For-profits' entry into Wisconsin program for disabled, elderly being approved by state (copy)

Plans by for-profit, out-of-state companies to acquire local nonprofits that run a Wisconsin Medicaid program for people with disabilities and the frail elderly are being approved by state agencies, amid concern the mergers could reduce services for more than 80,000 of the state's most vulnerable residents.

Louisville, Kentucky-based Humana's plan to purchase Inclusa, of Stevens Point, has passed reviews by the state Office of the Commissioner of Insurance and the state Department of Health Services.

"All certification criteria have been met, so we are in the process of moving forward and we anticipate that the contract reassignment will be moving forward soon," Alicia Boehme, director of the Bureau of Quality and Oversight at DHS, said Tuesday.

Molina Healthcare, based in Long Beach, California, plans to acquire My Choice Wisconsin, of Wauwatosa, which has a sizable presence in Dane County. My Choice and Inclusa are the largest of four managed care organizations, or MCOs, that run Family Care, a state program that provides home care, transportation, job support and other services to keep people out of nursing homes.

DHS is reviewing Molina's certification materials, with its merger expected to go before OCI soon, Boehme said Tuesday at a meeting of the Wisconsin Long-Term Care Advisory Council.

Despite advocates' criticism of the moves, including at public meetings in December and April, state officials say they are not legally able to block the mergers outright. OCI is limited to ensuring financial solvency and DHS is limited to making sure the companies can administer the Family Care program, officials said.

However, DHS said it is strengthening its contracts with the companies, such as requiring the MCOs to maintain at least 50% of their staff in Wisconsin and requiring six months' notice, rather than 90 days, to terminate a contract. The agency is also creating a "data firewall" to prevent MCOs involved in IRIS, a related program in which clients choose their own caregivers, from moving members between the two programs.

Molina already owns The Management Group, or TMG, the state's largest IRIS consulting agency. Critics fear Molina will try to transfer clients between Family Care and IRIS to its financial advantage. More than 57,000 residents are in Family Care or related programs, and nearly 25,000 are in IRIS.

"We did make many amendments to the contract to try and address the concerns," said Curtis Cunningham, assistant administrator for benefits and service delivery at DHS.

Beth Swedeen, executive director of the Wisconsin Board for People with Developmental Disabilities, said a caregiver shortage is already making it difficult for many people in the programs to get proper care.

Swedeen questioned the track records of the for-profit companies, which include a $1 million fine in California last year against Molina for delayed payments to providers and the company's $4.6 million payment in Massachusetts over claims of staffing violations. In 2021, Humana paid a $630,000 penalty in North Carolina to settle claims of health insurance violations.

"I don't know what that's going to do our smaller providers, in particular, which, from my experience are oftentimes some of our best providers," Swedeen said.

Elsa Diaz Bautista, executive director of Alianza Latina Aplicando Soluciones, a Milwaukee agency that serves children with special needs, said she's frustrated the state isn't doing more to prevent or manage the mergers.

"Where is the protection to the clients and the people who are using this?" she said. "The whole community is screaming from the top of their lungs that they don't agree with this and they're afraid of what's going to happen."

Meanwhile, providers such as St. Coletta of Wisconsin in Jefferson, which serves people with developmental disabilities, are trying to bring attention to what they say are unreasonably high surpluses already made by Family Care MCOs.

The four nonprofit MCOs collectively made nearly $98 million in operations from the program in 2021, for an average operating margin of 4.7%, with additional gains from other revenue, according to DHS. Their CEOs make $350,000 a year or more, according to tax filing information St. Coletta posted on its website.

The MCOs' low payments to providers are driving many providers out of business, and now their profits from are attracting acquisitions from for-profits companies outside of the state, said Ted Behncke, president of St. Coletta. The money comes from Medicaid, the state and federal program for people with low incomes.

"It's Wisconsin taxpayer money, it's federal tax money, that creates these funds, and they're just simply being kept, by nonprofits who by their charter shouldn't be looking to make profits," Behncke said.