VNS Choice: Ineligible Members and Capitation Kept After Disenrollment

The VNS Choice Medicaid settlement announced in 2014 required the company to pay $34,994,428 over ineligible enrollment and social adult day-care services. A second settlement in 2017 addressed members who should have been disenrolled while monthly payments kept coming. Both cases reached into the work of enrollment staff, care managers and payment teams: who qualified for the plan, what care they received, and when the money should have stopped. If you saw a member’s care record contradict the enrollment or payment record, these cases will sound familiar.

The settlements named VNS Choice, VNS Choice Community Care and Visiting Nurse Service of New York. The U.S. Attorney’s Office for the Southern District of New York pursued the civil cases. New York’s Medicaid Fraud Control Unit investigated, with assistance from the HHS Office of Inspector General. The government’s 2017 announcement says it joined the private whistleblower lawsuit under the False Claims Act that produced both resolutions.

What the Monthly Medicaid Payment Bought

VNS Choice received capitation, a monthly payment for each enrolled member, in exchange for arranging and providing community-based long-term care. Under its contract with the New York State Department of Health, that included care management, skilled nursing, physical therapy, speech therapy, occupational therapy and preventive services.

That payment structure explains Medicaid managed care fraud. Enrollment brought in the money. The member’s needs and care records showed whether the plan was meeting the obligations attached to it. A name left on the enrollment list could keep generating payments after the circumstances requiring removal were known inside the plan.

The National Health Law Program’s 2015 A Guide to Oversight, Transparency, and Accountability in Medicaid Managed Care describes the financial incentive plainly:

For this case, that puts the care file beside the payment ledger. The capitation payments explain what came in. The member’s eligibility and services explain why it was owed.

The 2014 Settlement and Social Adult Day Care

VNS admitted that 1,740 members referred by social adult day-care centers or using their services were ineligible for the Choice managed long-term care plan. The Justice Department’s November 6, 2014 announcement also reported an admission about the services themselves: during 2012 and 2013, various centers in VNS’s network did not provide services that qualified as personal care under its Medicaid contract.

The eligibility requirement gave the arrangement its purpose. Medicaid beneficiaries needed to qualify for a nursing-home level of care and require at least 120 days of community-based long-term care. VNS contracted with the centers to provide care, including personal care services. The government alleged that many of those centers provided minimal or substandard care, while members arrived through the centers or relied on them for most of their services.

The settlement also resolved allegations that VNS improperly received referrals from the centers and induced members to use them as their primary source of personal care. The referral and the service were connected: the center could bring someone into the plan and then become the place supposedly supplying the care that justified enrollment.

New York suspended new enrollment in April 2013 over concerns about that relationship. VNS began removing the ineligible members that August.

The settlement required VNS to check that centers could provide the required personal care and actually delivered the services in members’ care plans.

We see the absurdity: centers helped recruit members into a care plan while some of those centers failed to provide qualifying personal care.

The 2017 Settlement and Members Left Enrolled

VNS Choice agreed to pay $4,392,150 in the settlement announced July 17, 2017. VNS admitted failing to identify and timely disenroll 365 members, receiving monthly capitation payments to which it was not entitled. During the period covered by this case, the plan received $3,800 to $4,200 per member each month.

The contract described in the announcement required disenrollment when VNS knew a member no longer lived in its service area, had been absent for a specified period, had been hospitalized for 45 consecutive days or longer, or no longer qualified for Medicaid or managed long-term care. A member’s voluntary request also required VNS to initiate disenrollment.

According to the government’s complaint, approximately half of the affected members had moved away or left the service area for extended periods. Others had asked to leave the plan, repeatedly refused services, or no longer met the eligibility criteria. In many instances, the government alleged, VNS continued collecting payments for several months after the required disenrollment date while providing no health care services to the member.

How Are Overpayments Handled in Medicaid?

We help you work out what the plan owed back and what staff knew about it. In the VNS Choice case, removing a member did not return the capitation already collected. VNS admitted that, for some affected members, it knew at the time of eventual disenrollment that they should have been removed earlier, yet failed to repay the improper payments.

That admission makes the Medicaid False Claims Act case concrete. The plan knew the earlier disenrollment date mattered and still retained the money. An enrollment correction and a repayment were separate decisions, with separate records.

What the Whistleblower Saw Inside the Plan

The whistleblower, a former social worker at VNS, alleged that enrollment promises, care decisions and internal warnings told a different story from the plan’s membership list. His first amended complaint described salespeople offering cash, calling cards and trips to persuade people to complete enrollment forms. It also alleged that prospective members were promised more home-aide hours than their existing plans provided:

More care to win the enrollment. Less care once it was secured. That is the contradiction the complaint alleged, and a care coordinator could recognize it in the promised hours and the hours actually authorized.

The social worker alleged that approximately 25% of his caseload was too healthy or otherwise ineligible for Medicaid managed long-term care. He also alleged that the plan retained members who were abroad and receiving no care. The whistleblower, called the relator in the complaint, described repeated warnings inside the organization:

The alleged pressure ran the other way for members who needed more expensive care. The complaint said a supervisor told the social worker to discourage families from bringing members home after a sub-acute stay because VNS would have to pay for a 24-hour aide. It also alleged instructions to prepare disenrollment paperwork before meeting with families.

These allegations describe decisions an employee could hear and see: what sales promised, what care management approved, what supervisors were told, and whose enrollment the company wanted to keep.

What Evidence Is Needed to Prove Fraud?

For a capitation case like this one, the useful evidence connects a member’s eligibility and care to the months the plan received payment and what staff knew about the mismatch. We work with insiders to make those connections across enrollment, care management and finance.

Assessments, care plans and service records tell different parts of the story, and a center’s credentials and referral relationship add another layer.

The later case adds dates: when the plan learned a member had moved, requested disenrollment, refused services or lost eligibility, and when the plan actually removed that member. Capitation and repayment records then show what happened to the money. The complaint’s account of repeated case-review warnings adds the people who knew and the decisions made after they knew.

You may work with only one part of that picture. Our job is to understand what your part reveals and connect it with the payment and care obligations that make the case.

Why Claims Review Can Miss the Plan’s Conduct

A 1999 report, Controlling Fraud and Abuse in Medicaid: Innovations and Obstacles, from Harvard University’s John F. Kennedy School of Government, identified a basic oversight problem in state Medicaid programs: officials confused fraud against a managed-care organization with fraud by the organization itself.

The report explained that plans had a financial incentive to stop providers from cheating them. That incentive did not address the plan’s own diversion of capitation away from frontline care. Participants also reported that encounter data was inadequate for assessing quality of care.

The VNS cases show why that distinction matters. Reviewing what a provider charged the plan would answer a different question from whether VNS should still have been receiving Medicaid money for a particular member. We want to know what happened between the care record and the decision to keep collecting.

The Pattern Beyond VNS Choice

CenterLight Healthcare’s 2016 settlement likewise concerned ineligible members associated with social adult day-care centers. Its 2018 settlement concerned adult-home residents who did not receive qualifying community-based services, were not timely disenrolled and continued generating capitation. Both settlements included admissions. The recurring questions are who qualified, what services they received, and why enrollment continued.

A separate VNS Health settlement in 2024 concerned Far Rockaway Assertive Community Treatment services that the government alleged were incomplete or inadequately documented. That provider-side case concerned the treatment program’s services and records. The Choice settlements concerned membership and payments to the managed long-term care plan. The VNS name spans both sides of healthcare payment, and the entity receiving the money matters.

Can You Get Paid for Reporting Medicaid Fraud?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. The VNS cases began with a private whistleblower lawsuit. We work out with you which recovery a whistleblower reward is based on.

You Know When the Care and Payments Parted

If your enrollment, care or payment records tell different stories about the same members, talk with our whistleblower experts. We build the case with you and bring in Medicaid managed-care whistleblower lawyers who understand capitation, eligibility and the decisions behind retained payments. We stay beside you as that inside knowledge becomes a case for recovering the government’s money.