Federal authorities are investigating whether the state Department of Human Services has wrongly received federal funds through its operation of the Medical Assistance health insurance program.
Lucinda Jesson, the Commissioner of the Department of Human Services, confirmed the investigation this afternoon during comments to a state House of Representatives committee hearing that included testimony by St. Paul attorney David Feinwachs.
A former lobbyist with the Minnesota Hospital Association, Feinwachs provided 30 minutes of testimony that raised questions about exactly how the state has split costs of the Medical Assistance program with the federal government.
Jesson said she could not offer any details about the investigation. But she said she would be internally investigating some of Feinwachs’ concerns were it not for the federal inquiry.
Feinwachs showed committee members a document that suggested the state has been manipulating the Medical Assistance rate certification process to obtain unjustified federal funds.
“At the same time that I first heard of the allegations that Mr. Feinwachs referred to, that was when I became aware that federal authorities were investigating a number of these allegations,” Jesson said during the committee hearing. “We are fully cooperating.”
This year, the state and federal government are spending $3.3 billion to provide care for low-income and disabled residents on Medical Assistance; next year, they are budgeted to spend $3.6 billion.
For more than a year, Feinwachs has been raising questions at the Capitol about whether state dollars have wrongly inflated the profits of four HMOs that have contracts with the state to manage care for many Medical Assistance recipients. The HMOs are four of the states largest health insurers – Blue Cross and Blue Shield of Minnesota, HealthPartners, Medica and UCare.
Last year, in the midst of questions by Feinwachs and legislators about what happens to all the state money going to the HMOs, UCare volunteered to give back $30 million to the state because the plan’s profits were greater than expected.
One reason for the extra profit, UCare officials said at the time, is that Minnesota had suspended a program called General Assistance Medical Care – a program that traditionally had generated losses for the HMOs.
For years, state and health plan officials have said that losses in the General Assistance Medical Care (GAMC) program were balanced by profits in the Medical Assistance program. But that equation is central to the question that Feinwachs is raising.
“The real question is: Do we all agree that the federal government knew that this was happening?” Feinwachs asked.
In his testimony, Feinwachs blamed legislators for not raising more questions last year about the UCare payment. One question, he said, is: Why other HMOs didn’t make similar contributions. Another question: Why didn’t the federal government get half the money?
On this point, Feinwachs showed a copy of a March 2011 email from Jesson to another state official about the UCare payment that said: “In order to have a good chance of keeping all of this money, it must be characterized as a donation. If a refund, feds clearly get half.” She closed the email by writing: “I thought we were going to handle this through phone calls?”
During the committee hearing today, Jesson said she though the payment should be termed a donation because there was nothing in UCare’s contract that would compel them to make the payment.
“I’m the first to say that there is not some sort of crystal clear answer to this question about whether half of this should go back to the federal government,” Jesson said. “I think we have a reasonable position.”
