New Allegations of KanCare Fraud

Former executive alleges misconduct by Kansas Medicaid contractor

Topeka Capital Journal
October 28, 2014

A former insurance company executive involved in Kansas’ privatized Medicaid program filed a wrongful-termination lawsuit alleging retaliation by management for objecting to potentially unethical or illegal maneuvers to improve company revenue, documents said Tuesday.

The lawsuit filed in U.S. District Court by Overland Park resident Jacqueline Leary named as defendants Centene Corp., Centene subsidiary Sunflower State Health Plan in Kansas and two executives of the corporate entities.

Centene was among three for-profit, managed-care organizations selected in 2012 by the administration of Gov. Sam Brownback to operate a new $3 billion initiative named KanCare.

AmeriGroup Kansas, United Healthcare of the Midwest and Sunflower State Health Plan were awarded the exclusive contracts to provide Medicaid services to 400,000 of Kansas’ disabled and poor starting in January 2013.

The companies reported losses of $110 million in 2013 and $72 million in the first half of 2014, according to reports from the Kansas Department of Health and Environment.

Deanne Lane, spokeswoman for Centene in St. Louis, said she wouldn’t comment on the lawsuit.

“It is our policy not to discuss matters of litigation,” she said.

Leary, who was vice president of contracting and network development at Sunflower State Health Plan, said in the suit Centene managers responded to poor financial performance of the Kansas operation by blocking assignment of Medicare beneficiaries to medical providers that had contracted for reimbursement rates in excess of Kansas’ standard rate.

Initially, Leary was instructed to preclude new clients from being assigned primary care physicians affiliated with The University of Kansas Medical Center in Kansas City, Kan. The objective was to avoid expenses related to referrals by KUMC physicians and specialists.

The lawsuit filed Monday claims Centene executive Rob Hitchcock, one of the named defendants, was responsible for the order and quoted him as declaring, “let me be prescriptive — you will close the PCP panels to auto assignment that are employed by the academic medical center.” Hitchcock, who was Centene’s executive vice president of health plans, and others had discussed in February 2013 the weak financial performance of the Sunflower subsidiary, the suit said.

In March 2013, Leary said she complained to the second individual defendant, Jean Wilms, that proposed alteration of physician assignments “contravened Centene’s contractual obligations both to those providers and to the state of Kansas.”

Leary complied with instructions to close out KUMC and was “forced at the same time” to determine how to alter online and printed provider directories to make the change appear benign.

Subsequently, Leary alleged, Wilms ordered closure of automatic assignment avenues for all physicians working at hospitals with negotiated rates above 100 percent of standard payment. That adjustment removed from the auto-assignment process physicians at Stormont-Vail HealthCare, of Topeka, Saint Luke’s Health System and Via Christi Health and KUMC.

In July 2013, Wilms purportedly instructed the plaintiff to take the additional step of selectively shifting about 7,500 Medicaid members to physicians employed by entities paid standard rates.

Under the state’s contract with Centene, the lawsuit said, Sunflower must ensure clients “are afforded the right to select the providers of their choice without regard to variations in reimbursement.”

Leary said in the filing that she declined to follow the transfer order and “insisted that she would not lie in response to such inquiries.”

In January — days before being fired — she discussed with Sunflower’s vice president of compliance and regulatory affairs, Virginia Picotte, concerns about business decisions “contrary to both SSHP’s (Sunflower’s) contract with the state of Kansas and SSHP’s contracts with its providers.”

Paul Davis, the Kansas House minority leader and the Democratic nominee for governor, said Republican lawmakers had resisted meaningful oversight of the privatization of KanCare by the Brownback administration.

“Very, very disturbing allegations here,” Davis said. “There seems to be this increasing cloud around the KanCare program and the people that are involved in this. And I think we’re going to have to really, really dig in deep to figure out what is going on with this.”

Two Kansas lawmakers requested in September a state investigation into whether KanCare contracts were allocated properly. Rep. Jim Ward, D-Wichita, and Sen. Laura Kelly, D-Topeka, sought review of alleged “pay-to-play” corruption.

The state’s acting inspector general for Medicaid resigned in June amid controversy about his background and authority to perform oversight duties. Phil Hermanson, a former Wichita member of the Kansas House, stepped down as the Kansas Department of Health and Environment’s official responsible for detecting fraud and abuse in KanCare.

The Federal Bureau of Investigation was scrutinizing Brownback’s former chief of staff and other political figures for possible influence peddling in a case linked to KanCare contracts, sources said in April.

2 thoughts on “New Allegations of KanCare Fraud

  1. Cathy Pechin

    Well, it all makes sense to me. Sunflower after all didn’t exist until KanCare was born which never felt right. Yes, they are part of a major corporation but that never sat right either. The thing that baffles me the most is how they ever expected to make severe enough cuts to realize a profit and still do the job. It appears it was all spelled out as far as what was expected. I have a feeling as this story continues to unfold that it is going to be very interesting and hopefully a lesson learned.

    Perhaps it will turn out that some people in KS actually thought the majority would not care if our citizens with less income or disabilities went without needed healthcare services but hopefully the outcome of the election will indicate otherwise. I’m sitting on the edge of my seat waiting for returns. We voted yesterday morning and turn out for early voting looked pretty good.

  2. anonymous anonymous

    I was one of the original people that started with Sunflower. I was there the first day the plan went live. It was a mess nobody knew anything. It was still a mess when they wrongful terminated me. I remember Jackie. I was still on payroll when she was let go, her team was extremely shocked and upset about her termination. You know a company isn’t doing something right when they don’t payout your vacation that you earned for the year, but offer you a severance package. I know they offered Jackie to pay her salary for 2 or three months, and then they ask you not to say anything bad about the company in the community. REALLY that’s funny. The managers that Centene had running things absolutely knew NOTHING and it’s sad because it’s the people of Kansas that relay on this company for health care that is going to suffer behind this, and the employees if they get shut down.. I wish Jackie all the best and hopes she wins. I just might reach out to her and see how I can assist her because something needs to be done about Sunflower and their work ethics, business ethics. Finally Sunflower is going to get what they deserve. I hate it for the employee’s.


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