More on the Opiate Abuse Epidemic: Where Again Does the Finger Point?

In a recent blog post we pointed to conservatives' efforts to implicate Medicaid funding as somehow causative of, or at least promoting, the opiate "crisis." After all, funding for medications means people will use, and sometimes abuse, those medications. Meds they might otherwise ill be able to afford. (Implied solution: cut Medicaid.)

We also alluded to some of the logical fallacies in such thinking. Here, though, let's take it to another level: the blame game, where does it lead? Where does the finger point? Those who agree with Ronald Reagan that government is the problem, not the solution, fall into the trap of blaming public action and civic institutional development for the ills of our society.

But gosh, why is it that private actors get a bye? Isn't it possible that something other than public action could end up being the culprit? What creates this blind spot?

For one thing, those (they're discussed in the blog link above) who point fingers at Medicaid overlook inconvenient truths. Take the state-by-state data. True, West Virginia is among the top states, as it happens, for both Medicaid and addiction rates. But then look at New Hampshire. With Ohio, it is a close second for addiction but affluent enough to be near the bottom of states receiving Medicaid/CHIP. Somehow the great conservative logicians seem to miss data like this.

For another thing, when you go from the "faceless bureaucrats" to the families that run things in this country, there's the matter of privacy. There's a queasy feeling about ratting out your private "friends," even when they're not really friends at all. Even when they're polluting your environment or selling you (in our new parlance) some newly slavered S on toast. And private actors, once in the, well, let's say billionaire realm, can manage to protect their brand even while working behind the scenes to ruin--allegedly--people's health through false advertising. Turns out New Hampshire doctors prescribe opiates at about double the national rate, responding not to government but to private (Big Pharma) signals.

Such private matters have been the case, allegedly, with the family that brought you all the flavors of the pharmacologic gift that keeps on giving: oxycodone. We know this is the case especially, more recently along with fentanyl, with this drug in its most controversial form, Oxycontin. Oxycontin was brought to your local pharmacy by the still barely-known Sackler family. It's a dramatic story of a family out of Brooklyn by way of the medical schools of Glasgow and then the boardrooms and development offices of some of this nation's most prestigious citadels of culture.

Two recent discussions of the Sacklers point to their possible culpability in spreading a false gospel of SOAP: a Safe Opiate Administration Policy. Last fall we considered blogging on the first of those discussions in The New Yorker. But it's hard to access some literature hidden behind paywalls, so we held off. Now, however, a shorter and in a number of ways more accessible piece on the Sacklers now emerges in The Guardian.

The New Yorker piece, by investigative reporter and staff writer Patrick Radden Keefe, shows how this family of physician-entrepreneurs built an "empire of pain," as he styles it, starting as far back as the mid-20th century. This was the era of Estes Kefauver's aggressive committee hearings. But even congressional inquiry was no match for the aggressive advertising tactics and casuist hyperprofessionalism--hiding behind the degree--tactics of an Arthur Sackler, who "caught Kefauver in an error," notes Keefe, "and said, 'If you personally had taken the training that a physician requires to get a degree, you would never have made that mistake.'”

In related fashion, for health care the Sackler Brothers were among the first to use the megaphone of social media as a tool, in its primitive mid-century form, for disseminating messages to a gullible medical profession. They were sales geniuses, understanding the nudge-value of throwing money around. They created Medical Tribune, one of the most successful and impactful of what came to be known as throwaway journals These throwaways hit doctors' mailboxes on a daily basis. (Medical Tribune was biweekly but there were lots of others.) Conflict of interest? Why do you ask? Potentiating the message that opiates were safe, especially when there was a "clear need" for such agents? Question answers itself.

Toward the end of the last century, the story of the Sackler family and opiates took two other important turns. In 1995 OxyContin received FDA approval for moderate-to-severe pain. (Not long after, in the great tradition of the Revolving Door, the very FDA official who oversaw the drug's approval left the agency and went to work for the Sacklers at Purdue.)

Some of us recall that that was about the time an alarming tsunami of patients began to flood through our doors. Their complaint was stereotyped: months or even years after a mild-to-moderate injury, long after full healing could easily be documented, "If I don't take this medicine I get my pain back." Awareness of addiction was just about as conspicuous in its absence for us and our patients alike.

Some time also in the mid- to late-twentieth century, Sackler family largesse in the funding of the arts became an international phenomenon. While family names appeared conspicuously on galleries in prestigious institutions around the world, on the company website they equally conspicuously disappeared from the list of directors--up to eight in all.

This past week, New York journalist Joanna Walters, in The Guardian, related the story of Nan Goldin, a renowned Brooklyn artist-photographer. Goldin went from a case of tendinitis to a full blown OxyContin addiction that turned her into a recluse for three years. It is accessible with no paywall and makes intriguing reading. We watch Goldin out herself as an addict and valiantly seek to mount a counter-messaging movement. Goldin's verdict: "I don't know how they live with themselves."

And so here we are. Private actors buy their way forward into the benign and beneficent ranks of the cultured plutocracy. They do so while covering their tracks backward as the real vectors of an epidemic. (See Arthur Sackler's fascinating 1987 obituary in his own journal, extolling the "Renaissance Man" and implying he received medical school training at NYU.)

Meanwhile, the logicians in Washington, DC, still parrot Ronald Reagan that "government is the problem." No, Wisconsin Senator Ron Johnson, government, of which you are allegedly a part, is not the problem. Unless you're it. Those whom you protect with your flawed logic and equally flawed ideology are the problem. We suppose it's no wonder that last year, at an event in the state that both you and the Speaker of the House call home, Donald Trump kept calling Paul Ryan "Ron."

Big Bang Theory of Health Care: Ever Since 1967

Hold on to your hat: it all comes together now. Looking at events in our nation's capital, in a strange fever dream, The Big Bang Theory just came to me. No, call it the Big Fecal-Bang Theory, as I read about how our national leadership proceeds from one inanity to the next.

But when it comes to health care, and wiping out the safety net using false premises, inanity kills. So this is worth writing. But to see how it all ties together, we have to go back over half a century.

Where else can you read about the hidden connections between Hollywood, health insurance in the US of A, Really Bad Tax Cuts, Wisconsin cheese-eaters, opiate addiction and Really Bad Logic?

We will conclude with the antics over the past year of Senator Ron Johnson of Wisconsin in the annals of health care. But to pull it together we have to back to just over fifty years ago. Take a walk back to 1967.

That year two events occurred involving two major characters of the day. Hollywood!

The first was the ascent of an actor named Ronald Reagan, perhaps our first media-celebrity politician, to his first term as California governor. Some time later, eyeing higher office, he was insisting government-is-the-problem-not-the-solution. A mantra carried through ever-bigger megaphones until we arrived at the present day s-house.

California, of course, as a whole is now far less likely to throw up right wing politicians onto the national stage. (Rep. Issa is leaving it as we speak.) But our great expanse of red fly-over country still belches forth people like Paul Ryan and Ron Johnson to bollix up health care and pretty much everything else.

The second event worth recalling from 1967 is the grand Oscar-winning Mike Nichols and Buck Henry collaboration, The Graduate.  Forget about the stars. They're still in the news for all sorts of peculiar things. Remember Mr. McGuire? Until our current president trumped him with a potty-mouthed single-word viral epithet, Mr. McGuire was the single-word champ, with his fatherly diatribe to Dustin Hoffman on the future: plastics.

(The actor, Walter Brooke, who was among other things a big Thomas Jefferson enthusiast, was reportedly so enthused by his role that he remained forever wistful about his own failure to invest in plastics. Starting in 1968, though, many more did take the fictitious Mr. McGuire's advice, earning tidy sums in life imitating art.)

Show biz carrying over into the public square: Nothing New.

A decade or so later and now far from Hollywood, another family, that of today's Senator Ron Johnson saw the same writing on the wall. They launched a company in Wisconsin now called Pacur. A bit off-subject to explore just how much credit this intrepid midwestern businessman-turned-politician can take for single-handedly pumping up a company that specialized in plastic extrusions.

But by 2016-2017, Johnson had done just that in spades. And now according to multiple sources he allegedly uses the recent tax-cut legislation to win all sorts of special concessions for plastics from the GOP leadership in exchange for pushing that legislation forward. (See the cheesemen's connection with each other and the alt-right here and here.)

Simultaneously in 2016-2017, according to the reliably right wing organ Washington Examiner, Johnson was already now making a prefatory argument about Medicaid and how it might be responsible for the opiate crisis. That this took my breath away is what, in the event you're still reading, prompted the screed I'm now writing.

So first the boys from Wisconsin enact a bodacious and totally not needed nay harmful tax cut, favoring the wealthy. But long before its success was assured the cheese boys were preparing the ground for the dismantling of Medicaid. First you create a deficit by handing out tax breaks to rich friends. And donors. Then you produce the "evidence" for where the resulting deficit can be addressed, on the backs of poor patients.

That this evidence is specious is almost beside the point. It appeals to the Base, if that's still big enough (it is until November 2018 proves it isn't) to make a difference in pushing through the proverbial Drowning-of-the-Baby-in-the-Bathtub.

But the striking logic used by Johnson allows us to conclude with observations on the multiple fallacies of reasoning commonly committed by the increasingly extreme proponents of this grand new idea of repealing the twentieth century. Brings us right down to today--January 17, 2018--and the hearings Ron Johnson held on the vestiges of the Affordable Care Act and Medicaid expansion. Allegedly they were "trying to link Medicaid expansion to the opioid abuse epidemic."

The notion--now soundly disproved, if such things matter, by actual evidence--that decent health insurance gave more people access to prescription drugs, including opiates, and was therefore harmful as an unintended consequence, is as laughable as is climate change denial. But why should that stop them when "it's just common sense"? (I paraphrase.) The new line of attack on Medicaid is like so much other demagogic off-the-skids reasoning coming to us from extremists of every ilk.

They suffer from so many logical fallacies it's hard to know where to start. (But a good place is here, at UT El Paso.) The argument-from-pathos: "trust your gut." Too, the related biases of Confirmation and Availability, allowing for these wingers' selective use of "evidence" that only seems to bolster their view: "more people with addiction have Medicaid that those who don't."

Say what? See also: the Big Lie Technique. Over-generalization. The Post Hoc Propter Hoc Fallacy, famous ever since the Hippocratic writings. This last one is key: "Disco caused AIDS."

Or, more to the point, as a thought experiment, imagine what could be next when your parents and grandparents stand to lose some or all of their Medicare coverage. Analogous to what the boys of the GOP are doing with Medicaid--a cheap shot and easier target than Medicare.

"Evidence is now showing that addiction to death is far more common among people who have Medicare. Death is bad. Let's gut Medicare." The people don't count. What counts? Plastics!

Who Benefits? - From the Mayo Clinic Explicitly Putting Commercially Insured Patients Ahead of Some Government Insured Patients?

Amidst all the chaotic noise emanating from Washington, DC, little snippets of news keep slipping out reminding us that the US health care system remains monumentally dysfunctional, and that the dysfunction serves the interests of the system's insiders.

Putting Commercially Insured Patients First

On March 15, 2017, the Minneapolis Star-Tribune first reported that the CEO of the august Mayo Clinic had stated in a late 2016 speech to Clinic personnel that henceforth the institution would preferentially accept patients with private insurance over those with public (Medicaid or Medicare) insurance under certain circumstances.

when two patients are referred with equivalent conditions, he said the health system should 'prioritize' those with private insurance.

'We’re asking ... if the patient has commercial insurance, or they’re Medicaid or Medicare patients and they’re equal, that we prioritize the commercial insured patients enough so ... we can be financially strong at the end of the year to continue to advance, advance our mission,' [CEO Dr John] Noseworthy said in a videotaped speech to staff late last year. The Star Tribune obtained a transcript of the speech, and Mayo has confirmed its authenticity.

In response to the Star-Tribune, spokesperson Kari Oestreich stated:

Mayo remains committed to publicly funded patients — who make up half the health system’s business — even with the new policy.

'We can provide the care they require for complex medical issues,' he said. 'However, we need to balance requests from these patients with their specific needs — if it’s necessary for them to come to Mayo — as well as the needs of commercial paying patients.'

CEO Noseworthy felt that the problem was that publicly insured patients did not bring in enough money:

In his speech, Noseworthy said a recent 3.7 percent surge in Medicaid patients was a 'tipping point' for Mayo.

'If we don’t grow the commercially insured patients, we won’t have income at the end of the year to pay our staff, pay the pensions, and so on,...'

Note that this tipping point was apparently reached under the US Affordable Care Act (ACA, or "Obamacare") and had nothing to do with any attempts to "repeal and replace Obamacare" by the current Trump administration.

Was the CEO Just Being Honest?

A variety of people interviewed by the Star-Tribune and other news sources suggested that other hospitals may have previously thought to subtly discourage patients whose insurance coverage was less lucrative for the hospitals. However, what was unusual was that this policy at the Mayo was expressed openly, at least to hospital personnel if not the larger world.

The Star-Tribune reported, without further comment:

'The most interesting thing isn’t that it’s happening, it’s that a high level executive actually said it out loud,' said Mat Keller, who monitors health care policy and hospital finances for the Minnesota Nurses Association.

StatNews reported,

'There is this thought that hospitals treat whoever comes to their door, but this is a statement that lays out what happens,' said Christine Spencer, a health economist at the University of Baltimore. 'It’s a surprise to hear it out loud like that, but hospitals, probably for decades, have engaged in these more subtle attempts to get privately insured patients over Medicaid or the uninsured.'

Maybe CEO Noseworthy is just more honest than leaders at other institutions?


A Violation of Mission

Similarly, some experts also raised ethical concerns about the new  Mayo Clinic policies. For example, as reported by Modern Healthcare,

'A cornerstone of our ethical thinking is you get the same care whether you're rich or you're poor, and we don't triage by the size of your wallet,' Caplan said. 'A wealthy leader like Mayo is sending a grim message not only to other hospitals but to those who rely on Medicare and Medicaid.'

Also, per the Rochester (MN) Post-Bulletin,

Dr. Gerard Anderson, the director of the Johns Hopkins Center for Hospital Finance and Management who writes many national papers about health care funding, said Noseworthy's directive was like something from a Third World country.

'This is what happens in many low-income countries. The health system is organized to give the most affluent preference in receiving health care. It does not happen in most affluent counties,' he wrote in response to the Star Tribune article. "Hospitals spend nearly all the money they get. If private insurers pay less than public insurers, then it will appear that public payers are paying less than costs. However, what is really happening is that hospitals are spending all the money they receive and those that pay less are accused of not paying the full cost.'

 Putting more lucratively insured patients first seems to violate the Mayo  whose Mayo Clinic Mission 

To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education and research.

and hence is an example of mission-hostile management.


Moreover, the new policy seemed to directly contradict other policies of the Mayo Clinic:

Mayo Clinic's nondiscrimination policy statement states, 'As a recipient of federal financial assistance, Mayo Clinic does not exclude, deny benefits to, or otherwise discriminate against any person” based on race, gender, religion and other characteristics, including “status with regard to public assistance.' This statement applies to 'admission to, participation in, or receipt of the services and benefits under any of its programs and activities,' through Mayo itself or any contractors.

The system also states on its website that it 'appropriately serves patients in difficult financial circumstances and offers financial assistance to those who have an established need to receive medically necessary services and meet criteria for assistance.'

Note that ideally, the whole purpose of a non-profit organization is defined by its mission.  Non-profit organizations ostensibly raise money, through contributions, and by charging for programs and services, to support that mission.  To repeat, the money is supposed to support the mission.  The money is supposed to be a means to an end.  The mission is not too make money.

So the explicit choice to go against the mission for the purposes of making more money should be a red flag, and should only be justified if there is real peril of immediate financial collapse threatening the whole mission.  I did not see any evidence suggesting such a danger in the articles describing Dr Noseworthy's speech.


A Violation of Non-Discrimination Policies, or Even Laws and Regulations?

It seems possible that the explicit policy to disfavor patients with government insurance vis a vis those with private insurance could violate existing regulations or laws.  For example, per the Rochester (MN) Post-Bulletin, the new Mayo Clinic policy was raising related concerns on the behalf of Minnesota state government.

Minnesota Department of Human Services Commissioner Emily Piper, who oversees the agency that manages the state's MinnesotaCare and Medicaid programs, said she was surprised and disturbed to read the comments that Noseworthy made in an internal message to employees.

'Fundamentally, it's our expectation at DHS that Mayo Clinic will serve our enrollees in public programs on an equal standing with any other Minnesotan that walks in their door,' she said Wednesday afternoon. 'We have a lot of questions for Mayo Clinic about how and if and through what process this directive from Dr. Noseworthy is being implemented across their health system.'

Fear of Catastrophe, or Inconveniencing the Rich?

The new explicit Mayo Clinic policy to disadvantage patients insured by Government programs compared to those insured by commercial insurers has caused some experts to question whether Clinic leadership has proposed mission-hostile, discriminatory, unethical, or even illegal behavior.  Is the threat the Clinic faces justify  taking such actions?

As noted earlier, the Mayo Clinic CEO implied the institution was in danger of running out of money at the end of the year "if we don’t grow the commercially insured patients,..." But was that a serious concern?  Or when he said "we won’t have income at the end of the year to pay our staff, pay the pensions, and so on,..." was he really worried about the ability of the Clinic to pay its top leadership in the style to which they have become accustomed?

The CEO did not present and evidence that the Clinic is in such dire straits that it is likely to go bust this year.  The Clinic does not rapidly disclose details of its finances.  However, the latest Mayo Clinic Facts stated that total revenue from current activities is approximately $10,315,000,000.  The most recently available detailed financial report in the form of a Form 990 filed with the US Internal Revenue Service by the Clinic  in 2014, covering 2013, stated 2013 total revenue as $4,560,196,033. This suggests a greater than 100% increase over four years.  That seems to be an impressive growth rate, not suggesting imminent risk of bankruptcy.

On the other hand, the Mayo Clinic leadership does seem accustomed to living in style.  While Mayo Clinic executive salaries since 2013 have not been disclosed, the same 2014 990 form showed that in 2013 CEO Noseworthy received $2,336,662 in total compensation.  Other executives receiving more than $1 million in total compensation included Trustee and VP Dr William C Rupp ($1,049,333), Assistant Treasurer Paul A Gorman ($1,117,598), Treasurer Harry N Hoffman III ($1,835,134), and former CAO Shirley A Weis ($1,530,320).  In addition, the form included statements that trustees received reimbursements for first-class travel for themselves and spouses; the institution purchased the former chief administrative officer's (CAO) house when she relocated; many leaders received lucrative supplemental retirement plans (whose value was included in total compensation);  inventors including named employees are "entitled to a share of royalties received by Mayo, including instances where such royalties are in the form of equity-based instruments;" named employees received "tax -indemnifaction and gross-up payments," and that named employees included personal services (e.g., maid, chauffeur, chef). This seemed to be pretty rich living for leaders of a non-profit institution whose mission, to repeat is

To inspire hope and contribute to health and well-being by providing the best care to every patient through integrated clinical practice, education and research.

So is the Mayo Clinic about to go bankrupt if it does not move selected patients with less lucrative government insurance coverage to the back of the line?  Or are its executives so used to their remunerative bubble that they simply cannot conceive of trying to control costs to uphold the mission if such stringencies might reduce the money flowing to management?

Similarly, StatNews quoted [Chief executive of the Center for Healthcare Quality and Payment Reform Harold] Miller.

'True leadership would be to figure out how to deliver high-quality services at the lowest cost possible,' Miller said. 'If institutions are simply going to say, ‘I’m not going to serve patients unless I get paid more,’ that’s only contributing to the problem.'

Summary

 But these days, the actual leaders of health care organizations have become accustomed to the pay and perks of top executives of big commercial firms.  We have documented again and again the ever rising and increasingly monumental pay of health care CEOs, even of ostensibly non-profit organizations, seemingly out of proportion to their organizations' abilities to help patients' and the public's health.

This has gone on in an era of ascendant neoliberalism.  Krimsky summarized the tenets of neoliberalism in his review of Science-Mart by Phillip Mirowski.

The term neoliberal, which arises from the work of post–World War II economists such as Friedrich Hayek, Milton Friedman and others belonging to the 'Chicago school' of economics and law, has little in common with what is usually thought of as liberalism. The important tenets of neoliberalism, Mirowski says, include such propositions as the following: 'The Market' is a better processor of information than the state; 'politics operates as if it were a market'; 'corporations can do no wrong'; 'competition always prevails'; the state should be 'degovernmentalized' through 'privatization of education, health, science and even portions of the military'; a good way to initiate privatization is to redefine property rights; 'the nation-state should be subject to discipline and limitation through international initiatives'; 'the Market . . . can always provide solutions to problems seemingly caused by markets in the first place'; 'there is no such thing as a ‘public good’'; 'freedom' means economic freedom within the Market. 

The logic appears to be that leaders of organizations that can do no wrong should be entitled to market levels of compensation, however high they may be, and without concern of whether the market is perfect (because all markets are by definition, perfect).  Also, the logic appears to be that corporations that can do no wrong should be immune from questions about actions that appear to not put patients first.

All the distractions in Washington, DC should not put us off how the commercialization of health care in an era of neoliberalism (and managerialism) has led to ever worsening dysfunction, and ever increasing advantages to the insiders within the system.

But where will patients end up in such an era?

We need true health care reform that would enable leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.  What we will get is endless resistance to such reform from those who personally profit from the current dysfunctional, and increasingly corrupt system. And the current chaos and dysfunction in government at large is making it easier for those who personally profit to profit even more. 

Making Health Care Conflicts of Interest Great Again: A Consultant to Medicaid and Simultaneously to Medicaid Vendors for CMS?

President Trump campaigned on behalf of the neglected middle class, but at least in the health care sphere, those he has chosen for their advice or considered for nomination seemed to be more the corporate class.

Tomorrow, Ms Seema Verma, nominated by the Trump administration to be director of the Center for Medicare and Medicaid Services (CMS), one of the most powerful US government health care positions, will have an opportunity to appear before a Senate committee.  Ms Verma, unlike some other people President Trump has considered for health care leadership or advisory positions,  does seem to have a background in health care policy, if not actual on the ground health care.  But like many of those people, she has been accused of having important conflicts of interest.

Working as a Indiana State Consultant on Medicaid While Consulting for a Prominent Medicaid Vendor


Back in 2014, the Indianapolis Star reported on conflicts of interest affecting Ms Verma, then a consultant to Indiana state government on Medicaid services, while her company simultaneously worked for a Hewlett-Packard subsidiary that was a vendor to the Indiana Medicaid program.

The Star described Ms Verma's work for the state thus:

Verma enjoys a tremendous amount of sway for a private contractor. She has her own office at the state government center. Earlier this year, Pence turned to her to broker a deal with the state's hospital industry to help finance his plan to expand the Healthy Indiana Plan. And when Verma and one of Pence's Cabinet members — Family and Social Services Administration Secretary Debra Minott — butted heads over how soon to roll out the program, it was Minott who lost her job.

Verma's influence reaches back at least a decade and across the administrations of four governors, two from each party. During his first term, Gov. Mitch Daniels tapped Verma to help create a new health-care plan to address the state's uninsured population. Her solution: the Healthy Indiana Plan, a new low-income health insurance program that features high deductibles and requires participants to contribute a portion of their income to a health savings account.

Furthermore, in 2014,

Now, Pence wants to expand the plan to an additional 350,000 low-income Hoosiers through what he's calling HIP 2.0. And like Daniels, he turned to Verma for help in developing the plan and negotiating a financing agreement with the state's hospital industry. If approved by the federal government, billions of new Medicaid funds would flow to the state.

However, at the same time Verma and her company had this powerful role for the state, she also worked for HP.

HP's claims management and information system contracts show it has agreed since 2007 to pay Verma's company $1.2 million as a subcontractor for 'health consulting services.'

Yet Verma's work for the state clearly affected HP.

her duties involve crafting requirements for contractors, negotiating with contractors and supervising vendors. Her company's website also says she provided 'requirements for the state's three technology vendors to support HIP.' That would include Hewlett-Packard. One contract gives her the authority to 'initiate and/or track' a contract or contract amendments with the state's fiscal intermediary, which is HP. Another puts her in charge of technical changes to the state's medical management information system, which is operated by HP.

HP clearly had a major relationship with the state.

During that time, HP received more than $500 million in state contracts, including millions of dollars in contract changes to accommodate the Healthy Indiana Plan that Verma helped create and other new programs.

In 2014, the Star made a strong argument that Verma had a major conflict of interest, yet she appeared not to have made it explicit, or perhaps disclose it at all. 

'Certainly on the face of it, there is the appearance of a conflict,' said Trevor Brown, an expert on government purchasing and director of Ohio State University's John Glenn School of Public Affairs.

If Verma was a federal contractor, her dual roles 'would certainly raise tremendous concern for regulators and purchasing officials,' he said. 'This is exactly the kind of thing that would land an agency in a hearing before a legislative oversight committee.'

Lawmakers in Indiana, however, were unaware of Verma's work for HP.

'I was only aware she was working for the state,' said Sen. Patricia Miller, R-Indianapolis, chairwoman of the Senate Health Committee.

'There certainly appears to be the potential for conflict, and appearances matter,' said Ed Clere, R-New Albany, chairman of the House Health Committee

Verma's arrangement with HP also came as a surprise to former FSSA Secretary Debra Minott, who said she learned about it sometime in 2013.

'We had delayed paying an HP invoice because of an issue we were trying to resolve, and HP sent Seema to our CFO to resolve the issue on their behalf,' Minott said. 'I was troubled because I thought Seema was our consultant.'

At the time, though, all of this was legal, since Indiana had very weak regulations on conflicts of interest affecting state government operations.

Minott said when she brought her concerns to FSSA's ethics officer, she was told Indiana's ethics rules didn't apply to conflicts of interests among state contractors.

The lack of any such rule is just the latest in a litany of loopholes that good government advocates say Indiana needs to address.

A 2017 Update: Still Working for Hewlett-Packard, While Advising Nine State Governments

Apparently there were no changes in Ms Verma's relationships with the state of Indiana, and in her conflicts of interest since 2014. In fact, on February 14, 2017, the Associated Press published an updated description of her conflicts (via WKRN). Apparently, her conflicts of interest actually affected eight states other than Indiana.

A review by The Associated Press found Seema Verma and her small Indianapolis-based firm made millions through consulting agreements with at least nine states while also working under contract for Hewlett Packard. The company holds a financial stake in the health care policies Verma's consulting work helped shape in Indiana and elsewhere.

Her business activities continued to be very lucrative.

Since 2011, her firm, SVC Inc., collected more than $6.6 million in consulting fees from the state of Indiana, records show. At the same time, records indicate she also received more than $1 million through a contract with Hewlett, the nation's largest operator of state Medicaid claims processing systems.

Last year, her firm collected an additional $316,000 for work done for the state of Kentucky as a subcontractor for HP Enterprises, according to documents obtained by AP through public records requests.

Also,

Verma reported her salary with SVC is $480,000 and her business income from the company as nearly $2.2 million.

The AP found more experts to state that Ms Verma has serious conflicts of interest,

However, legal and ethics experts contacted by AP say Verma's work for Hewlett, and offshoot HP Enterprises, raised questions about where her loyalties lay — to the company, or to state taxpayers.

Richard Painter, former President George W. Bush's chief ethics lawyer, called Verma's arrangement a 'conflict of interest' that 'clearly should not happen and is definitely improper.'

Such arrangements are typically prohibited for rank-and-file state employees under Indiana's ethics rules and laws, but they're murkier when it comes to consulting work. Contractors have often replaced state employees in a GOP bid to drive down the number of public employees and distinctions between the two can be hard to discern.

'She was cloaked with so much responsibility and so much authority, people thought she was a state employee,' said Debra Minot, a former head of Indiana's Family and Social Services Agency under Pence who worked with Verma.

Indiana University law professor David Orentlicher compared Verma's dual employment to an attorney who represents both the plaintiff and the defense in a lawsuit. It's also similar to federal contract negotiator with a side job for a company they regularly negotiate with, he said.

'If you have one person on both sides of the negotiating, they can't negotiate hard for both sides,' said Orentlicher, a former Indiana Democratic state lawmaker.

Ms Verma's conflicts got little notice at the time of her nomination, but the 2014 Indianapolis Star was first noticed by PRWatch in January.

Summary


Revelations about these ongoing conflicts of interest have not apparently caused the Trump administration to rethink her nomination to be head of CMS.

Ms Verma happily went along working as an authoritative consultant for multiple states' Medicaid programs while also working as a consultant for a prominent vendor to these programs.  The 2014 report about these conflicts did not deter her from continuing her lucrative work for parties on both sides of the table.  Apparently, she continued to have similarly conflicted relationships with multiple other states, without anyone being the wiser.

If Ms Verma saw no problem with acting while subject to these conflicts, does anyone seriously expect that as head of the Medicare and Medicaid programs for the whole country she will put theinterests of the forgotten middle, working, and lower class patients who get health care insurance from these programs ahead of the interests of her corporate buddies?

Previously, the Trump administration nominated another heavily conflicted individual to be Secretary of Health and Human Services (look here and here).  He has gotten health advice from a silicon valley magnate who declared corruption was needed to prevent boredom (look here).  Several people he has reportedly considered to run the US Food and Drug Administration had their own substantial conflicts.  One was a  and one was a former pharmaceutical and biotechnology executive (look here and here).  One of the first people he sent to oversee FDA operations was a former pharmaceutical company lobbyist (look here).  A person proposed as "health care czar" is a billionaire biotechnology CEO (look here). 

Are these the sort of people who will first think of the welfare of the forgotten multitudes, or how much wealth they and their cronies can attain?

Finally, the Medicaid program is meant to be part of the safety net for the poorest Americans who cannot afford health insurance.  It seems bitterly ironic that the person proposed to become its leader has become rich as a consultant to state Medicaid programs (note above that Ms Verma made a salary of $480,000 a year, and received "business income" of $2.2 million presumably also a year from her consulting firm).  It is also bitterly ironic that many states have turned much of the operations of their Medicaid programs over to vendors who similarly have made a lot of money from a program for the poor.  

True health care reform requires leadership that puts patients' and the public health ahead of corporate health and managers' enrichment.

NOTE - Post revised on 16 February, 2017, to update links and add discussion of Ms Verma's salary and income.  

UnitedHealth's Latest Blunders Include Lax Fraud Detection, Recalled EHRs - So Why is its CEO Worth $13.9 Million, or is it $34.7 Million?

We managed to go four months since our last post about UnitedHealth, but sure enough, the company that keeps on giving... examples of poor management to contrast with ridiculous management pay... has done so again.

There were two obvious examples of poor management that recently appeared in the media.

Lax Fraud Dection

The background, as noted in a Kaiser Health News article published in September, is that it is now fashionable for American states to outsource some or most of their Medicaid health insurance programs to managed care organizations, often for-profit, as is UnitedHealth.  These programs are meant to provide insurance to the poor and disabled.  Yet once they have outsourced Medicaid, the states may be reluctant to cancel contracts, even if the outsourcing is not working:

 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 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 plans 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. 

Never mind that leaving such programs as is means taking money meant to finance care for the poor and using it to finance fraud, and reward managed care organizations for failing to find fraud.

One of the examples, but not a new one, used in the Kaiser Health News article, involved UnitedHealth:

Linda Edwards Gockel, spokeswoman for the Texas Health and Human Services Commission, said that in 2009, officials were concerned about a pilot program in the Dallas-Fort Worth area run by Evercare, a subsidiary of UnitedHealth Group. The program, which coordinated care and long-term services for elderly and disabled people, had been fined more than $600,000 for not providing proper access to care and failing to coordinate services.

Gockel said Texas decided to cancel the contract 15 months early, but continued to do business with Evercare because the problems in Dallas-Fort Worth weren’t affecting services it was providing elsewhere.

Then in July, NJ.com reported an investigation by the state of New Jersey into UnitedHealth's ability, or lack thereof, to detect fraud in the Medicaid managed care program it runs for the state.

 An HMO that earned $1.7 billion from 2009 to 2010 by providing Medicaid coverage to 350,000 low-income and disabled New Jerseyans didn't try very hard to detect fraudulent billing — identifying only $1.6 million, or one-tenth of one percent in improper payouts, according to a report the Office of the State Comptroller released today.

UnitedHealth did not even come close to fulfilling its obligations to provide sufficient resources to fight fraud:

The HMOs in the Medicaid program are required to dedicate one investigator for every 60,000 Medicaid clients. At that ratio, United's special investigations unit should have been comprised of about six employees whose sole focus is to detect fraud and abuse by medical providers and patients.

Instead, United reported it had dedicated the equivalent of two investigators during the two-year study period based on the amount of hours devoted to the unit. Upon scrutiny, the comptroller found United 'overstated' its staffing levels; the unit had one investigator, the report said. 

Note that this abject failure appeared to violate the contract UnitedHealth had with the state,

UnitedHealthcare Community Plan of New Jersey failed to hire enough investigators and train them properly, in violation of the managed care company's contract with the state, according to the report. 

Presumably, if fraud led to excess program expenses, it would be New Jersey, not UnitedHealth who ultimately had to pay them.  Again, it appears that money meant of pay for health care for the poor and disabled was diverted to fraudsters, and to revenue for UnitedHealth (partly because the latter did not see fit to spend enough money up front to detect the fraud.)  Of course, such management by UnitedHealth helped to increase its already fat revenue stream.

Faulty Electronic Health Records

In September, Bloomberg reported that UnitedHealth had to recall electronic health record software because of faults that likely increased the risk of bad patient outcomes,

UnitedHealth Group Inc has recalled software used in hospital emergency departments in more than 20 states because of an error that caused doctor’s notes about patient prescriptions to drop out of their files.

Certain versions of the software made by the largest U.S. health insurer had a bug that didn’t print information related to the medication and failed to add data to patients’ charts, according to a document filed with the U.S.Food and Drug Administration and posted July 29.

The technology is used in 35 facilities in states including California, New Jersey, and Florida, the document shows. The recall began June 21. There were no reports of patient harm and each facility was notified and received a digital fix, said Kyle Christensen, a spokesman for the UnitedHealth division that makes the Picis ED PulseCheck software that was recalled.

The incident shows how software errors can create dangers for patients at a time when digital health records are being implemented as a cornerstone of President  Barack Obams's modernization of the nation’s health-care system.

The "bug" could potentially harm patients,

 Doctor’s notes are critical for some medications, as they contain directions about diet and use. Failure to include the instructions could lead to serious injury or death, [University of Pennsylvania adjunct professor of sociology and medicine Ross] Koppel said.

It turns out that the Picis software has had other problems that could have increased the risk of harm to patients,

An online database maintained by the FDA shows that Picis Inc., a Wakefield, Massachusetts-based company that UnitedHealth acquired in 2010 for an undisclosed price, has reported six recalls involving electronic health record software since 2009.

One incident in 2011 involved anesthesia-management software sold nationwide that in one instance displayed a patient’s medical information in another patient’s file. Another involved software sold worldwide where on an unspecified number of occasions, the program failed to display the discontinued status on medication orders. Others included glitches that caused a failure to display appropriate allergy interaction warnings, the freezing of administrative controls, and other issues.

Note that it is the same Picis software that our blogger, InformaticsMD, has alleged lead to the death of his mother,

Alleged flaws in electronic health records have led to lawsuits. Scot Silverstein, a doctor and health-care informatics professor at  Drexel University, sued Abington Memorial Hospital in Pennsylvania in 2011 over the death that year of his 84-year-old mother. He blamed her death on a flaw in her electronic health record that he claims caused a critical heart medication to vanish from her file. One of the systems involved was made by Picis, according to his lawsuit. Picis is not being sued.

Linda Millevoi, a spokeswoman for Abington Memorial, declined to comment.

The latest InformaticsMD posts on this case are here and here.

Summary

These cases are just the latest in a long list of blunders and ethical missteps made by UnitedHealth and its top management.  The most significant examples of the latter about which we have posted appear in the appendix at the end.  The latest examples likely diverted money that should have supported health care for the poor, and and may have put patients' health and lives at risk.

Yet UnitedHealth is now the largest US health insurance company, and it has succeeded in making its current and former CEO fabulously wealthy.  According to filings with the US Security and Exchange Commission (SEC), its current CEO, Stephen J Hemsley, got $13.9 million in 2012, up from $13.4 million in 2011, as we posted here.  However, an analysis by the Minneapolis Star-Tribune that took into account stock gains and shares vesting suggested he got $34,721,122 in 2012, admittedly down from a breathtaking $48,075,614 in 2011. 

The previous UnitedHealth once was worth over a billion dollars due to back dated stock options, some of which he had to give back, but despite all the resulting legal actions, was still the ninth best paid CEO in the US for the first decade of the 21st century (look here).

So UnitedHealth continues to provide us with examples of how top leaders of health care organizations can become tremendously rich, despite, or perhaps because of repeated mismanagement and apparently unethical management on their watches.  Only when we make health care leaders truly accountable for their organizations, and especially for their organizations' ethics and effects on patients' and the public's health will be begin to challenge health care dysfunction.

(Note to readers recently joining us from countries other than the US - UnitedHealth is a multi-national that claims to operate in 33 countries (look here).  For example, its UK web-site is here.  So beware the export of bad management for enhanced prices.) 

 
Appendix - UnitedHealth's Ethical Lapses

 - as reported by the Hartford Courant, "UnitedHealth Group Inc., the largest U.S. health insurer, will refund $50 million to small businesses that New York state officials said were overcharged in 2006."
- UnitedHalth promised its investors it would continue to raise premiums, even if that priced increasing numbers of people out of its policies (see post here);
- UnitedHealth's acquisition of Pacificare in California allegedly lead to a "meltdown" of its claims paying mechanisms (see post here);
- UnitedHealth's acquisition of Sierra Health Services allegedly gave it a monopoly in Utah, while the company allegedly was transferring much of its revenue out of the state of Rhode Island, rather than using it to pay claims (see post here)
- UnitedHealth frequently violated Nebraska insurance laws (see post here);
- UnitedHealth settled charges that its Ingenix subsidiaries manipulation of data lead to underpaying patients who received out-of-network care (see post here).
- UnitedHealth was accused of hiding the fact that the physicians it is now employing through its Optum subsidiary in fact work for a for-profit company, not directly for their patients (see post here).

"Government-Run Health Insurance" Run by Corporations? - Two Medicaid Examples

In the US, there seems to have been a constant argument between right- and left-wingers over "government-run" health insurance.  The right tends to disparage all aspects of "government-run" health care, and in the case of insurance, uses the alleged faults of the two big US government health insurance programs as examples.  (Medicare is a federal government health insurance program for the elderly and disabled. Medicaid is federal-state program for the poor.) 

For example, per the Associated Press via BusinessWeek, from a currently prominent Republican hopeful for President, former Minnesota Governor Tim Pawlenty,

The former Minnesota governor was the latest politician to participate in the Health Policy Grand Rounds program that Dartmouth-Hitchcock Medical Center has organized for its staff during the past two presidential campaign cycles. Using Medicare and Medicaid as examples, he criticized the notion that government-run health care will produce efficiency and said the answer lies in empowering consumers.

Republican Congressman Darrell Issa (California) wrote in 2010:

an expansion of the federal bureaucracy at that rate will greatly increase the incidence of waste, fraud and abuse in health care. Already Medicare, which accounts for 14% of all federal spending, is rife with waste, fraud and abuse. Even Attorney General Eric Holder has said, 'By all accounts, every year we lose tens of billions of dollars in Medicare and Medicaid funds to fraud.'

A recent analysis by the Government Accountability Office (GAO) estimated that federal subsidy programs cost taxpayers about $100 billion every year in improper payments, with Medicare and Medicaid accounting for more than half of that.

The left may advocate for government-run, "single-payer" insurance programs, perhaps using the alleged benefits of Medicare and Medicaid as examples.

Scholarly articles about health care policy may refer to Medicaid as a government "single-payer" system.  (For example, see: Robinson JC. The commercial health insurance industry in an era of eroding employer coverage. Health Aff 2006; 25:1475-1486. Link here.)

In any case, I suspect most of us think of Medicaid as an example of "government-run" health care insurance, regardless of whether we believe that is a good or a bad thing.

Yet the reality may be more complex. Two recent stories, one a follow-up on an old Health Care Renewal post, provide some dots to connect.

Connecticut HUSKY Medicaid Program

In 2007, we posted about how the state of Connecticut was going to end participation in the HUSKY state Medicaid program for poor children by four insurance companies/ managed care organizations.  They apparently refused to provide information about payments to physicians and denial of payments for prescription drugs to the state.  The two largest organizations involved were Anthem Health Plans (a subsidiary of WellPoint), and Health Net.  At the time, we noted that this case provided an example of the lack of transparency exhibited by major health organizations.

Late last year, the Connecticut Mirror documented more criticism of the HUSKY program based on a report that showed that participating companies were making big profits from it (but perhaps not from other state Medicaid programs): 

The three managed care companies in the state's HUSKY insurance program for low-income children and families recorded profits of $18.8 million last year, according to figures released by the state Department of Social Services.

In one part of HUSKY, the insurers made margins of at least 20 percent and spent less than 72 percent of their revenues on medical care.

The figures released this month drew criticism from members of the Medicaid Care Management Oversight Council, who are in the midst of considering moving HUSKY out of managed care.

In more detail, the relevant numbers were:

AmeriChoice, part of UnitedHealthcare, spent 62 percent of its revenue on medical care and posted a 22.9 percent profit margin in the HUSKY B program.

By contrast, the federal health reform law sets minimum medical care ratios for insurers of 80 percent or 85 percent, depending on the type of plan. The provision does not apply to Medicaid plans, but was cited as a benchmark in the council's discussion.

None of the insurers met those benchmarks in HUSKY B, which covers children whose family income does not qualify for Medicaid. Last year, it covered between 13,000 and 16,000 children, many whose families earned below 300 percent of the federal poverty level.

Aetna spent 70.5 percent on medical care and made a 20 percent margin, while Community Health Network of Connecticut, a non-profit with far more enrollees than the other insurers, spent 71.8 percent of its revenues on medical care and made a 20.6 percent margin.

Margins were lower, and medical care ratios higher, in HUSKY A, a Medicaid program that enrolled as many as 358,088 children and adults in 2009.

Community Health Network reported a 95.1 percent medical care ratio and a -0.3 percent margin. AmeriChoice spent 86.3 percent of its revenue on medical care and achieved a 3.5 percent margin, while Aetna had an 83.9 percent medical care ratio and 6.5 percent margin.

Overall, the medical care ratio was 90.7 percent for both HUSKY programs and all three insurers. The overall margin was 2.3 percent.

The insurers involved defended themselves by noting to participate in HUSKY they also had to participate in another program, Charter Oak Health Plan, "on which they lose money."

Last month, it looked to be the end of managed care in these Medicaid programs, again as reported by the Connecticut Mirror:

The Malloy administration announced plans Tuesday to move the HUSKY and Charter Oak health programs out of managed care and increase care coordination in the state's other Medicaid programs, an effort officials said would save money while giving the state more control over health programs that serve more than 500,000 people.

This article also noted:

In the current system, the state pays three managed care companies set fees for each HUSKY and Charter Oak member every month, and the companies use the money to pay medical claims. Critics say it gives the managed care companies an incentive to deny care since they get to keep the money not spent on medical costs.

So let us deal directly with the cognitive dissonance generated by these articles. In the ongoing US health reform debate, Medicaid is usually discussed as a "government-run" health care (insurance) program. Yet these news articles from Connecticut suggest at least in that state, part of Medicaid was out-sourced to mostly large, national, for-profit health insurance companies/ managed care organizations. Furthermore, as noted just above, these corporations seemed to be mainly calling the shots in how their part of Medicaid was run. So is this "government-run" health care (insurance)?

But wait, there is more....

Minnesota Medicaid Controversy

Last month, the Politics in Minnesota web-site ran a report on an unlikely reformer:

Dave Feinwachs is no stranger to the Capitol.

For three decades he was the general counsel to the Minnesota Hospital Association. In that capacity, he negotiated with state agencies and testified regularly before legislative committees on health care issues.

But early last year, Feinwachs said, he was ordered by his superiors at the hospital association not to provide any further testimony at the Capitol. The reason for the muzzle: his vocal insistence that health maintenance organizations (HMOs) should contribute money to help salvage the state’s General Assistance Medical Care program for indigent adults.

Feinwachs says he abided by the prohibition on testimony before legislative committees, but apparently it was not enough to keep him in the good graces of his employer. In November he was fired as the group’s principal attorney. Feinwachs will not discuss the reason for his termination, citing potential litigation. But it almost certainly had something to do with his ongoing zealous campaign to force greater transparency and accountability on the state’s HMOs - primarily Blue Cross & Blue Shield, HealthPartners, Medica and UCare - which receive roughly $3 billion annually to run health plans for many of the state’s poorest residents.

So here we go again. This article suggested that Minnesota had out-sourced a very large part of its Medicaid program.

Furthermore, it also appears that the state government knows little about what happens to the money it hands over:

In the next two years, Minnesota is slated to funnel about $6 billion to the state’s HMOs to provide health care for 550,000 of the state’s poorest residents. To put that figure in perspective, it is nearly 20 percent of the state’s expected 2012-13 general fund revenues - and nearly identical to the state’s projected $6.2 billion deficit. In coming up with a solution to Minnesota’s financial crisis, Feinwachs and others believe, legislators must at least have a clear accounting of this massive pot of health care dollars.

HMOs, meanwhile, are not exactly yearning for scrutiny, especially as they launch a pitch to administer even more of the state’s health care spending.

In addition, there is reason to believe that Minnesota may be paying a significant amount for administration:

Feinwachs believes that the administrative overhead collected by HMOs could be in the neighborhood of 16 percent. He concedes, however, that this is no more than a 'guesstimate' pieced together from the limited information that is publicly available.

Then, there is reason to suspect that the private (and nominally not-for-profit) HMOs that Minnesota pays to run Medicaid have resisted accounting for how the money they got was spent:

Past attempts to bolster accountability and transparency for HMOs have largely run into a brick wall. For instance, when legislators considered requiring the health plans to chip in on a plan to restore the General Assistance Medical Care program last year, they were told by officials from the Department of Human Services that such a move would be illegal. Efforts to provide more financial disclosure have been rebuffed by the argument that such information is proprietary and not subject to the state’s data practices rules. The complexity of Minnesota’s patchwork of publicly funded health care plans, which very few individuals clearly understand, has also helped forestall changes.

'We can’t let the complexity of data and information beat us down, and I think that’s what happened in the years past,' Hosch said. 'The systems almost seem like they’re deliberately complex in order to confuse us.'

Apparently in these parlous financial times, Mr Feinwachs got some attention. Last week, the state Governor announced his willingness to dig into the results of the state's out-sourcing of Medicaid, per the Minneapolis Star-Tribune:

It's high time that Minnesota started treating its nonprofit health plans for what they are -- some of state government's largest vendors.

Reforms announced this week by Gov. Mark Dayton's office are a promising first step toward scrutinizing health plan contracts for savings and finding new ways to rein in Minnesota's soaring medical costs.

Managing care for more than 500,000 low-income, disabled and elderly Minnesotans enrolled in state public health programs is a $3.1 billion-a-year business for health plans in Minnesota, with the state and federal government jointly footing the bill.

Over the past decade, the state's portion of this outsourced care has increased from 5 percent to 11 percent of the state budget, according to Dayton's office.

The state also has more than 249,000 people -- typically the sickest of the sick -- in a fee-for-service public program. That spending is also ripe for a cost-savings review.

On Wednesday, Dayton announced plans to do what good business leaders do in difficult financial circumstances. His administration is going to start driving harder bargains with health plans.

Key parts of the plan include making the contracting system more competitive, making financial information more transparent, and doing deeper auditing of plans' books to analyze administrative and medical expenses.

So again in Minnesota, it appeared that the state had out-sourced a large proportion of its Medicaid program, covering apparently two-thirds of the state's Medicaid patients. It appears that knowledge of the out-sourcing of most of Medicaid was relatively anechoic, and that even the state's former Governor Pawlenty was unaware of it (see his comments in introduction to this post). Despite the amounts of money and the numbers of people involved, up to now the state government had apparently very little information about how billions of dollars were being spent by private, albeit nominally non-profit health insurance companies/ managed care organizations.

Summary

Two cases from two states suggest that some proportion of Medicaid, perhaps a very large proportion, has been out-sourced to private corporations, both nominally non-profit and for-profit.

In fact, a Washington Post article last year suggested that 70% of Medicaid patients are in managed care plans, most of which are likely out-sourced, not run by state Medicaid agencies.

Our two cases above further suggest that government officials may know little about how the money given to these corporations was spent, and how the corporations managed the supposedly "government-run" health insurance.

So much for the notion that the US Medicaid program is "government-run" health insurance.  Whether one believes that government bureaucrats are good or bad at running health care, it seems that most Medicaid patients' care is managed by corporate, not government bureaucrats.

The likelihood that a substantial proportion of Medicaid patients actually get their health care coverage from corporations, be that non-profit or for-profit, raises some important questions.
- What proportion of the government funds provided these corporations goes to health care versus administration, overhead, etc?
-  What then is the proportion of all Medicaid money spent on health care versus administration, overhead, etc at the federal, state, and corporate levels?
-  What proportion of the revenue of major health insurers/ managed care organizations actually comes from tax-payers via Medicaid?
-  To what extent do health insurers/ managed care organizations influence clinical care through their role implementing Medicaid?
-  How transparent are their finances and their implementation of Medicaid?
-  How well are they supervised and regulated by national and state government?

Meanwhile, it appears that there is far more overlap between government and corporate health insurance and managed care than most of us realized.  That suggests the usual debate between the foes and proponents of "government-run" health care (insurance) was vastly too simplistic.  Maybe some of those involved in the debate should have known that.   

Meanwhile, the concerns I discussed in 2002 that "health care has become dominated by large, bureaucratic organizations" appear increasingly well-founded.  This domination seems to be increasingly facilitated by collaboration - or should that be collusion? - among government and private bureaucracies.  The danger, as we have repeatedly discussed, is that the leaders of these bureaucracies may feel increasing loyalty to the managers' and executives' guild, and decreasing pressure not to fulfill their own and their cronies' self-interest.  We need at least to have some frank discussions about the increasing corporatism of health care and all of society, and what to do about it. 

Pharmacia, or Maybe Pfizer Settles, Only Eight Years Later

Didn't somebody say "justice delayed is justice denied?"* 

Here is a story for a Friday afternoon, via a press release from the New York state Attorney General's office, per Bloomberg:

Attorney General Eric T. Schneiderman today announced a multimillion dollar settlement with a pharmaceutical company that inflated the cost of drugs sold to state health programs. The company, Pharmacia Corporation, has paid $2.5 million to the New York Medicaid program and to the Elderly Pharmaceutical Insurance Coverage Program (EPIC), and also to cover the costs of the investigation.

Here is more information about the lawsuit:

The lawsuit, filed in 2003, charged that Pharmacia failed to report real and accurate prices, and did not take into account discounts, rebates, chargebacks and other price concessions to their wholesalers. As a result, New York's Medicaid Program and the EPIC program paid more for certain drugs manufactured by Pharmacia than those state programs should have.

This is an unusual entrant into our march of legal settlements. As noted above, this lawsuit took eight years to settle. The entity that made the settlement, Pharmacia, is actually long gone as an independent company. It merged into Pfizer in 2003 (see this). Despite the eight years of waiting, the settlement is extremely paltry compared to the size of the company to which the settlement now applies. According to Google Finance, in 2010, Pfizer's annual revenues were more than $67 billion.

This settlement adds in a small way to a series of settlements Pfizer has recently made.  Pfizer paid a $2.3 billion settlement in 2009 (see post here), and three other major settlements from then to early 2010 (see post here).  The company was listed as one of the pharmaceutical "big four" companies in terms of defrauding the government (see post here).  For other discussions of Pfizer on Health Care Renewal, look here. 

The New York Attorney General's press release claimed, "These are hard financial times for our state, and my office will do its part by uncovering every dishonestly claimed dollar, and holding those who take advantage of New York accountable."  Begging his pardon, but could he really have been serious that nicking Pfizer for $2.5 million eight years after the lawsuit was filed is really holding this giant company accountable?  Will this settlement make the company any more accountable than all those that came before, some almost one thousand times bigger?  Meanwhile, as is usually the case in these stories about the march of legal settlements in health care, no person who authorized, directed or implemented the questionable activity apparently paid any penalty or suffered any sort of negative consequences.

This week, Matt Taibi asked "why isn't Wall Street in jail?" in the title of his most recent Rolling Stone article.  I should also ask, why aren't some leaders of pharmaceutical, device, biotechnology, and managed care corporations in jail? 

Just as the leaders of big financial service firms seem to be completely unaccountable for the havoc they created in the global economy, and despite bluster by various government officials, the leaders of big health care corporations seem to be completely unaccountable for the unethical behavior of their companies that continue to inflate the health care bubble.

So for the nth time I will repeat:  we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Meanwhile, the continued unwillingness of government leaders to take on corporate leaders suggests how corporatist the US has become. Government for the corporations, by the corporations, and of the corporations, bodes no good for the people whose rights are increasingly being displaced.

Mr Taibi encapsulated the problem in a more colorful way, and I will end with his version, somewhat edited for this family publication:

Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.

'Everything's f***ed up, and nobody goes to jail,' he said. 'That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that.'

* - the quote has been attributed to William Gladstone in a 1868 speech. but may be older than that (link here)

Passport to ... Fraud? - AmeriHealth Mercy Settles

Back in November, 2010, we discussed the relatively opulent pay and perks given to and conflicts of interest affecting leaders of Passport Health Plan, a non-profit, state (Kentucky) supported Medicaid managed care organization/ health insurer.  This seemed to be another case of health care organizational insiders putting their personal gain ahead of their mission, which was particularly unseemly because their mission was serving the poor. 

Now Passport Health is in the news again, and not in a favorable way, as per the Louisville (Kentucky) Courier-Journal:

Passport Health Plan’s main contractor has agreed to pay more than $2 million in damages to the Kentucky Medicaid program to settle a fraud investigation, Attorney General Jack Conway announced Wednesday.

The settlement with AmeriHealth Mercy Plan is the result of a nine-month investigation by the Attorney General's Medicaid Fraud Unit into alleged falsification of records by the company that entitled it to more than $677,000 in bonus money for good performance.

Conway said the investigation centered on an allegation from a whistleblower that AmeriHealth falsely reported data to the state Medicaid Services Department on the number of Medicaid recipients who received cervical cancer screenings in 2009. The false numbers allowed AmeriHealth to receive the bonus money under the terms of its contract.

We have discussed a variety of cases of leaders of health care organizations getting compensation or benefits that seemed disproportionate in their organizations' context. The usual justification seems to be that it takes such rewards to attract the excellent leaders needed by health care organization.

Here is another example of leaders who not only seemed to get excessive compensation and benefits, but whose performance seemed far from excellent.

Moreover, it suggests that compensation and benefits may actually have an inverse correlation to performance. Organizations whose stewards seem unrealistic about the talents of their hired managers, and dependent on material rewards to retain such managers may lack good stewardship. Leaders who find themselves rewarded beyond any reasonable evaluation of their work may learn the lesson that they cannot ask for too much. Meanwhile, the excess of their rewards may inspire increasing greed rather than increasing devotion to the mission, while the pay and perks increasingly place them in a bubble that insulates from the concerns of the common people who their organizations are supposed to serve.

As we have said before, far too often the leaders of not-for-profit health care institutions seem more interested in padding their own bottom lines than upholding the institutions' missions. They often seem entirely unaware of their duty to put those missions ahead of their own self-interest. Like the financial services sector in the era of "greed is good," health care too often seems run by "insiders hijacking established institutions for their personal benefit." True health care reform would encourage leadership of health care who understand health care and care about its mission, rather than those who see a quick way to make a small fortune.

PS - Also note that this is also another example of the sort of legal settlements of misbehavior by health care organizations that seems to have little deterrent effect, mainly because no individual who authorized, directed or implemented the bad behavior suffers any negative consequences.  See our discussion in these previous posts.  True health care reform would also hold leaders accountable for their organizations' misdeeds.

"Living High Life on Money to Treat the Poor"

Here is another story that has developed over the last week about questionable goings on at a not-for-profit health care organization.  The organization in question this time was the not-for-profit, but state government supported Medicaid managed care organization/ health insurer for the Louisville, Kentucky region.  The details came from a Louisville (Kentucky) Courier-Journal article about a state auditor's report on the Passport Health Plan:

The organization providing Medicaid services in Jefferson and surrounding counties has spent lavishly on such things as travel, meals, salaries, bonuses and lobbying in recent years, the state auditor’s office said in a report released Tuesday.

The scathing report, which Gov. Steve Beshear described as 'disheartening,' said two Passport Health Plan officials — Executive Vice President Shannon Turner and Associate Vice President Nici Gaines — were paid well, ate well and traveled extensively.

'Lodgings were often luxury spas and resorts,' the report said. 'The executives used limousine services and dined at expensive restaurants. While these types of expenditures may be routine for many private, for-profit companies, they should not be typical in nonprofit, health care organizations.'

The report also said Passport made extraordinary efforts to burnish its public image and gain political support by spending $1 million since 2007 on lobbying and public relations, as well as $423,000 in donations and sponsorships.

Many of the donations had no connection with health care, the report said — including $600 to sponsor a reception for the Senate Republican majority in 2009, $10,000 to sponsor an 'inflatable character' for the Kentucky Derby Festival's Pegasus Parade, and contributions to the Boy Scouts, Kentucky Opera, Volunteers of America and others.

Here are some more specifics about amounts spent:

Travel: Passport spent $106,722 on more than 36 trips including trips to conferences at resorts in New Orleans, Key West, Las Vegas, Seattle, Philadelphia, Tucson, Washington and Coeur d'Alene, Idaho.
Meals: Spent $72,994 on 753 meals for groups large and small. These were mostly at Louisville restaurants but included tabs at some famous restaurants outside Kentucky, such as Emeril's and Commander's Palace in New Orleans.
Limo services: Five uses of limos totaling $3,996.
Lobbying and public relations: Spent $1 million.
Donations and sponsorships: Spent $423,000, some with no connection to health care, including $10,000 to be an “Inflatable Character Sponsor” for the Kentucky Derby Festival.
Gifts: Spent $9,311 for 95 gifts, which included flowers and Christmas gifts.
Salaries: Paid salary and bonuses of $303,750 to Executive Vice President Shannon Turner and $156, 000 to Associate Vice President Nici Gaines in most recent year.

Here are more specifics about conflicts of interest:

Conflicts of interest: Both Turner and Gaines received additional compensation in contracts with subcontractor they were overseeing, AmeriHealth Mercy. Also, Larry Cook, Passport's chairman and CEO, had divided loyalties because he serves as an executive vice president of U of L. He also was reimbursed $1,717 by AmeriHealth for expenses for a trip to Ireland in 2007.
Grants: Many grants were made by Passport to groups with ties to staff and/or board members

The organization also was charged with distributing additional funds to area health providers based on their initial investment in the not-for-profit managed care organization, but not on the amount of care they were providing to Medicaid patients:

[State Senator Tim] Shaughnessy was particularly concerned about distributions of $10 million in excess funds in late 2008 and again in and 2009 to the large Jefferson County health-care providers that formed Passport.

These distributions were reported to the Kentucky Department of Insurance as grants to cover indigent care costs incurred by Passport's provider partners — University Medical Center, University Physician Associates, Norton Healthcare, Jewish Hospital and St. Mary's Healthcare, and the Louisville/Jefferson County Primary Care Association.

But the auditor’s report said the money was distributed based on the percentage of the providers' initial investments to create Passport — not the amount of indigent care they provided. And the report said this money was placed in the general funds of these providers 'rather than specifically set aside for uncompensated indigent care.'

Finally, it appears that Passport tried to block disclosure of important information, including the compensation of its executives, even though it is a not-for-profit organization entirely funded by the government:

Early this year The Courier-Journal filed a request under the state open records law seeking Passport records on compensation of its executives and minutes of its board meetings. But Passport refused to release them, claiming that the law did not apply.

The attorney general's office disagreed, saying that Passport is 100 percent publicly funded and must release the records. But Passport again refused and took the matter to Jefferson Circuit Court, where it is pending.

So again we have the same tiresome features of leaders who apparently regard their organization as their own personal sandbox: lavish compensation, given the context, luxuries supplied the leadership out of organizational funds, conflicts of interest that apparently increased further the leaders' personal gains, and attempts to keep the whole thing secret. As a Lexington (Kentucky) Herald-Leader editorial ("Living High Life on Money to Treat the Poor") noted, given the mission of the organization, this sort of sleaze is particularly unfortunate:

In one way, though, Passport's profligacy deserves special condemnation. Every dollar Passport executives spent on their own pleasurable pursuits, on lobbying to insure tax money kept flowing their way, on buying goodwill in the Louisville area or on any other unnecessary expense was a dollar taken away from providing Medicaid services to the most vulnerable, needy members of society.

This case resembles one we discussed previously, that of the non-profit community health agency in Florida whose leaders again seemed to regard their job as an opportunity for personal enrichment.  It seems that even leaders of non-profit organizations whose mission is to help the needy may seem to put their own needs before those of their disadvantaged constituents.  Of course, given they may have seen leaders of not-for-profit universities and hospital systems making millions, and leaders of for-profit pharmaceutical, device, and especially managed care organizations/ health insurers making tens of millions, and conclude that their six-figure salaries and occasional luxuries were barely adequate compensation.

As we have noted before, the "executives take all" mentality of an era economically dominated by financiers as aristocrats seems to have infected health care.  Somehow we have to restore the idea that executives and managers  like doctors and nurses, should regard their work as calling meant to put the needs of patients and public health first, rather than a quick way to get rich. 

State, City Settle Case Alleging Medicaid Fraud

We have posted on a variety of settlements of cases alleging health care fraud, but this one has a new twist, as reported by the NY Times,

New York State and New York City officials agreed this week to repay the federal government for more than half a billion dollars in improper Medicaid claims, averting a potential court battle but adding more red ink to the state’s and city’s finances.

The settlement, which federal officials said was the largest recovery of Medicaid funds in history, ends a lengthy dispute with the federal government over whether school districts around the state improperly sought Medicaid payments for speech therapy and other services dating to the early 1990s.

Under the agreement, which was announced Tuesday, the city will repay about $100 million. The state will pay about $332 million in 10 installments over the next five and a half years and will also give up $107.9 million worth of Medicaid claims now owed by the federal government.

Though neither city nor state officials are required to admit wrongdoing under the agreement, it does require the state’s Department of Education to submit to independent monitoring of its Medicaid-financed programs.

Since the 1980s, Medicaid has helped school districts pay for the cost of services like speech therapy and psychological counseling for schoolchildren, including the cost of transportation to therapists’ offices. School districts in New York have been among the most aggressive in the country in seeking such aid: one federal study found that New York accounted for 44 percent of all student health services.

Those lawsuits, filed under the federal False Claims Act, spurred several audits by the Department of Health and Human Services of city and state programs that finance speech therapy and other programs for disabled children. Those audits found substantial potential for fraud, reporting that a vast majority of the claims submitted did not meet federal requirements, and that in many cases there was no evidence that the services had actually been provided.

This may be the first settlement of health care fraud allegations we have discussed in which all the involved parties were government agencies.

The current fervent debate in the US about health care reform has focused on ever rising health care costs. However, this debate has largely ignored the ethics of health care, and the sorts of leadership of health care organizations that has lead to rampant and costly mischief, of which this case is just the latest example. How can we control costs while so many health care leaders are seeking every angle to make more money, whatever the consequences?