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Chartered Health Finishes Audit; Negotiations to Sell Company Continue

Friday, January 11, 2013

***The department will hold a conference call for reporters today, Friday, Jan. 11 at 3 p.m. To participate, contact Kate Hartig at [email protected] to RSVP and for dial-in information.***

An independent audit of D.C. Chartered Health Plan Inc. shows that issues related to the parent company of the city’s largest Medicaid HMO negatively affected its financial results for 2011.

The audit cited $1 million in payments to a related company, Chartered Family Health Center, as one of the reasons the auditing firm qualified its opinion of the accuracy of parts of the report.

“Chartered’s management and the auditor were not able to form an opinion regarding the propriety of the transactions because of the inadequacy of the accounting records and insufficiency of supporting documentation,” said Daniel L. Watkins, the deputy rehabilitator appointed by the District’s Department of Insurance, Securities and Banking to run the company in receivership, in a Q&A accompanying this press release that can be viewed here.

Meanwhile, negotiations continue to sell some of the company’s assets to the AmeriHealth Mercy Family of Cos., a large managed-care organization headquartered in Philadelphia, said William P. White, commissioner of the Department of Insurance, Securities and Banking. The commissioner put Chartered into receivership in October.

Chartered insures 110,000 of the city’s neediest residents through Medicaid and the city’s own D.C. Alliance health insurance programs and provides payments to health-care providers for those medical services.  

“Even as we deal with a lot of legal and financial issues, serving these people and paying providers has been our major focus,” said Commissioner White. “There is no reason Chartered’s clients and providers should suffer because of the company’s problems.”

The deputy rehabilitator filed a status report today with the Superior Court judge overseeing the receivership, including the audited financial statement, which was delayed after Chartered hired new auditors in June. 

The statement indicated Chartered’s parent company, D.C. Health Systems Inc., had not paid $2.8 million in federal income-tax refunds due Chartered. 

Chartered has demanded the parent company pay the refunds and either provide appropriate documentation for the $1 million in Family Health Center transactions or repay those too.

Chartered’s finances turned out to be a little stronger than the previous, unaudited statement had indicated, though the improvement largely relies on a claim against the District for additional reimbursement, a claim the city is contesting. View a statement from the deputy rehabilitator on the audit.

Additional information and documents on the rehabilitation of DC Chartered Health Plan Inc. can be found at disb.dc.gov/chartered.