So it may be easy to dismiss the next story as just the sort of corruption that goes on in our little state of Rhode Island. But remember that the something similar is likely going on in your cities, states, and countries.
Starting with one of the first posts on this blog, we began to recount the follies of the management of Blue Cross and Blue Shield of Rhode Island (BCBSRI), a not-for-profit insurance company and managed care organization, the dominant health insurer in the state. In 2004, Blue Cross "fired its CEO this year after news reports of his huge salary, receipt of a $600,000 no-interest loan which he did not pay back, and, receipt of free acupuncture treatments from a practitioner who wanted to influence Blue Cross reimbursement policies. Meanwhile, Blue Cross was paying health care professionals poorly (often less than Medicare), while hiking premiums at double-digit rates." (See post here.) In 2005, the company settled a class action suit after it was accused of "bilking subscribers" by using a complex scheme to inflate their drug co-payments (see post here). In 2007, a former RI state senator pleaded guilty to literally being a Blue Cross "bag man," being paid for many more bags than he actually delivered to the company in return for promoting legislation favored by it (see post here).
Today, the Providence Journal reported that four high-ranking Blue Cross executives resigned in connection with "an expected announcement ... by the health insurer and the U.S. Attorney's office." They included Lynne A Urbani, who "was promoted to senior vice president for external services, taking on oversight of community services along with her prior responsibilities over customer, provider and medical services"; Matthew T Brannigan, "a former chairman of the East Greenwich Republican Town Committee, [who] joined Blue Cross in 1996 and had also been promoted earlier this year, from vice president to senior vice president for sales and marketing"; Scott A Fraser, "vice president for government relations, and also served for years as Blue Cross’ spokesman"; and Brian Jordan, "who was assistant vice president for government relations."
Then, a news release from the US Department of Justice revealed the Blue Cross had entered into a deferred prosecution agreement with the government. In it, the company acknowledged its conduct, including:
The company took responsibility for these actions.
BCBSRI acknowledged in the agreement that while lobbying [former Rhode Island state Senator] Celona on legislation, its executives caused the insurer to pay $74,000 to a communications company to produce a cable access program hosted by Celona. Celona was paid $13,565.
Likewise, BCBSRI acknowledged that, while its executives were lobbying [former Rhode Island state Senator] Martineau on legislation, members of the insurer’s executive management caused the insurer to pay about $175,500 to a business run by Martineau for the purchase of paper prescription bags.
BCBSRI further acknowledges that it paid $400,000 in insurance brokerage commissions to an unidentified former Rhode Island Senate President while its executives were lobbying him concerning legislation.
BCBSRI acknowledges and accepts responsibility for conduct of certain former executives, who caused the payments in question to be made, knowing that its executives were lobbying the legislators. The company also acknowledges that the executives were acting within their apparent authority as executives of Blue Cross Blue Shield of Rhode Island.
The nature of the deferred prosecution agreement was explained.
As part of the agreement entered today, BCBSRI will continue to cooperate fully with the government’s ongoing investigation. As long as BCBSRI complies with the terms of the agreement, the government agrees not to criminally prosecute BCBSRI for any conduct described in the agreement and in the plea agreements of the former state senators.
The company agreed to pay a fine, and revise its operations.
Under the terms of the non-prosecution agreement, BCBSRI has agreed to pay $20 million to the government and not to seek any rate increases specifically to recoup the $20 million. The money will go into a fund to be administered by the Rhode Island Foundation. The earnings and interest from the $20 million fund will be used to support projects designed to provide quality, affordable health care services in Rhode Island.
BCBSRI has also agreed to a series of ethical reforms that it has already implemented and will maintain. These reforms include: compliance oversight by a Corporate Compliance and Ethics Committee; a full time corporate compliance officer and ethics department; a code of ethics governing the conduct of directors, officers and employees; and ethics training programs. The insurer also agrees to hire a government-approved monitor to oversee its ethics reform and its compliance with the agreement. The monitor will be in place for at least two years.
Meanwhile, the Providence Journal also reported that the current chairman of the board of Blue Cross, Frank J Montanaro, has been accused of a conflict of interest apparently unrelated to the deferred prosecution agreement. Montanaro, who also is head of the Rhode Island State Association of Firefighters and president of the Rhode Island AFL-CIO labor union, served on an arbitration panel which had to decide on the health care benefits for Providence city fire-fighters. Montanaro was on the panel ostensibly to represent the fire-fighters' interests. Yet, he "argued during the arbitration that the city needed to stay with Blue Cross because a change would result in a disruption for the firefighters, but he never disclosed his connection, or that granting that clause would guarantee millions in business for his company." The arbitrator who represented the city's interests asserted, “Frank shouldn’t even be having this discussion with us. Because Frank is biased. Frank is on the board of Blue Cross. How can the chairman of Blue Cross sit here and impartially and objectively decide on this?”
So, another day, another set of executive resignations, another conflict of interest and another deferred prosecution agreement for a big (at least for little Rhody) health care organization. (This is, by the way, the second deferred prosecution agreement imposed on a big health care organization in the state. See our previous post on the agreement affecting the Roger Williams Medical Center.) Is it any wonder that honest health care professionals in this state are demoralized?
That one small state has had two such agreements in two years, and, of course, all the mismanagement and malfeasance we have documented now for three years on Health Care Renewal, suggests that the US, and most likely other countries, have big systemic problems with unethical health care practices and bad health care governance. But as Transparency International noted, health care corruption for a while has been the unacknowledged elephant in health care's living room, raising costs, stifling access, and degrading quality.
How many more such stories will it take for the remaining honest physicians to demand that we throw sunlight on the infestations and drain the swamps of corruption? Will the public and policy-makers ever notice?
By the way, although cases like that of Rhode Island Blue Cross at least serve to exemplify the problems, the failure so far of anybody at Blue Cross to lose more than their current jobs as penalties for their actions suggests that there is still little deterrence for malfeasance in the health care sphere.