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Clay’s Weekly Medicaid RoundUp: Week of October 14th, 2019

Soundtrack for today’s RoundUp pessimist readers-

For optimist readers-

MICHIGAN MOVING PBMS TO THE DOGHOUSE- So it seems that all the news of spread pricing these last 2 years or so has made people a little skittish on PBMs. Michigan Medicaid announced plans to nix its PBMs starting December 21 (interesting start date). At that time the state will take over management of drug benefits and save an estimated $40M. The change comes about 6 months after the Michigan Pharmacists Association rallied behind reports of PBM pricing shenanigans, including some that showed the state overpaying PBMs by $64M.

KEYSTONE STATE MOVING TO SINGLE PDL– All 8 PA MCOs will start using a single preferred drug list Jan 1 2020. The change was triggered by high Hep-C costs as well as an effort to help providers managing care for members with multiple drug regimes. State officials think this will save about $85M each year. Here’s the kicker- the earlier MCOs analysis said it will cost the state $81M each year. If you’ve ever tried to follow Medicaid Rx math you know its all witchcraft, so its not surprising that the MCOs and state came up with entirely different numbers.

WONDERS NEVER CEASE: FEDERAL JUDGE STOPS REGULATIONS PROMULGATED UNDER NORMAL LEGAL PROCESS– I think I have seen this movie before. If you followed the drama of the Public Charge Rule the last few months, you probably knew this was where we would end up. The Trump Administration promulgated rules that would enforce existing law (that requires those asking for admission into the U.S. to prove they will not require safety net services or have someone who can cover their costs. Very similar to what I found out when I wanted to move to Scotland in the late 1990s). The proposed rule made it all the way through the established, legal process- until it was rejected by 2 judges (1 in the southern district of NY and 1 in CA) who decided the right thing to do was to continue to not enforce existing law. My high school civics class really misinformed me about how the three branches of government work.

IDAHO CONSIDERING MAGIC MONEY POOL TO PAY FOR VOTER-APPROVED EXPANSION- And it looks like they will find it hiding in county coffers. Committee leads tasked with passing the hat are eyeballing $10M in county funds that they think are now fair game for Medicaid (since those funds currently go to uncompensated care, and Medicaid will now cover that). My prediction – these funds will be bundled with the disappearing tobacco settlement funds and get matched with the federal magic money cover expansion costs for about 6 months. That will grease the skids needed to get the initial vote done. Then we will hear about a huge Medicaid budget shortfall about 8 or 9 months into the expansion.

MORE NEWS STORIES OF MEDICAID PAYING COSTS FOR DEAD PEOPLE- This week its Minnesota with an estimated $3.2M owed back to the feds. Out of 100 sample capitation payments, 95 had unallowable payments. You can guess the answer by now – that this was during a transition to a new eligibility system, and we promise the new one won’t do the silly things the old one did (see also LA).

FARRIS’S FANTASTIC FRAUD FOLLIES– And now for everybody’s favorite paragraph. The paragraph taxpayers love to hate. Let’s start the ticker and see who wins this week’s award. Our first fraudster hails from Conway, Arkansas: Karen Todd was popped this week for billing $600k in bogus optometrist claims for her husband (Karen is the office manager; hubby the optometrist). Let’s stay in the south a moment and head to Raleigh, NC where we find Pamela Faulkner. Pam buddied up with Renee Borunda to steal $213,927 in Medicaid bucks. How? Bogus behavioral health services claims. Southerners continue to be represented this week as we head to Nashvegas. There we find Michael Kestner, Brian Richey, Daniel Seely and Jonathan White stealing a cool $100k from Medicaid (they tried for $8.6M but came up short) and another $5.3M from Medicare and TriCare. Their scheme involved rev max and fraudulent claims at their pain clinic. Ok let’s leave the south and head to Texas (its different, I promise). Omar Cuate Canales of Rio Grande City  plead out this week to $385k in Medicaid thievery using his DME business. Now its time to head to the heartland. Tracy Wellendorf of Cedar Rapids, Iowa agreed to pay back the $1M he stole from Medicaid using medically unnecessary sinus surgeries. Wellendorf agreed to pay back the $1M as a double-dog promise he did nothing wrong, but we all know something smells funny here (get it? Smells funny? Sinus surgeries…). Mrs. Todd you win this week’s award. Congratulations! Maybe you and hubby can take a nice vacation somewhere? I wanted to give this to Mr. Wellendorf, but since he wrote a big check to get the state to pretend he did nothing wrong, and I don’t want to get sued- Mr. and Mrs. Todd win! Taxpayers, you lost about $7.4M in that last paragraph.

That’s it for this week. As always, please send me a note with your thoughts to or give me a buzz at 919.727.9231. Get outside (make your first fire of the year if its cold enough wherever you are) and keep running the race (you know who you are).

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Trystero: de Vader zond de Zoon om de wereld te redden