Is Medicaid Reform Good for Taxpayers?

Earlier this year, Florida lawmakers passed legislation (HB 7107 & HB 7109) that would radically alter the way Medicaid services are delivered throughout Florida by pushing over 2 million Floridians into managed care plans.


Florida PIRG Education Fund

Earlier this year, Florida lawmakers passed legislation (HB 7107 & HB 7109) that would radically alter the way Medicaid services are delivered throughout Florida by pushing over 2 million Floridians into managed care plans.

The current Medicaid reform is directly based on controversial Medicaid experiments that have taken place over the last five years in five pilot counties (Duval, Nassau, Baker, Clay and Broward). However, this new proposal expands the concept greatly by creating a Statewide Medicaid Managed Care system (SMMC) that would take place in all 67 counties. 

With insufficient new protections being put into place to change the behavior of bad actors, this Medicaid reform plan is a recipe for a massive taxpayer rip-off.

To date, there is no credible research or data indicating that the pilots have been effective at achieving their goals. It is unclear whether they have saved money, and if so, whether that was at the expense of needed care. 

For-profit Medicaid managed care plans also have a horrific track record of defrauding the state and denying care in order to increase profits. This report looks critically at that track record while asking why the state is forging ahead to aggressively expand a pilot program that has not been proven to work.

According to Sean J. Hellien the corporate whistleblower that exposed Wellcare’s many Medicaid Fraud schemes, the company cheated the state out of $300 to $600 million dollars. It is clear that the HMO illegally pocketed well over $100 million in taxpayer dollars but the full extent of WellCare’s fraud has yet to be fully determined and documented.

The WellCare whistleblower suit gives us a peek behind the corporate curtain to look at the many schemes HMO used to maximize profits by defrauding the state, taxpayers and by denying services.

•    The WellCare whistleblower complaint reveals that Amerigroup, Valueoptions, Humana, United Healthcare and Vista, all used similar tactics to WellCare, such as false statements to illegally retain overpayments from the state. Hellain’s complaint also shines a light on collaborative efforts among companies to defraud the state and avoid being detected. 

•    In January of 2011, Amerigroup Community Care and United Healthcare were fined close to $4 million for the denial or improper reduction of speech-therapy services for children in the state’s Medicaid program.

•    Earlier this year, it was discovered that four private health insurers who participated in the state Medicaid privatization pilots, AmeriGroup Florida, Inc., Vista Health Plan, United Healthcare and WellCare, falsely reported spending millions of dollars on patient care in the State Children’s Health Insurance Program, costing the state $3.1 million between 2003 and 2007.

•    Last month, Humana Inc., was fined $3.3 million by the state for failing to promptly report Medicaid fraud or abuse to state investigators as the law requires. 

•    Total Medicaid HMO fines by AHCA from 2006-2011 amounted to $6,186,300. 

Medicaid HMOs stand to make a fortune if the state is given a green light by CMS (U.S. Center for Medicare & Medicaid Services) to move forward with the current Medicaid proposal. This is clear when looking at the money they are spending in political contributions and on lobbyist. Companies are looking to make billions by investing millions in the political process. The report found that Medicaid & Commercial HMOs (some of which will enter the Medicaid market if the SMMC moves ahead) paid: 

•    $$4,673,145.25 to political parties 

•    $971,660 to political committees and ECO’s

•    $378,750 to individual candidates

•    $98,000 to cabinet positions

It is clear that HMOs plan to make a great deal of money if the SMMC moves forward. However, the SMMC reform proposal is a bad deal for Florida’s taxpayers. It is essentially taking a failed five county experiment that was rife with fraud and expanding it to all sixty-seven Florida counties. 

The Medicaid Managed Care Pilot Program should not be expanded unless there is convincing evidence from an independent evaluation conducted by an organization with a reputation for unbiased research that an expansion would result in cost savings to the State of Florida and improve the health care services received by Medicaid enrollees. To date, all objective research and a great deal of anecdotal evidence suggest that the pilot projects have not been effective.

CMS should deny the state’s request for a waiver to create the SMMC. However, without changes to greater protect against fraud and abuse, and guarantees like an MLR that taxpayers will not get ripped off, this proposal could funnel billions from Florida’s citizens to big HMO corporations.