Wednesday, September 28, 2011

Hawaii leads in national attack against people with disabilities

The first argument the Supreme Court will hear when it begins its new term on October 3 could determine if this country’s entire disability population will be denied the protections of federal law.

We have until then to let our government know we do not support selling off "the 'social contract' that provides a decent, functioning society" to Wall Street so shareholders can make bigger profits.

Families like mine stand to lose the right to stay together, even when a child’s disabilities are so extensive the only alternative is a cage crib in a hospital somewhere. It was the Bush Administration that supported extending the social contract to children with disabilities by granting them legal rights to medical care in 1989.

Giving Wall Street corporations already caught embezzling hundreds of millions of federal dollars the ability to embezzle hundreds of billions more is insanity. But removing federal oversight now gives states the ability to restrict rights granted under federal law. The state can then legislate away the ability to appeal these corporation’s decisions, for instance, saving the companies money on legal fees while supporting increasing corporate earnings.

That is what has been happening in Hawaii, where Unitedhealth and Wellcare control two-thirds of the state’s Medicaid budget.

Last month Governor Neil Abercrombie admitted the purpose of Act 230 (formerly SB 1274) was to save Hawaii's private Medicaid contractors money on legal fees.

Act 230 goes into effect on January 1, 2012. At that time everyone enrolled in Medicaid loses the right to legal help in fighting life-threatening denials of medical services.

Last month he admitted the purpose of Act 230 (formerly SB 1274) was to save Hawaii's private Medicaid contractors money on legal fees.

Act 230 goes into effect on January 1, 2012. At that time everyone enrolled in Medicaid loses the right to legal help in fighting life-threatening denials of medical services.

With legal decisions coming down against the state only two days after the governor's "I am failing" speech, Unitedhealth continues until then to wrack up significant legal bills.

Now Abercrombie has found a way to save Unitedhealth money before January 1: by denying reimbursement for expert witnesses that testified on that child's behalf. The state has abruptly reversed a ten year old policy upheld by two previous administrations.

Honolulu attorney Rafael del Castillo represents my daughter Hannah, and five other families of my personal acquaintance. We are all fighting Unitedhealth's on-going denials of medically necessary services on behalf of our children with disabilities, services the state is paying them to provide.

The company is refusing to provide these services because they would cost too much money and that would have a negative impact on shareholder earnings. The services in all cases have been prescribed by our children's doctors.

Del Castillo asks for no money from his clients, even to pay advance costs for expert witnesses. H.R.S. 432E-6 is the state law that makes health insurance companies in Hawaii responsible for the fees incurred by the patient in appealing medical care denials, regardless of who wins the case. Del Castillo takes the chance he he will win in order to get paid. He is up to over 90% wins the last I heard.

Act 230 repeals H.R.S. 432E-6. Del Castillo says last week's move to prohibit reimbursement for expert witnesses goes "as far as the Administration could possibly go to repeal the law before the repeal takes effect on January 1."

When sister legislation to SB 1274 was introduced earlier this year, it turned out to have been drafted by attorneys for Wellcare, the other contractor for the state's disability services program. Interestingly, it would have made enrollees responsible for the legal fees of the insurance company, even when the insurance company lost.

Later the state legislature tried to make SB 1274 retroactive to January 1. Since there were twelve appeals cases pending, it was estimated at the time the measure would save Unitedhealth alone about $500,000.

Del Castillo is representing the person with disabilities in all twelve of these cases.

According to Del Castillo, "the Abercrombie Administration knows that it is making pending patient rights cases ... virtually impossible to win unless one of two things happens: The patient pays for any experts who cannot afford to work for free, or I pay for them. The Abercrombie Administration knows ... that I will have to pay for the experts out of my own pocket or lose the cases. "

It is more than beginning to look a lot like retaliation and harassment, both of which are prohibited by the Americans with Disabilities Act.

One of the questions that has to be asked now is whether Abercrombie's anti-Medicaid actions have become sufficiently blatant that our major Honolulu media will break their years-old black-out on news concerning Rafael.

Years ago he was told the insurance companies threatened to pull their media advertising if any story involving Rafael was run. When Rafael ran for Congress in 2010, neither major newspaper nor any of the TV stations mentioned it when he came in third.

The Honolulu media ran a single story in seven months concerning SB 1274. It was a television piece that aired late at night, and was a major embarrassment for Unitedhealth (their attorney told the reporter Unitedhealth was spending too much money on legal fees).

As a result, more than a quarter million people are unaware they are losing major civil rights on January 1.

What is happening now in Hawaii is symptomatic of the political power wielded by these publicly traded Medicaid contractors. The state first "disables itself", in del Castillo's words, by decimating the employment infrastructure that supported the previous fee-for-service Medicaid program. The contractors are being paid public funds to provide "managed care", so state employees become redundant.

The Medicaid contractors eventually become "too big" to fail; or more accurately, "too big to take down for criminal activity." That can be the only explanation for why companies caught stealing children's Medicaid money not only get new contracts, but get premium raises in the states from which they have embezzled funds.

State contracts to provide Medicaid services to the local disability community are extremely lucrative. They are calculated on a monthly per person basis, depending on the "risk" of the company incurring significant charges for that individual. Unitedhealth is likely receiving somewhere between $12,000 and $27,000 per month for each of Rafael's clients.

These so called "abd" contracts ("aged, blind and disabled") have an enormous impact on shareholder profits. In just under three years, Unitedhealth's Medicaid membership increased about 50%, while Medicaid revenues were up 135%, and net quarterly earnings up 318% (that is not a typo).

At least six Federal civil rights investigations have been opened in Hawaii since February 2010. The four children represented were all facing cuts in home nursing services. Between the ages of four and ten, all are medically fragile, to varying degrees technology dependent, none can eat by mouth, one is completely immobile, none of the others can walk by themselves, and three are too medically fragile to attend school with other children.

You see, our nation has a most enlightened policy towards children with disabilities. Medicaid law gives children (under 21) a legal right to services prescribed as "medically necessary" by their doctor or other provider. These become civil rights when those services involve ensuring that children can live at home with their families.

These legal and civil rights are a mandated part of any state's Medicaid program. They are expensive and they are comprehensive. The disability population may only represent twenty-eight percent of all Medicaid beneficiaries, but are allocated two-thirds of the national budget. Less than fourteen percent of the budget is spent on healthy, working age adults.

It is called the Early Periodic Screening, Detection & Treatment program, or EPSDT. While federal Medicaid regulations also mandate family education about EPSDT, the unfortunate truth is that most states are violating those regulations. Few families know what is available to them.

It is relatively easy to embezzle public money intended to provide services for children with disabilities. The kids themselves are frequently not in a position to speak up on their own behalf, and parents are often in a state of "shell shock" from caring for a child in danger of dying 24/7.

Unitedhealth, Wellcare and the state of Hawaii Department of Human Services Medicaid division have been under some sort of federal scrutiny for violating the rights of people with disabilities almost continuously since September 2009. That is less than six months after they started their $100 million per month contract with the state. In March 2010, legislative leaders were caught on tape reacting to sworn testimony that the death rate among enrollees jumped 36% in the first twelve months.

The public in Hawaii has heard nothing of any investigation into that horrendous assertion. Far more interesting, the relatively unknown governor of Hawaii is accomplishing "a de facto move toward the block-granting of Medicaid", exactly as predicted by Simon Lazarus of the National Senior Citizen Law enter three months ago.

Block-granting Medicaid, according to the Kaiser Foundation, means "that the federal government
gives states a fixed amount of money and each state decides who to cover and what services to pay for."
Sixty percent of respondents to a Kaiser poll rejected block-granting in favor of leaving the current system unchanged, whereby it is the "federal government guaranteeing coverage and setting minimum standards for benefits and eligibility."

Reagan tried to block-grant Medicaid in 1981 and failed. Clinton vetoed similar legislation that Congress had passed in 1995. Nobody has had to vote on anything to accomplish block-granting of Medicaid in Hawaii.

Even now, Hawaii is accepting bids for new state Medicaid contracts, and Wellcare and Unitedhealth are expected to be bidding. The Governor acknowledged last month knowing of the mounting list of complaints filed with federal regulators (CMS, the Centers for Medicare & Medicaid Services) against the State as well as Unitedhealth. He blamed the contract, which he inherited (true), while turning the entire Medicaid appeals process over to the same state bureaucrats already caught lying to federal regulators.

This is not over-dramatizing. CMS has caught DHS lying to them about my daughter at least twice. Rumors have it that Unitedhealth even lied to the state about losing a circuit court appeal that was actually won by one of the medically fragile children.

At the beginning of the year, CMS investigated DHS and Unitedhealth for Medicare fraud in Hawaii. The company was targeting what are called "dual eligibles", adults with disabilities who qualify for both Medicaid and Medicare. Every time the company signs up a new individual for Medicare, they are paid a bonus. A company employee made an appointment to see a severely disabled young man on Kauai, as a representative of Unitedhealth Medicaid. He was actually from Unitedhealth Medicare, and never explained to the family the purpose of the paperwork he had them sign. They only discovered it when prescriptions and services began to be denied, leading to such a severe deterioration in his condition he now requires dialysis three times a week.

It is not just Hawaii. Florida has passed legislation mandating the state's entire Medicaid population enroll into the same publicly traded companies already found embezzling from the state. Texas is also on the verge of mandating everyone on Medicaid join a managed care organization, among which will be the top publicly traded corporations.

Parents of children with disabilities in New Jersey recently received letters requiring them to sign up for Medicaid from one of four companies. Two of them were Unitedhealth (they also do business as Health Net of New Jersey), and a third was Amerigroup, another publicly traded company caught stealing from children.

The companies themselves make it difficult to track membership and revenues. Several companies do business under different names, with Unitedhealth needing thirteen pages in their year end SEC filing to list all the company aliases. I found the same publicly traded companies reporting themselves to CMS under two different categories (commercial or non-commercial), making official Medicaid statistics somewhat unreliable.

In last week's $150 million Medicaid fraud settlement, Tony West, assistant attorney general of the civil division of the U.S. Department of Justice, stated “This type of fraud uses patients as pawns in a game of corporate greed that puts cash over care, running up the bills on the very people our public health care programs are supposed to benefit."

Wellcare's $137 million Medicaid fraud settlement announced in May has not yet warranted a DOJ press release, let alone such passionate rhetoric.

In June, 29 Republican governors signed a letter to Congress asking for increased control over Medicaid budgets, supposedly to help balance local state spending.

An August letter from CMS to State Medicaid Directors contained the White House response. The governors had demanded a way to get out from under Medicaid access and participation ("maintenance of effort") requirements established first under the Recovery Act and then under the Affordable Care Act. The CMS response provided detailed instructions in how states could ignore these inconvenient regulations, removing one of the last obstacles to block-granting Medicaid out to publicly traded corporations.

Should these companies be considered "too big to fail"? How do you weigh shareholder profits against how I felt after waiting ten years for Hannah to give me my first hug?

Please sign our petition, take our poll, send a letter to your newspaper and congressional representatives. This enslaving of our country's most medically vulnerable people to corporate profits needs to end.

Wednesday, September 7, 2011

When Medicaid is big business, people suffer

Hawaii’s governor, the first Democrat elected in eight years, has publicly defended his decision to segregate the state’s Medicaid population as second class citizens.

Like Obama, Neil Abercrombie rode to victory last November on a great tide of hope for the future. And like Obama, he has apparently decided to side with Big Business against the civil rights of his voters.

There is something called “Federal Supremacy.” Federal law is the “supreme law of the land”, and states cannot limit legal rights defined by federal law.

One practical result is that children as well as adults with disabilities have the ability to appeal life-threatening denials of medically necessary services by their Medicaid plan. The majority of cases that reach this level involve children of all ages with disabilities, fighting for the right to live at home rather than in institutions. These home medical services are expensive, although less than what the state would pay for institutionalization.

In May, the White House unexpectedly pushed through an amicus (“friend of the court”) brief with the Supreme Court, taking the position that the protections of Federal law do not extend to Medicaid beneficiaries.

Disability law experts like Sara Rosenbaum and Simon Lazarus immediately warned of the potential “spill-over effect” if beneficiaries of the country’s “safety net programs” like Medicaid were suddenly denied the protections of the court.

Governor Abercrombie’s comments were made during an August 22 meeting called to explain why he signed a piece of legislation eerily similar to that amicus brief.

Hawaii’s S.B. 1274, signed by the Governor in July, accomplishes exactly what Lazarus warned of: it carves out the state’s entire Medicaid population (270,000) and denies them access to the protections of federal law.

The Governor openly admitted the purpose of SB 1274 was saving the state’s Medicaid contractors money on legal fees. Patterns of Medicaid providers violating federal regulations (and civil rights) he dismissed as mere “glitches”. (More information about SB 1274 as well as a link to a recording of the Governor's comments can be found here.)

The crux of SB 1274 was to repeal a state law enabling patients to challenge health insurers’ denials of care, and to be represented by an attorney in the process. The law required health insurers to pay the legal costs of the patient’s appeal when the company refused to approve medical treatments ordered by a doctor.

Seventy percent of Hawaii’s Medicaid budget is paid out to two publicly traded contractors, Unitedhealth and Wellcare. The two share a lucrative $1.2 billion a year contract to provide services to 40,000 children and adults with disabilities. Premiums are calculated individually, and because these contracts are specifically to cover home services for people with disabilities, monthly premiums can range as high as $27,000 for, say, a medically fragile child.

Publicly traded Medicaid (and Medicare) HMOs make shareholder profits by not spending premium money on medical expenses. Since the size of the Medicaid pie is the same it was before they bought the contract, services have to be cut twenty to fifty percent to support corporate profits.

State contracts with Medicaid providers like Unitedhealth and Wellcare must be approved federally (through CMS, the Centers for Medicare & Medicaid Services, part of DHHS). They mandate compliance with all state laws. Unitedhealth and Wellcare knew about Hawaii’s healthcare laws when they signed the contract, but apparently did not realize what they would cost them.

Only one thing is accomplished by deleting a state law requiring insurance companies to reimburse patients’ legal bills in disputes over medical care. It allows the company to slash services in order to increase profits, without worrying that patients have the ability to challenge them effectively.

In Hawaii, it got the publicly traded companies out from under the mounting legal bills incurred defending against life-threatening cuts in services, most of them victimizing children and seniors.

In April, Unitedhealth’s Hawaii attorney openly told a TV reporter that SB 1274 needed to be passed because the state’s "existing process is expensive, time-consuming and burdensome... just adds to the cost of healthcare when we [Unitedhealth] can ill-afford it."

What she failed to add was that her client, Unitedhealth had over a dozen cases pending against it at the time. As of this writing, she and Unitedhealth have lost every case ever filed against it under the same patient rights law she said needed to be repealed.

What is happening here in Hawaii is only the tip of the iceburg.

By the end of this year, publicly traded companies will own about 30% of Medicaid, up from 19.6% two years earlier.

Remember when Congress had to approve TARP giving the banks $700 billion back in 2008? In the end the price tag was $245 billion, almost all of which has been paid back by now.

The privatization of Medicaid and Medicare has gone from $105.3 billion in 2009, to $113.7 billion in 2010, and already stands at $65 billion for the first half of 2011. Not a penny of that $284 billion needs to be repaid.

The political hot potato neither Republicans nor Democrats are talking about is who determines how much of that money actually needs to be spent. Or even if any of this nice federal and state funding has actually been spent on real medical care for people who need it.

The amicus brief and state laws like SB 1274 clear the way for these publicly traded companies to increase profits without worrying about federal regulatory interference. Unitedhealth and Wellcare are only two of about ten publicly traded health companies together splitting about $11 billion every month in federal and state revenues for Medicaid and Medicare.

The morning after last November’s elections, Public Citizen published a study of the link between “party-shifting contests” and “unregulated third-party spending.” Twenty-two of fifty-eight new Republicans were in seven of the eight states that just settled with Wellcare for criminal Medicaid fraud claims. Unregulated third party spending in those seven states came to $11 million, of the $54 million tracked.

Eighty-five percent of the total was spent in states where six publicly traded corporations (Unitedhealth, Wellcare, Wellpoint, Centene, Amerigroup and Molina) own Medicaid contracts. Unitedhealth alone operated either Medicaid or Medicare HMOs in 28 of the 33 states where Republicans beat Democrats, and was bidding on new contracts with a 29th state at the time.

On August 5, the White House took another swipe at federal protections for people on Medicaid, and particularly those with disabilities. CMS sent a letter out telling states how to auction off their Medicaid contracts without worrying about inconvenient federal safeguards. The legal work-arounds that CMS proposes specifically target what is called “maintenance of effort.” New Medicaid contracts/programs cannot restrict existing access to program benefits.

Now they can.

The politics of Medicaid/Medicare corruption override party membership. Greed trumps ideology, apparently.

You see it as far back as 2002. That’s the year a group of Wall Street financiers bought Florida’s biggest Medicaid HMO, a little known company named Wellcare. George Soros, head of the group, was known for donating to Democrats. The financiers’ hand-picked CEO was a Bush fundraiser.
Between taking the company public in 2004 and selling out before the very public FBI raid in October 2007 (the last shares were sold only weeks earlier), the original investors turned $70 million into almost $900 million.

The whistleblower complaint that led to a dawn raid by 200 FBI agents was not unsealed until last summer, almost three years later. Reading it, however, makes it very clear that the criminally fraudulent practices that generated such excessive profits traced back to the change of ownership in 2002.

Wellcare almost appears to have been structured from the get-go as a financial experiment in how to get rich from Medicaid and Medicare.

One of the last Board Members whose involvement could be traced back to 2002 only stepped down in early 2010. It took until the fall for the company to finish getting around to suing former executives whom, it claimed, had hid their criminal actions from the Board.

In October, it was learned the company had become one of Florida’s largest political contributors between 2004 and 2007, reporting a total of $2.6 million to the state Republican Party as well as individual Republican candidates. According to a report in Health News Florida, “Tampa attorney Barry Cohen …said today the contributions were pennies on the dollar compared to the money the HMO saved in Medicaid fines -- and the profits it made.”

In November, industry analysts were predicting that “WellCare’s strong Medicaid HMO position in multiple states will enable it to grow the upcoming Medicaid expansion that is part of the new health law.”

In late April, the White House apparently backed a federal settlement with Wellcare letting the company off the hook forever. The final settlement was for about $137 million, of up to $600 million estimated embezzled from federal and state funds.

Since January, Wellcare has been outperforming the S&P 500 by up to 35%. Quarterly net earnings reported in June are 7.64% of gross premium revenue, up from 1.62% in June 2008. Quarterly gross premiums are down $160 million (from $1.64 billion to $1.49 billion) while net earnings have grown from $26.6 to $113.5 million.

There’s an old saying that you can’t know where you’re going unless you know where you’ve been. Wellcare’s first financial success was defeated because they got caught stealing. The emerging federal “hands-off” policy towards Medicaid means they, and all the other publicly traded companies feeding off the backs of our most vulnerable citizens, will no longer have to worry about getting caught. Nobody will be looking.

Sunday, September 4, 2011

Families to Hawaii's governor: Yes, you have failed

Families of children with disabilities have reacted strongly to the August 22 meeting with Governor Abercrombie. The letter below was written the day following the meeting.

Dear Governor Abercrombie:

We are families whose lives have benefited from Hawaii’s Insurance Commission external review system.
The format of yesterday’s conference did not enable all of us to speak. Many of us made the extraordinary effort to meet you in June, but you did not attend.

You said yesterday that:

“I think it’s fair to say that people felt that the review panel process in place kept the insurance companies in check, and on the whole they were able to get services that they wanted to have.

The two avenues available, the Department of Human Services hearing process or the 3-person panel, and I think most people went for the 3-person panel, and felt that was satisfactory. Nobody was arguing with that, least of all Suzie or Roz or myself or for that matter the professionals at DHS, that is to say those that were left after the ranks had been decimated over the last years.”

Please explain to us: if this is so, why did you sign a bill that deprives everyone on Medicaid of this process? The U.S. Dept. of Health and Human Services did not disapprove our existing process for Medicaid members, which is not an issue with the ACA. In fact, it expressly approved the inclusion of the 3-member panel option in the RFPs for QUEST and QExA (and we have not seen anything showing that DHHS approved revoking this option).

You said the denials of services that threaten the lives of our families are just “glitches.” You said the on-going regulatory violations we are experiencing are to do with the contractor. You said that if we needed a lawyer to dispute a denial, that means you are failing.

I regret to inform you that you are failing. Based on Insurance Division statistics, the number of cases filed since you took office nearly equals the number filed in the last 10 years. In fact, since you took office, over 20 cases have been filed in the external review and won by QUEST or QExA members against Evercare and HMSA QUEST. Some of those cases were previously denied by the Administrative Appeal and even had Legal Aid assistance. Apologies for failing, promises to do better, and an uncertain plan of assistance, will not help those more than twenty families as certainly as the external review did. The health plans are the only winners under SB1274.

Most of us are, right this minute, depending on a lawyer for our lives, and the lives of our children. We are in the midst of “glitches” that have spanned months, if not years. We have all experienced the failure of the DHS review system, including their failure to monitor the contractors for federal compliance.

We appreciate your intentions, but your proposals on Monday did not meet our concerns. In fact, they left us terrified for our futures and angry that you could belittle our life-and-death battles with the insurance plans as mere “glitches.” We will not rest our efforts until we have a system we can count on to prevent health plans from running over us and our children.

Son-of-a-glitch: Abercrombie defends turning state’s disabled population into second class citizens

On August 22, Governor Neil Abercrombie admitted that the purpose of SB 1274 was to save the state’s Medicaid contractors money on legal fees. He never explained how that would benefit patients.

SB 1274 deleted part of the state’s Patients Bill of Rights, depriving Hawaii’s entire Medicaid population (270,000) of access to the protections of federal law.

The Governor suggested numerous creative alternatives to legal counsel: “civilian public defenders,” “ombudspeople”, a new commission, even getting federal money to hire a patient advocate. It was clear that no work has been done on any of the ideas to replace the lawyers who have the expertise to interpret coverage contracts and to apply the law to a patient’s individual circumstances.

Just no lawyers. Unless of course the family has the money to spend on hiring one themselves.

The meeting was ostensibly to “reassure” families and advocates for the state’s disability population, in the aftermath of his signing of SB 1274. Abercrombie stated “I am failing” if anybody in Hawaii needs a lawyer to enforce their civil and legal healthcare rights.

On August 24, a Circuit Court decision was handed down against Evercare (Unitedhealth), proving even children in Hawaii need a lawyer in order to enforce civil rights under the ADA.

This is the second time since June the Circuit Court has ruled against Evercare. Both cases revolved around Unitedhealth’s cuts in benefits to medically fragile children, where percentage savings translate into thousands of dollars per month each.

Both children were fighting for the right to live at home with their families and not be put in institutions. But for their right to have a lawyer, neither child would have won.

But all this, according to Abercrombie, is just a “glitch.” No need for lawyers.

Also on August 22, Dr. Kenneth Fink, Hawaii state Medicaid Director, acknowledged in writing to the parent of one of these children that Evercare had violated federal confidentiality laws. This is the fourth such letter parents have received from Dr. Fink in less than a year.

Meanwhile the state has been unable to produce proof of Abercrombie’s statement that it was made “explicitly clear to [him] by the United States Department of Health and Human Services that the external review process we had in place did not meet the Affordable Care Act requirements.” This was a crucial ground for signing the Bill instead of vetoing it.

Supporters of the bill had tried to argue it was necessary in order to comply with an Affordable Care Act deadline of July 1. On June 21, the Governor’s office admitting to having had no contact with federal authorities on the issue, and later that week the deadline was extended to the end of the year. Nonetheless, now the Governor says there is a letter from DHHS.

Rafael del Castillo, healthcare rights attorney, asked the governor’s office following the meeting for a “copy of the DHHS correspondence explicitly stating that our existing external review is unacceptable.”

The meeting was two weeks ago, and he has received nothing to date. A recording of the meeting can be found here.

The impact of SB 1274 has been eerily similar to that of the White House-backed amicus brief submitted to the Supreme Court in May.

There is something called “Federal Sovereignty.” This means that federal law is the “supreme law of the land”, and states cannot limit legal rights allowed under federal law.

In his analysis of the amicus brief, Simon Lazarus of the National Senior Citizens Law Center explained that “the rule endorsed by the DOJ brief, [carves]… safety net laws and beneficiaries out from the protection of [the] Supremacy Clause."

That is pretty much what SB 1274 has accomplished: carving out Hawaii’s Medicaid population from the protections of federal law.

Abercrombie painted the concept of turning everyone on Medicaid into second class citizens in rosey terms. He had to sign SB 1274, he said, in order to prevent federal regulators from reducing the state’s “flexibility” and “opportunity to experiment” with people’s lives.

Why the state suddenly needs to experiment with a healthcare appeals system that has functioned appropriately for more than a decade, was not explained.

The crux of SB 1274 was to repeal a state law enabling patients to challenge health insurers’ denials of care, and to be represented by an attorney in the process. The law required health insurers to pay the legal costs of the patient’s appeal when the company refuses to approve medical treatments ordered by a doctor. Back in April, Unitedhealth’s attorney openly told a TV reporter that SB 1274 needed to be passed because this "existing process is expensive, time-consuming and burdensome... just adds to the cost of healthcare when we [Unitedhealth] can ill-afford it."

What she failed to add was that her client, Unitedhealth had over a dozen cases pending against it. As of this writing, she and Unitedhealth have lost every case ever filed against it under the patient rights law she said needed to be repealed.

By April, information surfaced that the bill was actually a way to change the federally approved contract between Hawaii and two specific Medicaid contractors, Unitedhealth and Wellcare. The current contract mandates the two companies follow state law, something they knew when the signed the contracts.

The problem with privatizing Medicaid is that, once these companies get control of the system, they can start demanding modifications in their contracts. The State is in a weak position to resist because it has gutted its social service infrastructure, essentially disabling itself. Unitedhealth and Wellcare decided they do not like being told what to do by successful patients and their attorneys, so they insist on the state finding a way to get rid of the law. That way, their Medicaid premium profits are safe from needy patients who have the power to enforce their rights because their legal fees are paid.

My daughter Hannah is another medically fragile child who has needed a lawyer to protect her from the harm caused by Unitedhealth. During the meeting on August 22, the Governor promised someone would call me about the “glitches” and “logistical problems” plaguing Hannah’s medical care.

There have been no calls. Just another glitch?

Monday, August 22, 2011

Medicare already 45% privatized, Medicaid could reach 30% by year's end

The privatization of Medicaid could hit 30% by the end of 2011. Medicare's privatization has already reached 45%.

The so-called Republican war on Medicare and Medicaid was already won a couple of years ago, and the battles waged so publicly now are, in large part, a public relations diversion.

What the Republicans, and apparently the President, don't want us to see is is the amount of government health care funds - between $2 billion and $5 billion every month - that this privatization has diverted to shareholder profits.

That money could be used instead to fund anywhere between 400,000 and 1 million full time jobs in local communities across the country. Every time one of these publicly-traded companies cuts the benefits it pays out, it means jobs have been lost as nurses, home attendants, adult day care, and a host of other local companies that provide equipment and services to the disability community. Meanwhile states have been able to cut their accounting, social work, quality control, regulation monitoring and other positions when the HMO takes over these jobs as part of its contract.

Figures published by the Commonwealth Fund, combined with Securities & Exchange Commission (SEC) filings, show the percentage of people receiving Medicaid who are signed up through publicly traded HMOs has gone from 19.6% in 2009 to 27.1% as of June 30, 2011.

New contracts coming into play this year will add at least 1.7 million new people, bringing privatization to 29.8%. The Affordable Care Act is expected to raise Medicaid enrollment by 16 million by 2019, and the Commonwealth Fund concluded that "given recent patterns in state contract awards to managed care plans, it is reasonable to anticipate that plans operated by publicly traded companies will enroll the majority of the expanded Medicaid population."

Of the 47 million signed up for Medicare, 21 million are enrolled in publicly traded HMOs. When compared against the total population of just Medicare's managed care and stand-alone drug benefit, that 21 million becomes 71% of the total number of enrollees in those programs.

We obviously cannot count on our elected officials to stop this insidious process by themselves. They aren't even telling us about it. Please sign our petition demanding legislation to take private profits out of Medicaid and Medicare.

Friday, August 19, 2011

Stopping the privatization of Medicaid and Medicare: Create jobs not profits

This country is in desperate need of legislation to halt the privatization of Medicaid and Medicare.

It is already costing taxpayers $11 billion a month in a subsidy or bailout or whatever you want to call it, that no one has voted on, and is the driving force behind a civil rights war going on right beneath our noses.

Throughout American history, every minority has won its equality through speaking up on is own behalf. The reason nobody knows about this particular civil rights war, is this time the minority cannot speak for itself.

They are our medically vulnerable of any age, those who because of time or disability would be living in institutions if not for Medicaid. Eighty-six percent of the national Medicaid budget is allocated for their care, to pay for the treatments and services to keep our loved ones at home with their families, or in the communities of their choice.

It may be budgeted for their care, but if it's paid to one of ten major for-profit HMOs, anywhere between twenty and fifty (or more) percent is taken out as a sort of middleman fee.

For our families, these cuts translate into reductions of sterile medical equipment, denials of anything from diapers to wheelchairs to communications devices, and reductions in those very services we need in order to keep our loved ones out of institutions. We sacrifice sleep, jobs, friends and the ability to multitask to try to compensate for cuts that were made to raise company profits.

Legislation imposing a 95% health benefits ratio (the percentage of the per person per month premium the HMO receives that is spent on actual health benefits) will do no good. The Administration effectively acknowledged the power of the criminal culture grown up around these HMOs when they gave Wellcare a "get out of jail free" card in April. No expenses they report themselves could ever be trusted.

The best legislation may be to outlaw capitation payments. Go back to a simple fee-for-service program; after all, it worked fine for forty years. All the county and state workers who lost their jobs when the HMO took over can be hired back. These are the people who are best capable of managing the care of someone who is medically vulnerable anyway, not employees of a for-profit HMO.

If the state goes back to writing the checks (more jobs), we eliminate the profit motive, while pumping $11 billion a month into local communities. That could translate into between 400,000 and 1 million jobs across the country. Every time a nurse is hired, a child or grandparent with disabilities is given forty hours a week of home nursing services, something that literally can mean the difference between life and death.

That could also be seen as a million jobs across the country that have been sacrificed in the past three years to keep profits up.

On my other website, I started a survey in January looking for information on how well states were adhering to federal Medicaid regulations. Not adhering means violating, right? While the sample remains small, every state represented so far is violating one federal regulation or another.

Yet the Supreme Court will soon be considering whether anyone signing up for Medicaid should forfeit the right to "federal Supremacy", turning about 50 million people immediately into second class citizens. The White House has also backed a series of proposed Medicaid regulations that implement this anti-regulation of the human and civil rights of our elderly, our adults and our children with disabilities.

Why isn't it child abuse to steal money intended to be spent on keeping children home with their families? Since when can the government abdicate regulatory control over the recipients of federal funds?

Millions like my daughter who have no ability to speak out in support of their own civil rights, are watching control over their life-and-death decisions being sold off to for-profit HMOs.

The first step to stop this insidious destruction of the human rights of the weakest members of our society is to let Congress and the President know that we know what they have been doing without the voters' permission. It is not over-dramatizing to say people have already died, and will continue to do so, until legislation takes the profit out of Medicaid and Medicare.

Please sign our petition here. With the pending Supreme Court decision, and final versions of those proposed new regulations coming up this fall, we need your voice now to help speak up for our children, those who will always be our children and those to whom we were children.

Friday, August 12, 2011

New Administration policy tells states how to auction off local Medicaid programs to for-profit HMOs without violating regulations

ADAPT, a national grassroots disability advocacy group, announced today its outrage over the Administration's latest attack against the human rights of America's medically vulnerable children, adults and senior citizens.

The policy was outlined in a letter sent to State Medicaid Directors by CMS (the Centers for Medicare & Medicaid Services, the federal regulatory agency for both Medicaid and Medicare) on Friday, August 5.

Reading between the lines, one purpose of the letter is to outline how states can sell off their Medicaid contracts to for-profit HMOs without violating any pesky federal regulations. Specifically, the letter addresses Medicaid issues only as they relate to the infamous "maintenance of effort" (MOE) regulation imposed under the Affordable Care Act.

At one point, the policy instructions are very explicit:

As detailed in our May 20, 2010 State Medicaid Director Letter, there are a variety of mechanisms available to States to rebalance their long-term support systems for persons with disabilities to achieve compliance with the ADA.

One of the points in the May 20 letter was to laud the "service delivery model" of managed care. These are the managed care contracts auctioned off to the growing for-profit HMO industry. The link to CMS' technical manual for running an honest managed care program does not appear to work any longer.

Government revenue for Medicaid and Medicare is already boosting some of these companies 23% higher for the year than the S&P 500. Unitedhealth, for instance, has successfully mislead both the Wall Street Journal and the New York Times into writing that their specular profits are related to performance in their commercial (employer) division.

Over the past three years, Unitedhealth's monthly income from commercial accounts increased by $300,000,000 while their monthly revenue from the government for Medicaid and Medicare increased by $1 billion. Which sector seems more likely to have produced a 313% increase in net earnings?

Last week's Medicaid policy statement is only the latest in a series of events evident of the Obama Administration's extreme pandering to big business HMOs.

Please help us stop this terrible mis-use of public funds.

Poll: Should Medicaid and Medicare be auctioned off to for-profit HMOs?

The disability rights, civil rights, womens rights, family rights, senior rights and healthcare rights advocates need to unite to stop Medicaid and Medicare being sold off to for-profit HMOs. Please take our poll: should Medicaid and Medicare be sold to for-profit HMOs?

Unfortunately, the process has already been underway since the Bush days, reaching almost $11 billion a month in government revenues paid to for-profit HMOS. That amount is growing, for some companies as fast as twenty percent within six months.

I'm the mother of a beautiful and loving soon-to-be 12 year old who is at 24/7 risk of death from epilepsy. Hannah's life was auctioned off to one of these companies (Unitedhealth) in February 2009 so I see every day the impact of its spectacular earnings growth on her daily life. There is a huge disability community on the internet, and I see the impacts there as well. They are intensifying as more and more states are requiring Medicaid recipients with disabilities to join these for-profit HMOs.

They have taken away from us the right of choice.

The companies aren't cutting services to our children because "the budget" has been cut. In fact, if you live in Hawaii, New York, Florida, Georgia and a few other states, your for-profit Medicaid HMO got a premium raise from your state. That's an increase to the budget, not a decrease.

What's getting cut is how much of the premium your Medicaid HMO is being paid for your child that is actually being spent on medical care. The health insurance industry calls it the "Medical loss ratio," I think of it as the "Patient loss ratio", some companies are reasonably straightforward and call it the "health benefits ratio."

If you google "medical loss ratio", you will see that this little number is playing a large role in Washington politicking. I've uploaded a number of articles about it here. The point is, it represents the amount of the premium spent on actual medical costs as a percentage of the premium. If a company reports an 80% MLR to federal regulators, it means they spent only eighty percent of the money allocated for the care of our children (for example), and saved the rest by denying medically necessary services and treatments.

A twenty percent "patient loss ratio" is what these companies brazenly report to the SEC. Federal investigations have revealed companies fraudulently inflating costs by up to 299%, and so a 50% PLR estimate could be conservative.

These companies are stealing from our children, our grandparents, and our communities' most vulnerable populations.

We can't change something we don't know about, so please help us spread the word.

Thursday, August 11, 2011

Romney says corporations are people, so why aren't HMO hoodlums who steal from taxpayers in jail?

If corporations are people, as Mitt Romney told a group today, then why aren't the companies caught defrauding Medicaid and Medicare in jail?

Romney's full statement, quoted in today's Huffington Post, is:

"Corporations are people, my friend... of course they are. Everything corporations earn ultimately goes to the people. Where do you think it goes? Whose pockets? Whose pockets? People's pockets. Human beings my friend."

"Everything ultimately goes to the people." That sure isn't the case with the big HMOs caught defrauding the taxpayers of billions of dollars intended to provide medical services to children.

I've asked before: if you were an employer and caught an employee stealing from you, would you hire that person again? And if you did and they did it again, would you hire them back a second time...a third time....?

Why is this any different from the Administration continuing to award federal subsidies to corporations already caught stealing from the government?

PR for the health insurance industry has done a great job fogging the mirror on Medicaid and Medicare. They have framed the entire debate in terms of the skyrocketing cost of medical care, the undeserving nature of recipients, and how the public budgets for these programs should be cut.

The problem is reality conflicts rather substantially with this PR "spin."

First, let's get the idea that Medicaid is for the poor or unemployed out of the way. Two-thirds of the national budget goes to keeping children and adults with disabilities, along with the elderly, out of institutions. Our country actually has a wonderful set of laws and regulations designed to keep families together, by providing medically necessary services in the individual's home. When the Medicaid budget starts getting cut, it's this two-thirds that is affected the most, and carries the highest human toll in misery and death.

Second, we need to remember that just because expenses are reported by insurance companies to federal authorities, doesn't mean those figures are accurate. The whistleblower case against Wellcare unsealed last summer reported expenses inflated by up to 299%. In Florida, investigators discovered Unitedhealth had billed the state for more than $2 million of speech therapy for children with disabilities that never took place.

Ironically, the insurance companies use these same inflated costs to justify premium increases in their state Medicaid contracts. In fact, the companies have to show they are losing money on the state contracts to get the rate increase. But if they were losing money in all the states that have awarded increases, how are they continuing to report record profits?

In its first quarter 2011 filing with the SEC, Wellcare said that "Hawaii program rate increases ... we believe have improved the stability of the program." With the company's operating profit jumping from 13.1% to 19.3% just in the past nine months, how much of the raise is being applied towards costs is in serious question.

Meanwhile, when PR flacks and industry reps talk about cutting provider rates, they forget to mention that doing so just increases the corporate HMO's profit margin. The HMO is not a "provider" in this lingo; it has replaced the state accounting and quality control bureaucracies with its own employees. The providers are the nursing agencies, pharmacies, hospitals, medical supply companies, day care centers for people with disabilities and other small businesses that provide direct services to the people needing them.

The biggest myth of all is that the issue that needs to be addressed is how to cut budgets. In essence, we are being asked to make decisions about cutting budgets without knowing how those budgets are spent. It might seem logical to equate Medicaid budgets with how much is spent on medical care, but that leaves out the twenty-to-fifty percent profit the HMO is scooping off the top of every payment they get from the government. Right now that totals somewhere between $2 billion and $5 billion a month, depending on how much fraud is going on.

As quietly as the government has been auctioning off Medicaid and Medicare to for-profit HMOs, the White House has taken steps to let these corporations know that federal regulators won't be watching too closely how these funds are actually spent.

On April 26, the Administration backed an agreement between Wellcare, nine states and the federal government, settling all the Medicaid fraud cases against them for $137 million. In return, the government agreed not to consider Wellcare a criminal and not to hold this non-criminal past against them in any future contract negotiations.

On May 6, the Administration published proposed new Medicaid access regulations that dropped jaws across Washington and the health reform movement. According to Sara Rosenbaum, Chair of the health policy department at George Washington University, "rather than being a forceful implementation of the law, the proposed rule is a model of inaction." She went on to call it "the first sign of the administration’s refusal to intervene" in state Medicaid practices, including those concerned with how government money is being spent. She calls the rule "a model of inaction," the sole remaining purpose of which is "to establish what might charitably be characterized as an information-gathering exercise."

Even this extremely watered down proposed law goes further by exempting everyone enrolled in Medicaid HMOs from inclusion in the five year information study.

Just from the year of statistics I took in college, I know any study that excludes seventy percent of the affected population has dubious accuracy.

Then on May 26, the White House took an action that could end up turning everyone receiving Medicaid into second class citizens. Defying HHS Secretary Sebellius as well as a number of health advocacy groups, Obama backed a "friend of the court" document submitted to the Supreme Court that advocates denying anyone on Medicaid the protection of federal law.

Simon Lazarus of the National Senior Center Law Center wrote:

The brief charts a path for the Supreme Court to permit federal courts to continue routinely to apply federal supremacy to strike down state laws protecting consumers, workers, retirees, bank depositors and others, alleged by business litigants to conflict with federal laws, while arbitrarily withholding identical protection from the vulnerable populations served by Medicaid and other safety net laws.

Rosenbaum warned in Politico that "there’s “no stopping point … in terms of its spillover effects” if the Supreme Court broadly restricts individuals’ access to the courts over state implementation of such a federal program."

If Romney thinks corporations are people, then Obama's actions tell us he values these corporations over the rights of the individual.

The country's most medically vulnerable population has been auctioned off to a bunch of criminal hoodlums with no regulatory strings attached.

Please sign our petition to stop this enslavement.

Tuesday, August 9, 2011

Wall Street HMOs use fraud, government handouts to pad profits, outgrowing S&P 500 by 25%

After the S&P tumbled yesterday to a year-to-date loss of 10.3%, for-profit HMOs like Unitedhealth, Wellcare, Aetna and Humana remained showing a 13.7 -19.9% gain since January 1. The economy-immune growth of these companies is entirely fueled by government handouts currently running about $11 billion per month.

We have a tendency to talk about Medicaid and Medicare as if budgets and people are the same. We talk about the people who will be affected by Medicaid or Medicare cuts, under the apparent assumption that the budgets are actually paid out to the people. That is what happens in every other country that runs a government health system. It is not, however, what is happening here in the US where our government public health programs - Medicaid and Medicare - are increasingly owned by big business HMOs.

Ten for-profit HMOs control the private Medicaid/Medicare market. Revenues from commercial (employer) accounts over the past three years have been stagnant at best, but Medicaid and Medicare revenues are accounting for 85% of the $2.7 billion per month increase in total premiums received.

The problem is, as the private HMO industry has grown, so has, apparently, criminal Medicaid fraud.

Unitedhealth Group, Wellcare, Amerigroup, and a fourth HMO now merged into Centene (Vista) were all found to be stealing taxpayer money in Florida that was destined for children's health care. According to the Associated Press, the companies also participated in the state's pilot privatized Medicaid HMO plan which, in spite of numerous consumer complaints, has now been expanded statewide.

It was possible to catch this criminal fraud because this specific contract between Florida and the HMOs required 85% of the taxpayer funds received to be spent on healthcare. (Few state contracts require minimum spending amounts from Medicaid contracts).

New bills were signed into Florida law earlier this year by Governor Rick Scott requiring everyone in Medicaid to join a for-profit HMO. The bills do not stipulate any minimum spending requirement, although they do require the HMOs to refund the state anything they make in profit over 5%.

Our experiences in Hawaii with Unitedhealth and Wellcare indicate the likelihood of Florida receiving any rebated profits is laughable. This type of fraud seems to require some sort of collusion between state Medicaid bureaucrats and the corporations, for the former to turn a blind eye to the latter's illegal actions. The potential for fraud is enhanced because there are no viable sanctions for violating federal Medicaid law. (The only sanction is for the feds to withhold all Medicaid payments to a state; CMS tried that in Alaska a couple of years ago and it was considered a debacle).

Unitedhealth testified in Hawaii federal court last year they were losing money on their Medicaid contract with the state. Rumors on the street are that the company is still crying crocodile tears over its purported losses, presumably laughing all the way to bank with (pre-tax) net earnings reaching 8.1% of premium revenue.

Personally, I find it ironic that Florida has accused Unitedhealth of stealing more than $2 million from children by forging speech therapy records, when the company has steadfastly refused to provide my daughter with such therapy since September 2009.

United and Wellcare also seem to have found a way, at least in Hawaii, to ensure audits are nearly impossible. Most of their payments from the state of Hawaii were made outside of the state's auditable medical IT software system.

Recent moves by the White House are increasing the power these HMOs have over people's lives. A "friend of the court" brief submitted by the Department of Justice to the Supreme Court recommends exempting Medicaid recipients from the sovereignty of the "law of the land." A new Medicaid access rule published in the Federal Register essentially guarantees a federal "hands off" policy towards state Medicaid programs and the corporate HMOs with whom they contract.

The end result of all this? Our government is currently paying about $11 billion every month to for-profit HMOs to handle Medicaid and Medicare, with a promise not to let nasty federal regulations interfere with corporate performance. If the HMOs want to skim twenty-to-fifty percent off the top towards corporate profits, no problem. If children and adults with disabilities, who account for more than two-thirds of national Medicaid expenditures, get sicker, have to be institutionalized or even die, no problem.

It's hard to imagine the Navy paying for a battleship and being satisfied with only half of one.

The latest round of SEC filings indicate another 1.7 million people will be herded into for-profit Medicaid HMOs in the next few months. Hawaii is getting ready to put its entire Medicaid program (220,000) up for bid, with both Wellcare and United expected to be bidding. Hawaii Gov. Neil Abercrombie is continuing his abject pandering to both corporations, regardless of the number of federal regulatory and civil rights investigations brought upon the state by the two within the past eighteen months.

This is a federal subsidy that must be stopped. Please sign our petition to put an end to President Obama's pandering to big business HMOs.

Monday, August 8, 2011

HMO spends $627 million in public funds defending against Federal criminal fraud charges

A company whose income derives entirely from taxpayer funds has spent $627.4 million of our money defending itself against federal criminal fraud charges. The figures are reported in Wellcare's SEC filings between January 1, 2009 and June 30, 2011.

Yet, while the S&P 500 is down 10.34% year to date, Wellcare's stock remains up 16.74% even after today's spectacular plummit.

Wellcare is not the only for-profit managed care company continuing to show significant year to date growth. Unitedhealth Group is up 16.44%, Humana up 19.93%, while Aetna, Coventry, Wellpoint, and Centene are all higher year to date.

Ironically, growth in all these companies has been fueled by federal and state tax-payer money. Total Medicare and Medicaid payouts to for-profit HMOs are running almost $11 billion per month. Life and death decisions for more than 33 million Americans, most of them medically vulnerable, have been sold off to these publicly funded HMOs, whose decision making is based more on shareholder profit than medical need.

The Affordable Care Act has tried to put in place minimum spending requirements of 80 to 85% for commercial and Medicare HMOs. Few states require any minimum spending on Medicaid contracts. Limited regulation and an absence of any effective enforcement of how taxpayer money is spent has led to fraudulent reporting of actual medical costs by up to 299%.

Somewhere between $2 billion and $6 billion a month is saved from government-paid premiums for Medicaid and Medicare by the HMOs simply refusing to authorize needed services.

Which brings us back to Wellcare's $627 million in taxpayer money spent defending itself against charges it has been stealing from us taxpayers.

Am I the only person who has a problem with this?

Monday, July 25, 2011

Obama's $1 trillion handout to big business insurers, Part 2

Share |

Once you start following the money rather than the rhetoric, you can start seeing how the Medicaid/Medicare reality has little do to with big business insurers' PR campaign.

Myth 1:  We need to find a good way to reduce costs; rising costs of services is  the problem.

Reality:  When private insurers create HMOs for Medicaid and Medicare, the company is paid by the government a set amount per month per person. With little to no regulation let alone enforcement of minimum spending requirements, reducing costs just gives the company higher profits. 

I've been puzzling for over a month now over an article by Paul Krugman. He states, "Yes, Medicare has to get serious about cost control; it has to start saying no to expensive procedures with little or no medical benefits, it has to change the way it pays doctors and hospitals, and so on."  He compares US Medicare with Canadian health care, which is "less open-ended and more cost-conscious."

The Canadian public health system probably doesn't have a corporate middleman who slips twenty to fifty percent of premiums into his back pocket every month.

Myth 2: Health care companies are making money because people can't afford to spend their deductibles.

Reality:  Unitedhealth sold this line to the Wall Street Journal after last year's earnings figures came out.  It was apparently deemed successful enough that the PR department used it again in May with the New York Times.  This time they brought out some commercial policy holders to interview who substantiated their claim.

In the past three years, Unitedhealth's commercial premiums have increased by only $334 million a month.  Government revenues paid by Medicaid and Medicare are up almost $1.5 billion a month.  Corporate profits from not spending government-paid premiums are up 67%, while the premium revenues themselves are up only 51%.

Unitedhealth's soaring profits are more accurately represented by the family who has been denied hospitalization, or medications, or home care services for their child or grandparent with a disability.

We don't make as good a PR statement, however.

Sunday, July 24, 2011

Obama's $1 trillion handout to big business insurers

Federal hand-outs to the health insurance industry could top $1 trillion in the next five years. Between twenty and fifty percent of that will be saved off the top as net profit.

The handouts are not loans or grants or even tax breaks. They are the product of the Administration's policy supporting auctioning off state Medicaid and federal Medicare contracts to publicly traded, for profit health insurance corporations.

Based on SEC filings for the first three months of 2011, government payments to the top ten for-profit insurers were running around $10.9 billion a month, up ten percent just in the previous six months. Depending on how much fraud is going on, between $1.9 and $5.4 billion of that gets "saved" every month towards corporate profits by the company simply refusing to spend it.

Obama's willingness to concede to cuts in entitlements will probably have little influence on these payouts reaching $1 trillion in the next five years. The White House has given off too many signals in the past six months of its willingness to give private insurers a free hand in how they spend federal funds. The Administration has even gone so far as letting one company off the hook for criminal Medicaid fraud in nine states.

Just as slavery cloaked itself in the myth of the paternalistic landowner, the public war raging today over Medicaid and Medicare is using the myth of the undeserving poor to detract attention from the obscene private profits being generated with public funds.

In reality, the people whose lives are being affected the most are our country's fourteen million children and adults (including the elderly) with disabilities. Two-thirds of the nation's total Medicaid budget is allocated to paying for medical services to keep people with disabilities at home with their families, rather than shutting them up into institutions. More and more of that money is being paid out to companies more responsible to shareholders than policyholders.

What the President has auctioned off to big insurers is control over life and death of our society's most vulnerable citizens.

The new dandies of Wall Street

Ten health insurance companies control the private Medicaid/Medicare market. Four exist completely on public funding: Amerigroup, Centene, Molina and Wellcare. The other six (Aetna, Coventry, Health Net, Humana, Unitedhealth and Wellpoint) have been replacing lost corporate group business with new Medicaid and Medicare "managed care" policies.

Unitedhealth's quarterly net earnings (three-month profit before taxes) jumped from $505 million for April - June, 2008, to over $2.1 billion in the first three months of 2011. Quarterly commercial premiums were up by only $1 billion, but Medicaid/Medicare quarterly revenues were up by over $4 billion.

At Aetna, commercial revenue is down from 79% of total quarterly premiums to 74%. Its replacement with Medicaid/Medicare government funding, however, has accompanied a 22% increase in quarterly net earnings.

Among the ten, Medicaid membership is up 19%, and the mix of Medicaid and Medicare products is up 33%, from 27.7 million to 36 million policies. Both commercial membership and quarterly commercial revenues are down.

The relationship between the number of new Medicaid enrollees and the revenue they generate for the company is not a straight one to one ratio. Humana and Coventry both reported a loss in Medicaid membership at the same time as an increase in Medicaid revenue. Wellcare had a three percent increase in Medicaid membership generating a 14% increase in Medicaid revenues, and Unitedhealth and Amerigroup both showed almost a three-to-one ratio of Medicaid revenue growth to membership change.

In order to understand why Medicaid (and Medicare) contracts are so lucrative, it is best to start with what one writer has called the insurance industry's "dirty secret."

The "Patient Loss Ratio" and why it's important to Wall Street

When state Medicaid programs are carved up and auctioned off to the lowest bidder, they include a rate schedule used to determine a monthly payment per person. The insurer is paid a set amount per month per person, depending on how healthy the person is. For really healthy people, the insurer may get only $400 a month from the government; for a medically fragile child living in a rural area, the company may be getting paid $25,000 a month by the government.

For the publicly traded health insurers winning these contracts, profit derives from the simple difference between how much the government is paying to provide services for each covered individual, and how much the company spends on that person.

In the health industry, it's called the "Medical Loss Ratio": how much is actually spent per individual as a percentage of the total premium paid for that person. Since the term seems to imply that expenses are a corporate loss, the "Patient Loss Ratio" represents how much every policyholder under Medicaid and Medicare is losing of their budget to corporate profits.

For example, a medically fragile child in a rural area who is dependent on technology to breathe and eat might have a monthly budget of $25,000 to pay for equipment and care services at home. That's what the company is paid every month, and it is less than the state would pay if the child was institutionalized. When the company is reporting an MLR of 80%, it means the so-called "managed care plan" has cut twenty percent of the child's services. For instance, the child's life may now be endangered by the loss of 200 hours of home nursing services per month, and the community has lost 1.25 full-time jobs.

Minimum spending requirements for Medicaid contracts are virtually non-existent. In a single case in Florida where a contract required an 80% minimum, all eight insurers were found to have fraudulently padded medical expenses by fourteen to sixty percent (in other words, the patients were losing between 34% and 80% of their budgets to profits).

Non-profit health insurers and even for-profit corporations with US Military contracts report spending ninety-five cents out of every premium dollar on actual medical costs. Nevertheless, the Administration, in an extremely generous mood, tried to set minimum spending requirements of only 80-85% for commercial and Medicare policies through the Affordable Care Act. However, states were allowed to apply for (and are receiving) "waivers" as low as 70% on the basis the local insurance industry will be inconvenienced.

What Al Capone, the drug cartels and health insurers have in common

Money breeds crime. The more excessive the potential profits, the more pervasive is the crime.  And the analogy between health insurers and the heroine trade was made two years ago.

A whistleblower complaint against Wellcare, Amerigroup, Unitedhealth, Humana and others was unsealed last summer. Sean Hellein, an executive at Wellcare, wore a wire for 18 months as part of an FBI investigation into Medicaid fraud. This is a must-read for anyone who wants to understand how pervasive criminal Medicaid fraud is within the heath insurance industry. Some of the methods revealed included:
* inflating medical costs on 161,170 claims by 218% to 299%;
* bullying terminally ill patients and the mothers of medically fragile babies into disenrolling  ("cherrypicking");
* setting up a Cayman Islands reinsurance subsidiary to overpay themselves;
* cooperation between companies in false-billing practices, to reduce the chances of getting caught; and
* tricking federal regulatory computers into doublecounting expenses.
Hellein's testimony also reveals how incompetent state regulators are at catching Medicaid fraud. From mid-2005 to the date of the document, a Florida computer error awarded an estimated $16.8 million in overpayments for one program to Wellcare, Unitedhealth, Amerigroup, Humana and two other HMOs. Another error that was capitalized on was made by actuarial firm Milliman Consultants. The Milliman report mistakenly over-priced expenses for one program by $19.4 million over two years. Aware of the error, Wellcare fraudulently used the actuarial report to apply for (and receive) a rate increase.

In late April, 2011, Wellcare reached a settlement on criminal Medicaid fraud charges with nine states and the federal government. The White House apparently supported letting Wellcare off the hook by promising never to call them gangsters for what they had done, and not to hold their past gangster activities against them in future federal contract awards.

Would Fort Knox have hired Al Capone? As the mother of one of the millions of children victimized by this fraud, it feels tantamount to the President forcing me to hire a pedophile as a babysitter.

Federal and state funds diverted from medical care for  children and adults with disabilities can mean the difference between living at home with family, or being institutionalized; it can mean the difference between living surrounded by loved ones, and a slow, lonely and miserable death.

We need to look beyond the rhetoric on Medicaid and Medicare and pay attention to how our tax money is being spent. 

I've consolidated my document collection here

Tuesday, June 28, 2011

Abercrombie betrays public trust by pandering to big business health insurers

My first career as a social anthropologist taught me a lesson that has stayed with me for almost forty years: what people do tells you a lot more than what people tell you they do. It is the difference between perception and reality, something that can be grotesquely distorted when enough money is spent.

Governor Abercrombie's action in signing SB 1274 yesterday is a good example of how this lesson applies to real life. Governor Abercrombie was elected, simply put, for his verbiage about helping Hawaii's children and most vulnerable citizens.

Questions began to arise in the disability community when the Governor's office released an ad for respite care that frivolized its purpose.

A swipe of the pen yesterday stripped 270,000 people of their right to an external appeal when their insurance carrier denies treatment ordered by a doctor. Last week's federally published regulation removed the entire purpose of SB 1274, which was to meet a July 1 deadine. The deadline was extended to the end of the year, with the feds saying they would let states know by the end of July if their current state programs needed any tweaking.

The action says more about the Governor than his words, because the only possible reason left for him to sign the bill was plain old pandering to big health insurance companies. They are tired of wasting corporate profits on lawyers defending the indefensible: cutting medical services just to cut costs. The fact it's the companies that keep losing these appeals is why Governor Abercrombie signed SB 1274.

It is the same sort of pandering to the same ten for-profit "pure-play and multiproduct plans" going on now in New Jersey, Florida, Texas, Georgia, New York, and thirty-five or so other states.

The Commonwealth Fund recently published an issue brief "Assessing the Financial Health of Medicaid Managed Care and Quality of Patient Care They Provide."

While the number of Medicaid members in publicly traded plans is still lower than the number in non–publicly traded plans, the total number in publicly traded plans has been increasing. From 2004 to 2009, the total Medicaid members enrolled in publicly traded plans rose from 5.6 million (32 percent of total Medicaid population) to 9.8 million members (41 percent of the total Medicaid members).

According to figures submitted to the SEC by the ten companies included in the Commonwealth study, that figure has grown fifty-one percent to 14.8 million as of March 31, 2011. All in all, about 40 million Americans with Medicaid, Medicare or Trinet (US military) are receiving their healthcare from publicly traded companies.

The rate at which Americans are being herded unknowingly into for-profit Medicaid managed care plans is growing faster than Medicaid membership itself. The DHHS 2010 Actuarial Report predicted a 5.6 increase in Medicaid membership between 2009 and 2010. Just in the six months between September 30, 2010 and March 30, 2011, Medicaid membership in for-profit companies grew ten percent. That ten percent growth in enrollment resulted in a thirty percent growth in Medicaid revenues to the same companies.

Couple that increase with the newly emerging White House position supporting the restriction of appeals rights for everyone on Medicaid, and the Republicans won't need to life a finger to destroy and privatize Medicaid. President Obama and compliant pro-big-business governors like Neil Abercrombie are doing the job for them.

The oddest part of all is that Nero is fiddling, Rome is burning, and the major media aren't noticing. Perhaps the very loud and boisterous Republican attack on Medicare has distracted them from the guerilla warfare launched against Medicaid.

Once more, it is an issue of perception versus reality.

Please sign our petition to stop this destruction of human rights.

Monday, June 27, 2011

Abercrombie signs SB 1274

My apologies. Governor Abercrombie did not sign SB 1274 until the last possible day in July. This post was based on a phone conversation.

Governor Abercrombie today signed SB 1274 into law.

I will have more information to report tomorrow.

This is disastrous for the 270,000 people in Hawaii on Medicaid.

Thursday, June 23, 2011

New federal ruling means SB 1274 can be vetoed now

The July 1 deadline that supporters of SB 1274 have been using as the excuse for passing the bill quickly, yesterday was extended to January 1, 2012.

There is no reason now for Governor Abercrombie not to veto SB 1274 immediately. His health policy expert admitted on Tuesday that the state had yet to seek any federal guidance on whether the bill was even necessary.

Here is the news from Rafael del Castillo:

Yesterday, the Federal government released new “technical guidance” relating to state external review processes and what was alleged by our Legislature to be preemption. SB1274 has an effective date savings clause extending its effective date to no later than 1/1/2012 if the feds postpone the deadline. Note that this is due to pressure from the insurers at the national level because they don’t want any external review at all. Note also that the title is “working with states” which has never happened so far with Hawaii.

I have a cadre of lawyers and law professors analyzing it and will get back to you as to that analysis. Here is the release from the DHHS Center for Consumer Information and Insurance Oversight discussing the technical guidance:

Affordable Care Act: Working with States to Protect Consumers

The Affordable Care Act establishes common-sense consumer protections and requires insurers to operate in a more transparent manner. Fair rules and transparency help create a more level playing field between consumers and insurers. The law also empowers States by putting them in the driver’s seat in implementing many of these new consumer protections.

On July 23, 2010, the Departments of Health and Human Services, Labor, and the Treasury issued an interim final rule regarding internal claims and appeals and external review processes for group health plans and health insurance issuers offering coverage in the group and individual markets. This rule works to give people in most plans better information about what their rights are and why their claims were denied or coverage rescinded. Under the rule, consumers have the:

*Right to information about why a claim or coverage has been denied. Health plans and insurance companies have to tell you why they’ve decided to deny a claim or chosen to end your coverage – and how you can appeal that decision.

*Right to appeal to the insurance company. If you’ve had a claim denied or had your coverage rescinded, you have the right to an internal appeals process, a process in which you ask your insurance company to conduct a full and fair review of its decision. If the case is urgent, your insurance company must speed up this process.

*Right to an independent review. Often, insurers and their policyholders can resolve disputes during the internal appeals process. If you can’t work it out through the internal appeals process, you now have the right to take your appeal to an independent third-party for review of the insurer’s decision. This is called “external review.” This way, the insurance company no longer gets the final say regarding your benefits, and patients and doctors get a greater measure of control over health care.

These protections and standards are an important step forward in reforming the health care system to make sure it works for consumers, not just insurance companies.

Amended IFR: State Flexibility and Transition to 2014

Today the Departments are amending the July 23, 2010 Interim Final Rule. Amendments to the IFR maintain the unprecedented consumer protections provided in the Affordable Care Act while reflecting comments from stakeholders and give States the flexibility they need to implement the law.

The July 2010 IFR set forth 16 minimum consumer protections based on the Uniform Health Carrier External Review Model Act written by the National Association of Insurance Commissioners (NAIC) that, if provided by a State external review process, will result in the States’ process applying in lieu of a Federal external review process.

Many States have made progress in meeting the minimum standards laid out in the July 23, 2010 IFR. To give States a reasonable opportunity to continue to implement these important consumer protections the amended IFR extends the transition period for State external review processes to January 1, 2012.

During the transition period (until January 1, 2012), at a minimum, plans and issuers are expected to follow their State laws and processes for external review in the States in which they are operating. Plans and issuers in States and territories where the HHS-administered Federal external review process already applies as of the date of this guidance are expected to continue their participation in the Federally-administered external review process until HHS determines otherwise.

In addition, separate guidance being issued contemporaneously with the publication of this amendment announces standards under which, until January 1, 2014, a State may operate an external review process under Federal standards similar to the required consumer protections outlined in the July 23, 2010 IFR. Under this guidance, if HHS determines that a State has neither implemented the required consumer protections nor implemented a process that meets the Federal standards that are similar to the required consumer protections, issuers in the State will have the choice of participating in either the HHS-administered external review process or contracting with accredited Independent Review Organizations. This guidance also phases in the use of multiple Independent Review Organizations for the plans that use them starting next year as a way of ensuring that the external review is unbiased.
HHS is adopting this approach to permit States to operate their external processes under standards established by the Secretary until January 1, 2014 to avoid unnecessary disruption while States work to adopt the consumer protections set forth in the July 2010 regulations. Starting in 2014, the appeals process will be more closely aligned across all types of plans.

Additional Amendments to the IFR:

The amended IFR released today includes details of all of the changes made from the original IFR. You can find the text of this amended IFR here.

Additional guidance issued contemporaneously with the publication of the amended IFR can be found here.

The filing in its entirety is here.

About Me

My photo
I'm the mom of a child with disabilities. Hannah's first neurologist said she might never develop beyond the level of a 2 month old infant, and there wasn't anything I could do about it. The brain damage was just too severe. Nine years later, she walks, uses a touchscreen computer and I've just been shown she can learn to construct sentences and do simple math with the right piece of technology. Along the way, I discovered I needed to teach myself what Hannah's rights to services really were. Learning about early intervention services led to reading about IDEA and then to EPSDT. I've been waiting for the Obama administration to realize the power and potential of EPSDT for the medical rights - including the right to stay at home with their families - of children with disabilities. The health reform people talk about long term care, and the disability people talk about education and employment, but nobody is talking about EPSDT. So I am.