HEALTHLINES Marcela Villa, a nurse who worked for a Medicaid subcontractor assessing appeals, says her managers kept pressuring her to deny expensive claims. PHOTO BY HEIDI DE MARCO
Coverage denied Patients suffer as layers of companies profit by
Chad Terhune
M care, but she played a crucial role in the lives of thousands of Medicaid patients in arcela Villa isn’t a big name in health
California. Her official title: denial nurse. Each week, dozens of requests for treatment landed on her desk after preliminary rejections. Her job, with the assistance of a part-time medical director, was to conclusively determine whether the care—from doctor visits to cancer treatment—should be covered under the nation’s health insurance program for low-income Americans. She was drowning in requests, she said, and felt pressed to uphold most of the denials she saw. “If it was a high-dollar case, they tried to deny it,” Villa said. “I told them, ‘You can’t deny it just because it’s going to cost $20,000.’” Villa, 32, did not work for the government. She did not even work for an insurer under contract with the government. She worked for
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a company now called Agilon Health. Owned by a private equity firm, it’s among the legion of private subcontractors looking to profit from Medicaid patients. California’s Medicaid program, known as Medi-Cal, has determined that the Long Beach company, which was paid to coordinate care for about 400,000 patients, improperly denied or delayed care for at least 1,400 of them, state officials confirmed. The state Department of Managed Health Care is investigating further. The state findings, along with internal company documents and a whistleblower complaint obtained by Kaiser Health News, shine a light on the potential dangers of outsourcing care for poor people. Government oversight, not rigorous to begin with, fades as taxpayer money filters down through layers of companies eager to seize on Medicaid’s substantial growth under the Affordable Care Act. Medicaid officials say they have authority only over the health plans, not their subcontractors. In an interview, Agilon chief executive Ron Kuerbitz acknowledged that some patients experienced modest delays in care but disputed that any suffered unjustified denials. He noted that an internal investigation by the company found no evidence of “systemic” denials and that most of the problems existed before Agilon took over another firm, Primary Provider Management Co., in 2016.
“We did the right thing when it was identified,” Kuerbitz said of the problems. “We disclosed it, we investigated it, and we pursued a remedial path.” Such concerns are not isolated to one company. Last year, KHN reported on similar irregularities at SynerMed, a Medicaid subcontractor that coordinated care for about 650,000 patients in California. In response to a whistleblower complaint, the state Medicaid program said it found “widespread deficiencies” at SynerMed that put patients “in imminent danger of not receiving medically necessary healthcare services.” The company’s staffers had falsified documents for years to cover up improper denials of care, according to state officials. Then SynerMed abruptly shut down, and some of its patients moved to Agilon’s medical groups. Nearly three-quarters of the 73 million low-
income Americans on Medicaid are now in managed care, in which states pay health insurers fixed monthly amounts for each enrollee to cover the range of services they need. Under this system, keeping patients as healthy as possible is one way to make money. Another is to deny or skimp on services. Increasingly, Medicaid plans outsource the work of managing patients’ health and medical treatment to subcontractors like Agilon—passing along a share of the government money coupled with the financial risk posed by a fixed budget.
These firms can be powerful gatekeepers. They run physician groups, bear responsibility for forming doctor networks and judge whether a request for care is necessary. Agilon is a big player in this state—doing business with insurers such as Blue Shield of California—and it’s now expanding in other states like Texas and Ohio. Primary Provider Management Co. ran several medical groups, including Vantage Medical Group with more than 5,000 physicians across Southern California. By building off PPMC’s base of Medicaid enrollees in California, the New York private equity firm that owns a majority stake in Agilon—Clayton, Dubilier & Rice— sought to coordinate care in Medicaid and Medicare Advantage plans across the country. (CD&R did not respond to interview requests.) For several years, the problems at PPMC, and then Agilon, went undetected. Then, in early 2018, Agilon disclosed to the California Department of Managed Health Care its discovery that employees had been altering records prepared for auditors, which it said was not known to top management. According to an internal report, completed in May and obtained by KHN, staffers had been falsifying documents since at least 2014 to pass audits by health plans. Employees were changing dates, for example, to cover up delays or withholding certain files so they couldn’t be reviewed. That same month, an anonymous whistleblower sent a letter to health plans and government officials, urging them to investigate “illegal, unethical” conduct at the firm. “Senior management delays treatments for cancer patients without any regard [for] patients’ well-being, to save their dollars,” the whistleblower wrote in a two-page letter reviewed by KHN. “They brag about how profitable we are.” In response to the allegations raised by the whistleblower and the state, Agilon opened another internal investigation. That second report, finished in June, found inadequate staffing to handle the volume of work, various shortcuts and practices outside industry “norms” and improperly denied claims. Both internal reports were released to the state. A top official at one of the largest Medicaid
insurers in the country, Inland Empire Health Plan, said the not-for-profit manHEALTHLINES C O N T I N U E D
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