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.