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.