June 22, 2011

IMAGINE THINKING that you’re being overcharged by a company, pursuing your claim in court — and then doing more business with that company. Unlikely — but that is how the District is behaving with millions of dollars in health-care contracts.

In giving final approval to the city’s fiscal 2012 budget, the D.C. Council acceded to an urgent request from Mayor Vincent C. Gray (D) to increase reimbursement rates for the two companies that provide managed-care programs for Medicaid and D.C. Healthcare Alliance clients. The council promised $32 million to cover new rates with a subsidiary of United Health Group and D.C. Chartered Health Plan Inc., which between them serve some 160,000 District residents. City officials argued that rates set by the previous administration were not actuarially sound as required by law, and one company — losing money — threatened to bolt the District.

It’s bad enough that the companies think they have the city over a barrel because of federal guidelines that require beneficiaries be given a choice under mandatory managed-care programs. Even worse is that D.C. Chartered Health Plan, which does the largest share of the business to an annual tune of $322 million, was hauled into court by the city because of suspect business practices. In 2008, then-interim D.C. Attorney General Peter Nickles sued the firm after an audit found what the city said was $7.6 million in questionable spending and a number of financial transactions with companies owned by the group’s parent company or the parent’s president. The company settled that year for $12 million; there was no admission of wrongdoing. Unbelievably, even as the city was suing the firm, it was inking a new contract with it. “You’re innocent until proven guilty, and they made the best bids in response to the [request for proposals],” Mr. Nickles feebly explained to the Washington Examiner at the time.

Jeffrey Thompson, owner of Chartered’s parent company, and his various businesses have been generous contributors to political campaigns and constituent service accounts, spending what City Paper’s Loose Lips totaled as $32,000 in the 2010 election cycle and more than $225,000 since 1999. Chartered’s attorney, the ubiquitous Frederick Cooke Jr., told us that the fact that Chartered’s contract has spanned city administrations speaks to the soundness of the services it provides.

Six council members opposed unconditionally giving the companies more money. Their suggestions of alternatives to be explored or a more careful analysis were slapped aside by a majority — Michael A. Brown (I-At Large), Phil Mendelson (D-At Large), Vincent Orange (D-At Large), Harry Thomas Jr. (D-Ward 5), Tommy Wells (D-Ward 6), Yvette M. Alexander (D-Ward 7) and Marion Barry (D-Ward 8). It makes you wonder whether those seven or the mayor cares what the public gets for its money.