SynerMed, a company that manages physician practices serving hundreds of thousands of Medicaid and Medicare patients across California, is planning to close as it is investigated by state regulators.
The company's chief executive, James Mason, notified employees in an internal email, obtained by Kaiser Health News, that audits by health plans found "several system and control failures within medical management and other departments."
As a result, Mason wrote, the company "will begin the legal and operational steps to shut down all operations." He said he was working on the transition of SynerMed's clients to another management firm within 180 days.
Separately, the California Department of Managed Health Care confirmed it is investigating the company.
"There is an open investigation of SynerMed, but the details are confidential right now," spokesman Rodger Butler. The agency monitors the financial solvency and claims-payment practices of many physician groups that contract with health plans.
The company's decision to close has alarmed some doctors and medical groups that have relied on the company to handle their finances and business operations.
For years, SynerMed has been a middleman between health plans and independent physician practices, handling insurance contracting, paying claims and performing other administrative tasks so doctors can focus on treating patients. That role has expanded as millions more Californians are enrolled in Medicaid managed-care plans under the Affordable Care Act.
SynerMed has called itself "one of the largest Medicaid/Medicare management service organizations in the nation." Last year, the company boasted that it had enrollment of 1 million patients in California, aided by an influx of enrollees who got coverage under the federal health law.
Mason didn't respond to requests for comment. The company referred calls to its general counsel, but she couldn't be reached.
He said two medical groups, AlphaCare and EHS (Employee Health Systems) Medical Group, have already terminated their contracts with SynerMed.
