Millions Made From Medicaid by San Diego Couple Who Run Managed-Care Plan

By Retired OBcean

I belong to a Medicaid managed-care plan called Community Health Group. It covers me when I go to a local nonprofit clinic in my neighborhood. I really don’t have any complaints about the clinic’s service or of the plan.

The Plan – which has annual revenues of $1.2 billion – serves nearly 300,000 poor and disabled patients in San Diego County – all under a state contract funded entirely by taxpayers. Reportedly, Community Health Group has earned above-average ratings for patient care.

Together, Community Health Group CEO Norma Diaz and her husband, Joseph Garcia, an outside consultant who serves as chief operating officer, made $1.1 million in 2016 and received more than $5 million since 2012, according to the health plan’s tax returns and company data. (Chad Terhune/California Healthline)

But I just found out from the Los Angeles Times that a couple, Norma Diaz and Joseph Garcia – who have been running the nonprofit health insurer for 3 decades – have been making millions. Off of Medi-Cal patients.

The Times:

Together, Diaz and Garcia made $1.1 million in 2016 and received more than $5 million since 2012, according to the health plan’s tax returns and company data. Diaz’s compensation as CEO exceeded the pay of several peers at bigger plans in 2016.

Garcia, married to Diaz since 1997, is an outside consultant who serves as chief operating officer. Their health plan, with $1.2 billion in annual revenue, had a profit margin of 19 percent in 2016, the highest of any Medicaid insurer in California and more than six times the industry average.

A critic said, “This is not only a conflict of interest but egregious overpayments.”

Wow! This kind of money is incredible. Especially given that it’s all taxpayer money funding services for poor and disabled San Diego County residents. From 2014 to 2016, Community Health Group recorded profits of $344.2 million, according to state data obtained and analyzed by Kaiser Health News.

The Times article opined that the type of “arrangement at this midsize California health plan raises broader questions about government oversight,” particularly now that states, in order to cover patients on Medicaid, the federal-state insurance program for the poor, are awarding billions of public money to privately-run plans.

It continues:

Evidence is mounting that Medicaid’s rapid expansion under the Affordable Care Act has far outstripped the government’s ability to monitor the taxpayer money it turns over to insurers. In California, for instance, some health plans have reaped outsize profits, so large that the state is now trying to claw back billions of dollars in overpayments, a recent Kaiser Health News investigation found.

As the Medicaid and Medi-cal numbers have exploded since the ACA rollout (from 58 million to 74 million Americans nation-wide), three-quarters of the patients are assigned to plans like Community Health Group, according to the LATimes. And Community Health Group gets a flat monthly fee per person – like me – to handle our medical care.

In order to supposedly keep costs down for Medicaid, states have saddled up to privately-run managed care. Meanwhile, the Trump era has encouraged Insurers to expand, as federal spending on Medicaid could crash under his Regime and the conservative GOP in control of Congress, shifting everything onto the states.

The article continued:

These managed-care contracts can be highly lucrative for the companies involved and their executives, such as Diaz and Garcia. Any money left over after spending on medical care and administration is profit or “surplus,” depending on whether the plan is nonprofit.

Federal auditors have warned for years about lax oversight of Medicaid money, a task that primarily falls to states. A 2017 report found that even as managed care has grown in importance, states have fallen behind in collecting essential data from plans.

Now Diaz and Garcia of California, of course, aren’t the sole benefactors of an apparent overly loose lax oversight of this type of arrangement.

In the last year alone, government auditors and consultants criticized Illinois, Kansas and Mississippi for poor supervision of Medicaid insurers. Illinois auditors said the state didn’t properly monitor $7.1 billion paid to Medicaid plans in fiscal year 2016, leaving the program unable to determine what percentage of money went to medical care as opposed to administrative costs or profit.

If you want more on a brief examination of Community Health Group and how its arrangement points to systemic flaws in oversight, go to the original.

But I am just aghast at the enormity of the profits being raked in – and the salaries of this couple – and, again, I’m sure there’s others similar in arrangement. The state – our state – must buckle up and rise to the occasion and deepen its oversight.

Perhaps some of these profits can be filtered down to the clinics and staff doing the service of medical care for nearly a third of a million of the most needy; and maybe more staff can be hired and more clinics opened.

Just saying.