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Personnel shake-ups come amid continuing federal probe of Minnesota’s Medicaid program

Top DHS officials leaving agency

State Medicaid Director David Godfrey is resigning, effective Sept. 14, to take a job as deputy director of health for Hennepin County. (Staff photo: Peter Bartz-Gallagher)

Personnel shake-ups come amid continuing federal probe of Minnesota’s Medicaid program

Last Wednesday it was announced that state Medicaid Director David Godfrey was stepping away from his post after less than two years on the job. Godfrey resigned, effective Sept. 14, to take a job as deputy director of health for Hennepin County.

Godfrey is not the only high-ranking official with the Department of Human Services (DHS) to resign in recent weeks. Just a week earlier, Assistant Commissioner Maureen O’Connell, who oversees chemical and mental health services, also announced her departure. O’Connell agreed to stay on until Oct. 5 in order to finish co-chairing an effort to overhaul the state’s services for people with disabilities.

In addition, this summer DHS lost Dave Greeman, who served as budget director for health care administration, and Shannon Kojasoy, legislative director for health care administration. Greeman left to take a position as the top budget official with the Minnesota Department of Health and Kojasoy opted to stay home with her newborn.

The shake-up comes as DHS faces intense scrutiny from the federal government over the administration of Minesota’s $8 billion per year Medicaid program. Last Thursday, a trio of influential GOP members of Congress sent a letter to DHS Commissioner Lucinda Jesson suggesting that the state may have improperly claimed “upwards of $500 million” in Medicaid funds over the past decade.

David Feinwachs, former general counsel for the Minnesota Hospital Association and a persistent critic of the state’s Medicaid program, believes it’s inevitable that connections will be inferred between the staff departures and the tumult created by the federal inquiries.

“Most of these people are retreating to safer surroundings,” Feinwachs said. “That’s my interpretation.”

Sen. Sean Nienow, R-Cambridge, who has been a chief critic of the state’s Medicaid program, agrees.
“If there is no connection, it shows a lot of coincidences,” Nienow said.

There is no indication that any of the recent resignations were directly spurred by the investigations into Minnesota’s Medicaid program. In fact, O’Connell’s position had no oversight of the program, and Greeman’s move to the Department of Health was widely viewed as a promotion. In his new post at Hennepin County, Godfrey rejoins former Senate Health and Human Services Finance Committee Chair Linda Berglin, with whom he worked closely during his tenure as a Senate fiscal analyst.

Nienow points out that there has also been a significant shake-up at Blue Cross Blue Shield — one of the four major health maintenance organizations (HMOs) that contract with the state to provide Medicaid coverage — in recent months. In March, three top officials (Chief Financial Officer Pam Sedmak, Chief Medical Officer Dr. Gregory Gilmet, and Senior Vice President of Marketing and Public Affairs Kathleen Mock) all left the organization. Just four months later, the nonprofit plan’s CEO, Kenneth Burdick, was ousted after just six months on the job.

“Is this normal? Maybe some of it is,” Nienow said. “Is it all normal? It doesn’t seem like it.”

Congressional letter requests more details

The allegations of mishandling federal funds appear to be spurred by ongoing questions surrounding UCare’s decision last year to return $30 million in Medicaid funds to the state in order to help solve the state’s budget deficit. UCare is another of the four main HMOs that contract with the state to deliver Medicaid coverage to roughly 600,000 low-income individuals. In a letter to Sen. David Hann, R-Eden Prairie, chair of the Health and Human Services Committee, in March, 2011,UCare President Nancy Feldman explained the nonprofit group’s rationale for making the unprecedented contribution. “Historically, DHS rates set for General Assistance Medical Care resulted in health plan losses which were offset by higher Medical Assistance payments,” Feldman wrote. (“Medical Assistance” is the name of Minnesota’s Medicaid program.) “When GAMC moved out of managed care in mid-year 2010, Medical Assistance rates were not lowered to reflect this overpayment.”

While that explanation might seem innocuous to laymen, federal investigators have seized on it as possible evidence that the state used federal money improperly. That’s because General Assistance Medical Care — which was eliminated by then-Gov. Tim Pawlenty in 2010 — was a state-only program that was not eligible for federal dollars. The tab for Minnesota’s Medicaid program, by contrast, is evenly split between the federal and state governments. DHS Commissioner Lucinda Jesson and other top officials initially claimed that they were entitled to keep all of the $30 million contribution, but eventually backed down after heavy criticism from federal officials who believed they were entitled to at least half the money. That’s hasn’t stopped congressional investigators from aggressively seeking more answers from DHS.

“We continue to examine Minnesota’s inappropriate use of federal tax dollars to cross-subsidize its state-only health programs,” wrote Sen. Chuck Grassley, R-Iowa, and Reps. Darrell Issa, R-California, and Trey Gowdy, R-South Carolina. “We also continue to examine UCare’s $30 million repayment of excess Medicaid payments and Minnesota’s attempt to keep this $30 million repayment.”

Grassley is the ranking Republican on the U.S. Senate Committee on the Judiciary. Issa is chairman of the U.S. House Committee on Oversight and Government Reform. Gowdy is chairman of the House Subcommittee on Health Care, District of Columbia, Census, and the National Archives. The legislators posed six detailed questions to Jesson and asked for a response by Sept. 13. There are at least two other active investigations by federal officials: The Center for Medicare and Medicaid Services and the U.S. Department of Justice are also looking into Minnesota’s Medicaid program.

Phil Griffin, a veteran health care lobbyist who represented UCare at the time of the $30 million contribution, argues that the federal agitation on the issue of Medicaid rates is odd given that they approved the contracts at the time. “This was all done with open eyes. We went to the feds year after year after year,” Griffin said. “They knew exactly what they were paying for.”

In a statement to Capitol Report, DHS portrayed the dust-up over the UCare contribution as an honest disagreement that has been settled. “The department sees the UCare contribution and the accusation of inappropriately financing state programs with federal dollars as separate issues,” the statement reads. “The department’s position on the UCare issue is consistent with the facts. This was a legitimate disagreement with the federal government, and the department had a legal opinion backing its good faith position. We are satisfied with its resolution.”

Probe includes decade-long practices

DHS also points out that the allegations relating to wrongfully utilizing federal dollars to subsidize state-only programs date back to the administration of Pawlenty, since GAMC was no longer in place when Dayton took office.

“Regarding the accusation of improper financing of state programs, current leadership has no firsthand knowledge of the prior administration’s managed care contracting practices and has transformed how such contracts are developed,” the statement reads. “The department has issued an RFP [request for proposals] for analysis of past rate-setting and related contracting practices and will share the results with state and federal lawmakers as well as the public.”

But that proposed audit of Medicaid rates from 2003 to 2011 has also drawn pointed criticism. DHS officials initially claimed that the proposal was developed in consultation with Legislative Auditor James Nobles, who has been scrutinizing the state’s Medicaid program. But Nobles took issue with that characterization and  expressed skepticism about the proposed audit’s credibility. In particular, he argued that the time frame suggested in the request for proposals was unrealistic. “If this is worth doing, it’s worth doing well,” Nobles said shortly after the audit was announced, “so that there are no questions left as to the accuracy, the objectivity, the rigor, the methodologies.”

But some critics of the HMOs that contract with the state to provide Medicaid coverage agree that the emphasis of federal officials has been misguided. “They’re asking a lot of the right questions, but they’re asking the wrong people,” said Buddy Robinson, co-coordinator of the Greater Minnesota Health Care Coalition, which released a report last month questioning what it deems to be excessive profits for the HMOs. “They need to be asking and putting under oath publicly the HMO honchos and also the officials who were running things under the Pawlenty administration.”

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One comment

  1. Witch hunt by Repubs, no? This happened under T-Paw’s watch. Why don’t they go after him? He was the boss after all…

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