KHN Morning Briefing

Summaries of health policy coverage from major news organizations

State Roundup: Florida To Investigate WellCare; Calif. Budget Cuts; Computer System Helps States Find Medicaid Savings

Nextgov: "A 17-year-old computer data matching system designed to prevent welfare recipients from drawing benefits in more than one state at a time is now helping cash-strapped states save millions of dollars -- but not as originally intended. Besides reducing fraud, the Public Assistance Reporting Information System allows state administrators to identify Medicaid beneficiaries who do not know they are eligible for military and veterans health benefits, thus allowing administrators to shift the financial burden of providing medical care for thousands of recipients entirely to the federal government. PARIS, developed in 1993 by the Department of Health and Human Services' Administration for Children and Families, allows state public assistance agencies to share information about applicants and recipients of certain benefits." Starting in October 2009, Congress required states to use this database as a condition of receiving Medicaid funds for automated data systems (Peters, 7/1).

Modern HealthCare: "The Florida secretary of healthcare administration is urging state officials to investigate and attempt to prosecute officials at WellCare, one of the state's largest private managed-care providers. The letter from state Agency for Health Care Administration Secretary Thomas Arnold to Attorney General Bill McCollum comes after a federal judge unsealed a whistle-blower complaint by a former WellCare analyst who accused the company of conspiring to 'rip off' the state's Medicaid program, Arnold's letter says. The complaint ... alleges that WellCare conspired with at least two hospital systems to falsely characterize the nature of certain payments to make it appear that the firm was spending less on administrative overhead than it was" (Carlson, 6/30).

Health News Florida: "Atty. Gen. Bill McCollum's office confirmed Wednesday that a criminal investigation into former executives accused of committing fraud at WellCare Health Plans is still going on. Meanwhile, Wall Street analysts tried to reassure investors about new management at the embattled HMO."

In related news, "Insurance Commissioner Kevin McCarty "criticized part of the complaint --- and reporting by Health News Florida --- about reinsurance that WellCare bought from a Cayman Islands subsidiary. Reinsurance is backup coverage that insurers buy to help pay major claims and limit their financial risks. The complaint alleged that WellCare paid premiums to its subsidiary that were nearly five times higher than what it paid to unrelated reinsurers.  It suggested that the practice allowed WellCare to under-report its profit margin and misrepresent costs" (Saunders, 7/1).

American Medical News: "Georgia Gov. Sonny Perdue vetoed a bill that would have extended the state's prompt-pay law to cover insurers administering self-funded health plans, despite overwhelming legislative support for the measure. 'I would have liked the opportunity to sign' the bill, Perdue said in his June 8 veto message. However, he said the Medical Assn. of Georgia 'insisted (over the objections of many) on including language that likely violates the Employee Retirement Income Security Act.' ERISA is a federal statute that covers, among others, companies and organizations that fund their own health insurance risk pools. ... the current prompt-pay statute, requiring insurers to pay physicians within 15 business days or face fines, applies to only 25% of the state's privately insured residents, according to Perdue"  (Cook, 7/1).

The Sacramento Bee: "A Sacramento Superior Court judge on Thursday blocked the county's scheduled cuts to medical programs for the poor, ordering that clinics slated for closure remain open. The cuts were set to take effect this weekend – the start of the new fiscal year. Cuts to primary care, including the clinics, were projected to save $7.8 million. ... This isn't the only lawsuit the county has faced over this year's budget cuts. There are three other lawsuits including lawsuits in federal and state court over cuts to mental health programs" (Lewis, 7/2).

San Jose Business Journal: "Health care leaders are concerned about a proposal by Gov. Arnold Schwarzenegger that would cut $523 million in the Medi-Cal budget through a series of measures that includes freezing inpatient hospital rates on reimbursements for services. The freeze would not apply to public hospitals such as Santa Clara Valley Medical Center. The state Department of Health Care Services notified providers on June 24 that the proposed rate freeze would cap rates at January 2010 levels effective July 1 through June 30, 2011" (Duan, 7/2).

The Couer d'Alene Press: "A Seattle-based health insurance provider's decision to stop covering small employer groups in Idaho will leave 450 people in the Coeur d'Alene and Moscow areas without medical insurance come Jan. 1. Group Health's decision to discontinue insuring groups of 50 people or [fewer] is a business decision that has nothing to do with health care reform, said Bob Burden, the administrator for the organization's coverage area east of the Cascades. 'Due to the small size of our small group enrollment in Idaho in the very limited geographic area that we cover, our small group product just has not been viable,' Burden said" (Dalen, 7/1).

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