Happy Holidays from Hawaii Medicaid: When $2.5 billion isn't enough

Apparently the almost $2.5 billion that Hawaii agreed to pay to UnitedHealth and WellCare in exchange for providing care for the state's disabled and elderly just isn't enough.

Less than a year after the two companies (UnitedHealth as Evercare and WellCare as Ohana) took over the state's Medicaid program that allows the elderly and disabled to stay in their homes, they're reportedly crying poor to the state.  All the actuaries screwed up.  The state has to renegotiate the contracts.  Woe is us.

And to prove it, they're slashing budgets from every which way.  Medically fragile children are having their nurses cancelled.  Quadraplegics are being told they can just sit at home by themselves all day and hope nothing happens.  Prescription medications are being cut to 21 day supplies, denied outright, or substituted by cheaper drugs that can worsen what they're supposed to be treating.

Hawaii's Attorney General's office has been investigating since September if WellCare is trying to defraud the state and a local quadraplegic man.  UnitedHealth admits outright they are in discussions with the state on how to weasel out of EPSDT's definition of case management on the basis of the state's 1115 Medicaid experimental project.  

In August, Federal regulators began discussions with Hawaii officials over potential violations of federal Medicaid law.  The DHHS Office for Civil Rights has been aware of the situation since July, and supposedly is now monitoring it directly from Washington, D.C.

Yet nothing has happened.  Families are spending the holidays wondering if they're going to have to institutionalize their child or parent or sibling so that UnitedHealth and WellCare can make a big enough profit.

I did a rough calculation of the profit off the top of the two contracts, and it comes to about $203 million over three years.  For a sense of comparison, the entire state budget for home services in FY2007 was only $140 million.

That doesn't include profits built into sub-contracts with wholly-owned subsidiaries.  Those end up disguised as direct medical payments in the budget so the 8% profit off the top includes 8% of the profits made by these subcontractors.

Apparently their budget woes in Hawaii aren't affecting the rest of UnitedHealth's and WellCare's contracts.  Both reported increased profits for the three months ending September 30, 2009 accompanied by increases in Medicaid and Medicare state contract clients.  UnitedHealth had third quarter revenue of over $21 billion, WellCare of $1.67 billion.

Meanwhile, UnitedHealth paid out over $405.7 million in fines in 2009 and WellCare paid $80 million in restitution to Florida in May and another $10 million to the SEC.

That doesn't even begin to touch on the subject of how much of Hawaii's federal stimulus funds that could only be spent on Medicaid (almost $175 million received as of December 4 with more on the way) are being directed towards the two companies.  If UnitedHealth and WellCare getting their standard 8% of off that, it's another $14 million. 

Nobody, including the state legislature, seems to know what's happened to that money.  I've gone so far, personally, as to ask CMS (the federal Medicaid regulatory people) how Hawaii is spending its Medicaid stimulus funds since its slashing budgets to the point of violating the ADA and federal Medicaid law.  They said they'd find me somebody to talk to, but haven't yet.  Rumor has it that it's a sensitive topic in Washington, which tells me Hawaii probably isn't the only state potentially violating civil rights and federal law by cutting services to disabled children, cognitively or physically impaired adults and the elderly.

A happy holiday it isn't.