Under pressure to expand health care choices for teachers, retirees and employees, state officials agreed this summer to let a politically connected insurer offer coverage again, even though auditors said the company had previously overpaid providers in the State Health Benefit Plan nearly $23 million.
Weeks later, in order to settle a legal claim and the overpayment accusations, the Department of Community Health (DCH) agreed to pay UnitedHealthcare $7 million and promised not to investigate other potential problems that the agency’s auditors found.
DCH officials had declared UnitedHealthcare in default of its contract to manage the plan in 2012 over what they said was nearly $23 million in overpayments to surgery assistants, possibly the largest such case in the plan’s history. Some of the billings were sent to the Attorney General’s Office for further investigation, and state auditors suggested there were other overpayment problems involving the company that needed looking into.
But instead of holding its ground, the agency agreed to pay United and promised not to investigate other potential overpayments, according to a copy of the agreement obtained by The Atlanta Journal-Constitution. In exchange, United dropped a lawsuit claiming DCH rigged bids to ensure Blue Cross and Blue Shield of Georgia took over the plan from United and other providers in 2014.
The agreement came a few weeks after DCH announced that United would, starting in 2015, once again be among the companies that managed the plan, which provides health care to 650,000 teachers, state employees, retirees and their dependents.
DCH Commissioner Clyde Reese said the decision to add United to the list of companies offering coverage next year was not part of the deal to settle the legal and overpayment issues.
“I personally felt like it’s important for the (plan) members to have more than one provider,” Reese said. “I did not want to go forward with them (United) as a vendor in 2015 with this hanging over us.”
Tracey Lempner, spokeswoman for United, said, “The settlement was a reasonable resolution and reflects our shared commitment to addressing improper billing.”
But A. Lee Parks, a lawyer representing plan members in a separate class-action lawsuit against DCH, was stunned by the agreement state officials signed off on.
“They gave away taxpayer money for free, and we don’t even know how much because they stopped the audit,” he said.
Teacher and retiree groups cheered Reese’s announcement in July that they would get to choose between multiple companies for their health care, something they’d demanded for months after Blue Cross was named the sole provider for 2014.
But John Palmer, a Cobb County middle school band director and member of Teachers Rally to Advocate for Georgia Insurance Choices, or TRAGIC, found the DCH deal with United a head-scratcher.
“I am surprised that DCH would give UnitedHealth $7 million to make the lawsuit go away, particularly if they had audit problems in the past,” Palmer said. “It further shows the mismanagement of DCH right now. I don’t know that anybody knows what’s going on.”
Complaints from state employees
The state’s handling of the $3 billion-a-year plan over the past 15 months has provided almost unrelenting political pain for Gov. Nathan Deal and his health agency.
Until this year, one of the main players in the plan was United, a company that has been represented in court by Deal’s campaign lawyer. The company and its employees have contributed about $400,000 to state candidates and causes in the last eight years, including $50,000 to Deal’s Real PAC in 2012 while United was fighting DCH over the overpayment issue.
For five years, United had been among the businesses managing the plan when DCH decided to go with Blue Cross. The new plan for 2014 offered members more limited health care choices with higher out-of-pocket expenses to save the state money.
United sued in the summer of 2013, claiming DCH had fixed the bids to make sure Blue Cross won. DCH denied the accusation.
When the new plan took effect in January, teachers, retirees and state employees cried foul over the dramatically higher out-of-pocket costs. Deal and DCH quickly pumped more money into the program to make at least some of those increased costs go away.
But TRAGIC and plan members continued to find problems with the coverage, arguing that teachers, retirees and employees need more and better choices.
A class-action lawsuit was a filed in May, estimating that more than 200,000 teachers, state employees and retirees have been paying over $10 million a month too much in premiums since Deal and DCH tried to fix the problems in January.
While more choices were added for 2015, including United plans, TRAGIC members said the pricing didn't make sense and some of the costs remained too high.
2015 open enrollment for plan members started Monday.
What plan members didn’t know when the latest changes were announced in July was that well before Blue Cross won the bid to handle the contract for 2014, DCH was raising problems with United’s bill paying.
DCH brought up issues with United in 2011 about potential overpayments from the plan to surgical assistants. Reese said in some cases, United was paying the assistants five to 10 times more than the doctors performing the surgery. In one case, United paid a surgeon $2,274 for a gastric bypass procedure but his surgical assistant $24,000, according to records obtained by the AJC.
DCH wound up withholding more than $22 million in payments to United. The company appealed DCH’s decision last year — not long after the “bid-rigging” lawsuit was filed — but Reese denied their protest.
A contract amendment between the agency’s auditor, AON Consulting, and DCH was drawn up to look into other potentially problematic areas, including anesthesiology, ambulatory surgical centers and laboratory services payments.
Deal brokered this summer
While teachers and retirees protested the health plan during the first half of the year, DCH was both trying to expand choices and having to deal with the earlier lawsuit filed by United.
Reese said Deal’s office was kept apprised of the negotiations but didn’t participate in reaching the agreement.
On July 1, DCH announced new, expanded health coverage for plan members that included the participation of United.
On July 28, Reese signed an agreement ending the legal fight started the previous year. The state agreed to give United $7 million of the more than $22 million it had withheld, and wouldn’t investigate other potential areas of overpayment from the company’s time running the State Health Benefit Plan. United dropped its lawsuit. “This agreement does not constitute an admission of liability by either of the parties,” the agreement said.
Reese said he got assurances from United that the overpayment situation has been “fixed and wasn’t going to be a problem going forward.” He added that DCH would keep an eye on the situation.
Reese said the earlier lawsuit was costing the state money to fight, and the agreement would keep the state from potentially being sued over the overpayment issue. The Attorney General’s Office said three lawyers and a paralegal had spent almost 1,100 hours working on the United lawsuit.
Of the agreement’s details, Reese, a former general counsel for DCH, said, “We felt like this was a reasonable compromise.”
He added, “It’s all about being part of a global agreement. You have to give something to get something.”
But Parks said the deal didn’t make sense for taxpayers.
“The taxpayer is the one who is hurt here,” he said. “How does the state, after taking back $22 million … how is it they not only don’t fire the contractor (United), they rehire them and give them a bigger share of the business, and they give them $7 million? We are all stunned.”
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