Examining the Grassley/DHS e-mail cache

May 14, 2012

Posted by Matt Ehling

As part of U.S. Senator Chuck Grassley’s investigation into the use of federal Medicaid dollars, the Senator’s staff sought documents from the Minnesota Department of Human Services through a data practices request.

PRM has obtained the results of Grassley’s request, and has posted the resulting cache of e-mail correspondence. Select messages are summarized below.

NOTE – Hand-written redactions to the printed e-mails were made before we obtained them. All other redactions were made by PRM to obscure personal e-mails or telephone numbers, as is our general practice. When PRM redacts such information, it leaves other personal identifying information, so that the chain of communication is clear.

E-mails begin after 2011 UCare meeting
The e-mail chain begins on March 9, 2011, shortly after UCare executives met with DHS officials about the possibility of giving monies from public health care programs back to the state. In a March 9th message, state Medicaid director David Godfrey updated other DHS officials about the content of the first UCare meeting.

Document notes lack of Medicaid connection
On March 15, Ghita Worcester of UCare sent background information on UCare’s donation to Scott Leitz of DHS. The attachment to Worcester’s e-mail contains several points:

• UCare arrived at the $30 million contribution figure “because it falls within a 2-3 percent range of revenue over expenses” that allows for a “reasonable level of financial reserves.”

• Along with its contribution, UCare planned to bring forward a proposal to “minimize volatility in gains and losses” in the state’s public programs contracts.

• According to UCare, “none of this contribution involved Medicaid dollars.”

This last point comports with the position held by DHS for many months – that the UCare donation did not involve federal funds.

“It must be characterized as a donation”
Several rounds of e-mail messages were exchanged on March 15th, as press release language regarding the UCare donation was finalized. In one message, DHS commissioner Jesson noted that the UCare contribution would need to be characterized as a donation – rather than as a refund – otherwise the federal government would “clearly get half.”

Later on in the e-mail chain, Dan Pollock of DHS made reference to the interest in managed care contracts that was stirring among legislators at the time. Pollock noted that the UCare donation was “likely to generate FAR more questions about our PMAP contracts.”

“UCare did the right thing”
On March 16, Scott Leitz of DHS sent an e-mail to various DHS officials, including Commissioner Cindy Jesson, and noted his support for UCare’s action. “UCare did the right thing here,” said Leitz, “and we should put the other plans on notice of our expectations of them.”

Press release issued
On March 16, the governor’s office issued a press release that announced the UCare contribution, which was characterized as “voluntary” and “one-time.” The release noted that the Governor asked Commissioner Jesson to “reach out to all health plans providing public health insurance and request comparable contributions.”

“Fuel to the fire?”
After the press release was issued, Pam Parker and Karen Peed of DHS corresponded about the substance of the release. “Does this help,” Parker asked Peed via e-mail, “or add fuel to the fire?”

2003 Medica give-back
Later on March 16th, several e-mails circulated within DHS that related to an earlier give-back of public health care funds. Steve Snook of DHS sent a “talking points” memo from a 2003 give-back by the Medica HMO to several DHS employees, including Karen Peed. The “Medica Talking Points” memo noted that:

• In 2003, Medica returned $80 million to its customers, including $19 million to the state for its public health care programs;

• Medica was retaining 4.4% of its earning from public program business, while other plans were retaining roughly 1%;

• A portion of the Medica contribution went to the State General Fund, but a portion was also shared with the federal government;

• At the time, DHS was “interested to learn if the reduction in Medica’s cost-trend” would be experienced by other HMO providers.

Once the Medica talking points was in circulation, Vicki Kunerth e-mailed Karen Peed with the following message – “Interesting precedent … not sure this is wise”

Legislature categorized contribution as “authorized expense”
On July 28, 2011, Abigail Read of Minnesota Management and Budget e-mailed the Minnesota Department of Health to update the agency about the status of the donated UCare funds. Read’s e-mail referenced statutory language passed by the legislature in 2011, which classified the UCare contribution as an “authorized” expense under Minnesota Statutes 62D.12, subd. 9a. 62D.12, subd. 9 prohibits HMOs from paying portions of their net income to persons or institutions in the form of dividends or rebates. Subd, 9a categorizes certain payments to organizations or individuals as “authorized expenses” allowable under HMO regulatory practices.

UCare check arrives
On November 7, 2011, Ann Berg of DHS notified Christopher Ricker of DHS that the department “has received the check from UCare.”

Legislative auditor asks questions
On February 8th, 2012, Martin Cammack of DHS e-mailed several DHS personnel to relate that Deputy Legislative Auditor Cecile Ferkul “voiced concerns about the UCare donation at a meeting I had with her today.” Ferkul’s concerns related to (unspecified) wording contained in a letter that UCare sent to the state.

On February 13, 2012, Cecile Ferkul e-mailed Ann Berg of DHS to inquire about Berg’s “assessment of how the donation satisfied federal requirements for provider-related donations.”

On February 14, 2012, Ann Berg e-mailed Scott Leitz of DHS to summarize her meeting with the Deputy Legislative Auditor, and noted that “She says that the only thing outstanding at this point is the planned letter to CMS regarding the UCare donation, and that she feels that the process should run its course.”

UCare contribution timeline
On February 16, 2012, Ann Berg of DHS e-mailed a document entitled “Timeline for UCare Donation” to Scott Leitz. The document highlighted relevant events in the chronology of the UCare contribution, including the date of the announcement, its receipt and deposit, and major correspondence. One piece of correspondence was described as:

• July 19, 2011 – Letter from Cindy Mann to David Godfrey received

This letter was not attached to the e-mail, but it is clear from subsequent correspondence that the referenced letter was written by Cindy Mann on July 1, 2011. Cindy Mann is the director of Medicaid services within CMS, the Centers for Medicare and Medicaid Services – the agency that administers federal Medicaid dollars to the states.

For context, the July 1st letter from Cindy Mann indicated that the federal government questioned the nature of the UCare contribution less than four months after it was made. Mann’s letter states that CMS considered “any such contribution from UCare … a refund of Medicaid payments or an applicable credit” that would result in a portion of the payment being refunded to the federal government, unless it was a “bona fide” donation.

DHS donation rationale presented to CMS
The chain of e-mail correspondence includes a February 17, 2012 letter from David Godfrey of DHS to Cindy Mann of CMS, which set out the DHS position for categorizing the UCare contribution as a donation, rather than as a refund.

Godfrey cited federal Medicaid law, and characterized the UCare contribution as a “bona fide” donation that had no “direct or indirect relationship to Medicaid payments,” and was thus not returnable to the federal government.

CMS follows up on UCare/Medicaid correlation
Included in the document cache is a letter previously featured on PRM’s site. This letter was Cindy Mann’s March 21, 2012 follow-up to David Godfrey’s February 17th letter. In her letter of March 21, Mann asked for additional information, in order to verify the state’s contention that the UCare donation had been derived from some other source besides Medicaid funds.

Grassley letter received by Governor Dayton
E-mail correspondence of March 8th, 2012 related to the receipt by Minnesota Governor Mark Dayton of a letter from U.S. Senator Charles Grassley regarding the UCare contribution. Governor Dayton, various staffers, and Commissioner Jesson corresponded about how the administration would respond to Grassley’s letter.

The correspondence included these talking points:

• Commissioner Jesson would handle the press response;

• Jesson had communicated the pertinent details of the UCare contribution to legislators and CMS in March of 2011;

• UCare funds were a voluntary donation, since Jesson did not have statutory authority to compel repayment from Pawlenty-era 2010 DHS contracts;

• The Dayton administration was supporting legislation for independent health plan audits, and was transforming the public health care contract bidding process