Gold Coast Health Plan: Payments That Allegedly Did Not Count as Medical Care

In the Gold Coast Health Plan Medicaid settlement, the plan and three Ventura County healthcare providers agreed to pay $70.7 million to resolve allegations that payments for additional services did not qualify as medical expenses. The case reached into the plan’s finances: what it paid providers, what those payments bought, and why it counted them toward a contractual spending requirement. A former controller and a former director of member services brought the whistleblower claims. Those are different views of the same question: did the money counted as care actually buy the care the contract required?

The Justice Department announced the three settlements on August 18, 2022. Gold Coast is a county organized health system that arranges health care under Medi-Cal, California’s Medicaid program. Ventura County, Dignity Health and Clinicas del Camino Real settled alongside it, with separate payment obligations.

The Adult Expansion Funds Came With a Spending Requirement

Gold Coast’s contract required qualifying medical spending for the Adult Expansion population. Under California’s contracts with county organized health systems, a plan had to spend at least 85% of those funds on allowed medical expenses. If it fell short, it owed the difference back to California, which in turn had to return that money to the federal government.

Medi-Cal expanded in January 2014 under the Affordable Care Act to cover previously uninsured adults aged 19 to 64 without dependent children, with annual incomes up to 133% of the federal poverty level. The federal government fully funded that expansion coverage for the program’s first three years.

In Medicaid managed care, the state generally pays the plan a fixed periodic amount for each enrolled member. That payment follows enrollment. The plan then arranges the services its contract requires. Here, the government’s allegations concerned what Gold Coast counted as medical spending after receiving the expansion funds.

Counting a payment as an allowed medical expense reduced the shortfall the plan had to return. That is why the expense records and provider contracts belong side by side.

What the Additional Services Payments Allegedly Bought

The United States and California alleged that Gold Coast and the providers knowingly submitted or caused false claims for “Additional Services” for Adult Expansion members from January 1, 2014, through May 31, 2015. The government’s account of the payments identifies problems with both their value and the services they supposedly purchased.

The governments alleged that the payments failed Gold Coast’s contractual definition of allowed medical expenses. They said the amounts were predetermined and did not reflect the fair market value of the additional services, or that the services duplicated work the providers already had to perform. They also alleged that the payments were unlawful gifts of public funds under California’s constitution.

The U.S. Attorney’s Office for the Central District of California said the money went toward services already reimbursed or services never provided. In the government’s account, money that should have remained subject to repayment instead became an expense claimed as care.

We would expect a spending safeguard to buy patients more care. Paying twice for the same care defeats it.

The valuation allegation asks a different question. What connected the amount paid to the value of the additional work? A payment calculation and a service agreement can tell different stories. We examine the promised service, the basis for its price and the expense the plan reported together. A controller or provider-finance employee can recognize those connections in ordinary business records.

The alleged failure ran across the plan and provider sides of the transaction. Gold Coast’s treatment of the expense mattered alongside what the provider had agreed to do and what it supplied. A reader who knows one side can explain a discrepancy that the other side’s paperwork conceals.

The Plan and Providers Had Separate Settlement Payments

The settlement announcement assigned a different obligation to each organization. Keeping those obligations separate also shows who did what in the healthcare system:

• Gold Coast Health Plan agreed to pay $17.2 million to the United States. It was the county organized health system arranging Medi-Cal care.
• Ventura County agreed to pay $29 million to the United States. The county owns and operates Ventura County Medical Center, an integrated system providing hospital, clinic and specialty services.
• Dignity Health agreed to pay $10.8 million to the United States and $1.2 million to California. The nonprofit hospital system operated two acute care hospitals in Ventura County.
• Clinicas del Camino Real agreed to pay $11.25 million to the United States and $1.25 million to California. It was a nonprofit health care organization in Ventura County.

A Controller and a Member-Services Director Saw Different Parts

Gold Coast’s former controller and former director of member services brought claims under the federal and California False Claims Acts. The civil settlements resolved claims from their qui tam case. The combination of roles is useful to understand: one puts the finances in view, the other the services members were supposed to receive.

For a controller or finance employee, the connection may run from a provider payment to the expense category and spending report. For a member-services employee, it may begin with what the plan promised members. For provider staff, it may be the service obligation or the explanation for an additional payment. These are the connections we examine with an insider when evaluating a False Claims Act case about a plan’s reported spending.

A 1999 report from Health Care Financing Administration seminars, Controlling Fraud and Abuse in Medicaid: Innovations and Obstacles, identified an oversight problem that explains why those different perspectives matter. Officials were confusing fraud committed against managed care organizations with fraud committed by them. The report described the latter problem this way:

The report also identified fraudulent subcontracts and failures to procure services among plan-side abuses. Its point was about where oversight had to look: inside the businesses standing between the state paying for care and the people delivering it.

Gold Coast’s settlement brings that distinction into a specific expense dispute. The insider’s contribution is knowing why a payment appeared in the medical spending account, what service the provider already owed, or how the amount was chosen.

The Integrity Agreements Followed the Money

Gold Coast and Ventura County each entered a five-year Corporate Integrity Agreement. Both had to implement centralized risk assessment programs and hire an independent review organization for annual reviews, but the reviews targeted different work.

For Gold Coast, the annual reviews focused on calculating and reporting Medi-Cal medical loss ratio data. For Ventura County, they targeted hospital claims submitted to Medicare and Medicaid, including claims to Medicaid managed care organizations.

WellCare Shows the Related Spending-Report Problem

WellCare’s April 2012 civil settlement required $137.5 million to resolve allegations that included inflated medical expenditures. The Eleventh Circuit opinion in the separate criminal case against former WellCare executives describes false behavioral-health expenditure reports that reduced repayments due to Florida Medicaid.

Gold Coast’s allegations centered on provider payments for the California expansion population. The WellCare executives’ criminal case concerned behavioral-health expenditure reporting. The connection is the spending account: what the plan reported spending on care affected what it owed back.

The practical question travels across both cases. What made the reported expense medical spending under the governing contract? For Gold Coast, the governments challenged the value of additional services and whether those services were already required. For an insider, understanding the service behind an expense can be as important as knowing the amount entered in the report.

The Whistleblower’s Knowledge Has Value

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Gold Coast’s case began with people whose work put the plan’s finances and member services in view. Your knowledge of why a payment was counted as medical spending can help us connect the reported expense to the decisions behind it.

You Know What the Payment Was For

If you know why a plan counted a provider payment as care, speak to one of our Whistleblower Experts about what the payment really bought. We connect the financial and service evidence to build your strongest Medicaid whistleblower case. We bring in Medicaid managed care whistleblower lawyers and stand with you throughout the case.