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Important questions left unanswered about how state medical-assistance money is spent

On Dec. 23, 2010, Nancy Feldman, president and CEO of UCare, wrote to respond to a Dec. 20 MinnPost commentary by Sen. John Marty titled "Who's minding the store? Billions in Minnesota contracts escape competitive bids, auditing." In her article, ("It's inaccurate to say Minnesota health plans not audited by state, federal agencies"), Feldman claims that there is no reason to be concerned about the state's payment of some $3 billion to health plans who are vendors to our prepaid medical assistance program (PMAP). She notes that there are many requirements pertaining to the auditing of health plan finances.

This, of course, is true — but completely misses the mark and is unresponsive to the issue of how our tax-funded PMAP dollars are spent. There is no auditing that addresses this critical issue. I am the person Marty referenced in his article as spearheading efforts to bring greater transparency and accountability to these programs. As Marty indicated, I and others have been asking a series of simple and straightforward questions of our PMAP vendors. These questions are: 1.What did you do with the public money that was given to you?  2. What did you buy?  3. What did you pay for what you bought?  4. Who did you buy it from? 5. Most importantly, how much did you keep for yourself?

Not one of the reports or audits that Feldman references in her article in any way speaks to any of these questions. This is precisely the point we are trying to make. Insurance companies, doing the business of insurance, are extensively audited and provide numerous reports. However, when insurance companies act as administrators and do not assume insurance risk, do not issue insurance policies but rather function as disbursement agents for government programs, there are in fact no audits for this activity. 

Given the amount of money that the state of Minnesota devotes to these programs and the fact that this disbursement function appears to be one of the most, if not the most profitable activity for health plans; shouldn't the state and its taxpayers know how and for what this money is being spent? 
I, and others, have looked at the reports and the websites as well as the functions of the various state agencies that Feldman references, and I am unable to find anything that addresses the questions we are asking. There is nothing irresponsible about demanding answers to these questions. In fact, it would be irresponsible not to ask, and grossly irresponsible not to demand answers.
The Wall Street Journal (Dec. 29, 2010) carried the headline "Insurers bid for state Medicaid plans." According to the Journal: "Health insurers are preparing to capitalize on $40 billion of new opportunities to run privately managed Medicaid plans for the states, which would position insurers to benefit from the health overhauls expansion of Medicaid in 2014." According to the Journal, Gail Boudreaux, UnitedHealth's executive vice president, told investors last month: "The Medicaid space is a significant long-term growth opportunity for us."
Marty was recently quoted as suggesting that "our relationship to these health plan PMAP vendors is akin to leaving the cash register drawer open and allowing them to take whatever they want." The senator's characterization is completely accurate. Now the PMAP vendors want the elderly and disabled moved into this opaque and unaccountable system. Thus, it appears that the health plans not only want the cash register drawer left open, they now want the keys to the store.

Shouldn't we know what they do with the money we currently give them before we decide to hand everything over including our most vulnerable populations?

David Feinwachs, of St. Paul, is an attorney. He was general counsel to the Minnesota Hospital Association for nearly 30 years.

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Comments (1)

I have encountered no evidence to counter my long standing belief that, simply because there are no highly-paid CEOs involved and there is no need to supply dividends to investors, an efficient state bureaucracy set up to manage and disburse these funds is ALWAYS more cost effective than allowing private entities to do so.

Privatizing what should be government functions, although it may be started with low ball bidding to hide that fact, ALWAYS ends up being far more expensive to the taxpayer because the fabulously wealthy are allowed to pad their pockets with money extracted from your wallet and mine in ways the state employees would NEVER be allowed to do.

(And yet, even now the Chamber of Commerce is whining about state employees being overpaid because they haven't been able to reduce the income and benefits of those employees to the same artificially low levels the rest of us are now receiving while they pad their own pockets with the money they should be paying other people.)