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AP: In Medicaid reform, Fla. GOP saw rich benefit

By TRAVIS REED | Associated Press Writer

5:24 PM CST, February 13, 2009

MIAMI - While Florida politicians were considering a vast overhaul of the state's troubled Medicaid system, a Tampa company that administered care for half a million poor and needy residents was busy lining their pockets with campaign donations.

WellCare Health Plans Inc., its subsidiaries and executives spent $2.4 million on political contributions in the 2004 and 2006 elections, according to an analysis of campaign records by The Associated Press. More than 95 percent of it went to Republicans, who pushed forward a nationally watched plan that funnels more state and federal Medicaid spending than ever through private companies like WellCare, which profit most by providing the least care.

At the same time, WellCare acknowledges it was cheating Florida out of tens of millions in overpayments and is under investigation for suspected fraud and unfair business practices by a cadre of state and federal agencies.

WellCare manages care for nearly 2.4 million people on government-sponsored health plans in Florida, Connecticut, Georgia, Hawaii, Illinois, Missouri, New York and Ohio. Florida's Medicaid reforms are being closely monitored by other states seeking to alleviate their own health care costs.

WellCare gave $100,000 to the Republican Party of Florida on Dec. 6, 2005 -- a day after the Legislature convened specifically to consider the Medicaid proposals, and days before they passed. The company spent seven times more on lobbying than its top two competitors combined, skirting state laws meant to cap candidate donations at $500 per person or company by writing checks under nearly 30 different business names.

Half of WellCare's contributions -- $1.2 million -- went to the Republican Party of Florida. State law provides no limit on party donations, and there is virtually no way to tell where the funds go after that.

"It doesn't surprise me that (Democrats) got a lot less money," said Sen. Dan Gelber, a South Florida Democrat and former federal prosecutor. "We thought -- I thought -- it was bad policy. I thought it was a bad idea before it started and I think it's a bad idea every month since it started. This was about essentially forcing Medicaid populations wholesale into HMOs where they were going to receive less care."

WellCare's offices were raided by the FBI, Florida regulators and numerous other agencies in October 2007. In a now-unsealed plea agreement, prosecutors and a former employee said the company inflated expenditures by submitting fake documents to the state. Under some mental health care contracts, WellCare was paid a flat per-patient fee and required to spend at least 80 percent of it on care. Any leftover amount beyond 20 percent was to be repaid to the state, but the bogus expenditures allowed WellCare to keep that surplus.

WellCare agreed in August to repay $35 million, its best estimate of the total wrongly kept from 2002-2006. After the raid, the company restated its quarterly and annual profits -- driving down net income by $32 million -- and saw its top three executives resign.

No criminal charges have been announced against WellCare or its officials but investigations by Florida, Connecticut and federal prosecutors are ongoing. The Securities and Exchange Commission is leading an informal investigation, and Wellcare faces numerous shareholder lawsuits and sealed whistleblower complaints, the company's SEC filings say.

WellCare has since halted all Florida campaign contributions.

"... As part of a broader enterprise-wide compliance initiative detailed in our public filings, we are developing new policies and procedures regarding, among other things, political activities and contributions," WellCare said in a written statement to the AP. "WellCare takes very seriously its responsibility as a government-sponsored managed care health plan, and appreciates that health care is top of mind to many political leaders. Our top priority is to provide our members timely access to quality health care."

Then-Gov. Jeb Bush, who led the reforms, said WellCare didn't pay for favorable policy -- pointing as proof to the company's recent departure from counties affected by the reforms.

"There's no question WellCare lobbied hard as we overhauled Medicaid in Florida, but ultimately reform didn't deliver what the managed health care companies wanted, and patients and taxpayers won instead," Bush said. "Managed health care companies make less under Medicaid reform because they are no longer paid the same for healthy and chronically ill people. Providers are only paid for the services actually required by the individuals in the plan, not an expansive and expensive menu of services never utilized by healthy patients."

Until recently, WellCare was the largest provider under Florida's Medicaid reform, which is testing broad privatization in five counties. The companies are given flat, per-patient fees from the state and federal governments and profit from the balance not paid in care.

Advocates said the plan would cut burgeoning Medicaid costs by shifting risk to the private sector. Opponents worried people would slip through the cracks or be denied access to doctors and medicine. WellCare served about 80,000 patients in the pilot effort before saying this month it would exit in May because recent state budget cuts made the business unprofitable.

Still, WellCare has approximately 330,000 Florida enrollees in traditional Medicaid programs, more than twice as many as top competitor Amerigroup Corp.'s 165,000. While WellCare dropped more than $2 million on Florida's 2004 and 2006 elections, Amerigroup spent just $74,200. UnitedHealth Group Inc., the third-largest Medicaid HMO here, gave $234,000, campaign records show.

Two of the biggest recipients of WellCare contributions were former state Senate presidents -- current Sen. Ken Pruitt, who led the body from 2006-2008, and former Sen. Tom Lee. Pruitt received $25,500, and tied with former Rep. Frank Farkas as the company's largest direct beneficiary. Neither returned telephone messages requesting comment.

Another top GOP recipient was former House member Holly Benson, who now oversees WellCare and all other Medicaid HMOs as secretary of the Florida Agency for Health Care Administration. Benson accepted $18,500 combined in the 2004 and 2006 elections, but said that didn't compromise her integrity. She said it was a small portion of the $125,000 her campaign raised in 2004 and $380,000 in 2006 -- and the state's $35 million settlement was "unprecedented" proof of objectivity.

Lee, who got $23,748 in a failed 2006 state CFO campaign, recalled WellCare's aggressive spending. Perhaps oddly, the Medicare reform package passed in the same week as his long-sought ban on lobbyist gifts.

"I have an enormous history of public frustration with things like campaign finance reform, gift disclosures, etc.," said Lee, who has returned to his Tampa-area homebuilding business. "Nothing would be a better gift for this democracy than to figure out a way to help us clean up this process."

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Associated Press writer Kelli Kennedy contributed to this report.