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.

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About Me

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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.