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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!

CEO of Cardinal Gets a Raise – With Our Tax Dollars!

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 $635,000with 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.

FINALLY!!! Not the first time that I have blogged about the mismanagement (my word) of our tax dollars. See blog. And blog.

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?

Embezzlement at MCO Eastpointe and the Freedom of Information Act

How many times have I blogged about the unsupervised, unharnessed actions of the managed care organizations (MCOs) in our State, which happen to be managing billions of our tax dollars for Medicaid behavioral health care? These MCOs, which are in the process of consolidating to create even larger MCOs and to handle even more tax dollar money, are running rampant and unsupervised by the Department of Health and Human Services (DHHS). See blog. And blog.

DHHS is the single state agency charged with managing Medicaid for NC. According to federal law, the single state agency may not delegate certain duties. Our 1915 b/c Waiver allows DHHS to waive some duties related to behavioral health, but not all. For example, it is, ultimately, DHHS’ duty to ensure that our Medicaid recipients have access to care.

It is, ultimately, DHHS’ duty to ensure that the MCOs are following the law.

However, recently, that duty was picked up by the State Bureau of Investigation (SBI). Thank goodness someone is reviewing the MCO’s books!

SBI arrested former Eastpointe CFO William Robert Canupp on December 16, 2015, for nine charges of financial fraud and embezzlement. Eastpointe is one of our MCOs and manages behavioral health care for Medicaid and state-funded programs in 12 counties. These allegations of fraud and embezzlement are from when Canupp worked at Eastpointe.

This recent arrest demonstrates a real need for accountability at the MCOs. While Eastpointe and the other MCOs are terminating health provider contracts and denying/reducing services, who is reviewing these decisions. Apparently, not DHHS.

What can you do?

As you should know, the MCOs are not private entities. They are agents of the state and receive funding from county, state, and federal funds. In other words, the MCOs manage and spend our tax dollars. Therefore, these entities are liable to us for all expenditures and are subject to the Freedom of Information Act or FOIA. The FOIA allows any one of you to request any financial record, any document showing access to care, any document showing monies spent on actual care versus administrative costs, or any other information you desire and the MCOs must provide it to you.

Here is a link to a sample public records request.

The MCOs are bound by NC General Statute, Chapter 132 and must allow you to examine any requested documents within a reasonable time.

Use the FOIA to get answers!

New NC Senate Bill Proposes 4-6 MCOs!! And the Creation of ARPLOs!!

Senate Bill 568 was filed today!!! It is a bill that you should follow!

SB 568 reads: “It is the intent of the General Assembly to transform the State’s health care purchasing methods from a traditional fee-for-service system into a value-based system that provides budget predictability for the taxpayers of this State while ensuring quality care to those in need.”

It proposes, among other things, a consolidation of the 9 current managed care organizations (MCO) here in North Carolina to “not more than 6” and “no less than 4” MCOs.

It further establishes another acronym: ARPLOs.

“At-Risk Provider-Led Organizations (ARPLOs). ARPLOs are capitated health plans administered by North Carolina’s provider-led Accountable Care Organizations that will manage and coordinate the care for the Patient Population, outside of the PCMHs, pending waiver approval where appropriate for this transformation by the Center for Medicare & Medicaid Services.”

Remember, the House has pushed for ACOs and the Senate has pushed for MCOs.  See blog.

Is the Senate bending toward the House??????

More to come…

CSC Sued in NY: Accused of Multi-Million Dollar Healthcare Fraud Scheme!!

Remember the NCTracks lawsuit?  NCTracks Derailed: Class Action Lawsuit Filed!!  Computer Sciences Corporation (CSC) is one of the Defendants in that action here in NC.

Well, Monday CSC was hit with another enormous lawsuit.  This one is filed in New York, and the Plaintiff is the U.S. Federal Government.

The feds are accusing CSC of a multi-million dollar Medicaid fraud scheme through its Medicaid billing software CSC implemented in NY.

Here is the press release.

From the complaint: “[T]hese fraud schemes were far from isolated events; instead, they were part and parcel of a general practice at CSC and the City to blatantly disregard their obligations to comply with Medicaid billing requirements.” (Compl. par. 8.)

The feds are seeking treble damages, which permits a court to triple the amount of the actual/compensatory damages to be awarded to a prevailing plaintiff.

According to the lawsuit, CSC has received millions of taxpayer dollars (budgeted for Medicaid) unlawfully and in direct violation of federal billing requirements.

If I were a taxpayer in NY, I would be incensed!!!! If I were a Medicaid recipient of parent of a child receiving Medicaid services, I would be furious!!

Now, take a step back…who is administering our Medicaid billing system here in NC?

Answer: CSC

This will almost certainly cause the federal government to peer a bit closer at all CSC’s billing software systems in other states…

NC Taxpayers Demand Accountability as to Behavioral Health Care Medicaid Funds (And That Medicaid Recipients Reap the Benefit of Such Funds).

I ask you, why do employees of an MCO receive better health care plans with Medicaid dollars than a Medicaid recipient with Medicaid dollars?

The State of North Carolina is accountable to me, and every taxpaying citizen, for taxes spent. 

Similarly, executives of a corporation owe a duty to shareholders to account for stock crashing.  Remember Enron? What a disaster!

Enron has been dubbed the biggest audit failure.  Enron shareholders filed a $40 billion law suit after the company’s stock price, which achieved a high of US$38.44 per share in mid-2000, plummeted to less than $1 by the end of November 2001.  And why did the shareholders sue?  Because they lost money?  Well, yes, but it is much more.  The reason the shareholders lost money is because the executives of Enron owed a duty to the shareholders, basically, to be accountable to report correct data on financials.

Apparently, Enron’s financial statements were complex and confusing to shareholders.  It has been said that from 1997 until its demise, “the primary motivations for Enron’s accounting and financial transactions seem to have been to keep reported income and reported cash flow up, asset values inflated, and liabilities off the books.” Bodurtha, James N., Jr. (Spring 2003). “Unfair Values” – Enron’s Shell Game. Washington, D.C.: McDonough School of Business. p. 2. CiteSeerX: 10.1.1.126.7560.  Arthur Anderson was the audit and accounting firm, which also went belly up due to Enron.  But Enron’s financials were false and, ultimately, led to numerous convictions.

Now, I am certainly NOT comparing the State of North Carolina to Enron.  I am merely providing an example of a possible result when accountability is ignored.  When the fiduciary duty owed is not fulfilled.

Not completely unlike corporate financials, North Carolina creates a budget every fiscal year (yeah, I get it, not completely similar either). 

When the Medicaid budget is created each year, which is more than $18 billion, I, as a taxpayer, expect those Medicaid dollars allocated to the Medicaid budget to be spent for the benefit of Medicaid recipients.  Medicaid money should be spent on Medicaid providers, who service Medicaid recipients.  I expect that administration costs be kept at a minimum.  I expect that Medicaid providers receive timely, prompt payments, and I expect that Medicaid recipients receive good, quality, and continuing health care.

I do not expect the State to cover the health care for everyone.  Not even most people.  I understand that funds are not limitless in government and that there must be limitations on spending, otherwise our great State will become another Detroit. 

However, I do expect that the funds that ARE allocated to Medicaid to BE allocated for the benefit of the Medicaid recipients. Period.

In the past year, we have implemented the Managed Care Organizations (MCOs) to manage Medicaid behavioral health care.  In theory, the MCOs were implemented to cut down the administrative costs for DHHS.  Basically…outsourcing.  In theory, it sounds good.

DHHS’ administration costs are out-of-control.  After the January 2013 Performance Audit on DHHS, State Auditor Beth Wood said North Carolina’s administrative costs are 38 percent higher than the average of nine states because of “structural flaws” in how DHHS operates the Medicaid program.

So, in response to these high administrative costs (among other things), we took the administration of behavioral health from DHHS and delegated that administration to the MCOs.  With the number of employees in Health and Human Services over 17,000 employees and the average MCO employing only a couple hundred, it seems, on its face, to be a good idea.  Surely these MCOs can and will run more efficiently that the government! Right?

(The other assumption in outsourcing is that DHHS administrative costs would actually decrease due to the MCOs, but I have seen no indication of this). I have seen no indication of the “structural flaws” in how DHHS operates the Medicaid program being fixed.

According to the website indeed.com, the average salary for a person working at NC DHHS is $47,000.  In addition to the average salary, you also need to contemplate that employees of NC DHHS qualify for basic health benefits at no cost.  However, if a DHHS employee wants to have his or her spouse covered or an insurance plan above the “basic plan,” there is a nominal cost. (The standard plan (above a basic plan) for an employee is still low, only $22.76/mo).

Health insurance premiums are a HUGE expense.  So when calculating salaries, if an employee receives free health care, in essence, the salary is higher…due to not having to pay premiums every month.  Health care premiums add up.  For example, I pay $750.00 monthly for health insurance for me and my husband. That’s $9000/year! Yikes!! (No, for real, yikes!!)  If Williams Mullen paid my health insurance premium, in essence, my salary would increase by $9000/year.

Including health care and trying to underestimate instead of overestimate, I calculate the average salary, including health care premiums, at NC DHHS at about $52,000-ish.

Since the MCOs went “live,” the Medicaid tax dollars that would have been held by NC DHHS, are now divvied up and bestowed upon each MCO.  Today, we have 11 MCOs, but soon Smokey Mountain Center will take over Western Highlands, bringing us to 10 MCOs.  Plus, according to a recent article published, “Frustrations With MeckLINK Grow as Denials for Care Increases,” MeckLINK is financially unstable.  We may soon be down to 9.  But, as for now, 11 MCOs receive the federal and state tax dollars for Medicaid behavioral health.

Key point? Tax dollars.

CenterPoint Human Services (CenterPoint), one of the MCOs, staffs approximately 200 employees (about 19 part-time). Out of the 200-ish employees, 41 employees receive salaries over $75,000 (including health care).  Almost 1/4 of CenterPoint’s employees have salaries OVER $75,000. 

145 employees receive salaries over the NC DHHS average salary: $52,000. 

Let’s talk about the price of health care.  Remember, these are OUR tax dollars.

Employee A has a base salary of $45,500.  But A received $16,965 in medical contribution.  Remember, my insurance for me and my husband costs $9,000/year.  For $16,965, how big of a family are we taxpayers covering?

Employee B has a base salary of $43,500. (Now, let me preface this example with…I hope…I pray…that this one example is a typo on CenterPoint’s financials, because, if not, this is outrageous!).  According to CenterPoint’s financials, Employee B gets $84,658 in medical contributions. Including FICA contribution, dental, short and long-term disability, 401K, etc., Employee B receives $136,716 in total compensation.  Admittedly, I have no way to confirm whether this is a typo….and, I must admit, I really hope it is. Regardless, according to CenterPoint’s financials Employee B receives $84,658 in medical contributions for a total of $136,716 total compensation, but with a base pay of only $43,500.

But here it is in black and white (and yellow) (toward the bottom):

Health Insurance

Three other employees, C, D, and E, have base salaries of $49,750, $49,000, and $47,100, respectively, and medical contributions of $12,007 each.  And here I thought MY health insurance was expensive…

The number $12,007 is popular.  12 employees in total receive $12,007 in medical contributions for a total of $144,084 (for 12 employees).

Another employee gets $16,965 in medical contribution with a base salary of $47,100.

Now let’s talk about the Medicaid recipients’ behavioral health care services.

Since the MCOs went live, it is indisputable that less behavioral health services are being authorized by the MCOs.  (Why the government has not addressed this tragedy, I do not know).  Another question is how many less behavioral health care servies?  I have my suspicions that if we were shown the number of behavioral health care services authorized last year compared to this year, the line would look like \. 

Remember the chart from yesterday?

MeckLINK_June_Slide

And this chart only shows one county. One MCO.

NC DHHS is handing over millions (just the behavioral health portion of the Medicaid funds) of Medicaid dollars to the MCOs.  But the money is not going to service Medicaid recipients.  The Medicaid dollars are paying salaries at every MCO, as well as the employees’ families’ health insurance plans.  What Medicaid funds go to the recipients for medically necessary services?  Seems to decrease every day.

I ask you, why do employees of an MCO receive better health care plans with Medicaid dollars than a Medicaid recipient with Medicaid dollars?

Aren’t Medicaid funds supposed to be for Medicaid recipients?

Maybe instead of all this administrative waste, we should just buy private health insurance for all Medicaid recipients. It would probably be cheaper.  And the medically necessary services would

                                                                                                  NOT

                                                                                                            LOOK

                                                                                                                     LIKE

                                                                                                                            THIS.

Going back to the State of North Carolina’s accountability to me and all taxpayers as to Medicaid tax dollars spent, I have not seen any investigation as where the behavioral health care Medicaid money is being spent.

The same article from above stated something that made me extremely concerned.  In “Frustrations With MeckLINK Grow as Denials for Care Increases,” the article cites that “[o]nce MCOs took over, North Carolina stopped tracking what care patients are receiving. A health official said the database goes blank. That means the state does not know how many North Carolinians received services, what those services were, or what was denied. It can compare MCOs financials, but not their care.” (emphasis added).

Are you kidding me? The State of North Carolina, which is accountable to me and all taxpayers, cannot determine whether the Medicaid dollars being handed over to the MCOs are being used appropriately????

Yet 145 employees at CenterPoint receive salaries over the NC DHHS average salary: $52,000!  145 out of 200-ish, to be exact.  Some employees are receiving health insurance contributions of over $10,000/year…and NC cannot determine how many Medicaid recipients received medically necessary behavioral health care??

As a taxpayer, I am appalled. And I want accountability!!

Where is the fiduciary duty to taxpayers?