You could hear the outrage in the voices of some of the NC legislators (finally, for the love of God – our General Assembly has taken the blinders off their eyes regarding the MCOs) at the Joint Legislative Oversight Committee on Medicaid and NC Health Choice on Tuesday, December 6, 2016, when Cardinal Innovations‘, a NC managed care organization (MCO) that manages our Medicaid behavioral health care in its catchment area, CEO, Richard Topping, stated that his salary was raised this year from $400,000 to $635,000 – with our tax dollars. (Whoa – totally understand if you have to read that sentence multiple times; it was extraordinarily complex).
Senator Tommy Tucker (R-Waxhaw) was especially incensed. He said, “I received minutes from your board, Sept. 16 of 2016, they made that motion, that your 2017 comp package, they raised your salary from $400,000 to $635,000, they gave you a 0 to 30 percent bonus potential which could be roughly another $250,000 and also you have some sort of annuity or long-term package of $412,000,” said Sen. Tommy Tucker.
Sen. Tucker was not alone.
Representative Dollar was also concerned. But even more surprising than our legislators stepping up to the plate and holding an MCO accountable (MCOs have expensive lobbyists – with our tax dollars), the State’s Department of Health and Human Services (DHHS) Secretary Rick Brajer was visibly infuriated. He spoke sharply and interrogated Topping as to his acute income increase, as well as the benefits attached.
As a health care blogger, I receive so many emails from blog readers, including parents of disabled children, who are not receiving the medically necessary Medicaid behavioral health care services for their developmentally disabled children. MCOs are denying medically necessary services. MCOs are terminating qualified health care providers. MCOs are putting access to care at issue. BTW – even if the MCOs only terminated 1 provider and stopped 1 Medicaid recipient from receiving behavioral health care services from their provider of choice, that MCO would be in violation of federal law access to care regulations. But, MCOs are terminating multiple – maybe hundreds – of health care providers. MCOs are nickeling and diming health care providers. Yet, CEO Topping will reap $635,000+ as a salary.
The MCOs, including Cardinal, do not have assets except for our tax dollars. They are not incorporated. They are not private entities. They are extensions of our “single state agency” DHHS. The MCOs step into the shoes of DHHS. The MCOs are state agencies. The MCOs are paid with our tax dollars. Our tax dollars should be used (and are budgeted) to provide Medicaid behavioral health care services for our most needy and to be paid to those health care providers, who still accept Medicaid and provide services to our most vulnerable population. News alert – These providers who render behavioral health care services to Medicaid recipients do not make $635,000/year, or anywhere even close. The reimbursement rates for Medicaid is paltry, at best. Toppings should be embarrassed for even accepting a $635,000 salary. The money, instead, should go to increasing the reimbursements rates – or maintaining a provider network without terminating providers ad nauseum. Or providing medically necessary services to Medicaid recipients.
Rest assured, Cardinal is not the only MCO lining the pockets of its executives. While both Trillium and Alliance, other MCOs, pay their CEOs under $200,000 (still nothing to sneeze at). Alliance, however, throws its tax dollars at private, legal counsel. No in-house counsel for Alliance! Oh, no! Alliance hires expensive, private counsel to defend its actions. Another way our tax dollars are at work. And – my question – why in the world does Alliance, or any other MCO, need to hire legal counsel? Our State has perfectly competent attorneys at our Attorney General’s office, who are on salary to defend the state, and its agencies, for any issue. The MCOs stand in the shoes of the State when it comes to Medicaid for behavioral health. The MCOs should utilize the attorneys the State already employs – not a high-dollar, private law firm. These are our tax dollars!
There have been few times that I have praised DHHS in my blogs. I will readily admit that I am harsh on DHHS’ actions/nonactions with our tax dollars. And I am now not recanting any of my prior opinions. But, last Tuesday, Sec. Brajer held Toppings feet to the fire. Thank you, Brajer, for realizing the horror of an MCO CEO earning $635,000/year while our most needy population goes under-served, and, sometimes not served at all, with medically necessary behavioral health care services.
What is deeply concerning is that if Sec. Brajer is this troubled by actions by the MCOs, or, at least, Cardinal, why can he not DO SOMETHING?? Where is the supervision of the MCOs by DHHS? I’ve read the contracts between the MCOs and DHHS. DHHS is the supervising entity over the MCOs. Our Waiver to the federal government promises that DHHS will supervise the MCOs.
If the Secretary of DHHS cannot control the MCOs, who can?
Our State Auditor Beth Wood’s most recent audit finds that The Public Schools of Robeson County failed to spend approximately $1 million in Medicaid dollars intended for special needs children in schools!!
See audit report.
“The Public Schools of Robeson County (School District) did not use approximately $1 million per year in Medicaid administrative reimbursements to provide required services to students with disabilities. The School District missed this opportunity to better serve students with disabilities because it was unaware of a contractual requirement to use the Medicaid reimbursements to provide required services.
Over the last three years, the School District reported that it used $26,780 out of $3.16 million in Medicaid administrative reimbursements to provide services to students with disabilities.
The amounts reportedly spent each year are as follows:
• $ 8,969 out of $1,010,397 (0.89%) in 2013
• $12,043 out of $872,299 (1.38%) in 2012
• $ 5,768 out of $1,278,519 (0.45%) in 2011”
The question that I have after reading the audit report is…WHERE IS THE MONEY?
Was this $1 million given to the school system and spent on items other than services for children? Is the school district sitting on a surplus of money that was unspent? Or was this amount budgeted to the school system and the remainder or unspent money is sitting in our state checking account?
To me, it is relatively unclear from the audit report which of the above scenarios is an accurate depiction of the facts. If anyone knows, let me know.
On July 1, 2014, Cardinal Innovations, one of NC’s managed care organizations (MCOs) granted its former CEO, Ms. Pam Shipman, a 53% salary increase, raising her salary to $400,000/year. In addition to the raise, Cardinal issued Ms. Shipman a $65,000 bonus based on 2013-2014 performance.
$400,000 a year, plus bonuses. Apparently, I got into the wrong career; the public sector seems to pay substantially more.
Then in July 2015, according to the article in the Charlotte Observer, Cardinals paid Ms. Shipman an additional $424,975, as severance. Within one year, Ms. Shipman was paid by Cardinal a whopping $889,975. Almost one million dollars!!!! To manage 16 counties’ behavioral health care services for Medicaid recipients.
For comparison purposes, the President of the United States earns $400,000/year (to run the entire country). Does the CEO of Cardinal equate to the President of the United States? Like the President, the CEO of Cardinal, along with all the other MCOs’ CEOs, are compensated with tax dollars.
Remember that the entire purpose of the MCO system is to decrease the risk of Medicaid budget overspending by placing the financial risk of overspending on the MCO instead of the State. In theory, the MCOs would be apt to conservatively spend funds and more carefully monitor the behavioral health care services provided to consumers within its catchment area to ensure medically necessity and not wasteful, unnecessary services.
Also, in theory, if the mission of the MCOs were to provide top-quality, medically necessary, behavioral health care services for all Medicaid recipients in need within its catchment area, as the MCOs often tout, then, theoretically, the MCOs would decrease administrative costs in order to provide higher quality, beefier services, increase reimbursement rates to incentivize health care providers to accept Medicaid, and maybe, even, not build a brand, new, stand-alone facility with top-notch technology and a cafeteria that looks how I would imagine Googles’ to look.
Here is how Cardinal’s building was described in 2010:
This new three-story, 79,000-square-foot facility is divided into two separate structures joined by a connecting bridge. The 69,000-square-foot building houses the regional headquarters and includes Class A office space with conference rooms on each floor and a fully equipped corporate board room. This building also houses a consumer gallery and a staff cafe offering an outdoor dining area on a cantilevered balcony overlooking a landscaped ravine. The 10,000-square-foot connecting building houses a corporate training center. Computer access flooring is installed throughout the facility and is supported by a large server room to maintain redundancy of information flow.
The MCOs are not private companies. They do not sell products or services. Our tax dollars comprise the MCOs’ budget. Here is a breakdown of Cardinal’s budgetary sources from last year.
The so-called “revenues” are not revenues; they are tax dollars…our tax dollars.
78.1% of Cardinal’s budget, in 2014, came from our Medicaid budget. The remaining 21.7% came from state, federal, and county tax dollars, leaving .2% in the “other” category.
Because Cardinal’s budget is created with tax dollars, Cardinal is a public company working for all of us, tax paying, NC, residents.
When we hear that Tim Cook, Apple’s CEO, received $9.22 million in compensation last year, we only contributed to his salary if we bought Apple products. If I never bought an Apple product, then his extraordinarily high salary is irrelevant to me. If I did buy an Apple product, then my purchase was a voluntary choice to increase Apple’s profits, or revenues.
When we hear that Cardinal Innovations paid $424,975 to ousted CEO, Pam Shipman, over and above her normal salary of $400,000 a year, we all contributed to Shipman’s compensation involuntarily. Similarly, the new CEO, Richard Toppings, received a raise when he became CEO to increase his salary to $400,000 a year. Again, we contributed to his salary.
A private company must answer to its Board of Directors. But an MCO, such as Cardinal, must answer to tax payers.
I work very hard, and I expect that my dollars be used intelligently and for the betterment of society as a whole. Isn’t that the purpose of taxes? I do not pay taxes in order for Cardinal to pay its CEO $400,000.
For better or for worse, a large percentage of our tax dollars, here in NC, go to the Medicaid budget. I would venture that most people would agree that, as a society, we have a moral responsibility to ensure that our most vulnerable population…our poorest citizens…have adequate health care. No one should be denied medical coverage and our physicians cannot be expected to dole out charity beyond their means.
We know that Medicaid recipients have a difficult time finding physicians who will accept Medicaid. We know that a Medicaid card is inferior to a private payor card and limits provider choice and allowable services. We know that certain services for which our private insurances pay, simply, are not covered by Medicaid. Why should a Medicaid-insured person receive sub-par medical services or have more difficulty finding willing providers, while privately insured persons receive high quality medical care with little effort? See blog or blog.
Part of the trouble with Medicaid is the low reimbursements given to health care providers. Health-care consulting firm Merritt Hawkins conducted a study of Medicaid acceptance rates which found that just 45.7 percent of physicians are now accepting Medicaid patients in the U.S.’s largest 15 cities and the numbers worsen when you look at sub-specialties.
The reimbursement rates are so low for health care providers; the Medicaid services are inadequate, at best; and people in need of care have difficulty finding Medicaid physicians. Yet the CEO of Cardinal Innovations is compensated $400,000 per year.
Cardinal has 635 employees. Its five, top-paid executives are compensated $284,000-$400,000 with bonuses ranging $56,500-$122,000.
Richard Topping, Cardinal’s new CEO, told the Charlotte Observer that “it doesn’t cut into Medicaid services.”
He was also quoted as saying, “It’s a lot of money. It is. You’ve just got to look at the size and the scope and the scale.”
In contrast, Governor McCrory is compensated approximately $128,000. Is McCrory’s “size, scope, and scale” smaller than the CEO’s of Cardinal? Is the CEO of Cardinal “size and scope and scale,” more akin to the President of the US?
“We are a public entity that acts like a private company for a public purpose,” Toppings says. Each MCO’s Board of Directors approve salaries and bonuses.
Cardinal is not the only MCO in NC compensating its CEO very well. However, according to the Charlotte Observer, Cardinal’s CEO’s compensation takes the cake.
Smokey Mountain Center (SMC) pays its Chief Medical Officer Craig Martin $284,000 with a $6,789 longevity bonus.
Four years ago, before the initial 11 MCOs, the administrative cost of the MCOs was nonexistent (except for the pilot program, Piedmont Behavioral Health, which is Cardinal now). Implementing the MCO system increased administrative costs, without question. But by how much? How much additional administrative costs are acceptable?
Is it acceptable to pay $400,000+ for a CEO of a public entity with our tax dollars?