Tracking Wall Street's takeover of Medicaid and Medicare

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I've been tracking nine companies expansion into Medicaid and Medicare since 2009, and some as far back as June 2008. The information is taken from their quarterly and annual SEC filings.

The nine companies tracked were Aetna, Amerigroup, Centene, Coventry, Humana, Molina, Wellcare, Wellpoint and UnitedHealth Group. Federal Medicare and State Medicaid contract business generated more than $111 billion in 2010 premium revenues to these nine companies.

A health Insurance company's standing on Wall Street and with its stockholders is based on keeping an important business indicator as low as possible. Called the Medical Loss Ratio (MLR), it stands for the percentage of each monthly insurance premium received that is spent on actual medical costs. These nine companies reported MLRs between 79.4% (Coventry) and 87.5% (Aetna). That means they saved shareholders almost $20 billion in operating profit from Medicaid and Medicare premiums.

State and federal contracts pay the companies based on intricate risk levels calculated for each individual "policyholder." They may be paid $5,000 a month for a senior citizen, $12,000 a month for my daughter, or as much as $29,000 a month for someone meeting the highest risk criteria.

When a state-operated Medicaid program that pays actual bills (called fee for service) is suddenly replaced by for-profit "managed care" plans, each "policyholder's" individual budget has to be cut by that 13% to 20% margin that now goes straight to company bank accounts.

Most Medicaid contracts either do not stipulate an MLR, or when they do, companies can easily defraud Medicaid by pumping expenses. The Affordable Care Act was supposed to be imposing an 85% MLR on Medicare and 80% or 85% on employer-paid policies. An Oppenheimer analyst calculated six companies alone (UnitedHealth, Aetna, Cigna, Coventry, Wellpoint and Humana) would have owed about $1.9 billion in rebates just to commercial and individual policyholders.

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.

A Florida investigation into a single Medicaid contract that actually stipulated an 80% MLR found all eight Medicaid HMO providers (including Wellcare, Amerigroup, and Humana) owed the state refunds.

The lower the MLR, the more medical services are cut.

Back in January, the Children's Disability Rights Education Association launched two surveys to gather information on how well states are following federal Medicaid regulations specifically directed to protecting children with disabilities. While the initial survey sample is small (41), its unanimity is glaring: all 41 respondents (forty of them family and caregivers), coming from 19 states, have been the victim of one illegal Medicaid action or another.

This is what happens when profit-based companies take over Medicaid contracts and have to slash services to please stockholders and Wall Street.

CDREA's article on the survey details the impact on family life that these anonymous financial decisions can have.

If you believe that life and death medical decisions for medically fragile children, the elderly, and adults with disabilities should not be made by for-profit health insurance companies, please sign our petition.

If you believe federal and state tax dollars destined to provide care for the elderly, and children as well as adults with disabilities should not be diverted to private corporate CEO salaries and profits, please sign our petition.

UnitedHealth, Wellcare and Hawaii Senate Bill 1274: a true Wall Street romance

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Hawaii SB 1274 remains alive, along with its assault on the health care rights of almost everyone with employer-paid or Medicaid insurance. Raphael Del Castillo sent out this information at 4 am today:

I just came from the decision making by the House Comm on Finance, which passed SB1274 on with amendments. It was disappointing and frustrating. Health chair Ryan Yamane came to tell the committee that they were waiting for “language” to preserve the consumer protections in our existing law, but have not received any (my language recommendations don’t count – who knows, make up your own reasons). They are waiting on the Insurance Commissioner and the Abercrombie Administration. THERE ISN’T GOING TO BE ANY LANGUAGE FROM THE COMMISSIONER. IF HE DOES NOT SUBMIT ANY, THEY WILL PASS THE BILL AS IT STANDS, SO WHY WOULD HE SUBMIT ANY?

MORE ALARMING STILL IS THE FACT THAT NO LEGISLATOR HAS YET RESPONDED TO THE OBJECTIONS TO THE EXCLUSION OF MEDICAID MEMBERS FROM THE EXTERNAL REVIEW. THEY ARE NOT LISTENING TO ME. NEVERCARE IS A LOT RICHER.

MEDICAID MEMBERS, THIS MEANS THAT IF YOU DO NOT PROTEST, YOU WILL LOSE YOUR RIGHTS NO MATTER WHAT HAPPENS (UNLESS THE BILL IS KILLED).

Del Castillo is asking for an immediate email campaign to President Obama.

sit down and send an email to the President, president@whitehouse.gov (with cc: to all of the addresses below) asking him the following two things: Why is the Obama Administration conspiring with health insurers

1. To DENY Hawaii consumers their long-established protections?
2. To DEPRIVE the poorest and most vulnerable of Hawaii’s people of the protections they now have against the richest health insurance company in the world?

Put this in the subject box: “NO ON SB 1274”

The petition distributed through change.org has also been updated to include President Obama, as well as the governor and Hawaii State Senate.

Death by Medicaid: Please sign our petition to take away Wall Street's license to kill

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One death is already too many. Wall Street can no longer be allowed to make life-or-death health decisions for children, the elderly, and adults as well as children with disabilities.

Please sign our petition to stop federal Medicaid and Medicare dollars being paid to for-profit corporations.

Roughly one-seventh of the total federal outlay for Medicaid and Medicare was paid to companies that brag about spending as little as possible of each Medicaid or Medicare dollar on actual patient services. The 13.7 million Americans who now receive Medicaid through one of nine publicly trade corporations used to receive their services through state-run plans that paid the actual medical bills incurred, a system called "fee for service."

When a "fee for service" budget is handed over to a private insurer, the companies are under no legal obligation to pay out any minimum percentage in actual services. When a company such as UnitedHealth reports paying less than eighty cents out of every dollar, it means that the person with disabilities whose budget it is has had their medical costs cut by an average of twenty percent.

Long-term medications are suddenly denied payment. One young adult I know has had twenty-two medications denied payment since January and now requires dialysis.

Nursing services are abruptly cut, with no consideration to medical needs. UnitedHealth has mounted an offensive war against parents here in Hawaii, bullying and trying to coerce families into agreeing to cuts in home services. We're being accused of being bad parents somehow if we can't be professional nurses at the same time.

The $19.5 billion in off-the-top profit from Medicaid and Medicare managed care contracts received by nine companies I tracked could have been used to pay for more than just CEO salaries. For example, two companies that only offer federal Medicaid/Medicare programs, Amerigroup and Centene, paid out $5.5 million and $7.1 million respectively to their CEOs in 2009.

UnitedHealth tried to explain away 2010's skyrocketing profits by saying it was because people didn't have the money for copayments, so they weren't going to the doctor. But commercial premium revenue was up only one percent: the company's twenty-one percent increase in net earnings was tied more closely to the 24% increase in Medicaid and 12% increase in Medicare premium revenue, combined with a two percent reduction in the Medical Loss Ratio (MLR).

Every penny saved against that MLR, the percentage of the capitated fee received that is actually spent on medical services, exacts a human toll. These capitated fees are received to provide people whose special health care needs put them at risk of death or institutionalization with the services and medications they need to stay healthy and alive with their families.

The little boy that died here is not the first victim of Wall Street greed in the guise of Medicaid. Sworn testimony was presented to Hawaii State Senate leaders more than a year ago that the death rate among the elderly and disabled had gone up 36% in the first year after UnitedHealth and Wellcare took over the contracts. A list of names surfaced, and reportedly families were visited by either the FBI or DoJ.

But if he's not the first, he needs to be the last.

Please sign our petition, and forward to your friends.

News at childrensdisabilityrights.org hacked

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The news and alerts pages were hacked and are down. I'm trying to figure out how to get them back up and apologize to anyone who came across the hacker's site.

Death by Medicaid: A child has died

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A child has died but insurance company profits remain high.

Wall Street's pillaging of Medicaid and Medicare to the tune of over $111 billion in 2010 helped push net earnings for some companies 21% to 81% higher than 2009. Seven of the nine companies I've been tracking bragged in their 2010 SEC filings about the $19.5 billion saved off the top of federal and state Medicaid and Medicare contracts by lowering the amount of every dollar actually spent on costs.

What even The Wall Street Journal has failed to notice is that lowering costs (variously called the Medical Loss Ratio, Medical Benefits Ratio, Health Benefits Ratio, etc.) only happens when you cut services.

There is a human cost to these cuts in services. When life-saving medications are suddenly denied, thereby lowering the MLR, the company is taking a chance the patient will continue to live while the savings are realized.

A little boy has paid the price for this with his life, however, and no one is doing anything about it.

Different branches of the Federal government have been receiving complaints about Hawaii's Med-Quest program and providers UnitedHealth Group and Wellcare since August 2009. Federal Medicaid regulators from the Centers for Medicare & Medicaid Services (CMS) along with the DHHS Office for Civil Rights have been kept aware of a continuing pattern of Medicaid service cuts that persistently violate federal Medicaid regulations and civil rights.

My daughter is alive because I have learned how to play the insurance company game. They will suddenly deny one of Hannah's medications (or refuse to fill a new prescription), and I don't find out until I call to see if I can pick it up. Hannah's Medicaid provider, UnitedHealth, has told the pharmacy they won't pay for it, and then starts the back and forth over prior authorizations. New medical orders for Hannah's ketogenic diet, used to control her seizures, have still not been filled fifteen days after submission. I also have not received anything in writing from the insurance company. One prescription was finally filled on Tuesday after I emailed the president of the company and the state Medquest office.

But what about the families who don't know the insurance company is just playing a game with them?

How many federal investigations does it take before somebody sees the pattern and puts a stop to it?

A young man who is a double amputee and lost the use of both arms now requires dialysis after twenty-two different medications have been denied insurance payment. CMS and state Medicaid officials have been following the case since January. CMS has also been looking into potential Medicare fraud by UnitedHealth as a result of this case.

A five year old medically fragile child's home nursing hours were cut 33% while she was hospitalized for a worsening of her seizure condition. The cut was to go into effect immediately upon her return home, with the parents never to this day (it's been two weeks) receiving anything in writing from UnitedHealth. CMS and OCR have been following this case closely as well.

Medicaid "hit squads" have been terrorizing the families of medically fragile children here for months. A mother was verbally abused for not understanding medically technical language, and another mom was told she didn't spend enough time with her child. UnitedHealth later tried to trick a mom into agreeing with their proposed reduction in nursing hours by repeatedly asking, "it's reasonable, isn't it?" CMS, OCR and state Medicaid officials are following these cases as well.

Meanwhile, Medicaid insurance company Wellcare admitted to drafting anti-consumer state legislation in Hawaii that would have directly benefited the company as well as UnitedHealth. State legislation is still alive that will deprive everyone covered by UnitedHealth and Wellcare of any outside appeals by patients who don't agree with the companies' cuts in services to bolster stock prices. (It will also do away with the current independent review source for such profit-based decisions for people holding employer-paid health policies at HMSA, HMAA, Kaiser, UHA and other insurers).

A federal whistleblower complaint unsealed last summer, using information gathered during an eighteen-month cloak and dagger investigation, quoted Wellcare executives lauding the profitability of Medicaid contracts to provide care for the elderly and disabled. The head of "utilization management" (cost cutting from state and federal contracts) was quoted saying "we would prefer it if they would die because it's cheaper."

Our government has essentially given Wall Street a license to kill the weakest members of our society: the elderly, and children as well as adults with disabilities. The recession has ironically boosted corporate insurance profits tremendously, as states carve out new Medicaid and Medicare contracts that are put out to bid to private insurers. Between June 2008 and December 2010, UnitedHealth Group's Medicaid revenue skyrocketed by more than 640%. The company hit its lowest medical benefit ratio in five years in fourth quarter 2010, coming in at less than eighty cents on the dollar while annual after-tax profit was up 21%.

How does the life of a little boy figure into these types of calculations?

A federal employee told me yesterday that his death is not a civil rights issue, it is an issue instead for the regulators. This information has distressed me, as it belittles his life. Our children's lives should not be profit centers. Federal and state dollars spent on care for the elderly and people with disabilities should be used to pay for services, not CEO salaries (almost $9.5 million to UnitedHealth's CEO in 2009).

The practice of allowing profit making companies to pillage federal coffers under the guise of providing cost-effective "managed care" to the elderly and people with disabilities must be stopped.

No more children can be allowed to die.