Posted on 04/08/2002 6:20:02 PM PDT by GailA
Criminal probe looks at Access...MedPlus, where money went By Paula Wade wade@gomemphis.com April 8, 2002
NASHVILLE - A federal grand jury is studying the results of a months-long probe of Access. . .MedPlus, the defunct TennCare managed care organization that has been under investigation by a task force including the FBI, TBI, IRS and the Department of Justice.
Investigators have interviewed state officials and former company officials regarding the firm's operations, its complex structure of related companies and the flow of hundreds of millions of state and federal tax dollars intended to provide health care for TennCare enrollees.
Although Access drew criticism from state regulators and health care providers for more than three years for its consistent failure to pay bills and its aggressive use of political connections on Capitol Hill, the grand jury investigation marks the first indication of a criminal probe of the MCO.
The firm collapsed on Oct. 18, 2001, the day after the state announced the cancellation of its TennCare contract because of the company's repeated failures to abide by the contract's terms and because of its shaky fi-nancial status.
That collapse left debts to health care providers and other contractors statewide totaling as much as $100 million. The collapse also left state officials and the state's medical community wondering where the firm's money went.
Access. . .MedPlus was the managed care organization operated by Tennessee Coordinated Care Network Inc., whose sole source of revenue was its $39 million-per-month TennCare contract. TCCN was a shell with only one employee, president Albert Head.
All the work was done by its management company, Medical Care Management Company (MCMC), which was wholly owned by Access Health Systems Inc. MCMC and AHS are both headed by Access. . .MedPlus and TCCN founder Anthony Cebrun. TCCN and AHS are both in Chapter 11 bankruptcy. The cases have been consolidated.
TCCN would collect the $39 million a month from the state through the TennCare contract and pay MCMC its management fee (about 11 percent), and then the rest would be used to pay health providers as directed by MCMC. Its Access. . .MedPlus plan was the state's largest TennCare MCO, with 279,000 enrollees.
Nashville attorney Courtney Pearre, who is the state-appointed supervisor of Access's liquidation by the state Department of Commerce and Insurance, confirmed he was interviewed by the investigating task force months ago but said he has not been called to testify before any grand jury.
Two former high-ranking officials of MCMC confirmed they were interviewed by the task force as well and were told at the time that a federal grand jury in Nashville was looking into the case. TBI officials and the U.S. Attorney's Office in Nashville declined to comment on the case.
James Kelley, AHS and MCMC's attorney in the bankruptcy, said he does not know the parameters of the federal-state probe. "All I know is that we've sent a bunch of our papers over to them," he said.
Cebrun could not be reached by The Commercial Appeal for comment. Executives of MCMC also did not return phone calls.
Company officials have stated repeatedly that they considered MCMC's "management fee" to be the property of MCMC to use as it pleased, even though it was clear the firm was not running the Access. . .MedPlus plan effectively. For example, from December 1999 to mid-2001, the company's claims payment system was in chaos and overpaid, underpaid or simply lost claims turned in by health providers.
The system was so badly broken that the state's Department of Commerce and Insurance, which had Access under its supervision from April 2000 until the collapse, couldn't determine what the financial condition of the company was.
Access became infamous among the state's health providers for sending late payments of long-overdue claims and then later sending "recoupment letters" saying it had overpaid those claims and would reduce future payments by the estimated overpayment amount.
Craig Becker, executive director of the Tennessee Hospital Association, welcomed news of the probe.
"Our concern has been all along that our members weren't paid, and there were so many settlements (where hospitals agreed to settle claims for pennies on the dollar) that you have to wonder where all the money went," said Becker.
Documents filed in U.S. Bankruptcy Court revealed that MCMC, the management company, was paid $48.7 million in management fees for the first nine months of 2001, $59.1 million in 2000 and $47.8 million in 1999. Access Health Systems also listed eight subsidiaries, each with state names preceding "Managed Care Network" in the title, and reports that none of the firms ever operated.
The bankruptcy papers also list four separate holding companies as related entities and three other health care companies as well. One of them, Healthcare International Management Company, has attempted to establish a health care organization in South Africa, where Cebrun has a home.
Cebrun is listed in the bankruptcy filing as owning 69.6 percent of the stock of Access Health Systems and was paid $300,000 in salary during 2001, plus $24,038 for vacation pay, a $270,816 life insurance policy and $10,500 in a 401K match. Those figures reflect only what he was paid by AHS and do not include any pay he may have received from the related entities.
The other stockholders in AHS were the Community Health Resources Development Foundation with 20 percent and Medical Care Investors LLP with 7 percent.
Sarah Scott of Knoxville, listed as an officer on the foundation's charter, said the foundation was formed to pursue a grant but never got off the ground. The officers of Medical Care Investors Inc. include AHS treasurer Walter Richards and Susan Short Jones, the attorney for AHS.
But the federal and state probes and the bankruptcy are not the only legal worries for Access. . .MedPlus.
The bankruptcy filing also lists seven lawsuits against TCCN, MCMC and/or AHS. They include a class action brought by former MCMC employees, suits alleging breach of contract by two physician groups and a class action brought by the Tennessee Medical Association.
Mississippi Insurance Commissioner George Dale also is pursuing a lawsuit against Cebrun and others, alleging a "civil conspiracy" to hide the financial instability of the small, now-defunct Mississippi Managed Care Network until it was insolvent.
Contact Nashville Bureau reporter Paula Wade at (615) 242-2018.
About like Neds former people running Xantus? The same ones who were insisting Medicaid was broke?
more sunquist n algore buddies???
PUBLIC EYE
Dellums for Dollars
Ex-Representative Ron Dellums, a longtime leftist, now stumps for global AIDS funding. Is it altruism? Doug Ireland lifts the veil on his paymasters.
[snip]
It turns out that Dellums is a highly paid consultant to pharmaceutical giant Bristol-Myers Squibb (BMS). When POZ asked him how much BMS was paying him -- his fee is rumored to be in the mid-six figures -- Dellums refused to answer, yelling that the question was "insulting." He has accompanied top BMS executives on junkets to South Africa. And a largely paper nonprofit that Dellums chairs, the Constituency for Africa, gave BMS -- which has made billions from AIDS drugs developed by taxpayer-funded research -- an award for its "contributions to fighting AIDS."
Dellums insisted he has only consulted with BMS on its controversial "Secure the Future" program, through which the company will spend $20 million a year over five years to provide research and training on AIDS in five Southern African countries.
[snip]
But that's not the only conflict in Dellums' portfolio. The ex-Representative also heads an outfit called Healthcare International Management Company, which, according to its governmental affairs VP Charles Stevenson, is trying to set up HMOs in South Africa and other African countries. Given the appalling history of managed care here, it's hard to see how this approach would benefit HIVers in South Africa, whose health care system is already sinking under the weight of the epidemic.
Dellums' company is, in turn, a subsidiary of a financially troubled Tennessee-based conglomerate, Access Health Systems, whose CEO, Tony Cebrun, has what several local reporters told POZ is a "lavish home" in South Africa. Another subsidiary, Access MedPlus, is the second-largest subcontractor to the state's TennCare program covering the state's 1.3 million uninsured people. The company has been teetering on the edge of bankruptcy, prompting numerous suits for nonpayment by health care providers. Although criticized by state officials for failing to make mandatory financial disclosures, Cebrun's operation is, according to one reporter who insisted on anonymity, "politically untouchable" because "half the black politicians in the state have relatives on its payroll." One of those politicos is former Rep. Harold Ford Sr., boss of a notoriously corrupt Memphis-based political machine, who retired from the House under a hail of subpoenas. Ford brokered the deal that brought Dellums to Access Health Systems, for which Dellums was paid $1 million, according to a company source.
Which brings us back to the Dellums-inspired World Bank AIDS Trust Fund. Under the Leach-Lee legislation, it is the World Bank -- which has long pressed for managed care in developing countries -- that would determine AIDS spending. If the Dellums-Cebrun company persuades South Africa to let it set up HMOs, it stands to make a bundle.
So while the Leach-Lee bill may be better than nothing, the skein of Dellums' interlocking interests does call to mind the cynical old saw: He does well by doing good.
By Marc Perrusquia
perrusquia@gomemphis.com
March 3, 2002
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 TennCare 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 TennCare 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 TennCare 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 folded.
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.
In 1995, TBI agents arrested a Nashville woman who admitted forging more than 140 applications for TennCare while working as an independent contractor for OmniCare. Pamela Renee King said she obtained the data contained on the false applications while working as a fitness consultant in the health center at the sprawling Saturn automobile plant in Spring Hill, Tenn. TBI investigator Shana Roberts said King was paid between $13 and $17 for each application. As long as the scam went undisclosed, OmniCare received $111 per patient per month for patients who didn't exist or who were fraudulently enrolled in the program. King was the second OmniCare representative to be caught by TBI agents in 1995.
Harold McGhee, a former employee at the Shelby County Corrections Center, admitted to agents he had enrolled 202 inmates that he knew already had medical coverage and were therefore ineligible for TennCare. Both King and McGhee were convicted of mail fraud and making false statements. Each received a sentence of about a year in prison.
'The Fords had gotten him' Although he wasn't a company officer or a member of OmniCare's board of directors, former Rep. Harold Ford was publicly identified in 1996 by the Commercial Appeal as being associated with OmniCare. Ford, an African-American, was first elected to Congress in 1974, beating a white incumbent.
Ford's district encompassed most of Memphis, which became majority black. Ford had a rocky political career, and he allied himself and his family with Gore. He was indicted on federal bank, mail-fraud and conspiracy charges in 1987, stemming from $1 million of loans he had received from banks controlled by Democratic politician Jake Butcher and his brother C.H. Butcher. The money was loaned for business purposes, but was allegedly converted to personal use by Ford. His first trial resulted in a hung jury. A second jury acquitted him.
When the House banking scandal broke in 1993, it was revealed that Ford had written 388 bad checks totaling $552,447 at the bank between 1988 and 1991. Although he was one of the worst offenders, a special prosecutor's probe found no criminal wrongdoing on Ford's part. Ford retired from Congress in 1996 and was succeeded by his son, Harold Ford Jr., a move that angered some local black leaders who resented the Ford family's belief that the congressional seat belonged to them rather than to the people.
At the time, Ford Jr. was only 24 years old, the youngest member of Congress. It was Harold Ford, Jr. whom Gore picked to make one of the Democratic convention's keynote addresses. In addition to Harold Ford Sr.'s older brother, John, a state senator, other Ford brothers who have been actively involved in family politics include: 1) Joe Ford, who ran for mayor of Memphis in 1999; 2) former state Rep. Emmitt Ford, who served time in a federal prison in the late 1990s for failure to file tax returns on income of $700,000; and 3) Dr. James Ford, an ophthalmologist, a member of the Shelby County Commission and a TennCare provider. A hard-charging young TBI agent, David Loftus, who worked on the Shelby County Corrections Center portion of the OmniCare investigations, told his colleagues he was bound and determined to find out why the Ford family's involvement in OmniCare was not being taken more seriously by the TBI. "The evidence showed that the Fords were up to their eyeballs in OmniCare and yet nobody was holding their feet to the fire," said Loftus.
Even though an assistant U.S. attorney in Memphis warned Loftus to be more discreet "about what he said about the Fords or they will get you," he continued to probe the Ford family's involvement with TennCare. Loftus had nearly finished his two-year stint as a probationary agent with TBI and had recently received an outstanding evaluation from his supervisor, when suddenly he was summoned to TBI headquarters and was summarily fired. No reason was given.
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