Managed Care – Eight Reasons Why MCOs Smell Like Pre-Minced Garlic

When it comes to the managed care organizations (MCOs) in NC, something smells rancid, like pre-minced garlic. When I first met my husband, Scott, I cooked with pre-minced garlic that comes in a jar. I figured it was easier than buying fresh garlic and dicing it myself. Scott bought fresh garlic and diced it. Then he asked me to smell the fresh garlic versus the pre-minced garlic. There was no contest. Next to the fresh garlic, the pre-minced garlic smelled rancid. That is the same odor I smell when I read information about the MCOs – pre-minced garlic in a jar.

garlic minced-garlic

In NC, MCOs are charged with managing Medicaid funds for behavioral health care, developmentally disabled, and substance abuse services. When the MCOs were initially created, we had 13. These are geographically situated, so providers and recipients have no choice with which MCO to interact. If you live in Sandhills’ catchment area, then you must go through Sandhills. If you provide services in Cardinal’s catchment area, then you must contract with Cardinal – even though you already have a provider participation agreement with the State of NC to provide Medicaid services in the State of NC.

Over the years, there has been consolidation, and now we have 7 MCOs.

newestmco

From left to right: Smoky Mountain (Duke blue); Partners Behavioral Health (Wake Forest gold); Cardinal Innovations Healthcare (ECU purple); Sandhills (UNCC green); Alliance Behavioral Healthcare (mint green); Eastpointe (Gap Khaki); and Trillium (highlighter yellow/green).

Recently, Cardinal (ECU purple) and Eastpointe (Gap khaki) announced they will consolidate, pending authorization from the Secretary of DHHS. The 20-county Cardinal will morph into a 32-county, MCO giant.

Here is the source of the rancid, pre-minced, garlic smell (in my opinion):

One – MCOs are not private entities. MCOs are prepaid with our tax dollars. Therefore, unlike Blue Cross Blue Shield, the MCOs must answer to NC taxpayers. The MCOs owe a duty of financial responsibility to taxpayers, just like the state government, cities, and towns.

Two – Cardinal CEO, Richard Topping, is paid $635,000, plus he has a 0 to 30 percent bonus potential which could be roughly another $250,000, plus he has some sort of annuity or long-term package of $412,000 (with our tax dollars).

Three – Cardinal is selling or has sold the 26 properties it owns or owned (with our tax dollars) to lease office space in the NASCAR Plaza office tower in uptown Charlotte for $300 to $400 per square foot plus employee parking (with our tax dollars).

Four – Cardinal charges 8% of public funds for its administrative costs. (Does that include Topping’s salary and bonuses?) How many employees are salaried by Cardinal? (with our tax dollars).

Five – The MCOs are prepaid. Once the MCOs receive the funds, the funds are public funds and subject to fiscal scrutiny. However, the MCOs keep whatever funds that it has at the end of the fiscal year. In other words, the MCOs pocket any money that was NOT used to reimburse a provider for a service rendered to a Medicaid recipient. Cardinal – alone – handles around $2.8 billion in Medicaid funding per year for behavioral health services. The financial incentive for MCOs? Terminate providers and reduce/deny services.

Six – MCOs are terminating providers and limiting access to care. In my law practice, I am constantly defending behavioral health care providers that are terminated from an MCO catchment area without cause or with erroneous cause. For example, an agency was terminated from their MCO because the agency had switched administrative offices without telling the MCO. The agency continued to provide quality services to those in need. But, because of a technicality, not informing the MCO that the agency moved administrative offices, the MCO terminated the contract. Which,in turn, puts more money in the MCO’s pocket; one less provider to pay.  Is a change of address really a material breach of a contract? Regardless – it is an excuse.

Seven – Medicaid recipients are not receiving medically necessary services. Either the catchment areas do not have enough providers, the MCOs are denying and reducing medically necessary services, or both. Cardinal cut 11 of its state-funded services. Parents of disabled, adult children write to me, complaining that their services from their MCO have been slashed for no reason….But the MCOs are saving NC money!

Eight – The MCOs ended 2015 with a collective $842 million in the bank. Wonder how much money the MCOs have now…(with our tax dollars).

Rancid, I say. Rancid!

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on February 3, 2017, in "Single State Agency", 1915 b/c Waiver, Access to Care, ACTT, Administrative Costs, Alliance, Behavioral health, CABHA, Cardinal Innovations, CenterPoint, Decrease in Medicaid Spending, DHHS, EastPointe, ECBH, Gordon & Rees, Health Care Providers and Services, In Home Care Services, Knicole Emanuel, Managed Care, MCO, Medicaid, Medicaid Advocate, Medicaid Attorney, Medicaid Contracts, Medicaid Costs, Medicaid Funds, Medicaid Providers, Medicaid Recipients, Medicaid Reimbursement, Medicaid Reimbursements, Medicaid Services, Medicaid Spending, Medical Necessity, Mental Health, Mental Health Problems, Mental Illness, North Carolina, Outpatient Behavioral Health, Partners, Psychiatrists, Psychologists, Residential Services, Sandhills, Smokey Mountain Center, Tax Dollars, Taxes, Taxpayers, Termination of Medicaid Contract, Trillium, Western Highlands and tagged , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. 9 Comments.

  1. As a parent of an adult with dd, I totally agree and I would add from experience that MCO’s try to save their money in their budgets by claiming that a request should be covered by general medicaid, instead of under the waiver, thus removing it from their obligation. Either way, it costs taxpayer dollars so they are not saving $ for taxpayer as they sometimes suggest. At best, when they are correct, the system further delays whatever the service or equipment the individual needs, generally by months. (The process for the initial request from the MCO may take a couple of months, then the process , including getting signatures again from relevant providers and parties, must start over). But I would guess from my personal experience, that at least 50% of the denials which arise from the MCO position that the particular request should be covered under regular Medicaid are wrong. My example is needing a particular component, in this case side pads, for a ceiling lift/transfer system which #1, was made only for this particular system, and #2, a ceiling mounted system is covered under Home Modifications. My MCO claimed, ignorantly, that because the item requested was pads, the pads would be covered under regular Medicaid instead of the waiver. These pads were made only as an accessory for the system which had previously been paid for by the waiver. And regular Medicaid would not cover these pads, but the MCO stubbornly insisted that the pads made for this system did not fall under Home Modifications. Also, the more recently formed MCO would not use the vendor for these pads that had previously installed and serviced the system, because they did not want to increase vendors. This particular system only has ne vendor in our state, so SOL. I ended up purchasing the $250 pads myself.
    I find the MCO’s create more and more headaches for DD families.
    And to another point, taking away case management by the state and instead replacing with so called care coordinators who A) have an instant conflict of interest because they are employed and subordinate to those administrators who make those decisions and approvals for any requests, meaning that if they advocate and push for a needed service for families they could be running up against supervisors and others up the food chain, B) have been told not to advocate for individuals and families, something sorely needed within the system, and C) are assigned an unbelievable caseload, which basically inhibits families from full knowledge of choices or from receiving requests in a timely manner.

  2. Spot on!
    We were told for years that our son is ‘too medically needy’ for the waiver, only to be referred right back to Cardinal by Medicaid for the broader services. Cardinal made this decision after reviewing his records and performing their ‘SIS Scale’ (which is not accurate in brain injury). Our son should have had a slot available because of his age and CAP-C coverage, but was pushed off into CAP-DA at the age of 20.
    We were told that Cardinals ‘only obligation is to assist in a facility placement, which may or may not be in the State of North Carolina’. Cardinal administration refused to put anything in writing. Eventually they did put him on the ‘Registry of Unmet Needs’, their euphemism for waiting list. And we wait. And wait.
    Cardinal also has control of distribution of State Funds, monies to assist the neediest among us who are not eligible for waivers or who are waiting for a slot.
    As they grow, Cardinal appears to be becoming further out of reach of the clients they serve. Transportation is already an issue, and closing local offices to sequester themselves uptown only makes a bad situation worse.
    The salary mentioned, when compared to other MCOs, is outrageous. That one salary is half of the state funding for the new Brain Injury Waiver. People have had assistance hours cut, funds cut, refused, caregivers pay rates were cut..leading to a shortage in available help for families. What ’employer’ (the mco sets the reimbursement rates) cuts pay after years of employment? People are quitting to work at WalMart where the pay is better. That’s how much our disabled citizens are valued.
    Consumers have no choice. Phone calls often go unanswered, calls not returned for days if at all. There is frustration on all sides, mostly from families afraid to speak up at consumer forums for fear of backlash. When there is only one game in town, that fear is justified.

  3. Great post as usual, Knicole! Keep up the great work!

  4. Thank you Knicole! Love how you spread the word!

  5. KLGRUMBLATT@aol.com

    Kathleen L Grumblatt, LCSW, DCSW

  6. Thanks for keeping this story going. Someone needs to bring attention to the unethical practices of MCO’s like Cardinal Innovations. DHHS sure isn’t going their job.

  7. Another Taxpayer

    “plus he has some sort of annuity or long-term package of $412,000 (with our tax dollars).”

    I don’t know what that might be, but I do know the Cardinal employees have consistently reduced or lost their benefits, sick time,etc.. so I can only imagine. Or perhaps it is Richard Topping’s consultants, realtors, hand-picked board and wife who have benefited as well. The state audit revealed much, but employee morale is never captured adequately in these assessments either, including new parking expenses for the employee.

  1. Pingback: House Bill 403: A Potential Upheaval of Medicaid! | medicaidlaw-nc

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