Scan Health Plan

Sam Ervin is chief executive of SCAN Health Plan, a Long Beach-based, nonprofit company mandated into existence by Congress. Called a Social Health Maintenance Organization, SCAN Health Plan--still in the demonstration phase--offers free hospital, outpatient and in-home health benefits to the elderly in Orange and Los Angeles counties using Medicare funds. The Social HMO model, Ervin says, could be a forerunner to a national health system. He talked recently with staff writer James M. Gomez.

A Long Beach health plan agreed to pay $320 million to resolve allegations that it was overpaid by the state's Medi-Cal program going back to 1985, government officials said. Federal officials called the settlement from SCAN Health Plan the largest of its kind from a single provider in Medi-Cal, the state's Medicaid program for the poor and disabled. Separately, the United States attorney's office in Los Angeles said SCAN paid an additional $3.8 million to settle a whistle-blower's allegation that the nonprofit company was overpaid by Medicare because of withholding of information about patients' diagnosis codes.

Bruce Chernof, the embattled county health services director, announced Friday that he is leaving to become the chief executive of a new Long Beach-based foundation dedicated to improving healthcare for senior citizens. Chernof will be the first to lead the SCAN Foundation, with an initial budget of $205 million from the SCAN Health Plan, a nonprofit Medicare and Medicaid HMO. Chernof's resignation Thursday from his county post caught county officials by surprise, and some privately expressed anger that he departed when the county health system is facing major troubles.

A multimillion-dollar settlement reached this week over alleged overpayments to a Medicare health plan in Long Beach highlights how vulnerable Medicare is to potential abuse even as changes are underway to shore up the massive government program. Medicare is already hemorrhaging an estimated $60 billion annually to fraud and improper payments, and some experts worry that the problem could worsen as government officials give medical providers and insurers more incentive to exaggerate - deliberately or accidentally - how sick some patients are to boost their profits.

A multimillion-dollar settlement reached this week over alleged overpayments to a Medicare health plan in Long Beach highlights how vulnerable Medicare is to potential abuse even as changes are underway to shore up the massive government program. Medicare is already hemorrhaging an estimated $60 billion annually to fraud and improper payments, and some experts worry that the problem could worsen as government officials give medical providers and insurers more incentive to exaggerate - deliberately or accidentally - how sick some patients are to boost their profits.

For about 1.5 million California seniors enrolled in Medicare health maintenance organizations, the task of selecting a health plan has been daunting. Many people rely on recommendations from friends, feel-good advertisements or finding their doctor in the HMO's booklet. What's been needed is information that would allow people to directly compare how Medicare HMOs throughout California measure up on costs and services.

For more than a decade, Sam Ervin has struggled to ensure that his modest experiment in health care--a program to keep people out of nursing homes for as long as possible--would survive in the rough-and-tumble managed-care industry. While SCAN Health Plan, the small, not-for-profit HMO that Ervin heads, has certainly survived, it has not flourished. And when Ervin tried to jump-start his company's growth recently by converting it to for-profit status, state regulators objected.

A Long Beach health plan agreed to pay $320 million to resolve allegations that it was overpaid by the state's Medi-Cal program going back to 1985, government officials said. Federal officials called the settlement from SCAN Health Plan the largest of its kind from a single provider in Medi-Cal, the state's Medicaid program for the poor and disabled. Separately, the United States attorney's office in Los Angeles said SCAN paid an additional $3.8 million to settle a whistle-blower's allegation that the nonprofit company was overpaid by Medicare because of withholding of information about patients' diagnosis codes.

In Long Beach, 720 senior citizens are pioneering a novel way to confront the health-care costs of old age: They go to the SHMO. And if they're not up to the trip, the SHMO goes to them. SHMO? That's government talk for "social health maintenance organization," which may sound like gobbledygook but stands for a serious, experimental approach to health care for the elderly.

Long Beach-based SCAN Health Plan is entering the Ventura County market, offering services in limited areas for seniors looking to supplement Medicare coverage, officials said. More than 50,000 seniors in Camarillo, Fillmore, Oxnard, Santa Paula and Ventura will now be able to choose between two Medicare Advantage HMOs, potentially finding savings, said Katharine Raley, an insurance counselor for the county's Area Agency on Aging.

Bruce Chernof, the embattled county health services director, announced Friday that he is leaving to become the chief executive of a new Long Beach-based foundation dedicated to improving healthcare for senior citizens. Chernof will be the first to lead the SCAN Foundation, with an initial budget of $205 million from the SCAN Health Plan, a nonprofit Medicare and Medicaid HMO. Chernof's resignation Thursday from his county post caught county officials by surprise, and some privately expressed anger that he departed when the county health system is facing major troubles.

Long Beach-based SCAN Health Plan is entering the Ventura County market, offering services in limited areas for seniors looking to supplement Medicare coverage, officials said. More than 50,000 seniors in Camarillo, Fillmore, Oxnard, Santa Paula and Ventura will now be able to choose between two Medicare Advantage HMOs, potentially finding savings, said Katharine Raley, an insurance counselor for the county's Area Agency on Aging.

For about 1.5 million California seniors enrolled in Medicare health maintenance organizations, the task of selecting a health plan has been daunting. Many people rely on recommendations from friends, feel-good advertisements or finding their doctor in the HMO's booklet. What's been needed is information that would allow people to directly compare how Medicare HMOs throughout California measure up on costs and services.

For more than a decade, Sam Ervin has struggled to ensure that his modest experiment in health care--a program to keep people out of nursing homes for as long as possible--would survive in the rough-and-tumble managed-care industry. While SCAN Health Plan, the small, not-for-profit HMO that Ervin heads, has certainly survived, it has not flourished. And when Ervin tried to jump-start his company's growth recently by converting it to for-profit status, state regulators objected.

Sam Ervin is chief executive of SCAN Health Plan, a Long Beach-based, nonprofit company mandated into existence by Congress. Called a Social Health Maintenance Organization, SCAN Health Plan--still in the demonstration phase--offers free hospital, outpatient and in-home health benefits to the elderly in Orange and Los Angeles counties using Medicare funds. The Social HMO model, Ervin says, could be a forerunner to a national health system. He talked recently with staff writer James M. Gomez.

In Long Beach, 720 senior citizens are pioneering a novel way to confront the health-care costs of old age: They go to the SHMO. And if they're not up to the trip, the SHMO goes to them. SHMO? That's government talk for "social health maintenance organization," which may sound like gobbledygook but stands for a serious, experimental approach to health care for the elderly.

Local senior citizens ages 65 and over who visit the SCAN Health Plan offices today will be able to call a loved one or friend anywhere in the continental United States free of charge. Calls may be made between 10 a.m. and 2 p.m. Each person is requested to limit the call to about 15 minutes. Refreshments and door prizes will be offered. SCAN Health Plan's offices are at 521 E. 4th St., Long Beach. SCAN Health Plan provides retirees over 64 with a full range of medical and social services.

SCAN Health Plan, the Long Beach health maintenance organization, wants to make a buck. The nonprofit HMO, which provides medical and dental coverage to about 12,000 seniors in Orange, Los Angeles, Riverside and San Bernardino counties, recently applied to state regulators for the OK to convert itself to a for-profit entity. * Barbara Marsh covers health care for The Times. She can be reached at (714) 966-7762 and at barbara.marsh@latimes.com