Medicaid Medicare Your Coverage Options

Are commercial Medicaid and Medicare plans a good taxpayer investment?  

Written by Diane Archer

How do we know whether commercial Medicare and Medicaid health plans are a good taxpayer investment? Chad Terhune reports for Kaiser Health News that one non-profit commercial Medicaid health plan had “profits” of more than $344 million over three years. Why is this taxpayer money not being spent on the people with Medicaid enrolled in the health plan or going back to the state?

It appears that California Medicaid does not have systems in place to oversee its commercial Medicaid health plans. As a result California may be paying these health plans too much in taxpayer dollars. Or, California may not be ensuring that funds given to its Medicaid plans are being spent as they should be on their members. California is not alone. The federal government also has found Illinois, Kansas and Mississippi to be derelict in their oversight of their Medicaid health plans.

As one example of a health plan needing state oversight, Community Health Group is a San Diego California Medicaid plan that serves close to 300,000 low-income people, run by Norma Diaz, CEO, and Joseph Garcia, COO. It had a 19 percent profit margin or “surplus” in 2016, amounting to $344 million. The health plan had annual revenue of $1.2 billion. And, the CEO and COO earned $1.1 million in 2016.

Can the states get excess monies back from commercial Medicaid health plans? And, how good a job is the federal government doing of overseeing the commercial Medicare Advantage plans? Reports suggest that they too can be wrongly and grossly overpaid. The Government Accountability Office (GAO) reports that in 2013 alone CMS may have improperly paid $14.1 billion to Medicare Advantage plans because these commercial plans claimed their members had more serious health conditions than the evidence suggested.

Moreover, can a state or the federal government do anything about excessive compensation paid to staff at commercial Medicaid and Medicare health plans? One executive compensation consultant says that Diaz and Garcia are seriously overpaid. But, California’s head of the Department of Managed Health Care said that the state has no control over executive pay at these plans.

It is hard to believe that we are not wasting billions of taxpayer dollars on commercial Medicare and Medicaid plans every year. Wouldn’t we be better off relying on a government-administered plan, like traditional Medicare, which is far more cost-effective and accountable?

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