The focus of the first article in this series was on Centene’s current – and anticipated – role within NHS England’s Integrated Care Systems (ICSs) programme. While brief mention was made of the corporation’s background, this article will examine it more fully, notably as the market leader within US Medicaid Managed Care (MMC), the private sector administration of state services for the poor, pregnant women, elderly adults and people with disabilities. It also provides care for 1 in every 3 children. Given the increasingly evident parallels between ICSs and MMC, it is worth looking at what the English public can expect, notably as most investigations into the MMC market reveal a system plumbing new depths of corrupt and exploitative behaviour.
LARGEST
As discussed in the previous article, in 2015 Centene was invited by NHSE and Nottingham healthcare leaders to design its ICS. In order to offset privatization fears the corporation was presented to the public as a tech expert offering data analysis to help integrate services, but in internal documents this was expanded upon. According to Dr Stephen Shortt, the Nottingham ICS lead, it was a journey into unknown territory and “to give us the best chance of success we had to work with people who have real life experience of doing this on a scale and at a pace that hasn’t been achieved in England before”. Centene, as the “largest and best-in-class US Medicaid Managed Care company” was seen as the ideal partner.
The first part of this statement is indisputable. Indeed, the corporation’s growth has been remarkable and built almost entirely on managing public programmes, particularly Medicaid. While the Affordable Care Act (ACA) of 2010 greatly expanded the number of people eligible for receipt of these services, almost all were channelled to MMC-owned plans which claimed they could save money by removing service duplication and unnecessary use of hospital provision as well as an emphasis on prevention, IT and integration of services. Since the ACA Centene’s revenues have grown enormously from $5.2bn in 2011 to $111bn by the end of 2020 with the last figure itself representing a near 50% leap from the previous year, largely owing to the purchase of a leading competitor, WellCare. As Centene’s CEO, Michael Neidorff, himself the highest paid healthcare executive in the US with annual compensation of $26m, told Forbes magazine, “we have an insatiable appetite” for further mergers and acquisitions.
BEST-IN-CLASS
But how are such figures achieved? According to the LA Times, Medicaid “is rarely associated with getting rich. The patients are poor, the budgets tight and payments to doctors often paltry”. However, the newspaper reported in November 2017 that MMC companies in California made $5.4bn in profits from 2014-16 and that in this period “a unit of Centene’s raked in $1.1bn profits”, prompting a health professor at the University of Southern California to say, “these profits are gigantic – wow”.
A variety of interrelated mechanisms can be identified, including: (a) reducing the quality of care; (b) control of the regulatory environment, through for example, political lobbying, donations and the revolving door of state and corporate actors; (c) failure to comply with regulations; (d) reduced reimbursement rates to medical providers; (e) minimizing provider networks; (f) exclusionary contract language, and (g) reducing and/or denying care, particularly for the most expensive patients.
In Centene’s case, the examples could fill a book.
• In California, Medicaid companies made $5.4bn in profits from 2014-16. Notably 6 of the 12 worst performing health plans in the state were run by Centene, and 7 of its 10 regional health plans scored below average on quality. The company’s San Joaquin health plan ranked last at 31%; the highest performing Kaiser Permanente plan scored 92%.
• In Kansas there have been multiple allegations of improperly denied claims, often with no explanation, as well as inconsistent and inaccurate payments to providers.
• Patients who bought policies from Centene filed a federal lawsuit in Washington state claiming the company did not provide adequate access to doctors. It also said that many doctors will not accept patients covered by the corporation because of its refusal to pay legitimate claims. According to the lawsuit, Centene targets low-income customers who qualify for substantial government subsidies “while simultaneously providing coverage well below what is required by law and by its policies”.
• In Mississippi and Ohio, the corporation gave large donations to the State governors. It is also now under investigation in both states for allegedly obscuring and overcharging Medicaid by millions of dollars in drug costs. The Ohio Attorney General said; “Corporate greed has led Centene and its wholly owned subsidiaries to fleece taxpayers out of millions”.
• Also in Ohio, Centene was the subject of four increasingly larger individual noncompliance sanctions — each between $1 million to $4 million — for failure to meet minimum performance standards for four consecutive years beginning in 2013.
• The company paid Kentucky $7.5 million to settle a breach of contract lawsuit alleging it wrongfully terminated its Medicaid agreement and which cost the state $28 million to $40 million. It also agreed to pay $4.5 million to settle a lawsuit alleging it had failed to pay nurses overtime in multiple states, including Illinois, Ohio and Missouri.
• Iowa health officials withheld $44 million from Centene under the state’s privatized Medicaid programme, pointing to unresolved issues with payments to health providers as the corporation had not paid more than 100,000 claims that providers had submitted. The state’s action “was the first time Iowa’s Health Department has withheld payment to a Medicaid insurer”.
• In Illinois, Centene’s subsidiary, IlliniCare, “slashed payments for medical equipment by as much as 50% in 2019, a move that critics said was making it difficult for people to obtain life-sustaining devices”.
‘PAIN & PROFIT’
The most comprehensive, and the most damning, investigation into MMC was however carried out by reporters from the Dallas Morning News in Texas and published in a series of 8 articles beginning in June 2018 and entitled ‘Pain & Profit’.
As could be expected, the conservative state had embraced the shift to private management, and by 2018 over 90% of the Medicaid population were enrolled in private plans offered by 5 major healthcare companies, including Cigna, UnitedHealth, and the largest, Superior Health Plan, owned by Centene. According to the News, the deal was that the companies “would save taxpayers millions while delivering better healthcare in exchange for a small profit”. However, the articles proved so unsettling that within days of publication the state’s Health Commission convened an emergency meeting – they normally meet once a year – to deliberate on the findings.
These identified a revolving door of legislators and company personnel acting in concert to award contracts, rewrite medical assessment rules, frustrate appeals, reduce fines, and cover up often dangerously low levels of care. Of perhaps even more concern for the authorities was the fact that the companies were reducing or denying care to those most in need of expensive medication, medical equipment, and hours of nursing provision. Cutting such services offered the greatest opportunity for profit, and indeed the articles found that it was the sickest patients, especially medically fragile children, which brought in the most profit on a per patient basis to the companies, netting them more than $145 million in 2017.
While other companies were mentioned in the series, Centene featured most prominently, both as the largest Medicaid insurer in the state but also owing to the scale of its malpractice. The articles also offered clear descriptions of the effect privatizing Medicaid had on individual patients and in both the following examples the patients came under Centene’s care.
The first was of twin 1-year old foster children with severe disabilities and requiring round the clock care, particularly as one needed 2 to 7 tracheal suctions per hour. Centene said this level of care wasn’t medically necessary and changed the authorization for 2 nurses on a 24-hour shift to one nurse for both babies for only 12 hours. During a break in care one child pulled out his trach and was left brain damaged.
Such reductions in the level of care can save the company as much as $500 per day, and the News reported a paediatric specialist who treats medically fragile children as saying, “I believe this particular managed care organization is putting children’s lives in danger to make a profit”.
The second concerned a 38-year old quadriplegic who had been promised enough help to live at home. However, Centene would not provide the hydraulic lift necessary for movement to the shower and the bathroom, so she remained in bed, nor would it provide the special mattress to protect her skin from life-threatening bed sores. Then, the company reduced her care giver hours from 12 to 7: “alone for 17 hours a day, unable to move, in pain, the patient began to plan her suicide”. Centene was collecting “thousands of dollars a month to provide everything she needed to live at home, but she didn’t receive the equipment”.
The articles subsequently won at least two national prizes for public service journalism. The Bingham Prize judges said they “were struck by the injustice of the offenses and the time taken to identify victims who otherwise would have remained hidden, voiceless and sacrificed for profit”, and one judge added; “I’m not ashamed to say I wept in anger and despair as I read about the challenges families and individuals faced to get the care they needed to live or, quite literally, to breathe”.
CONCLUSION
It is worth spelling out. This is the corporation whose UK CEO has just become Boris Johnson’s health supremo and has designed at least two and perhaps several more of England’s regional-scale ICSs. It aims to incorporate itself as a for-profit, Managed Care insurer at the heart of these ICSs, administering public funds, negotiating with providers, and deciding which services will be available to patients. If it can save money by cutting or refusing care it will keep a sizeable amount of that money, and in order to do so it will cut as much care as it can. And if Texas, Iowa, Kentucky, or any of the other US states are anything to go by, it will be ruthless – irrespective of the client base.
As Greg Dropkin points out, a contract notice following Centene’s design of the Nottingham ICS makes it clear that NHSE and local leaders knew that Clinical Commissioning Groups’ shelf life was limited and that there was a built-in place for an insurance middleman . As the notice says: “The implementation of the ICS will involve a variation to the contract and may involve the transfer of the contract to another Provider or the Care Integrator in the place of the CCG”. The word ‘may’ is disingenuous. A corporation of Centene’s size and ambition is not going to be content with a design role and it is no coincidence that CCGs are being disbanded as ICSs approach legal status.
In 10 years, Centene’s revenues have grown from $5bn to over $110bn primarily by exploiting the most vulnerable groups in US society. It is now at the heart of the UK government and aims to redesign the English NHS. The threat of a takeover of a number of GP surgeries – while important – is very much of secondary concern.
References
- It is worth mentioning that 83% of poor children and 48% of people with disabilities are dependent on Medicaid for healthcare services.
- Nottingham West CCG, ‘Combined meeting of Nottingham West CCG Clinical Development Committee (CDC) and Practice Commissioning Group (PCG)’, 7 December 2017. https://www.nottinghamwestccg.nhs.uk/media/2243/governing-body-papers-combined-25-january-2018compressed.pdf
- Under the Affordable Care Act, Medicaid coverage was expanded to all individuals under age 65 with incomes up to 138% of the federal poverty level, subject to the States’ elections. The numbers covered grew from $380bn in 2009, to over $600bn in 2020, and is now the nation’s
largest public health programme. The scale of private outsourcing, according to many commentators, approaches Pentagon levels. - https://www.macroaxis.com/financial-statements/CNC/Revenues
- In 2010 this figure was $6.1m.
- https://www.forbes.com/sites/brucejapsen/2020/02/05/centenes-insatiable-appetite-for-deals-remains-after-wellcare-buy/?sh=47d6829f6731
- Nearly one in five Americans, 74 million people, are on Medicaid. For states, it is the biggest source of federal funding and the second-largest budget item, behind education. In total, children comprise roughly half of Medicaid recipients. 35.7 million children were
enrolled in either Medicaid or CHIP at the beginning of 2018. This means that one-third of American children are on Medicaid, and half of all births in the country are paid for by the program. - https://www.latimes.com/business/la-fi-medicaid-insurance-profits-20171101-story.html
- Often called ‘rationing by inconvenience’ it means placing administrative barriers in the way of healthcare services: “that of slowing and controlling the use of services and payment for services by impeding, inconveniencing, and confusing providers and consumers alike”.
See, for example: https://pnhp.org/2010/08/06/rationing-by-inconvenience/ - https://www.latimes.com/business/la-fi-medicaid-insurance-profits-20171101-story.html
- https://www.inthepublicinterest.org/wp-content/uploads/ITPI_PrivatizingVAMedicaid_March2018.pdf
- https://www.nytimes.com/2018/01/11/health/centene-health-insurance-lawsuit.html
- https://www.djournal.com/news/state-news/mississippi-started-investigating-its-largest-medicaid-contractor-2-years-ago/article_bc5ab565-b03e-5053-9805-e799975d82e8.html
- https://eu.desmoinesregister.com/story/news/investigations/2018/07/01/iowa-new-private-medicaid-company-troubled-past-centene-millions-dollars-penalties/637740002/
- Ibid.
- https://eu.desmoinesregister.com/story/news/health/2020/01/03/health-medicaid-department-human-services-withholds-money-insurance-provider-iowa-total-care/2807411001/
- https://eu.desmoinesregister.com/story/news/investigations/2018/07/01/iowa-new-private-medicaid-company-troubled-past-centene-millions-dollars-penalties/637740002/
- The Dallas Morning News articles are unavailable in Europe. However, a very useful summary is offered by: https://claudepeppercenter.fsu.edu/side-posts/dallas-morning-news-pain-and-profit-briefing-by-the-claude-pepper-center/
- See comments section in: https://sochealth.co.uk/2021/05/10/centene-the-real-agenda/