healthy4u: Medicaid

UnitedHealth's Latest Blunders Include Lax Fraud Detection, Recalled EHRs - So Why is its CEO Worth $13.9 Million, or is it $34.7 Million?

We managed to go four months since our last post about UnitedHealth, but sure enough, the company that keeps on giving... examples of poor management to contrast with ridiculous management pay... has done so again. There were two obvious examples of poor management that recently appeared in the media. Lax Fraud Dection The background, as noted in a Kaiser Health News <a href="http://www.kaiserhealthnews.org/Stories/2013/September/15/medicaid-managed-care.aspx">article</a> published in September, is that it is now fashionable for American states to outsource some or most of their Medicaid health insurance programs to managed care organizations, often for-profit, as is UnitedHealth.  These programs are meant to provide insurance to the poor and disabled.  Yet once they have outsourced Medicaid, the states may be reluctant to cancel contracts, even if the outsourcing is not working: <blockquote class="tr_bq"> In Florida, a national managed care company’s former top executives were convicted in a scheme to rip off Medicaid. In Illinois, a state official concluded two Medicaid plans were providing 'abysmal' care. In Ohio, a nonprofit paid millions to settle civil fraud allegations that it failed to screen special needs children and faked data. Despite these problems, state health agencies in these - and other states - continued to contract with the plans to provide services to patients on Medicaid, the federal-state program for the poor and disabled. Health care experts say that’s because states are reluctant to drop Medicaid plans out of fear of leaving patients in a bind. 'You probably won’t find many examples of states flat out pulling the plug. That’s sort of the nuclear option,' said James Verdier, a senior fellow at Mathematica Policy Research, a nonpartisan think tank. </blockquote>Never mind that leaving such programs as is means taking money meant to finance care for the poor and using it to finance fraud, and reward managed care organizations for failing to find fraud. One of the examples, but not a new one, used in the Kaiser Health News article, involved UnitedHealth: <blockquote class="tr_bq">Linda Edwards Gockel, spokeswoman for the Texas Health and Human Services Commission, said that in 2009, officials were concerned about a pilot program in the Dallas-Fort Worth area run by Evercare, a subsidiary of <a href="http://www.unitedhealthgroup.com/" target="_blank">UnitedHealth Group</a>. The program, which coordinated care and long-term services for elderly and disabled people, had been fined more than $600,000 for not providing proper access to care and failing to coordinate services. Gockel said Texas decided to cancel the contract 15 months early, but continued to do business with Evercare because the problems in Dallas-Fort Worth weren’t affecting services it was providing elsewhere.</blockquote> Then in July, NJ.com <a href="http://www.nj.com/politics/index.ssf/2013/07/nj_comptrollers_report_finds_hmos_fraud_detection_efforts_lax_in_medicaid.html">reported</a> an investigation by the state of New Jersey into UnitedHealth's ability, or lack thereof, to detect fraud in the Medicaid managed care program it runs for the state. <blockquote class="tr_bq"> An HMO that earned $1.7 billion from 2009 to 2010 by providing Medicaid coverage to 350,000 low-income and disabled New Jerseyans didn't try very hard to detect fraudulent billing — identifying only $1.6 million, or one-tenth of one percent in improper payouts, according to a report the Office of the State Comptroller released today.</blockquote> UnitedHealth did not even come close to fulfilling its obligations to provide sufficient resources to fight fraud: <blockquote class="tr_bq">The HMOs in the Medicaid program are required to dedicate one investigator for every 60,000 Medicaid clients. At that ratio, United's special investigations unit should have been comprised of about six employees whose sole focus is to detect fraud and abuse by medical providers and patients. Instead, United reported it had dedicated the equivalent of two investigators during the two-year study period based on the amount of hours devoted to the unit. Upon scrutiny, the comptroller found United 'overstated' its staffing levels; the unit had one investigator, the report said. </blockquote> Note that this abject failure appeared to violate the contract UnitedHealth had with the state, <blockquote class="tr_bq">UnitedHealthcare Community Plan of New Jersey failed to hire enough investigators and train them properly, in violation of the managed care company's contract with the state, according to the report. </blockquote> Presumably, if fraud led to excess program expenses, it would be New Jersey, not UnitedHealth who ultimately had to pay them.  Again, it appears that money meant of pay for health care for the poor and disabled was diverted to fraudsters, and to revenue for UnitedHealth (partly because the latter did not see fit to spend enough money up front to detect the fraud.)  Of course, such management by UnitedHealth helped to increase its already fat revenue stream. Faulty Electronic Health Records In September, Bloomberg <a href="http://www.bloomberg.com/news/2013-09-10/unitedhealth-recalls-digital-health-record-software.html">reported</a> that UnitedHealth had to recall electronic health record software because of faults that likely increased the risk of bad patient outcomes, <blockquote class="tr_bq">UnitedHealth Group Inc has recalled software used in hospital emergency departments in more than 20 states because of an error that caused doctor’s notes about patient prescriptions to drop out of their files. Certain versions of the software made by the largest U.S. health insurer had a bug that didn’t print information related to the medication and failed to add data to patients’ charts,according to a document filed with the U.S.Food and Drug Administration and <a href="http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRes/res.cfm?ID=119832" rel="external" title="Open Web Site">posted</a> July 29. The technology is used in 35 facilities in states including California<a href="http://topics.bloomberg.com/california/"></a>, New Jersey, and Florida<a href="http://topics.bloomberg.com/florida/"></a>, the document shows. The recall began June 21. There were no reports of patient harm and each facility was notified and received a digital fix, said Kyle Christensen, a spokesman for the UnitedHealth division that makes the <a href="http://www.picis.com/solutions/emergency-department/ed-pulsecheck.aspx" rel="external" title="Open Web Site">Picis ED PulseCheck</a> software that was recalled. The incident shows how software errors can create dangers for patients at a time when digital health records are being implemented as a cornerstone of President  Barack Obams's modernization of the nation’s health-care system. </blockquote> The "bug" could potentially harm patients, <blockquote class="tr_bq"> Doctor’s notes are critical for some medications, as they contain directions about diet and use. Failure to include the instructions could lead to serious injury or death, [University of Pennsylvania adjunct professor of sociology and medicine Ross] Koppel said.</blockquote> It turns out that the Picis software has had other problems that could have increased the risk of harm to patients, <blockquote class="tr_bq">An online database maintained by the FDA shows that Picis Inc., a Wakefield, Massachusetts-based company that UnitedHealth acquired in 2010 for an undisclosed price, has reported six recalls involving electronic health record software since 2009. One <a href="http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRes/res.cfm?id=104224" rel="external" title="Open Web Site">incident</a> in 2011 involved anesthesia-management software sold nationwide that in one instance displayed a patient’s medical information in another patient’s file. <a href="http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRes/res.cfm?id=86830" rel="external" title="Open Web Site">Another</a>involved software sold worldwide where on an unspecified number of occasions, the program failed to display the discontinued status on medication orders. Others included glitches that caused a <a href="http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRes/res.cfm?id=103528" rel="external" title="Open Web Site">failure</a> to display appropriate allergy interaction warnings, the <a href="http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfRes/res.cfm?id=89514" rel="external" title="Open Web Site">freezing</a> of administrative controls, and other issues.</blockquote> Note that it is the same Picis software that our blogger, InformaticsMD, has alleged lead to the death of his mother, <blockquote class="tr_bq"> Alleged flaws in electronic health records have led to lawsuits. Scot Silverstein, a doctor and health-care informatics professor at  Drexel University, sued Abington Memorial Hospital in Pennsylvania in 2011 over the death that year of his 84-year-old mother. He blamed her death on a flaw in her electronic health record that he claims caused a critical heart medication to vanish from her file. One of the systems involved was made by Picis, according to his lawsuit. Picis is not being sued.</blockquote> Linda Millevoi, a spokeswoman for Abington Memorial, declined to comment. The latest InformaticsMD posts on this case are <a href="http://hcrenewal.blogspot.com/2013/09/a-new-and-quite-perverse-hospital-ploy.html">here</a> and <a href="http://hcrenewal.blogspot.com/2013/08/a-good-way-to-cynernetically-harm-or.html">here</a>. Summary These cases are just the latest in a long list of blunders and ethical missteps made by UnitedHealth and its top management.  The most significant examples of the latter about which we have posted appear in the appendix at the end.  The latest examples likely diverted money that should have supported health care for the poor, and and may have put patients' health and lives at risk. Yet UnitedHealth is now the largest US health insurance company, and it has succeeded in making its current and former CEO fabulously wealthy.  According to filings with the US Security and Exchange Commission (SEC), its current CEO, Stephen J Hemsley, got $13.9 million in 2012, up from $13.4 million in 2011, as we posted <a href="http://hcrenewal.blogspot.com/2013/05/unitedhealth-ceo-continues-to-prosper_3.html">here</a>.  However, an <a href="http://apps.startribune.com/top_100_exec_comp/topCeoView.php">analysis</a> by the Minneapolis Star-Tribune that took into account stock gains and shares vesting suggested he got $34,721,122 in 2012, admittedly down from a breathtaking $48,075,614 in 2011.  The previous UnitedHealth once was worth over a billion dollars due to back dated stock options, some of which he had to give back, but despite all the resulting legal actions, was still the ninth best paid CEO in the US for the first decade of the 21st century (look <a href="http://hcrenewal.blogspot.com/2010/08/despite-scandal-former-unitedhealth-ceo.html">here</a>). So UnitedHealth continues to provide us with examples of how top leaders of health care organizations can become tremendously rich, despite, or perhaps because of repeated mismanagement and apparently unethical management on their watches.  Only when we make health care leaders truly accountable for their organizations, and especially for their organizations' ethics and effects on patients' and the public's health will be begin to challenge health care dysfunction. (Note to readers recently joining us from countries other than the US - UnitedHealth is a multi-national that claims to operate in 33 countries (look <a href="http://careers.unitedhealthgroup.com/why-work-here/our-locations.aspx">here</a>).  For example, its UK web-site is <a href="http://www.unitedhealthuk.co.uk/">here</a>.  So beware the export of bad management for enhanced prices.)    Appendix - UnitedHealth's Ethical Lapses  - as <a href="http://www.courant.com/business/hc-natbizdigbrf0530.art2may30,0,109447.story">reported</a> by the Hartford Courant, "UnitedHealth Group Inc., the largest U.S. health insurer, will refund $50 million to small businesses that New York state officials said were overcharged in 2006." - UnitedHalth promised its investors it would continue to raise premiums, even if that priced increasing numbers of people out of its policies (see post <a href="http://hcrenewal.blogspot.com/2008/05/commercial-managed-care-organizations.html">here</a>); - UnitedHealth's acquisition of Pacificare in California allegedly lead to a "meltdown" of its claims paying mechanisms (see post <a href="http://hcrenewal.blogspot.com/2008/01/bungled-not-brilliant-results-of.html">here</a>); - UnitedHealth's acquisition of Sierra Health Services allegedly gave it a monopoly in Utah, while the company allegedly was transferring much of its revenue out of the state of Rhode Island, rather than using it to pay claims (see post <a href="http://hcrenewal.blogspot.com/2007/03/unitedhealth-declares-health-care.html">here</a>) - UnitedHealth frequently violated Nebraska insurance laws (see post <a href="http://hcrenewal.blogspot.com/2007/01/on-performance-on-one-supposedly.html">here</a>); - UnitedHealth settled charges that its Ingenix subsidiaries manipulation of data lead to underpaying patients who received out-of-network care (see post <a href="http://hcrenewal.blogspot.com/2009/01/unitedhealth-and-ingenix-settles.html">here</a>). - UnitedHealth was accused of hiding the fact that the physicians it is now employing through its Optum subsidiary in fact work for a for-profit company, not directly for their patients (see post <a href="http://hcrenewal.blogspot.com/2011/07/here-comes-your-new-doctor-brought-to.html">here</a>).

UnitedHealth's Latest Blunders Include Lax Fraud Detection, Recalled EHRs - So Why is its CEO Worth $13.9 Million, or is it $34.7 Million?

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17 Sep 2013

"Government-Run Health Insurance" Run by Corporations? - Two Medicaid Examples

In the US, there seems to have been a constant argument between right- and left-wingers over "government-run" health insurance.  The right tends to disparage all aspects of "government-run" health care, and in the case of insurance, uses the alleged faults of the two big US government health insurance programs as examples.  (Medicare is a federal government health insurance program for the elderly and disabled. Medicaid is federal-state program for the poor.)  For example, per the Associated Press <a href="http://www.businessweek.com/ap/financialnews/D9LTA0UO2.htm">via BusinessWeek</a>, from a currently prominent Republican hopeful for President, former Minnesota Governor Tim Pawlenty, <blockquote>The former Minnesota governor was the latest politician to participate in the Health Policy Grand Rounds program that Dartmouth-Hitchcock Medical Center has organized for its staff during the past two presidential campaign cycles. Using Medicare and Medicaid as examples, he criticized the notion that government-run health care will produce efficiency and said the answer lies in empowering consumers.</blockquote> Republican Congressman Darrell Issa (California) <a href="http://issa.house.gov/index.php?option=com_content&view=article&id=271:rep-darrell-issa-the-lackluster-record-of-government-run-health-care&catid=23:opinion-editorials">wrote</a> in 2010: <blockquote>an expansion of the federal bureaucracy at that rate will greatly increase the incidence of waste, fraud and abuse in health care. Already Medicare, which accounts for 14% of all federal spending, is rife with waste, fraud and abuse. Even Attorney General Eric Holder has said, 'By all accounts, every year we lose tens of billions of dollars in Medicare and Medicaid funds to fraud.' A recent analysis by the Government Accountability Office (GAO) estimated that federal subsidy programs cost taxpayers about $100 billion every year in improper payments, with Medicare and Medicaid accounting for more than half of that.</blockquote> The left may advocate for government-run, "single-payer" insurance programs, perhaps using the alleged benefits of Medicare and Medicaid as examples. Scholarly articles about health care policy may refer to Medicaid as a government "single-payer" system.  (For example, see: Robinson JC. The commercial health insurance industry in an era of eroding employer coverage. Health Aff 2006; 25:1475-1486. Link <a href="http://content.healthaffairs.org/content/25/6/1475.short">here</a>.) In any case, I suspect most of us think of Medicaid as an example of "government-run" health care insurance, regardless of whether we believe that is a good or a bad thing. Yet the reality may be more complex. Two recent stories, one a follow-up on an old Health Care Renewal post, provide some dots to connect. Connecticut HUSKY Medicaid Program In 2007, we <a href="http://hcrenewal.blogspot.com/2007/11/health-plans-programs-cancelled-for.html">posted</a> about how the state of Connecticut was going to end participation in the HUSKY state Medicaid program for poor children by four insurance companies/ managed care organizations.  They apparently refused to provide information about payments to physicians and denial of payments for prescription drugs to the state.  The two largest organizations involved were Anthem Health Plans (a subsidiary of WellPoint), and Health Net.  At the time, we noted that this case provided an example of the lack of transparency exhibited by major health organizations. Late last year, the Connecticut Mirror <a href="http://www.ctmirror.org/story/8085/husky-managed-care-company-profits">documented </a>more criticism of the HUSKY program based on a report that showed that participating companies were making big profits from it (but perhaps not from other state Medicaid programs):  <blockquote>The three managed care companies in the state's HUSKY insurance program for low-income children and families recorded profits of $18.8 million last year, according to figures released by the state Department of Social Services. In one part of HUSKY, the insurers made margins of at least 20 percent and spent less than 72 percent of their revenues on medical care. The figures released this month drew criticism from members of the Medicaid Care Management Oversight Council, who are in the midst of considering moving HUSKY out of managed care.</blockquote> In more detail, the relevant numbers were: <blockquote>AmeriChoice, part of UnitedHealthcare, spent 62 percent of its revenue on medical care and posted a 22.9 percent profit margin in the HUSKY B program. By contrast, the federal health reform law sets minimum medical care ratios for insurers of 80 percent or 85 percent, depending on the type of plan. The provision does not apply to Medicaid plans, but was cited as a benchmark in the council's discussion. None of the insurers met those benchmarks in HUSKY B, which covers children whose family income does not qualify for Medicaid. Last year, it covered between 13,000 and 16,000 children, many whose families earned below 300 percent of the federal poverty level. Aetna spent 70.5 percent on medical care and made a 20 percent margin, while Community Health Network of Connecticut, a non-profit with far more enrollees than the other insurers, spent 71.8 percent of its revenues on medical care and made a 20.6 percent margin. Margins were lower, and medical care ratios higher, in HUSKY A, a Medicaid program that enrolled as many as 358,088 children and adults in 2009. Community Health Network reported a 95.1 percent medical care ratio and a -0.3 percent margin. AmeriChoice spent 86.3 percent of its revenue on medical care and achieved a 3.5 percent margin, while Aetna had an 83.9 percent medical care ratio and 6.5 percent margin. Overall, the medical care ratio was 90.7 percent for both HUSKY programs and all three insurers. The overall margin was 2.3 percent.</blockquote> The insurers involved defended themselves by noting to participate in HUSKY they also had to participate in another program, Charter Oak Health Plan, "on which they lose money." Last month, it looked to be the end of managed care in these Medicaid programs, again as <a href="http://www.ctmirror.org/story/11427/malloy-administration-moving-husky-out-managed-care">reported</a> by the Connecticut Mirror: <blockquote>The Malloy administration announced plans Tuesday to move the HUSKY and Charter Oak health programs out of managed care and increase care coordination in the state's other Medicaid programs, an effort officials said would save money while giving the state more control over health programs that serve more than 500,000 people. </blockquote> This article also noted: <blockquote>In the current system, the state pays three managed care companies set fees for each HUSKY and Charter Oak member every month, and the companies use the money to pay medical claims. Critics say it gives the managed care companies an incentive to deny care since they get to keep the money not spent on medical costs.</blockquote> So let us deal directly with the cognitive dissonance generated by these articles. In the ongoing US health reform debate, Medicaid is usually discussed as a "government-run" health care (insurance) program. Yet these news articles from Connecticut suggest at least in that state, part of Medicaid was out-sourced to mostly large, national, for-profit health insurance companies/ managed care organizations. Furthermore, as noted just above, these corporations seemed to be mainly calling the shots in how their part of Medicaid was run. So is this "government-run" health care (insurance)? But wait, there is more.... Minnesota Medicaid Controversy Last month, the Politics in Minnesota web-site ran a <a href="http://politicsinminnesota.com/blog/2011/02/picking-the-lock-on-hmos-%E2%80%98black-box/">report</a> on an unlikely reformer: <blockquote>Dave Feinwachs is no stranger to the Capitol. For three decades he was the general counsel to the Minnesota Hospital Association. In that capacity, he negotiated with state agencies and testified regularly before legislative committees on health care issues. But early last year, Feinwachs said, he was ordered by his superiors at the hospital association not to provide any further testimony at the Capitol. The reason for the muzzle: his vocal insistence that health maintenance organizations (HMOs) should contribute money to help salvage the state’s General Assistance Medical Care program for indigent adults. Feinwachs says he abided by the prohibition on testimony before legislative committees, but apparently it was not enough to keep him in the good graces of his employer. In November he was fired as the group’s principal attorney. Feinwachs will not discuss the reason for his termination, citing potential litigation. But it almost certainly had something to do with his ongoing zealous campaign to force greater transparency and accountability on the state’s HMOs - primarily Blue Cross & Blue Shield, HealthPartners, Medica and UCare - which receive roughly $3 billion annually to run health plans for many of the state’s poorest residents.</blockquote> So here we go again. This article suggested that Minnesota had out-sourced a very large part of its Medicaid program. Furthermore, it also appears that the state government knows little about what happens to the money it hands over: <blockquote>In the next two years, Minnesota is slated to funnel about $6 billion to the state’s HMOs to provide health care for 550,000 of the state’s poorest residents. To put that figure in perspective, it is nearly 20 percent of the state’s expected 2012-13 general fund revenues - and nearly identical to the state’s projected $6.2 billion deficit. In coming up with a solution to Minnesota’s financial crisis, Feinwachs and others believe, legislators must at least have a clear accounting of this massive pot of health care dollars. HMOs, meanwhile, are not exactly yearning for scrutiny, especially as they launch a pitch to administer even more of the state’s health care spending.</blockquote> In addition, there is reason to believe that Minnesota may be paying a significant amount for administration: <blockquote>Feinwachs believes that the administrative overhead collected by HMOs could be in the neighborhood of 16 percent. He concedes, however, that this is no more than a 'guesstimate' pieced together from the limited information that is publicly available.</blockquote> Then, there is reason to suspect that the private (and nominally not-for-profit) HMOs that Minnesota pays to run Medicaid have resisted accounting for how the money they got was spent: <blockquote>Past attempts to bolster accountability and transparency for HMOs have largely run into a brick wall. For instance, when legislators considered requiring the health plans to chip in on a plan to restore the General Assistance Medical Care program last year, they were told by officials from the Department of Human Services that such a move would be illegal. Efforts to provide more financial disclosure have been rebuffed by the argument that such information is proprietary and not subject to the state’s data practices rules. The complexity of Minnesota’s patchwork of publicly funded health care plans, which very few individuals clearly understand, has also helped forestall changes. 'We can’t let the complexity of data and information beat us down, and I think that’s what happened in the years past,' Hosch said. 'The systems almost seem like they’re deliberately complex in order to confuse us.'</blockquote> Apparently in these parlous financial times, Mr Feinwachs got some attention. Last week, the state Governor announced his willingness to dig into the results of the state's out-sourcing of Medicaid, per the Minneapolis Star-Tribune: <blockquote>It's high time that Minnesota started treating its nonprofit health plans for what they are -- some of state government's largest vendors. Reforms announced this week by Gov. Mark Dayton's office are a promising first step toward scrutinizing health plan contracts for savings and finding new ways to rein in Minnesota's soaring medical costs. Managing care for more than 500,000 low-income, disabled and elderly Minnesotans enrolled in state public health programs is a $3.1 billion-a-year business for health plans in Minnesota, with the state and federal government jointly footing the bill. Over the past decade, the state's portion of this outsourced care has increased from 5 percent to 11 percent of the state budget, according to Dayton's office. The state also has more than 249,000 people -- typically the sickest of the sick -- in a fee-for-service public program. That spending is also ripe for a cost-savings review. On Wednesday, Dayton announced plans to do what good business leaders do in difficult financial circumstances. His administration is going to start driving harder bargains with health plans. Key parts of the plan include making the contracting system more competitive, making financial information more transparent, and doing deeper auditing of plans' books to analyze administrative and medical expenses.</blockquote> So again in Minnesota, it appeared that the state had out-sourced a large proportion of its Medicaid program, covering apparently two-thirds of the state's Medicaid patients. It appears that knowledge of the out-sourcing of most of Medicaid was relatively anechoic, and that even the state's former Governor Pawlenty was unaware of it (see his comments in introduction to this post). Despite the amounts of money and the numbers of people involved, up to now the state government had apparently very little information about how billions of dollars were being spent by private, albeit nominally non-profit health insurance companies/ managed care organizations. Summary Two cases from two states suggest that some proportion of Medicaid, perhaps a very large proportion, has been out-sourced to private corporations, both nominally non-profit and for-profit. In fact, a Washington Post <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/07/07/AR2010070703560.html">article</a> last year suggested that 70% of Medicaid patients are in managed care plans, most of which are likely out-sourced, not run by state Medicaid agencies. Our two cases above further suggest that government officials may know little about how the money given to these corporations was spent, and how the corporations managed the supposedly "government-run" health insurance. So much for the notion that the US Medicaid program is "government-run" health insurance.  Whether one believes that government bureaucrats are good or bad at running health care, it seems that most Medicaid patients' care is managed by corporate, not government bureaucrats. The likelihood that a substantial proportion of Medicaid patients actually get their health care coverage from corporations, be that non-profit or for-profit, raises some important questions. - What proportion of the government funds provided these corporations goes to health care versus administration, overhead, etc? -  What then is the proportion of all Medicaid money spent on health care versus administration, overhead, etc at the federal, state, and corporate levels? -  What proportion of the revenue of major health insurers/ managed care organizations actually comes from tax-payers via Medicaid? -  To what extent do health insurers/ managed care organizations influence clinical care through their role implementing Medicaid? -  How transparent are their finances and their implementation of Medicaid? -  How well are they supervised and regulated by national and state government? Meanwhile, it appears that there is far more overlap between government and corporate health insurance and managed care than most of us realized.  That suggests the usual debate between the foes and proponents of "government-run" health care (insurance) was vastly too simplistic.  Maybe some of those involved in the debate should have known that.    Meanwhile, the concerns I <a href="http://www.ejinme.com/article/S0953-6205%2803%2900029-3/abstract">discussed</a> in 2002 that "health care has become dominated by large, bureaucratic organizations" appear increasingly well-founded.  This domination seems to be increasingly facilitated by collaboration - or should that be collusion? - among government and private bureaucracies.  The danger, as we have repeatedly discussed, is that the leaders of these bureaucracies may feel increasing loyalty to the managers' and executives' guild, and decreasing pressure not to fulfill their own and their cronies' self-interest.  We need at least to have some frank discussions about the increasing corporatism of health care and all of society, and what to do about it.

"Government-Run Health Insurance" Run by Corporations? - Two Medicaid Examples

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29 Mar 2011

Pharmacia, or Maybe Pfizer Settles, Only Eight Years Later

Didn't somebody say "justice delayed is justice denied?"*  Here is a story for a Friday afternoon, via a press release from the New York state Attorney General's office, <a href="http://www.bloomberg.com/apps/news?pid=conewsstory&tkr=PFE:US&sid=atVb2W5YOIaE">per Bloomberg</a>: <blockquote>Attorney General Eric T. Schneiderman today announced a multimillion dollar settlement with a pharmaceutical company that inflated the cost of drugs sold to state health programs. The company, Pharmacia Corporation, has paid $2.5 million to the New York Medicaid program and to the Elderly Pharmaceutical Insurance Coverage Program (EPIC), and also to cover the costs of the investigation.</blockquote> Here is more information about the lawsuit: <blockquote>The lawsuit, filed in 2003, charged that Pharmacia failed to report real and accurate prices, and did not take into account discounts, rebates, chargebacks and other price concessions to their wholesalers. As a result, New York's Medicaid Program and the EPIC program paid more for certain drugs manufactured by Pharmacia than those state programs should have. </blockquote> This is an unusual entrant into our march of legal settlements. As noted above, this lawsuit took eight years to settle. The entity that made the settlement, Pharmacia, is actually long gone as an independent company. It merged into Pfizer in 2003 (see <a href="http://www.pfizer.com/about/history/pfizer_pharmacia.jsp">this</a>). Despite the eight years of waiting, the settlement is extremely paltry compared to the size of the company to which the settlement now applies. According to Google Finance, in 2010, Pfizer's annual revenues were more than $67 billion. This settlement adds in a small way to a series of settlements Pfizer has recently made.  Pfizer paid a $2.3 billion settlement in 2009 (see post <a href="http://hcrenewal.blogspot.com/2009/09/pfour-legal-settlements-for-pfizer-why.html">here</a>), and three other major settlements from then to early 2010 (see post <a href="http://hcrenewal.blogspot.com/2010/03/settlement-and-conviction-round-up.html">here</a>).  The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post <a href="http://hcrenewal.blogspot.com/2010/12/drug-companies-are-now-no-1-when-it.html">here</a>).  For other discussions of Pfizer on Health Care Renewal, look <a href="http://hcrenewal.blogspot.com/search/label/Pfizer">here</a>.  The New York Attorney General's press release claimed, "These are hard financial times for our state, and my office will do its part by uncovering every dishonestly claimed dollar, and holding those who take advantage of New York accountable."  Begging his pardon, but could he really have been serious that nicking Pfizer for $2.5 million eight years after the lawsuit was filed is really holding this giant company accountable?  Will this settlement make the company any more accountable than all those that came before, some almost one thousand times bigger?  Meanwhile, as is usually the case in these stories about the march of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements </a>in health care, no person who authorized, directed or implemented the questionable activity apparently paid any penalty or suffered any sort of negative consequences. This week, Matt Taibi asked "<a href="http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216">why isn't Wall Street in jail?"</a> in the title of his most recent Rolling Stone article.  I should also ask, why aren't some leaders of pharmaceutical, device, biotechnology, and managed care corporations in jail?  Just as the leaders of big financial service firms seem to be completely unaccountable for the havoc they created in the global economy, and despite bluster by various government officials, the leaders of big health care corporations seem to be completely unaccountable for the unethical behavior of their companies that continue to inflate the health care bubble. So for the nth time I will repeat:  we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich. Meanwhile, the continued unwillingness of government leaders to take on corporate leaders suggests how corporatist the US has become. Government for the corporations, by the corporations, and of the corporations, bodes no good for the people whose rights are increasingly being displaced. Mr Taibi encapsulated the problem in a more colorful way, and I will end with his version, somewhat edited for this family publication: <blockquote>Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer. 'Everything's f***ed up, and nobody goes to jail,' he said. 'That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that.'</blockquote> * - the quote has been attributed to William Gladstone in a 1868 speech. but may be older than that (link <a href="http://freakonomics.blogs.nytimes.com/2010/06/17/quotes-uncovered-justice-delayed/">here</a>)

Pharmacia, or Maybe Pfizer Settles, Only Eight Years Later

Didn't somebody say "justice delayed is justice denied?"* Here is a story for a Friday afternoon, via a press release from the New York state Attorney General's office, per Bloomberg:Attorney General…

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18 Feb 2011

Passport to ... Fraud? - AmeriHealth Mercy Settles

Back in November, 2010, we <a href="http://hcrenewal.blogspot.com/2010/11/living-high-life-on-money-to-treat-poor.html">discussed</a> the relatively opulent pay and perks given to and conflicts of interest affecting leaders of Passport Health Plan, a non-profit, state (Kentucky) supported Medicaid managed care organization/ health insurer.  This seemed to be another case of health care organizational insiders putting their personal gain ahead of their mission, which was particularly unseemly because their mission was serving the poor.  Now Passport Health is <a href="http://www.courier-journal.com/article/20110126/NEWS01/301260140/1010/features/Passport+Health+Plan+contractor+pays+$2+million+to+settle+fraud+investigation">in the news</a> again, and not in a favorable way, as per the Louisville (Kentucky) Courier-Journal: <blockquote>Passport Health Plan’s main contractor has agreed to pay more than $2 million in damages to the Kentucky Medicaid program to settle a fraud investigation, Attorney General Jack Conway announced Wednesday. The settlement with AmeriHealth Mercy Plan is the result of a nine-month investigation by the Attorney General's Medicaid Fraud Unit into alleged falsification of records by the company that entitled it to more than $677,000 in bonus money for good performance. Conway said the investigation centered on an allegation from a whistleblower that AmeriHealth falsely reported data to the state Medicaid Services Department on the number of Medicaid recipients who received cervical cancer screenings in 2009. The false numbers allowed AmeriHealth to receive the bonus money under the terms of its contract.</blockquote> We have discussed a variety of cases of leaders of health care organizations getting compensation or benefits that seemed disproportionate in their organizations' context. The usual justification seems to be that it takes such rewards to attract the excellent leaders needed by health care organization. Here is another example of leaders who not only seemed to get excessive compensation and benefits, but whose performance seemed far from excellent. Moreover, it suggests that compensation and benefits may actually have an inverse correlation to performance. Organizations whose stewards seem unrealistic about the talents of their hired managers, and dependent on material rewards to retain such managers may lack good stewardship. Leaders who find themselves rewarded beyond any reasonable evaluation of their work may learn the lesson that they cannot ask for too much. Meanwhile, the excess of their rewards may inspire increasing greed rather than increasing devotion to the mission, while the pay and perks increasingly place them in a bubble that insulates from the concerns of the common people who their organizations are supposed to serve. As we have <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">said before</a>, far too often the leaders of not-for-profit health care institutions seem more interested in padding their own bottom lines than upholding the institutions' missions. They often seem entirely unaware of their duty to put those missions ahead of their own self-interest. Like the financial services sector in the era of "greed is good," health care too often seems run by <a href="http://hcrenewal.blogspot.com/2009/12/compensation-madness-insiders-hijacking.html">"insiders hijacking established institutions for their personal benefit."</a> True health care reform would encourage leadership of health care who understand health care and care about its mission, rather than those who see a quick way to make a small fortune. PS - Also note that this is also another example of the sort of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> of misbehavior by health care organizations that seems to have little deterrent effect, mainly because no individual who authorized, directed or implemented the bad behavior suffers any negative consequences.  See our discussion in <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">these previous posts</a>.  True health care reform would also hold leaders accountable for their organizations' misdeeds.

Passport to ... Fraud? - AmeriHealth Mercy Settles

Back in November, 2010, we discussed the relatively opulent pay and perks given to and conflicts of interest affecting leaders of Passport Health Plan, a non-profit, state (Kentucky) supported Medicai…

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10 Feb 2011

"Living High Life on Money to Treat the Poor"

Here is another story that has developed over the last week about questionable goings on at a not-for-profit health care organization.  The organization in question this time was the not-for-profit, but state government supported Medicaid managed care organization/ health insurer for the Louisville, Kentucky region.  The details came from a Louisville (Kentucky) Courier-Journal <a href="http://www.courier-journal.com/article/20101109/NEWS01/311090031/1008/">article</a> about a state auditor's report on the Passport Health Plan: <blockquote>The organization providing Medicaid services in Jefferson and surrounding counties has spent lavishly on such things as travel, meals, salaries, bonuses and lobbying in recent years, the state auditor’s office said in a report released Tuesday. The scathing report, which Gov. Steve Beshear described as 'disheartening,' said two Passport Health Plan officials — Executive Vice President Shannon Turner and Associate Vice President Nici Gaines — were paid well, ate well and traveled extensively. 'Lodgings were often luxury spas and resorts,' the report said. 'The executives used limousine services and dined at expensive restaurants. While these types of expenditures may be routine for many private, for-profit companies, they should not be typical in nonprofit, health care organizations.' The report also said Passport made extraordinary efforts to burnish its public image and gain political support by spending $1 million since 2007 on lobbying and public relations, as well as $423,000 in donations and sponsorships. Many of the donations had no connection with health care, the report said — including $600 to sponsor a reception for the Senate Republican majority in 2009, $10,000 to sponsor an 'inflatable character' for the Kentucky Derby Festival's Pegasus Parade, and contributions to the Boy Scouts, Kentucky Opera, Volunteers of America and others.</blockquote> Here are some more specifics about amounts spent: <blockquote>Travel: Passport spent $106,722 on more than 36 trips including trips to conferences at resorts in New Orleans, Key West, Las Vegas, Seattle, Philadelphia, Tucson, Washington and Coeur d'Alene, Idaho. Meals: Spent $72,994 on 753 meals for groups large and small. These were mostly at Louisville restaurants but included tabs at some famous restaurants outside Kentucky, such as Emeril's and Commander's Palace in New Orleans. Limo services: Five uses of limos totaling $3,996. Lobbying and public relations: Spent $1 million. Donations and sponsorships: Spent $423,000, some with no connection to health care, including $10,000 to be an “Inflatable Character Sponsor” for the Kentucky Derby Festival. Gifts: Spent $9,311 for 95 gifts, which included flowers and Christmas gifts. Salaries: Paid salary and bonuses of $303,750 to Executive Vice President Shannon Turner and $156, 000 to Associate Vice President Nici Gaines in most recent year. </blockquote> Here are more specifics about conflicts of interest: <blockquote>Conflicts of interest: Both Turner and Gaines received additional compensation in contracts with subcontractor they were overseeing, AmeriHealth Mercy. Also, Larry Cook, Passport's chairman and CEO, had divided loyalties because he serves as an executive vice president of U of L. He also was reimbursed $1,717 by AmeriHealth for expenses for a trip to Ireland in 2007. Grants: Many grants were made by Passport to groups with ties to staff and/or board members </blockquote> The organization also was charged with distributing additional funds to area health providers based on their initial investment in the not-for-profit managed care organization, but not on the amount of care they were providing to Medicaid patients: <blockquote>[State Senator Tim] Shaughnessy was particularly concerned about distributions of $10 million in excess funds in late 2008 and again in and 2009 to the large Jefferson County health-care providers that formed Passport. These distributions were reported to the Kentucky Department of Insurance as grants to cover indigent care costs incurred by Passport's provider partners — University Medical Center, University Physician Associates, Norton Healthcare, Jewish Hospital and St. Mary's Healthcare, and the Louisville/Jefferson County Primary Care Association. But the auditor’s report said the money was distributed based on the percentage of the providers' initial investments to create Passport — not the amount of indigent care they provided. And the report said this money was placed in the general funds of these providers 'rather than specifically set aside for uncompensated indigent care.'</blockquote> Finally, it appears that Passport tried to block disclosure of important information, including the compensation of its executives, even though it is a not-for-profit organization entirely funded by the government: <blockquote>Early this year The Courier-Journal filed a request under the state open records law seeking Passport records on compensation of its executives and minutes of its board meetings. But Passport refused to release them, claiming that the law did not apply. The attorney general's office disagreed, saying that Passport is 100 percent publicly funded and must release the records. But Passport again refused and took the matter to Jefferson Circuit Court, where it is pending.</blockquote> So again we have the same tiresome features of leaders who apparently regard their organization as their own personal sandbox: lavish compensation, given the context, luxuries supplied the leadership out of organizational funds, conflicts of interest that apparently increased further the leaders' personal gains, and attempts to keep the whole thing secret. As a Lexington (Kentucky) Herald-Leader <a href="http://www.kentucky.com/2010/11/14/1524618/living-high-life-on-money-to-treat.html">editorial </a>("Living High Life on Money to Treat the Poor") noted, given the mission of the organization, this sort of sleaze is particularly unfortunate: <blockquote>In one way, though, Passport's profligacy deserves special condemnation. Every dollar Passport executives spent on their own pleasurable pursuits, on lobbying to insure tax money kept flowing their way, on buying goodwill in the Louisville area or on any other unnecessary expense was a dollar taken away from providing Medicaid services to the most vulnerable, needy members of society.</blockquote>This case resembles one we <a href="http://hcrenewal.blogspot.com/2010/08/making-community-health-agency-into.html">discussed </a>previously, that of the non-profit community health agency in Florida whose leaders again seemed to regard their job as an opportunity for personal enrichment.  It seems that even leaders of non-profit organizations whose mission is to help the needy may seem to put their own needs before those of their disadvantaged constituents.  Of course, given they may have seen leaders of not-for-profit universities and hospital systems making millions, and leaders of for-profit pharmaceutical, device, and especially managed care organizations/ health insurers making tens of millions, and conclude that their six-figure salaries and occasional luxuries were barely adequate compensation. As we have noted before, the "executives take all" mentality of an era economically dominated by financiers as aristocrats seems to have infected health care.  Somehow we have to restore the idea that executives and managers  like doctors and nurses, should regard their work as calling meant to put the needs of patients and public health first, rather than a quick way to get rich.

"Living High Life on Money to Treat the Poor"

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15 Nov 2010

State, City Settle Case Alleging Medicaid Fraud

We have posted on a variety of settlements of cases alleging health care fraud, but this one has a new twist, as <a href="http://www.nytimes.com/2009/07/22/nyregion/22whistle.html">reported </a>by the NY Times, <blockquote> New York State and New York City officials agreed this week to repay the federal government for more than half a billion dollars in improper Medicaid claims, averting a potential court battle but adding more red ink to the state’s and city’s finances. The settlement, which federal officials said was the largest recovery of Medicaid funds in history, ends a lengthy dispute with the federal government over whether school districts around the state improperly sought Medicaid payments for speech therapy and other services dating to the early 1990s. Under the agreement, which was announced Tuesday, the city will repay about $100 million. The state will pay about $332 million in 10 installments over the next five and a half years and will also give up $107.9 million worth of Medicaid claims now owed by the federal government. Though neither city nor state officials are required to admit wrongdoing under the agreement, it does require the state’s Department of Education to submit to independent monitoring of its Medicaid-financed programs. Since the 1980s, Medicaid has helped school districts pay for the cost of services like speech therapy and psychological counseling for schoolchildren, including the cost of transportation to therapists’ offices. School districts in New York have been among the most aggressive in the country in seeking such aid: one federal study found that New York accounted for 44 percent of all student health services. Those lawsuits, filed under the federal False Claims Act, spurred several audits by the Department of Health and Human Services of city and state programs that finance speech therapy and other programs for disabled children. Those audits found substantial potential for fraud, reporting that a vast majority of the claims submitted did not meet federal requirements, and that in many cases there was no evidence that the services had actually been provided. </blockquote> This may be the first settlement of health care fraud allegations we have discussed in which all the involved parties were government agencies. The current fervent debate in the US about health care reform has focused on ever rising health care costs. However, this debate has largely ignored the ethics of health care, and the sorts of leadership of health care organizations that has lead to rampant and costly mischief, of which this case is just the latest example. How can we control costs while so many health care leaders are seeking every angle to make more money, whatever the consequences?

State, City Settle Case Alleging Medicaid Fraud

We have posted on a variety of settlements of cases alleging health care fraud, but this one has a new twist, as reported by the NY Times,New York State and New York City officials agreed this week to…

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22 Jul 2009

Sanofi-Aventis Settles

Here is another addition to the parade of multi-million dollar legal settlements by health care corporations. As <a href="http://www.google.com/hostednews/ap/article/ALeqM5iz-Iv0odwT89eHgHRlkwHSgLx5RwD98FB4T80">reported by the AP</a>: <blockquote> Drugmaker Sanofi-Aventis has agreed to pay nearly $100 million to settle allegations it cheated Medicaid on the cost of nasal sprays. The Justice Department said Aventis Pharmaceutical Inc., a wholly owned subsidiary of Sanofi-Aventis U.S. LLC, has agreed to pay the government $95.5 million to settle the charges. The government charged that between 1995 and 2000, Aventis and its corporate predecessors did not offer Medicaid the best prices for the sprays Azmacort, Nasacort and Nasacort AQ. In reaching the settlement, Sanofi-Aventis U.S. did not admit any wrongdoing. The company, based in Bridgewater, N.J., issued a statement saying it believed the old pricing system was legal. Under the law, the company was required to tell Medicaid the lowest price that it charged companies for those products, and offer state Medicaid programs rebates based on those prices. Prosecutors contend that in order to dodge that obligation, Aventis entered into a private deal with the HMO Kaiser Permanente that repackaged Aventis drugs under a new label, allowing them to overcharge Medicaid programs for the same product. </blockquote> It seems that scarcely a week goes by without a settlement of charges of unethical behavior by some major health care organization. The ongoing parade of such cases ought to inspire some worry about the ethics of the leaders of such organization. Given the current very public discussion of how expensive health care has become, one would think that there would be some discussion of how much of this expense is due to various kinds of deceptive and unethical behavior by some of the biggest, richest, and most powerful health care organizations. But perhaps that would be too upsetting for those who make so much money running these organizations. As we have <a href="http://hcrenewal.blogspot.com/2009/05/synthes-settles-agrees-to-stop-giving.html">said before</a>, most recently <a href="http://hcrenewal.blogspot.com/2009/05/novo-nordisk-accepts-deferred.html">here</a>, while human beings authorized or committed the acts that got the organization in trouble, rarely do these people seem to suffer any negative consequences. At most, the organization may pay a fine. In this case, the fine was, in corporate terms, of modest size. However, even a large fine, may come out of dividends or the stock price, dispersing the cost to stock-holders, or out of salaries across the board, dispersing the cost to all employees. Thus, those who got the organization into trouble are unlikely to feel pain from it. Perhaps because of reverence for all organizations related to health care, and fear that the bankruptcy of any health care organization will leave patients in the lurch, prosecutors do not seem inclined to actually prosecute such organizations. The net effect, though, seems to be that dishonest executives of health care organizations can continue to act with impunity.Until bad leadership of health care organizations leads to negative consequences for those practicing it, health care leadership can be expected to continuously degrade. ADDENDUM (2 June, 2009) - See <a href="http://scienceblogs.com/effectmeasure/2009/06/placing_a_vaccine_order_with_c.php#more">these comments </a>on the Effect Measure blog.

Sanofi-Aventis Settles

Here is another addition to the parade of multi-million dollar legal settlements by health care corporations. As reported by the AP:Drugmaker Sanofi-Aventis has agreed to pay nearly $100 million to se…

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29 May 2009

Mismanagement Are Us

The media today contains a host of stories about health care mismanagement at all sorts of organizations. Not for Profit RI Blue Cross Fights to Keep Paying Directors The <a href="http://www.projo.com/news/content/projo_20041215_blue15.eb905.html">Providence Journal reported </a>that not-for-profit RI Blue Cross is fighting in court to continue providing health insurance to its own board members, including the chair, also the head of the RI AFL-CIO, despite a new law that forbids compensation to board members without state approval. RI Blue Cross , which has about 70% of the health insurance market in little Rhode Island, fired its CEO this year after news reports of his huge salary, receipt of a $600,000 no-interest loan which he did not pay back, and, receipt of free acupuncture treatments from a practitioner who wanted to influence Blue Cross reimbursement policies. Meanwhile, Blue Cross was paying health care professionals poorly (often less than Medicare), while hiking premiums at double-digit rates. "Where's the Outrage Over King/Drew?" King/Drew Medical Center in Los Angeles, run by Los Angeles County, was <a href="http://www.latimes.com/news/local/kingdrew/la-me-kdday1dec05,0,5281026.story">documented by the Los Angeles Times </a>to have a history of medical errors and systemic quality problems, accompanied by high costs, and chronic personnel difficulties, (most strikingly 120 workers' compensation claims involving injuries incurred by falling out of chairs.) Today, <a href="http://www.latimes.com/news/opinion/la-oe-morrison15dec15,0,3878267.column?coll=la-home-utilities">op-ed columnist Pat Morrison wondered </a>at the silence of the politicians responsible for its oversight. Perhaps, they were afraid to criticize "the most symbolic and substantive institution in the black community", (per Asseymblyman Mervy Dymally). Morrison concluded that to politicians, "saving the hospital and its jobs matter more than saving the patients whose lives depend on it." British Foundation Hospital Trust Loses its Chair The chair of one of the new foundation hospital trusts in the UK was fired by the external Monitor organization after it incurred more than an 11 million pound deficit since April, <a href="http:///www.guardian.co.uk/uk_news/story/0,3604,1373818,00.html">reported the Guardian</a>. The trust's board and the Monitor organization have been exchanging charges about who is to blame. The Monitor accused the trust's board of covering up the deficit, after initially projecting a large surplus. Medicaid Money Went for Care of Dead People Several state Medicaid organizations were accused of mistaken payments. In Colorado, millions went to pay for care of people who were already dead, <a href="http://rockymountainnews.com/drmn/legislature/article/0,1299,DRMN_37_3400136,00.html">per the Rocky Mountain News</a>. In Washington (state), 1.4 million pills, including the narcotics Vicodin and Percocet, went missing, <a href="http://seattlepi.nwsource.com/local/aplocal_story.asp?category=6420&slug=WA%20Unaudited%20Medicaid">per the Seattle Post-Intelligencer</a>. Flawed Defibrillator Evaded FDA Scrutiny <a href="http://www.nytimes.com/2004/12/15/business/15device.html?hp&amp;ex=1103173200&en=1acb9230d6a94d4e&ei=5094&partner=homepage">The New York Times reported </a>how defective defibrillators escaped FDA oversight. The former CEO of Access Cardiosystems, locked in a legal battle with the company, notified the FDA late in 2003 of potentially defective products. An initial inspection did not find major problems, but when the company received more reports of problems last summer, the FDA responded failed to send inspectors back. A recall was finally ordered in November, and the company closed its doors, leaving customers, including emergency services units, scrambling to replace their now useless defibrillators.

Mismanagement Are Us

The media today contains a host of stories about health care mismanagement at all sorts of organizations.Not for Profit RI Blue Cross Fights to Keep Paying DirectorsThe Providence Journal reported tha…

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15 Dec 2004

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