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Regulators Halt WellCare From Signing New Medicare Customers

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By RICHARD MULLINS | The Tampa Tribune

Published: February 19, 2009

Updated: 02/19/2009 08:22 pm

TAMPA - Federal regulators Thursday suspended WellCare Health Plans Inc. from signing up any new customers for its Medicare-backed insurance and drug plans and sternly scolded the company for faults.

WellCare is one of the nation's largest administrators of Medicare and Medicaid benefits for the poor and elderly on behalf of government agencies. Yet WellCare was overall the worst performer among all such plans and had the worst record of complaints (three times the national average), said Abby Block, Medicare's chief of private plans, in a letter to the company.

Among faults, regulators said WellCare forged enrollment documents and provided misleading or inaccurate information to potential customers.

The sanctions take effect March 7 for Tampa-based WellCare and call a halt to growth in major parts of its business until federal officials believe WellCare has fixed faulty business practices.

The suspension does not affect any current enrollees in WellCare plans, nor does it involve the company's Medaid programs. But it does suspend WellCare from adding any new members to its Medicare health and drug plans across the country.

WellCare had "demonstrated a longstanding and persistent failure to comply" with federally-backed healthcare requirements, according to a letter sent Thursday to WellCare from the Centers for Medicare and Medicaid Services.

WellCare spokesman Amy Knapp said this federal action does not relate to any recent government probes or investigations – such as the high-profile raid on the company's offices in October 2007. Rather, federal regulators Thursday called out WellCare on the quality of its business practices. Last July, the company disclosed that previous executives overbilled government health programs by $49 million.

Knapp said the company "continues to cooperate" with regulators.

In imposing the suspension, CMS specifically said WellCare was deficient in handling enrollments, cancellations, customer grievances, appeals and oversight of brokers. CMS had been meeting regularly with WellCare over the last month regarding the issues, the letter noted.

Yet from Jan. 1 this year to Feb. 1, CMS received 2,500 complaints from WellCare's Medicare customers, the letter said. Almost 800 complaints were deemed "immediate" and had to be resolved within two days, and WellCare failed to do so for approximately 300 cases, CMS said.

WellCare served approximately 2,373,000 members as of Dec. 31, 2007, the last time the company publicly released customer rolls.

WellCare broke agency guidelines when it "misled and confused beneficiaries and engaged in door-to-door solicitation," CMS said, and while the company said those problems were fixed, a CMS audit "found the same marketing deficiencies."

The suspension will remain in effect until Medicare officials say they are satisfied WellCare has fixed its business practices, and a relapse was not likely, CMS said. The action appears to have spooked investors, as stock in WellCare fell $4.25, or 30 percent, to $9.80 per share in after hours trading, according to Bloomberg News. That's down from $120 per share before the October 2007 raid.

Reporter Richard Mullins can be reached at (813) 259-7919.

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