Home Health & Hospice Week

Relationship with CIGNA, pump manufacturer called into question.

Gentiva Health Services Inc. has found itself in the midst of a scandal over its managed care practices, and the taint could leave the whole home care industry with a bad reputation.
 
A high-profile report in the Nov. 12 Wall Street Journal detailed a system where Gentiva's CareCentrix division handles insurer CIGNA Healthcare's home care business as a contractor. In turn, Gentiva subcontracted with insulin pump manufacturer Dana Diabecare USA to handle insulin pump business - including fielding requests for CIGNA beneficiaries to receive alternate, more expensive insulin pumps from competitor Medtronic Inc. and others.
 
First, CIGNA beneficiaries complained that Dana's inferior (and cheaper) pump wasn't adequate although it was the insurer's preferred product. Then, Dana employees used phony names and called themselves "benefit coordinators" when handling appeals from patients and their physicians for other pumps, the Journal says.
 
Stuck in the middle: Dana says it passed along applications for non-Dana pumps to Gentiva, but beneficiaries say they never heard back on appeals or received denials. CIGNA says it relied on Gentiva to forward appeals for the pump to the insurer, which makes all final coverage decisions.
 
Gentiva didn't know the Dana employees were using fake names and doesn't condone the practice, the Journal reports. But the Melville, NY-based home care giant says it isn't a conflict of interest for the manufacturer to handle the appeals because CIGNA makes the final decision on them, according to the newspaper.
 
"It shocks us that this normally conservative and careful company could put itself and its shareholders and patients at potential risk by allowing the manufacturer of one pump to even touch a request for another," said Fulcrum Global Partners, a Gentiva stock analyst. "To us, that entire setup is fraught with the potential for conflicts that is so obvious that we cannot understand what [Gentiva] could possibly have been thinking," Fulcrum said in a note, according to news reports.
 
After the Journal ran the report - and Gentiva's stock price dove 13 percent - the company said in a release that the newspaper provided an "incorrect description" of its role in the process.
 
"We have conducted a thorough review of the issues cited in the story," Gentiva notes in the release. "We have found ... no evidence of any breach of the processes of Gentiva or its CareCentrix(R) managed care unit, and no evidence of any inappropriate conduct on the part of Gentiva or its associates."
 
CIGNA dropped Dana as its preferred insulin pump provider in August after the Food and Drug Administration issued a warning to the Metairie, LA-based company about late patient-problem reporting for its devices. Several government agencies are investigating Dana for possible violations, including using confidential patient information the company received from the appeals for improper marketing practices, the Journal says.
 
The Journal also highlighted Gentiva CFO John Potapchuk's sale of more than 31,000 shares of stock mere days before the newspaper article ran and the resulting stock slide. Potapchuk maintained his stock sale was unrelated to the newspaper article, according to the paper.