Patti's Blog - Advocate for Elders, People with Disabilities and Their Families: Medicaid - Medicare

Patti's Blog - Advocate for Elders, People with Disabilities and Their Families: Medicaid - Medicare

Hawaii DOE is billing Medicaid for OT, PT and Speech services our kids are getting at school

Several months ago, I wrote that I had asked the Hawaii Department of Edcuation for an accounting of all funds applied for and/or received from Medicaid for my daughter's services.  I was told verbally, in no uncertain terms, that DOE had received nothing from Medicaid for Hannah's services.

I now have the documentation to show that DOE has been billing Hawaii Medquest for my daughter's occupational therapy, physical therapy and speech therapy services since May 2009.  They have received reimbursements for services provided back to December of 2008.

December 2008 is coincidentally when I received a letter from Hawaii DOE stating that if I did NOT sign and return the letter to them, I was explicitly giving them permission to bill Medicaid on my daughter's behalf.

According to a report by former School Superintendant Pat Hamamoto to the state legislature in December 2009, the state had identified approximately 2500 special ed students receiving Medicaid for whom federally funded reimbursements could be sought.

That's only ten percent of all Hawaii kids receiving special education services.  It's also only about ten percent of all Hawaii children already signed up for Medicaid who have been referred for specialist medical treatments of some sort.

I've written a long article on the Children's Disability Rights Education Association "News and Alerts" page about the need to ensure our kids are signed up for Medicaid, and how we can go about doing so.

It's a gift we as parents can give our children that the law has never given us access to before. And if the schools do their job, they'll actually benefit by receiving federal reimbursements for 75% of the funds they are already spending on your child.

It's a win-win for everyone.

What a 50% Medicaid payment error rate could mean for Hawaii

On April 7, I emailed CMS asking to confirm a rumor I had heard.  Part of the rumor had to do with a possible 50% error rate on Hawaii's Medicaid program.

UPDATE:  April 20, 2010
I heard today from CMS that they have confirmed that the two for-profit health insurance companies will continue to operate the state's Medicaid program.  This is good news for enrollees who are in the appeals process from denials of services, medications, etc.

She was not able to confirm, however, anything about the rumor of the 50% payment error rate.

What does a 50% Medicaid payment error rate mean?  It can mean that half of all Medicaid claims are paid twice:  once by either Evercare or Ohana through their capitation payments, and the second time by Medicaid's fee for service program.

Here is how it might happen:

1.  ACS, as the fiscal agent for Hawaii's fee-for-service Medicaid program, charges a fee for every claim they submit.

2.  Hawaii receives matching funds from the federal government for ACS's services, just as they do for the state's QExA program operated by Evercare and Ohana.

3.  ACS is billing the state for claims incurred by patients served by Evercare and Ohana.

4.  ACS would then be receiving federal (and state) funds for claims that are the responsibility of Evercare and Ohana and which are included in the calculations for the monthly per person payments (capitation payment) they receive.  Evercare (UnitedHealth) and Ohana (Wellcare) are retaining their full capitation payments, hence the double payments.

What that means for Hawaii is that suddenly our Medicaid budget could be half of what it should be.  For example, since the state's total Medicaid budget for FY2010 is about $1.4 billion, then suddenly the state might have only $700 million to spend.

A national report by CMS published last year found that the payment error rate nationwide for managed care Medicaid organizations was one tenth of one percent.  Nationwide, CMS found a payment error rate of 8.72%.  These figures, which include Hawaii, are for FY2008, before Evercare and Ohana began their Hawaii contracts.

In March, Hawaii Governor Linda Lingle blamed the state's "Cadillac" Medicaid program for 75% of the state's budget deficit by 2014.  As far as I can tell, the only "cadillacs" may be those driven by whoever is pocketing all these double payments.

Why is Hawaii not collecting all the Medicaid stimulus funds available to the state?

A three month survey of how efficiently states are claiming their Medicaid stimulus funds from the federal government shows that Hawaii has consistently been in the bottom five.

The statistics come from the federal government website www.recovery.gov.  I have isolated the figures just for Medicaid out of the totals received from the federal Department of Health and Human Services.  The survey covers all fifty states and the District of Columbia.

In December 2009, Hawaii was third from the bottom, having claimed only eighty percent of the total funds available.  In February, Hawaii was second from the bottom, having claimed only 75% of the total.  In March 2010, Hawaii was fifth from the bottom, collecting 86% of the funds available.  However, the total amount of funds available did not change from February to March, 2010 for Hawaii.

The median percentage of funds claimed in March 2010 was 97%.  Ten states managed to collect 100% of the funds available, with another twelve collecting between 98% and 99%.

Hawaii outsourcing hundreds of millions of dollars to the mainland

It appears that Hawaii's Departments of Education and Human Services are out-sourcing information technology and other business to the mainland, losing the state hundreds of millions of dollars.

Hawaii is the only state in the country that depends on another state to be its fiscal agent for Medicaid.  While I've been unable to find the contracts themselves, a DHHS report noted the state spent about $48 million between June 2002 and December 2004 on its contracts with Arizona, ACS and HMSA.  ACS and Arizona now operate the entire contract, which could easily cost as much if not more than it did six years ago.

Since the Medicaid information system is operated by Arizona, ACS, which has the local contract with DHS, cannot perform any on-site maintenance or repairs for the system.
The contract with Arizona necessitated a contract with another Arizona firm, Fourthought Group.  They were paid $1.8 million over 24 months in 2004-2006, to make sure the HIPAA security system worked on the computer information system operated by Arizona.

Hawaii DHS has paid about $5.25 million to D.C. law firm Covington & Burling to write, re-write and defend legally the state's Medquest contracts with UnitedHealth and Wellcare.  C&B have also represented UnitedHealth in the past.  The most recent contract is from March 2010 for an additional $500,000. 

Hawaii's Medquest contracts with UnitedHealth of Minnesota and Wellcare of Florida are shipping out over $310 million to the mainland, including over $100 million in lost insurance premium taxes.  This does not even begin to factor in the local jobs that have been lost due to cost-cutting measures the two companies have implemented that appear just to shore up their profit margins.

Hawaii's Department of Education has been paying the University of Massachusetts Medical School since 2006 to handle Medicaid reimbursements to the schools for special education health related services.  I calculated the other other day that the state seemed to be losing about $85 million in potential federal reimbursement in FY2010, in addition to whatever portion of the state's salaries could be reimbursed as administrative costs for the Medicaid program.  (As a sense of comparison, the state of Missouri was receiving over $5 million a quarter in federal funds just for administrative time.)  According to a DHS budget document, the schools are only receiving about $1.3 million this year in Medicaid reimbursements.  I have been unable to find what DOE is spending on the contract with the UMass Medical School for the past four years.

One has to wonder what our pro-Hawaii-business governor and legislators are thinking about when they make the decisions that lose our state so many millions of dollars in additional employment, services and taxes.

Profits on profits: How UnitedHealth and Wellcare are making money off the backs of Hawaii's most vulnerable populations

I have obtained copies of the capitation rates Hawaii is paying UnitedHealth (Evercare) and Wellcare of Florida (Ohana) for the two companies' coverage of Hawaii's aged, blind and disabled population.

I reported back in January that a rough calculation of the profits made by UnitedHealth and Wellcare on their Hawaii Medicaid contracts came to about $203 million.  That figure was based on a total contract value of $2.5 billion, a three percent guaranteed profit, and an additional five percent off the top "performance" bonus.

As I reported earlier today, Hawaii's agreement with the two for-profit companies included reimbursing them in advance for insurance premium tax payments.  Normally an insurance company pays a tax on premiums received to the state.  For Hawaii, that amount in February 2009 was 4.265%.  However, the capitation rate statements for both companies show that that this tax was added on to the capitation payments, essentially reimbursing the two profit making companies in advance for tax payments due the state.  (I mention "in advance" as I do not know when the payments would be due, but it is possible that the additional tax reimbursements could earn interest for the two companies prior to being paid back to the state).

Assuming the two contract amounts remained the same as when the contracts were originally signed, that would mean a savings of about $107 million for the two companies.

However, the contracts have not remained the same.  Contract supplements between Hawaii, UnitedHealth and Wellcare were signed in October 2009 that increased at least some of the capitation fees.

Evercare's rate sheets for February 2009 show that the company would have received $8,898.32 per month for my daughter's home and community based services, and an additional $609.60 a month for her medical expenses. That totals $9,507.92 a month.

In October, the figures jumped by 33%, with the total monthly capitation payment rising to $12,660.27 per month.

The problem is that Evercare is not paying for my daughter's home and community based services, and has not paid for these services since the program began in February 2009.  Hannah's services are being paid through the Department of Health's Developmental Disability waiver program.

This is not an isolated example.  The family of another Kauai child was told last year by UnitedHealth that the company would pay no more for her home services care than $6,000 a month, what it would cost them to put her in an institution.  Evercare was actually already receiving the same amount they received for my daughter, and in fact, they would have received $13,676.57 a month if the child had been institutionalized.

At that point in time, Evercare also was not paying for the child's home services, which were being completely funded through the Department of Health.

The $6,000 figure was used also by Wellcare in its attempt to coerce a young adult with quadriplegia into taking a reduction in home services.  At that point in time, Wellcare would actually have received over $9,000 a month if the young man had been institutionalized.  The point appeared to be, however, that the capitation rate for this particular category had actually been decreased by 20%, and Wellcare needed to find a way to bully the family into accepting a reduction in services which had nothing to do with any change in the young man's medical needs.

Both Wellcare and UnitedHealth began cutting home support services in October, as I heard from affected families.  At the same time, I heard from federal regulators that the two companies were claiming they weren't being paid anywhere nearly enough money to cover their costs.  In December, a state Medquest employee said the state was in the process of discussing revisions in the contracts, but whether this was camouflage for the October contract supplement or involves an additional capitation rate increase I have no records for, I cannot say. 

Another hidden profit center within the UnitedHealth plan comes from its control over prescriptions.

Last week, for the second time, UnitedHealth refused to authorize medications that had been prescribed for my daughter.  The last time this happened, UnitedHealth insisted my daughter take an alternative drug, one which was absorbed into the bloodstream and could cause side effects for a medically fragile child taking multiple seizure medications.

This time, UnitedHealth's wholly owned subsidiary, Prescription Solutions, refused to authorize two drugs for Hannah. When I complained that my daughter needed the medications, I was told that before these drugs could be authorized, we would have to try two other medications.

Hannah had used both these other medications in the past, with no effect.  Prescription Solutions did not realize that, however, since they were missing my daughter's prescription list from February 2009 to November 2009.

As I pointed out in letters to both UnitedHealth and the Centers for Medicare and Medicaid Services, UnitedHealth was once again second guessing my daughter's physicians.  The medications they were insisting we use did not even treat the ailment my daughter had been diagnosed with.

I have heard from numerous other families that they have gone to the pharmacy and discovered the drugs that were covered for their medically fragile children previously have suddenly been denied authorization since February 2009.  Parents are being asked either to pay entirely for the medicine, or told the company had only authorized the medication for three weeks out of the month, and the family would need to pay for the fourth week of supplies.

Profits upon profits upon profits:  the financial benefits of such vertical integration are well known.  The only problem I see is that it is our children and adults with disabilities, and our senior citizens, who are providing these profits.  Have lives been lost due to these profits?  Have families suffered unbearable grief and suffering because of these profits?

The likelihood is yes, and we have to ask ourselves what this says about us as a state and a community.  We should be mortified.

Financial questions seem to surround Hawaii's relationship with Unitedhealth and Wellcare

Rumor has it that doctors and other Medicaid providers in Hawaii are questioning why the bills they send to Evercare and Ohana are being paid with checks from ACS.

Evercare and Ohana are the two for-profit companies providing medicaid and home services to the state’s aged, blind and disabled population.  They receive a monthly per head capitation payment from the state (comprised of both state and federal funds).

Presumably the capitation payment is supposed to be all inclusive.  It even includes a prepayment of the insurance premium tax due on the capitation payments (see below).

ACS (Affiliated Computer Systems, Inc.) has been Hawaii’s fiscal agent for Medicaid claims processing since 2002.  In February 2009, they signed a new $21 million contract renewal for eighteen months.  As part of the new contract ACS will continue to manage claims processing for the local Medicaid Fee-for-Service population (which excludes the 40,000 participants in Evercare and Ohana). They are using the state’s Medicaid Management Information System but not providing on-site support since the system is remotely operated by the state of Arizona. (According to a December 2009 report by CMS, Hawaii is the only state in the country that is letting another state act as its fiscal agent for Medicaid).

It is a mystery why any provider billing the two group plans would be paid through the fee-for-service fiscal agent. 

If this is indeed the case, then unless the two group plans are reimbursing ACS from the capitation payments, there could be a potential for the state and federal government to pay twice for the same service.  The services rendered are assumed to be covered under the capitation rates received by the group plans, but then potentially paid for a second time with state and federal funds through the fee-for-service program managed by ACS.

A second peculiar financial question is raised by an email exchange where state Medicaid officials were arranging for the two group plans to use the state’s Employer Identification Number (EIN).  It is unclear from the emails if this was a one-time effort or is continuing to the present, or ended somewhere in between.

A third potential financial peculiarity comes from the fact the group plans are receiving an additional 4.265% from the state to cover the state’s insurance premium tax.  Normally, this is a tax paid by the insurance company to the state.  In the case of Evercare and Ohana, the federal and state governments are paying this tax as an upfront reimbursement.  On the two contracts totalling about $2.5 billion, that represents a tax loss to the state of about $107 million.

To put that amount in perspective, I had earlier calculated the off-the-top profit for the two companies from the original contract at about $203 million.

Prior to February 1, that was an extra $310 million that the state had available to pay for home and medical services for its most vulnerable populations.

What a sweet deal for the two for-profit insurance companies.

Are Hawaii schools giving up millions in federal reimbursement dollars?

Hawaii's Department of Education may be forgoing millions of federal dollars while it brings infamy down upon the state for cutting a full day from our school week.  The point of the Friday Furloughs (as they're called) was to save the state about $117 million, part of the total $227 million in budget cuts Hawaii Governor Lingle mandated.

Going through DOE's expenditures for FY2010 (which is not over yet), I was able to identify at least $113 million in expense that could be reimbursed by Medicaid.  Medicaid pays seventy-five cents of every dollar spent by schools on health services.  The state should have been able to collect about $85 million from Medicaid, but a DHS budget document shows DOE is only getting about $1.3 million in Medicaid reimbursements.

The expenses I identified as reimbursable through Medicaid include:

Autism services                                              $41 million
Speech pathologists                                       $18 million
Occupational therapists                                  $ 4 million
Physical therapists                                          $ 4 million

Contracted special ed services                       $ 3 million
School health aides                                         $ 6 million
School based mental health services             $  2 million
School based behavioral health services       $35 million

DOE can also receive 75% reimbursement from Medicaid for administrative time spent managing the above services.  What proportion this might represent of the $170 million spent on special education salaries I do not know.


Less than a month before she resigned, Hawaii Superintendant of Schools Patricia Hamamoto reported to the legislature that the state's endeavors to collect from Medicaid were going well.  An outside contractor had been hired in 2006, and DOE was so happy with them the contract was continued until June 2010.  Total collected to date appears from the report to be just over a million dollars, with another seven million projected by 2013.