Posted on 03/03/2002 4:55:44 AM PST by GailA
TennCare deal paid Ford $1.6 million
Ex-congressman's consulting fees drain resources, critics say
By Marc Perrusquia perrusquia@gomemphis.com
A TennCare subcontractor paid former congressman Harold Ford $45,750 a month through a consulting agreement that raises new questions about big-dollar side deals within the state's taxpayer-funded health plan for the poor. Ford's consulting firm received $1.6 million between 1998 and 2001 from MIM Corp., a New York-based firm that has collected several hundred million dollars from TennCare.
Over that period, Ford also received more than $1 million to act as a registered lobbyist for seven firms, including MIM and the company that managed a defunct TennCare managed care organization.
Neither Ford nor MIM would talk about his specific duties on behalf of the company.
However, MIM hired Ford just as it launched an effort to win contracts worth $200 million to manage the pharmacy benefits for six TennCare managed care organizations.
Officials with MIM's chief competitor for those contracts say they believe Ford helped sway the MCOs to MIM.
Ford's influence on TennCare continues to grow. His consulting and lobbying firm, The Harold Ford Group, has hired Gov. Don Sundquist's former chief of staff, Wendell Moore, who's been pushing for TennCare concessions for MIM.
News of Ford's fees touches a nerve among critics who long suspected that consulting deals were padding costs and draining resources from TennCare.
"It's an awful lot of money to spend on one consultant, that's for sure," said Craig Becker, president of the Tennessee Hospital Association.
Becker was among those who pushed the state to release financial information on private companies hired by TennCare.
Goaded by persistent reports of MCOs funneling generous consulting fees to politically connected friends, Becker and others were concerned that some contractors couldn't pay health care providers.
In 1999, the state began requiring more financial disclosures from privately run MCOs hired by TennCare, but officials still know little about some firms' expenditures that are believed to have contributed to the failure of two health plans.
One failed MCO, Access Med Plus, had racked up an estimated $80 million to $100 million in debts to hospitals, doctors and other health care providers by the time the state took it over last fall.
Ford's deal with MIM came to light as The Commercial Appeal took a closer look at the state takeover of Access MedPlus. Serving 279,000 poor or otherwise uninsurable residents, the company received nearly all its revenue from TennCare and also had a large contract with MIM.
The company that managed Access MedPlus paid Ford $295,000 in lobbying fees, including $180,000 in 1998 to assist an ambitious health care venture in developing African nations.
Ford said his fees from Medical Care Management Co. had nothing to do with the failure of Access MedPlus because the health plan and the management firm were separate entities.
"I don't want to leave it out here, 'Oh, they paid Harold Ford, you know, he was a consultant, and didn't pay the providers,' " Ford said in a telephone interview from Miami, where his consulting and lobbying firm operates one of three offices.
"Well, the providers wouldn't have been paid out of the management money anyway."
Officials sifting through the Access MedPlus wreckage don't share that view.
Medical Care Management Co. received up to $53 million a year to run Access MedPlus. Those funds should have been used to ensure the health plan was run properly and providers were paid, said Manny Martins, the assistant commissioner of Commerce and Insurance overseeing Ten Care MCOs.
"Those two entities are inseparable through this contract arrangement," he said.
MIM payments
Ford's consulting deal with MIM is revealed in a statement filed last June with stock regulators.
Monthly payments, totaling $549,000 a year over the three-year contract, were made for "lobbying and health care related services," according to an MIM proxy statement filed with the Securities and Exchange Commission.
Ford's fees exceeded the salary of MIM chief executive officer Richard H. Friedman, who received $451,596 in 2000, company records show.
Ford's consulting agreement began in October 1998 with an initial term set to expire Oct. 13, 2001. Ford joined MIM's board of directors last year, but it was unclear whether his consulting contract has been renewed.
"Harold does very, very good work for this company," said MIM vice president and general counsel Barry A. Posner. Calling Ford "a trusted adviser," Posner said the former Memphis congressman provides "advice on governmental contracts," but declined to discuss details of those services.
Records show MIM hired Ford 14 days after the benefits management firm ended a business relationship that could have cost it several hundred million dollars in lost TennCare revenue unless steps were taken to recover that income.
MIM helped service six Ten
Care MCOs through a contract with RxCare, a for-profit prescription drug network owned by the Tennessee Pharmacists Association. As a pharmacy benefits manager, MIM manages client files for MCOs to track prescription drug use and help keep costs down.
TennCare accounted for about $327 million, or 72 percent, of MIM's $451 million in revenue in 1998, company rec ords show.
But on Sept. 29, 1998, MIM and RxCare announced they were parting ways.
At the time, federal agents were investigating an alleged kickback scheme surrounding MIM's original landing of Ten Care contracts in 1994.
Three men, including an RxCare executive and MIM's founder, eventually pleaded guilty to misdemeanor health care fraud charges.
But MIM's explanation for severing its ties to RxCare dwelt in part on the company's intention to expand business operations outside Tennessee, a move that has gradually reduced MIM's reliance on TennCare.
After separating, former partners MIM and RxCare agreed to compete for TennCare contracts set to expire at the end of 1998.
MIM executives noted in a quarterly financial statement that failure to directly market to the Tennessee MCOs "would have a material adverse effect on the Company's financial condition and results of operations."
In direct competition, MIM beat the pharmacists' group on its home turf to win contracts with six TennCare MCOs, including Access MedPlus, Xantus and Memphis-based firms TLC and Omnicare.
Two Tennessee Pharmacists Association officials believe Ford had a hand in influencing MCO executives to pick MIM over RxCare, the TPA subsidiary, for the multimillion-dollar pharmacy management contracts.
"They had some political clout," said Baeteena Black, TPA executive director.
Black said she began seeing Ford at government meetings on MIM's behalf at the time and was told Ford was employing his extensive contacts across the state to ensure that MCOs would go with MIM.
Ford declined comment when asked if his agreement with MIM included persuading MCOs to sign with the firm.
Asked the same, MIM's Posner terminated an interview with a reporter.
Some of Ford's work for MIM involved lobbying the federal Health Care Financing Administration, the executive branch and the House of Representatives, according to his lobbying reports filed between 1998 and last year.
Ford's $180,000 in lobbying fees from MIM represented about a tenth of the firm's total payments to him, the remainder evidently stemming from consulting work he and his client consider confidential.
Ford's influence
In the wake of the Access MedPlus collapse in October, Ford arranged a meeting in the Governor's Office to ask state officials to let MIM retain the pharmacy benefit work it had performed through Access MedPlus.
State officials listened - and even asked another provider to help - before determining that the logistics of Ford's proposal weren't feasible.
Among those attending the high-stakes meeting was attorney Hardy Mays.
Mays, former chief of staff to Gov. Sundquist and President Bush's nominee for a federal judgeship, declined comment on the meeting, saying he couldn't ethically disclose the name of the client he represented.
Wendell Moore, who succeeded Mays as Sundquist's chief of staff before resigning last fall, now is working for The Harold Ford Group in Nashville. Moore did not respond to calls for comment. Ford declined comment when asked about Moore.
According to sources, Moore recently contacted state employees on behalf of MIM, inquiring about the business lost when Access MedPlus fold ed.
Ford retired from his Ninth District congressional seat in 1996 after 22 years, but he and his family remain influential.
His son, Harold Ford Jr., succeeded him. He also has siblings on the Memphis City Council and Shelby County Commission. His brother, state Sen. John Ford (D-Memphis), sits on the TennCare Oversight Committee.
TennCare subcontractor Behavioral Health Group paid John Ford $3,000 in consulting fees in 1994 and 1995 in a failed deal with an Access MedPlus subsidiary in Mississippi. BHG also paid consulting fees to Harold Ford, said owner Stephen H. Winters.
The hospital association's Becker said the state could do more to curb consulting and other costs by scrapping MCOs, which may spend up to 13 percent of TennCare revenue on administration, in favor of Administrative Services Only contracts with agencies that just pay medical bills.
TennCare officials say managed care is the efficient method for health care, noting MCOs must spend at least 85 percent of TennCare money on medical care.
Still, legitimate questions remain about whether MCOs like Access MedPlus made proper use of management fees, said the state's TennCare supervisor Manny Martins.
- Marc Perrusquia: 529-2545
By Marc Perrusquia perrusquia@gomemphis.com
A decade after a jury acquitted him of charges that pushed him to the brink of ruin, former congressman Harold Ford has rebounded in a big way.
Now a business consultant and lobbyist, Ford is pulling in as much as $800,000 a year, possibly more.
"Things are going well. I mean, I'm working every day," said Ford, 56, speaking by phone from Miami.
Ford keeps one of three business offices there (the others are in Memphis and Nashville) and lives part time in his $1.4 million condominium on a private island off Miami Beach.
Dubbed "a congressman who sold his power" by prosecutors who failed to convict him in his tumultuous 1993 bank fraud trial, Ford has turned the tables with a twist of sweet irony.
Tapping connections and influence built over two decades in Congress, Ford truly is selling power to a stable of clients who pay him to run interference with government regulation.
Ford apologized to supporters in 1999 for not making a long-expected bid to become mayor of Memphis, explaining then that his new business was going too well to abandon.
Public records show Ford's firm, Harold Ford & Co., collected at least $2.5 million from clients over a four-year period between 1997 and last year. Ford opened his firm, now called The Harold Ford Group, in 1997, the year after retiring from the Memphis congressional seat he'd held for 22 years.
Ford said that, as a matter of policy, he doesn't discuss clients or details of his business.
One client who did talk said Ford knows his way around Washington and Nashville and is worth his fees.
"He got me in to meet (former House speaker) Newt Gingrich and (then Senate majority leader) Trent Lott," said Stephen H. Winters, who paid Ford about $260,000 in 1998-99.
Winters hired Ford while trying to undo legislation that he said led his company, Memphis-based home health care agency Medshares Inc., to file for bankruptcy protection.
Disclosure reports show nearly half Ford's lobbying fees have come from two firms contract ing with TennCare, the state's taxpayer-funded health plan for the poor: Access MedPlus, the managed care organization liquidated last year, and MIM Corp., a New York-based pharmaceutical benefits management company.
Other clients include Methodist Healthcare and the Regional Medical Center at Memphis, plus one added last year: Fannie Mae, the national mortgage finance firm.
Another recent addition, Pegasus Airwave, an international marketer of therapeutic cushions designed to prevent bedsores, paid Ford $100,000 in 2000 and an additional $60,000 last year.
Ford said in a lobby report that his work for Pegasus included an effort to "facilitate the introduction of a new product" to the government-run Veterans Administration.
Ford declined to discuss his employees, but corporate records filed in 1999 listed two others involved in the limited liability company: sons Newton Jake Ford and Sir Isaac Ford.
Ford's firm was paid at least $800,000 in 1999, yet records indicate he could be getting more.
As a registered federal lobbyist, Ford is required to report fees twice a year to the clerks of the U.S. House and Senate. Though the reports require details of lobby work involving contacts with the executive and legislative branches, there's no clear requirement to report money earned as a consultant, the bigger part of Ford's business.
Some lobbyists list all fees billed to a client, said Bill Allison of the Center for Public Integrity, a Washington-based public watchdog group.
"The idea that you can just neatly separate these into different piles is incredulous," he said.
Overall, Ford has listed seven clients in disclosure reports, but he said he's had a total of nine.
The difference between his lobbying and consulting fees can be vast.
Ford's lobbying reports show he got $180,000 from MIM Corp. between 1998 and last year, but Securities and Exchange Commission records show the company paid Ford $1.6 million over that period.
"We play by the rules," Ford said of the reports. "And when we do consider ourselves lobbying for one of our clients, we file the reports. But that wouldn't necessarily mean that that's all of the things that we do for our clients."
In 1999, Ford was one of 129 former federal lawmakers registered as a lobbyist.
The man Ford succeeded in Congress in 1975, Republican Dan Kuykendall, worked as a lobbyist and consultant for 25 years.
The lobbying firm headed by former Louisiana congressman Bob Livingston received $1.1 million in lobbying fees in 1999, ranking The Livingston Group 112th among all lobbying firms by revenue, according to nonprofit researchers The Center for Responsive Politics.
The Washington-based organization notes that former members of Congress are often paid seven-figure salaries because they "are considered the most valuable commodity a lobbying firm can have."
- Marc Perrusquia: 529-2545 
By Charles Trainor Jr. For Harold Ford, the good life of a former congressman is symbolized by a condominium he bought for $1.45 million in March 1999 on privately owned Fisher Island, a playground for the rich and famous off Miami Beach. Dade County, Fla., property records show Ford obtained the 2,500-square-foot condo among these high-rises as a second home, financing the purchase with a $1.3 million mortgage from First Tennessee Bank in Memphis. Ford still keeps a home in Memphis - a new house he and his son Isaac bought last year for $295,000 from Hyneman-Bronze builders in The Village of River Oaks in East Memphis. Property records also show Ford paid $155,000 in October 2000 for an undeveloped 4-acre lot in the Preserve of Notting Hill, a blossoming development north of Collierville.
Yep. And with 75% of the people in TN paying for 25% of the people in TN's health care and understanding that it is a BOONDOGGLE and understanding that it IS the root cause of the state's financial woes and that it MUST be fixed and fixed soon, how come the good 'ole boys in Nashville won't fix it? Taxation without representation, once again.
My memory will last until November. If you support the Income Tax, Tenncare, closing State Parks or cutting education you are the cause, not the soloution and you will not get my vote come November.
This has got to stop. We have people moving from surrounding states solely to get TennCare for themselves and their kids, some with incredibly complex and expensive problems. Add to this the gov't workers who were found to be gracing the TennCare rolls, millions in pork barrel spending(some in NY of all places), failure to pay providers, and lack of guts in Nashville to fix the problem and you have a recipe for grass-roots revolt.
Here are a few other Ford/Sundquist links:
Meeting of Sundquist, (John) Ford raises questions - Cherokee contract renewed days later
Its too bad Taxquist seems to want to treat Tenncare as the third rail instead of attacking it head on as it should be dealt with. Tennessee is the test case. We, as a state, need to show the nation one of the many reasons that socialist medicine cannot work.
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