ORANGE — Quantum Health Resources Inc.'s billing dispute with the State of California heated up Wednesday when the state controller's office issued a letter demanding the company repay $2.3 million in past Medicaid claims.
The controller's office also threatened not to pay an additional $1 million in current claims and any future claims until the company resolves the past ones. The agency told the company "your records do not adequately support amounts claimed" from the state's Medicaid program.
In an interview, State Controller Kathleen Connell said the state may find further billing discrepancies as it continues auditing $27.5 million worth of Medicaid reimbursements it made to Quantum in a four-year period ended last June.
The claims in question involve revenue Quantum received for Monoclate P, a blood coagulating product it provides to hemophiliacs. The company, which moved its executive offices to Indianapolis from Orange last year, supplies therapies and services to hemophiliacs and other people with chronic lifelong disorders.
So far, auditors have worked through about a third of the claims in question, Connell said. "We are concerned that they (Quantum) understand the seriousness of this overpricing and that they seek to immediately resolve the issue with the Department of Health Services, or they begin payment on the outstanding amount," she said.
Her office's demanding letter surprised Quantum officials, who figured they were about to reach a compromise on billing issues through the separate state Department of Health Services, which runs its Medicaid programs.
John M. DeStefanis, Quantum's president and chief operating officer, said the official letter merely formalizes an issue that the company has been discussing with the state for two months. "We are dealing with two different organizations that don't seem to be talking to each other."
Similarly, Lynda Frost, a Health Services Department spokeswoman, said department officials were "caught off guard" by the controller's sudden demands. She said Health Services officials believed, like Quantum's, that talks with the company had been moving toward a resolution. She noted that a meeting on the matter is planned today between Health Service officials and the controller's staff.
Frost described Quantum as a "valued" state provider of services for hemophiliacs. She said the department hopes to resolve the issues with the company and the controller in the "very near future."
DeStefanis said the billing controversy arose after the company asked the Health Services department in January to change its way of reimbursing the company for blood coagulation products.
In late February, the company announced that, as a result of a controller's office audit, controller's officials had determined that the company had been overpaid for blood coagulants and $27.5 million in revenue was in question.
The state has two other suppliers of the Monoclate P product, including Alpha Therapeutic Corp., which also has a billing dispute with the controller's office. Last December, the controller demanded that Alpha repay the state more than $500,000 for overpayment on similar products for hemophiliacs.
The state has also withheld payment of $62,000 in new claims. The case is on appeal with the Health Services department, the controller's office said.