This is what is implied every time a politician says they have to cut Medicaid services. Read the individual stories -- the biggest cuts are not affecting people who are poor or unemployed but the families caring for their children (of any age) with disabilities.
Our federal laws happen to give children and adults with disabilities the right not to be institutionalized. It is hard to imagine any set of laws more supportive of the basic values of the American family than one which ensures our children and our grandparents can continue to live at home. It's a set of laws that recognizes that the government has a responsibility to keep families together, since none but the very richest could ever afford to pay for what it takes on their own.
When politicians start talking about cutting services to these children and grandparents, they are ripping apart the very core of the family, forcing agonizing decisions between the heightened risk of death versus institutionalization.
The unnecessary pain, delays in medically necessary treatment, stress and basic indignities that are forced upon families caring for their children or grandparents with disabilities is inhumane. At the lowest level it involves an annual savings of $1500 in exchange for creating a bloody wound in a child's stomach twice a year.
At the highest level, children and, particularly, young adults with disabilities are being irretrievably harmed, and in some cases, killed. Death can come from a lack of transportation to dialysis treatments, sepsis from a lack of dental care, or a simple refusal to fill a doctor-ordered prescription. The worst deaths are the ones that come because families have tried so hard to avoid institutionalization, but simply can't match the intensity and type of care that has been taken away due to "budget cuts."
Too many of these "budget cuts" are resulting from the sixteen percent annual expansion in the privatization of Medicaid (and Medicare). That's the rate at which states are turning over their Medicaid services to private contractors like UnitedHealth, Wellcare, Wellpoint, Aetna, Humana and others. Instead of paying bills for actual services incurred, these plans make their profits off of getting paid a per capita rate from the state for every enrollee, and spending as little of it as possible.
In my opinion, the government waste of giving private Medicaid insurance companies more than $1.1 billion a month in profit is substantial and should be eliminated. Shareholders are benefiting while children are harmed.
Within the vast online community of parents caring for their children with disabilities, is is not uncommon to hear a mom talk of her child as a "blessing." Our children teach us lessons in patience and the importance of the little things in life on a daily basis, and many of us celebrate the fact our children will never come to learn jealousy, hatred, greed or envy.
So for all you politicians and health insurance executives who keep trying to cut Medicaid home services for my little girl and all the others like her: why won't you come out and tell me why you value their lives so little? Are we a culture that "throws away" those who are too old to contribute financially, or whose disabilities, whether from birth or accident, prevent them from living alone?
Sunday, January 30, 2011
Tuesday, January 25, 2011
Abercrombie wants to cut Medicaid services??????
I just posted this on Civil Beat, but wanted to share it here as well. I posted it in response to their article covering Governor Abercrombie's "State of the State" speech.
I am completely floored that Abercrombie would say "the rising cost of health care also requires that we cut back on benefits provided to Medicaid patients."
Why don't we stop paying out around $15 million a month in profits to UnitedHealth and Wellcare? Cutting budgets doesn't have to mean cutting services, when the middlemen are only spending eighty-four cents of every federal and state dollar they get, keeping the other sixteen for themselves.
Part of "the rising cost" is because both companies received another increase in their capitation rates in July.
When is Abercrombie going to notice any of the federal investigations going on over at Med-Quest? The DD Division of DOH already admitted a federal audit caught them at a form of Medicaid fraud.
And as long as state salaries are public, has the new DHS director thought about reducing Fink's salary back to that of his predecessor? On the other hand, I hear she was on one of his selection committees, so maybe not.
I am completely floored that Abercrombie would say "the rising cost of health care also requires that we cut back on benefits provided to Medicaid patients."
Why don't we stop paying out around $15 million a month in profits to UnitedHealth and Wellcare? Cutting budgets doesn't have to mean cutting services, when the middlemen are only spending eighty-four cents of every federal and state dollar they get, keeping the other sixteen for themselves.
Part of "the rising cost" is because both companies received another increase in their capitation rates in July.
When is Abercrombie going to notice any of the federal investigations going on over at Med-Quest? The DD Division of DOH already admitted a federal audit caught them at a form of Medicaid fraud.
And as long as state salaries are public, has the new DHS director thought about reducing Fink's salary back to that of his predecessor? On the other hand, I hear she was on one of his selection committees, so maybe not.
Sunday, January 23, 2011
UnitedHealth testifies under oath losing money in Hawaii
David Heywood, Executive Director of UnitedHealth's Medicaid and Medicare operations in Hawaii, testified recently in federal court that the company "has been losing money."
Huh?
This is the same company whose Medicaid revenues exploded by 93% between June 2008 and September 2010, at the same time Medicaid membership only increased by 45%.
This is the same company that just reported fourth quarter 2010 profit up ten percent, and their annual profit for 2010 up 21%.
This is the same company that presumably received the state increase in capitation payments as Wellcare on July 1, 2010.
Perhaps UnitedHealth defines "losing money" differently than the rest of the world.
The federal court case in question had been narrowed down over time to the issue of whether or not UnitedHealth and Wellcare provided the elderly and people with disabilities with the same access to medical care as enjoyed by the rest of Hawaii's Medicaid program. The two companies exclusively operate Hawaii's Medicaid program for the elderly and people with disabilities, called QExA.
The judge concluded his ruling with the comment that "plaintiffs have not established that the QExA program is in violation of any federal law." Narrowing the focus of the case obviously had an impact on that issue, since it is well-known that UnitedHealth and Evercare, along with Hawaii's Medicaid office, have been under federal investigation for criminal fraud and violation of numerous federal laws since the fall of 2009.
Huh?
This is the same company whose Medicaid revenues exploded by 93% between June 2008 and September 2010, at the same time Medicaid membership only increased by 45%.
This is the same company that just reported fourth quarter 2010 profit up ten percent, and their annual profit for 2010 up 21%.
This is the same company that presumably received the state increase in capitation payments as Wellcare on July 1, 2010.
Perhaps UnitedHealth defines "losing money" differently than the rest of the world.
The federal court case in question had been narrowed down over time to the issue of whether or not UnitedHealth and Wellcare provided the elderly and people with disabilities with the same access to medical care as enjoyed by the rest of Hawaii's Medicaid program. The two companies exclusively operate Hawaii's Medicaid program for the elderly and people with disabilities, called QExA.
The judge concluded his ruling with the comment that "plaintiffs have not established that the QExA program is in violation of any federal law." Narrowing the focus of the case obviously had an impact on that issue, since it is well-known that UnitedHealth and Evercare, along with Hawaii's Medicaid office, have been under federal investigation for criminal fraud and violation of numerous federal laws since the fall of 2009.
What can you buy with $1.1 billion a month?
Six insurance carriers are profiting $1.1 billion a month from their state and federal contracts for Medicaid and Medicare.
If that money wasn't going for company profits, what else could it pay for?
For one thing, it would provide somewhere between 142 to 228 hours a month of personal assistance services to every one of the 370,000 people currently on waiting lists for Medicaid home services.
As of October 1, 2010, the Affordable Care Act has given states the ability to do away with their waiting lists completely for Medicaid services by implementing what is called a Section 1915i waiver. The number refers to the section under Title XIX of the Social Security Act.
The problem is with corporate Medicaid taking over state contracts at an average growth rate of eleven percent in fifteen months, that $1.1 billion is just going to keep increasing, while the people on the waiting list continue waiting.
Do you think this is a good use of federal and state funds destined to help people with disabilities? If you don't, please take our poll and let your voice be heard.
If that money wasn't going for company profits, what else could it pay for?
For one thing, it would provide somewhere between 142 to 228 hours a month of personal assistance services to every one of the 370,000 people currently on waiting lists for Medicaid home services.
As of October 1, 2010, the Affordable Care Act has given states the ability to do away with their waiting lists completely for Medicaid services by implementing what is called a Section 1915i waiver. The number refers to the section under Title XIX of the Social Security Act.
The problem is with corporate Medicaid taking over state contracts at an average growth rate of eleven percent in fifteen months, that $1.1 billion is just going to keep increasing, while the people on the waiting list continue waiting.
Do you think this is a good use of federal and state funds destined to help people with disabilities? If you don't, please take our poll and let your voice be heard.
Hawaii Medicare Alert
A Kauai family says they were tricked by a UnitedHealth employee into changing their medically fragile son's Medicare plan, resulting in new pharmacy co-payments that did not exist previously.
According to complaints filed with Hawaii Department of Human Services, Leonard Cabral made an appointment to come to the family's home to discuss the son's Evercare Medicaid policy. As of December 2010, the son had yet to receive his Medicaid ID card from Evercare, apparently because his primary physician was not on UnitedHealth's provider list.
The "new Medicaid" card that arrived, however, was in fact a membership card for UnitedHealth's Medicare plan for Hawaii. The physician is on that provider list.
But when the family went to the pharmacy to pick up three essential medications their son has been taking all along, suddenly a co-payment was due that had never existed before. The family did not have the money to make the co-payment and so the son is without his life-saving medications.
Sources tell me that health insurance carriers like UnitedHealth get paid a premium for every Medicare patient they enroll. Cabral's apparent deception resulted in UnitedHealth getting the membership premium, and gaining a new monthly capitation fee from Medicare while keeping the existing capitation payment for their Medicaid program.
If this has happened to one family, it has likely happened to others. Medicare plans can be changed back to the original carrier, and complaints filed with federal Medicare authorities. The legality of UnitedHealth's actions in this care is being questioned.
According to complaints filed with Hawaii Department of Human Services, Leonard Cabral made an appointment to come to the family's home to discuss the son's Evercare Medicaid policy. As of December 2010, the son had yet to receive his Medicaid ID card from Evercare, apparently because his primary physician was not on UnitedHealth's provider list.
The "new Medicaid" card that arrived, however, was in fact a membership card for UnitedHealth's Medicare plan for Hawaii. The physician is on that provider list.
But when the family went to the pharmacy to pick up three essential medications their son has been taking all along, suddenly a co-payment was due that had never existed before. The family did not have the money to make the co-payment and so the son is without his life-saving medications.
Sources tell me that health insurance carriers like UnitedHealth get paid a premium for every Medicare patient they enroll. Cabral's apparent deception resulted in UnitedHealth getting the membership premium, and gaining a new monthly capitation fee from Medicare while keeping the existing capitation payment for their Medicaid program.
If this has happened to one family, it has likely happened to others. Medicare plans can be changed back to the original carrier, and complaints filed with federal Medicare authorities. The legality of UnitedHealth's actions in this care is being questioned.
Wednesday, January 19, 2011
Poll: Should private health insurance carriers be allowed to make profits from Medicaid and Medicare?
Every month, six private insurance carriers generate a $1.1 billion gross profit from government funds received on behalf of Medicaid and Medicare policyholders.
These are state and federal funds that were to be used for providing care for the elderly, children, and children as well as adults with disabilities. The profits are made, and increased (as quarterly SEC filings show) by cutting medical care and services, whether by suddenly denying longstanding prescriptions, reducing home medical supplies, or slashing the home care services that keep our children and grandparents at home with their families and not in institutions.
What do you think? Is this right? There is an alternative, that providers be non-profits, or rigidly monitor and enforce an MLR in the high nineties.
Please take our poll and let us know what you think!
These are state and federal funds that were to be used for providing care for the elderly, children, and children as well as adults with disabilities. The profits are made, and increased (as quarterly SEC filings show) by cutting medical care and services, whether by suddenly denying longstanding prescriptions, reducing home medical supplies, or slashing the home care services that keep our children and grandparents at home with their families and not in institutions.
What do you think? Is this right? There is an alternative, that providers be non-profits, or rigidly monitor and enforce an MLR in the high nineties.
Please take our poll and let us know what you think!
Monday, January 17, 2011
How Hawaii's change from a "bureaucratic nanny state" to a Medicaid "free enterprise solution" victimized my daughter.
My eleven year old daughter's only alternative to living with me is an intensive care unit at a hospital. Hannah has constant seizures when awake and asleep, any one of which can be life-threatening. She can walk around but is partly blind from brain damage. At home, she has learned her way around by the different colored walls. In an intensive care unit at a hospital she would have to be confined in a five-sided crib (four sides plus the top) made of metal bars, so she can't get out and hurt herself.
On February 1, 2009, Hawaii changed from a "bureaucratic nanny state" to a "free enterprise solution" to Medicaid. All forty-some thousand children and adults with disabilities, including the elderly, were forced to sign up for receiving their services from either UnitedHealth or Wellcare. My daughter has been signed up with UnitedHealth since then.
Here is how the "free enterprise solution" has managed Hannah's care. I am excerpting below from a complaint I filed with federal Medicaid regulators at CMS who have been investigating Hawaii's Medicaid program since the fall of 2009.
On February 1, 2009, Hawaii changed from a "bureaucratic nanny state" to a "free enterprise solution" to Medicaid. All forty-some thousand children and adults with disabilities, including the elderly, were forced to sign up for receiving their services from either UnitedHealth or Wellcare. My daughter has been signed up with UnitedHealth since then.
Here is how the "free enterprise solution" has managed Hannah's care. I am excerpting below from a complaint I filed with federal Medicaid regulators at CMS who have been investigating Hawaii's Medicaid program since the fall of 2009.
The dates in blue represent the commencement of the problem. You'll see that some issues have dragged on for months with no notice of action (NOA) from Evercare as required by Federal law. This would also apply to providers since they should be receiving NOAs for decreases (cuts) in services/Durable Medical Equipment/Medications. This is not occurring. NOAs provide the rights of the client and provider to appeal a decision, it also sets forth the decision for the denial. For monitoring purposes by the State and reports to CMS, this insures that trends (denials/NOA) are reviewed to insure that denials are justified (not just denied and not paid for by the insurance company). It also assists in detecting fraud by insurance companies (i.e. reporting services were provided when they were not for monthly capitation payments). If Evercare denies with no NOA it is not reported to the State of Hawaii and therefore there is no oversight of the Health Plan.
The most recent case with Dr. Fink [Hawaii state Medicaid Administrator] is an example of lack of adequate oversight. Instead of investigating the issue of not being provided an NOA, Fink's letter just regurgitated what was stated by Evercare. Under the 1115 waiver approval of the QExA health plans, following this process was key to insure that the rights of the most fragile/vulnerable population (aged, blind, and disabled) were not violated when these health plans took over FFS. If this is happening to my daughter and there is approximately 41,628 enrolled with the QExA health plans, how many other clients’ rights have been violated by decisions by health plans with no NOAs. This leads to how many clients have been harmed or injured by these on-going violations.
12/09/10
Denial on 12/08/10 of prescription for urgent medical supplies. No NOA issued. Resolved 12/10/10.
The Medicaid PR Machine
State officials and insurance company executives use misinformation against both the public and the feds.
1. CMS publishes lists of all the Medicaid waivers in each state, the name of the private provider, and the number of people serviced. For all of the programs managed under a capitation payment system, providers were identified as either a Commercial Managed Care Organization (CMCO) or a Medicaid Managed Care Organization. (MMCO).
The most recent complete list I had to work with was June 2009. CMS reported a total of 6.7 million people received their care from CMCOs, and another 5.7 million were enrolled in MMCOs.
I looked at the SEC quarterly filings for June 30, 2009, and just the six companies I was tracking reported 10 million Medicaid enrollees. Amerigroup, Molina, Wellcare and UnitedHealth all reported themselves as both CMCOs and MMCOs.
2. Somewhere along the line, the distinction between CMCOs and MMCOs has been blurred to the point that everything from the trade press to national news talks about "managed care" Medicaid as if has something to do with improved care. The term is essentially a replacement for "capitated payment plan", which has much more to do with profits than care.
Unless, of course, the provider company is a non-profit corporation. There are many non-profit Medicaid providers, or providers with MLRs over 90%. But this is not the segment of the industry that is growing.
3. The former State Medicaid Director of Alabama was recently quoted in the media saying
This is not a comparison of apples with apples, but more apples with aardvarks. If you look at the way DHHS used to report stimulus funds disbursements, you'll see through how many different funding streams each state received money. Money for maternal and child health care comes through different contracts and sources than the Medicaid funds to pay to keep children at home with their families. "Medicaid" is not some single pot of funds into which the feds donate money and the states spend it willy nilly for whatever they want.
The "societal question" is whether the state is going to spend $500,000 a year to keep that person home with their family, or $600,000 to lock them up in an institution. Either way, federal funds are reimbursing at least two-thirds of the cost.
The other question has to be why anyone in their right mind would dream of turning the contract to provide that $500,000 worth of medical services over to a company that will immediately skim $85,000 off the top by cutting services to the new policyholder.
4. The other side of the nomenclature issue occurs when state officials start talking about their health care budget deficits. I have found none that mentioned how much of the past deficit is due to profit payouts to insurance providers, or how much of the future deficit could be covered by eliminating the profit.
For instance, this article on the need for cuts in Hawaii's Medicaid program makes it sound as if all the insurance companies are equal, and everyone has approximately the same share of the population. In fact, just two companies, UnitedHealth (which goes as Evercare) and Wellcare (which is known as Ohana here) receive at least $1.2 billion of Hawaii's total annual Medicaid budget. The seventeen percent average net income from the MLR means about $204 million a year is going into the two sets of corporate pockets. In exchange they are supposed to be providing home care services to people who are too disabled to care for themselves.
Interestingly, during the time that the state cut payments to the smaller companies, they were reportedly continuing to make monthly payments to UnitedHealth and Wellcare.
1. CMS publishes lists of all the Medicaid waivers in each state, the name of the private provider, and the number of people serviced. For all of the programs managed under a capitation payment system, providers were identified as either a Commercial Managed Care Organization (CMCO) or a Medicaid Managed Care Organization. (MMCO).
The most recent complete list I had to work with was June 2009. CMS reported a total of 6.7 million people received their care from CMCOs, and another 5.7 million were enrolled in MMCOs.
I looked at the SEC quarterly filings for June 30, 2009, and just the six companies I was tracking reported 10 million Medicaid enrollees. Amerigroup, Molina, Wellcare and UnitedHealth all reported themselves as both CMCOs and MMCOs.
2. Somewhere along the line, the distinction between CMCOs and MMCOs has been blurred to the point that everything from the trade press to national news talks about "managed care" Medicaid as if has something to do with improved care. The term is essentially a replacement for "capitated payment plan", which has much more to do with profits than care.
Unless, of course, the provider company is a non-profit corporation. There are many non-profit Medicaid providers, or providers with MLRs over 90%. But this is not the segment of the industry that is growing.
3. The former State Medicaid Director of Alabama was recently quoted in the media saying
"We've got people asking us to do 24/7 at-home care," she says, "which means that we'll be paying $500,000 for one individual. And then you have to debate as a society is that what we want to do versus taking that $500,000 and spending it on prenatal care for 10,000 women. I mean it's a societal question, it's a conundrum almost."
This is not a comparison of apples with apples, but more apples with aardvarks. If you look at the way DHHS used to report stimulus funds disbursements, you'll see through how many different funding streams each state received money. Money for maternal and child health care comes through different contracts and sources than the Medicaid funds to pay to keep children at home with their families. "Medicaid" is not some single pot of funds into which the feds donate money and the states spend it willy nilly for whatever they want.
The "societal question" is whether the state is going to spend $500,000 a year to keep that person home with their family, or $600,000 to lock them up in an institution. Either way, federal funds are reimbursing at least two-thirds of the cost.
The other question has to be why anyone in their right mind would dream of turning the contract to provide that $500,000 worth of medical services over to a company that will immediately skim $85,000 off the top by cutting services to the new policyholder.
4. The other side of the nomenclature issue occurs when state officials start talking about their health care budget deficits. I have found none that mentioned how much of the past deficit is due to profit payouts to insurance providers, or how much of the future deficit could be covered by eliminating the profit.
For instance, this article on the need for cuts in Hawaii's Medicaid program makes it sound as if all the insurance companies are equal, and everyone has approximately the same share of the population. In fact, just two companies, UnitedHealth (which goes as Evercare) and Wellcare (which is known as Ohana here) receive at least $1.2 billion of Hawaii's total annual Medicaid budget. The seventeen percent average net income from the MLR means about $204 million a year is going into the two sets of corporate pockets. In exchange they are supposed to be providing home care services to people who are too disabled to care for themselves.
Interestingly, during the time that the state cut payments to the smaller companies, they were reportedly continuing to make monthly payments to UnitedHealth and Wellcare.
Tracking the corporate penetration of Medicaid 1997 - 2010
I've put together as a collection the documentation I used to track corporate expansion into Medicaid.
There are SEC filings for Amerigroup, Centene, Molina, Wellcare, Wellpoint and UnitedHealth between June 2008 and September 2010. These filings are also interested to read in terms of their reporting on ongoing criminal and/or civil litigation.
Trade press articles lauding the profitability of Medicaid go back to 1997. Reports have been coming out fairly regularly since March 2009 on the great growth potential of the sector.
There are SEC filings for Amerigroup, Centene, Molina, Wellcare, Wellpoint and UnitedHealth between June 2008 and September 2010. These filings are also interested to read in terms of their reporting on ongoing criminal and/or civil litigation.
Trade press articles lauding the profitability of Medicaid go back to 1997. Reports have been coming out fairly regularly since March 2009 on the great growth potential of the sector.
Sunday, January 16, 2011
The Medicaid Money Machine: Is it creating a corporate criminal culture?
The link between well-publicized Medicaid cuts, state budget deficits, criminal Medicaid fraud and the corporate penetration of Medicaid (and Medicare) has gone largely unnoticed. There are further correlations between corporate expansion into Medicaid, and November’s congressional races where Republicans ousted sitting Democrats with the help of more than $54 million in “outside” contributions. Eighty-five percent of those funds were spent in states with corporate Medicaid operations owned by one of six companies.
Forty-one of these turnovers (or 61%) were in states with pending or recent federal investigations into either criminal Medicaid fraud or violations of the civil right of people with disabilities not to be segregated into institutions.
Eight companies in Florida were recently ordered to pay the state back $6.8 million in Medicaid funds. As best I can tell, they all retained their contracts. One Florida-based company, Wellcare, paid Florida $80 million in May 2009 for Medicaid fraud and this summer tried to settle a criminal fraud whistleblower suit in Florida for another $137 million. Wellcare’s third quarter 2010 Medicaid revenues were up five percent even though Medicaid membership was down one percent.
Florida’s new Republican governor was the co-founder and CEO of a healthcare company that pled guilty to criminal fraud charges during his tenure. This still holds a national record for the largest Medicare settlement, paying more than $1.7 billion in fines, damages and penalties.
Is there a growing criminal corporate culture where defrauding state and Federal governments isn’t just accepted, it’s rewarded with more contracts?
If there is, it’s a culture that threatens to tear apart families at their very core, taking children from their parents, and grandparents from their children.
Who is buying Medicaid
As of September 30, 2010, more than eleven million people on Medicaid were receiving their medical care through state contracts with just six publicly traded corporations. In the previous fifteen months, corporate penetration into Medicaid for “the six” was up eleven percent while Medicaid revenue shot up twenty percent.
UnitedHealth Group, Amerigroup, Wellpoint, Wellcare, Centene and Molina (“the six”) together control almost twenty percent of the national Medicaid market. The six received a total of $19.6 billion in the third quarter of 2010 from states and the Federal government for policyholders on Medicaid or Medicare.
Market-share leader UnitedHealth (with 3.235 million Medicaid policyholders) experienced a 20% increase in Medicaid enrollment between June 30, 2009 and September 30, 2010, at the same time that commercial membership was stagnant. During the same period, the company’s gross Medicaid revenue increased 35%, and total net earnings were up 49%.
Amerigroup, 99% of whose membership is Medicaid, commented in their 2009 SEC filing that just a single state contract (with Texas) “represented approximately 25.0% of premium revenues and a significantly higher percentage of our net income.”
Wellcare’s small group contract in Hawaii represents less than two percent of the company’s total Medicaid membership but generated 18% of their Medicaid revenues, as of June 30, 2009. New rate increases went into effect in July 1 2010 per the company third quarter 2010 SEC filing, which the company credited for having “improved the stability of the program.”
UnitedHealth’s Hawaii program represents less than one percent of the corporation’s Medicaid enrollees but generates almost six percent of its Medicaid revenue.
The Medicaid market is obviously lucrative. In order to understand why it is so profitable we have to understand the new Medicaid math.
The New Medicaid Math
Back in the old days, before Medicaid became privately owned, states paid the bills for people enrolled in Medicaid as they came in. The state Medicaid apparatus created lots of local jobs, but the point was that that bills paid were actual bills incurred.
That is not how it works now.
Over the past years, the insurance companies have sold the states on the idea that hiring them will save the states money in both the long and short term. They will provide managed, coordinated care, for which the state will pay them on an individually calculated flat per capita rate.
These “per person per month” rates can range anywhere from a few hundred dollars to as high as $30,000 per person per month (for a medically fragile child). They are called “capitation payments” since they are based per capita. The insurance company receives the cumulative total of all those individually allocated amounts once a month. It comes as a check from the state, but at least two-thirds of that money represents Federal stimulus funds that were given to the state to pay for increased Medicaid costs.
Medicare capitation checks come directly from the Federal government (CMS) and can range $3,000 to $5,000 per month per person easily.
The issue that makes these capitation payments a political hot potato is how much of each individually calculated fee paid by the state actually needs to be spent on that particular policyholder’s medical care.
The Medical Loss Ratio
The Medical Loss Ratio, also known as the Medical Benefits Ratio or the Health Benefits Ratio, is the percent of the monthly insurance premium that is actually spent on health benefits for the policyholder. Companies report their MLRs to the SEC as a consolidated company-wide average.
Part of the Affordable Care Act was a requirement that MLRs be calculated per individual policyholder. If a certain limit is not met, the company would have to reimburse the policyholder the difference.
In late November DHHS released potential regulations to implement minimum MLRs of 80% for small commercial groups, and 85% for large commercial groups. Last May, an Oppenheimer analyst had already calculated that if these regulations had been in effect in 2009, UnitedHealth alone would have owed commercial policyholders $867 million in rebates.
The Oppenheimer study looked at state insurance records as well as SEC filings. They found that average MLRs differed widely across the country: two different Wellpoint subsidiaries in Colorado spent only 33.2 percent and 53 percent respectively on actual patient care. A UnitedHealth program had an average MLR of about 63 percent.
In July 2010, it was reported that UnitedHealth, Wellpoint, Aetna, Cigna and Humana were talking about bankrolling upcoming elections to the tune of about $20 million.
The issue of the MLR, whether those 80 and 85% figures will hold or slide, and what the insurance companies will be allowed to count in calculating those figures, is part of what they were paying to influence.
It Gets Worse
All the hubbub right now over the MLR is focused on commercial policies. States can set their own MLRs in Medicaid service contracts, and federal regulators assume that the states are monitoring their corporate partners for compliance. This may be premature.
For instance, Florida required Medicaid contractors for a single behavioral health program to have an MLR of 80%. Audits found the highest MLR at any of the eight contractors (including Amerigroup and Humana) was 66% at Humana.
Reading the whistleblower report filed by a former Wellcare employee helps to connect the dots between capitation payments, MLRs and criminal Medicaid fraud.
Sean Hellein’s False Claims Act complaint was filed against eight companies, including Wellcare, UnitedHealth, Amerigroup and Humana. It details how the companies “cooperate with each other by consciously making the same false claims” to state Medicaid offices. Hellein told a reporter that “each uses a different technique for hiding the overcharges to make it harder for the state to catch on”.
Hellein’s complaint was also filed in Illinois, Indiana, Louisiana, New York, Georgia and Hawaii, where, according to Hellein, similar criminal Medicaid fraud schemes are being perpetrated by the named companies. When Wellcare floated the idea of the $137 million settlement, Hellein said the actual damages were closer to $400-600 million.
Controlling Congress is going to help keep that issue under wraps as well.
Who are the victims
In 2009, seventy-two percent of people enrolled in Medicaid were there because they had special health needs due either to age or disability. Forty-eight percent alone, more than 31 million, were children. Just under fifteen percent (9.5 million) were on Medicaid because their disabilities are too severe to enable them to care for themselves.
The growing trend over the past year has been for states to “carve out” Medicaid coverage for their “aged, blind and disabled” (ABD) population, and put it out to bid for private contractors. As far back as May 2009 at least forty states were considering moving their ABD populations into contracts to be auctioned off to the lowest bidders.
These are the juiciest of all the Medicaid contracts, where capitation rates can range as high as $30,000 a month for a medically fragile child. The child’s only option is to be institutionalized in a hospital, which will likely cost the state closer to $50,000 a month. A good percentage of that $30,000 every month goes to creating local jobs for the personal care assistants, CNAs and skilled nurses who care for the child so she can remain at home with her family.
The problem is that the child’s nursing cost $30,000 a month before the contract was turned into a profit stream. In order for the company to maintain its standard 80%-odd MLR, it must cut the child’s services by twenty percent.
In plain English: If a state has a Medicaid pie of $1 billion, and they turn that pie over to any one of the six companies I’ve focused on, the pie is still the same size. It’s just that now at least seventeen percent has been subtracted to cover corporate profits.
I mentioned earlier that the six companies received $19.6 billion between July and September 2010 from state governments and CMS to cover Medicaid and Medicare policyholders.
Reporting average MLRs ranging from 80.1 % to 86.9% translates into at least $3.3 billion skimmed off the top as operating profit in that three-month period.
That $1.1 billion a month came from cutting services. (Cutting services also means cutting local jobs, but I have not found good figures on that yet).
Anything the company may skim by reporting false expenditures is just the frosting on the cake.
Why this is tearing families apart at their core
One of the new Republican congressmen from Florida recently told NPR that “we can't focus on building the bureaucratic nanny state if we're going to pull out of this debt and deficit.” He went on to recommend the “free market, free enterprise solutions that we can look to reform our health care system.”
Florida’s “free market, free enterprise solutions” to Medicaid are apparently riddled with criminal fraud, and have been for years.
As for the concept that we are a “nanny state”, as the parent of a child with severe disabilities I am highly incensed.
We are talking a “nanny state” where sick children, disabled children of all ages and the elderly are given the medical assistance they need to be able to live at home with their families. Only the extreme rich could ever hope to pay for these things themselves, and the alternative is to rip people from their families and herd them into institutions. There the government would pay even more for their upkeep, but at least we would not have a “nanny state.”
Hawaii’s ABD population was turned over to a “free enterprise” solution in February 2009. The death rate increased 35% in the first year after UnitedHealth and Wellcare replaced our “nanny state.”
In fact, Hawaii’s Medicaid program has been under federal criminal investigation in one form or another since the fall of 2009. The Department of Health recently admitted to Medicaid fraud in their Developmental Disability Division. Rumor has it that Hawaii Medicaid bureaucrats actually ordained they were above federal law last year, so they wouldn’t have to keep track of complaints filed against UnitedHealth and Wellcare.
Hawaii’s former Director of the Department of Human Services, Lillian Koller, was instrumental in helping former Republican Governor Linda Lingle fashion Hawaii’s free enterprise solution to the nanny state. She has now gone to work for South Carolina’s new Republican governor. South Carolina recently auctioned off its Medicaid disability and children’s health contracts to Centene.
South Carolina is one of only two states (the other being Tennessee) that already had 100% of its Medicaid population enrolled in capitated payment type programs.
And so the culture of criminal Medicaid fraud spreads insidiously, with no one paying real attention. As the House tries to vote away healthcare reform next week, we can watch as any form of control over this rampant corporate greed at any cost is legislated away.
Forty-one of these turnovers (or 61%) were in states with pending or recent federal investigations into either criminal Medicaid fraud or violations of the civil right of people with disabilities not to be segregated into institutions.
Eight companies in Florida were recently ordered to pay the state back $6.8 million in Medicaid funds. As best I can tell, they all retained their contracts. One Florida-based company, Wellcare, paid Florida $80 million in May 2009 for Medicaid fraud and this summer tried to settle a criminal fraud whistleblower suit in Florida for another $137 million. Wellcare’s third quarter 2010 Medicaid revenues were up five percent even though Medicaid membership was down one percent.
Florida’s new Republican governor was the co-founder and CEO of a healthcare company that pled guilty to criminal fraud charges during his tenure. This still holds a national record for the largest Medicare settlement, paying more than $1.7 billion in fines, damages and penalties.
Is there a growing criminal corporate culture where defrauding state and Federal governments isn’t just accepted, it’s rewarded with more contracts?
If there is, it’s a culture that threatens to tear apart families at their very core, taking children from their parents, and grandparents from their children.
Who is buying Medicaid
As of September 30, 2010, more than eleven million people on Medicaid were receiving their medical care through state contracts with just six publicly traded corporations. In the previous fifteen months, corporate penetration into Medicaid for “the six” was up eleven percent while Medicaid revenue shot up twenty percent.
UnitedHealth Group, Amerigroup, Wellpoint, Wellcare, Centene and Molina (“the six”) together control almost twenty percent of the national Medicaid market. The six received a total of $19.6 billion in the third quarter of 2010 from states and the Federal government for policyholders on Medicaid or Medicare.
Market-share leader UnitedHealth (with 3.235 million Medicaid policyholders) experienced a 20% increase in Medicaid enrollment between June 30, 2009 and September 30, 2010, at the same time that commercial membership was stagnant. During the same period, the company’s gross Medicaid revenue increased 35%, and total net earnings were up 49%.
Amerigroup, 99% of whose membership is Medicaid, commented in their 2009 SEC filing that just a single state contract (with Texas) “represented approximately 25.0% of premium revenues and a significantly higher percentage of our net income.”
Wellcare’s small group contract in Hawaii represents less than two percent of the company’s total Medicaid membership but generated 18% of their Medicaid revenues, as of June 30, 2009. New rate increases went into effect in July 1 2010 per the company third quarter 2010 SEC filing, which the company credited for having “improved the stability of the program.”
UnitedHealth’s Hawaii program represents less than one percent of the corporation’s Medicaid enrollees but generates almost six percent of its Medicaid revenue.
The Medicaid market is obviously lucrative. In order to understand why it is so profitable we have to understand the new Medicaid math.
The New Medicaid Math
Back in the old days, before Medicaid became privately owned, states paid the bills for people enrolled in Medicaid as they came in. The state Medicaid apparatus created lots of local jobs, but the point was that that bills paid were actual bills incurred.
That is not how it works now.
Over the past years, the insurance companies have sold the states on the idea that hiring them will save the states money in both the long and short term. They will provide managed, coordinated care, for which the state will pay them on an individually calculated flat per capita rate.
These “per person per month” rates can range anywhere from a few hundred dollars to as high as $30,000 per person per month (for a medically fragile child). They are called “capitation payments” since they are based per capita. The insurance company receives the cumulative total of all those individually allocated amounts once a month. It comes as a check from the state, but at least two-thirds of that money represents Federal stimulus funds that were given to the state to pay for increased Medicaid costs.
Medicare capitation checks come directly from the Federal government (CMS) and can range $3,000 to $5,000 per month per person easily.
The issue that makes these capitation payments a political hot potato is how much of each individually calculated fee paid by the state actually needs to be spent on that particular policyholder’s medical care.
The Medical Loss Ratio
The Medical Loss Ratio, also known as the Medical Benefits Ratio or the Health Benefits Ratio, is the percent of the monthly insurance premium that is actually spent on health benefits for the policyholder. Companies report their MLRs to the SEC as a consolidated company-wide average.
Part of the Affordable Care Act was a requirement that MLRs be calculated per individual policyholder. If a certain limit is not met, the company would have to reimburse the policyholder the difference.
In late November DHHS released potential regulations to implement minimum MLRs of 80% for small commercial groups, and 85% for large commercial groups. Last May, an Oppenheimer analyst had already calculated that if these regulations had been in effect in 2009, UnitedHealth alone would have owed commercial policyholders $867 million in rebates.
The Oppenheimer study looked at state insurance records as well as SEC filings. They found that average MLRs differed widely across the country: two different Wellpoint subsidiaries in Colorado spent only 33.2 percent and 53 percent respectively on actual patient care. A UnitedHealth program had an average MLR of about 63 percent.
In July 2010, it was reported that UnitedHealth, Wellpoint, Aetna, Cigna and Humana were talking about bankrolling upcoming elections to the tune of about $20 million.
Overall, the insurers are expected to focus on swaying about two dozen close House contests, says one source. The insurers’ goal will be to help elect members who can be allies in the all important regulatory writing process now underway to implement key parts of the health care legislation that was signed into law earlier this year.
The issue of the MLR, whether those 80 and 85% figures will hold or slide, and what the insurance companies will be allowed to count in calculating those figures, is part of what they were paying to influence.
It Gets Worse
All the hubbub right now over the MLR is focused on commercial policies. States can set their own MLRs in Medicaid service contracts, and federal regulators assume that the states are monitoring their corporate partners for compliance. This may be premature.
For instance, Florida required Medicaid contractors for a single behavioral health program to have an MLR of 80%. Audits found the highest MLR at any of the eight contractors (including Amerigroup and Humana) was 66% at Humana.
Reading the whistleblower report filed by a former Wellcare employee helps to connect the dots between capitation payments, MLRs and criminal Medicaid fraud.
Sean Hellein’s False Claims Act complaint was filed against eight companies, including Wellcare, UnitedHealth, Amerigroup and Humana. It details how the companies “cooperate with each other by consciously making the same false claims” to state Medicaid offices. Hellein told a reporter that “each uses a different technique for hiding the overcharges to make it harder for the state to catch on”.
Hellein’s complaint was also filed in Illinois, Indiana, Louisiana, New York, Georgia and Hawaii, where, according to Hellein, similar criminal Medicaid fraud schemes are being perpetrated by the named companies. When Wellcare floated the idea of the $137 million settlement, Hellein said the actual damages were closer to $400-600 million.
Controlling Congress is going to help keep that issue under wraps as well.
Who are the victims
In 2009, seventy-two percent of people enrolled in Medicaid were there because they had special health needs due either to age or disability. Forty-eight percent alone, more than 31 million, were children. Just under fifteen percent (9.5 million) were on Medicaid because their disabilities are too severe to enable them to care for themselves.
The growing trend over the past year has been for states to “carve out” Medicaid coverage for their “aged, blind and disabled” (ABD) population, and put it out to bid for private contractors. As far back as May 2009 at least forty states were considering moving their ABD populations into contracts to be auctioned off to the lowest bidders.
These are the juiciest of all the Medicaid contracts, where capitation rates can range as high as $30,000 a month for a medically fragile child. The child’s only option is to be institutionalized in a hospital, which will likely cost the state closer to $50,000 a month. A good percentage of that $30,000 every month goes to creating local jobs for the personal care assistants, CNAs and skilled nurses who care for the child so she can remain at home with her family.
The problem is that the child’s nursing cost $30,000 a month before the contract was turned into a profit stream. In order for the company to maintain its standard 80%-odd MLR, it must cut the child’s services by twenty percent.
In plain English: If a state has a Medicaid pie of $1 billion, and they turn that pie over to any one of the six companies I’ve focused on, the pie is still the same size. It’s just that now at least seventeen percent has been subtracted to cover corporate profits.
I mentioned earlier that the six companies received $19.6 billion between July and September 2010 from state governments and CMS to cover Medicaid and Medicare policyholders.
Reporting average MLRs ranging from 80.1 % to 86.9% translates into at least $3.3 billion skimmed off the top as operating profit in that three-month period.
That $1.1 billion a month came from cutting services. (Cutting services also means cutting local jobs, but I have not found good figures on that yet).
Anything the company may skim by reporting false expenditures is just the frosting on the cake.
Why this is tearing families apart at their core
One of the new Republican congressmen from Florida recently told NPR that “we can't focus on building the bureaucratic nanny state if we're going to pull out of this debt and deficit.” He went on to recommend the “free market, free enterprise solutions that we can look to reform our health care system.”
Florida’s “free market, free enterprise solutions” to Medicaid are apparently riddled with criminal fraud, and have been for years.
As for the concept that we are a “nanny state”, as the parent of a child with severe disabilities I am highly incensed.
We are talking a “nanny state” where sick children, disabled children of all ages and the elderly are given the medical assistance they need to be able to live at home with their families. Only the extreme rich could ever hope to pay for these things themselves, and the alternative is to rip people from their families and herd them into institutions. There the government would pay even more for their upkeep, but at least we would not have a “nanny state.”
Hawaii’s ABD population was turned over to a “free enterprise” solution in February 2009. The death rate increased 35% in the first year after UnitedHealth and Wellcare replaced our “nanny state.”
In fact, Hawaii’s Medicaid program has been under federal criminal investigation in one form or another since the fall of 2009. The Department of Health recently admitted to Medicaid fraud in their Developmental Disability Division. Rumor has it that Hawaii Medicaid bureaucrats actually ordained they were above federal law last year, so they wouldn’t have to keep track of complaints filed against UnitedHealth and Wellcare.
Hawaii’s former Director of the Department of Human Services, Lillian Koller, was instrumental in helping former Republican Governor Linda Lingle fashion Hawaii’s free enterprise solution to the nanny state. She has now gone to work for South Carolina’s new Republican governor. South Carolina recently auctioned off its Medicaid disability and children’s health contracts to Centene.
South Carolina is one of only two states (the other being Tennessee) that already had 100% of its Medicaid population enrolled in capitated payment type programs.
And so the culture of criminal Medicaid fraud spreads insidiously, with no one paying real attention. As the House tries to vote away healthcare reform next week, we can watch as any form of control over this rampant corporate greed at any cost is legislated away.
Friday, January 7, 2011
Alert for Hawaii Evercare members
Evercare in Hawaii welcomed the new year for some Hawaii families by giving them only four days notice that home nursing services were being cut.
The victims are the families of our state's most vulnerable population: children and adults who would otherwise be locked up in institutions due to their disabilities, whether from birth, age or accident.
According to the evidence I've seen, Evercare dated the letters December 27 (Monday), and families received the letters on December 28 (Tuesday). Service providers also received notice on December 28, including the schedule showing that cuts would begin to go into effect on January 1.
Evercare told the families they could call or write (to Tampa, Florida) to appeal the decision. In at least one case I am aware of, the January 1 service cuts were implemented even though a family had telephoned in their appeal and specifically asked for services to remain in place. (That was one requirement of several imposed by the letter: that if you didn't ask specifically for your existing services to remain in place during your appeal, they wouldn't.)
The Evercare letter stated that existing services would only remain in place if five conditions were met, one of which was the appeal was filed within ten calendar days of the date on the letter (December 27). Unfortunately, that conflicts with the thirty day time period recipients were given to file an appeal,
Families who have not yet filed appeals need to do so as quickly as possible. I would recommend emailing or faxing them to your Evercare service provider if possible, in addition to mailing it to Florida. You need to be able to have a record that the company received your appeal.
If cuts have already gone into effect, you can ask for an expedited appeal on the basis that your loved one's health and safety at home are being endangered.
Once you have your appeal in place, you might want to think about enlisting your doctor's help in getting the services back, or even getting them increased if that is what is medically necessary.
I wrote an article on my other blog about letters of medical necessity and how to file them. Here is Evercare's prior authorization request form that the doctor must fill out, and fax, with the letter, to the fax number on the top.
The victims are the families of our state's most vulnerable population: children and adults who would otherwise be locked up in institutions due to their disabilities, whether from birth, age or accident.
According to the evidence I've seen, Evercare dated the letters December 27 (Monday), and families received the letters on December 28 (Tuesday). Service providers also received notice on December 28, including the schedule showing that cuts would begin to go into effect on January 1.
Evercare told the families they could call or write (to Tampa, Florida) to appeal the decision. In at least one case I am aware of, the January 1 service cuts were implemented even though a family had telephoned in their appeal and specifically asked for services to remain in place. (That was one requirement of several imposed by the letter: that if you didn't ask specifically for your existing services to remain in place during your appeal, they wouldn't.)
The Evercare letter stated that existing services would only remain in place if five conditions were met, one of which was the appeal was filed within ten calendar days of the date on the letter (December 27). Unfortunately, that conflicts with the thirty day time period recipients were given to file an appeal,
Families who have not yet filed appeals need to do so as quickly as possible. I would recommend emailing or faxing them to your Evercare service provider if possible, in addition to mailing it to Florida. You need to be able to have a record that the company received your appeal.
If cuts have already gone into effect, you can ask for an expedited appeal on the basis that your loved one's health and safety at home are being endangered.
Once you have your appeal in place, you might want to think about enlisting your doctor's help in getting the services back, or even getting them increased if that is what is medically necessary.
I wrote an article on my other blog about letters of medical necessity and how to file them. Here is Evercare's prior authorization request form that the doctor must fill out, and fax, with the letter, to the fax number on the top.
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About Me
- Disability Mom
- 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.
