United HealthCare of Florida is the second Medicare+Choice HMO to settle allegations of failing to provide promised benefits to beneficiaries.
The Sunrise, Fla., subsidiary of Minneapolis-based UnitedHealth Group will pay $9.6 million plus $950,000 in interest as additional benefits to its Florida beneficiaries in contract year 2001. They settled without admitting legal guilt.
United HealthCare allegedly said that it would offer an "out-of-area travel benefit" to beneficiaries in 1995 when it submitted its 1996 adjusted community-rate proposal, which determines how HCFA will reimburse Medicare HMOs.
However, that benefit was neither included in its marketing materials to beneficiaries nor offered to them, causing HCFA to overpay United HealthCare, according to a July repayment agreement obtained by MODERN HEALTHCARE from HHS' inspector general's office under the Freedom of Information Act.
The error was uncovered by a 1998 inspector general's audit.
United HealthCare of Florida paid no civil monetary penalties as part of the agreement, nor was it required to sign a corporate integrity agreement as is customary in fraud cases. HCFA spokesman Don McCloud said HCFA characterized the overpayment as a mistake and not fraud.
The $10.5 million will be delivered either in enhanced benefits or reduced premiums to 53,000 South Florida beneficiaries, according to Michael Strand, United HealthCare spokesman. Strand said no other United HealthCare subsidiaries got similar overpayments.
In May 1998, First Priority Health, a subsidiary of Blue Cross of Northeastern Pennsylvania, paid $250,000 in civil monetary penalties to resolve similar allegations that it had failed to provide supplemental benefits--such as dental, pharmaceutical and vision care--that it promised in its marketing materials. First Priority also settled without admitting legal guilt.
Thomas Ward, president and CEO of Blue Cross of Northeastern Pennsylvania, said First Priority Health's failure to implement supplemental benefits was a mistake.
"When we recognized the problem, we immediately took positive action to do what was right for our customers. It was simply a misunderstanding that needed to be addressed and we addressed it," Ward said in a statement at the time.