Category: Curator

HHS Curator is our free research service published by our team. We read hundreds of Medicaid news items each week and highlight and summarize them for you to save you time.

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The Centers for Medicare & Medicaid Services Could Improve Its Wage Index Adjustment for Hospitals in Areas With the Lowest Wages A-01-20-00502 12-30-2020

MM Curator summary

A recent CMS audit of wages paid in hospitals will likely be used to increase the wage index used for rural hospital reimbursement.

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

12-30-2020 | A-01-20-00502 | Complete Report

Why We Did This Audit

The Centers for Medicare & Medicaid Services (CMS) has characterized its bottom quartile wage index adjustment as a way to increase the accuracy of the hospital wage index system. We are issuing this data brief because wage index accuracy is essential to the primary objective of the inpatient and outpatient prospective payment systems (IPPS and OPPS), which is to create incentives for hospitals to operate efficiently, while ensuring that payments are adequate to compensate hospitals for the reasonable costs of high-quality, necessary care. If hospitals are undercompensated because of inaccurate wage indexes, that puts them under financial stress, which could lead to a variety of adverse outcomes, up to and including closure.

The objective of this audit is to analyze certain characteristics of the hospitals with area wage indexes (AWIs) in the bottom quartile for 2020 to provide information to CMS and other stakeholders during the implementation of CMS’s bottom quartile wage index adjustment. We are providing the results of this audit in the form of a data brief to best present our results at this stage in the anticipated 4-year period during which CMS plans to adjust the wage indexes in the bottom quartile.

What Is an Area Wage Index? What Is “Circularity”?

CMS calculates AWIs annually and uses those AWIs to adjust Medicare standard payments to hospitals in the inpatient and outpatient prospective payment systems to reflect the prices hospitals face in their local labor markets. Researchers and stakeholders use the term “circularity” to refer to the fact that CMS calculates the current year’s AWIs based on wage data submitted by hospitals in their Medicare cost reports. Those wage data are approximately 4 years old when used by CMS to calculate wage indexes. Critics of circularity (or rather of circularity combined with that 4-year time lag) assert that it can prevent some hospitals from raising wages.

What Is the Bottom Quartile Wage Index Adjustment?

For 2020 (Federal fiscal year (FFY) for inpatient claims and calendar year for outpatient claims), CMS raised AWIs in the bottom quartile (the lowest 25 percent) to bring them closer to the 25th percentile wage index. CMS did this because, in its opinion, the wage index system had previously been perpetuating and exacerbating low wage indexes because of circularity combined with the 4-year time lag, as described above. Accordingly, CMS has stated that it intends to employ this new tactic of raising the wage indexes in the bottom quartile each year for at least 4 years, with the expectation that the hospitals in the bottom quartile will use the opportunity afforded by higher Medicare payments to raise wages.

We Found That:

  • Of rural hospitals in the IPPS, 55 percent had wage indexes in the bottom quartile for FFY 2020.
  • Of bottom quartile hospitals, 53 percent were rural.
  • Bottom quartile hospitals tended to be smaller and lower-volume hospitals.
  • Bottom quartile hospitals were located in 24 States overall, but 41 percent of bottom quartile hospitals were located in just 6 States.
  • Most States that did not expand Medicaid under the provisions of the Affordable Care Act had hospitals in the bottom quartile.
  • Most States with hospitals in the bottom quartile had the lowest possible State minimum wage.
  • The profit margins of hospitals in the bottom quartile varied significantly.
  • The average hourly wages of hospitals in the same area sometimes varied significantly. (That is, some hospitals already were paying significantly higher wages than other hospitals in the same area prior to the bottom quartile wage index adjustment.)

Key Take-Away

When post-pandemic conditions allow for new initiatives, CMS could consider focusing the bottom quartile wage index adjustment more precisely toward the hospitals that are the least able to raise wages without that adjustment. Those hospitals are the ones with low or negative profit margins rather than higher, positive profit margins. CMS could also consider studying the question of why some hospitals in a particular area were able to pay higher wages than other hospitals in the same area prior to the implementation of the bottom quartile wage index adjustment. More information might enable CMS to focus the adjustment even more precisely.

Filed under: Centers for Medicare and Medicaid Services

6:54 AM

Clipped from: https://oig.hhs.gov/oas/reports/region1/12000502.asp


 

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UnitedHealth to Purchase Change Healthcare for $8 Billion

MM Curator summary

The health insurance giant continues its payer and provider services build out with the $13B purchase of Change.

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

(Bloomberg) — UnitedHealth Group Inc. agreed to purchase Change Healthcare Inc. in a deal that values the health technology company at about $8 billion.

UnitedHealth will pay $25.75 per share in cash, the companies said Wednesday, a 41% premium over Change Healthcare’s closing price Tuesday of $18.24. Including more than $5 billion in debt owed by Change Healthcare, the deal amounts to $13 billion.

The deal will combine Change Healthcare with UnitedHealth’s OptumInsight unit to offer software, data analytics, technology and other services to the health-care industry.

The acquisition is one of UnitedHealth’s largest and is another step in expanding the company’s health services business under its Optum division. The companies said the combination would help simplify services around medical care to improve health outcomes and lower costs.

Both businesses inhabit the complex behind-the-scenes space of U.S. health care, where companies determine what medical care is appropriate and provide services to move information on claims and payments between insurers, medical providers, and patients.

“Together we will help streamline and inform the vital clinical, administrative and payment processes on which health care providers and payers depend to serve patients,” Andrew Witty, president of UnitedHealth Group and chief executive officer of Optum, said in a news release.

Change Healthcare rose 39% in premarket trading at 6:56 a.m. in New York. They had gained 16% in the past 12 months through Monday. UnitedHealth fell 2.3% in premarket trading.

Broadening Reach

In recent years, UnitedHealth has broadened its reach well beyond health insurance. Through its Optum division, the company increasingly delivers medical care directly to patients and sells consulting, technology, and data to other health-care entities.

Change Healthcare’s CEO, Neil de Crescenzo, will lead the combined business unit as the CEO of OptumInsight, the companies said. Nashville, Tennessee-based Change Healthcare has about 15,000 employees, according to data compiled by Bloomberg.

OptumInsight is the smallest business unit in the Optum family by revenue, yet it has the highest operating margins of the company’s reported segments, exceeding 20% in each of the last three full years.

The OptumInsight business accounted for about $2.8 billion in revenue in the three months ending Sept. 30, according to filings, or about 4% of the company’s total. That includes revenue from outside clients as well as “affiliated customers” within UnitedHealth Group. Change Healthcare reported revenue of $756 million in the same period.

The deal is expected to close in the second half of 2021. Private equity funds affiliated with Blackstone Group Inc. that own about 20% of Change Healthcare’s common stock have agreed to vote in favor of it, the companies said. It’s expected to boost UnitedHealth’s adjusted earnings per share by $0.50 in 2022, the companies said.

The acquisition is the second major health-care deal in the first week of 2021. On Monday Centene Corp. agreed to buy Magellan Health Inc. for $2.2 billion.

Clipped from: https://finance.yahoo.com/news/unitedhealth-purchase-change-healthcare-13-113122374.html

 
 

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Trump Team Approves Controversial Request To Revamp Medicaid In Tennesssee

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TN received approval for its first-of-its-kind innovation waiver to share savings it creates in its Medicaid program with CMS.

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

Seema Verma, chief administrator of the Centers for Medicare & Medicaid Services, says the changes in the way Medicaid is funded and regulated in Tennessee “could be a national model moving forward.”

With less than a dozen days left in power, the Trump administration on Friday approved a radically different Medicaid financing system in Tennessee. With this move, the federal government is for the first time granting a state broader authority in the operation of its health insurance program for the poor without interference from Washington, allowing Tennessee to make decisions on such issues as whether to add new benefits or eligibility categories or spend Medicaid dollars outside of health care, if it thinks that would help enrollees.

Instead of the open-ended federal contribution to the funding of Medicaid in all other states — which increases with higher enrollment and associated health costs — Tennessee will instead get a capped amount of money, via an annual block grant.

The annual funding cap will increase if enrollment grows. What’s different is that, unlike with other states, Medicaid funding to Tennessee won’t automatically keep up with rising expenses.

The approval is a 10-year “experiment,” according to Friday’s announcement by Seema Verma, administrator of the federal Centers for Medicare and Medicaid Services. The approach has been pushed for decades by conservatives who say states too often chafe under strict federal guidelines about enrollment and coverage. They think they can find ways to provide care more efficiently, she says.

But Michele Johnson, executive director of the Tennessee Justice Center sees the move as a step backward for the state’s Medicaid program.

“No other state has sought a block grant, and for good reason,” Johnson says. “It gives state officials a blank check and creates financial incentives to cut health care to vulnerable families.”

Tennessee is one of 12 states that have not approved expanding Medicaid under the Affordable Care Act – a decision that’s left tens of thousands of working adults in Tennessee without health insurance.

Whether this change in the way Tennessee’s Medicaid program is funded will stick is an open question. The incoming Biden administration is likely to oppose the move, but to unravel it, officials would need to set up a review that includes a public hearing.

Implementing such a fundamental change via an executive branch action rather than getting Congress to amend Medicaid law is also likely to be met with court challenges.

In any event, the changes to the state’s program will take months to implement because the shift in policy requires final approval by the legislature, and officials in Tennessee must also negotiate quality of care targets with the administration.

TennCare, the state’s Medicaid program, says the new system would give it unprecedented flexibility to decide who is covered and what services it will pay for.

Under the agreement, TennCare will have a specified annual spending cap, to be based on historical spending, inflation and predicted future enrollment changes. If the state can operate the program at a lower cost than the cap and maintain or improve quality, the state then shares in the savings.

Trump administration officials say the approach adds incentive for the state to save money, unlike the current system, in which increased state spending is matched with more federal dollars. If Medicaid enrollment grows, the state can secure additional federal funding. If enrollment drops, it will get less money.

“This groundbreaking waiver puts guardrails in place to ensure appropriate oversight and protections for beneficiaries, while also creating incentives for states to manage costs — while holding them accountable for improving access, quality and health outcomes,” Verma said. “It’s no exaggeration to say that this carefully crafted demonstration could be a national model moving forward.”

The agreement is somewhat
different from traditional block grants championed by conservatives, the CMS notes, since it allows Tennessee to get more federal funding as enrollment grows. And while the state is given flexibility to increase benefits, it can’t on its own cut benefits.

However, opponents — including most advocates for low-income Americans — say the approach will threaten care for the 1.4 million people in TennCare — a group that includes children, pregnant women and the disabled. Federal funding covers two-thirds of the cost of the program.

Democrats have fought back against block grant Medicaid proposals since the Reagan administration and most recently in 2018 as part of Republicans’ failed effort to repeal and replace major parts of the Affordable Care Act. Even some key Republicans opposed the idea because it would cut billions in funding to states, and that would make it harder to help the poor.

The approval of Tennessee’s request comes as Medicaid enrollment is at its highest-ever level.

More than 76 million Americans are covered by the state-federal health program — a million more than when the Trump administration took charge in 2017. Enrollment has jumped by more than 5 million in the past year as the economy slumped with the pandemic.

Medicaid, part of President Lyndon B. Johnson’s “Great Society” initiative of the 1960s, is an entitlement program in which the government pays each state a certain percentage of the cost of care for anyone eligible for the health coverage. As a result, the more money states spend on Medicaid, the more they get from Washington.

The newly approved demonstration project in Tennessee calls for CMS to work with the state to set spending targets that will increase at a fixed amount each year.

The plan also includes a “safety valve” to increase federal funding in the case of unexpected increases in enrollment.

“The safety valve will maintain Tennessee’s commitment to enroll all eligible Tennesseans with no reduction in today’s benefits for beneficiaries,” according to a CMS written statement.

Tennessee has committed to maintaining coverage for eligible beneficiaries and existing services while staying under the spending targets.

In exchange for taking on this financing approach, the state will receive a range of operating flexibilities from the federal government, as well as up to 55% of the savings generated on an annual basis when spending falls below the aggregate spending cap and the state meets certain quality targets, yet to be determined.

The state can spend that money on various health programs for residents, plus areas that Medicaid funding typically doesn’t cover, such as improving transportation and education and employment for enrollees.

Ten years is an unusually long time for a federally granted waiver of its rules, but the Trump administration has approved other long-term experiments in recent years to give states more flexibility.

“The block grant is just another example of putting politics ahead of health care during this pandemic,” says Johnson of the Tennessee Justice Center. “Now is absolutely not the time to waste our energy and resources limiting who can access health care.”

State officials in Tennessee applauded the approval.

“It’s a legacy accomplishment,” says Gov. Bill Lee, a Republican. “This new flexibility means we can work toward improving maternal health coverage and clearing the waiting list for developmentally disabled.”

“This means we will be able to make additional investments in TennCare without reduction in services and provider cuts.”

Kaiser Health News is a nonprofit, editorially independent program of the Kaiser Family Foundation, and is not affiliated with Kaiser Permanente. KHN chief Washington correspondent Julie Rovner contributed to this report.

Clipped from: https://www.npr.org/sections/health-shots/2021/01/09/954985151/trump-officials-approve-tennessees-controversial-request-to-revamp-medicaid-fund


 

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Aetna drops Walgreens from its Illinois Medicaid plan

MM Curator summary

Analysts speculate that the move is simply CVS excluding a top competitor.

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

The removal of one pharmacy chain from the network has not created or contributed to network access issues, Aetna says.

As of December 1, Aetna dropped CVS competitor Walgreens from its Illinois Medicaid plan. 

Aetna’s decision to exclude the Walgreens chain from its Aetna Better Health of Illinois pharmacy network affects about 400,000 residents in the state, according to the Chicago Tribune. Many in this population are poor, unemployed and disproportionately suffering from COVID-19.

Nearly 2,000 pharmacies participate in Aetna’s Better Health of Illinois network, Aetna Medicaid said by statement, including other national pharmacy chains such as Walmart, regional chains such as Osco and many independent pharmacies. 

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In Chicago, there are 271 in-network pharmacies with an average distance to these locations of half a mile, Aetna said.

“The removal of one pharmacy chain from the network earlier this month has not created or contributed to network access issues, and we meet or exceed all of the state’s access requirements for managed care organizations,” Aetna said. “In fact, the Illinois Department of Healthcare and Family Services has reviewed our updated network and determined it promotes equity.”

Aetna said it has worked with its pharmacy partners to offer and expand coverage of 90-day prescriptions through mail order, offer free delivery to members across the state and empower pharmacists to allow early medication refills where situationally appropriate.

WHY THIS MATTERS

In November 2018, the $69 billion merger for CVS Health to acquire Aetna closed.

Aetna has given no reason for its decision to exclude Walgreens, leaving critics to fill in the blank that eliminating a large competitor from its network would be the motivating factor.

In 2019, CVS Health topped a Becker’s Hospital Review list of the nation’s largest pharmacies, which were ranked by total prescription revenue. CVS was followed by Walgreens, Cigna\Express Scripts, UnitedHealth Group’s OptumRx and Walmart. 

THE LARGER TREND

In 2018, the Tribune reported that pharmacy access was a growing concern in Chicago. Some public health experts said that more than a dozen low-income neighborhoods, mostly on the South and West sides of Chicago, were becoming pharmacy deserts.

Providers have increasingly been addressing the social determinants of health for patients as it has become clear that SDOH issues such as food and housing insecurity, transportation and isolation have as much influence on health as clinical concerns. 

RWJBarnabas Health recently launched a social determinants of health program called Health Beyond the Hospital in collaboration with NowPow and ConsejoSano, in order to refer and connect patients to community-based services.  

Clipped from: https://www.healthcarefinancenews.com/news/aetna-drops-walgreens-its-illinois-medicaid-plan

 
 

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Humana files new Medicaid lawsuit over membership assignment – Louisville Business First

MM Curator summary

Humana is arguing that Passport did not have the right to sell future enrollment to Molina, as that enrollment is part of plans win when they bid successfully.

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

Humana filed a lawsuit against the state over the Medicaid program.

Humana Health Plan Inc., a subsidiary of Humana Inc. that operates its Kentucky Medicaid program, has filed another lawsuit in the dispute over the state’s five Medicaid contracts.

In the suit filed Dec. 23, Humana alleges that the state violated the new Medicaid contracts when it allowed Long Beach, California-based Molina Healthcare Inc. to acquire Passport Health Plan Inc.’s membership in 2020 and allowed it keep Passport members going into the new 2021 contracts, which started on Jan. 1.

Molina’s deal to acquire Passport closed in September. Passport was not awarded a contract by the Beshear administration when it announced the awards in May.

At issue in the suit is how members within the Medicaid program are assigned to companies for coverage and whether or not Molina’s takeover of Passport allows it to acquire Passport’s membership for a new contract period.

Humana maintains that Passport doesn’t have the rights to sell off its membership and had no claim to its membership at all beyond its contract, which ended at the end of 2020.

“The [Medicaid] contracts did not contemplate that [Medicaid companies] who failed to win new contracts could auction off their members to the highest bidder,” the lawsuit reads. “Thus, Passport had no membership rights to ‘sell’ Molina.

“Similarly, as a ‘new [Medicaid company],’ Molina had no right under the [contract] to obtain Passport’s membership except under the reallocation formula set forth in” a specific section of the contract.

Humana maintains that allowing Molina to acquire Passport’s membership deprives Humana and the other winning Medicaid companies from enjoying the benefit of winning the contracts, which includes, in part, having the members from failing Medicaid companies reassigned to the winners.

The company maintains that Passport’s membership should be reassigned to the winning companies based on a process and formula articulated in the 2021 Medicaid contracts.

Humana appealed Molina’s takeover of Passport’s membership twice — to the Kentucky Finance and Administration Cabinet and the Kentucky Health and Family Services Cabinet. Both appeals were denied, the lawsuit states.

Issues of membership

For Molina’s part, the company’s executives told investors and analysts on a public call that it hoped that it simply would get all of Passport’s roughly 315,000 members, rather than the 140,000 members that it expected to get through the assignment process, the lawsuit states. In a transcript of the call, Molina’s CEO Joseph Zubretsky said: “If we obtained all 315,000 members, that would represent a little over $1 billion of upside… to the estimate we’ve given you.”

Clipped from: https://www.bizjournals.com/louisville/news/2021/01/04/humana-files-a-new-lawsuit.html


 

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CMS officially withdraws $50B threat to Medicaid

MM Curator summary

CMS officially withdrew the Medicaid Financial Accountability Regulation after a year of intense industry protest on the reg that would have changed multiple financing schemes used to maximize federal funding.

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

The Centers for Medicare & Medicaid Services has officially withdrawn a controversial Medicaid proposal that providers warned could up to $50 billion from the program annually. 

CMS Administrator Seema Verma announced the move to officially rescind the Medicaid Fiscal Accountability Rule (MFAR) from the federal register on Twitter Thursday afternoon.


In late November, some had feared that CMS would walk back on the decision to withdraw after Verma defended the proposal while speaking with the National Medicaid Directors Association.

“While we support its intent, further work is needed to ensure accountability for states while protecting critical safety-net care for vulnerable patients,” Verma wrote. “While the proposed rule will be withdrawn, I thank Congress for recently enacting new payment transparency requirements which help accomplish our goals.” 

The agency in mid-September announced plans to rescind the MFAR proposal. The decision was cheered soundly by long-term care providers who feared the rule would cripple Medicaid financing in states and jeopardize beneficiaries’ access to care.

Clipped from: https://www.mcknights.com/news/cms-officially-withdraws-50b-threat-to-medicaid/

 
 

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Commonwealth Provides Update on Latest Medicaid, SNAP Enrollment Data, Announces Recent Changes to SNAP Benefits and Eligibility

MM Curator summary

PA has seen a 10.6% increase in Medicaid enrollment during the pandemic and a 5.6% increase in SNAP.

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

HARRISBURG, PA — Department of Human Services (DHS) Secretary Teresa Miller is reminding Pennsylvanians that safety-net programs like Supplemental Nutrition Assistance Program (SNAP) and Medicaid are available to individuals and families who are struggling to afford food or access health care. Secretary Miller also discussed recent SNAP changes that will help individuals and families amidst the continuing public health crisis and heightened unemployment.

“We all deserve the dignity of having those most essential needs met, especially when we fall on hard times. That’s why DHS is here, regardless of the pandemic, to make sure you can get through times like these,” said DHS Secretary Teresa Miller. “Our public assistance network can be a lifeline that makes sure people can go to the doctor, have enough to eat, or pay their utilities as other bills and needs arise. This network exists to help you through any change in your circumstances, whether it’s a loss of employment or a reduction in income. No one should feel like they have to endure this period and its stress, anxiety, and uncertainty alone. If you or someone you know could use a hand, please let us try to help.”

Enrollment statewide for Medicaid has increased by 300,076 people since February 2020, for a total enrollment of 3,131,639 people in November — a 10.6 percent increase.

Pennsylvanians who have lost health coverage or are currently uninsured and need coverage for themselves or their children may qualify for coverage through Medicaid or the Children’s Health Insurance Program (CHIP). Medicaid and CHIP provide coverage for routine and emergency health services, tests and screenings, and prescriptions, and COVID-19 testing and treatment are covered by Medicaid and CHIP. Medicaid and CHIP enroll individuals throughout the year and do not have a limited or special enrollment time, so people needing health coverage can apply for these programs at any time. There are income limits for Medicaid, but all children qualify for comprehensive health, vision, and dental coverage through CHIP regardless of their parents’ income. Children who are not income-eligible for Medicaid are automatically referred to CHIP for coverage.

Enrollment for SNAP statewide has increased by 96,549 people since February 2020, for a total enrollment of about 1,834,008 in November — a 5.6 percent increase.

SNAP helps more than 1.8 million Pennsylvanians purchase fresh food and groceries, helping families with limited or strained resources be able to keep food on the table while meeting other bills and needs. Inadequate food and chronic nutrient deficiencies have profound effects on a person’s life and health, including increased risks for chronic diseases, higher chances of hospitalization, poorer overall health, and increased health care costs. As the nation faces the COVID-19 pandemic, access to essential needs like food is more important than ever to help keep vulnerable populations healthy and mitigate co-occurring health risks.

Congress has temporarily increased the SNAP maximum benefit allotment by 15 percent through the recently-signed federal government funding bill. This change affects every SNAP recipient in the commonwealth and is effective from January 1, 2021, through June 30, 2021. Below is the new SNAP maximum monthly allotment based on household size:

Additionally, Federal Pandemic Unemployment Compensation (FPUC) will no longer be counted as income for people applying for SNAP eligibility, opening SNAP as an option for more people who have lost income or employment due to the pandemic.

“We are thankful for these rule changes, as those with the lowest income that were receiving the maximum SNAP benefits did not see an increase in their benefits during the pandemic and economic downturn. This not only hurt our lowest-income neighbors, but our communities, as charitable food networks were overburdened. This is incredibly helpful for our lowest-income families and others who are going through difficult times,” said Secretary Miller. “If you were previously ineligible for SNAP because of pandemic unemployment assistance, I strongly urge you to apply again and let this program help with one essential need.”

Applications for SNAP, Medicaid, and other public assistance programs can be submitted online at www.compass.state.pa.us. Those who prefer to submit paper documentation can print from the website or request an application by phone at 1-800-692-7462 and mail it to their local County Assistance Office (CAO) or place it in a CAO’s secure dropbox, if available. You do not need to know your own eligibility in order to apply. While CAOs remain closed, work processing applications, determining eligibility, and issuing benefits continues. Clients should use COMPASS or the MyCOMPASS PA mobile app to submit necessary updates to their case files while CAOs are closed.

Pennsylvanians who need health insurance who do not qualify for Medicaid can explore coverage options through Pennie, the commonwealth’s health insurance exchange. Open enrollment for 2021 plans continues through January 15, 2021. Pennsylvanians can learn more at www.pennie.com. Applicants not financially eligible for Medicaid are automatically referred to Pennie for eligibility review.

For more information about food assistance resources for people around Pennsylvania impacted by COVID-19 and the accompanying economic insecurity, visit the Department of Agriculture’s food security guide.

For more information on public assistance programs, visit www.dhs.pa.gov.

Clipped from: https://www.mychesco.com/a/news/pennsylvania/commonwealth-provides-update-on-latest-medicaid-snap-enrollment-data-announces-recent-changes-to-snap-benefits-and-eligibility/


 

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Centene Is Climbing on Its Plans to Buy Magellan Health for $2.2 Billion

MM Summary

Centene adds a giant pharmacy services component with the purchase of Magellan.

M&A activity continues to pick up in the health-care space.

Centene (ticker: CNC) announced Monday that it will pay $95 per share for Magellan Health (MGLN), a 14.7% premium over Magellan’s closing price last Thursday of $82.84. Shares of Magellan were up 12.3%, to $93.00, in early trading on Monday.

Shares of Centene, meanwhile, were up 1% at the open of trading Monday, to $60.62.

The deal comes a year after Centene closed its $17.3 billion acquisition of WellCare Health Plans, another insurer focused on government-sponsored health plans. Centene is one of the largest players in that sector, with a managed care membership of 25.2 million people, with roughly half of them enrolled in Medicaid plans.

Centene said that it expects the Magellan deal to bring in 5.5 million members on government-sponsored plans, 2 million members of Magellan’s pharmacy benefit manager plans, and a behavioral health platform with 41 million members, among other businesses.

“This acquisition accelerates our diversification strategy and enhances our ability to build next generation capabilities in our specialty care business by leveraging our scale and investments in technology,” said Centene CEO Michael Neidorff in a statement.

In an interview with Barron’s on Monday morning, Neidorff said that he chiefly wanted Centene to have access to Magellan’s behavioral-health network, which contracts with states, employers, and other insurers to offer various behavioral health care services.

“Behavioral health is probably the most underserved area,” Neidorff said. “This gives us access to a very broad network… It gives them access to our technology.”

Neidorff said that Magellan will be treated as an independent company within Centene, and that outside clients will have equal access to its behavioral-health product.

“If you have a newly diagnosed diabetic, after they see their endocrinologist, they should go see a psychologist to help them deal with it,” Neidorff said. “You end up with better compliance and a healthier situation.”

Neidorff said that he expects the deal to close in the second half of the year.

On an analyst call Monday, Neidorff said that regulatory approval for the deal wouldn’t pose a major challenge. “It’s complex, but it’s something we’re very used to. We’ve had some that are far more complex,” Neidorff said. “I don’t anticipate any divestitures.”

Magellan recently sold off its Magellan Complete Care business, which offers Medicaid and Medicare plans in certain states, to Molina Healthcare (MOH) for $820 million. Molina Healthcare announced Monday that the transaction closed last Thursday.

In the interview with Barron’s, Neidorff said that the sale of that business was necessary to allow regulatory clearance of the deal.

The immediate reaction to the deal from Wall Street analysts appears to be positive. In a note out early Monday, Cantor Fitzgerald analyst Steven Halper said the transaction looked good for Centene.

“We believe [Magellan Health] is a solid acquisition with modest near term accretion,” Halper wrote. “The company’s leverage ratios will certainly increase again, but given a relatively low cost of capital, the company should be able to drive incremental returns.”

Shares of Centene were down 1.8% over the past 12 months, as of Friday’s close. The stock trades at 11.4 times expected earnings over the next 12 months, according to FactSet, below its five-year average of 14 times earnings. Of the twenty-one analysts who cover the stock tracked by FactSet, 19 rate it a Buy or Overweight, while two rate it a Hold.

Clipped from: https://www.barrons.com/articles/centene-is-climbing-on-its-plans-to-buy-magellan-health-for-2-2-billion-51609771065


 

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COVID-19: Feds Charge NYC-Area Pharmacy Owners In $30 Million Health Care Fraud

MM Curator summary:

 
 

Peter Khaim and Arkadiy Khaimov (NYC) stole $30M from Medicaid using billing override codes during the COVID pandemic. Got paid for cancer med Targretin Gel – that was never provided or even authorized by a doctor.

 
 

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

 
 

 
 

Clipped from: https://dailyvoice.com/new-jersey/fortlee/news/covid-19-feds-charge-nyc-area-pharmacy-owners-in-30-million-health-care-fraud/800165/

 
 

Agents with U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Photo Credit: COURTESY: HHS-OIG

The owners of more than a dozen New York City-area pharmacies exploited the COVID-19 pandemic to scam Medicaid out of $30 million, then used the money to buy themselves real estate and luxury items, federal authorities charged.

Peter Khaim, 40, and Arkadiy Khaimov, 37, both of Forest Hills, got others to pose as pharmacy owners or supervisors to take advantage of emergency override codes added to the Medicare system during the national state of emergency, an indictment returned by a grand jury in Brooklyn alleges.

They used these to submit fraudulent claims for the expensive cancer medication Targretin Gel 1%, none of which was ever provided, ordered, or even authorized by medical professionals, it says.

Targretin Gel 1% has an average wholesale price of roughly $34,000 for each 60-gram tube, federal authorities noted.

The drugs were often ordered during periods when pharmacies weren’t operating, using doctors’ names on prescriptions without their permission, they said Monday.

Khaim and Khaimov paid others to pose as the owners of the pharmacies and hired pharmacists to pretend to be supervisors “for the purpose of obtaining pharmacy licenses and insurance plan credentialing,” Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division said.

To launder the money, the pair “created sham pharmacy wholesale companies, which they named after pre-existing pharmacy wholesalers,” Rabbitt said.

They also “fabricated invoices to make it appear that funds transferred from the pharmacies to the sham pharmacy wholesale companies were for legitimate pharmaceutical drug purchases,” he added.

The pair conspired with an international money launderer who arranged for funds to be wired from the sham pharmacy wholesale companies to companies in China for distribution to individuals in Uzbekistan, federal authorities said.

Members of the Uzbekistani immigrant community funneled back through an unlicensed money transfer business, minus a commission that was deducted by the money launderer, they said.

When the amount of fraudulent proceeds exceeded the amount of cash available in the Uzbekistani immigrant community, Rabbitt said, Khaim and Khaimov “directed the international money launderer to transfer funds back from the sham wholesale companies to the defendants, their relatives, or their designees, in the form of certified cashier’s checks and bags of cash that were dropped at their house in the middle of the night.

“The defendants used the proceeds of the scheme to purchase real estate and other luxury items,” he said.

Khaim and Khaimov are each charged with conspiracy to commit health care fraud and wire fraud and conspiracy to commit money laundering.

Khaim also was separately charged with concealing money laundering and aggravated identity theft.

Khaimov also was separately charged with concealing money laundering.

Both men “lined their own pockets by exploiting Medicare flexibilities that were designed to ensure that patients obtained access to needed medications during the COVID-19 crisis,” Rabbitt said.

“The changes to this program, funded by taxpayers, were put in place to help fellow citizens obtain needed medications during the pandemic, not line the pockets of fraudsters,” said Acting Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office.

“Those who attempt to illegally profit from our public funded healthcare programs should remember taxpayers also fund courts and jails,” Sweeney said.

The U.S. Department of Health and Human Services Office of Inspector General’s New York Field Office investigated the case along with the IRS-Criminal Investigation’s New York Field Office and the Federal Deposit Insurance Corporation’s Office of Inspector General.

Assistant Chief Jacob Foster of the Criminal Division’s Fraud Section’s National Rapid Response Strike Force and Trial Attorney Andrew Estes and Assistant Chief Brendan Stewart of the Fraud Section’s Brooklyn Strike Force are prosecuting the case.  

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Athol Daily News – AG Healey secures $10M from Home Health Care biz that falsely billed MassHealth

MM Curator summary:

 
 

MA homecare company (Maestro) stole $10M from Medicaid billing for services that had not been authorized by a physician.

 
 

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

 
 

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MAURA HEALEY

BOSTON — In ongoing efforts to combat fraud in the home health industry, Attorney General Maura Healey announced Friday that her office reached a $10 million settlement with a Lawrence-based home health care company and its owner to resolve allegations that they falsely billed the state’s Medicaid Program (MassHealth) for unauthorized services. The company, Maestro-Connections Health Systems, LLC, has an office in Athol.

Pursuant to a settlement agreement with the AG’s Office, Maestro and CEO George Kiongera will pay $10 million to resolve allegations that, from January 2014 through August 2019, they knowingly submitted false claims to MassHealth and MassHealth managed care entities for home health services that had not been appropriately authorized by a physician. Maestro has locations in Lawrence, Auburn, Athol, Framingham, Taunton, Holyoke, and Lynn.

“Companies like Maestro that defraud MassHealth take vital resources away from the program and the people who need them most,” said AG Healey. “Since 2016, my office has recovered $40 million for MassHealth by combating fraud, waste, and abuse in the home health industry. Our work continues to ensure health care dollars are spent appropriately.”

“MassHealth identified allegations of fraudulent billing by Maestro and referred the company to the Attorney General’s Medicaid Fraud Division,” said Assistant Secretary and Medicaid Director Dan Tsai. “Today’s outcome demonstrates the ongoing work between MassHealth and the Medicaid Fraud Division and MassHealth’s program integrity efforts to prevent inappropriate payments.”

“The submission of false claims to the MassHealth program drains resources from legitimate patient care,” said Phillip M. Coyne, Special Agent in Charge, Office of the Inspector General of the U.S. Department of Health and Human Service’s Boston Regional Office. “I appreciate the partnership with the Medicaid Fraud Division of the Massachusetts Attorney General’s Office in holding accountable those that seek to exploit this vital taxpayer-funded program.”

To bill MassHealth for home health services, a provider must ensure that the member’s physician has reviewed and signed a plan of care certifying that home health services are medically necessary. Home health agencies are required to maintain these records for at least six years after the medical services are provided and claims have been presented for payment. The AG’s Office alleges that Maestro billed for services for which it did not have valid, signed plans of care certifying that those services were medically necessary.

In addition to the financial payment, the settlement also includes a requirement that Maestro not resume providing services to MassHealth members until it has hired an independent compliance monitor to oversee a three-year compliance program. That program will include updated policies and procedures, new training for staff, and yearly audits conducted by the monitor.

In a November 2017 settlement with the AG’s Fair Labor Division, Maestro and Kiongera agreed to pay more than $1 million in restitution and penalties after failing to pay overtime to more than 600 home health aides and failing to keep accurate payroll records.

Today’s settlement is part of a larger effort by AG Healey and MassHealth to combat fraud in the home health industry.

 
 

Clipped from: https://www.atholdailynews.com/AG-Healey-combats-fraud-in-home-health-industry-37898036