Articles on this Page
- 05/30/14--10:42: _Lawsuit: Low-income...
- 06/02/14--03:02: _Shameful coverage o...
- 06/02/14--10:49: _State Senate leader...
- 06/02/14--16:24: _EPA plan would slas...
- 06/03/14--13:33: _Court reopens third...
- 06/03/14--13:42: _States urged to emb...
- 06/04/14--02:08: _Medicare Advantage ...
- 06/04/14--02:00: _Why Medicare Advant...
- 06/04/14--02:30: _Whistleblower suit ...
- 06/04/14--14:16: _Explaining Medicare...
- 06/04/14--02:00: _Methodology for 'Me...
- 06/04/14--06:31: _Mississippi's super...
- 06/04/14--13:02: _Labor Department is...
- 06/05/14--13:50: _150 billion reasons...
- 06/05/14--11:09: _Republicans to targ...
- 06/06/14--07:36: _Race-car driver's p...
- 06/06/14--06:44: _Potential Sprint, T...
- 06/06/14--09:40: _Charles Koch's long...
- 06/08/14--21:02: _How an island parad...
- 06/09/14--06:30: _Health insurers hav...
- 06/02/14--03:02: Shameful coverage of Obamacare's real impacts
- 06/04/14--02:08: Medicare Advantage made simple: a glossary
- 06/04/14--02:00: Why Medicare Advantage costs taxpayers billions more than it should
- Risk score errors triggered nearly $70 billion in “improper” payments to Medicare Advantage plans from 2008 through 2013 — mostly overbillings, according to government estimates. Federal officials refused to identify health plans suspected of overcharging Medicare, citing agency policy that keeps many business records confidential. The Center is suing to make these records public.
- Risk scores of Medicare Advantage patients rose sharply in plans in at least 1,000 counties nationwide between 2007 and 2011, boosting taxpayer costs by more than $36 billion over estimated costs for caring for patients in standard Medicare.
- In more than 200 of these counties, the cost of some Medicare Advantage plans was at least 25 percent higher than the cost of providing standard Medicare coverage. The wide swing in costs was most evident in five states: South Dakota, New Mexico, Colorado, Texas and Arkansas.
- 06/04/14--14:16: Explaining Medicare Advantage, and why it matters to you
- 06/04/14--02:00: Methodology for 'Medicare Advantage Money Grab'
- 06/04/14--06:31: Mississippi's super PAC-dominated Senate slugfest not over yet
- 06/05/14--13:50: 150 billion reasons Medicare Advantage matters
- 06/05/14--11:09: Republicans to target Van Hollen in FEC complaint
- 06/06/14--07:36: Race-car driver's payday lending business 'deceived borrowers'
- 06/06/14--06:44: Potential Sprint, T-Mobile marriage threatens consumer gains
- 06/06/14--09:40: Charles Koch's long history of education funding
- 06/08/14--21:02: How an island paradise became a haven for dirty money
- 06/09/14--06:30: Health insurers have their way with regulators
A class-action lawsuit filed against the state of California Thursday alleges that low-income students are deprived of an equal education because they are denied academic instruction time — yet assigned to excessive hours of “service” that include tasks like tidying up classrooms.
In addition to being assigned menial tasks at school, some pupils — even those below grade level in reading or other subjects — are simply sent home during free time “even though they are supposed to receiving a full day of education,” the suit filed in Alameda County Superior Court argues.
The 18 plaintiffs in the suit are Latino and black students at seven of the state’s most disadvantaged and underfunded schools, whose students are almost all ethnic minorities. The schools are located in Los Angeles County and the San Francisco Bay Area. The suit demands that the state of California — a defendant in the suit — monitor practices at the schools and intervene to make improvements.
“I think a lot of parents would be aghast if these were the conditions in their children’s schools,” said Kathryn Eidmann, Los Angeles-based staff attorney at Public Counsel, the nation’s largest pro bono law firm. Public Counsel is representing the plaintiffs, along with the American Civil Liberties Union of Southern California and other legal groups. Certain practices “slowly rob” students of real instructional time, lawyers said.
At-school “work” periods assigned to students are “classes in name only,” Eidmann said. “It’s being done to fill a hole.” Many teachers at the schools face tough challenges, Eidmann said, and staff turnover during the year and the use of multiple substitute teachers are common.
State officials said they had not yet had time to review the litigation, but also cited fresh efforts to improve the situation for low-income students.
The suit comes just as California lawmakers launch an initiative they hope will boost lagging graduation and academic proficiency among Latino and black students, in particular. Students registering lower rates of graduation and achievement are concentrated in schools stripped bare by years of state budget cuts and unequal local financial support.
The Golden State — long seen as a bellwether for national trends — is preparing to send millions of new state dollars to districts so they can use the funds, based on local jurisdictions’ own plan, to upgrade education for disadvantaged children.
The lawsuit filed Thursday alleges that at Fremont High School in Oakland, approximately one-third of seniors are assigned to so-called “Inside Work Experience” periods “instead of being placed in meaningful core or enrichment classes.” Students sort mail, run errands and perform other tasks. Juniors in the school of some 800 students are also assigned such work periods as well, the suit says.
“When plaintiff Daisy Romo received her schedule at the beginning of the 2013-2014 school year,” according to the suit, “she was first assigned to an IWE (Inside Work Experience) instead of a science class.”
In L.A. County, at Compton High School, another “chronically low performing school” with a high rate of staff turnover, students are also allegedly assigned to “teaching assistant” periods during which kids help teachers with tasks or simply get “free periods.” Plaintiff Lucia Barajas, according to the suit, requested that a free period she was given be switched to a chemistry class she needed to pass to graduate.
“She was told, however, there was no space in any chemistry class,” the suit says.
Another Compton High student, Ignacia Barajas, was enrolled in a U.S. history class with more than 10 substitute teachers during the fall 2013 semester. “On some days,” according to the suit, “no substitute teacher showed up at all. The class waited outside the classroom door until they were sent to the library or another teacher’s classroom for the duration of the class period.”
At Castlemont High School in Oakland, student plaintiff Lee Simmons was assigned “work experience” periods for two out of six periods in the day. That’s a 33 percent reduction in his instructional learning time during his senior year, according to the suit. In South Central Los Angeles, student Jessy Cruz of a school also called Fremont High School will graduate without enough credits to enter a four-year college. Yet he was assigned to two "service" periods at school and a period of "home" time, the suit also says.
The suit argues that academic instructional time the plaintiffs have been getting is “far below the norm” in public schools across the state, even though large numbers of these students are struggling to catch up with affluent peers.
Even if they are able to graduate, Eidmann said, they are deprived of courses affluent students are getting in their schools that prepare them for entry to college.
All the schools named in the suit — including one elementary school — are affected by neighborhood violence that lead to “lockdowns,” resulting in hours, even days of lost instructional time, lawyers for the students also argue. Some schools have few or no counselors or psychologists on staff to help thousands of students cope with disturbances that spark fear and absenteeism.
“For these students, consigned to a series of schools that perpetually fail to deliver education, hope fades and potential is crushed,” the suit argues. “The loss of educational opportunity does not occur in any dramatic, headline-making way,” but rather “over time, from the loss of learning time itself.”
Students receive “fewer minutes of learning per hour, fewer hours per week, and fewer weeks per year. As a result of this massive deprivation, an indefensibly high percentage of students at these schools fall far behind, give up, and drop out.”
State Superintendent of Public Instruction Tom Torlakson — who is named as a defendant — and State Board of Education President Michael Kirst issued a statement Thursday saying that they hadn’t had time to review specific claims in the suit. But the statement also said: “California’s education system is in the midst of a historic effort to shift authority over decision making to local school districts, empowering them to determine how best to meet the needs of the students they serve.”
The statement encouraged plaintiffs’ lawyers to work with local school districts.
Troy Flint, director of communications for the Oakland Unified School District, said, “We are not opposed to the lawsuit” filed by Public Counsel and the ACLU. Flint said the district is aware “there are serious problems” at Fremont and Castlemont high schools. He said that the district has been trying to initiate reforms at each school to ensure students are put into more appropriate classes.
The suit argues that practices to patch together classes for students at these underfunded and troubled schools are violating students’ right to educational opportunities, regardless of “wealth or race” under the California State Constitution.
In 2013, the Center for Public Integrity published reports on the expulsion of students in California’s Kern County — mostly for behavior that did not require expulsion — and their assignment to alternative schools so far away the students were put on home-study plans or dropped out. Most were the children of farmworkers who were unable to drive their children back and forth to schools 20 to 40 miles away. The students expected to school themselves at home four out of five days a week were counted as full-time enrolled students.
If you read my column last week about a Senate hearing that showed how Obamacare has affected Americans, you might have wondered if I was in the same room with reporters who presumably covered the event.
The disparity goes a long way toward explaining why so many of us are clueless about the actual impact the law is having on our lives.
The title of the May 21 Senate Commerce Committee hearing: “Delivering Better Health Care Value to Consumers: The First Three Years of the Medical Loss Ratio.” I was one of four witnesses talking about the part of the law that requires health insurers to issue rebates to policyholders if they spend more than 20 percent of premiums on non-medical expenses, including profits — the so-called Medical Loss Ratio.
Prior to the passage of the law, insurance company executives — who consider what they spend on medical care to be a loss — were in many cases devoting up to half of premiums they collected to pay for advertising and other administrative functions and to reward executives and shareholders.
As I wrote last week, consumers have saved at least $3 billion since the provision of the law that mandates insurers must spend at least 80 percent of our premiums on medical care went into effect in 2011.
The hearing wasn’t just about numbers, however. Katherine Fernandez, a small business owner from Houston, testified about how the MLR provision and other aspects of the law have enabled her family to pay less for far more comprehensive coverage than was possible in the past.
She told the committee that because both her husband and son had pre-existing conditions, the only policies available to them pre-Obamacare would not cover any medical care pertaining to those maladies. And even then the policies had both high premiums and high deductibles. She said that during the 14 years prior to the law’s passage, her family paid more than $100,000 in premiums for what she described as bare-bones coverage. And the premiums went up sharply every year — 165 percent between 2000 and 2003 alone.
She said she was elated when the Affordable Care Act passed. “No more pre-existing condition clauses … and insurance companies had to refund some of what we paid if they didn’t spend enough. What reasonable ideas.”
If you read the accounts of the hearing in The Washington Post, USA Today, Politico or CBS News — the only news outlets I could find that provided any coverage — you would not have read anything about the $3 billion consumers have saved as a result of the MLR provision or how the law has benefited the Fernandez family.
The focus of all those stories was a brief exchange toward the end of the hearing between Committee Chair Jay Rockefeller, a West Virginia Democrat, and GOP Sen. Ron Johnson of Wisconsin about whether the color of President Obama’s skin might explain why some people are opposed to the law.
Rockefeller suggested race might be a factor, which provoked a spirited denial from Johnson. Politico’s only hint about the hearing’s actual subject was this: “His (Rockefeller’s) critiques of the GOP again came in a sparsely attended committee hearing, this time during an analysis of health-care spending.”
The only one of these pieces that even mentioned “medical loss ratio” was the CBS story, and it, too, was primarily about the exchange between Rockefeller and Johnson. In the USA Today article, which apparently was based on a National Journal transcript, the only hint of a hearing was in the very last sentence: "Rockefeller then veered into another topic before adjourning the hearing."
That other topic, of course, was the medical loss ratio.
The Washington Post likewise found medical loss ratio of no interest. Its story, too, was about the back-and-forth between Rockefeller and Johnson during what the reporter dismissed as “an otherwise sleepy committee hearing.”
Granted, it is challenging to substantively cover the Affordable Care Act. The U.S. health care system is dizzyingly complex, and so is the law. It’s far easier to write about constant political sparring than to take the time to educate readers about what’s actually in the law and how it affects people. It’s not a heavy lift to review a transcript and write the kind of “he said, she said” — in this case the “he said, he said” — coverage that passes for journalism.
There are a lot of reasons why Americans don’t know how the law affects them or why they believe things about Obamcare that aren’t true. The Democrats have done a lousy job of explaining it. And more than $400 million has been spent by opponents attacking it — 15 times as much as has been spent by supporters. But one of the biggest reasons is the failure of many in the media to provide anything other than the most superficial coverage. As a former reporter who used to cover hearings on the Hill, I consider that shameful.
A prominent Tennessee state senator involved in national juvenile justice reforms said he is troubled by a recent Center for Public Integrity report on children who’ve been prosecuted for truancy in his state, jailed and given permanent court records without the benefit of appointed legal counsel.
“They should be provided proper notice and counsel at the front end,” said state Sen. Mark Norris, a Republican from Collierville, near Memphis, who is the Tennessee Senate majority leader and was elected last fall to serve as chairman of the national Council of State Governments.
Norris said the findings in the Center’s Juvenile Injustice report “need to be aired,” and if need be, he would consider supporting a legislative solution.
The nonpartisan Council of State Governments provides staff research and policy recommendations to assist leaders in states struggling to shape solutions to problems. The council’s Justice Center has made documenting the negative impact of harsh school discipline — and keeping students out of the criminal justice system — a top priority in recent years.
On Tuesday, with Norris joining in, the influential council plans to unveil a comprehensive “consensus” report on school discipline recommendations.
The report includes ideas authors argue are practical and cost-effective alternatives to removing students from schools through suspension and expulsion. The report also cautions against unnecessary referrals of students to police and to courts for school-based infractions.
The council’s own research — including a longitudinal project tracking suspended Texas students over time — has found that “when students are removed from the classroom as a disciplinary measure, the odds increase dramatically that they will repeat a grade, drop out, or become involved in the juvenile justice system.” The report found that such actions disproportionately affect children of color and students with special needs.
Norris said he has similar concerns about truancy prosecutions that fail to address kids’ individual needs and problems and introduces them to the criminal justice system.
He said he’s been troubled to realize that kids get sent to court in the Memphis area for infractions like school dress code violations. “They still have the young boy there for the drooping drawers or sassing,” he said.
The Center’s Juvenile Injustice report featured a student whose records show she was jailed the first time she appeared in court in Tennessee’s Knox County and pleaded guilty to truancy without the benefit of a lawyer.
Although truancy is not a crime, the student — who was struggling with unrecognized special needs at school — was unaware the court gave her a delinquency record in connection with her truancy. Such a record remains on file unless youths later request such files be expunged.
Other truants interviewed by the Center said they were shackled and jailed in a Knox County juvenile detention center after they were accused of failing to follow court orders governing their behavior — including orders of mandatory drug testing and court-prescribed counseling programs, at the students’ own expense.
The U.S. Justice Department is looking into practices in Knox County. It is unclear how many truants have been jailed in the county — with or without representation — and how many might have permanent delinquency records that could surface to undermine future job and other applications.
Knox County volunteer lawyers say the Knox County Juvenile Court has rejected their offer to set up a project at the court to offer pro bono counsel to accused truants as they arrive with parents to hearings.
Truancy in most states is not a crime, and the accused minors do not benefit from the constitutional right to appointed counsel when they first enter court and before they plead guilty. Truancy is a status offense, like violating a curfew or running away, infractions that only minors can be accused of committing.
Federal law does not allow immediate jailing of status offenders if states wish to receive federal juvenile-justice grants, as Tennessee does. However, federal law does allow limited jailing of status offenders if judges impose court orders on these minors and they fail to obey them. The youths must first be afforded appointed attorneys, however, if courts are considering jailing the youths in response to their failure to follow orders.
Some parents and youths jailed in Knox County told the Center that they were not informed of that right. Lawyers in Knox County who later represented children who had been jailed said there was no proof in these emotionally troubled students’ files that they had been offered appointed attorneys before those jailings.
Norris, in response, said: “You have federal rules in place and apparently they’re being ignored.”
Norris also said he was troubled that accused truants don’t benefit from attorneys — if they can’t afford to hire one — when they are first summoned to court and asked to enter a plea.
“How can that plea be a knowing plea without representation — especially with a child?” Norris said.
In 2012, more than 9,600 accused truants were summoned to courts in Tennessee.
Nationally, in 2010, about 137,000 status offenders, about a third of them truants, were ordered into courts for their infractions, according to the Vera Institute of Justice.
Some states require that truants or other status offenders receive representation automatically or early during their involvement in courts. In 2012, an attempt in Tennessee by establish that immediate right to counsel for truants failed without debate in the state legislature; a fiscal analysis found the proposal would require an additional half million dollars a year on top of juvenile indigent defense costs estimated at $2 million in 2010 out of $37 million overall for indigent defense.
The Environmental Protection Agency on Monday proposed the first-ever limits on greenhouse gas emissions from existing power plants. The high-profile announcement marks the second time in less than a year the agency has released far-reaching rules aimed at fulfilling a key pillar of President Obama’s sweeping climate plan — to cut carbon pollution from both existing and planned power plants.
EPA Administrator Gina McCarthy unveiled a dense, 645-page proposal to limit carbon dioxide emissions from roughly 1,000 existing coal, gas, and oil plants nationwide — the largest source of carbon pollution in the United States, accounting for nearly one- third of all domestic greenhouse gas emissions. McCarthy presented the groundbreaking regulation as a “vital piece of President Obama’s climate plan” and “critical step forward” in the global fight against climate change.
“This is not just about disappearing polar bears or melting ice caps,” she said. “This is about protecting our health and our homes. This is about protecting local economies and jobs.”
Dubbed the “Clean Power Plan,” the EPA proposal would cut carbon emissions from existing plants by as much as 30 percent by 2030, as compared to 2005 levels — or, about 730 million metric tons of carbon pollution. Under this plan, state officials would develop energy-efficiency policies and renewable-energy programs to meet what the EPA has identified as state-specific goals for reducing carbon pollution.
To reach such “carbon targets,” the states could implement a range of options from designing a market-based carbon tax to using “no carbon” electricity sources like wind, solar, and nuclear. The EPA proposal would give states a flexible timeline for submitting their plans to the agency, with initial drafts or final plans due by June 2016.
Touting the plan’s “huge” benefits, including the billions of dollars saved in health-care costs because of fewer asthma attacks and premature deaths, the EPA administrator called it “an investment in better health and a better future for our kids.”
Alluding to the battle now brewing over carbon regulations for power plants, she added, “There are still special interest skeptics who will cry the sky is falling. Who will deliberately ignore the risks, overestimate the costs, and undervalue the benefits. But the facts are clear.”
Even before Monday’s announcement, the EPA’s plan to regulate carbon pollution from aging coal-fired power plants had set off a fierce lobbying campaign by coal companies and coal-burning utilities. Last fall, the agency announced its first-ever national standards to cut carbon dioxide emissions from planned power plants; those standards are pending. Like that rule, opponents consider Monday's proposal to be an effective ban on coal plants.
“If these rules are allowed to go into effect, the administration for all intents and purposes is creating America’s next energy crisis,” said Mike Duncan of the American Coalition for Clean Coal Electricity, the coal industry’s most public voice. Noting how coal still accounts for nearly 40 percent of all electricity, he reiterated longstanding industry arguments about the costs of such stringent regulation — i.e., higher energy prices, lower grid reliability.
Other vocal opponents, like Jeffrey Holmstead, who represents coal and utility companies at the D.C. lobbying firm Bracewell & Guiliani, wondered whether EPA’s proposal would actually address such climate dangers as rising sea levels and soaring temperatures. “The way they’ve promoted the rule is highly misleading,” charged Holmstead, who headed the EPA’s air and radiation office under President George W. Bush. “This is the rule that’s going to address all these risks,” yet nowhere do EPA officials say how the proposed rule will do so.
Calling its overall goal “unrealistic,” he noted that many states have already implemented “easy fixes and easy improvements” to try to promote energy efficiency and renewable sources, thus reducing carbon pollution. Currently, according to the EPA, 38 states have their own renewable portfolio standards or goals; 27 have the same for energy efficiency. For most, Holmstead said, “I don’t think there’s any plausible way to comply without a cap and trade proposal or a carbon tax” — an option fraught with politics.
The EPA proposal must go through a 120-day public comment period and additional reviews. Next month, the agency also plans to hold four public hearings on the proposal, in Denver, Atlanta, Pittsburgh, and Washington, D.C. A final rule is expected by June 2015.
A federal appeals court has withdrawn a three-judge panel’s 2007 dismissal of a Pennsylvania man’s lawsuit against ExxonMobil Corp. after a Center for Public Integrity investigation found that the wife of one of the judges owned up to $100,000 worth of stock in the oil company at the time of the panel’s decision.
The New Orleans-based 5th U.S. Circuit Court of Appeals had dubbed the case as “frivolous” when it originally dismissed the case that accused ExxonMobil and its chairman of maliciously and illegally raising oil and gas prices.
But the court reopened the case on May 15, one day after the court received a letter from the plaintiff, Daniel Tilli, saying that he was “in disbelief” that Judge Thomas Reavley did not know that his wife had owned stock in the oil company until seven years after the court ruled. Reavley is married to fellow 5th Circuit Judge Carolyn King.
Tilli, a Bethlehem, Pa., resident who represented himself, requested that a new panel hear his case because Reavley was “not impartial.”
By law, judges cannot own even a single share of stock in companies that come before them. Nor can their spouses or dependent children.
Tilli learned about the judge’s conflict of interest after it was brought to the 5th Circuit’s attention by the Center in early April. The Center identified the conflict while reporting its months-long “Juris Imprudence” investigation, which found 26 other examples since 2010 where federal appellate judges ruled on cases in which they had a financial conflict.
As required under court rules, Reavley and judges in all of those cases had letters sent to the litigants to alert them of the mistakes. The letters were the first step in possibly reopening the cases.
Reavley’s case is the third to be reopened due to the Center’s reporting.
In one case that was reopened because of a stock conflict involving 4th U.S. Circuit Court of Appeals Judge Allyson Duncan, a new three-judge panel reached the same decision as the first. Another case tainted by stock ownership of 11th Circuit Judge Frank Hull is still pending. Many of the others remain in limbo.
Lyle Cayce, the 5th Circuit clerk of court, told the Center that Reavley’s involvement in the Tilli case was the result of a “staff error.” He said the case pre-dated an automated screening process, which helps the court avoid assigning judges to cases in which they have a conflict of interest.
Now that the 2007 judgment has been withdrawn, a newly constituted three-judge panel without Reavley will review the case. But it’s unclear how long it will take the new panel to reach a decision.
Because the case wrapped up nearly seven years ago, Cayce said the court is currently retrieving some case records, which are no longer stored in the court.
It’s also unclear how a new panel will rule. Neither Tilli nor an attorney for ExxonMobil could immediately be reached for comment.
A prominent state lawmakers’ advisory group issued a major report Tuesday warning of the “school to prison” pipeline and offering multiple alternatives to harsh school discipline and police crackdowns on students.
Released by the Council of State Governments — a nonpartisan national research group that advises legislators — the “School Discipline Consensus Report” encourages schools and lawmakers to embrace ideas such as conflict resolution and counseling — rather than suspensions, expulsions and forcing kids into juvenile court for infractions as minor as cursing or shoving matches.
“When suspended, these students are at significantly higher risk of falling behind academically, dropping out of school and coming into contact with the juvenile justice system,” says the report. “A disproportionately large percentage of disciplined students are youth of color, students with disabilities and youth who identify as lesbian, gay, bisexual or transgender.”
In a conference call with reporters Tuesday, a Republican Tennessee state Senate leader — Sen. Mark Norris — spoke out in favor of the report’s recommendations in his role as the elected chairman of the council.
“This is a wake up regardless of what side of the aisle you sit on,” said Norris, who hails from Collierville, a Memphis suburb. “We’re very worried about that pipeline to court.”
Norris’ own state has come under scrutiny from the U.S. Justice Department for prosecuting and jailing accused truants — including kids with mental-health difficulties — whose parents say they were not afforded appointed attorneys in juvenile court in Knox County, as the Center for Public Integrity recently reported.
If kids are derailed from school by harsh reactions to minor misbehavior, Norris said, they won’t become productive members of a community and contribute to its economic well-being.
He said communities need a “bright light” on counterproductive discipline, including issues raised in the Center’s report, such as accused truants facing prosecution in court without the appointment of legal counsel.
The School Discipline Consensus Report calls on state, community and school leaders to help reduce suspensions, expulsions and arrests of students and “provide conditions for learning wherein all students feel safe, welcome and supported.”
A national network called Dignity in Schools — which has helped shape discipline reform in many cities — said interested educators can find viable alternatives in the report: “The strategies in the report are practical, innovative and are based on successful efforts that have been made in schools all across the country from Denver to Austin to Baltimore.”
In 2011, the Council of State Governments released a longitudinal study finding that 60 percent of all Texas students had been suspended at least once, with punishment falling particularly harshly on black and Latino male students.
The vast majority of suspensions and expulsions — 97 percent — were due to discretionary or local “zero tolerance” policies, not federal policies mandating removal of students. Compared to peers, students with multiple suspensions disproportionately went on to get into trouble with the criminal justice system — not straighten out and get engaged in school.
Texas state Sen. John Whitmire, a Democrat from the Houston area, told reporters during the conference call: “Out-of-school suspensions rarely accomplish anything.”
As chair of the Texas Senate Criminal Justice Committee, Whitmire said he tells his colleagues in the legislature “you either pay now” to help kids stay in school, or “you pay later” with higher incarceration costs. Whitmire said kids in Texas have been accused of misdemeanors for infractions as minor as throwing an eraser.
To address behavioral problems, the report suggests that “each school should have a student support team (or teams) to oversee services for youth with behavioral health and related needs.”
Norris agreed that alternatives listed in the report can be “cost-effective” and that there are multiple options “so you can find what is relevant in your state.”
The report includes recommendations such as the use of “restorative” justice peer counseling. It also includes lengthy sections urging schools to define precisely what the role of police officers should be in a school.
“Police should not be engaged in routine classroom management,” the report recommends, “and whenever possible should use alternatives to arrest for students’ minor offenses that can be appropriately addressed through the school’s discipline system.”
The Center for Public Integrity has reported on how aggressive use of police and “zero tolerance” suspensions and expulsions have fallen disproportionately on black, Latino and low-income children, including middle-school students.
In Kern County, California, for example, low-income farmworker kids have been removed from regular schools for minor infractions and sent to alternative schools so far away that they languished at home, assigned to study on their own, or dropped out.
In Los Angeles, until recent reforms were enacted, the nation’s largest school police force was ticketing tens of thousands of inner-city children in low-income neighborhoods, about half of them 14 or younger.
Kids as young as 12 have been arrested at Los Angeles schools for playground fights with friends, and they developed juvenile records for assault as a result, the Center reported.
Since the Texas longitudinal study’s release in 2011, some of the Lone Star state’s school districts have implemented reforms that contributed to 10 percent overall reduction in suspensions and a 30 percent reduction in expulsions at last count, according to Michael Thompson, director of the Council of State Governments Justice Center, which produced the report.
More needs to be done, Whitmire said. He called it “nonsense” for a school in Duncanville, Texas to suspend and send home about 170 students in May for dress code violations that included not wearing a belt or a shirt with a collar. Principal Andre Smith told media that the school resorted to the suspensions to teach students to “meet expectations” in school and “outside of school as well.”
Thompson said the report released Tuesday represents “a consensus” and “a vision from the field” with alternatives to harsh discipline recommended by more than 100 educators, parent representatives, law enforcement and court officials and mental and social-welfare officials.
Local and state leaders will join representatives of the Council of State Governments in Austin, Texas, on Wednesday and in Los Angeles on Thursday to promote the strategies in the report.
The council’s report was prepared in part with funding from the California Endowment, Atlantic Philanthopies and the Open Society Foundations, which also funds independent reporting by the Center for Public Integrity.
Medicare covers about 54 million Americans who are over 65 years old or disabled. The government-funded program offers two options:
Fee-For-Service: This is the standard coverage chosen by more than two-thirds of beneficiaries. They can visit any doctor they want and buy insurance policies to cover any gaps in what Medicare will pay for. Doctors bill Medicare for each service they provide.
Medicare Advantage: Nearly 16 million seniors have joined about 700 insurance plans that accept a set fee from Medicare for covering each patient in exchange for providing all medical care, from doctor visits to hospital services. The plans also provide extra benefits that are popular with the elderly, including gym memberships and eyeglasses and often are less expensive than standard Medicare. Monthly premiums average about $35.
The Centers for Medicare and Medicaid Services: Referred to as CMS, this federal agency oversees Medicare and Medicaid, the government health plan for low income people. CMS is part of the Department of Health and Human Services.
Dual Eligibles: The term refers to people who are eligible both for Medicare and Medicaid because they have low incomes. These patients are generally considered the most costly to treat.
In-Home Health Assessments: Medicare Advantage plans tout these free “house calls” as a major health benefit. But the visits also can be profitable for the health plans when they uncover new diseases that raise a patient’s risk score— even if the health plan provides no added treatment. CMS officials proposed banning home visits for collecting risk data, but backed down. The industry said banning the house calls would cut its Medicare payments by some $3 billion a year.
Monitor, Evaluate, Assess/Address and Treat (MEAT): Doctors must document that they did all these things in order for a health plan to claim payment based on a patient’s illness. In other words, a health plan cannot just write down that a patient has a disease and seek extra payments from Medicare. The plan must also show that its doctors assessed and treated the condition. Still, federal officials in April backed off a proposed regulation that would have banned home health assessments which uncovered new diseases but didn’t lead to any more treatment.
Retrospective Chart Reviews: The risk-based payment system has spurred the growth of a medical information and data analysis industry that “mines” electronic patient medical files looking for evidence of unrecognized diseases that could boost risk scores and Medicare payments. CMS has proposed that health plans also report cases in which risk scores should be reduced, which would reduce overpayments.
Risk Score: Since 2004, CMS has paid Medicare Advantage plans based on a risk score that is supposed to assess the overall health of each patient. Medicare pays higher rates for sicker patients that are likely to require more costly medical services and less for healthy people. Medicare Advantage plans on average received about $9,900 per person in 2011.
Risk Adjustment Data Validation(RADV)audits: Health plans collect medical data used to calculate patient risk scores. But mistakes are common and trigger billions of dollars in “improper payments” every year, mostly overcharges. RADV audits are supposed to keep the industry honest. But CMS only does a few dozen audits a year and usually recoups minimal amounts.
Special Needs Plans: These are Medicare Advantage plans that enroll people with chronic diseases such as diabetes and take other steps to manage their care.
First in a three-part series.
In South Florida, one of the nation’s top privately-run Medicare insurance plans faces a federal investigation into allegations that it overbilled the government by exaggerating how sick some of its patients were.
In the Las Vegas area, private health care plans for seniors ran up more than $100 million in added Medicare charges after asserting patients they signed up also were much sicker than normal — a claim many experts have challenged.
In Rochester, New York, a Medicare plan was paid $41 million to treat people with serious diseases — even though the plan couldn’t prove the patients in fact had those diseases.
These health plans and hundreds of others are part of Medicare Advantage, a program created by Congress in 2003 to help stabilize health care spending on the elderly. But the plans have sharply driven up costs in many parts of the United States — larding on tens of billions of dollars in overcharges and other suspect billings based in part on inflated assessments of how sick patients are, an investigation by the Center for Public Integrity has found.
Dominated by private insurers, Medicare Advantage now covers nearly 16 million Americans at a cost expected to top $150 billion this year. Many seniors choose the managed-care Medicare Advantage option instead of the traditional government-run Medicare program because it fills gaps in coverage, can cost less in out-of-pocket expenses and offers extra benefits, such as dental and eye care.
But billions of tax dollars are misspent every year through billing errors linked to a payment tool called a “risk score,” which is supposed to pay Medicare Advantage plans higher rates for sicker patients and less for those in good health.
Government officials have struggled for years to halt health plans from running up patient risk scores and, in many cases, wresting higher Medicare payments than they deserve, records show.
The Center’s findings are based on an analysis of Medicare Advantage enrollment data from 2007 through 2011, as well as thousands of pages of government audits, research papers and other documents.
Federal officials who run the Medicare program repeatedly refused to be interviewed or answer written questions.
Among the findings:
Some academic experts and researchers believe the increase in risk scores is more likely to reflect aggressive billing than a rapid deterioration in patients’ health.
Industry executives don’t dispute that billing errors occur. But they deny that they charge too much, arguing they only want to be paid fairly for their services.
Clare Krusing, director of communications for America’s Health Insurance Plans, said that the industry trade group is “working together” with federal health officials to improve reporting of risk score data.
In the South Florida case, government lawyers have been investigating Humana, Inc. for several years as they try to determine if the company and some of its medical clinics manipulated the complex Medicare Advantage billing system. Humana says it is cooperating with the investigation.
In a separate civil case, a former Bush administration health official alleges in a whistleblower lawsuit unsealed earlier this year that two Puerto Rico health plans cheated Medicare out of as much as $1 billion by inflating patient risk scores. The plans, which at the time were owned by a subsidiary of New-Jersey based Aveta, Inc., denied the allegations.
Government audits and research reports have warned for years that Medicare’s risk scoring formula breeds overbilling, but efforts to hold the industry accountable have met with little success. Federal officials have yet to recoup hundreds of millions of dollars in suspected overpayments to health plans that date back as far as 2007.
Excellus Health Plan, the Rochester, New York, health plan that federal auditors said may have overbilled by as much as $41 million in 2007 for treating patients with serious diseases, paid but a fraction of that amount back years later. A company spokesman said the plan settled the matter by paying the government $157,777 in December 2013.
Some critics expect little to change unless federal officials disclose Medicare Advantage plans’ full service and billing histories — as they have recently done with Medicare fees paid to more than 880,000 individual doctors and others.
“The [Medicare Advantage] plans don’t want the data out,” said Dr. Brian Biles, a professor in the Department of Health Policy at George Washington University, whose Freedom of Information Act lawsuits shook loose limited enrollment records used in this project. (Biles assisted Center for Public Integrity reporters with the analysis.)
Dr. David Wennberg, a Dartmouth Institute researcher who has studied the payment issue, said that with billions of tax dollars at stake federal officials need to hit the “reset button” on risk scoring.
Wennberg said Medicare Advantage “is a very large program with lots of money flowing through it. There are always vested interests in protecting the status quo.”
Health care politics
The Affordable Care Act, or Obamacare, orders deep rate cuts in Medicare Advantage, partly to cover millions of uninsured people. That’s consistent with an early Obama administration promise to reduce payments to the health insurers.
But support for Medicare Advantage in Congress has snowballed as it has attracted more and more seniors who are happy with their care and the price they pay for it. Earlier this year, the insurance industry mounted a fierce media campaign to block the rate cuts, enlisting support from more than 200 members of Congress and forcing the administration to partially back off.
The debate over how best to pay Medicare Advantage health plans — and how to curb overcharging — has been contentious for years.
As far back as the 1980s, Congress hoped that carving a bigger role for managed care plans like Medicare Advantage would help curtail overall Medicare spending and ward off waste and fraud that can pop up when doctors and hospitals are paid for each and every service they perform.
To that end, Medicare decided to pay health plans a set monthly rate for patients regardless of how much care they needed. But some health plans stacked the deck by signing up people who were healthier than average, a marketing ploy known in insurance circles as “cherry picking.”
That led to a “lot of game playing” and “dumping patients who were ill,” said Laurence Bishoff, a Boston health care consultant.
Congress thought it saw a remedy in the Medicare Modernization Act of 2003. The law created Medicare Advantage and phased in “risk adjusted” payments starting a year later.
Thomas Scully, who helped get the program running under President George W. Bush, said rates were generous in hopes of enticing insurers to expand their Medicare business and not shy away from people in poor health.
“We very intentionally tried to overpay them a little bit,” said Scully, now a Washington lobbyist with numerous health care industry clients.
Health status was added to other factors such as sex, race and age in setting rates. Plans that took on the greatest risk by accepting the sickest patients were paid the most.
But turning to risk scores as the way to adjust payments ushered in a new form of Medicare billing abuse: Some health plans misstated how sick their patients were or failed to document they had treated illnesses Medicare paid them to treat, the Center’s investigation found.
By 2009, government officials were estimating that just over 15 percent of total Medicare Advantage payments were inaccurate, about $12 billion that year.
By the end of 2013, officials reported the error rate had dropped to nine percent, which still added up to $11.8 billion for the year. Nearly 80 percent of that — $9.3 billion — was overcharges, records show.
The Medicare Advantage billing error rate has averaged 12 percent over the past six years, at times outpacing that of standard government-run Medicare, which federal officials assert is highly vulnerable to billing fraud and abuse.
Medicare Advantage has faced much less scrutiny. The federal Centers for Medicare and Medicaid Services didn’t try to recoup overpayments until 2012, eight years after phasing in risk scoring. And when it did, it won back only $3.4 million — a tiny fraction of the estimated losses, according to government records. Though the agency is beefing up collection efforts starting this year, most health plans won’t see federal auditors for years.
Malcolm Sparrow, a professor at Harvard University’s John F. Kennedy School of Government and health fraud expert, said officials are “asking for trouble” by allowing health plans to generate the data on which risk scores and their revenues are based.
“You want to make sure this is audited rigorously,” Sparrow said. “It’s much more expensive [to taxpayers] not to.”
Four of the ten major Medicare Advantage plans with the highest average risk scores nationally are in Puerto Rico.
Medicare Advantage plans, which control 70 percent of the island market, argue their patients are poorer and sicker than average. They also say that cuts required under the Affordable Care Act have hit them hard, prompting cuts in benefits and higher premiums for patients who can ill afford to pay more.
Risk scores at the two Aveta-related health plans, MMM Healthcare and Preferred Medical Choice, shot up by an average of 11 percent from 2007 through 2011. Nationwide, the growth rate averaged three percent over the same period. The company had no comment.
San Juan-based Medical Card System, known by the initials MCS, reported a 5 percent rise in the scores over the same time — nearly twice the national average.
The billing practices also have attracted legal scrutiny. The whistleblower lawsuit filed against Aveta by former executive Jose R. “Josh” Valdez alleges that the company overbilled Medicare by as much as $1 billion by inflating risk scores.
Valdez alleges that Aveta paid its stockholders a $100 million dividend during the time that it was overcharging Medicare.
MCS has faced its troubles over risk scores, too.
Federal agents searched the MCS tower headquarters on Oct. 13, 2011. MCS said in a 2012 financial statement that it had received four grand jury subpoenas as part of a U.S. Attorney’s Office investigation of its “risk adjustment data reporting.”
MCS said the company conducted an “internal review” that found no wrongdoing, but prompted it to return an “immaterial” amount of money to Medicare.
In an April interview inside the MCS tower in San Juan’s Hato Rey financial district, Chief Executive Officer Jim O’Drobinak said the federal probe has ended and MCS has been cleared.
“Nothing came of it,” he said, blaming the investigation on a “disgruntled former employee.” Law enforcement sources confirmed that the investigation has been closed.
Dr. Inés Hernández, MCS chief medical officer, said that the health plan has moved aggressively to treat patients in their homes and identify diseases so they can be treated in the early stages.
“We’re not just getting information for risk scores,” she said.
But CMS officials have been concerned that home visits and other health assessments by health plans can contribute to higher risk scores — and drive up costs without benefiting patients by providing them with more care.
Congressional auditors and some lawmakers have asserted for years that overpayments to Medicare Advantage plans may be much higher than federal officials have acknowledged.
Among the most steadfast critics is Rep. Henry Waxman, D-Calif. In a March 6, 2009, letter to an agency official, he argued that Medicare Advantage plans were a bad deal for taxpayers because each illness they discover, “whether it is treated or not can increase the payment the plan receives from CMS.”
Waxman, who then chaired the House Energy and Commerce Committee, criticized health plans for figuring out how to “manipulate” risk scores to wrest money they didn’t deserve from Medicare.
CMS officials have conceded that risk scores rose much faster for Medicare Advantage patients than for those in standard Medicare and that the rise couldn’t be explained away by saying that the health plan members were sicker.
Starting in 2010, they stepped in and cut payments to Medicare Advantage plans to offset rising risk scores.
Yet in January 2012 the Government Accountability Office, the watchdog arm of Congress, said that the cuts weren’t deep enough and opined that Medicare could have saved as much as $3 billion a year by reducing risk scores further.
A year later, the GAO went a step further. A January 2013 report said CMS made “excess payments” to Medicare Advantage plans of between $3.2 billion and $5.1 billion between 2010 and the end of 2012 because risk scores were higher than justified.
The Center for Public Integrity data analysis found that Medicare Advantage can cost the government as much as 25 percent more than standard Medicare in some areas.
The data analysis also found that seemingly tiny variations in risk scores can boost taxpayer costs enormously — especially in health plans that are growing fast.
Industry officials have a different take.
They argue that their members tend to have lower incomes than the elderly population as a whole and have a higher risk of needing expensive medical care.
“They have looked healthier because of incompleteness of this data,” said John Gorman, a former federal health official who is now a prominent Medicare Advantage consultant.
Others blame the sheer complexity of risk-scoring for causing confusion about billing.
Jim Redmond, a vice president at Excellus Health Plan, which federal auditors in 2012 said couldn’t always document illnesses it was paid to treat, denied any impropriety. He said the billing system was “established with good intentions” but “didn’t fully recognize” how difficult it would be for health plans to oversee.
“We have more than 18,000 physicians submitting claims to us every day. We audit a portion of the claims and medical records for accuracy, completeness and consistency,” Redmond wrote in an email.
“However, the medical delivery system would grind to a halt if we made every provider submit all of the documentation for each and every claim they file on behalf of members.”
Court records show that the billing system’s complexity has stymied government investigators reviewing a whistleblower lawsuit filed in 2010 by physician Olivia Graves against Humana.
Graves, who has practiced in South Florida for more than three decades, alleges that a Humana-owned clinic diagnosed patients with conditions such as diabetes with complications, which boosted Medicare payments. She alleged that those diagnoses were “not supported by the medical records.” Her suit alleges that Humana knew about the alleged overcharging and did nothing to stop it..
The U.S. Attorney’s Office declined to join the South Florida case even though a federal judge granted it 11 requests for more time to investigate. They argued lawyers and other government personnel “had little or no experience in the applicable regulations and operations of the [Medicare Advantage] program” However, government lawyers said their investigation is continuing.
The case was unsealed in May and is pending.
Humana also faces other investigations into allegations that it overbilled the government, including a criminal investigation by the Department of Justice in Washington and a criminal case involving the U.S. Attorney’s branch office in West Palm Beach, Florida, according to court records. Humana spokesman Tom Noland said “Humana to our knowledge is not the subject of a criminal investigation.”
Many researchers are hoping that CMS will make public detailed Medicare Advantage billing and service data that might allow them to assess how well risk scoring is doing in predicting costs. They also want to study industry claims that they are treating lower income and sicker patients.
But that’s not yet possible because CMS has shown little interest in making Medicare Advantage data public.
That’s quite a different stance than the agency took in April, when it released detailed information about how much individual doctors were paid by Medicare. The decision drew criticism from the American Medical Association, which has argued that it violated the privacy of doctors. CMS principal deputy administrator Jonathan Blum, who left the agency in May, previously announced on his blog that data “can shine a light on how care is delivered in the Medicare program.”
Sparrow, the fraud expert from Harvard, said that it should be easier for the government to cough up information about huge health care corporations than about individual physicians. The doctor billing data covers about $77 billion in taxpayer spending for 2012, about half the Medicare Advantage price tag.
“Anything that starts with a ‘b’ seems like a lot of money to me,” Sparrow said, adding that Medicare Advantage financial data and other records “ought to be a matter of ordinary public record.”
Medicare Advantage is a “black box,” added James Cosgrove, who heads health investigations for the GAO, the audit arm of Congress.
“We know what services they say they will provide … but we never know exactly what services are being provided,” Cosgrove said.
Josh Valdez took an executive level job in April 2010 expecting to improve medical services at two Puerto Rican Medicare Advantage health plans owned by a subsidiary of New Jersey company: Aveta Inc.
But a few months after coming on board, the former government health official claims, he discovered that the plans — MMM Healthcare and PMC Medicare Choice — had been cheating Medicare out of hundreds of millions of dollars for years, according to a whistleblower lawsuit he filed in federal court.
Valdez accuses the health plans of “rampant fraud,” alleging they overcharged Medicare $300 million to $350 million a year from 2007 through 2010. He claims that Aveta Chief Executive Officer Richard Shinto fired him “in retaliation for his outspoken opposition to these illegal practices.” Valdez filed the lawsuit in Santa Ana, California, in April 2011, but it remained under court seal until February of this year. The case is pending.
In a May 23 statement to the Center for Public Integrity, the health plans called Valdez a “former disgruntled employee” and added that the company “categorically denies the allegations in the former employee’s lawsuit and is highly confident that it will prevail in the case.”
Valdez is a veteran health care executive and consultant who headed the California regional office of the U.S. Department of Health and Human Services from 2001 through 2003 under President George W. Bush. He also was a health policy adviser to Republican Mitt Romney during the 2012 presidential race.
Valdez said in court papers that he served as president of MSO of Puerto Rico, also owned by a subsidiary of Aveta, for eight months until his dismissal in December 2010. MSO worked with local doctors to coordinate coverage for some 230,000 elderly and disabled people then enrolled in those two Aveta-related Medicare Advantage health plans. In a press release touting his hire, Aveta said Valdez would enhance medical care while “effectively managing healthcare costs.”
Aveta’s Puerto Rico health plans and MSO are now operated by InnovaCare Health Solutions, according to the firm’s website. InnovoCare has the same Fort Lee, N.J. office and phone number as Aveta. Several members of the Aveta board, including founding principal investor Daniel E. Straus, have been affiliated with both companies. Innovacare general counsel Christopher J. Joyce declined to discuss the corporate structure.
Straus, a prominent investor in several health-care businesses, also has worked with hedge funds and as a New York City real estate developer. Joyce said Straus would have no comment.
The whistleblower suit is significant not only for the magnitude of overbilling it alleges. It also raises questions about federal oversight of billing practices by health plans that contract with the government to cover nearly 16 million Americans, at a cost expected to top $150 billion this year.
The federal government paid the two Puerto Rico plans a total of between $1 billion and $1.8 billion annually from January 2007 through December 2010, according to the suit. Up to $350 million a year was for bills that were “improperly inflated,” according to Valdez.
Valdez argues that the health plans sought out chronically ill patients, who command the highest Medicare payment rates, but overcharged for them by manipulating a billing formula known as a “risk score.” Medicare sets risk scores for all patients based on medical data submitted by the health plans that indicates how sick patients are. Sicker patients mean higher rates.
These scores “were false or fraudulent because they were based on diagnosis codes that were not substantiated by the medical records or by the medical conditions of the Medicare beneficiaries served by the plans,” the suit states.
Valdez said he was told by top executive Shinto in May 2010 that an internal audit of medical records had confirmed that two-thirds of patient risk scores could not be supported.
According to Valdez, the audit results were discussed at several executive-level meetings, including some at which top brass talked about setting up a reserve fund in case federal officials should conduct their own review and demand refunds.
At a July 2010 meeting, Penelope Kokkinides, Aveta’s chief operating officer, allegedly said the company would be “screwed” if it was audited by the federal Centers for Medicare and Medicaid Services, especially if the review reached back to 2007. She said overcharges had been “particularly egregious” that year, as the suit paraphrased her alleged remarks.
Kokkinides estimated the liability to the government was as high as 20 percent of its total Medicare payment, or about $350 million a year, Valdez alleges. Kokkinides would not comment on the suit.
During his tenure there, Valdez said, company officials gave no indication they would “notify CMS of the problem or return the improperly obtained funds to the government,” according to the suit. CMS regulations not only require Medicare Advantage plans to attest that risk data they present for payment are accurate but also obligate them to return any overpayments they discover.
Still, CMS largely trusts the nation’s 700 Medicare Advantage plans to report risk scores accurately and honestly — and conducts only a smattering of yearly audits. There’s no indication that CMS officials reviewed the risk scores for the two Puerto Rican plans. In its 2012 annual financial report to insurance officials in Puerto Rico, MMM Healthcare stated that it had not been subject to a CMS payment audit.
However, in late March of 2011, Valdez said he took his allegations to the U.S. Attorney’s Office for the central district of California, which has since launched an investigation. That investigation “has not been completed,” government lawyers wrote in a January 2014 court filing.
Valdez blamed the faulty risk scores on errors in “medical status visit” forms filled out by the plans’ doctors. The visits were done to help identify “high risk” members and maximize payments for them. Doctors participated in a profit sharing arrangement that paid them 50 percent to 60 percent of surplus money that came in from Medicare as a result of the annual visits, according to the suit.
The lawsuit alleges that company officials failed to take “corrective measures to delete or filter out” inaccurate codes, although they knew the doctors had an incentive to inflate them.
In July 2010, executives decided to hold onto millions of dollars in these payments to the doctors in case CMS auditors required the company to repay money, according to the suit.
That concern didn’t dissuade company officials from borrowing $100 million, which was used to pay a dividend to investors, “the largest of whom was founder and Chairman Daniel E. Straus,” according to the suit. Valdez said he objected to paying the dividend while the potential liability to the government “remained unaddressed.”
What is the difference between Medicare Advantage and Medicare?
They’re two sides of the same coin. By choosing standard Medicare, people can visit any doctor they want. But they may have to buy supplemental insurance to cover gaps in what Medicare will pay for. This option is called “fee-for-service.”
By contrast, Medicare Advantage plans accept a set fee from the government for covering a person’s health care. The plans may provide extra benefits, including gym memberships and eyeglasses and cost patients less out of pocket than standard Medicare. Medicare Advantage is growing rapidly and now serves about 16 million people, about a third of all people on Medicare.
I'm a taxpayer. Why does this matter to me?
It matters because it costs taxpayers $150 billion a year. Medicare costs are threatening to swamp the federal treasury and policymakers agree the program can ill afford waste and billing abuses. Young people should care about this spending so that Medicare will be there for them when they need it.
What are risk scores?
A risk score is a formula the government uses to pay Medicare Advantage plans. The system is supposed to pay higher rates for sicker patients that are likely to require more costly medical services and less for healthy people.
Why were risk scores adopted?
Congress wanted to make sure health plans wouldn’t shy away from taking sicker patients who could cost them more to treat.
I'm covered under Medicare Advantage. Can I look up how my doctor uses risk scores?
No. The process goes on behind the scenes and it’s so complicated many people in the health care industry don’t fully understand how it works.
As the baby boomer generation ages, isn't it possible that the U.S. population is just sicker and requires more costly care?
It’s hard to say definitively without knowing a lot of medical details about individual patients. The government has not made this sort of data available. We are hoping that our lawsuit will shed some light on this.
What does this alleged overbilling mean for Obamacare?
The Affordable Care Act is using risk scoring and some policy experts worry that the system will prove extremely difficult to police — especially given the government’s history with Medicare Advantage.
Is there any chance of recouping any of the $70 billion in "improper" payments?
The Centers for Medicare and Medicaid Services, which runs the program, has broad authority to recoup overpayments, but has shown little interest in doing so. Instead, health plans suspected of overbilling have paid little penalty and can count on the government to keep their identities secret.
How did you come up with the idea of doing this investigation?
In 2012, we published the series Cracking the Codes, which exposed how thousands of doctors had steadily billed higher rates over the past decade, costing taxpayers billions of dollars. After that, I wanted to look at Medicare Advantage because it has grown so quickly, costs taxpayers a bundle and has been the focus of much less scrutiny both from government and the media. For instance, Medicare officials have recently released vast amounts of billing data for fee-for-service Medicare, but are keeping Medicare Advantage data under wraps.
If you didn’t get a response from your FOIA request, where did the data for this investigation come from?
Months and months of searching public records, including federal and state court records and websites, and interviewing experts. Given the sheer complexity of Medicare Advantage, federal officials must post a good deal of information online.
There are also many health lawyers who advise the industry and data companies that assist with billing who discuss these issues online.
CMS posted some limited Medicare Advantage data online (2007 through 2011) after a researcher sued them.
How would you use or augment this investigation if you were to receive records from your FOIA request?
We want to tell people how CMS makes decisions and how well it safeguards taxpayer dollars. That’s very hard to gauge right now because the agency is secretive, won’t grant interviews to the media and pretty much ignores requests for public information.
We also want to know about political and lobbying pressures officials face — basically the same sort of accountability journalism we’ve been doing at the Center for Public Integrity for years.
What’s coming next?
We are committed to covering this program and greatly appreciate hearing from anyone with a story to tell about how it works.
Are you a health professional or medical coder and have a story to tell about Medicare Advantage billing issues or “risk scores”?
Or are you a patient in a Medicare Advantage plan and have been scheduled for a "home visit"? Let us know if the visit was helpful to you or not.
Please email me at email@example.com or call 202-481-1210.
Have your own question for Fred? Leave it in the comments below, and if we can answer it, we'll do so and add it here.
For this series, the Center for Public Integrity analyzed Medicare Advantage (MA) data obtained from the Centers for Medicare and Medicaid Services (CMS). The data contained enrollment and payment information for MA contract-plans and Fee-For-Service (FFS or traditional Medicare) payment data by county, downloaded from two CMS web pages: CMS Plan Payment Data and CMS Monthly Enrollment.
Brian Biles, an MD and professor in the Department of Health Policy at George Washington University, and Giselle Casillas, an MPP and senior research assistant at the GWU, offered methodology advice and helped guide parts of the analysis.
The Center used monthly enrollment data from March as enrollment remains relatively stable that month. Because of regulations in the Health Insurance Portability and Accountability Act (HIPAA), small Medicare Advantage plans with 10 or less people are omitted from the data so that patient identities remain private. These CMS public data contain no patient-level information other than aggregated enrollment figures.
We analyzed data covering 2007 to 2011. After the Center completed its analysis, CMS released 2012 data.
A key to understanding cost differences between MA and traditional Medicare lies in comparing the risk score in each plan and each county. To accomplish the comparison, MA data were weighted by insurance plan county enrollment as Fee-For-Service (FFS) risk score data was only available on the county level. Weighted risk scores were calculated by taking county total enrollment, further broken down by the MA providers’ total enrollment in that county, and weighting the risk score by that number. We weighted the payments by county enrollments, similar to methodology used by the Medicare Payment Advisory Commission (MedPAC).
To compare annual payments instead of monthly costs between MA and traditional Medicare, the weighted base payment for each county for MA plans and the FFS base payments were multiplied by twelve.
For the annual payments at the national level, the Center excluded payments in Puerto Rico, as do most researchers working with MA data, due to significantly different Medicare billing there.
Other limitations include CMS calculations of the traditional FFS risk scores, which are done on a rolling basis in 5-year groups rather than the single year calculation for MA risk scores. Small risk scores changes and differences, though, can significantly add to costs to the taxpayer. The analysis only highlights plans with a wide gap between their risk scores and comparable FFS risk scores, or uses other descriptive measures, such as percentage change in MA risk scores. Also, many of the aggregated calculations are rounded down to eliminate any over estimations.
The data behind the interactive graphic comes from the same CMS data. The Center used the raw data or simple descriptive percentage change in MA risk score to highlight MA trends from 2007-2011.
Calculating a national trend in risk scores is difficult at best. Limitations include the nature of the aggregated data provided by CMS and lack of more specific attributes related to patients who remain in the program through the years as compared with new enrollees. From the CMS data, calculations suggest the average risk score grew slightly under 2 percent. But a report from MedPAC suggest a projected 3 percent growth overall between just two of the years in the data. Finally, a Government Accountability Office Report suggests it could be higher. A 3 percent average is a conservative estimate for comparison purposes only.
A U.S. Senate primary dominated by super PACs and nonprofit groups is headed into overtime.
Neither incumbent Sen. Thad Cochran, R-Miss., nor Chris McDaniel, his tea party challenger, on Tuesday mustered the requisite 50 percent of votes needed to propel them from one of the nation's most contentiousintramuralbattles toward an likely trip to Capitol Hill.
Unless a final batch of uncounted votes dramatically swing they way of one candidate over the other today, Cochran and McDaniel now square off again in a June 24 runoff emblematic of a broader GOP civil war pitting party standard bearers against tea party insurgents.
That likely means three more weeks of freewheeling spending by a gaggle of outside organizations — some with few ties to Mississippi, a state of fewer than 3 million people — that have dominated the race.
Super PACs, nonprofit groups and other political committees spent more than $8 million to beat down or boost up their candidate of choice, generally through television, radio, mail and phone ads, according to a Center for Public Integrity analysis of federal disclosures.
Cochran and McDaniel together controlled less than two-fifths of the $13.4 million that poured into their primary fracas.
Nevertheless, when the money the candidates themselves raised for their primary campaigns is added to the money spent by supportive outside groups, the results are nearly even: Team Cochran controlled about $6.9 million, Team McDaniel about $6.5 million.
Most of the outside spending in Mississippi's Senate primary — $5.26 million — benefited McDaniel, with tea party super PACs Club for Growth Action, Senate Conservatives Action and FreedomWorks for America investing the most.
But their often negative ad barrages forced Cochran, seeking a seventh term, to kick his own campaign operation into fundraising hyperdrive to keep pace.
Cochran had little choice, as outside organizations supporting his re-election spent barely half of what pro-McDaniel groups did.
Of particular note: In the three weeks leading up to today's vote, Cochran amassed more than $335,100 in four-figure campaign contributions — he won't report his smaller donations until later this month — and personally secured a $150,000 loan to his campaign from a Mississippi bank.
McDaniel's campaign, meanwhile, generated less than $60,000 in such contributions, federal records indicate.
The incumbent's most generous air cover came from the Mississippi Conservatives Fund super PAC, the mainstream Republican-backing U.S. Chamber of Commerce, the National Association of Realtors Congressional Fund and the American Hospital Association PAC, federal records show.
During the entirety of the race, Cochran's campaign committee outraised McDaniel's campaign committee by a more than 3-to-1 margin: $4.1 million versus $1.22 million.
Mississippi's imbalance between candidate and special interest spending is remarkable for its rarity.
During the 2012 election cycle, outside political groups didn't once outspend candidates in their own U.S. Senate primary races, according to data provided to the Center for Public Integrity by the Center for Responsive Politics. It happened just one time — in Arkansas — in 2010.
It's easier than ever for non-candidate committees to act as prominent forces in political races thanks to the Supreme Court's 2010 decision in Citizens United v. Federal Election Commission, which allowed corporations, nonprofits, unions and special interests to raise and spend unlimited amounts of money to advocate for or against politicians.
Mississippi's primary slugfest also marks a far cry from 2008, when Cochran raised just $2.7 million during his entire re-election campaign.
The reverberations from a Center for Public Integrity/ABC News investigation continued this week as the U.S. Department of Labor warned its officials to view with skepticism any X-ray readings by a Johns Hopkins University doctor who virtually never diagnoses black lung, a deadly disease that afflicts coal miners.
The news organizations reported last fall that Dr. Paul Wheeler, an associate professor of radiology at the Johns Hopkins Medical Institutions often hired by coal companies to weigh miners’ claims for federal benefits, had never found the most severe form of the disease among more than 1,500 claims. Johns Hopkins suspended its black lung X-ray reading program promptly after the story was published.
On Monday, in a development first reported by ABC News, the Labor Department issued a bulletin instructing district directors in the department’s Office of Workers’ Compensation Programs to “take notice” of the journalists’ work and assume Wheeler’s findings in black lung cases are suspect.
“The CPI and ABC News reports, and Johns Hopkins’ investigation and suspension of its black lung reading program, are relevant, material and probative evidence regarding Dr. Wheeler’s qualifications,” the bulletin says. “Such a consistent record of never diagnosing complicated [black lung] and almost never diagnosing simple [black lung] undermines the credibility of his conclusions and renders them less credible than a positive reading. In addition, the reports demonstrate that Dr. Wheeler’s diagnoses have been wrong many times.”
In an emailed statement Wednesday, Johns Hopkins spokeswoman Kim Hoppe wrote, "We take these allegations very seriously and are still conducting the investigation into the [X-ray reading] program." Hoppe wrote that "nobody at Hopkins — including Dr. Wheeler" is doing such readings while the inquiry is ongoing.
Eleven years ago, Congress created private Medicare Advantage health plans to help control health care spending on the elderly. The plans now cover nearly 16 million seniors at an estimated cost to taxpayers of more than $150 billion this year, but our latest investigation found that manipulation of a Medicare Advantage payment tool called a “risk score” is adding billions to the program's cost. Our Multimedia Editor Eleanor Bell sat down with the project reporter Fred Schulte to talk about some of his findings.
Eleanor Bell: The government is wasting tens of billions of dollars by overpaying private health insurers that inflate how sick their patients are.
That's the key finding of a new Center report by journalist Fred Schulte.
For more than a year, he’s been investigating Medicare Advantage, the government-backed alternative to Medicare for seniors run mostly by private companies.
At the heart of the story are allegations that some big insurers are ripping off the taxpayer and questions about why the government is doing so little to stop it.
The report finds that not only has Washington known about this for years, but it has records of who’s responsible and refuses to release them.
Now the Center for Public Integrity is suing to make those files public.
We’ll have more about that in a moment, but firstly Fred, let’s start from the beginning:
Medicare Advantage was introduced by Congress more than a decade ago to stabilize health care costs, has it been effective?
Fred Schulte: Well it’s been very effective for many patients. Witness the fact that it’s grown dramatically and now has over 16 million members in various Medicare Advantage plans. Many people like it because it costs them less out of pocket than the standard Medicare and so it’s expected to grow even further. So it’s a very effective program for many people.
What we were looking at was more the financial aspects of it — as to whether the payments are being made properly and whether some of the health plans are being overpaid and whether too much taxpayer money is going down the tube.
EB: And what did you find?
FS: Well we found that there’s considerable evidence that billions of dollars have in fact been improperly paid to these plans over the years and that’s the government’s own estimates.
EB: We’re actually talking about 70 billion dollars of improper payments across the board aren’t we?
FS: - Right
EB: … Those that are being overcharged as well as those that are being potentially being undercharged. Where does the balance tip, there?
FS: Well, the allegations revolve around how the government pays the programs and whether they’re paying them too much. The Medicare Advantage programs are paid under a very complicated formula in which they determine what they call a risk score which is supposed to pay higher rates for sicker patients and lower rates for the healthier people but what’s happened over the years is that the government’s had a difficult time keeping the risk scores from going up and some of the plans from being paid too much.
Every year they sample the enrollment of Medicare Advantage patients and they try to determine whether the patients actually have the diseases that the plans say they have, or if they’re as serious as the plans say they have. And they’ve typically found that in many cases the plans can’t justify that the patients are as sick as they say and they those call those improper payments and a good deal of that amount is an overpayment and those overpayments have come up to tens of billions of dollars over the last five years.
EB: Now you mention that these payments are calculated by a complex formula called a “risk score.” How does that work?
FS: Well it isn’t working so well actually. I mean it’s a very, very, complicated system. Normally Medicare pays on what’s called a “fee for service” system and that would be that every doctor bills for every service every time. With the Medicare Advantage there aren’t any bills, there’s just the establishment that a person has a certain illness and they’re paid based on having that illness … or not having an illness. It’s very difficult for the government to keep track.
EB: Say you have an enlarged prostate, would you know what your risk score is on the basis of having that particular illness?
FS: No, this is something that goes on completely behind the curtain. Patients have no idea what’s going on, and many people inside the healthcare industry don’t even claim to understand the complexities of the system. But it’s not something that patients would even know about.
EB: Some might say that we’re just talking about an ageing population that’s living longer and getting sicker. Is that the case here?
FS: Many people don’t believe that the Medicare Advantage is attracting the sicker patients than the Medicare population as a whole but that’s one of the things we’re trying to get our hands on.
EB: To a certain extent though, the government has been transparent. I mean it has released all this billing data.
FS: Right. They have recently released the Medicare billing data for doctors and a number of media outlets have been doing stories about how doctors are being paid. But what they have not released is the Medicare Advantage data. I mean this is the billing data the government doesn’t want you to see. And that’s why we want people to be able to see it.
EB: Is this why you’re suing?
FS: Well that’s one of the reasons. We’re asking not only for that; we’re asking for the names of companies, and big insurance companies that have been billing and how they’ve been billing and who’s been found to have overbilled. And we think that that information ought to be available to taxpayers. The government has said that they were, their main reason for not releasing doctors’ specific billing data, over the years, has been privacy reasons: that they didn’t want to invade the privacy of a doctor. But when you’re talking about huge insurance companies we don’t see how that, how there should be any privacy there.
EB: And we’re not sure that they’re not doing their own investigation into these companies at the moment?
FS: Well no. Because the program is like a black box and there’s no way for anyone to get any insight into how they’re running the program because when you ask them questions they refuse to answer. We’ve tried repeatedly to get interviews with CMS officials. We tried to submit questions to them in writing and it’s just a total stonewall. And we think that when you’re running 150 billion dollar program that uses taxpayers’ money, that there should be some accountability.
Republican officials will soon file a complaint with the Federal Election Commission against Rep. Chris Van Hollen, D-Md., that accuses him of illegally accepting pro bono legal services, a senior party officer tells the Center for Public Integrity.
The pending complaint, which a Van Hollen spokeswoman blasted as a "frivolous action," will argue that the congressman failed to disclose as campaign contributions free legal help he's received from several campaign reform groups as part of a federal lawsuit he's brought against the FEC. The complaint will also call into question the very legality of the pro bono assistance.
Republicans' rationale for the complaint: Van Hollen has stated in court documents that his political campaign would be directly affected by the outcome of ongoing case Van Hollen v. FEC, which aimed to revealdonors behind certain kinds of political attack ads that secretive nonprofit organizations sponsored. Thus, the free legal aid to affect the outcome of the case should be reported as in-kind campaign contributions.
The GOP party officer who confirmed the complaint declined to say who in the Republican party would specifically file it.
The National Republican Congressional Committee, for its part, cheered the pending complaint, although officials there would not confirm whether the committee would itself sign on.
“It is beyond ironic for the former head of the [Democratic Congressional Campaign Committee] to file a lawsuit asking for stricter regulations on reporting political campaign finances and then fail to adhere to existing federal election campaign guidelines," NRCC spokeswoman Andrea Bozek said. "Guess Congressman Van Hollen is putting new meaning to the phrase put your money where your mouth is."
Republican National Committee spokeswoman Kirsten Kukowski said her committee is not involved in the complaint, and therefore, has no comment on the matter.
Van Hollen spokeswoman Bridgett Frey said the pending complaint illustrates how "desperate Republican partisans are to keep a torrent of secret money flowing in political election campaigns."
She added: "This is a good sign that they are afraid that legal efforts to promote transparency and disclosure are making headway."
Both Frey and the three campaign reform groups — the Campaign Legal Center, Democracy 21 and Public Citizen — also argued in nearly identical statements to the Center for Public Integrity that pro bono efforts to fight against the FEC "are not contributions for the purpose of influencing a federal election and are therefore not covered" by laws that govern campaign contributions.
In a joint statement, the Campaign Legal Center, Democracy 21 and Public Citizen further asserted that "Van Hollen has not violated any federal law, nor have we. The objective of the lawsuit in question is to ensure that elections are conducted under regulations that comply with the federal campaign finance laws, not to influence the outcome of any federal election."
They continued: "We are confident that the FEC will dismiss such a complaint if it is filed."
Investigations into complaints filed with the FEC — and their resolution — are often themselves secretive matters. Months, even years may elapse without the FEC acknowleding a complaint's existence. "To protect the interests of those involved in a complaint, the law requires that any commission action ... be kept strictly confidential until the case is resolved," the agency explains.
Within 30 days after the involved parties are notified of a resolution, the FEC publicly releases the outcomes and case files of the investigations. Complainants and respondents are, however, allowed to waive their rights to secrecy and speak publicly about a case if they so choose.
The six-member commission — three Republican appointees, three Democratic appointees — often deadlocks along ideological lines, meaning there's little guarantee any complaint before the body will garner a majority decision.
Van Hollen, a leadingliberalvoice on political disclosure issues who's captured at least 62 percent of votes cast during his past five elections, is likely to win a seventh term in November. He faces what's so far token opposition from Republican businessman David Wallace.
Van Hollen also boasts one of the House's more well-funded campaigns this election cycle, reporting more than $1.8 million cash on hand through March 31, according to campaign finance disclosures.
A payday lending business with ties to Indian tribes successfully dodged allegations for years that it violated state lending laws. But now, a U.S. district judge has dealt the online business a defeat, ruling in a lawsuit that the company broke federal law by deceiving borrowers about how much they’d have to repay.
The Federal Trade Commission, which brought the lawsuit, will now ask U.S. District Court Judge Gloria M. Navarro of Nevada to order the company and others involved to repay borrowers tens of millions of dollars in illegal charges.
The Center for Public Integrity and CBS News exposed in 2011 that Scott Tucker, a convicted felon turned professional race-car driver, started the online lending business, now known as AMG Services of Overland Park, Kan. Tucker turned to three Indian tribes in Oklahoma and Nebraska when the attorney general of Colorado tried to shut his business down.
The Miami and Modoc tribes of Oklahoma and Santee Sioux of Nebraska successfully argued in state courts they have sovereign immunity, so states cannot take their businesses to court, even if operated off the reservation or over the Internet.
However, the FTC in 2012 filed a lawsuit against AMG Services, Tucker and others arguing that tribal sovereign immunity doesn’t apply to the federal courts. Navarro recently sided with the FTC on that point.
On May 28, Navarro ruled further that AMG Services violated the Truth-in-Lending Act by misleading borrowers about the interest they would owe. In a typical case, the company would tell someone borrowing $500 that they would only have to repay $650. But in reality, the company would rely on confusing language deep in the fine print to automatically renew loans borrowers thought they were paying off, the judge ruled. So a $500 loan could actually cost the borrower $1,925.
Navarro noted that the company’s own training material encouraged employees not to explain the true cost of the loan to borrowers.
“I think we should leave out terms like renew and pay down,” a company trainer wrote in an email. “We don’t want to complicate things if we are trying to get them to get a loan.”
“Like any other contract, payday lending contracts must disclose the true cost consumers will pay,” Jessica Rich, head of the FTC’s Bureau of Consumer Protection, said in a statement. “This is especially important because many consumers who take out payday loans calculate the amount they can afford to pay down to the dollar.”
Attorneys for AMG Services did not respond to requests for comment.
Sprint Corp. and T-Mobile USA Inc., which only weeks ago were arguing that the government should increase competition in the wireless market by allocating new airwaves to smaller companies like them, are switching sides and looking to join the giants through a merger.
Sprint’s plan to buy T-Mobile for $32 billion is aimed at making the combined company a more formidable competitor to giants Verizon Communications Inc. and AT&T Inc., which together claim 68 percent of U.S. wireless subscribers, respectively. The purchase of T-Mobile would almost double Sprint’s market share to about 30 percent.
Just last month, T-Mobile and Sprint succeeded in convincing the Federal Communications Commission to ensure that smaller wireless companies had a shot a buying valuable new wireless airwaves by limiting how much Verizon and AT&T can buy at an auction next year.
Now the rules that Sprint and T-Mobile fought for may come back to hurt them. Adding T-Mobile’s spectrum holdings with Sprint’s may put the combined company over the limit that bars it from bidding on the reserved portion of spectrum, which comprises prime frequencies that can travel long distances and penetrate buildings. The Center for Public Integrity reported on the high stakes of the spectrum auction in March.
The Sprint purchase of T-Mobile “certainly would impact the combined company's ability to bid,” Matt Wood, policy director at Free Press, an advocacy group in Washington, D.C., that supports the spectrum limits, said in an email.
Jeff Silva, an independent telecommunications analyst in Washington, D.C., agreed that the merger could make Sprint too big to bid on the reserved frequencies.
“That means they won’t get as much spectrum,” he said.
The purchase would also eliminate T-Mobile, the one company that has put pressure on carriers to lower prices. In the last year T-Mobile has cut prices, eliminated two-year contracts and roaming charges, and offered to pay early termination fees for customers who switch from a competitor. Since the company began offering the promotions in the second quarter of 2013, the number of its subscribers increased 11 percent to 49 million compared with a 3.2 percent growth to 122 million for Verizon and a 7.5 percent increase to 116 million for AT&T during the same period, according to data compiled by Strategy Analytics, a technology consulting firm.
Despite the possibility of less competition, the FCC may be enticed by Sprint to approve the purchase with a sweetener, such as a guarantee that it will spend billions of dollars in the spectrum auction, said Todd O’Boyle, program director for media and democracy at Common Cause, an advocacy group in Washington, D.C., that opposes wireless industry consolidation.
That’s what AT&T did last month when it pledged to spend $9 billion in the auction if the FCC approved its proposed purchase of DirectTV. The promise is aimed directly at FCC Chairman Tom Wheeler, who views the success of the auction as the determining factor on how his chairmanship will be judged, analysts say. And the auction’s success will not be based on whether it promotes competition, but rather how much money is raised, O’Boyle said.
“Wheeler has said over and over again that his mantra is ‘competition, competition, competition,’” O’Boyle said. “But it’s likely that he would be willing to allow less competition if he had a guarantee that the auction would be a success.”
Next year’s spectrum sale, together with a previous auction held this year and another scheduled in November, needs to bring about $30 billion for the FCC to meet the goals Congress set in the law authorizing the sale, telecommunications analysts said. The FCC expects to raise about $11.5 billion from two auctions this year. Add to that AT&T’s promise to spend $9 billion, and the agency can reach a total of $20 billion.
“If Sprint puts a serious $10 billion commitment on the table, you are home free,” O’Boyle said. “Whatever Verizon and other smaller carriers and hedge funds bid on for the remaining spectrum goes straight to the Treasury, and Wheeler can then tell Congress what a great job he did. They will all be happy with him. That kind of promise from Sprint may sway Wheeler to approve the deal.”
The merger, if approved, may cause the FCC to rewrite the auction plan altogether. In the rules it adopted in May, the commission said if there were “a proposed transaction … affecting the top four nationwide providers and their spectrum holdings, we will revisit our decisions here regarding the reserved spectrum provisions.”
Conservative billionaire Charles Koch's eponymous charitable foundation today announced it's giving the United Negro College Fund $25 million to primarily fund thousands of merit-based scholarships.
While the development may come as a shock to some Democrats and liberals, particularly those like Senate Majority Leader Harry Reid who've soughttovilify Charles Koch and brother David as self-centered industrialists bent on buying elections, it's status quo for the elder Koch sibling.
As the Center for Public Integrity reported in March:
In all, two of the six private charitable foundations the Koch brothers control and personally fund combined in 2012 to infuse colleges and universities with more than $12.7 million, according to a Center for Public Integrity analysis of Internal Revenue Service tax filings.
The vast majority of this cash was spread among 163 U.S. colleges and universities — many with reputations for liberal faculty and left-leaning patrons — throughout 41 states and the District of Columbia. It came on top of tens of millions of dollars more Koch foundations have given colleges and universities during the past decade, tax filings show.
Various Koch-backed charitable foundations have also made massive contributions to medicine and the arts as well as sizable grants to a variety of politics- and government-focused outfits.
The Kochs separate network of nonprofit trade associations and "social welfare" nonprofits have pumped hundreds of millions of dollars into issue advertisements and direct advocacy for and against political candidates — activity that continues today at a torrid pace as the nation heads toward congressional elections in November.
In the fall of 2012, two strangers from Africa showed up in Seychelles, an emerald-green archipelago in the Indian Ocean nearly a thousand miles east of Somalia. Unlike Prince William and Kate Middleton and other A-list celebrities who favor Seychelles as a getaway, these visitors didn’t come to enjoy the islands’ natural beauty and luxury accommodations. They were there, they said, to conduct business in Seychelles’ bustling offshore financial center.
They made their way to the offices of Zen Offshore, one of dozens of firms on the islands that set up hard-to-trace “shell companies” for clients around the world. They explained that they represented an individual who served as a “liaison officer between the Zimbabwean government and the rich diamond mines.”
But before they could go further, a Zen Offshore representative cut them off.
“Yep, we don’t want to know that,” he said, chuckling. “If we have knowledge of that, we have to put it forwards.”
The conversation can be quoted in exact detail because the would-be customers weren’t actually emissaries for a corrupt middleman in Africa. They were undercover journalists running a hidden-camera sting for an Al Jazeera television program.
Like most small tax havens, Seychelles has an outsized impact that belies its modest market share, and is a crucial link in the chains of secrecy that drive the wider offshore system.
But unlike many other island havens for dirty money, the Seychelles has resisted international pressure to crackdown on cross-border tax dodging and money laundering. Any by pushing back against organisations like the Organization for Economic Cooperation and Development and other international powers, the Seychelles offshore industry is growing.
Read the full story on ICIJ.org.
Second in a three-part series.
Four years ago, Medicare auditors came to an alarming conclusion: the federal government shouldn’t have paid a half-dozen insurance plans hundreds of millions of dollars to treat seniors in especially poor health.
The findings signaled that billing errors could be deeply rooted within private Medicare Advantage plans — which contract with the federal government to care for nearly 16 million elderly Americans — and that these abuses could be wasting taxpayer dollars at a ferocious clip.
Medicare expects to pay higher rates for legitimately sicker people who may require expensive care. But the auditors concluded that all six health plans they visited couldn’t justify the money they took in for 40 percent or more of their patients. That triggered whopping overpayments which auditors pegged at nearly $650 million for 2007 alone — just for those six plans.
One major Texas health plan was paid to care for a man it said had brain cancer. But his medical file showed he was treated for an enlarged prostate, a common ailment that didn’t merit any added payment, auditors wrote.
In Arizona, a health plan collected thousands of dollars from Medicare to treat congestive heart failure in a patient seen for knee pain, according to auditors. In Pennsylvania, a person treated for blurry vision was charted as having serious heart disease.
It took years for the Department of Health and Human Services (HHS) inspector general to publish those findings, and government officials have yet to pry back more than a tiny fraction of the disputed money, the Center for Public Integrity has learned.
And despite the bundle of taxpayer dollars on the line, the HHS inspector general didn’t do any more audits, and decided in 2013 to scrap similar future reviews as part of a budget cut.
Robert Trusiak, a former Department of Justice prosecutor, said that “at the very least” federal officials should have demanded refunds from the health plans and lowered the boom on any plan caught “gaming” Medicare.
“The dollars here are huge,” he said.
The money’s not likely to be returned. The Center for Public Integrity’s yearlong investigation of the Medicare Advantage industry found that federal officials over the past decade have missed multiple opportunities to corral tens of billions of dollars in overcharges and other billing errors tied to a complex payment formula known as a “risk score.”
Health plans collect medical data that is used to compute the health risks for each patient enrolled, but there’s been little to deter plans from jacking up the resulting “risk scores.” When risk scores overstate a patient’s illness, the plans make more money from Medicare. There’s little chance patients or the public will find out when this happens because federal officials have kept most audit results confidential.
Washington health-care lawyer Thomas C. Hill said insiders have known of “significant problems” with Medicare Advantage billing practices for years. But they’ve received scant public notice because neither industry nor government has much to gain by letting the secrets spill out, he said.
“The government isn’t in the best light when there’s that high an error rate,” Hill said. “They are reluctant to expose that to the world.”
Officials from the HHS IGs office defended the findings in the half dozen audits, but declined to comment beyond that. Officials from the Centers for Medicare and Medicaid Services (CMS), the HHS agency that actually runs the program, declined to comment at all, despite numerous requests.
Medicare unveiled risk scores in 2004. Congress wanted to systematically pay more for people with chronic or costly diseases, such as cancer and diabetes with complications, and less for those in robust health. Lawmakers also hoped to cut Medicare waste and billing abuse that can occur when doctors and hospitals are paid for each and every thing they do, a practice known as “fee for service.” That can give them a financial incentive to do more to earn more.
Medicare adjusts the risk scores used in the Medicare Advantage program based on more than 70 conditions and their severity. That can mean thousands of extra dollars over the course of a year to treat a single patient.
Take depression. Mild and temporary feelings of sadness and hopelessness don’t increase Medicare payments. But if that depression and other symptoms linger for at least two weeks it may be classified as “major depressive disorder” and generate hundreds of dollars in payments to the Medicare Advantage plan to treat that patient.
Patients never know how their health is rated because neither the health plan nor Medicare shares risk scores with them — and the process itself is so arcane and secretive that it remains unfathomable to many health professionals.
Health plans that cheat can face civil or criminal penalties, but federal officials largely trust them to collect medical data for risk scores accurately for the millions of seniors they sign up.
The Centers for Medicare and Medicaid Services conducts its own periodic audits — separate from the HHS IG efforts — known as Risk Adjustment Data Validation, or RADVs. But CMS has yet to impose major penalties when it detects inflated risk scores in those audits, though it may do so for the first time later this year (see sidebar). Still, CMS moves so sluggishly that it will likely take a decade or more to review hundreds of current Medicare Advantage contracts, records show.
CMS is but one part of the giant Health and Human Services Department. The HHS Office of Inspector General is supposed to backstop CMS and act as a watchdog to make sure that taxpayer dollars aren’t misspent. But CMS and the HHS OIG are in conflict over how best to conduct these audits. Neither would comment on the process.
Meanwhile, taxpayer losses pile up by the billions.
Based on its own sampling of data from health plans, CMS has estimated that faulty risk scores triggered nearly $70 billion in what officials deemed “improper” payments to Medicare Advantage plans from 2008 through 2013. Most were overcharges sparked by health plans “upcoding” — overstating how sick their patients were — or failing to document that patients actually had diseases the plans were paid to treat, according to CMS. Overall, Medicare paid the health plans about $135 billion in 2013 alone.
But which health plans consistently have been overpaid — and by how much — remains under wraps. While CMS audits have detected billing errors in 30 percent or more of the patient files reviewed, the agency cloaks the identities of health plans audited and the results. CMS officials declined a Center for Public Integrity request to make its audits public or discuss the process. Last month the Center sued in an effort to obtain those audits.
The CMS policy means that those six audits by the HHS inspector general — which does publish its findings — stand as the only public account detailing Medicare Advantage billing practices over the past decade.
Those inspector general’s audits began late in 2008. Drafts weren’t presented to the health plans until two years later. The eye-popping findings didn’t begin to dribble out until 2012 — even though Medicare paid the health plans hundreds of billions of dollars in the interim as enrollment began to surge.
Dr. Todd M. Husty, a Florida physician and medical billing consultant, said he was “shocked” that the HHS inspector general failed to step up their audits given the early findings. “They could have cleaned this up four years ago,” he said. The health plans “were kind of sailing along not looking at how accurate their risk scores were because nobody ever dinged them.”
Patrick Burns, a co-director of Taxpayers Against Fraud, a Washington-based group, said that only stiff penalties will protect taxpayers from getting fleeced.
“The billing system has failed and needs to be rejiggered,” he said, adding: “Even when we catch it, nobody gets spanked.”
HHS Inspector General’s Office spokesman Donald White wouldn’t comment on the audits except to say that the office “stands by” its findings.
White conceded that further risk-scoring audits by the IG’s office are “indefinitely on hold” because of the expense of paying medical coders to scrutinize patient files. Late last year, the office told Congress it would need to cut back on its workload to save money.
That decision leaves CMS as the only government entity watching over Medicare Advantage billing, and its findings are not made public.
The industry denies that the health plans overbill and note that they have worked with federal officials to revamp record-keeping practices.
“Medicare Advantage plans are working hard to comply with CMS requirements and we have every reason to believe these activities will be effective,” said Clare Krusing, director of communications for America’s Health Insurance Plans, the industry trade group.
Under the traditional Medicare program, launched in 1966, the government pays doctors and other medical professionals according to the fee-for-service concept.
Congress first carved out a significant role for private health plans in Medicare in the 1980s.
Lawmakers decided Medicare would pay plans a monthly rate for each person they enrolled. They expected that would save money by curbing waste and unnecessary medical care that can occur in fee-for-service Medicare. Congress also reasoned that removing the incentive to overbill would help control fraud. Many lawmakers also favored a medical insurance option for seniors run by the private sector.
In 2003, Congress tried to boost the program’s fortunes by renaming it Medicare Advantage and phasing in risk-based payments to the private plans, starting in 2004. The expectation was that health plans wouldn’t shy away from taking sicker patients so long as they were paid fairly.
Medicare tried to predict the costs of treating a range of diseases, including those likely to require expensive treatment and adjusted payments upward for them. However, government officials paid little attention to warnings from some researchers that the strategy would spawn a whole new form of costly billing abuse that could prove immensely difficult to stamp out, government records reveal.
Quite simply: as Medicare began paying more for “sicker” patients, Medicare Advantage health plans began reporting their patients were sicker than the Medicare population as a whole.
Risk scores rose twice as fast for people who joined a Medicare health plan as for those who didn’t. A July 2004 CMS study of nine plans found inflated risk scores for a third or more of patients. A second study done for CMS opined that the upward trajectory could most logically be explained by Medicare Advantage plans chasing dollars, not by any decline in patients’ health.
In February 2008, CMS officials amplified that point, writing that it was not “reasonable to assume” that people in Medicare Advantage got sicker faster than seniors who chose standard Medicare coverage.
Since then, dozens of academic papers and government reports have focused on the rising costs of the Medicare Advantage option. Some cite lax government oversight of risk scores, including persistent “upcoding,” as the main culprit.
The Center for Public Integrity’s analysis of Medicare Advantage plan data from 2007 through 2011 confirmed that risk scores rose more than twice as fast as the government-estimated average for people in standard Medicare in some plans in at least 1,000 counties nationwide.
CMS, starting in 2010, cut risk scores across the board, reducing payment rates to Medicare Advantage. But critics argue that even as the health insurance industry launches an intense lobbying campaign to shelve sharper rate cuts, it remains overpaid.
“That’s a systematic problem that has to be addressed,” said Dr. Robert Berenson, a former member of a panel that advises Congress on Medicare spending. He added that the method of payment leaves “a lot of room for bad actors.”
While HHS inspector general auditors sat on their findings for years, the industry was pushing back hard behind the scenes, trying to discredit the findings or keep them hidden, records show.
Excellus, a Rochester, N.Y.-based health plan attacked the auditors’ methodology in a December 2010 letter to an Inspector General’s Office official.
The health plan said the auditors’ finding that it was overpaid by about $41.6 million in 2007 was “inflated and based on flawed data.” The plan also blamed any deficiencies in record keeping on its doctors. An Excellus spokesman told the Center for Public Integrity that the health plan settled the matter in December 2013 by paying the government $157,777. “[The government] recognizes this is an industry-wide issue,” said the Excellus statement, “and it is adjusting its audit approach accordingly, while continuing to encourage health plans to work with the provider community to improve documentation of claims and diagnoses.”
PacifiCare, a division of insurance titan UnitedHealth Group, the nation’s largest Medicare Advantage contractor, hotly disputed audit findings for its plans in California and Texas.
Auditors had deemed the risk scores for 45 of 100 California patients “invalid” because medical records didn’t verify they had been treated for the conditions claimed. One patient who had knee replacement surgery was listed as having blood poisoning. While the medical chart confirmed the operation, no care for blood poisoning was evident.
UnitedHealth Group fired back in a September 2010 letter that HHS had “exceeded its authority.” In a second letter that year, the company demanded that the results be kept confidential while executives contested the audit finding that the plans could owe the government more than $539 million for 2007.
In the end, the inspector general’s review of just those six plans estimated that Medicare overpaid a total of nearly $650 million just for 2007, the only year studied. The inspector general lacked the power to demand refunds, but it recommended that CMS work out how much the health plans should return to the federal treasury. The inspector general did not pursue a broader investigation into the high error rates — and still hasn’t. And CMS sided with the industry and all but ignored the inspector general’s recommendations.
The health plans contend that the audit process can be subjective and unwieldy because they must scramble to track down records of medical visits years after they occurred. Sometimes, doctors retire or move, making it hard to locate patient files, they say.
Several point out that they shouldn’t be penalized when doctors fail to keep adequate records. They also argue that no billing formula can fully predict who will require expensive medical care and they can lose money when risk-based payments don’t cover their costs.
Cigna Healthcare of Arizona, for example, disputed the audit finding that it was overpaid by more than $23 million for 2007. Calling the audit standards “fatally flawed,” Cigna said it actually lost about $800,000 that year treating the 100 patients whose files auditors sampled.
The industry also argues that just because medical auditors can’t find a record of a disease doesn’t mean patients don’t have it, or that the condition isn’t affecting their health and treatment plan. Doctors are trained to detail what they did during an office visit, but may not dwell on all the underlying medical conditions that impact treatment decisions, they say.
HHS IG auditors counter that they can only rely on the medical record presented to them. If that record fails to substantiate a specific diagnosis and treatment, then they count it as an overpayment and want a refund. Under their contracts with the government, health plans are responsible for assuring these records are accurate.
James Cosgrove, who directs the health care division of the Government Accountability Office, the watchdog arm of Congress, said that federal health officials have yet to answer a basic question: did the health plan fail to provide the service or did it simply not document it properly?
“That’s something we would be very interested in looking at,” Cosgrove said.
While the industry clashed with the HHS Inspector General’s Office, it found a sympathetic ear at CMS. Rather than hammer the health plans for chronic billing blunders, the agency has mostly shrugged them off or settled for recouping minimal sums.
In February 2012, CMS officials decided to forgive overpayments to Medicare health plans made from 2008 through 2010. The surprise decision brought cheers to corporate boardrooms, according to John Gorman, a former federal health official who now advises Medicare Advantage plans.
Gorman said CMS decided that “the sins of the past are absolved.”
“They didn’t have to do that, and we, hundreds of CFOs and bankers up and down Wall Street and Madison Avenue, are thankful they did,” Gorman added.
The CMS decision certainly spelled relief for Coventry Health Care in Bethesda, Maryland, which operates in more than a dozen states and is owned by insurance giant Aetna. Within a week of the decision, the company freed up $133 million it had held in reserves to cover any potential liability from flawed risk scoring, according to its financial statements.
Humana Inc., which disclosed to securities regulators that it was the subject of six CMS payment audits for 2007, declined to say how much the audits cost the company, but noted the results were not significant financially.
CMS ignored the HHS inspector general’s finding that the six health plans it audited had been overpaid by an estimated $650 million for 2007. CMS settled five of the six audits for a total repayment of just over $1.3 million, the Center for Public Integrity found.
Further, CMS decided not to chase after overcharges from 2008 through 2010 even though the agency estimated through sampling that it made more than $32 billion in “improper” payments to Medicare Advantage plans over those three years. CMS did not explain its reasoning.
CMS took that stance just a month after congressional auditors criticized the agency for failing to crack down on Medicare Advantage plans that overbilled.
CMS officials also decided in 2012 to conduct only 30 of its own confidential RADV overpayment audits each year. That’s less than a third the number of audits the agency said it would do in 2009. At that time, the Obama administration had promised to ramp up efforts to recoup overpayments to help fund the Affordable Care Act.
At that rate, it would take CMS more than 15 years to review the hundreds of Medicare Advantage contracts now in force.
CMS also helped out the industry in other ways likely to limit recoveries. The agency agreed to write off a portion of overpayments to account for doctors’ coding differences and mistakes, a concession insiders said was a big break for the health plans.
CMS officials also declared an amnesty period for voluntarily disclosing improper risk scores for which plans had been overpaid, much like a library suspending fines for a short period for the return of overdue books.
Trusiak, the former federal prosecutor, said CMS officials yielded too much ground to the industry and that these concessions will “restrict the amount of money recouped” by taxpayers.
Still, it’s not clear that the health plans will continue to slip the hook.
After years of delays and deliberation, CMS now intends to “extrapolate” its RADV audit findings for the first time later this year. Auditors will presume that the percentage of billing errors they find in a sampling of 200 patients exists throughout a plan’s full membership. That could potentially cost a large health plan millions of dollars or more.
Former CMS official Thomas E. Hutchinson, who helped design the RADV audit process and now advises health plans, said that small penalties weren’t taken seriously by the industry. In some cases, he said, it cost health plans more to retrieve medical records to buttress their billing than accepting the small CMS penalty for failing to do so.
Now, he said, health plans could face a “nuclear option” if they can’t justify their billings. “We either have too little a stick or too big a stick,” Hutchinson said.
CMS officials have said they expect to recover $370 million in overpayments as a result of their 30 audits that start this year. Though that’s significantly below earlier predictions, it still caught the industry’s attention.
Both Humana and UnitedHealth Group, the nation’s two biggest Medicare Advantage plans, have told investors they could be ordered to cough up significant refunds, according to Securities and Exchange Commission filings. Humana reported to the SEC in November that “certain” of its contracts would be audited. It offered no details. Other plans also warned investors of a “material effect” on their finances, the SEC filings show.
In January, CMS threw another curve by proposing regulations that would require health plans to return overpayments they had received dating back six years. CMS did not explain how that proposal was consistent with its earlier decision to forgive overpayments from some past years.
The regulations also clear the way for other divisions of HHS — presumably the Inspector General’s Office — to conduct more Medicare Advantage audits.
Whether the inspector general’s office will actually take up the challenge is anyone’s guess. It has already gone on record saying it lacks the funding to undertake comprehensive risk score audits, which it has set as a priority every year since 2008. In a video presentation outlining their investigative priorities for 2014, OIG officials made no mention of Medicare Advantage.
The inspector general’s audits are far more threatening to the industry than those done by CMS. The inspector general’s audits are widely distributed and can draw media attention as well as demands for reform in Congress.
Absent the inspector general’s review, it’s doubtful the public will ever get a full accounting of how accurately individual Medicare Advantage plans spend billions of tax dollars.
Burns, of the taxpayer rights group, said federal officials need to get serious about protecting taxpayers and keep from being “outgamed” by the health care industry.
“You need an electric fence for these cows,” he said. “As soon as you touch it you get nailed.”