: Eight steps Texas can take to fix its managed-care mess

Years of poor state oversight have allowed companies to skimp on essential care for sick kids and disabled adults

Day after day, Heather Powell lay in bed, in pain, in her small San Antonio apartment. For two years she languished there, staring at the ceiling, watching cop dramas on Netflix, surfing the Internet with a computer mouse tucked under her chin. She had been almost completely paralyzed from the neck down in a shooting more than a decade earlier. These days she found some joy in the only human relationships she had left, with the helpers who washed her body and cooked her food and laughed at her jokes. A state program was supposed to give Powell, now 38, enough help so she could live at home, rather than in a nursing home. But the hydraulic lift that moved her to the shower or a wheelchair broke, trapping her in bed. There was no sign of the special mattress her doctors had prescribed to relieve pain and prevent the sores that can kill immobilized people. No sign of the gadget that would allow her to turn on the lights or adjust the thermostat with her voice — even after a nurse hired by the state wrote a scathing report about Powell’s suffering. Last spring came the cruelest cut. Superior HealthPlan, the company Texas paid to manage her care, said it was cutting the hours of the aides who helped her get through each day. Rather than spending 12 hours a day with her, they would be around for just seven. Previously: The preventable tragedy of D’ashon Morris When a giant health care company wanted to save money, a foster baby paid the price. Catch up. Alone for 17 hours a day. Unable to move. In pain. Powell began to plan her suicide. Texas is supposed to provide a reasonable quality of life to poor, sick people like Powell, who need long-term care that was once available only in nursing homes. The state used to pay for that care directly, writing checks to doctors and home-care agencies. When Texas turned over many of its health programs to private companies to manage, they promised to save taxpayers millions while delivering better health care to more than 4 million Texans, including about 720,000 medically fragile children and adults. But years of inept state regulation have allowed corporations to profit as they skimp on care for sick kids and disabled adults in the program known as Medicaid managed care. And Texas health officials have hidden the full extent of the problems from the public. The Dallas Morning News has identified hundreds of cases in which essential medical care was delayed, denied or not delivered to people with critical health needs. We reviewed thousands of pages of documents, including patient medical files, corporate financial records and state records gathered through 160 public-information requests. We analyzed state data and talked to hundreds of people: patients, policy experts and medical professionals. Here’s what we found: At least 8,000 Texans like Powell — disabled people trying to stay out of nursing homes — have major unmet medical needs. The state hasn’t even studied the care of other disabled adults or ailing children.

STAR+PLUS A managed care program for people who have disabilities or are age 65 or older. Many of these patients need nursing-facility-level care in their homes such as hospital beds and breathing machines. Complaints are growing from patients and their families who say the private health care companies are refusing critical services. Since 2014, appeals of such decisions have risen 26 percent in the program for the elderly and disabled and 31 percent in the program for foster children.

and 31 percent in the program for foster children. The companies providing care get to decide what treatments are “medically necessary,” and the state often fails to challenge or even review policy changes that can deny care to thousands of patients. In 2016, state regulators found one such change by Superior HealthPlan was illegal — but only after a baby named D’ashon Morris suffered catastrophic brain damage.

Medically vulnerable patients struggle to find doctors as the health care companies vastly overstate how many doctors are in their networks. As we will detail in part 3, the companies haven’t hired nearly enough “care coordinators” to connect people with treatment, and those they do hire are overwhelmed by too many cases.

When somebody gets hurt, the state rarely does anything about it, as we will show in part 4. From 2013 to 2016, the state fined the companies just $12.4 million, or two-hundredths of a cent for every one dollar Texas paid them in those years. The managed-care industry asserts that it saves Texas about a billion dollars a year while improving the health of children, reducing asthma cases and short-term complications from diabetes. Disabled adults, the industry says, also benefit, showing lower rates of certain infections and pneumonia.


The Texas health commission did not provide us with independent analysis to confirm those savings and said it could not arrange an interview with state executives. Health Commissioner Charles Smith announced his retirement last month. Weeks earlier, The News requested an interview and his staff was working to provide answers to our questions. “Our most important mission is making sure people get the services they need,” commission spokeswoman Carrie Williams ultimately said in a lengthy statement. “All of these challenges have our ongoing attention and need to be strengthened in order for us to have a successful program,” she added. Whatever benefits managed care may have for healthy kids, our investigation shows it’s not working for sick people. That’s because the system provides perverse incentives for health care companies. Term: Medically necessary care Companies decide which drugs, services and exams must be provided for people to either get better or maintain their level of health. Using criteria they set, and broad guidelines set by the state, companies often deny claims for services they decide are not needed. There’s some wiggle room when it comes to adults, but in Texas, children are legally entitled to all necessary care. “The only way to make money is to deny medically necessary care,” says Peter Hofer, a senior litigator for Disability Rights Texas, which represents Medicaid patients and foster children. “It’s a bad model.” Hofer was involved in landmark litigation that created many of the state rules that companies are supposed to follow. The Texas Legislature embraced managed care two decades ago as a way to curb soaring Medicaid costs. Like HMOs — health maintenance organizations — in the private sector, Medicaid managed-care companies promised to negotiate low rates for doctors and hospitals, slash spending on unnecessary services and do a better job of weeding out fraud. Term: Coordinated care The central promise of managed care is that health plans offer staff who connect patients with doctors and specialists to create an individualized plan of care. This is supposed to reduce spending on unnecessary services and provide better preventive care. But a state study published last year found big gaps. In the disabled program, for example, managed-care companies offered more than half of patients only the very lowest level of help: two phone calls a year. And a state study found that four out of five managed-care companies didn’t even meet this low goal. It recommended reducing caseloads to make sure these patients — almost 300,000 Texans — got help. The companies also pledged to improve health outcomes through “coordinated care” that would ensure patients got treatment and access to preventive checkups and vaccinations. In return for all of this, Texas promised the companies a modest profit. More sick people, more money In the early years of managed care, Texans with complex medical needs represented a small fraction of companies’ revenues. Today, those sick people account for more than half of the revenue, with $11.7 billion last year alone. Fragile Healthy SOURCE: News analysis of state financial data Andrew Chavez / DMN Fragile Texans are more profitable When lawmakers pushed medically fragile children into managed care, it was a boon for for-profit health care companies. Dollar for dollar, a vulnerable patient is more profitable than a healthy patient. SOURCE: News analysis of state financial data Andrew Chavez / DMN The first managed-care programs focused on relatively healthy patients, mainly poor children. But the elderly and disabled, who make up less than a quarter of the people in the program, account for more than half of Medicaid spending in Texas. Texas soon became a national leader in the effort to put more vulnerable people into managed care. In 2008, it chose Superior as the only health plan available to foster children. Over time, the state rolled the elderly and disabled into managed care, too. And last year, lawmakers ignored warning signs as they expanded the program to cover children who qualify for Social Security disability benefits or depend on machines for eating and breathing. Today, Texas and the federal government pay about $11.7 billion a year for the programs that care for the state’s sickest citizens. Nine out of 10 of those patients rely on five giant corporations: Superior, Amerigroup, Cigna, Molina and United Healthcare. Texans with complex medical needs are now the most profitable, on a per-person basis, for the companies in Medicaid managed care, financial data shows. The companies told state regulators last year that they netted $147 million on fragile patients alone. Few — but damning — studies Managed care comes with inherent tension: Doctors and the companies argue over what care is necessary, with patients caught in the middle. So how often do the companies refuse to pay for treatment or services that doctors say are necessary? The state health commission said it has no idea. While the companies do report some information, it is dotted across thousands of spreadsheets. And auditors have repeatedly warned that companies often supply unreliable and misleading data. Texas pays health care companies a higher monthly fee to provide at-home care for people like Powell, who would otherwise be confined to nursing homes. In 2013, lawmakers became alarmed at how fast this program was growing and raised concerns that the managed-care companies were needlessly putting people into it just to make more money. The Legislature ordered a study. So in 2015, nurses traveled the state to check on a small sample of people in the program. The News obtained records created during that study and discovered that the nurses found problems in more than a third of the 272 cases they reviewed. Term: Skilled nursing While family members can provide a lot of help at home, some patients need help that a trained nurse should provide. Examples include assistance with some medicines and suctioning out airways for people with tracheostomy tubes. Many patients needed but didn’t get skilled nursing — a benefit for which the state pays extra. Some patients waited hundreds of days for basic supplies like adult diapers and wipes. One woman spent half a year trying to get a walker despite her history of falls. The nurses flagged George Berry, a 55-year-old diabetic man who has lost most of his eyesight and needed a nurse’s help to make sure he took the right amount of insulin. Citing privacy concerns, an Amerigroup spokeswoman wouldn’t comment on that case, but said the company hired extra people to make sure its clients are getting what they need. “Amerigroup worked quickly and collaboratively” with the state heath commission to address problems identified by the nurses, said Olga Gallardo of Anthem, the health care giant that owns Amerigroup. But three years later, Berry told The News he still hasn’t received home nursing and has ended up in the emergency room several times because he took too much insulin. “I haven’t seen a nurse in so long, I don’t know what they smell like,” he says. The company’s profit margin from this program, 6 percent over the last four years according to our analysis of state data, far exceeds what other companies have pocketed. It netted almost $400 million, more than all the other health care companies combined. Last year, the nurses went out again, checking this time on 358 disabled patients. Again, The News got the underlying records. One in 5 of the patients had unmet needs so severe that nurses recommended health regulators immediately intervene. Almost 20 people were at risk of serious injury because they weren’t getting the services they needed, including some with dementia who had no help.


Some patients hadn’t seen a nurse in years, or had ill-fitting or painful dentures, cavities and rotting teeth. In some cases, the companies had rejected valid claims. In others, they hadn’t followed through on the needs they knew existed. When the nurses embarked on the 2017 study, they carefully chose the patients they visited, using the same techniques as social scientists to make sure their sample was representative. That method, combined with some basic statistics, would allow them to estimate how many disabled patients might be at risk. They never published that estimate; the state instead downplayed the significance of the problems in a vague report to lawmakers. Complaints about denied care have risen among fragile patients Over the past decade, complaints about vulnerable patients in Texas being denied care have nearly tripled. These patients have complained at five times the rate of healthy people, whose care is far less expensive. Fragile Healthy SOURCE: News analysis of health commission complaints database Andrew Chavez / DMN So we did the estimate for them. Using the most conservative assumptions, we found that at least 8,000 patients — and as many as 14,000 — in that program may be going without the services they need. That’s out of about 50,000 total. There is no similar data for medically fragile children, foster kids or disabled Texans who aren’t in the program for keeping patients out of nursing homes. But a report released in April by outside researchers, based on 22,000 patient records, also found serious problems. For example, at two companies, at least two-thirds of the patients who needed personal assistance at home weren’t getting it. Managed-care companies in Texas have the power to write their own policies about what is “medically necessary care.” Those rules aren’t supposed to be stingier than federal and state standards. Children are entitled to receive individual assessments of their needs — and to have all those needs met. But Superior has used its policy-writing power to deny care, regardless of what each child might need, according to state records and dozens of interviews with advocates, disability lawyers and parents across the state. Jane Hardey, a crisis communications expert hired by Superior, said the company follows state parameters on issues like medical necessity, home nursing and reauthorizing treatment. She called accusations that the company is denying care to save money “categorically false.” In 2014, Superior decided that only specialists, not family doctors, could test children for allergies, according to state emails and legal filings. Within months, state regulators were dealing with a crisis: Children in rural areas couldn’t get allergy treatment. The company had no specialists in 63 counties, court records show, forcing patients to travel hundreds of miles to find a doctor. “Superior’s strategy is to deny as many claims as possible, regardless of the service or provider,” says Casey Low, an Austin lawyer who represents family doctors suing Superior over that policy change. “If they can cover more people, but pay less out in services, they make more money.” Similarly, the company changed its rules in 2016 to require one nurse to care for two very sick patients, a move that effectively cut its costs in half. The state later determined that policy was illegal, according to records obtained by The News, but not until more than a dozen foster children across the state were put in danger. Doctors, home therapists and disabled people have complained to state health officials and the Legislature for years that Superior was creating unnecessary roadblocks designed to deny care and save money. Critics cite onerous paperwork for doctors and multiple layers of screenings and approvals before the company will allow treatments. “I believe that this particular managed-care organization is putting children’s lives in danger to make a profit,“ says Dr. Ruchi Kaushik, a pediatric specialist in San Antonio who treats medically fragile children. “We shouldn’t put children’s lives at risk, just so someone can make some money.” For patients of managed-care companies in general, the problems are getting worse, data shows. Formal complaints that managed-care companies are refusing needed treatment have jumped as lawmakers have moved more and more people into their care, according to state data. The trend is especially pronounced in the programs for foster children and the disabled, where the rate of these complaints has almost tripled since 2008. Filing a formal appeal is even more complicated than making a complaint. But appeals have jumped 27 percent in the programs for foster children, the elderly and disabled since 2014. When the bottom line hurts, appeals rise The program for the elderly and disabled is a volatile business because patients need expensive long-term services, which hurt companies’ bottom lines. Over the last four years, the companies that struggled to make big profits accounted for the most appeals by members who were denied care. SOURCE: News analysis of state financial data and quarterly performance reports Andrew Chavez / DMN

Heather Powell gets a hug from her counselor, Russell Gainer, after a weekly session at home. Powell also has a physical therapist who visits her regularly. After Superior HealthPlan cut her personal attendants’ hours, she started planning to kill herself by overdosing on her blood-pressure medication.

‘I would rather not be alive’ A year ago, Heather Powell got a visit from a registered nurse hired by the state, investigating a complaint about her care. Sara Goodman found that Superior had been collecting thousands of dollars a month to provide Powell everything she needed to live at home — including $5,000 for the lift, a special mattress and voice-activated controls. But she didn’t get the equipment. “She has not been out of the bed for more than one year except for transfer by ambulance to medical appointments,” the nurse wrote in her report. “She is a young, intelligent person who wants to live in her home and participate in the community,” the goal of the Medicaid program she was in, Goodman added in an internal memo obtained by The News. “Superior has failed to address this member’s needs,” wrote Goodman, who did not respond to a request for comment. The same year it was skimping on care for Powell and countless others, Superior lost $5.7 million through its contract to provide long-term care for disabled people — its first loss after three years of profitability. That summer, the state pressed Superior to supply the things Powell needed, a commission spokeswoman said. But the company provided only a thin gel mattress topper, a much cheaper option that caused her pain. “This is a complex case,” said Williams, the Health and Human Services spokeswoman. “Our staff worked hard behind the scenes on a number of very specific items to help improve her care and quality of life.” Soon after, Superior cut her personal attendants’ hours. “If I were to lose these hours,” Powell remembers thinking, “I would rather not be alive.” She began planning to kill herself by overdosing on her blood-pressure medicine, she says. But the more she thought about Superior’s reductions, the angrier she got at the company. Rather than give up, she called a disability lawyer and asked for help fighting Superior. By February, Powell had developed ulcers on her lower back. Heather Powell of San Antonio, almost completely paralyzed from the neck down, received a visit recently from care team assistant Corinna Cerda. That’s when The News asked the health commission questions about Powell’s case. Within a few weeks, Superior set up her special mattress, which constantly shifts and redistributes her weight to prevent ulcers. Her pain quickly became less severe, she says, and she needed fewer drugs to get through the day. The company also restored the number of hours that personal attendants would be around to help her take her medicine and clean her wounds and place an electric blanket on her when her temperature drops. She’s relieved, but she says she spends a lot of time worrying for others who might be suffering. “Can you imagine,” she asks, “how many people they probably do that to?” Follow J. David McSwane, Andrew Chavez and Tom Fox on Twitter. Up next Texas pays companies billions for ‘sham networks’ of doctors The state tells foster parents that hundreds of psychiatrists will see their kids. We found only 34. Managed-care companies overstate the number of physicians available to treat the state’s sickest patients. Keep reading.

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