Whistle-blower: California managed-care company improperly denied care to thousands

SynerMed, a Monterey Park, Calif.-based company that manages physician practices and administers managed-care contracts, improperly denied care to thousands of patients and falsified documents to hide the scheme, according to a confidential report that was sent to California health officials.

Here are eight things to know about SynerMed's conduct and the state's investigation.

1. The allegations were originally made in a 20-page report written by a SynerMed executive. The company's senior director of compliance, Christine Babu, then performed an internal investigation and outlined the violations in a confidential Oct. 5 report, which was obtained by Kaiser Health News.

2. The report was anonymously sent to California health officials in October. State regulators subsequently launched an investigation, and health insurance companies performed surprise audits.

3. According to the whistle-blower's report, a small team at SynerMed routinely falsified denial letters without supervision from physicians or other clinicians. Ms. Babu's internal investigation revealed the falsified denial letters often were not sent to patients, and were written solely to satisfy auditors. The only explanation given for falsifying the letters was that employees felt extreme pressure from management to clear a backlog of paperwork, according to Kaiser Health News.

4. Within two days of a decision to deny coverage for services, Medicaid managed care companies and commercial health plans are required to provide members with a written denial notice. The notice gives the patients the ability to appeal the decision with their health plan and then with regulators. However, SynerMed's compliance department determined the company did not properly inform patients, leaving "thousands of members unaware of their appeal rights going back years past. As such, members may experience delays in care, lapse in coverage, delay in access to care and or financial hardship."

5. In November, SynerMed said it was closing. Company CEO James Mason wrote in a Nov. 6 internal email, obtained by Becker's Hospital Review, that the company was shutting down after audits by health plans revealed "several system and control failures within medical management and other departments."

6. California Medicaid officials issued a notice to insurers Nov. 17 informing them of the widespread deficiencies at SynerMed. "Members are currently in imminent danger of not receiving medically necessary healthcare services," as a result of SynerMed's conduct, the notice stated. State officials ordered health insurers to figure out how many enrollees experienced delayed care or unfulfilled services, according to Kaiser Health News.

7. On Wednesday, Mr. Mason said SynerMed took all of the allegations seriously and investigated them fully. "It is unfortunate that one of our employees jumped the gun and disclosed confidential information regarding our clients and members," he told Kaiser Health News.

8. SynerMed is a subsidiary of PAMC, which also owns Los Angeles-based Pacific Alliance Medical Center. The hospital agreedin June to pay $31.9 million to the federal government and an additional $10 million to the state of California to resolve allegations it violated the False Claims Act, the Anti-Kickback Statute and Stark Law.

Read the full Kaiser Health News article here.

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