The June 2018 Dallas Morning News’ investigative series, “Pain and Profit”, published over several days with personal stories as well as a systemic critique of Texas’ multibillion dollar Medicaid managed care industry, is the result of a yearlong investigation into patients and families being shortchanged in care. Part 6 was added on August 26, 2018 by staff writers, J. David McSwane and Andrew Chavez with photos by Tom Fox; Part 7 on October 25 and Part 8 on December 8, 2018.
Key Summary Points:
- Texas’ Medicaid Managed Care program is an $11.7 billion dollar industry for five HMOs to care for the state’s medically frail children, children in foster care and the vulnerable elders and persons with disabilities in need of long term care.
- The HMOs are able to make their own rules for assessing the needs of very sick people and for managing their care with a network of providers who are subcontracted with by the HMOs. Minimal oversight of the managed care program, has been provided over the past ten years by the Texas Health Commission, the state agency overseeing the Medicaid program.
- Two state studies were provided by state nurses in 2015 and 2017 which called for immediate interventions for very ill patients not being served appropriately and advised that millions of dollars in fines be assessed. These recommendations were largely ignored by the health commission and the state legislature because officials said “companies might stop doing business and the state would have no way to provide health care for millions of people.”
- The sickest patients, especially the very fragile children, bring the most profit on a per patient basis to the managed care companies, netting more than $145 million in 2017.
- Secret shopper assessments by the health commission’s contract evaluator, the University of Florida, and by The Dallas News reporters, showed provider networks advertised by the HMOs were not really accessible – it included doctors that were not taking new patients, phone numbers that did not work, and often providers no longer participating in Medicaid.
- Texas health commissioners and state officials often leave public service to work for the managed care companies and several MCO lobbyists have taken jobs with state government.
- Superior, owned by Missouri-based Centene Corp, continues its foster children care monopoly through 2022, even after the Texas Health and Human Services Commission and the state began in June tracking Superior’s denials of care recommended by doctors for foster children.
- In over 2/3rds of the 16,000 fair hearings over 8 years, the state reviewers ruled in favor of the managed care companies. The patients’ appeals are often related to critical long term services.
- “We have to question whether there’s room for profit, whether it’s really allowable to trade away some of the care those kids need – for a profit”, said Anne Dunkelberg, Austin Center for Public Policy Priorities.
- The recommendations to improve the care of vulnerable Texans include: End the incentive to deny care; actually coordinate care; penalize bad behavior of MCOs; ensure access to doctors and treatment; fix the state’s unfair appeals system; give foster kids another option than just one MCO; take control of medical guidelines; let sick and disabled kids opt out.
Born 3 months early, D’ashon Morris and his twin sister, were adopted by their foster mother after a year of care. Both had severe disabilities requiring 24 hour nursing care. Superior, a subsidiary of Missouri based Centene Corp, was asked to provide the 24 hour nursing care but instead decided 24 hour care was not medically necessary and changed the authorization for 2 nurses on a 24 hour shift to one nurse to care for both very sick babies for only 12 hours. Documentation was provided to show the risks of two patients to one nurse and most of the nurses caring for the twins quit because of their concerns over medical liability. D’ashon was requiring 2 to 7 tracheal suctions on average per hour, according to the doctors’ notes. Superior refused to change the care authorization and the mother, a pediatric nurse, quit her job to fill in the gap of the nurses’ care.
Superior’s response to another appeal by the mother was for her to restrain D’ashon’s hands with “a soft splint” so he couldn’t pull out his trach. Badawo, the mother, refused to do that to her son. She also point out that such an action would be against state restraint laws. The medical director at Superior was heard on a conference call telling Superior colleagues that the plan was to convince the doctors caring for D’ashon that 24 hour care was not necessary. “Glomb recommended that …Superior staff ….convince the Dr.’s that the children do not need the hours requested.” The Dallas News article points out that “This was a serious accusation. Medicaid does not allow health care companies to take away nursing hours or therapy without a formal medical assessment and a specific medical reason, such as marked improvement in health care….”
Superior increased the hours to 17 instead of 12, even though the home health agency providing the nurses wrote an email to the state Medicaid office in the fall of 2016 detailing the need for 24 nursing care. A month later, Superior stopped payments to the home health agency although ultimately they were not kicked out of the network.
In October 2016, Badawo made a trip to Nigeria to visit family and D’ashon and his sister were placed in two different foster care homes. The nursing care authorized by Superior for 17 hours was not available in the early morning hours and D’ashon pulled out his trach. By the time his breathing was restored after a 911 call, he was permanently brain damaged and now requires 24 hour nursing.
The state health department nurses concluded that Superior violated federal and state nursing ratios and that Superior was responsible for D’ashon’s brain damage. The nurses recommended a $345,000 fine but it was never carried through. Superior was never sanctioned or fined. At the beginning of 2017, Superior was awarded a new contract worth more than $440 million annually.
Part 2: “As Patients suffer, companies profit: years of poor state oversight have allowed companies to skimp on essential care for sick kids and disabled adults.”
Heather Powell, a quadriplegic for almost 10 years from a shooting accident, and only 38 years old was promised enough help to live at home rather than in a nursing home. However, Superior would not provide the hydraulic lift necessary for movement to the shower and the bathroom, so she remained in bed. Nor would the managed care plan provide the special mattress to protect her skin from bed sores. Then, Superior reduced her care giver hours from 12 to 7. So, Powell was alone and in pain for 17 hours a day.
After reviewing thousands of patients’ medical files, corporate financial records and state records through over 160 public records requests, the investigators found at least “8,000 patients like Powell with unmet medical needs” trying to stay at home. They also found that complaints are growing and medically fragile Medicaid patients struggle to find doctors willing to care for them.
Texas and the federal government pay $11.7 billion for Medicaid care with 90% going to 5 major HMOs: Superior, Amerigroup, Molina, Cigna and United Healthcare. The companies reported a profit of $147 million on fragile “Patients” alone. “The only way to make money is to deny medically necessary care,” according to Peter Hofer, senior litigator for Disability Rights Texas.
In 2015, the state was ordered by the legislature to study the program keeping people out of nursing homes by providing care at home. The Dallas News obtained records from the study and “discovered that the nurses found problems in more than a third of the 272 cases reviewed.” Necessary services such as skilled nursing, basic supplies and DME were delayed for a long time or never provided.
Records were accessed on the 2017 state review of 358 disabled patients in the community where serious unmet needs were found with 20% calling for immediate intervention. “Some patients hadn’t seen a nurse in years, had ill-fitting or painful dentures, cavities and rotting teeth.” The state downplayed the findings of the nurses with a “vague report to the legislature.” The Dallas News staff extrapolated the state nurses’ findings and found that between 8,000 and 14,000 of 50,000 persons provided home and community based care are going without necessary services. This addresses only the population at risk of nursing home placement. The Dallas News reporters could find no similar data for medically fragile children, foster kids, or disabled Texans not in the home and community based Medicaid program.
Part 3: “Texas pays companies billions for sham networks of doctors – Managed care companies overstate the number of physicians available to treat the state’s sickest patients.”
“The companies Texas hires to care for its sickest citizens – foster children, chronically ailing kids, elderly and disabled adults – have been vastly overstating the number of doctors and specialists available to treat them.”
“Federal regulators require states that hand off Medicaid to private companies to hire outside researchers to study, among other things, how hard it is for patients to get the care they need. Since 2002, Texas has used a team at the University of Florida to do its quality assessments. In 2016 the group began conducting ‘secret shopper’ calls, in which academics pose as patients trying to arrange doctors’ appointments. When the undercover callers tried to get mental health care through the state’s program for the elderly and disabled, only about 1 in 5 accepted the plan and were able to schedule an appointment, according to public documents obtained through open records requests. About 27% of the doctors called said they didn’t take Medicaid. The next year, researchers found that trend had gotten worse – 38% of doctors said they weren’t taking the government program.”
How did the state health commission then give the MCOs a passing grade for appointment availability? According to the Dallas News, the state did not count the doctors whose phone numbers did not work nor those who didn’t accept Medicaid misconstruing the only 14% percent of doctors who were actually taking appointments as 88% of doctors listed by the MCOs as available to see a patient within days or weeks.
“In their published networks, the companies include many physicians who aren’t taking new patients, don’t accept government funded health plans or aren’t treating Texans anymore. And state health officials know it.”
Dallas News reporters found by calling all psychiatrists listed in the Superior network that only 34 across the state would accept a foster child as a new patient. There are more than 10,000 foster children in need of counseling, according to state data.
“State records suggest some companies may be intentionally thinning their networks in hopes of reducing doctor visits and bolstering their profits.” ….. “strategic narrowing of its networks to save money.”
According to the managed care industry’s lobbying group, “care coordination is the chief benefit” of managed health care.
“But the companies haven’t hired enough coordinators, and those they have on staff are often referring patients to dead-ends, the state’s own research shows. A report last year by the nonpartisan Legislative Budget Board found that most members in managed care programs receive minimal or no coordination services from their managed care organization.” Patients “…with the highest needs often experience the largest gaps in access to services that should be coordinated by the MCO.”
Part 4: “Glossover of the horror: Texas fails to act when health care companies put patients in peril.”
In 2017, Gov. Abbott said the state health commission was going to crack down on the medical companies that were shortchanging “sick and vulnerable Texans.” The Dallas Morning News found that although state regulators recommended penalties of more than $102 million, the actual fines were $11.7 million. One of the state nurses investigating a sample of Medicaid patients’ care responded that the health commission leaders “keep everything under wraps” even though the nurses found “patients with dementia at home without any help, for instance, and not providing basic equipment like walkers and adult diapers.”
According to the Dallas News: The state reduced sanctions by at least $395 million and three current and former health commission employers did not track corrective action plans for the decade’s record of infractions.
“In 2015, regulators learned one company was double-counting millions of dollars of expenses – but the company not only stayed in the Medicaid managed-care program but got billions in new business. The state has looked at tiny samples of the companies’ receipts but has still found that every year they misspend tens of millions of dollars on things like lobbying, entertainment, lawsuit settlements and payments to their corporate owners. Auditors urged the health commission to dig deeper, but it rarely followed up.” The Dallas News reported close communication between the state health commission and the managed care companies’ lobbyists with major contributions to the governor and legislators’ campaigns.
The state health commission came up with a new methodology for assessing penalties that reduced the staff recommended fines in 2017. The new penalties methodology fined more for “failures that caused significant harm and less for contract violations that didn’t hurt anyone.”
“Sloppy data, shoddy oversight” Between 2009 – 2016, the report gives examples of staff recommended fines for violations by specific MCOs and how they were disregarded or reduced: Superior HealthPlan fined only $51,750 of a recommended $800,000 sanction in 2012 and Molina barred from accepting new clients over 9 months in 2013 for an inadequate network of providers. “Senior health officials have often ignored the findings of their own auditors and contract watchdogs.”
Another example was with Amerigroup, 2nd largest Medicaid managed care player in Texas, that got at least $18 million in overpayments from “unreliable and misleading data submitted since at least 2015.” “Regulators said the flawed data created a significant concern about the overall integrity of what’s known as encounter data – actual payments for services provided to patients…any reporting from the agency that uses encounter data is potentially inaccurate” regulators wrote….”including any reporting that may have been provided to the Texas Legislature and the federal government.” The state regulators recommended Amerigroup be suspended but no action was taken. “Eventually, the audit problems went away”, according to the regulators.
According to the Dallas News: “Texas is unusual in how it regulates managed care companies. It pays billions first and asks questions later.”
The Amerigroup audit in 2013 found 16 of the 65 expense items reviewed to have “no identifiable benefit to Texas Medicaid programs, including $650,000 in campaign contributions, legal settlement payments
and other inappropriate costs, according to documents The Dallas News obtained through the Texas Public Information Act.” “In 2015, an inspector general report noted that Amerigroup had spent more than a half million dollars in Medicaid money on investment management, lobbying and parties…the state auditor’s office found Cigna’s HealthSpring plan using Medicaid money for $3.8 million in stock options for executives, charitable donations and gifts. Auditors questioned an additional $34 million the company spent on salaries and expenses that weren’t related to Texas Medicaid.”
“A Glossover of the Horror” – State nurses focused on reviews of the home and community based services waiver for the elderly and disabled to stay out of nursing homes in their 2015 and 2017 studies. The state nurses recommended fines of at least $280 million for services needed but not provided and for which the managed care plans were paid. But the Medicaid director in 2016, Gary Jessee, decided to only ask for recoupments for some of the clients totaling $223,159.37. Jessee said they did not levy the huge fines “because nurses had looked at only a small sample of patients and the commission hadn’t made it clear enough to the companies which patients should be upgraded to the more expensive program.”
Jessee left the commission in July 2017 to work for Sellers Dorsey, a consultant firm filled with former commission staff members who now advocate for managed care expansion.” The state nurses made similar findings in their 2017 review of Medicaid patients’ care in the community with the state paying a higher premium for services not delivered. The violations were the ones that resulted in a recommendation for $102.2 million in fines that were reduced to $11.7 million by the top officials. One of the state nurses, Nancy Toll, said that the officials warned that “companies might stop doing business in Texas and the state would have no way to provide health care for millions of people.”
“Last November, when the health commission submitted its report to lawmakers about what state nurses had found, it shrouded its significance in vague and bureaucratic language, Toll says. Everything is glossed over and distilled down into something that doesn’t accurately reflect what going on, she says, “It’s a usual glossover of the horror.”
Part 5: “Parents vs. the Austin Machine – Texas families take fight for fragile kids to the Legislature”
In 2016, Texas moved the 160,000 chronically sick kids program into Medicaid managed care which was already covering foster kids and many elderly, disabled Texans. The parents of many of the medically fragile children formed a nonprofit called Protect TX Fragile Kids. Part 5 begins with a personal story of a middle class family caring for a child with congenital defects and very serious conditions and having to deal with a major interruption of the care being provided when Managed Care took over and changed their access to providers.
The revolving door
Part five gives an historical overview of managed care’s revolving door in Texas beginning with Centene Corporation setting up Superior HealthPlan in Texas in 1998 and the hiring of the Texas health commissioner, Mike McKinney, as their vice president. In 2001, Gov. Rick Perry hired McKinney as his chief of staff. “By the time Perry left office, Texas was paying the company to care for nearly a million people” in Texas. McKinney left Austin to help Centene expand throughout the US.
Five of the last seven Texas health commissioners left state government to work for managed care companies. “Some industry lobbyists are now settling back into state jobs where they oversee the companies that previously paid them well.”
Walter Fisher, Abbott’s legislative director, was a former lobbyist for Centene. Abbott’s policy director, John Colyandro, worked for Texas Conservative Coalition, which received money from managed care and published research in support of them. Abbott’s chief of staff, Luis Saenz, was a longtime United HealthCare lobbyist. Abbott received $122,500 in campaign donations from the MCOs in the last 5 years.
In 2013, David Dewhurst, then lieutenant governor and controlled the Senate, proposed the medically fragile kids be moved into managed care. His health policy adviser, Jamie Dudensing, helped write the bill that passed and she became the chief executive of the Texas Association of Health Plans the following year.
In 2016 as the STAR Kids program was being launched, “the president of Cook Children’s a nonprofit managed care provider in Fort Worth, warned health officials that the savings the state expected were impossible to achieve without taking medical services away from fragile kids.”
Concerns Ignored – A Wave of Complaints –Disasters Ignored, Profits Soared.
In October 2016, a month before the STAR Kids program was implemented, “an advisory board that included doctors, managed care executives and parents of medically fragile children urged the health commission to delay the program for a year due to the uncertainty of the assessment tool to be used by the plans. The health commission refused to delay the roll out so the parents decided to go to the Texas Legislature in January 2017. But “about 100 lawmakers accepted campaign contributions” from MCOs, according to the data found by the Dallas News reporters. “The companies also spent at least $5.4 million on lobbyists, more than any previous years, according to filings with the Texas Ethics Commission.”
A Wave of Complaints – “In January 2017, Texas’ medical director for Medicaid warned his colleagues that the state was unprepared for a substantial increase in denials of in-home nursing. Dr. Rajendra Parikh estimated that the managed care companies would double the rate of denials, emails show. Parikh noted that for-profit companies were taking over care for about 60 percent of the new sick kids and that ‘one of them’ – a reference to Superior – ‘is consistently creating issues.” There were 730 complaints from parents and health care providers in the program’s first 3 months and they would rise.
Briar McCann, 13 year old quadriplegic with cerebral palsy who can’t speak, eat or breathe on his own – Superior cut his nursing hours and physical therapy in the first week telling his mother to do home exercises with her son. “Over the next several months (in 2017), scores of parents took their kids to the Capitol to show lawmakers who was being affected.”
One Republican from Plano, Sen. Van Taylor, intervened on behalf of 20 children who were denied nursing hours, equipment drugs or need other help but there was no intervention on behalf of the other 168,000 kids in the program for the medically fragile children. “Over the last decade, Texas legislators, members of congress and other officials have complained to the health commission more than 2,300 times about problems with managed care companies.”
Disasters ignored, profits soared – Two attempts at legislation in 2017 failed, one for a study of alternatives to the managed care program for medically fragile children and another amendment to allow parents to choose between managed care and the traditional, fee for service Medicaid. The health commission officials told lawmakers they were monitoring the STAR Kids program and that the complaints were “parents overeating because they had to switch doctors.”
Profits were made by the for-profit health care corporations, more than $1,000 per child. “The nonprofits, run by local hospitals and doctors, lost an average of $1,800 per child. Those organizations spent about 20% more of the taxpayer money they received on actual medical services than corporations that answer to Wall Street.”
“In many cases, nonprofits lost money in a part of the state where a for-profit insurer was able to make money. If the trends continue, the sick children in this new program will be far and away the most profitable patients for the companies like Superior and Amerigroup.
The 1,500 members of Protect TX Fragile Kids vowed to return to the Capitol again. “The companies have gotten away with this for so long because the other populations they were serving before us couldn’t speak up…They are lining their pockets at the expense of a very vulnerable population.”
Part 6: “Recipe for Disaster- How a company’s refusal to cover medical costs is hurting sick foster kids in Texas”
The Texas “troubled child-welfare system” with Superior’s “refusals to cover medical costs, from inexpensive diapers to costly treatments, have made some foster parents’ tough jobs nearly impossible. Foster parents, doctors and child-welfare workers have filed hundreds of formal complaints about the company in recent years. Judges in Houston have stepped in order medical care that Superior has denied to foster kids. And families who have taken in medically needy children are backing out, The Dallas News found, adding to the state’s drastic shortage of beds.”
Texas renewed Superior’s “exclusive $350 million a year contract in August – without giving other companies a chance to bid for the program known as STAR Health.” The Texas Health and Human Services Commission defended the extension with statistics on routine checkups and other measures more attributable to healthy children. The Commission determined that major changes to the treatment of foster children will not occur until Superior’s contract extension ends in 2021.
“Texas pays more than $20 billion a year to private companies to manage health benefits for more than 4 million Texans, most of them poor children. But the program also covers 30,000 foster kids, about 160,000 severely sick children and more than 500,000 elderly and disabled adults.” The program reports good results in preventive care like vaccinations for healthy kids, but the needs of chronically ill and disabled people are often not met since the less care provided under managed care, the more money the managed care companies get to keep.
The Dallas News reviewed the outcomes of 16,000 fair hearings over more than 8 years and found the managed care companies won in 2/3rds of the cases and that the appeals process is so difficult that half of the patients give up before a ruling. Fair hearing rulings are not readily available to the public and they don’t set precedent, so the company may continue to deny the same service over and over again. Also there is no enforcement mechanism to make companies pay up for a service when the fair hearing ruling favors the patient. One example showed how the managed care company just refused to pay for medical equipment even though the patient won the hearing.
Appeals to the state health commission result in even less favorable rulings for patients, only about 5% in the last four years. One case reported is of a patient who filed a lawsuit after the state health commission ruled against her physician order for a standing wheelchair to facilitate her personal care and asked a county judge to review the state’s denial. “The appeal’s court excoriated the state for its arbitrary decision-making and shifting justifications….with no rational connection between the decision and the facts.” It took this patient four years to get the wheelchair.
Texas fair hearings are run by state employees, not doctors or lawyers, and they are supposed to decide if the managed care companies follow medically necessary guidelines with rules that are written by the managed care companies. Broad standards for medical necessity are set by Texas but the 20 managed care organizations develop their own rules with policies constantly changing and not readily available to the public.
The Dallas News series of 2018 shows how Texas is not getting $22 billion worth of care for its thousands of elderly and disabled persons, many chronically sick children, who are not getting the medical care they need under Medicaid managed care. The following are the paper’s recommendations for immediately protecting the state’s most vulnerable Texans.
- End the incentive to deny care: Texas is encouraged to do more than hire more regulators and nurses and look at how other states have responded when managed care companies have not delivered needed care. Connecticut in 2012 took back the financial risk and responsibility of care for Medicaid patients provided by hospitals and doctors, while leaving patient coordination with managed care. Connecticut reports savings on medical care, far less spending on overhead and more doctors participating in Medicaid.
- Actually coordinate care: The Texas nonpartisan Legislative Budget Board reported last year that “most members in managed-care programs received minimal or no coordination services from their managed care organization.” Managed care companies should be held accountable of care coordination and if not provided, pay local doctors or nonprofits to coordinate care.
- Investigate, track and penalize bad behavior: At least $90 million in fines had been assessed against companies that violated their contracts but were reduced by Gov. Abbott’s staff. 92% of Medicaid patients are under the care of companies that are supposed to investigate fraudulent bills. Gov. Abbott is called upon to enforce the contracts with improved oversight that does not require legislative action.
- Make sure vulnerable people have access to doctors and treatments: A national study reported that 30% of Texas doctors don’t participate in Medicaid due to inadequate payment and the red tape required by the managed care organizations. Abbott’s administration is called on to follow the lead of states that set minimums for physician reimbursement and to ensure adequate provider networks.
- Fix the state’s unfair appeals system: Some states allow Medicaid patients to ask for independent medical professionals’ reviews of companies’ denials but Texas has declined to implement such a program. Recommended reforms include a complete overhaul of the appeals process beginning with the first notice of denial of care with specific reasons for the refusal of care; publication of the appeals hearing decisions online so prior rulings may be accessed; and the involvement of independent medical professionals to review company denials.
- Give foster kids another option: Texas contracts with only one company to provide health care for 30,000 foster children, half with special needs. Houston judges have ordered medical care that Superior (the only HMO the state contracts with for the frail and vulnerable children and adults) has denied; foster families have backed out of providing foster care due to the denial of services; and some children have suffered catastrophically from poor care decisions by the managed care company. Abbott is encouraged to cancel the Superior contract or allow competitive bidders in 2021.
- Take control of medical guidelines: Texas government agencies set broad care guidelines and allows managed care companies to set their own policies which leads to inconsistent care decisions. Gov. Abbott should consolidate medical necessity guidelines and provide oversight of medical decisions a
- Let sick and disabled kids opt out: 20 other states exempt children with high medical needs from managed care or allow families to opt out if they prefer traditional Medicaid. The Dallas News found that for profit companies made about $1000 per child while nonprofit managed care which spent more on actual health care, lost $1800 per child. “We have to question whether there’s room for profit, whether it’s really allowable to trade away some of the care those kids need – for a profit”, said Anne Dunkelberg, Austin Center for Public Policy Priorities. Texas should allow these children to opt out of managed care if they prefer the traditional Medicaid program.