Claims Act.

“Sentara has provided more than 27,000 documents and approximately 70 hours of interviews from seven former and current employees to date in response to the DOJ’s inquiry. This recent ruling on procedural matters will help clarify the process moving forward. As it has for nearly three years, Sentara will continue to operate in good faith and looks forward to a resolution of this matter,” Sentara spokesperson Michael Kafka told The Capitolist.”

“In 2017, when policymakers in Washington destabilized health insurance markets, more than 350,000 Virginians were at risk of not having access to any insurance on the exchanges. Sentara had a choice: follow the same path as some of the biggest insurers and exit, or work with state and federal officials to ensure residents of Charlottesville and other regions still had access to an ACA-eligible plan,” he added. “At the urging of state and federal officials, Sentara formulated rates in just 26 days that normally take six months or more to develop. These rates were verified by a leading independent actuarial firm and approved twice by Virginia regulators.”

Florida’s Agency for Health Care Administration (AHCA) is currently engaged in the process of re-procuring Medicaid managed care contracts, a routine procedure that occurs every six years and is essential for the continued operation of the state’s Medicaid program. The re-procurement process, which involves contracts worth billions of dollars, determines which healthcare providers will manage Medicaid services for the state. A final decision on the recipients of the lucrative contracts is expected to be made public later this month.


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