What happened to $360 million from Medicare ‘coding’ error at The Villages Health?

With so many questions surrounding the bankruptcy at The Villages Health, one question tends to dominate the discussion. What happened to the $360 million in the erroneous Medicare “coding” that triggered the bankruptcy filing?

Court documents filed on behalf of The Villages Health indicate that its “professionals,” (its own legal team and recently hired restructuring officer Neil Luria) are conducting a “forensic” audit of The Villages Health’s finances and, thus far, have found “no evidence of missing or unaccounted for funds.”

The court document offers a peek into the finances of The Villages Health:

In 2022, The Villages Health had operating receipts of $164.3 million and $100.7 million of operating disbursements, including $10.7 million in rent paid to The Villages Operating Co. for the use of “state of the art facilities.” The Villages Operating Co. is owned by the Developer. That left a “net operating cash flow of approximately $63.6 million.” The document says that $63 million was used to pay down its “line of credit with its majority shareholder,” which is also The Villages.

In 2023, The Villages Health had operating receipts of $188.2 million and operating disbursements of $118.5 million, including $11.3 million in rent. That left a net operating cash flow of $69.8 million. The line of credit with its majority shareholder was paid down by another $22.7 million. Tax-related distributions to the “owners” of The Villages Health totaled approximately $44.9 million.

For 2024, The Villages Health had operating receipts of $186.6 million and its operating disbursements were approximately $133.4 million, including $11.8 million in rent, yielding a net operating cash flow of approximately $53.1 million. It paid down $32.5 million on its line of credit. Tax-related distributions to the “owners” of The Villages Health totaled approximately $19.3 million.

This week, The Villages Health is headed to bankruptcy court and pleading for permission to borrow $46 million to keep the lights on at its specialty clinics located throughout Florida’s Friendliest Hometown. There are 55,000 patients and 900 medical employees counting on the survival of those clinics. Even if the money is approved, the future seems far from certain.

The Villages is hoping to unload The Villages Health, and potential financial liabilities, in a sale to Humana’s CenterWell. However, The Villages Health’s Medicare Advantage partner of more than a decade, UnitedHealthcare has filed legal objections to the sale.

The Villages is hoping to close on the sale to Humana in early October. If the sale is successful, it would seem to suggest that there would be major changes to the Marcus Welby-type care introduced by The Villages when The Villages Health was born nearly 15 years ago.