Public health is for the public: Rafael Del Castillo for Congress

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Rafael Del Castillo is a lawyer who follows his conscience.  The Honolulu attorney has been working as much as fifty hours a week for free since January 1.

 

His clients are twelve families appealing health insurance company denials of services for their children with disabilities.  Many of the denials are life-threatening, as the children, ranging in age from 4 to 19, are medically fragile.

He is working for free because a new law went into effect that destroyed appeal rights patients had had for a dozen years which reimbursed them for any legal fees in their appeals. 

Del Castillo is running for Congress, for the seat in the U.S. House of Representatives being vacated by Mazie Horono.  His web site details his positions better than I can here, but I am writing this because I believe actions can speak as eloquently as words.

I can think of no higher recommendation for a politician than someone who will follow his conscience as Del Castillo has been doing.

My medically fragile daughter Hannah is one of Del Castillo’s clients.  Over the past couple of years, I’ve come to know some of the other families who rely on Del Castillo to keep our children safe, at home, and as healthy as possible.

The law depriving our children of a level playing field against a $110 billion a year Wall Street giant actually covers all 270,000 or so people in Hawaii enrolled in Medicaid.

The law was intended to be the final step in the effective block-granting of Hawaii’s Medicaid program.   Cutting off access to lawyers was a simple way to deny 270,000 people access to the protections of federal law.   It gave the state ultimate power over how federal Medicaid funds are spent, accomplishing overnight what the US Congress has blocked for the past thirty years.

What neither the state nor the health insurance companies planned on was Del Castillo continuing to represent his clients, whether he would be paid or not.

The law was introduced by Hawaii’s first Democratic Governor in eight years, and passed within his first seven months in office.  In a meeting with the families last August, the Governor admitted the law was intended to save the insurance companies money on legal fees.

The company saving the most from the law immediately was Unitedhealth.  At the time, Del Castillo had over a dozen cases just against that company, and a record of winning 90% of all cases.  By May 2011, Del Castillo was estimating Unitedhealth’s legal costs defending its unreasonable denials of care at around half a million dollars for the year to date.

Ironically, Unitedhealth’s Medicaid and Medicare operations in Hawaii had been under some form of federal or state oversight since April 2010 for violating the legal rights of these same children. Federal Medicaid and Medicare laws were broken every time Unitedhealth denied services to the children that their doctors had prescribed as “medically necessary.”

So the Governor knew Unitedhealth was violating federal regulations by cutting services for our kids when he told us point blank that he was “a failure” if any of us needed a lawyer.

The Governor was also aware the services are not being denied because the state lacks the money to pay for them.  They are being denied so Hawaii’s two for-profit Medicaid managed care companies can sustain twenty percent operating profits.

After all, what does a $9.4 billion “savings” from its federal Medicaid and Medicare contracts mean to Unitedhealth compared to a few hours of nursing care here, or a speech therapy session there?

Del Castillo has been so busy working for our children for free that he has done little fundraising for his Congressional campaign.  That was one of the reasons cited by Hawaii’s biggest media outlet in their refusal on Friday to include Del Castillo in their upcoming Congressional debate.

For years, the media has blackballed Del Castillo.  Over a decade ago he was told the health insurance companies had linked pulling their advertising with news coverage of Del Castillo’s work on behalf of patient healthcare rights.  Unlike, apparently, the Governor, he is not willing to play ball with one of the state’s biggest federal contractors.

Government needs to be taken away from the corporations and given back to the people.  Public health funds need to go to the public, not Wall Street.

This is why I support Rafael Del Castillo for Congress.

Obama's $1 trillion handout to big business insurers

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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. 

Administration pandering to big business insurers is like hiring a pedophile as a babysitter

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A proposed Medicaid regulation published in the Federal Register on May 6 takes on new ominous overtones in light of the recent Administration-backed policy brief submitted to the Supreme Court.

Sara Rosenbaum, head of the Health Policy Department at George Washington University, calls the rule "a model of inaction," a purpose of which is "to establish what might charitably be characterized as an information-gathering exercise." Writing in the New England Journal of Medicine, Rosenbaum continues

Even this information-gathering exercise is wanting. The proposed rule exempts Medicaid managed care from review, despite the fact that the access statute protects all beneficiaries, including the 70% who receive their care through managed care plans. Moreover, the proposed rule gives states an inordinately long 5 years to measure access within their residual fee-for-service programs, which overwhelmingly serve the beneficiaries with the most severe physical and mental health conditions.

Why would federal policy exclude seventy percent of Medicaid beneficiaries from any evaluation of how well a state's Medicaid program is conforming to federal law? That would be like taking a census and excluding seventy percent of the population. The proposed rule explains that managed care organizations are already covered under a different section of federal law, and that is sufficient to ensure their compliance.

Managed care contracts are being farmed out across the country to provide services to children, families, the elderly and people with disabilities. These are the people who would be unrepresented in these state evaluations, allowing for-profit corporations to continue to abuse children and steal their federal funding with impunity.

Six federal civil rights investigations, a state-issued "corrective action plan", and extensive reporting to CMS of violations of federal regulations have shown, at least in Hawaii, that managed care Medicaid insurers ignore federal laws with impunity.

Of the six federal civil rights actions, at least four have targeted one company, Unitedhealthcare, which operates in Hawaii as "Evercare." The company reported a 20% increase in quarterly Medicaid/Medicare revenues between September 20, 2010 and March 31, 2011, during which Medicaid/medicare membership only increased 5%. One quarter of the company's policyholders generate 55% of the company's premium revenues.

New Jersey has recently announced they are turning all their Medicaid families over to mandatory "managed care organizations." Two of the four providers are Unitedhealthcare and Amerigroup, both with documented histories of criminal Medicaid fraud investigations.

Wellcare reached a settlement over criminal Medicaid fraud accusations in every state in which they operated in May. They apparently have retained all these contracts, and even got rate increases of up to 3% from four of the states.

The company told the SEC that in exchange for their settlement over Medicaid fraud, the federal government had agreed "to release and refrain from instituting, directing or maintaining any administrative action seeking to exclude the Company from Medicare, Medicaid and other federal healthcare programs." Quite a "get out of jail free" card, but also in keeping with the pattern of Administration pandering to big business health insurers.

CMS, the division of HHS that administers Medicaid and Medicare, is a watchdog with no teeth: they can document violations of federal law but cannot enforce them. The only action CMS can take against a state is to withhold the federal payment share. That was tried in Alaska and backfired, creating more human misery than it alleviated.

Rosenbaum cautions at the end of her article that regardless of what form the potential regulation takes in the end,

it would not even remotely amount to the type of comprehensive federal enforcement scheme that would justify a decision by the U.S. Supreme Court to overturn generations of Constitutional precedent and foreclose access to the courts by millions of beneficiaries and the health care providers who serve them.

Would any parent in their right mind hire a pedophile as a babysitter? Why is President Obama pushing a federal policy "arguing that the courts are closed to private individuals where Medicaid-access litigation is concerned" while surreptitiously shoveling millions of medically vulnerable Americans into programs run by apparently criminal companies?

It is uncannily similar to what has happened here in Hawaii, where turning over the state's Medicaid waiver program to two for-profit corporations produced a 36% rise in the death rate within the first year. State legislation sitting on our governor's desk would deprive everyone on Medicaid of external appeals of medical denials from their health insurer. That legislation has been openly supported by Unitedhealthcare and Wellcare, the latter even admitting in court to having written a sister bill. A Unitedhealthcare attorney moaned on TV that these appeals (almost all of which are finding on behalf of the children) were costing the company too much money.

If all of this comes to pass as federal Medicaid policy, there will be no record of how badly and corruptly corporations are saving money by deciding services based on profit not need.

Please sign our petition. We have to stop this from happening.

The unspoken link between the Republican war on Medicare and the privatization of Medicaid

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There is a strong link between the Republican war on Medicare, and the progressive privatization of Medicaid, and that is the primary beneficiaries of each: the Wall Street darlings of the health insurance industry.

Paul Krugman's piece yesterday in The New York Times describes the Republican vision of Medicare as Vouchercare, where private health insurers are paid a set fee every month per person. It would function similarly to the capitation contracts for Medicaid that these same private health insurers are gobbling up quietly across the country.

About $30 billion in Medicare and Medicaid funding was paid to nine corporate insurance companies in the first quarter of 2011, already well on the way to topping the 2010 total of $113 billion. According to published Medical Loss Ratios, more than $5 billion of that was skimmed off the top as operating profit: the difference between what the company is paid per person per month and what they actually spend on that person. With seven of the nine reporting lowered MLRs for 2010, that quarterly figure is also on the way to besting the 2010 published total of about $19.5 billion.

Unitedhealth is the leader of the pack financially. A five percent increase in Medicaid membership generated a twenty-three percent increase in Medicaid revenues just in the past six months.

Meanwhile, criminal fraud investigations have found several of these companies - Amerigroup, Humana, Wellcare and Unitedhealth in particular - artificially inflating MLRs. Florida is asking for millions of dollars to be returned, just from investigations that are already four or five years old. Wellcare, whose Medicaid/Medicare income grew nine percent in 1Q 2011 over the previous year, submitted a settlement agreement with nine states over Medicaid fraud in late April. A few days later they scooped up a new contract with one of the nine, Georgia.

The selling of Medicaid and Medicare to the private sector becomes particularly frightening in light of a recent amicus brief the Administration has submitted to the Supreme Court. Barring Medicaid beneficiaries access to the protections of federal civil rights laws can only produce an exponential growth in criminal Medicaid and Medicare fraud.

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's role in federal fraud settlement reveals possible double-dealing behind SB 1274

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On April 26, 2011, Hawaii was one of nine states signing a settlement agreement between Wellcare Health Plans and the Office of Inspector General of DHHS, Civil Divisions of the US Attorney's office, and every state where Wellcare currently does business.

According to the company's first quarter SEC filing, Wellcare gets their federal slate wiped clean in exchange for the $137 million settlement.

The United States and the Settling States agree to release us from any civil or administrative monetary claim under the False Claims Act and certain other legal theories for certain conduct that was at issue in their inquiries and the qui tam complaints. Likewise, in consideration of the obligations in the Federal Settlement Agreement and the Corporate Integrity Agreement (as described below under United States Department of Health and Human Services), OIG-HHS agrees to release and refrain from instituting, directing or maintaining any administrative action seeking to exclude us from Medicare, Medicaid and other federal health care programs.

When did anyone plan on telling the people in Hawaii that their Medicaid health insurer, the same one that benefits from segregating everyone on Medicaid into a guinea pig herd with no access to outside second opinions, is paying the state millions in exchange for not being convicted of criminal Medicaid fraud?

In practical terms, this means that Hawaii Governor Abercrombie has been negotiating silently for the past several months for Hawaii's share of a settlement deriving from accusations of criminal Medicaid fraud. SB 1274 came out of his office unexpectedly in January. At one time, Wellcare lawyers admitted to state legislators they had personally drafted a silent companion bill.

How much of a fraud settlement is Hawaii getting? An article out of Florida expects that state to receive $23 million.

While Wellcare reported their percentage rate increases in Florida and Georgia, they did not disclose the figure for Hawaii and New York premium increases.

The nine states that settled with Wellcare over criminal Medicaid fraud allegations are Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Missouri, New York and Ohio. Wellcare currently operates Medicaid programs in all but two of those states, Connecticut and Indiana.

Also announced in the quarterly report,

On May 4, 2011, the Federal Court entered an order (the “Approval Order”) approving the Stipulation Agreement. As required by the Stipulation Agreement, in March 2011 the Company paid $52,500 into an escrow account for the benefit of the class. The Stipulation Agreement also provides, among other things, that the Company will make an additional cash payment to the class of $35,000 by July 31, 2011 (the “July 2011 Payment”). It also requires, among other things, that the Company issue to the class tradable unsecured subordinated notes having an aggregate face value of $112,500, with a fixed coupon of 6% and a maturity date of December 31, 2016. Additionally, the Company will be required to pay to the class an additional $25,000 if the Company experiences a change in control at a share price of $30 or more within three years of the date of the Stipulation Agreement.

Meanwhile, Wellcare's premium income in the first quarter (almost $1.5 billion, all of it federal/state Medicaid or Medicare funding) was up nine percent over the first quarter of 2010.

DHS backing "separate but equal" rights for Medicaid enrollees

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With no apparent regard for the change in political party at the governor's level, Hawaii's Department of Human Services is openly backing the health plans' attack on patient rights via S.B. 1274.

According to the latest news released by Rafael del Castillo, "The Dept. of Human Services and the health plans, particularly Evercare and Ohana, are arguing that the Medicaid members will have equal rights even if they are separate. Those of you who are young may not remember, but many of your parents were opposed to the concept of “separate but equal” a generation ago, and the US Supreme Court finally realized that in a just society, if it was supposedly equal, there was no justification for it being separate."

So far, Speaker Calvin Say has assigned House members to the conference committee on SB1274, with Senate members not yet named. Opponents of SB 1274 are asked to please call or fax everyone on this list to let them know you want the bill killed.

Co-Chairs:
Ryan Yamane (D), Phone 808-586-6150 Fax 808-586-6151
Robert Herkes (D), Phone 808-586-8400 Fax 808-586-8404
Gilbert Keith-Agaran (D), Phone 808-586-6210 Fax 808-586-6211
Marilyn B. Lee (D), Phone 808-586-9460 Fax 808-586-9466

Members:
John Mizuno (D), Phone 808-586-6050 Fax 808-586-6051
Dee Morikawa (D), Phone 808-586-6280 Fax 808-586-6281
Kymberly Marcos Pine (R), Phone 808-586-9730 Fax 808-586-9738

Transparency in government: UnitedHealth and S.B. 1274

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Corporate health plan backing for S.B. 1274 became crystal clear on Friday. When the media needed a spokesperson on behalf of the bill, UnitedHealth offered up its local Honolulu lawyer.

UnitedHealth (or Evercare as they are known in Hawaii) could not have made their interest in the passage of S.B. 1274 clearer. The attorney they used is the same one who defends Evercare whenever a patient appeals to the external review panel the company's denial of medically necessary medications, treatments or services.

S.B. 1274 was recently amended to be retroactive to January 1, automatically dismissing all current cases. UnitedHealth is the defendant in eleven of twelve pending cases, so this amendment alone could be saving the company as much as $500,000.

The plaintiffs' attorney in all those cases is Honolulu lawyer Rafael del Castillo. Del Castillo only takes cases "on a contingency basis." That means he accepts no money from clients up front, even when actual hard costs are incurred for expert testimony. Del Castillo is only paid or reimbursed for the expert fees and other costs to the extent the Insurance Commissioner orders the health plan administrators to pay them.

Alston Hunt does not have to depend on the Insurance Commissioner for its fees. It gets paid no matter what, with our money. I wonder how many legal hours Alston Hunt got to bill UnitedHealth for strategizing how to be the best spokesperson for the bill?

State bills pending in Florida and Hawaii to increase for-profit Medicaid penetration while reducing patient rights

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The state legislature in Florida has apparently decided to completely scrap the state's Medicaid program. Considering Medicaid fraud has been called the state sport, this is obviously necessary.

The problem is that the "new Medicaid" that Florida is trying to shape will essentially amount to giving more and more money to the same companies already caught or suspected in federal Medicaid fraud. A recent article calls it "the scariest part of scary Medicaid overhauls.

Isn't that like hiring Bonnie and Clyde as bank tellers?

On April 13, the Florida Tribune reported that "The House and Senate also have both agreed to use managed care as the main vehicle to lower costs and include requirements that long term care patients use managed care."

Back in June 2009, at least 56% of Florida's Medicaid enrollees were receiving their services through for-profit HMOs. In the summer of 2010, it was revealed that all eight for-profit subcontractors to one state Medicaid contract were cheating on the MLR (medical loss ratio, the percentage of each capitation payment spent on services for that specific individual). Amerigroup alone had to refund over $2 million to the state. Also last summer, there was talk of extending a minimum MLR to the state's other Medicaid contracts.

There's a battle going on in the Florida state legislature now between those in favor of establishing a 90% MLR, and those who want no MLR at all. Nobody is questioning turning the kitchen sink, water main and all, over to for-profit insurers.

If everyone ends up comprising on some "reasonable" MLR, it will still mean that state and federal funds are being diverted away from health services and into shareholder profits. Sean Hellein's whistleblower report demonstrated how casually insurance companies like Wellcare, Amerigroup and UnitedHealth (all named in the suit) treat the issue of committing Medicaid fraud, especially when it comes to falsifying MLR figures.

Between last summer's enthusiasm and the current Medicaid battle was the November election. Florida elected a new Governor who had been the CEO of a healthcare company holding the record for the country's biggest criminal Medicare fraud case. In Public Citizen's post-election night report on unregulated third party spending (subsequent to Citizens United v. Election Commission), Florida ranked second highest, with four congressional candidates splitting almost $2.9 million. One of those newly elected Congressmen dismisses any compassionate element of Medicaid (including, presumably, for children) as being evidence of a "bureaucratic nanny state" that can only be fixed with a "free enterprise solution."

Florida and Hawaii make two states where local legislative wars are being fought that have major repercussions for the future of Medicaid. These wars all have to do with the way states get their Medicaid money from the feds, and who they then give it to. Money for Health reform and stimulus funds is all channeled through different accounts. For instance, the federal DHHS report on stimulus funds paid out to states reported on March 31 2010 that the state of Florida had received $3 billion into thirty-seven different accounts. Each account is a possible contract to be bid out.

Every contract represents another opportunity to clear twenty percent in operating profit. With forty states reportedly considering (or in the process of) turning their ABD populations over to for-profit HMOs, the financial impact on the disability community could be overwhelming.

From our experience in Hawaii, when an ABD population is turned over to a for-profit HMO, that means the HMO now covers everything, including home attendants, medications, skilled nursing, home medical supplies, behavioral programs, durable medical equipment, even the cost of institutionalization. Hawaii's contracts with UnitedHealth and Wellcare clearly showed they received higher capitation payments for an individual if they were in institutional care than home care. Institutionalization therefore increases the premium while at the same time giving the insurer more power over how much of it has to be spent.

This is how the news of Florida Governor Scott's recently proposed cut in provider service reimbursement rates can relate to the MLR. Florida was already bidding out its ABD program to private HMOs like Amerigroup in early 2010. If ABD services are being channeled through new HMO providers, as they are done here, then reducing provider rates can be a back-door way of increasing corporate profit.

According to Amerigroup's 2010 annual SEC filing, the company's contract with the Florida Department of Elderly Affairs for Long-Term Care was renewed in September, they gained a new CHIP contract with the state in 2010 plus became a Medicare Advantage provider with Florida the same year. Overall, the company's net earnings were up 83%, helped along significantly by lowering the MLR by four percent.

Involved in the Florida legislative battle is SB 1972. On April 11, it was reported that Medicaid insurers, including the private HMOs, were backing an element of SB1972 that "would name them as agents of the state and give them the full protection of Florida's sovereign immunity, no matter how much damage they cause to an innocent disabled adult or child who has been entrusted to their care." As preposterous as it sounds, it is similar to an attempt here in Hawaii to assimilate child and protective services under the Medicaid ABD program. UnitedHealth and Wellcare employees suddenly had the right to threaten to remove a child from a family for abuse, if the family did not agree to the company's recommended reductions in Medicaid services.

Now we're putting Bonnie and Clyde in charge of the bank's vault.

Please sign our petition to get for-profit HMOs out of Medicaid and Medicare.

Hawaii health insurers back state bill attacking patient rights

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There is a war going on against Hawaii's middle class, and between what appears to be a virtual media black-out on the subject and a public misinformation campaign, nobody seems to know a thing about it.

At least half a million people in Hawaii who have health insurance are going to lose the right to an effective external appeal of decisions made by their health insurance providers if Hawaii Senate Bill 1274 passes. Health insurance carriers have already admitted publicly to drafting companion legislation, and are increasingly open in their support of 1274.

SB 1274 will repeal HRS 432E-6, which created a state external review process that could intervene when a health insurance company denied medically necessary treatment or medication. The state law creates a local hearing process where both sides can present expert testimony, and decisions are issued by a panel rather than a lone individual.

According to Rafael del Castillo, a Honolulu attorney who specializes in representing clients appealing insurance company decisions under HRS 432E-6, the insurance companies have lost or given up in about eighty percent of these cases.

That means that in eighty percent of the cases, the insurance company denial had nothing to do with medical necessity, just saving the company money.

The Affordable Care Act may have also extended the coverage of HRS 432E-6 to most families with employer-paid health insurance. Del Castillo is seeking confirmation from the Department of Labor.

If Hawaii Senate Bill 1274 passes in any shape or form, the middle class is also going to lose any external review rights they just gained last fall.

SB 1274 came to life very unexpectedly in January, seeming to originate out of the office of the state's newly elected Democratic governor Neil Abercrombie. People were stunned since Abercrombie was assumed to be a pro-consumer rights politician.

At first it had a silent companion bill, S.B. 658, making patients responsible for insurance company legal fees if the patient lost the appeal. Attorneys for Wellcare, a for-profit HMO that makes about $600 million a year from its contract with Hawaii, admitted at a Senate hearing to having drafted the bill. S.B. 658 has been tabled indefinitely ever since.

The latest development is a clause that has been added to S.B. 1274 making it retroactive to January 1. All cases currently in the external review process would be dismissed, which could save the insurance companies as much as $500,000 in legal fees. According to del Castillo, the big winner in the bill going retroactive is UnitedHealth Group, operating in Hawaii as Evercare.

Every health insurance carrier operating in Hawaii is going to benefit if S.B. 1274 is signed: HMSA, Kaiser, HMAA, UHA, Aloha Care, Evercare (UnitedHealth) and Ohana (Wellcare) all benefit from repealing the law that gives their policyholders an effective way to challenge denials of treatment. That gives the insurance carriers free rein in making medical decisions based on operating profit rather than the policyholder's medical needs.

The mis-information campaign is claiming HRS 432E-6 violates new federal regulations and so MUST be repealed. Del Castillo has been working with federal authorities since January on how the existing law can meet new federal regulations with nothing more than a few tweeks, rather than a sledgehammer. According to del Castillo, Hawaii's health insurers continue to push hard to get 1274 passed and are refusing to accept any compromise that preserves the consumer protections we now have. Del Castillo has even received a letter threatening to sue him on behalf of unnamed insurers if he continues providing lawmakers with information about past external review cases consumers have won.

The media blackout on this (with the notable exception of HPR) is fascinating. It is easy for them to dismiss del Castillo's information campaign on 1274 on the basis he is the one to benefit if the current law stays in place. After all, he's the only local lawyer who is willing to represent health care consumers in this external review process. Since del Castillo finances these cases himself until the decision awards him costs, the retroactivity singles him and his clients out for special financial punishment.

Del Castillo says an editor told him years ago that one of the state's big insurance companies had threatened to pull advertising if his cases against them got any media coverage. It is obviously impossible to prove, but it is interesting that all of his advocacy work on behalf of patient rights is ignored, and even when he came in second in last year's Democratic primary race for Congress, never received a word of coverage in any of the major newspapers, TV or radio outlets.

A political candidate who gets 22,000 votes and is completely ignored by all the media is practically a story by itself.

Once upon a time, long ago, Hawaii was known as "the Health State". We had a state law that established a health patient's bill of rights, all the kids had insurance, and employers were required to provide health coverage. For a very short time, even President Obama was linked to his origins from "the Health State."

But about the time Obama came into office, Hawaii's Republican governor turned over seventy percent of the state Medicaid budget to two for-profit insurance carriers, the death rate among the elderly and people with disabilities increased, children had already lost their health coverage, and so the Health State was rather abruptly dismantled.

We can't let the Abercrombie Administration and this Legislature take away our right to an independent review panel when our health insurance company denies us medically necessary coverage. We can’t let lawmakers retroactively repeal rights people relied upon in incurring substantial costs and in seeking denied medical care. It doesn't matter if the company name on your insurance card is HMSA, HMAA, UHC , Kaiser, Aloha Care, Evercare or Ohana, you lose your health patient rights if SB 1274 gets passed.

We all lose.

Privatizing Medicaid and Medicare is an attack on the middle class

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There seems to be a general assumption that when people talk about cuts to Medicaid and Medicare, it has to do with poor people. In fact, the cuts affect middle class working families the hardest, by targeting anyone who isn't rich enough to pay for keeping a medically needy child or grandparent at home and out of an institution.

It is normal for about two-thirds of every state's Medicaid budget to go, not for people who qualify from poverty or unemployment, but to the medical care of children and adults with disabilities, whether from birth, accident, age or illness. These are middle class American families who make too much money to qualify for Medicaid; they are trying to care at home for a child, a grandmother, a sibling who qualifies for Medicaid on the basis of disability through what are called "waiver programs" (because family income/assets are "waived" in calculating eligibility).

That sixty-six to seventy percent of every state's Medicaid budget is what is up for grabs when companies like Wellcare gloat in their year-end reports that forty states are considering turning their ABD (aged, blind and disabled) population over to private contractors.

In Florida, for instance, the ABD population could be expected to account for somewhere between $12 and $14 billion, considering the $20 billion annual budget. Private contracts for ABD services were handed out to companies like Amerigroup last year. The newly elected governor of Florida, who vowed after the election to parcel out the state's entire Medicaid population to private contractors, recently announced he was filling a $174 million budget deficit by decreasing the rates paid to caregivers by 15%. Lowering reimbursement rates helps insurance companies decrease their Medical Loss Ratio thereby increasing profits. The family can either take another job to try to supplement the medical services lost, or put their family member in a hospital or institution. Again, it's the insurance company holding the state Medicaid contract for the ABD population and/or long term care who makes out.

Meanwhile Florida's state legislature is trying to rewrite Medicaid. One proposal would change the name of the Medically Needy program to the Medicaid Nonpoverty Medical Subsidy, while eliminating coverage of hospitals and medications.

What are adults with catastrophic illnesses supposed to do without medications?

Splitting up state Medicaid populations into "risk-based health maintenance organizations" will affect people who qualify because of poverty or unemployment, yes. But with two-thirds of any state's budget spent on the much smaller aged, blind and disabled population, the biggest impact is where the companies get the biggest bang for the buck saved. Capitation contracts are hard to come by, but I published Hawaii's a long time ago, verifying that individual budgets can go as high as $29,000 a month. This is not money spent on somebody because they are poor, it is money allocated to the home nursing care for someone who is so disabled they cannot live on their own.

Wasting up to twenty percent of our federal and state budgets for Medicaid and Medicare on CEO salaries and corporate profits is hurting millions of average middle class Americans whose only fault is wanting to keep their families, including their most vulnerable members, together.

Please visit this petition to put a stop to Wall Street's pillaging of Medicaid and Medicare. Every signature sends an email to Deputy Attorney General for Civil Rights Thomas Perez, Secretary Duncan of Education and Secretary Sebelius of DHHS to stop this attack on our civil and patient rights.

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.

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.