In Florida, a national managed-care company’s former top executives were convicted in a scheme to rip off Medicaid. In Illinois, a state official concluded two Medicaid plans were providing “abysmal” care. In Ohio, a nonprofit group paid millions to settle civil fraud allegations that it failed to screen special needs children and faked data.
Despite these problems, state health agencies in these and other states continued to contract with the companies to provide services to patients on Medicaid, the federal-state program for the poor and disabled.
Health-care experts say that’s because states are reluctant to drop Medicaid plans out of fear of leaving patients in a bind.
“You probably won’t find many examples of states flat-out pulling the plug. That’s sort of the nuclear option,” said James Verdier, a senior fellow at Mathematica Policy Research, a nonpartisan think tank. “There are all sorts of sanctions you can impose — financial penalties, limitations on enrolling new beneficiaries.”
States are increasingly turning to insurance companies to provide coverage for people on Medicaid in hopes of saving money and improving care. About 30 million Americans on Medicaid now belong to a managed-care plan, and beginning in January, millions more will become eligible for Medicaid under the federal health law. Many will be placed in managed care. States give managed-care plans a fixed amount per member each month to set up networks of doctors and hospitals that provide care to members.
Thirty-six states and the District have enrolled some or all of their Medicaid population in private health plans, many of them owned by major insurers that operate in multiple states.
State health officials are responsible not only for monitoring and oversight, but for enforcing contracts and cracking down on plans that violate the rules or perform poorly.
Advocates say that states need to do a better job of policing problem plans and not wait until a contract is up for renewal to pull the plug.
“You have a situation where too many states take a hands-off approach. I think there’s a significant risk of substantial harm to consumers,” said Alice Dembner, project director for Community Catalyst, a national health-care consumer advocacy group.
Occasionally, a state does force out a plan, but it’s usually insurance regulators acting because of money issues. In the District, the insurance department took control of the nonprofit D.C. Chartered Health Plan last year after an internal audit found financial irregularities. Its founder is under federal investigation in a political corruption case. Another plan assumed its operations this spring.
State health officials don’t want to dump plans and force patients to switch doctors and prescription drug plans, said Matt Salo, executive director of the National Association of Medicaid Directors.
“Are the other plans capable of dealing with that influx? Maybe they are and maybe they’re not,” he added. “Maybe they’d have to revamp their networks [of doctors and hospitals] and payment structure. That might not be something they can do at the drop of a hat.”
Anne Swerlick, deputy advocacy director for Florida Legal Services, doesn’t buy that argument.
“If we’re going to have managed care, and we’re going to have standards that get enforced,” she said, “the state needs to have some capacity to transition people to other plans.”
In Illinois, Medicaid Deputy Administrator Jim Parker said his office was unable to cut ties with Harmony Health Plan, a subsidiary of WellCare Health Plans, and Family Health Network, a nonprofit community plan, despite serious quality problems over a decade. “Their performance was abysmal,” he said.
Parker said one reason the state kept awarding them contracts was that they agreed to participate in a program in several counties that didn’t interest most companies.
The two plans have made some improvements, Parker said, and in 2014, when Illinois begins moving large numbers of Medicaid patients to mandatory managed care, “we will not keep plans that are not doing well.”
WellCare spokesman Jack Maurer wrote in an e-mail that the company has “worked hard to improve its quality scores and has made significant investments to this end.”
Family Health Network chief executive Keith Kudla said that the company has been the quality leader among plans in its Chicago-area market. “We recognize, however, in comparison to national benchmarks, that we can do better,” Kudla wrote in an e-mail. He said his company embarked in 2010 on a multimillion-dollar strategy to expand access, improve care coordination and upgrade information systems.
Another nonprofit Medicaid plan got into trouble with government officials, but the issue wasn’t about quality.
CareSource, a Dayton, Ohio-based plan, agreed in 2011 to pay the federal government and the state $26 million to settle civil fraud allegations that it failed to provide screenings and other services for adults and special needs children and submitted false data to the state. The company denied the allegations, but said it settled to bring the matter to a close.
CareSource had no comment.
Ohio Medicaid spokesman Sam Rossi wrote in an e-mail that the settlement “did not include any actual finding of wrongdoing, and there was never an allegation of consumer harm.” He said CareSource has taken steps in recent years “to better document the services it provides.”
CareSource remains Ohio’s largest Medicaid managed-care plan.
In Florida, WellCare never lost its contract after FBI agents raided the company’s Tampa headquarters in 2007, which led to criminal charges and convictions of former top executives this year for scheming to defraud the state. The company agreed to pay more than $200 million to settle criminal and civil fraud allegations. It did not admit wrongdoing in the civil case. Today, it runs the largest Medicaid plan in Florida.
WellCare spokesman Maurer said in a statement that a new leadership team appointed in 2008 “has set an exemplary ‘tone at the top’ by emphasizing integrity, personal accountability, ethical business practices, regularly compliance and transparency.”
Florida Medicaid Director Justin Senior said the state decided not to drop WellCare’s contract largely out of concern it would have caused chaos for patients. He said the company’s new leadership has made a difference.
“There’s no reason not to continue to do business with them,” Senior said. “They were making up for the past wrongs of the past management team. A leopard can change its spots.”
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.