Mississippi state auditor, AG investigating company accused of pocketing millions of taxpayers’ money

Published 11:10 am Monday, April 19, 2021

By Jerry Mitchell

Mississippi Center for Investigative Reporting

The state auditor and Mississippi attorney general are investigating whether Centene Corp., as a provider of Medicaid drug services, failed to disclose discounts on pharmacy services, inflated dispensing fees and received reimbursements for amounts already paid.

Ohio Attorney General Dave Yost made similar allegations in a lawsuit. “Corporate greed has led Centene and its wholly owned subsidiaries to fleece taxpayers out of millions,” he said. “Centene has broken trust with the state of Ohio, and I intend to hold this company accountable for its deceptive practices.”

Asked about these allegations in Mississippi, a Centene spokesman told MCIR, “These claims are unfounded, and Envolve (a wholly obtained subsidiary) will aggressively defend the integrity of the pharmacy services it has provided. Envolve Pharmacy Services saved millions of dollars for taxpayers when compared to market-based pharmaceutical pricing. … Our company is committed to the highest levels of quality and transparency.”

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Between 2016 and 2020, the Mississippi Medicaid program paid Centene more than $1.1 billion for pharmacy services.

State Sen. Becky Currie, R-Brookhaven, said if Centene is “cheating in the pharmacy area, what else are they doing? We don’t know because we’ve never bothered to look.”

Medicaid patients are covered under MississippiCAN, a plan that lets patients pick from three for-profit managed care companies: Molina Healthcare (a new entry), UnitedHealthcare Community Plan and Magnolia Health, a subsidiary of Centene, which in 2020 took in more than $111 billion, nearly double its total revenue from two years earlier.

These companies promise to reduce medical costs by promoting better health care among patients.

So, what do the numbers show?

In 2015-2016, Magnolia received overall scores of 1.5 in prevention and 2 in treatment (on a scale of 1 to 5), according to the Health Insurance Plan Ratings issued by the National Committee for Quality Assurance, a nonprofit that uses surveys and data to measure health care quality.

Four years later, prevention inched up to 2, while treatment stayed the same at 2. Scores of 2 and lower are considered “lower performance.”

Magnolia did improve in consumer satisfaction from 3 to 4.5. The scores of 4 and higher are considered “higher performance.”

Broken down by categories, the company received a score of 5 for dental visits and avoiding opioids at high dosage and a 4 for eye exams and asthma control. But the score was 1 for childhood and adolescent immunizations as well as heart disease, a 1.5 for children and adolescent well care and a 2 for diabetes treatment.

In 2015-2016, UnitedHealthcare received a 1.5 each in prevention and treatment. Four years later, those scores improved slightly to 2.5 in prevention and 2 in treatment. During that same time, consumer satisfaction fell slightly from 3.5 to 3.

UnitedHealthcare scored a 5 for dental visits and asthma control, and a 4 for prenatal checkups, for continued follow-up after diagnosis for attention deficit disorder and “getting care quickly.”

The company received a host of 1s that included childhood immunizations, blood pressure control, glucose control, statin therapy for diabetes, statin therapy for cardiovascular disease and getting patients to adhere to depression medication.

There are no scores so far for Molina, according to the website.

Asked about these low scores, UnitedHealthcare spokeswoman Sara Belfry responded, “We are working to ensure our members receive the care we expect, and 85% of our primary care physicians are in value-based contracting agreements that reward those who achieve improved quality of care results. We also provide clinical guidance and collaborate with providers to develop innovative programs to close member/patient gaps in care and help providers improve quality measures.”

Belfry said the quality scores for UnitedHealthcare had actually improved 60% since 2012. That’s when the company’s scores were even lower.

A Magnolia Health spokesperson said the company “is committed to ensuring our members have access to high-quality healthcare, and we partner with providers to offer comprehensive healthcare services with a focus on positive outcomes for our members. Magnolia continues to develop new and innovative programs to treat the whole person and focus on each individual’s unique needs.

“Routine well-child care and vaccinations have declined dramatically during the COVID-19 pandemic, as parents avoid medical services to mitigate the transmission of the coronavirus. While Magnolia Health recognizes the health concerns of the community, it encourages parents to continue to schedule checkup appointments and get early vaccinations for young children to protect against preventable diseases.”

Taxpayers should be concerned about how their millions are being spent by these companies, said Richard Roberson, general counsel for the Mississippi Hospital Association, which has competed for a managed care contract. “If public school test scores were that low, legislators would have a fit about high administrative costs for poor classroom performance.”

Mississippi Medicaid spokesman Matt Westerfield said agency officials look at these health insurance plan ratings “the way we look at Hospital Quality Star Ratings – they are instructive but not the complete picture. While we see room for improvement, we are encouraged that (these) ratings have improved over time, and that one plan’s consumer satisfaction score is among the highest in the country.”

He said, since Drew Snyder took over as executive director in 2018, the department has “focused more on quality rather than quantity.”

A year later, the department introduced two initiatives to improve quality, the first of which could impose financial penalties, Westerfield said. Magnolia avoided a financial penalty; UnitedHealthcare and Molina did not.

The second initiative, the Quality Incentive Payment Program, uses supplemental funds to improve the quality of care and health of those covered by Medicaid, he said. “Payments are linked to potentially preventable hospital readmission rates.”

The Division of Medicaid, he said, is also working with stakeholders to improve its Managed Care Quality Strategy, last updated in 2018.

Currie wonders how much managed care is taking place.

Currie, a member of the House Medicaid Committee, called for a full audit of the companies. “We are giving them full rein of Mississippi taxpayers’ money without checks and balances,” she said. “Are legislators finally going to look at this and realize that we can do better?”

New legislation requires more stringent reviews or audits of these companies but stops short of specifics.

Currie warned an audit would mean nothing if experts in Medicaid aren’t involved. “It’s a monster to understand,” she said.

In 2016, the Legislature authorized examination of the performance of the managed care companies. The report concluded that in 54 out of 68 categories, Magnolia and United failed to meet or only partially met requirements.

That report by Navigant Consulting cited widely varying numbers, questioning the validity of some Medicaid data. In May 2016, Magnolia reported that 22% of patients had follow-up visits within 30 days of hospitalization, but in June that figure was 62%. In July 2016, UnitedHealthcare reported 0.8% of patients and a month later reported 1.98%.

The report recommended lawmakers order an in-depth study to evaluate the cost of the MississippiCAN program.

In its 120-page response, Mississippi’s Medicaid officials disputed many of Navigant’s findings, saying they had already provided such an evaluation to the Legislature. A report for the agency by Myers and Stauffer concluded MississippiCAN had saved the state $286 million between 2011 and 2017.

During that same time, the auditor’s office determined more than $616,000 in “improper payments” had been made to these companies, and Mississippi’s Medicaid officials agreed.

In 2015, Mississippi Hospital Association offered to provide a nonprofit competitor, Mississippi True, to the for-profit managed care companies. The governor signed a law enabling such provider-sponsored health plans to operate, but Mississippi True failed to score high enough to make the cut, Medicaid officials said.

Three years later, the House voted for language to allow a limited pilot for Mississippi True, but that part of the bill died in the Senate.

Currie wondered why leaders never gave Mississippi True a chance, saying she believed it was “cheaper and better, and I’m all for cheaper and better.”

The pandemic has devastated many businesses, but the revenue for Magnolia’s parent, Centene, skyrocketed past $111 billion in 2020. In its second quarter report, the company acknowledged it had profited “from lower medical utilization as a result of the COVID-19 pandemic.”

The St. Louis-based company ranks among the nation’s 10 biggest healthcare corporations.

Centene is filling campaign coffers

Centene, which ranks 42 on the Fortune 500, is also one of the governor’s big donors. He has received more than $200,000 from the corporation, plus another $5,000 from Centene’s top brass, including CEO Michael Neidorff, who brags his company serves 1 in every 15 Americans, “maintaining our leadership in government-sponsored healthcare.”

Centene also gave $43,000 to 10 Mississippi lawmakers through its political action committee, $20,000 to the Republican Party of Mississippi and $10,000 to the Democratic Party of Mississippi, according to OpenSecrets.org.

Centene Management Co.’s LLC gave then-Lt. Gov. Tate Reeves one large $50,000 donation, making the company the largest donor in 2017. It also gave $25,000 to House Speaker Philip Gunn and $10,000 to Secretary of State Delbert Hosemann.

Centene has given more than $12 million in contributions to politicians across the U.S. over the past 21 years, according to FollowTheMoney.org. Nearly $7.3 million has gone to Republican candidates, nearly $3.5 million has gone to Democratic candidates, and another $1.5 million has gone to candidates whose parties weren’t designated.

Centene drew scrutiny in Ohio

Mississippi and other states began taking a closer look at Centene after The Columbus Dispatch in Ohio reported in 2018 that that state’s taxpayers might be paying twice for the same Medicaid drug services.

HealthPlan Data Solutions determined the pharmacy middlemen in Ohio were raking off up to $186 million a year above the industry’s standard profit margin. Ohio taxpayers were paying three to six times as much to process prescription drugs for the poor and disabled as the industry standard, according to its report.

In 2019, Arkansas told Centene officials they had to refund more than $12 million after collecting too much in premiums. According to the Centers for Medicare and Medicaid Services, Centene collected $983 million in premiums from 2016-18, but spent just $756 million of that on medical care and other health-related expenses.

In Mississippi, the state auditor’s office began digging into the pharmacy allegations against Centene in the summer of 2019, according to a letter obtained by MCIR. Asked about this, the auditor’s office confirmed it was investigating the matter on behalf of taxpayers.

Mississippi Attorney General Lynn Fitch’s office is also investigating. “We are still early in our investigation,” said Colby Jordan, director of communications, “so we cannot release details yet, but it is similar to the Ohio case.”

The Ridgeland law firm of Liston & Deas, which is working with the Ohio attorney general’s office and representing Mississippi in the matter, declined to comment.

“It’s never been about what’s good for Mississippi,” Currie said. “Our hospitals are struggling. If nothing changes, our healthcare system is going to break.”

This report was produced in partnership with the Community Foundation for Mississippi’s local news collaborative, which is independently funded in part by Microsoft Corp. The collaborative includes the Clarion Ledger, the Jackson Advocate, Jackson State University, Mississippi Center for Investigative Reporting, Mississippi Public Broadcasting and Mississippi Today.

Researcher Vilas Annavarapu contributed to this report.

Jerry Mitchell is an investigative reporter for the Mississippi Center for Investigative Reporting. Email him at Jerry.Mitchell@MississippiCIR.org and follow him on Facebook, Twitter or Instagram.