Physician Patient

Archive for September, 2017

Minnesota Needs an Audit to Know Where Taxpayer Dollars are Going in Our Medicaid (Medical Assistance) HMO and Fee-for-service Programs

Saturday, September 16th, 2017

Past attempts to obtain an independent professional audit of the MN Medicaid program have failed. Clearly, our MN Office of the Legislative Auditor (OLA) headed by James Nobles needs to expediently conduct a professional audit/inquiry of where Minnesota and federal taxpayer Medicaid money is going — to whom and for what MN Medicaid clinical and administrative services. For recipients in the Minnesota Medicaid. programs, HMOs are now charged (and charge) to manage the care of 75% of enrollees, while 25 % are in fee-for-service. The audit should study both populations. HMOs cannot be a black box. Our Minnesota legislators need this data.

Minnesota policymakers need this information to make informed decisions. As a vital part of modifying/replacing the Affordable Care Act (ACA, Obamacare), Federal authorities are now in the process of proposing and enacting block grants for federal Medicaid funds, and Minnesota needs to know where and to whom our Medicaid money is going now, so we can properly decide where and to whom it should go in the future.

This means that Minnesota Medicaid HMOs simply must open their books to a rigorous professional audit by our State Auditor. And Minnesota lawmakers need to demand that they do. Will the Governor and Legislature do this?


History of the Minnesota Office of the Legislative Auditor (OLA) Regarding Doing a Medicaid Audit:

1) In 2008 the OLA examined the financial management of Minnesota health care programs, and reported that essentially, there was no oversight or supervision of these programs, and the OLA didn’t audit!

2) In August 2010 the U.S. Government Accountability Office reported that the actuarial standards of practice our HMOs claim to adhere to did, in fact, not exist, and the OLA didn’t audit.

3) In January 2011 the American Academy of Actuaries issued a statement saying that they did not look for false data or audit information supplied by the health plans, and the OLA didn’t audit.

4) In March of 2011 Ucare returned 30 million dollars to the state of Minnesota revealing that they had been cross-subsidizing a state program with Medicaid money which they characterized as an over payment and the OLA didn’t audit.

5) In April of 2012 The U.S. House of Representatives Committee on Oversight and Government Reform issued a report which stated that Minnesota provides a stunning example of how states are failing to properly ensure the appropriate use of taxpayer dollars spent on Medicaid managed care. And also stated that the federal government is likely owed hundreds of millions of dollars in additional over payments made to all the states HMOs over the past several years. And the OLA didn’t audit!

6) In July of 2012 the Minnesota Department of Commerce issued a letter stating that they had never audited the health plans use of public program money and did not think it was their job to do so. And the OLA didn’t audit!

7) In March 2013 The Segal Company did an actuarial review of Medicaid managed care rate setting in Minnesota. Segal said ” we believe the Milliman trend methodology produced a systemic overstatement of the trend causing the program to exceed targets over time.” Segal also said “… it seems unreasonable that no one ( DHS, Actuary, or CMS) called into question the pattern over the extended period of review.” And the OLA didn’t audit!

8) In September 2013 PCG Health reviewed Minnesota’s health care programs use of managed care and noted that Minnesota ranked only behind the District of Columbia and New York in highest Medicaid expenditures per full-benefit enrollee. And the OLA didn’t audit!

9) In February 2014 in response to a 2012 legislative mandate that the OLA should hire a third party firm to audit the HMOs, The OLA issued a statement that said “after many months of efforts the Office of the Legislative Auditor was unable to secure the services of a qualified accounting firm that was, in our opinion, adequately independent to conduct the audit.” The OLA went on to say that OLA would conduct the audit themselves.

One year later in 2015 the OLA told the legislature that an audit was expensive, unnecessary and complex. The OLA gave back the funds which had been set aside for the audit and recommended the audit statute be repealed. THE OLA DIDN”T AUDIT!!!

10) In January 2015, the executive director of the Minnesota Council of Health Plans published an article in the Star Tribune newspaper in which she said “… HMO reserves are not cash on hand. In fact, more than half of what appears on paper to be HMO reserves is actually money the state has yet to pay the HMOs.” “…there is an HMO shift that totals more than $1.3 billion.” And the OLA didn’t audit!

11) In March of 2015, The Government Accountability Office released a report which said ” …we recommended that CMS require states to conduct audits of payments to and by managed care organizations…” And the OLA didn’t audit!

12) In the past few years a series of court cases have claimed HMO fraud based on hidden internal markups involving both Medicare advantage and ERISA employer plans. And the OLA didn’t audit!

13) On August 14, 2017 news sources reported that over 200 lawsuits had been filed against Blue Cross of Michigan, identical in nature, based on hidden internal markups And the OLA didn’t audit!

14) Recently, a group of concerned citizens met with the OLA and he informed them that he is aware of his fiduciary duty to the Federal government. And the OLA didn’t audit!

Will the OLA promise to investigate Minnesota Medicaid HMOs to learn:

1) Whether or not the reported reserves of the HMOs actually exist or, if as the former executive director of the Minnesota Council of Health Plans claimed, they exist only on paper because the money has been “shifted” to the State of Minnesota.

2) If the reserve money has been shifted, is this permanent and ongoing? What was the money used for? Why is the federal government billed for reserves for what Governor Dayton and other MN officials have described as a cost plus program (meaning by definition that reserves are unnecessary).

3) If the HMOs are engaging in hidden internal cost inflation of the type discovered in the case of Hi-Lex vs Blue Cross of Michigan. (In this case Blue Cross argued that all managed care organizations do this.) Shouldn’t we see if our HMOs are guilty of this fraud in their operation of our Medicaid program?

4) If paid claims data (as examined by audit and not self reported) supports the HMOs assertion that health care costs are out of control or if the HMOs own price inflation and administrative expense and profitability are the real cost drivers in the system.

5) If administrative costs are being hidden in the medical expense category to manipulate medical loss ratios (not to be confused with whether self reported administrative expense is proper and reasonable).

6) If federal funds are being diverted to subsidize non federal qualifying activities (as Ucare admitted doing in March of 2011).

7) Also, the OLA has said that he has unfettered authority to audit and inspect whatever he chooses and requires no legislative authority. Now in the case of HMO audits he claims his hands are tied by the precise wording of the statute apparently designed to prevent an effective audit. How do we deal with this paradox? Do we need to alter the defective Benson wording to get the job properly done?

8) Over the course of the last decade the OLA has done everything possible to avoid any meaningful audit of the HMOs. Why trust him now with no external third party oversight.

9) How will the OLA get paid claims data which the plans have refused to give DHS and which DHS has never forcefully demanded.

10) How exactly will the OLA audit organizations that do not use or adhere to the generally accepted principles of accounting?

11) The OLA has said the methodology of the audit is a secret pursuant to the data practices act. WTF???

12) The significance of the statements made by the former Minnesota Medicaid director on 7/9/15 regarding the feds cracking down on “the Minnesota experience of the past decade”.

(Submitted by MPPA Board Member Dave Feinwachs, JD, PhD)

MPPA Meeting Thursday September 14, 2017 at 6 PM in Central Medical Building, St. Paul.

Thursday, September 14th, 2017

Those present: President Lee Beecher, Bob Geist, Dave Racer, Hannelore Brucker, Carl Burkland, Don Gehrig, Wayne Zuehlke, Mike Ainslie, Dave Feinwachs, Tim Herman, and Doug Smith.

1. Minutes of the May 16, 2017 meeting had been circulated to all before the meeting and were not discussed further.
2. 2017 Senate Select Committee on Access and Cost was discussed by RWG. The committee Chair, Sen. Scott found himself unable to get to the meeting and sent his regrets.
3. 2018 Legislature. David Racer and Feinwachs led the discussion.
• It was noted that the Reinsurance bill passed this session had some serious problems, especially since MCHA was not revived—MCHA ought to be a priority.
• The fate of the Health Care Access fund (and provider tax) remains problematic.
• The new option for discounted fist dollar care coverage (by Golden Rule and UHC corporation) was briefly discussed—catastrophic insurance would be needed.
• It was noted that with Guaranteed Issue (GI) and Community Rating (CR) there is no true insurance underwriting—the corporations are on the public-private dole. One person observed that the ObamaCare promise was that, if you back the bill, we’ll give you all the patients and the money—the result is the corporations complain that they don’t get enough money with all the patients. Trump so far is not coughing up the dollars; if the mandate is not enforced, the “plans will collapse.” [IMO, maybe. But we got what was a medical system handed to government protected HMO-ACO cartels as a path to UHI—this time to commercial corporation health services or corporate socialism (aka “privatization”) unlike to national socialized NHSs as done abroad—RWG.] The corporations are looking at a bipartisan Congressional recue at this moment.
• The HMOs make their money in Medicaid. [The expensive disabled are steered into the FFS sector (run by DHS); the well are steered to the Medicaid HMOs (aka “cherry picking”). Confirmation came from DHS, this morning: “MA recipients with a disabled basis of eligibility are excluded from this requirement (to enroll in HMOs) and largely served under fee-for-service.”
• A problem has occurred to those age >55 no Medicaid. They are finding out that their homes are being owned by the government with liens based on how much premiums would have cost; not on how much was spent on their care—if they had no Medicaid expenses, they could still lose their house. Apparently, folks have found out and are dropping out of Medicaid. The legislature has not corrected the problem.
• The problem with MN Medicaid is that the HMOs are spending state money but claim that how it is spent is a “trade secret” (i.e., proprietary information). DHS thus has no idea how money is spent on enrollees [with exception that a childless adult cost $7,992/person in 2016—RWG]. If federal block grants happen, full disclosure of encounter data ought to be mandated.
• The Hi-Lex vs. Michigan Blues was brought up because Medicaid is a self-insurance program akin to a private company ERISA self-insurance program—Hi-Lex is one of thousands of such ERISA companies using HMOs as TPAs. Medicaid uses HMOs as 3rd party administrators (TPAs). The MN HMOs would have us believe they are “at risk” insurance companies yet they tell the state what was spent and the state “believes” it and pays up—without an audit! Hi-Lex won the suit in 2015 with the result that the Blues illegal fraud cases have jumped to > 200 all of which the Court said shall be paid without question. [There remain efforts to open-up Medicaid HMO books to see, if MN (and CMS) Medicaid has been similarly defrauded. No state audits have been done!
• Action item for Dave Feinwachs: It was suggested that members co-sign a letter to the Office of the Legislative Auditor (OLA) to obtain paid claims data—many agreed; Dave Feinwachs will arrange.]
4. Family Medical Account bill. RWG discussed his testimony to the Senate Select Committee last week. A copy of the FMA briefing letter was handed out and was previously attached to the emailed agenda. FMA program is basically a method of FFS payment for Medicaid enrollees in categories families with children and childless adults. Mike Ainslie wondered if this could be used for the disabled—this is not in the bill but ought to be considered for a separate bill for a program of Personal Health Budgets for high need patients. [Pilot studies have begun in the UK NHS of all places—RWG. See O’Shea L, Bindman AB. Personal Health Budgets for Patients with Complex Needs. N Eng J Med. 2016;375(19):1815-1817.]
• Action item for RWG. I hope to get hearings on the FMA bill when the legislature re-convenes.
5. Other legislative items.
• Tax-free insurance equity for those not in employer-based insurance is a federal, not State issue.
• Out-of-pocket expenses credited to deductibles (the Fairness bill) for out of network care failed in the legislature so far.
• “Up to 50% of EHR data entry clerking” is an unpaid expense for un-paid data collection mandated by state law. It was suggested that using the VAH system (a public free EHR system) cold break the strangle hold on the IT involved.
1. Action item for Smith Racer, RWG: [All members were sent an email this morning regarding the IT problem and it ramifications thanks to the work of Doug Smith and Dave Racer—please note the recommendations of how to deal with the problem using legislation to negate a bad law—RWG].
6. MPPA. It was pointed out that MPPA is an excellent irritant of importance stimulating political action thanks to the synergy of the group and its wide-spread connections. No one is alone, as long as MPPA exists and our many Fellows freely discuss the issues of political malpractice, which continues to threaten patients, professional integrity ( the covenant of loyalty to patients first), and has already resulted in toxic financial results for families and the nation.

6. The meeting adjourned at 8 PM—with the usual post meeting confabulations!

7. The next meeting will be sometime before the legislature re-convenes. Congressional acts may determine the MN 2018 legislative session activities. During this summer and fall, there has been and will be continuous member activity regarding the next legislative session.

Respectfully submitted,
Robert W. Geist MD,
Secretary pro-tem