Colorado Medicaid HMO Under Investigation for Billing Fraud

Colorado officials are investigating Community Health Plan of the Rockies, a Medicaid HMO, after a former customer service manager filed suit last month, alleging that "the HMO was purposely delaying and denying payment of members' medical bills," the Denver Post reports. Gary Dick filed the suit on March 9 with the Denver District Court, claiming that he was fired after disclosing the HMO's tactics to coworkers and that health plan CEO Larry Rachmel "openly took pride that he had increased CHPR's profitability by implementing policies and procedures that frustrated the payment of legitimate claims." Health plan attorney Ron Taylor called the suit "ludicrous" and "groundless." Community Health Plan was one of "only a handful" of Colorado health plans to make a profit in 2000, posting $1.1 million in net profit, the Post reports.

Questionable Past
The Post reports that although Community Health Plan's owners were "under fire" in Florida in 1994 for "excessive profit-taking and failing to provide adequate care to members," Colorado regulators allowed the health plan to establish a Medicaid HMO in Colorado that year. Like "many other states in the mid-1990s," Colorado was "eager" to provide insurance for its Medicaid population and "welcomed" HMOs willing to participate in Medicaid managed care programs. While Colorado officials were aware of the health plan's track record in Florida, Jack Ehnes, the Colorado insurance commissioner in 1994, said, "[A]t the time we felt that there wasn't evidence the company would have problems in Colorado. You don't ever want to transfer problems from another state to your state." And when Colorado approved Community Health Plan's licence to operate in the state, it required the health plan to "make a bigger financial deposit than it typically requires of new HMOs -- $2 million -- and required the plan to submit financial records once a month during its first three years of operation." But the regulating agency had "few employees" to monitor HMOs and investigate complains, and Community Health Plan has gone "virtually unregulated." The lawsuit has spurred the health plan's first "detailed" examination by Colorado insurance regulators, the Post reports. The plan serves 34,222 members in Colorado (Austin, Denver Post, 4/22).