Sacramento area insurer pays $97 million after over-billing U.S. for veterans care

A Rancho Cordova health insurance company has repaid $97.2 million to settle an investigation into inflated claims submitted to the U.S. Department of Veterans Affairs, federal prosecutors announced Tuesday.

Health Net Federal Services LLC agreed to the settlement after an audit by the VA Office of Inspector General revealed that Health Net had filed duplicate claims under a veterans healthcare contract. A follow-up investigation “confirmed the conduct,” the U.S. attorney’s office said. Health Net repaid $93.7 million plus $3.5 million in interest.

“Providers must be held to the highest standard of care and must rigorously comply with their contractual obligations,” said Acting U.S. Attorney Phillip Talbert in a prepared statement.

Health Net is a subsidiary of St. Louis-based Centene Corp., a health insurance giant that in 2019 began constructing a massive West Coast headquarters in Natomas.

The campus, on a 68-acre parcel west of Sleep Train Arena, is designed to consolidate Centene’s 3,000-employee workforce in the Sacramento area and house 2,000 new hires, for a total population of 5,000 workers in five buildings. Centene has begun moving workers onto the campus, city officials said.

Prosecutors said Health Net secured a $5 billion contract with the VA in 2013 to provide healthcare under a program that offers private care to veterans when VA facilities are overwhelmed. Health Net was the third-party administrator, reimbursing doctors and clinics for their work and then billing the VA.

The U.S. attorney’s office said its investigation revealed $92.5 million in overpayments in a five-year stretch ending in 2019. Health Net also failed to pass through more than $1 million in discounts it had negotiated, prosecutors said.

While the U.S. attorney’s office said the problems were first revealed in an inspector general’s audit, Health Net says it brought the billings to the government’s attention.

“Overpayments on a program of this size and scale can sometimes occur,” the company said in an emailed statement. “It is important to recognize that HNFS identified and voluntarily self-reported these overpayments that were inadvertently made by the VA to HNFS. HNFS subsequently returned those overpayments with interest.”

This story was originally published April 6, 2021 at 1:57 PM.