CareSource: Required Care and the Reports That Said It Happened

In the CareSource Medicaid fraud settlement, the company agreed to pay $26 million to the United States and Ohio to resolve allegations that the plan failed to provide required assessments and case management, then sent false data making the services appear complete. For a nurse or reporting employee, the allegation is familiar: the computer says the work happened, while the people responsible for doing it know otherwise.

The Justice Department announced the settlement on February 1, 2011. Two former CareSource employees brought the False Claims Act qui tam case. Their complaint describes their jobs as telephonic case-management queue nurses responsible for assessing children with special health care needs. They knew the difference between completing an assessment and completing the field that said it was done.

What CareSource Was Required to Provide

The government alleged that CareSource knowingly failed to provide required screening, assessment and case management for adults and children with special health care needs from January 2001 through December 2006. It alleged that false reports to Ohio helped the company retain Medicaid incentives and avoid penalties.

The whistleblowers’ complaint describes the service sequence. Screening identified children who might have special health care needs. A detailed baseline assessment determined whether the child needed case management. Case management then connected the child with the care those needs required.

According to the complaint, a proper baseline assessment involved a five-page questionnaire and an interview lasting 30 to 60 minutes. The questions sought detailed information about the child’s needs. Case management involved a treatment care plan, a primary care physician, a case manager and coordination among providers and, where appropriate, health and social service agencies. Care plans required regular monitoring and updates.

The assessment was supposed to lead a child toward services. The whistleblowers alleged that falsifying it could cut off that route while leaving Ohio with a report saying the plan had done its job.

Why False Data Mattered in Managed Care

In Medicaid managed care, the state pays a plan a fixed amount for each enrolled member. Payment attaches to enrollment. The contract defines the services the plan must provide or arrange, and performance reports help the state assess whether it did so.

The complaint describes CareSource’s payment as capitation and says Ohio used screening, assessment and case-management data to decide whether the company could retain reserve money, had to forfeit it or qualified for a bonus. The alleged falsehood therefore reached both the account of care and the financial consequences of performance.

The National Health Law Program’s 2015 A Guide to Oversight, Transparency, and Accountability in Medicaid Managed Care explains the underlying incentive: plans bear the loss when care costs exceed their fixed payments, but retain more money when they provide less care. That makes accurate performance measures essential. In the CareSource allegations, the measures themselves became part of the deception.

This is the care-not-delivered problem inside a plan’s reporting operation. We follow what the plan promised, what the patient received and what the state was told about the difference.

Allegedly Marked Assessed Before the Assessment

The whistleblowers alleged that written workflows directed nurses to record assessments before performing them. Ohio’s Screening, Assessment and Case Management System held the reported data. A completed entry could therefore tell the state that work was finished while staff were still trying to reach the family.

The complaint puts the instruction plainly:

The same complaint alleged that enrollment postcards became another substitute for completed assessments. New members mailed the cards back and received McDonald’s gift certificates. Nurses allegedly had to mark members assessed from those answers, even though the cards were neither intended nor approved to replace proper screening and baseline assessment.

Screening paperwork also allegedly became completed clinical work in the system. Nurses received bundles of white sheets identifying children with special health care needs and were required to create entries showing completed assessments for those children. At other times, particularly near month-end, nurses allegedly received lists of member numbers to mark assessed.

We see the central absurdity in that alleged workflow: identifying a child who needed an assessment became the occasion to record that the assessment was already finished. The alleged reporting shortcut swallowed the service it was supposed to measure.

How a Missing Call Allegedly Became a Refusal of Care

The complaint alleged that unfinished contact attempts disappeared while false completion records remained. Enrollees whom nurses could not reach stayed in a missed-call queue. Staff periodically cleared that queue, but the system retained the entries saying baseline assessments had been completed.

The whistleblowers described another change to those records. Staff allegedly compared the queue with a list of members who had used healthcare services. According to the complaint, staff removed members who had gone months without using services from the queue and recorded them as refusing case management. The nurses said those members had never been told they were entitled to the assessment and case-management services.

That allegation shifts responsibility for missing care onto the family. The system records a choice the whistleblowers said the family never made.

Even an actual assessment did not always lead to care, according to the complaint. Queue nurses allegedly assigned themselves as case managers without the training or resources to provide the service. The whistleblowers also alleged that inadequate staffing left treatment care plans rarely or never monitored and updated. They described instructions to persuade qualified adults to refuse case management because too few nurses were available.

Assessment Numbers Allegedly Rose Without the Assessments

The whistleblowers alleged that CareSource Management Group raised its reported assessment completion figures without doing the corresponding work. Their complaint describes a spring 2004 email from the care-management director reporting completion at 64% of screened members. A later supervisor email put the preliminary average at 97.5% and called the earlier figures incorrect.

The nurses said they had not performed enough assessments to explain the increase. They also alleged that a supervisor told them she had altered reports to increase reported assessments and satisfy the contract’s quota and bonus provisions. The complaint gives the financial stakes through an internal conversation: a compliance-department employee allegedly told the nurses that Management Group risked losing $6.3 million for each six-month reporting period in state fiscal year 2004 if it missed minimum performance measures.

The alleged benefit went beyond the incentive payment. The complaint said that meeting specified assessment and case-management targets could relieve the plan of submitting individual case files, leaving the state to evaluate performance from uploaded data. The whistleblowers alleged that manipulated results obtained that relief.

Better numbers, less scrutiny. We think that is the most revealing part of the alleged arrangement: the report that concealed missing work could also remove the requirement to send the files behind it.

False Reports and the Plan’s Own Responsibilities

CareSource’s alleged reporting failures illustrate a distinction that troubled Medicaid officials before this case: fraud against a plan and fraud by a plan. A 1999 Harvard Kennedy School report, Controlling Fraud and Abuse in Medicaid: Innovations and Obstacles, described state officials’ confusion between the two. It explained that a plan’s incentive to stop providers from overbilling it does not address the plan’s own diversion of money from patient care.

The CareSource complaint alleged that each state data submission required a certification of accuracy, completeness and truthfulness, and that the company supplied false certifications. It also alleged that officers, supervisors and managers knew required services were missing and false data were being reported, yet continued directing the practices.

A separate managed-care case shows why the state-facing report deserves attention. The WellCare civil settlement in 2012 also resolved allegations involving false patient and encounter data submitted to state Medicaid programs. The shared issue is the plan’s account of services reaching the payer, with employees inside the operation able to explain how that account was produced.

What Evidence Is Needed to Prove Fraud?

For these allegations, the useful evidence connects required care, the work actually performed, the data sent to Ohio and the money affected by that data. The nurses’ complaint makes those connections concrete: written workflows, assessment records, missed-call queues, white sheets, management emails, reported completion figures and performance requirements. We examine those records together with the decisions behind them to build the False Claims Act case the evidence supports.

The complaint alleged that CareSource subcontracted screening, assessment and case-management obligations to CareSource Management Group, which employed the nurses. That connects the company promising care with the operation producing the reports.

Can You Get Paid for Reporting Medicaid Fraud?

Yes. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In the CareSource case, the Justice Department announced approximately $3.1 million for the two former employees as their share of the federal portion of the settlement.

The nurses’ role made the case concrete. They were responsible for the assessments and described how entries, assignments and management instructions departed from the work. Their knowledge connected the service Ohio bought with the account Ohio received.

You Know What the Completion Field Leaves Out

If your plan’s reports say assessments or case management happened and your work tells a different story, speak to one of our whistleblower experts about the care your plan reported but never delivered. We bring in Medicaid managed-care whistleblower lawyers who understand service obligations and performance reporting, and stand beside you throughout the process to build your strongest Medicaid whistleblower case.