Wednesday, November 15, 2006

Medicaid HMOs: Dump 'Em

Every wonder how Medicaid HMO's like WellCare, Centene Corporation, Molina Healthcare and Amerigroup Corporation can make so much money? Me too. But their profits have been so impressive that they're "giving back" to their communities and to politicians, even when most of their clients can't afford health care. From this morning's Wall Street Journal:
Centene last year was the biggest donor for a $9.5 million renovation of an arts building in St. Louis, now called the Centene Center for Arts and Education, according to a spokeswoman for the center. The company paid $200,000 last year for the naming rights of a minor-league baseball stadium in Montana, where Centene employs 100 claims processors but doesn't have Medicaid clients. Centene also pledged $400,000 this year to the school district in Clayton, Mo., where the company has its headquarters, to rename the district's stadium.
Could it possibly be because they are not health care insurance providers but health care insurance deniers? After all, Medicaid HMOs, like other HMOs, seek to save money by eliminating unnecessary care and paying for preventive treatments. But who is deciding what amounts to "unnecessary care?"
Kuldeep Singh, an internist in Valdosta, Ga., says that when Georgia began to move more than a million Medicaid recipients into HMOs this year, he suddenly faced hurdles not imposed by regular Medicaid. Recently, he says, one of his assistants had to wait on hold to get approval from WellCare for a hospital chest X-ray on a patient suspected of having pneumonia. "It was ridiculous," says Dr. Singh. A spokesman for WellCare says it sometimes requires such approval because hospital-based X-rays cost two to three times as much as those done in a doctor's office or imaging center.
Oh, I get it, take a sick, coughing person from a hospital to a doc-in-the-box. Brilliant, just brilliant. At least our state has caught on:
In Illinois, the state and the Justice Department asserted in a lawsuit that Amerigroup spent only $131 million on medical care from 2000 to 2004 despite taking in $243 million from the state. The lawsuit accused Amerigroup of fraudulently trying to exclude pregnant and sick patients to reduce its medical costs. A jury in Illinois state court agreed last month, finding Amerigroup liable to the government for $144 million. Internal Amerigroup emails filed in court show managers contemplated disciplinary action for employees who signed up women in the third trimester.
It doesn't take a rocket scientist to figure out these guys are bilking our health care system. It's time to dump 'em.

Maybe then they'll get the message: patients come first, before communities and before politicians.



Dreaming again said...

Oklahoma had a HMO medicaid system. It was an absolute NIGHTMARE.

They changed it.

Now, you have to go to one of the medical clinics that are contracted with the state. Resident training programs. Fine. 75 to 100 doctors to take care of the patients in the Tulsa metropolitan area (in one clinic, there are 2 clinics, I don't know how many docs are in the other clinic). Granted ... there isn't a lot of personal knowlege about known about my kiddo's.
However ...these guys are SMART. GREAT care ...and thorough. They pay attention to the previous visits records.

WHOLE lot better than the HMO system.

Unknown said...

To fully disclose, I work for, and firmly believe Medicaid HMOs are best for Medicaid patients.

HMOs provide the patient with a coordinated system of care and emphasis on primary care.

Numerous studies have shown that HMOs provide higher quality care at lower cost than fee-for-service. See links to studies at

Most companies are not making a huge profits doing it. Centers for Health Care Strategies recently published a study indicating that the national HMO profit margin on medicaid business is 2%.

In Illinois' FFS Medicaid program, over half the ambulatory services provided to Medicaid patients are done in the ER. Extremely wasteful, expensive, and unneccessary spending.

HMOs insure Medicaid patients at a 5% to 8% discount below what it costs the state to provide coverage. If run well, an HMO program is Medicaid at its best -- providing high quality care more efficiently than the unmanaged fee-for-service program.

DrWes said...


Thanks for your comments. ER visits are, indeed, wasteful of resources, but with uninsured numbers growing this pressure on ER's will continue. While I also agree that government has significant difficulties controlling costs relative to private entities, the fact remains that administrative costs of Medicaid HMO's remain exorbitant has well. "Profit" is defined as income minus expenses. To think that political contributions and "naming rights" to stadiums are being used on the "expense" side of Medicaid HMO's just so lobbyists can say "See how little profit we're making?" is sickening. The largess of Medicaid HMO's cannot be tolerated in this era of sky-rocking health care costs and growing numbers of uninsured.

Anonymous said...

I doubt they'll get the message, Dr. Wes ... they'll just get more clever at working the system ... :o(

Anonymous said...

In addition to patients who have to do a lot of calling around while they are sick, the docs taking care of them have to spend a lot of administrative time calling paper pushers to approve basic necessities.
These companies function by creating disincentives to physicians from treating patients. Physicians never get reimbursed for these kinds of services.