Yes, they are innocent until proven guilty. But it doesn’t look good for Wellcare, the Florida-based Medicaid and Medicare health plan.
And what’s bad for WellCare may be bad for private insurers.
While it is unclear what is behind the Federal and state investigation of WellCare, whenever a couple hundred agents show up unannounced, it is likely not good news.
We do know there have been some newsworthy developments in WellCare’s executive suite of late. TheStreet.com reports that a former member of WellCare’s board, Andrew Agwunobi, is now the top health care regulator for the State of Florida. Before resigning his directorship, Agwunobi received a million dollars in stock options as a parting gift from Wellcare for his six months’ service on their board. The newly-appointed regulator was treated much better than two other execs who departed around the same time, but did not move on to regulatory positions (ibid).
WellCare’s CEO also appointed his cousin to the audit committee, and actually refers to the gentleman as an “independent” director.
Last week the SEC joined the investigation, and Connecticut regulators threatened action against the company for its failure to comply with requirements to fix erroneous messages to providers. (In fairness, my state’s attorney general is notoriously fond of the ‘big announcement’)
What does this mean for you?
Regardless of the outcome of the Federal probe, this is yet more ammunition for single-payer advocates, more support for their claim that the for-profit world cannot be trusted to deliver health care services.
“And what’s bad for WellCare may be bad for private insurers.”
Y’know, Joe, if this is bad for private insurers, doesn’t that mean that all private businesses are vulnerable to similar suspicion?
I put it to you Joe – if this is bad for all private businesses, isn’t that an indictment of the entire American free enterprise system?
Well . . .
I don’t know about the rest of you, but I won’t sit here quietly while Mr. Paduda trashes the United States of America!
[Please now imagine me striding away from my computer, humming the Star-Spangled Banner]
I note with interest that most of these fraud scandals seem to involve the taxpayer funded programs (Medicare and Medicaid) as opposed to attempts to defraud private insurers. Moreover, the 2005 series by the New York Times about (mostly) provider fraud in the New York Medicaid program suggested that as much as 40% of NY’s Medicaid dollars could be lost to fraud. The NY program now costs approximately $50 billion per year (including the federal share) which is about 16% of Medicaid spending for the entire country even though NY accounts for less than 7% of the national population.
Perhaps both Medicare and Medicaid, which love to brag about their efficiency and low administrative costs, might be wise to invest in more robust fraud mitigation systems. Taxpayers would actually benefit from higher administrative costs if reduced losses from fraud more than paid for the investment.
Barry, you are exactly right about the need for the feds to ramp up their fraud units. They know what fraud is, they know how to find it, they know how to prosecute it. Problem is, they don’t have the staff to chase after more than a small fraction of fraudulent activity. Naturally they pursue the largest cases. And, besides, the criminal justice system is so clogged that none but the most egregious cases will be prosecuted anyway. (This latter issue is a problem for private insurers, too.)
All helps to explain why the Medicare and Medicaid fraud prosecutions we do hear about are so serious.
Odds against positive change at Medicare or Medicaid? I think less than 50-50 and I doubt the odds change under any universal health insurance system.