SB 1274 and the Governor's attitude towards insurance companies

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Civil Beat this morning published an interview they did with Governor Abercrombie on Friday. Abercrombie is somewhat fixated on AARP, and threatens to "roll over" them if they try to oppose his pension tax proposal next time. His biggest beef with the association is that they are just a front for insurance companies.

I responded, and since it has to do with SB 1274, I want to put my questions out to the public.

I'm floored by the incredible irony of Abercrombie's statement about AARP, that "This is when your special interest becomes a private interest at the expense of the public interest." AARP is bad because they are an insurance company, but that attitude apparently doesn't spare him from playing nicey-nice with actual insurance companies like Unitedhealth and Wellcare.

The governor is putting business with crooks ahead of the public interest. Florida is trying to recover millions in stolen Medicaid funds destined for children's programs from both companies.

But SB 1974 will accomplish nothing other than saving these two corporations potentially millions of dollars in legal fees. With no outside challenges to their medical decisions, they save the money on the services as well as the fees. When it looked like SB 1274 was going to be made retroactive, Rafael del Castillo calculated it would save Unitedhealth about $500,000 in legal fees, just for five months of case work.

The Office for Civil Rights at DHHS just opened at least its fifth investigation in Hawaii since February 2010. All five have been over Medicaid cuts in services to children with disabilities, cuts that put these children at risk of institutionalization. Two cases were closed with decisions in favor the children last summer. All of the cases involved either Evercare/Unitedhealth or Ohana/Wellcare.

Of course, the way Hawaii's contracts with Evercare and Ohana are written, they get a bigger capitation payment every month if the child is institutionalized.

Given Hawaii's role in the recent federal Medicaid fraud settlement with Wellcare, the Governor owes the public an explanation of how his office could support legislation that helps companies that hurt children. That, too, seems to exemplify "when your special interest becomes a private interest at the expense of the public interest."

Would you hire a pedophile as a babysitter? Why do we hire companies who hurt children and their families to provide them with this kind of care?

Hawaii DD Division apparently admits to defrauding federal government and state taxpayers

According to a November 16 letter from the Hawaii Department of Health's Developmental Disabilities Division, the program has apparently been caught by federal authorities defrauding Medicaid.  The DD division established new reporting guidelines that went into effect on December 1, and the letter emphatically tells recipients to comply with ongoing federal and state audits.

The news was quietly inserted into a letter that went out to DD waiver participants and providers with a headline of "documentation requirements" that was a bit misleading.

The Fray letter states "as a result of the recent Payment Error Rate Measurement audit conducted by CMS, the Med-QUEST Division is implementing new documentation requirements for PAB services."

Last April I reported that CMS was unable to deny rumors that Hawaii's Payment Error Rate Measurement could be as high as fifty percent (it's legally supposed to be between three and five percent).  

(paraphrased from then)  What would a 50% Medicaid payment error rate mean?  It could mean that half of all Medicaid claims are paid twice:  once by either Evercare or Ohana through their capitation payments, and the second time by Medicaid's fee for service program.

Here is how it might happen:

1.  ACS, as the fiscal agent for Hawaii's fee-for-service Medicaid program, charges a fee for every claim they submit.

2.  Hawaii receives matching funds from the federal government to pay these fees for ACS's services, just as they do for the state's aged and disabled program operated by Evercare and Ohana.

3.  ACS could be billing the state for claims incurred by patients served by Evercare and Ohana.

4.  ACS would then be receiving federal (and state) funds for claims that are the responsibility of Evercare and Ohana and which are included in the calculations for the monthly per person payments (capitation payment) they receive.  Evercare (UnitedHealth) and Ohana (Wellcare) are retaining their full capitation payments, hence the double payments.

What that means for Hawaii is that suddenly our Medicaid budget could be half of what it should be.  For example, since the state's total Medicaid budget for FY2010 is about $1.4 billion, then suddenly the state might have only $700 million to spend.

Out of that comes the fifteen-to-twenty percent net operating profit UnitedHealth and Wellcare skim off the top of their state capitation fee payments.  That's at least another $92,000,000. 

So from the original annual budget of about $1.4 billion,  only about $608 million is left to spend on actual services for Hawaii's Medicaid population.

When services are cut, the Medicaid profits aren't cut, and the capitation fees not only are not reduced, at least here in Hawaii they've been increased several times by means of "contract amendments".    The Medicaid company cries poor and that it is a victim of rising medical costs, to justify increases in the capitation fees paid by the states.

This is why Hawaii's Medicaid waiver program for our aged and disabled population experienced a thirty-six percent increase in the death rate of participants within its first year of operation.

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

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

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

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

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

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