DOJ intervenes in case against California clinic

by Ben Vernia | August 7th, 2012

On August 7, the Department of Justice announced its intervention in a whistleblower suit against a San Francisco-area health clinic that received additional federal funds for serving low-income patients. According to DOJ’s press release:

The United States has joined a whistleblower action pending in the Northern District of California against the federally-qualified health center (FQHC), North East Medical Services (NEMS), alleging that the center under-reported income it received from a managed care organization in order to artificially inflate reimbursements it received from the California Medicaid program, the Justice Department announced today. North East serves the San Francisco Bay area.

FQHCs are “safety net” community clinics certified under federal law and licensed under state law to provide medical care to poor and under-served populations. As such a health center, North East Medical Services is entitled to special payments from the California Medicaid program (Medi-Cal) that are significantly more generous than typical Medicaid payments. However, in order to receive these additional payments, NEMS must submit annual reports to Medi-Cal stating the total amount it actually received during the preceding year from any source for treating Medi-Cal enrollees. Medi-Cal then subtracts that amount from the amount that NEMS is entitled to receive as an FQHC and pays NEMS the difference. The government alleges that NEMS significantly under-reported payments it received from a managed care organization for treating Medi-Cal beneficiaries in order to artificially inflate the payments it received from Medi-Cal.

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