October 18, 20185:00 AM ET
CHAD
TERHUNE
Health insurance wasn't available through his job, so Jose Nuñez
turned to Medicaid, the nation's public insurance program that assists 75
million low-income Americans.
Like most people on Medicaid, the Los Angeles trucker was
assigned to a private insurance company that coordinated his medical visits and
treatment in exchange for receiving a set fee per month — an arrangement known
as managed care.
But in 2016, when Nuñez's retina became damaged from diabetes,
the country's largest Medicaid insurer — Centene — let him down, he says. After
months of denials, delays and erroneous referrals, he is claiming in a lawsuit, the
62-year-old was left nearly blind in one eye. As a result, he lost his driver's
license and his livelihood.
"They betrayed my trust," Nuñez says, sitting at his
kitchen table with his thick forearms folded across his chest.
The current political debate over Medicaid has centered on the
idea of putting patients to work so they can earn their government benefits.
Yet some experts say the country would be better served by asking this question
instead: Are insurance companies — which receive hundreds of billions in public
money — earning their Medicaid checks?
More than two-thirds of Medicaid recipients are enrolled in such
programs, a type of public-private arrangement that has grown rapidly since
2014, boosted by the influx of new beneficiaries under the Affordable Care Act.
States have eagerly tapped into the services of insurers as one
way to cope with the expansion of Medicaid under the ACA, which has added 12
million people to the rolls. This fall, voters in three more states may pass
ballot measures backing expansion. Outsourcing this
public program to insurers has become the preferred method for running Medicaid
in 38 states.
Yet the evidence is thin that
these contractors improve patient care or save government money. When auditors,
lawmakers and regulators bother to look, many conclude that Medicaid insurers
fail to account for the dollars spent, deliver necessary care or provide access
to a sufficient number of doctors. Oversight is sorely lacking and lawmakers in
a number of states have raised alarms even as they continue to shell out money.
"We haven't been holding plans to the level of scrutiny
they need," said Dr. Andrew Bindman,
former director of the federal Agency for Healthcare Research and Quality and
now a professor at the University of California, San Francisco. "This
system is ripe for profit-taking, and there is virtually no penalty for
performing badly."
In return for their fixed fees, the private insurers dole out
treatment within a limited network, in theory allowing for more judicious,
cheaper care. States contract with health plans as a way to lock in some
predictability in their annual budgets.
More than 54 million Medicaid
recipients are now covered by managed care plans, up from fewer than 20 million
people in 2000. (In traditional Medicaid, states pay doctors and hospitals
directly for each visit or procedure — an approach that many researchers say can encourage unnecessary or excessive
treatment.)
Already, states funnel nearly $300 billion annually
to Medicaid insurers. That's up from $60 billion a decade ago. Today's spending
is approaching what the Pentagon awards annually to military contractors.
Medicaid is good for business: The stock price of Nuñez's
insurer, Centene, has soared 400 percent since the ACA expanded Medicaid
eligibility. The company's chief executive took in $25 million last year, the
highest pay for any CEO in the health insurance
industry.
In California, the largest Medicaid managed care market with
nearly 11 million enrollees, Centene and other insurers made $5.4 billion in
profits from 2014 to 2016, according to a Kaiser Health News analysis.
Plans get to keep what they don't spend. That means profits can
flow from greater efficiency — or from skimping on care and taking in excess government payments.
"States are just giving insurers the keys to the car and a
gas card," says Dave Mosley, a
managing director at Navigant Consulting and former finance director at the
North Carolina Medicaid program. "Most states haven't pressed insurers for
the information needed to determine if there's any return on their
investment."
Two of California's most profitable insurers, Centene and
Anthem, ran some of California's worst-performing Medicaid plans, according to
state quality scores and complaints in government records. California officials
have been clawing back billions of dollars from health plans after the fact.
For nearly two decades, federal officials have tried building a
national Medicaid database that would track medical care and spending across
states and insurers. It's still unfinished, hampered by
differing reporting methods in the states and refusals by some health plans to
turn over data they deem trade secrets.
In July, a federal inspector general's report accused
Medicaid insurers of intentionally ignoring fraud and overpayments to doctors
because inflated costs can lead to higher rates in the future.
In a report last month,
the U.S. Government Accountability Office disclosed that California's Medicaid
program is unable to electronically send records justifying billions of dollars
in spending; that has forced federal officials to sift through thousands of
documents by hand. California says it can't share key files electronically
because it uses 92 separate computer systems to run the program.
"You simply cannot run a program this large when you can't
tell where the money is going and where it has been," says Carolyn Yocom,
a health care director at the GAO.
Today, Medicaid consumes the single largest share of state
budgets nationwide at nearly 30 percent — up from less than 21 percent a decade
ago — crowding out funding for education, roads and other key priorities.
"If anything, our results suggest that the shift to
Medicaid managed care increased Medicaid spending," researchers at the
Congressional Budget Office and the University of Pennsylvania concluded in
2013, based on a nationwide analysis.
Industry officials insist that managed care saves money and
improves care. Medicaid Health Plans of America, an industry trade group,
points to a study showing
that health plans nationally saved the Medicaid program $7.1 billion in 2016.
Health plans also say they can help modernize the program,
created more than half a century ago, by upgrading technology and adopting
fresh approaches to managing complex patients.
Getting it right has big implications for patients and taxpayers
alike, but the results in many states aren't reassuring.
State lawmakers in Mississippi,
both Republicans and Democrats, criticized their Medicaid program last year for
ignoring the poor performance of two insurers, UnitedHealthcare and Centene,
even as the state awarded the companies new billion-dollar contracts.
In Illinois, auditors said in
January that the state didn't properly monitor $7 billion paid to Medicaid
plans in 2016, leaving the program unable to determine what percentage of money
went to medical care as opposed to administrative costs or profit.
In April, Iowa's state ombudsman said Medicaid insurers there
had denied or reduced services to disabled patients in a "stubborn and absurd"
way. In one case, an insurer had cut in-home care for a patient with
quadriplegia by 71 percent. Without the help of an aide to assist him with
bathing, dressing and changing out his catheter the man had to move to a
nursing home, according to the ombudsman, Kristie Hirschman.
"We are not talking about widgets here," Hirschman
says. "In some cases, we are talking about life-or-death situations."
Meanwhile, the Trump administration has sent mixed signals on
Medicaid oversight. Seema Verma, administrator for the Centers for Medicare
& Medicaid Services, has promoted a new, nationwide scorecard and vowed to
ramp up audits that target states and health plans.
"We need to do better," Verma said in a Sept. 27 speech to
the Medicaid managed care industry. "Medicaid has never developed a
cohesive system of accountability that allows the public to easily measure and
check our results."
But consumer advocates also are concerned that Verma's efforts
to roll back "burdensome regulations"
will weaken accountability overall. Many also disagree with her support of
Medicaid work requirements.
Nuñez, the truck driver in California who lost much of his
sight, is suing a unit of Centene for negligence and breach of contract. The
company has denied the allegations in court filings and
declined to comment further, citing the pending litigation.
Talk of requiring Medicaid recipients to work is hard for Nuñez
to take. "I need my health to work," he says. "They took that
away from me."
This
story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent
service of the California Health Care
Foundation. KHN is not affiliated with Kaiser
Permanente.
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