More on the financial side of a for-profit Medicaid company

It can be interesting what pops up in a company's reports to the SEC.

Wellcare's first quarter 2010 report noted their legal battle over the missing Florida Medicaid funds cost the company about $169.7 million between 2007 and the first quarter of 2010.  Mention was also made that the company is responding to subpoenas issued by the Connecticut Attorney General's office relating to "transactions between us and our affiliates and their potential impact on the costs of Connecticut's Medicaid program."

This could be a complicated way of saying that Connecticut suspects they have been inflating prices and claims submitted or payable by the state's Medicaid department.

Wellcare is currently in what is known as a "Deferred Prosecution Agreement" with the US government.  They are supposed to not commit any crimes for three years.

For all of 2009 (and the Hawaii contract was only in effect for eleven of those months), Wellcare's Medicaid segment revenue went up 8.9% to $265.6 million.  The report states "the increase in Medicaid segment revenue is primarily due to the inclusion of operations for the Hawaii ABD program" which made up only two percent of Wellcare's total Medicaid membership.  Since the company at the same time lost enrollees in two large states (Florida and Ohio), the contribution of the little Hawaii membership to company revenues seems extremely out of balance.

UnitedHealth's first quarter filing includes $20.8 billion in "goodwill".  What is goodwill?  Political contributions?

UnitedHealth introduces a wonderful "fog the mirror" phrase for cutting costs:  "net favorable medical cost development." 

For the three months ended March 31, 2010 and 2009, there was $490 million and $200 million, respectively, of net favorable medical cost development related to prior fiscal years. The 2010 favorable development was primarily driven by changes in previous estimates related to more efficient claims handling and processing, resulting in higher completion factors, lower than expected health system utilization levels, the H1N1 influenza outbreak being less costly than had been estimated and the mix effect of longer duration state Medicaid members who have a more favorable health status (my emphasis).

UnitedHealth has also recently published a research document that shows that if the states move all the new Medicaid enrollees they will gain from the Affordable Care Act, plus all their current Medicaid enrolles, into managed care, the states will save $366 billion over 10 years.

UnitedHealth, of course, is happy to offer such medicaid managed care programs to the states to handle this influx, and has already figured out how to save the states money on their long-term care expenses.

The underlying assumption is that managed care provides coordinated care which produces better care.  The logic breaks down with the first assumption, and as our experiences here in Hawaii are teaching us, the last assumption is pure fantasy.

The Huffington Post ran a story in April about how health care reform is going to encourage all the for-profit health insurance companies to inflate the possibly already inflated medical direct costs column on their spreadsheets.  The new law will require health insurers to spend at least eight-five cents of every premium dollar received in the large state Medicaid programs on actual medical benefits.  Companies like UnitedHealth are well below that figure currently, and when the law goes into effect next January, the insurers will be expected to refund consumers the difference.

The day that for-profit health insurers refund money to their enrolles is not likely to occur, since all the companies have to do is start re-classifying expenses as medical in order to pass.  Wellpoint has apparently already been caught "reclassifying" more than half a billion dollars in other expenses as "medical" ones.

Medicaid managed care and the "prior authorization" game

It is almost as if UnitedHealth and Wellcare are playing a game with Hawaii's disabled population:  anything that is asked for, deny because there is no prior authorization, then delay while the family tries to navigate its way through the appeals system. 

It is a fabulous way to save money.

My ten year old daughter is a case in point.  Hannah is medically fragile and has seizure activity in her brain constantly whether she is awake or asleep.  She cannot get sick because as soon as her body temperature goes over 99 her seizures increase.

Every new prescription, every new service, and every visit to a specialist requested from Evercare since November has been denied.

The doctors do not seem ready for all the additional reams of paperwork that have been introduced into their practices.  I saw the forms one pediatrician had filled out to get a severely disabled child into the 1115 Medicaid waiver program.  There were pages upon pages of specific questions about the individual's condition, and the doctor had essentially used the comment sections to answer them. 

The new forms are so complicated that my daughter's care coordinator at UnitedHealth is helping Hannah's pediatrician by filling them out and then giving it to the doctor's office to review and sign.

It is the same game that Wellcare played with Mycal Johnston and Martin Boegel, except the stakes were so much higher.

Hawaii's Medicaid money machine is a license to kill

Fourteen year old Mycal Johnston drowned from the fluid in his lungs on July 12 , 2009.  He had been discharged on June 24 from Oahu's Kapiolani Children's Hospital, with a prescription to fill at home for the one drug specialists had found that could control this life-threatening symptom of Mycal's cystic fibrosis.

The family lives in the Hawaiian Homelands on Molokai.  They took the prescription to the pharmacy, and Wellcare denied authorization.  The print-out received by the pharmacist on July 7 cites "prior authorization required" and "cost exceeds maximum" as the denial codes.

Prior authorization required Mycal to have a primary care physician.  Wellcare had never bothered to find him one on Molokai.  No primary physician, nobody to sign the forms that had to be submitted to Wellcare in order to get "prior authorization" for anything.  Meanwhile, Wellcare was receiving over $15,000 a month from the state for Mycal's care.

At the time of his death, Mycal's parents were trying to sell their truck in order to pay for the medication themselves.

In the first year after UnitedHealth and Wellcare took over Hawaii's Medicaid services for the elderly and disabled, the death rate rose 36%.  According to testimony presented at a hearing in March, the majority of deaths were due to the inability "to access services in time not to die."

A list of over 25 deaths in the first eight months after UnitedHealth and Wellcare took over is purportedly under investigation by the FBI. Mycal's is one of them, and the family was interviewed by the FBI only a few weeks ago.

A Mother's Day shooting in Honolulu was eventually tied to Wellcare's refusal to provide an enrollee with a doctor so that somebody could authorize his prescription medicine refills.  Sources tell me there have been at least two other similarly sourced crimes on Oahu.

While people are dying, UnitedHealth and Wellcare are taking home about $15 million a month in net revenue and profits.  That figure represents the difference between what Hawaii is paying them for taking care of our elderly and disabled, including children, and what they are actually spending on medical benefits.

The state, with the help of the media, has done a great "fog the mirror" job of deceiving the Hawaii public about the size of the contracts with UnitedHealth and Wellcare.  The phrase that was commonly used was the state was signing a $1.5 billion contract with the two companies.  In fact, the state signed one contract with UnitedHealth for about $1.3 billion and a second contract with Wellcare for another $1.2 billion.

Following the scheduled renegotiation of the capitation rates in October, the two companies are now jointly receiving about $2.3 million per day.  That comes to $840 million a year total (not the the $500 million a year figure that appeared in a recent Advertiser article).

According to their year-end financial reports, UnitedHealth typically spends about 82% of premiums on actual medical costs, and Wellcare reports paying out 86%.  On two contracts worth a total of $840 million a year, the savings realized from not spending the capitated payments they were receiving is about $117 million. This is in addition to the 3.0% guaranteed profit promised by Hawaii to Wellcare and UnitedHealth along with a five percent performance incentive.  That would be an additional $67.2 million a year in profits, or a total monthly take-home profit of over $15 million.

Since the Federal Government is currently reimbursing Hawaii for 67% of our Medicaid costs, then $10 million a month of that profit comes from federal funds, including stimulus money that could only be spent on Medicaid.

On March 25, Governor Linda Lingle asked the state legislature for an emergency $40 million in order to make the next months' Medicaid payments.  The Advertiser reported that the state spent about $100 million a month on Medicaid, and the $40 million from the state would be matched by $80 million from the federal government, and then they could pay the $100 million bill for April.

What the Advertiser did not mention was that seventy percent of that payment was going to only two of the companies:  UnitedHealth and Wellcare.

On May 6, the state called off its plan to save $8.8 million by closing welfare eligibility offices and laying off 228 public employees.

Prior to February 1, 2009, when Wellcare and UnitedHealth started their contracts with the state, the $15  million a month they take home in net income would have stayed here in Hawaii.  It would have provided medications and a doctor for Mycal, overnight care services for Erik Sorensen, and Martin Boegel's monthly prescriptions.  It would have paid for a lot of the state workers who have lost their jobs in order to make way for the "administrative" arm of the new insurance companies.

Hawaii is not the only state crying poor when it comes to making excuses for cutting Medicaid budgets.  On February 19, USA Today reported that "more than half the states are reducing Medicaid services and payments...this year as the recession propelled enrollments to record levels and sapped money from treasuries."  A May 20 article in the Wall Street Journal reported that

Across the country, budget-strapped states are focusing on Medicaid. Created in
1965, it is now a $379 billion program, including state and federal funds. State
spending grew an average 7.9% in fiscal 2009 as the economic crisis hit and more
people signed up for Medicaid.

What is being omitted from these stories is how much of that $379 billion contributed to the 56% rise in profits experienced by the health insurance industry in 2009.

As unemployment rises, commercial (employer-paid) enrollment in the health insurance companies is dropping.  The Medicaid market, however, is booming.  The top six managed care for-profit health insurance companies include two of the nation's largest insurers:  UnitedHealth and Wellpoint (the other four are Molina, Centene, Amerigroup and Wellcare).  All five of the top for-profit health insurance companies (UnitedHealth, Wellpoint, Cigna, Humana and Aetna) have entered into the Medicaid market, competing for state contracts.

A study released on March 25 summarized it by saying "increasingly more companies are showing interest in the Medicaid segment as a means of growing revenues."  Another article from April states the issue more bluntly:

The share of Medicaid recipients in managed care plans has risen from 56 percent to 71 percent in the past decade. That suggests states are seeing financial benefits from Medicaid HMOs. But the real attraction to states is that managed care helps them budget their Medicaid expenditures. If that budgeting was working so well — in other words, if it meant the states could drive hard bargains with private insurers — they wouldn’t be complaining that
Medicaid is eating up more and more of their revenues. And insurance companies wouldn’t be seeing Medicaid as the goose that promises to lay golden eggs.

In the case of Hawaii, there is no evidence to show that the state is saving any money from its contracts with UnitedHealth and Wellcare.  If the actuarial data Hawaii used in calculating its per person per month rates is corrected for the October 1 payment figures (the existing figures end immediately prior to the scheduled October rate increases), the numbers show that the per person per month plan was going to cost the state fifty-one percent more than the previous fee-for-service plan would have.   The January 2009 actuarial report instead reported the managed care plan would save the state 5.9% from the fee-for-service model.

On January 1, Wellcare ceased offering any Medicaid plans where they have to reimburse for actual costs incurred.  They are only offering plans where they can get a set payment per person per month, regardless of what they spend.  Wellpoint only offers Medicaid managed care plans, and I have yet to identify any UnitedHealth Medicaid plans that are not managed care.

A Medicaid system that pays the same amount per month per person regardless of actual expenditures is doomed to lead to decisions made on the basis of increasing net per person profit rather than meeting the individual's medical needs.  The Hawaii plan is cursed twice, however, by being authorized under Section 1115 of The Social Security Act rather than Section 1915.

Section 1115 and Section 1915(c) of The Social Security Act both give states the regulatory framework to provide in-home services to community members who are too incapacitated or disabled to live in their homes without these supports.  Both sets of programs allow family income and assets to be "waived", so that the individual with the chronic health need or disability is qualified on the basis of their own income and assets. The most significant difference between the two is how each calculates the "cost neutrality" component that the state must meet.

A Section 1915(c) Medicaid waiver program compares the average per person cost for home services with the average per person cost for institutional services.  Individual budgets can be flexible since it would be extremely unlikely for a single person to throw the overall average off.

For a Section 1115 Medicaid waiver program, the state must show that they are spending no more money with the waiver program than they would have if it did not exist. The budgetary cap is usually calculated either per person per month or per capita.  There is no room to accommodate medical emergencies or needs that are simply greater than originally imagined.  The individual's budget is under constant scrutiny for ways to minimize expenditures.

The combination of this "individual as profit center" approach with the natural instincts of the two for-profit companies managing Hawaii's program Is the source of the rising death rate amongst Hawaii's disabled and elderly.  Similar 1115 programs are in place or under development in Arizona, Florida, Illinois and Colorado.

The irony of the situation here in Hawaii is that UnitedHealth and Wellcare, in spite of record profits, continue to cry poor.  Federal regulators from CMS and OCR have been telling me since December that the companies were trying to get more money out of the state, or reduce what they had to cover.  That's where our battle over EPSDT has arisen here, as UnitedHealth and Wellcare are clearly responsible in their contracts for any EPSDT coverage but equally clearly did not intend to pay for any wide array of services. 

What keeps getting pushed to the side, if mentioned at all, in national stories about Medicaid cuts is the issue that these cuts can represent violations of the civil rights of people with disabilities.  Civil suits have been filed, heard or decided in twenty-one states since Obama's election.  Either the Department of Justice, the DHHS Office for Civil Rights or Federal Medicaid regulators (CMS) have openly intervened in at least eleven states with a combination of formal, informal and even criminal investigations into civil rights violations related to Medicaid cuts.

Nine of those eleven states use Medicaid managed care by a for-profit insurance company for their disability population.

UnitedHealth operates a managed care Medicaid program in 19 of the 21 states where lawsuits have been filed or heard.

All these numbers are "at least" since, with the exception of Hawaii, it is usually only possible to find out about these investigations after they are concluded and documentation shows up on the internet. It is a curious fact that the Department of Justice has publicly intervened in five states since December, citing civil rights violations against people with disabilities stemming from Medicaid cuts.

The Hawaii investigations would likely be completely secret right now if I had not been involved directly with CMS and OCR.  How many other states have similar ongoing investigations is unknown.

In Hawaii the investigations are centered on our managed care Medicaid plans run for the disabled.  All but two of the states where cuts have resulted in law suits have for-profit managed care for their Medicaid populations.

The states are in trouble over Medicaid, but how much of that trouble is directly related to the obscene profits being paid out to for-profit Medicaid insurance companies is incalculable.  Certainly here in Hawaii, the profits collected by UnitedHealth and Wellcare are enough to make up for the vast majority of cuts, and return state workers and home healthcare providers to their jobs.  If the plans are not only not saving the state money, but actually cost more than paying actual medical costs incurred, then why is Hawaii not ditching these two companies and keeping the money here?

The 1115 managed care plan was the brainchild of our current Governor and her team.  It does not speak well of how lives are prioritized against corporate profits in what used to be called "the Health State."

Republican Charles Djou Wins House Seat In Obama's Home District

Neither the Democratic Party nor the public seem aware that Djou's election occurred following news that Hawaii's Medicaid plan for the disabled is under federal investigation by the FBI, the federal Office for Civil Rights and CMS.

The plan, which provides care for people who are so disabled they require assistance to live in their homes rather than be institutionalized, was crafted and set in place under Hawaii's Republican Governor Linda Lingle. Two for-profit companies, UnitedHealth and Wellcare, received $2.5 billion in contracts to provide medical care to the disability community.

Since UnitedHealth and Wellcare took over on February 1, 2009, the death rate in that disability community has gone up 36%.

OCR and CMS got involved in determining if UnitedHealth and Wellcare were violating the civil rights of people with disabilities last August. Once deaths from lack of services began surfacing, the FBI 's investigation started in the fall.

Rumor has it that some in the Democratic Party locally have known about the investigations, but didn't see any political capital in "Lingle-bashing" since this is her last term. Whether that apathy contributed to Djou's victory on Saturday, who can say, but it certainly did not work against him.

Meanwhile, The Honolulu Advertiser had a chance last week to interview eight families whose children or parents died from their disabilities due to lack of services from UnitedHealth and Wellcare. The opportunity was ignored, and the resulting story could have been written by the companies' PR departments.
Read the Article at HuffingtonPost

Who gets to decide medical necessity in Hawaii: NOT the insurance companies

Yesterday's story about Hawaii's Medicaid program for the elderly and disabled quoted the regional president for Hawaii at Wellcare as saying "we approve all medically necessary care to members."  A UnitedHealth spokesperson was quoted saying their health plan is "required to...assure that members receive medically necessary services."

When Erik Sorensen's home care services were cut by Wellcare, his appeal ended up at the Hawaii State Insurance Commission.  The decision, released on February 25, clearly stated that, in imposing the cuts in services, Wellcare "made a coverage decision without undertaking the required statutory medical necessity analysis."

There are currently several other cases pending at the state insurance commissioner, all alleging that cuts in services by both Wellcare and UnitedHealth have not met "the required statutory medical necessity analysis."

Yesterday's story in the Honolulu Advertiser omitted any mention of the cases pending against Wellcare and UnitedHealth at the state Insurance Commission.  It not mention the February 25 decision of the Insurance Commission against Wellcare, which directly contradicts the official company statement which was cited in the article.

In fact, the decision referred to Wellcare's concept of "medical necessity" as "an absurd statutory construction." 

Fear and Loathing in Paradise: How many people have to die before anyone pays attention

It is almost as if post-Watergate investigative journalism somehow never made it to Hawaii.

In the past couple of weeks, it has come out that the FBI has been conducting criminal investigations into the deaths of people with disabiities covered by Medicaid; that the state has had a 36% increase in deaths of people covered by Medicaid in the past year; and that a shooting in Honolulu by an off-duty FBI agent was in part due to Medicaid's refusal to provide the victim with a doctor who could authorize his medications.

This all comes on top of the Office for Civil Rights of DHHS opening two investigations into civil rights violations of children with disabilities served by Medicaid, and the Center for Medicare and Medicaid Service (the federal Medicaid regulators) being in talks with Hawaii since August over the same potential civil rights violations.

The problems all derive from Hawaii's Republican-mastered Medicaid managed care system that is operated by insurance giants UnitedHealth and Wellcare.  According to year-end financial reports released by both companies it appears that their Hawaii membership of elderly and disabled people is generating profit four to five times greater than the percent of membership.  How?  By not spending the capitated insurance payments they are receiving from the state.

Last week, eight families with loved ones who have died or are dying from neglect and denials by Hawaii's two for-profit Medicaid providers got up the courage to come forward.  This is a big thing here in Hawaii.  Almost everyone has an aunty who has a friend who has a relative who works for the city or state government.  But these eight families were determined that no one else should have to go through what they have in the past year.

The names and phone numbers were all provided to a reporter at the main Hawaii newspaper, the Honolulu Advertiser.

The resulting story that appeared today could have been written by the PR people at UnitedHealth and Wellcare.  None of the families were ever contacted.  To say they feel betrayed, humiliated and angry is putting it mildly.  It is almost as if their children and parents had died again, with no one in the world caring.

The same Republican party machine responsible for outsourcing billions of dollars of Hawaii stimulus funds for Medicaid and education has just managed to get the first Republican in twenty years elected to the House.

The so-called "Health State" is slowly killing off its disabled population through neglect.  Obama's home state is sending a Republican to Congress.

There are problems here in Paradise, and they do not appear to be fixable from within.  All I can do is hope someone, somewhere pays attention and does something to bring this on-going tragedy to an end.

Hawaii elects Republican congressman amidst federal investigations into Republican-mastered Medicaid program

On Saturday, Hawaii elected the state's first Republican congressman to Washington in more than two decades.  In his first published comment after the election, Charles Djou said "I think we sent a clear message to Washington, D.C., that we are spending too much money and that we need more fiscal responsibility, and I look forward to going to Washington, D.C., and Congress to do exactly that."

Djou's words come in the wake of recent revelations that the state's one-year-old Medicaid managed care system may be under investigation by the FBI as well as the Office for Civil Rights of DHHS and CMS, the Medicaid regulatory arm of DHHS.  The investigations are all related to cuts in services to the state's disabled and elderly population that have reportedly, in some cases, led to injury and even death.

In fact, from last week until yesterday, eight different families who have experienced personal tragedy due to these service cuts have offered to be interviewed by the press.  The story that came out in this morning's Honolulu Advertiser made no mention of any of these families, nor of the published fact that the death rate among Medicaid enrollees in Hawaii has jumped 36% since this new managed care program went into effect.

This system was conceived under the leadership of Hawaii Governor Linda Lingle, a Republican. Since Lingle's election in 2002, the out-sourcing of Hawaii services has taken some interesting turns:

Hawaii is the only state in the country that pays another state to be its Medicaid fiscal agent.  Hawaii pays Arizona about $9 million a year for the services, which is on top of the contract the state has with ACS to handle the billing put through the Arizona-owned system.  An interesting caveat to this is that ACS cannot perform any on-site maintenance of the system.

Hawaii has been paying the University of Massachusetts Medical School since 2006 to handle federal reimbursements due the state for Medicaid expenditures made by DOE.  As of July 1, 2009, they company still had not got around to getting every potential Medicaid-covered child into the system.  Reimbursements are therefore running about $1.3 million a year, even though DOE generates at least $80 million a year in Medicaid-billable expenses.

Hawaii has paid a Washington, D.C. law firm $5.25 million to write, re-write and legally defend the state's contract between UnitedHealth and Wellcare for the Medicaid services which are bringing all the afore-mentioned federal investigators to our islands.

Hawaii's contracts with UnitedHealth and Wellcare take about $300 million off the top out of Hawaii.  That doesn't include profits generated by denying services that could be covered under the per enrollee payment the companies get every month from the state.  Nor does it include the employment lost as state workers are laid off and replaced by corporate employees, or the local jobs lost as home support services have been cut.

"Fiscal responsibility" seems to have a different definition for me than it does for Mr. Djou.  His political party has favored the rape and pillage of the state's economy by fat profit-making companies for the past eight years.  It's the people who suffer when the state's budget for things like education and medical care has been gutted in order to make way for corporate profit.  The windfall profits these companies had to get by accessing the state's federal stimulus funds is incalculable.  Money that was supposed to help people has gone to make profits.

This is not responsible government.  At least not a government that is responsible to the people who elect it.

Death by Medicaid: Turning 21 can be a killer

Erik Sorensen died because he turned 21.

An accident in 2008 left him paralyzed from the neck down.  He was completely dependent for every movement, every bodily function, on the help of others.  He was enrolled in one of Hawaii's 1915(c) Medicaid waiver programs, and in February 2009 was transferred into the state's new 1115 Medicaid program operated by UnitedHealth and Wellcare.

In June, he turned 21.  Five months later Wellcare (Ohana in Hawaii) told him they were cutting his home health services by fifty-five percent, from 17 hours a day to less than 8 hours a day.

It took more than three hours for Erik's helpers to get him out of bed, into the bathroom, showered and dressed every morning.  Meals took an hour and a half each, and he couldn't be left alone since he was in constant danger of choking to death.  It took half an hour to get him into his wheelchair van (which he could not drive), and another half hour to get him out, with a total of four transfers per trip.  With only eight hours of services, it was going to be impossible for Erik to leave the house.  (A detailed description of a day in Erik's life can be found here.  It is very graphic.)

It also meant he would have to left at home alone for hours on end.  If he needed to cough, if his catheter bag needed to be emptied, if the spasms in his legs threw him onto the floor, if the house caught fire, he could die before anyone got home.

The cuts in services would take effect in less than two weeks.  Erik's case coordinator from Wellcare told him the insurance company wouldn't pay any more for his home services than it would cost them to put him in an institution.  That, the case coordinator said, cost only $6,000 a month, while his current services were costing the company $11,000. 

What had actually happened was that when Erik turned 21 he moved from have a disability code of AM15 (19-20 year old males) to the disability code of AM16 (21-39 year old males).  Under Hawaii's capitated rate agreement with Wellcare, the company was paid $11,840.27 a month for an AM15, but only got $5,398.71 for an AM16.  The level of services he had been receiving was costing Wellcare $10,431.20 a month.

In fact, Wellcare had a financial incentive to try to get Erik into an institution.  The capitated payment they would have received for him every month was not $6,000 but somewhere between $7,000 and $16,000 (island dependent).

I worked with Erik and his family, and while the appeal process was going on his services could not be cut.  Meanwhile, Erik was finally in a position to look forward.  He planned to attend a special program for quadriplegics on the mainland that was designed to enhance independence, he got his GED, and he signed up for classes at the local community college.

In Erik's eyes, all of that would be doomed if Ohana carried through on their threat of institutionalizing him.  In January 2010, Erik signed a formal declaration that was filed in Hawaii District Court, stating he felt coerced and threatened with institutionalization by Wellcare. When Erik later had a chance to get 24/7 service coverage (so he could be covered all night), he turned it down.  As his mom says, "we were both scared to death what Ohana would do" if they took the increased schedule.  The stress on Erik from the ordeal did not stop just because the appeal was over.

Sometime during the night of March 23, Erik vomited and breathed the acid liquid into his lungs.  Aspiration pneumonia set in immediately and his lungs became so filled with fluid the oxygen supply to his brain was severely reduced.  He died on March 25 from the complications of brain death.

There is no reason that the home care of a 21 year old individual should be half of what they were at age 20.  It is as if the system is saying that the life of a 21 year old is only worth half if what is was the day before their birthday.  It is a problem happening across the country, however, and what has become known as the "aging out [of EPSDT]" issue is being tested in the courts.  Decisions have been coming in supporting the ADA rights of the plaintiffs.

In Erik's case agaust Wellcare before the Hawaii State Insurance Commission, the February 25 decision criticized Wellcare for decision to cut medically necessary services that were "unreasonable from the standpoint of procedure and statutory compliance.

Respondent [Wellcare] made a coverage decision without undertaking the required statutory medical necessity analysis.  Respondent did not consider the recommendations of the Petitioner's treating physicians.  Respondent either did not know that Petitioner might have autonomic dysreflexia or disregarded information to that effect in contradiction to notes on a medical record.  Respondent relied heavily upon Home and Community Based Services Assessment Tool which has not been validated as a prevailing standard of care in the medical community.  Respondent did not have all relevant medical records at their disposal in making their decision.  This metholody does not indicate a high degree of diligence or care.

Diligence and care just means spending money.  The lower your cost to premium ratio, the more profit you get.  This is how capitated payment systems run by for-profit health insurance companies are diverting hundreds of millions of dollars in each state away from health services for people with disabilities and into the profit margins of the health insurance companies.  I've already written about the disproportionate profits Medicaid contracts are generating for the companies. Wellcare's recent abandonment of any program where they pay actual medical costs incurred implies it must be much more profitable to receive capitated payments.

The lives of children and adults with disabilities should not be put into the hands of companies that have such a financial inducement to base services on profits rather than medical necessity.

Why it's inevitable Hawaii's capitated Medicaid system will kill and injure the people it serves

On February 1 of 2009, Hawaii's aged, blind and disabled Medicaid population were switched from what's called a "fee for service" program to a "capitated fee" program. 

A fee for service program means the insurance provider is reimbursing your actual medical bills.

With a capitated fee program, the insurance company gets a monthly fee (the capitation fee) for each individual enrolled, ranging from $200 to $20,000 per month.  While the state pays them their capitation fee every month, the state does not tell the providers that they actually have to spend the money. 

There is a reason why Wellcare Health stopped providing fee for service Medicare programs as of January 1, 2010.  While I'm not an economist, knowing the way a for-profit company operates I have to assume that managed care programs, which all feature capitated payments, are much more profitable than paying members' actual medical bills.

United Healthcare, which does business in Hawaii as Evercare, reported that while 2009 overall company gross revenues dropped two percent from 2008, their Medicaid subsidiary's revenues were up forty percent to $8.4 billion, and their Medicare subsidiary reported revenues up 15% from 2008 to $32.1 billion.

United Healthcare doesn't report its earnings as clearly as Wellcare does -- I can't specifically say that the company's 2.9 percent of membership which are Medicaid covered is equal to the financial performance of Americhoice, UHC's Medicaid subsidiary.  However, Americhoice revenues are eleven percent of UHC's gross revenue from premiums, which gives a similar profit ratio to what I found for Wellcare.

By the first quarter of 2010, UHC has increased its profit margin based on expenses as a percentage of the premium up to 20.1%.  Page 5 of the report makes the interesting statement that "prior period
favorable development reflecting lower medical costs" is responsible for the increased profit margin.  Again, I am not an economist but that does sound, to me, a fancy way of saying cutting services regardless of whether or not they are medically necessary.

UHC's report does not mention the company's monthly capitation payment from the state of Hawaii.  Sources tell me it is slightly higher than Wellcare's even though Wellcare serves more people.  At about $1.2 million a day, UHC would be receiving $438 million dollars a year from Hawaii.   That figure represents about half of one percent of the company's total revenues from premiums.  Hawaii's membership in Evercare that is generating that income, however, is only one-tenth of a percent of the company's total health benefits membership. 

It's obvious that capitated Medicaid programs generate huge profits for the companies.  Those profits can only be realized if medical expenses are reduced as much as possible in relation to the set amount per month that each company receives for each individual enrollee.

I reported last week that deaths under Medicaid care had increased 36% since UnitedHealth and Wellcare took over the care of Hawaii's elderly, disabled and blind population. 

Cutting costs equals more profits equals more deaths. 

It's such an abhorrent concept that I am forced to wonder whose idea it was to institute such an inhumane system in the state of Hawaii.  And who, faced with multiple on-going federal investigations, is continuing to keep the capitated Medicaid system alive and kicking.

Hawaii is 2% of Wellcare membership but generates 9-12 % of company revenues

According to Wellcare Health's 10-K report to the SEC, nine percent of the company's gross revenue in 2009 was generated by the two percent of its members who live in Hawaii.

Wellcare is the parent company of Ohana, one of two for-profit companies providing medical, home and community services to the state's elderly, disabled and blind population.  Ohana was recently linked to a shooting in Honolulu, when it was discovered the victim had not been able to renew his prescription medications because the company could not find him a doctor to authorize them.

Wellcare only offers Medicaid and Medicare plans, in contracts with individuals states and the Center for Medicare and Medicaid Services.  They operate Medicaid plans in seven states, and Medicare plans in twelve states (including Hawaii).

The 10-K report summarizes Wellcare's income and expenses as of December 31, 2009.  At that point in time the company had 2.3 million members, of which 1.3 million (or fifty-seven percent) were enrolled in the company's Medicaid programs.  The report makes frequent mention of the Hawaii program.

As of January, Hawaii membership in Ohana was about 22,000.  That is less than two percent of the company's total Medicaid membership (1.67%).

Page 29 of the report states that Hawaii's monthly payment to Wellcare "averages" $25 million per month.  Over a year, that comes to $300 million.  The company's total gross revenue from its Medicaid enrollees is $3.3 billion. 

In October 2009, however, Wellcare renegotiated its contract with the state of Hawaii, raising some capitation rates by as much as thirty-three percent.  Sources now tell me that the state of Hawaii Department of Services is paying Ohana closer to $1.1 million a day, which would actually come out to $33 million a month instead of $25 million.  At the rate, Hawaii's paltry two percent membership would be paying twelve percent of the company's gross revenues.

On page 27 of the report, it says the company cannot increase revenues to meet rising costs since they are locked into their contracts with the states.  Apparently this does not preclude, however, re-negotiating the contract for higher rates, as Wellcare did last October.

Page 58 of the report notes that Wellcare's revenue from state Medicaid contracts had jumped 8.9 percent from the previous year, in spite of the 8.3% decline in membership from being dropped by programs in Florida and Ohio.  The report directly attributes this significant increase in company revenues to the tiny 2% of their members in Hawaii.

Page 59 of the report blames the Hawaii enrollees for the company's drop in the profitability derived from calculating actual expenses as a percentage of the capitation fee.  For instance if direct medical costs rise from 84.8 percent of revenue from premiums, to 86.3%, then the company's profit has decreased accordingly.  These are the actual figures for Wellcare taken from the report.

We reported last week that Ohana was receiving $3,890 every month as their capitation payment for Martin Boegel, the victim of a suicide-driven shooting in Honolulu last week.  By not finding Mr. Boegel a physician, the company did not have to pay out that money for prescription medication or doctor visits.

This is how for-profit companies make more money by denying or reducing services that a doctor has said are medically necessary for an individual with disabilities to live at home rather than in an institution.

I reported earlier than the off-the-top profit Wellcare and UnitedHealth were receiving from their contracts with Hawaii was more than what the Medicaid home services cost the state for the entire year of 2008.  Those numbers were based on an eight percent profit (three percent off the top and than a 5% performance bonus) and did not take into account how much money the company was saving by simply not spending what Hawaii was paying them.

Hawaii Medicaid employee says FBI investigating deaths from budget cuts

According to a long-time employee of the Hawaii Department of Human Services, the FBI has been investigating almost forty deaths that have occured in the past year linked to cuts in Medicaid services enacted by UnitedHealth (Evercare) and Wellcare (Ohana).

My source says the list ranges from infants to the elderly.  This list is representative of the 36% increase in deaths of Medicaid enrollees I reported yesterday has occurred since UnitedHealth and Wellcare took over Hawaii's medicaid program on February 1, 2009.

I was also told that Martin Boegel is not the first criminal victim whose problems could possibly be linked to UnitedHealth or Wellcare not assigning a physician who could authorize their medications.

The FBI investigation was begun some time last fall, it seems.

I have emailed the FBI agents who I have been told are involved in this investigation. Here is part of the text of that email:

On Monday, the Criminal Investigation Office at DOJ did suggest that I contact the FBI directly regarding a current investigation of [name redacted] in Hawaii.

If the FBI or DOJ are already actively investigating issues related to Hawaii's QExA program, the public needs to know.  If the FBI or DOJ are already investigating the list of more than twenty people who reportedly died from care-related issues under QExA, the public needs to know.

Certainly the forty-some thousand aged, disabled and blind enrolled in Evercare or Ohana, along with their families and caregivers, deserve to be made aware that the life and death decisions currently being enacted by the two companies may not be in their best interests.

[Name redacted] avoidable death in March, and the Boegel shooting on Sunday, demonstrate that.

I look forward to receiving your response.

We all do.  

Statement by Hawaii Medicaid Employee regarding Martin Boegel and Ohana

The following statement was released this morning by a current Med-Quest employee who is familiar with the circumstances of Martin Boegel's Medicare and Medicaid coverage.  The statement was written after I reported yesterday that Ohana had told a local reporter that Martin's medications were a Medicare responsibility, not theirs.

 I want to clarify the following because this is the reason many more innocent lives will be affected because of the lack of care by insurances like Ohana (Wellcare).  When the QExA Healthplans went "live" February 1, 2009 they were not ready to go.  This is an example of how Ohana does not even understand the basic coverage of Medicare.  Mr. Boegel did not have prescription drug coverage (Part D) under Medicare, he only had limited hospital, he did not have Medicare Part B, C, D and limited coverage under A.  That is why he had coverage under the State Prescription Assistance Program (SPAP - see below).  There has been numerous Aged, Blind, and Disabled harmed, when I left there were thousands of complaints some have since passed because Ohana and United did not want to pay for the most vunerable populations care and no one was there to advocate for them.

Ohana is ultimately responsible as they were to coordinate all care for Mr. Boegel Ohana does not even know the basic coverage of the primary insurance Medicare, and concerning as over 35,000 Medicaid clients are dual eligible (Medicare Primary/Medicaid Secondary).  Now look at how many lives were affected, the shooter, the by-standers, and his family (mom).  I hope this email makes a difference as there has been and will be more incidents in the future.

Update on potential Ohana involvement in Tantalus shooting

According to a reporter I spoke with this afternoon, Ohana is saying that Martin Boegel had his medications paid for by Medicare and therefore his lack of medications, apparently, is not their responsibility.

The contract between the state of Hawaii and Wellcare (parent of Ohana) as well as UnitedHealth clearly requires the health plans to provide each member with a primary care physician and a case service coordinator.

The health plan shall ensure that each member has selected or is
assigned to one (1) PCP who shall be an ongoing source of primary care
appropriate to his or her needs.  [section 40.180]

Each member shall be assigned a service coordinator who will assist in
planning and coordinating his/her care. The service coordinator shall
assist with coordinating QExA services with Medicare, the DOH programs
excluded from QExA, and other community services to the extent they are
available and appropriate for the member.  [section 40.260]

Without a primary care physician, Martin Boegel had no one to write his prescription, regardless of whether the medication was to be paid by Medicare or Ohana.

As a clarification:  the quotes are drawn from the Request for Proposal issued by the state of Hawaii, which was then made a part of the contracts between the state and the two private insurance companies.

Is Honolulu shooting linked to 36% increase in Medicaid deaths?

Yesterday I reported that the FBI had apparently been notified of a link between Sunday's shooting of a young man who had been unable to obtain his medications since January, and a pattern of Medicaid service cuts that have already brought the state under examination by CMS and the DHHS Office for Civil Rights.

Thanks to Larry Geller of Disappeared News, I have now seen footage of an informational hearing held at the Hawaii Legislature where subpoened testimony said that Medicaid enrollee deaths had increased 36% in 2009 (after UnitedHealth and Wellcare began operations here) over 2008.

The testimony also noted the majority of death were medical and due to the lack of access to services.

How many more of our most vulnerable citizens need to get hurt or killed before a stop is put to these cuts.

FBI told Honolulu shooting linked to Ohana Medicaid program

The following information was reportedly provided by email to the FBI today.

This is what happened about the following case.
Client was unable to secure a PCP from Ohana and/or Psychiatrist, everyone he called (including his mother) would not take Ohana (Wellcare) Insurance.  As a result when he went to pick up his prescriptions, it was denied for "prior authorization PCP".  Martin had no PCP assigned and was unable to secure one, which was the responsibility of Ohana (Wellcare) Healthplan.  He was never visited by his Care Coordinator as required by Contract for Ohana (Wellcare).

Although APS healthcare (Fee For Service Contractor for SMI) may be responsible for the payment of the psychotrophic drugs as he is a Severally Mentally Ill (SMI) client (see attached Demograpics Highlighted), a PCP was still required to pick up meds and Martin could not secure one (Ohana failed to get him one assigned since Feb 1, 2009).  He was never visited by his Care Coordinator, his card from Ohana reflects no PCP, the system was rigged to deny services for client.

Ohana receives $3,890 per month for this client and was responsible for coordinating his care.   The medication only cost $80-90 per month.  Martin just wanted to die and because of his religion suicide was not an option.  This is another example of Wellcare's practice.

Here is a link to the original story that appeared today in the Honolulu Advertiser.

Arkansas becomes eighth state where feds intervene over Medicaid service cuts

On May 6, the U.S. Department of Justice filed a lawsuit "alleging that the state of Arkansas is systemically violating the Americans with Disabilities Act of 1990 (ADA)."

This brings now to eight the number of states I've been able to identify where federal authorities have had to intervene directly to stop violations of the civil rights of Americans with disabilities.   All the violations are in conjunction with state Medicaid cuts in the type of home medical services that enable children as well as adults with disabilities to live at home rather than in institutions.

In February, Hawaii became the seventh state when the DHHS Office for Civil Rights opened two separate investigations into whether Hawaii Medicaid cuts were violating the ADA.  The state has been in discussions with CMS since last July over these same cuts.

How many states does it take before the DOJ steps in nationwide to stop these abuses?  I reported back in February that lawsuits alleging similar civil rights violations had been filed, heard or decided in at least seventeen states in the previous year.

Moreover, how long was the Justice Department investigating the state of Arkansas?  Was any moratorium placed on Medicaid decision-making that could have violated the rights of Arkansas individuals with disabilities while the investigation was going on?  What if children and adults with disabilities are dying while these investigations are going on, not just in Arkansas, but also in Hawaii and the other sixteen states?

Plea sent to CMS for help in getting Hannah's catheters

It has been suggested to me that the continuing failure of Medicaid to provide my little girl with medically necessary catheters could have ramifications for quality of care and/or access to care issues.

I've emailed CMS to ask if they can help get Hannah the equipment prescribed for her last Friday.

It is just too sad a commentary on how easy it is to victimize a child with disabilities who cannot possibly speak up in their own defense.

Hawaii Medicaid: Denials of Access to Services?

Denial of access to medical services through Medicaid can take many forms.

Cutting out transportation to medical appointments can be a denial of services for an elderly or disabled person with no other way to get to their appointments.  If those appointments are for, say, dialysis, what is the eventual fate of an individual denied access to life-giving dialysis treatments?

Refusing to authorize prescription medications can be a denial of services, especially when those medications are necessary to continue life.  My daughter has had her prescriptions denied twice by Evercare (owned by UnitedHealth), and each time the company played doctor and demanded she first try another medication of their choice. 

The question I'm raising is if failing to provide a ten year old child with medically necessary catheters is a denial of access to services as well.

My little girl had a trip to the Emergency Room last week during to severe urine retention problems.  She was cath'ed and the pediatrician the next day ordered her to be cathed if she holds her urine more than twelve hours.

That was last Friday afternoon.  I immediately alerted Hannah's case coordinator at Evercare of this issue, and that we needed supplies.

There are no spare urinary catheters on Kauai.  And as of right now (Thursday at 11 a.m.) we still don't have any catheters for Hannah.

If Hawaii Medicaid cannot be concerned with getting catheters to a disabled child, no wonder there is no concern about other potentially life-threatening actions taken under its authority.

Wellcare caught with their hand in the cookie jar again

On April 28, Wellcare Health agreed to repay the state of Illinois about $1 million in overcharged capitation payments.  Wellcare does business in Hawaii as Ohana, one of the two for-profit health insurance companies providing services for the state's aged, blind and disabled population.

In May 2009, Wellcare avoided federal prosecution for Medicaid fraud by paying Florida Medicaid $80 million.  The fraudulent $40 million Wellcare had stolen from Florida included money that went to the state's EPSDT program for children with disabilities, and funds that went to help the aged population in Medicare.

Also in 2009, CMS struck Wellcare from the Medicare provider list, calling it "one of the overal worst performers among all [Medicare provider] plans".  The letter from CMS also referred to the company's poor record in properly processing grievances, and that the company's "complaints are three times the national average."

This is the company that Hawaii's elderly and disabled population depend on for providing them with the Medicaid services they need to stay out of institutions. 

Ohana's capitation payment for institutionalized individuals is higher than what the company receives if the patient is treated in their home.  As an example, for girls such as my daughter, Ohana will receive anywhere from $1,000 to $4,000 a month more in capitated payments if the child is institutionalized, depending on the island.