The HMO Black Box

Our state Senator Sean Nienow introduced 9 bills last session to resolve the problem of lack of transparency and accountability in the administration of Medicaid and Prepaid Medical Assistance Programs (PMAP) by the HMOs in Minnesota. Currently there is very little independent oversight of these programs and some say millions of dollars of tax payer revenue could be misappropriated due to this lack of oversight. Where is the roughly 3 billion dollars per year that is reimbursed to the four HMO providers going? No one really knows because no one can look into the HMOs proverbial black box.

In the late 1990's the Minnesota Legislature decided to try administering public health care through the HMOs thinking that these private medical insurance companies could do it more economically than the state system. The HMOs were forced to participate and it was guaranteed that they would get reimbursed for their expenses each year plus at least a 2% profit. There is no competition in the system and whatever the HMOs charge the state pays. There is no cap on the maximum profit they can take from the program and there is no clearly defined terms for administration costs. Serious problems exist here and Minnesota could be losing millions in revenue.

Minnesota's Department of Human Services is charged with the oversight of this program through the HMOs and at the federal level the Centers for Medicaid and Medicare Services oversees and assists the states in running the program. This might be adequate oversight except for one problem. The HMOs self audit and self report. They may claim that they give hundreds of reports each year on the financial records of the program but no one verifies the data. There is a firm that assists the DHS in oversight (Noridian and Milman) however this firm admits that they too just accept the data given them by the HMO's with no independent audit.

Senator Nienow and others are asking why are the HMOs reporting high profits on the public administered programs, much higher than on their commercial insurance? Why do the HMO's have over 2 times the required reserves in the bank? Why is the cost of running the programs through the HMOs higher than the cost of fee-for-service programs still handled by the DHS when the most expensive care, such as that of the disabled is handled by the fee-for-service side?

This issue has bipartisan support yet these bills did not even get a hearing last session, why? Could it be that there are 27 registered lobbyists pressuring legislators to drop it? Is it because Gov. Dayton signed an executive order limiting the HMOs to 1% profit for year 2011? Maybe the donation of 30 million dollars by HMO UCare back to the DHS had some influence. Senator Nienow suggested the executive order is meaningless because the HMOs could hide profits in administrative costs and no one would know it. Nienow also questions why a private insurance company would “donate” 30 million dollars, no small amount, to the state. Could it be that the HMOs are nervous that questions are being asked and want to diffuse the inquiry?

Conservatives have much to say about the efficacy of public health care plans and the constitutionality and sustainability of federal programs such as Medicare and Medicaid. One thing everyone can agree on is that if the government is going to take tax payers money and spend it on these programs they better spend it wisely. Sadly, there is no way to verify if that is happening without independent audits. Health care is about one third of the state budget. Some say the budget debate and government shut down could have been avoided if the legislature would have tackled this issue.

Senator Nienow is leading the effort to bring badly needed transparency and accountability to the administration of PMAP by the HMOs. Residents of Minnesota should stand with the senator against the lobbyists and the HMOs who, while at first forced to participate, may have made this into a low risk cash cow, and demand that these bills get a hearing.

It's the tax payers money. They have a right to know how it is being spent and the legislature has the responsibility to pop the lid of the HMO Black Box.

Senator Nienow will be on the Sue Jeffers show discussing this issue on Saturday September 19th between 4-7 PM. More information can also be found by going to the Face Book page, The HMO Black Box at https://www.facebook.com/pages/The-HMO-Black-Box/228426590543415 and on the Chisago GOP website activists page.