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Banned
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aceventura3, picture a funnel of money flow that begins with a wide mouth that sucks in all of the medical insurance premiums deducted from every worker's paycheck for the medicare portion of the FICA deduction, matched by an equal employer "contribution". It's comprised of 1.45 percent of earnings from each, or 2.90 percent total, of all W-2 earnings, wuth unlike the SSI joint deduction, <a href="http://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax">no limit</a>.
Here is a report on what the private sector has been doing to medicare:
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http://www.sfgate.com/cgi-bin/articl...12/MN63168.DTL
Medicare bilked for billions in bogus claims
Private watchdogs rife with conflicts make system an easy target for fraud
- Reynolds Holding, Chronicle Staff Writer
Sunday, January 12, 2003
The system of private contractors policing the $250 billion-a-year Medicare program is riddled with conflicts of interest, financial disincentives and regulatory breakdowns so severe that fraud and abuse bleed tens of billions of dollars from the program every year.
Several of the most egregious frauds have involved the watchdogs themselves -- private insurance companies the government hires to examine and pay Medicare claims -- court records show.
But even reputable companies lack incentive to search for fraud. They serve at the behest of medical trade groups and, in some cases, are business partners with doctors and hospitals. They skimp on oversight, checking for the proper completion of claims forms but rarely for deceit.
The result is a variety of billing scams involving nonexistent patients, unnecessary treatments, phony tests, excessive charges, services never rendered or procedures billed more than once.
"It is utterly ridiculous," says Malcolm Sparrow, a health care fraud expert at Harvard University's Kennedy School of Government. "We are trusting insurance companies to do oversight of the medical profession, and they are riddled with corruption themselves."
Sparrow estimates Medicare fraud at $50 billion to $75 billion a year -- about twice the amount of Congress' most expensive proposal for helping senior citizens buy prescription drugs.
Fraud is so costly that it has helped force Medicare into drastic spending limits since 1997. Last year, the program cut doctors' reimbursement rates 5.4 percent, with an additional 12 percent reduction scheduled for the next three years. Lower rates have led many medical providers to drop Medicare patients, leaving millions of Americans without sufficient health care coverage.
The system's failures emerged with disturbing clarity Oct. 30, when FBI agents seized records involving two heart specialists suspected of billing Medicare for unnecessary procedures at Redding Medical Center.
Several days later, the medical center's owner, Tenet Healthcare Corp., announced that a private watchdog -- Mutual of Omaha -- had persuaded the federal Department of Health and Human Services to investigate the company for extracting billions of dollars in possible overcharges through a Medicare loophole.
No charges have been filed in either case.
But other Medicare scams are so brazen that critics say even cursory oversight would reveal wrongdoing.
From 1991 through 1997, Healthcare One, a medical equipment seller in Encinitas (San Diego County), persuaded more than 110 elderly cancer patients to order special pumps for draining excess lymph fluid. Though the pumps didn't meet federal standards, the company forged doctors' letters to certify that the patients could not survive without them.
Failing to check the paperwork, the Medicare watchdog reimbursed the company $5,400 for each pump, a total of more than $500,000 in public funds for bogus medical equipment.
"They jeopardized patients' lives in the name of the almighty buck," says Ray Pettersen, Healthcare One's former national sales manager. "And they weren't ripping off the government, but you and me and every other taxpayer."
CONFLICTS OF INTEREST
Medicare's persistent breakdowns derive in part from its size. The program, created in 1965 to guarantee health care coverage for Americans over 65 or with certain disabilities, covered more than 40 million Americans last year and paid about a billion claims.
But critics say the system's fraud problems stem from a compromise Congress struck with the health care establishment 38 years ago. Fearing socialized medicine, doctors and hospital owners agreed to participate in the program only after being allowed to select the insurance companies that process the claims and serve as the program's watchdogs.
Today, 49 private insurance companies work for the Centers for Medicare and Medicaid Services, the federal agency that runs Medicare.
The insurance companies receive bills from doctors and hospitals that treat Medicare patients, examine the bills for mistakes and then pay them with checks drawn on two federal trust funds. The trust funds are financed through payroll taxes, patient premiums and general tax revenues.
The government reimburses the companies for their costs of processing claims, and grants them a fixed budget for administrative tasks such as controlling fraud and abuse.
Typically, the U.S. government awards contracts through competitive bidding.
But the compromise with Congress allowed the American Hospital Association, an advocacy group for hospitals, to decide which insurance companies should handle hospitals' Medicare bills.
Virtually all the companies turned out to be members of the National Association of Blue Shield Plans, now the Blue Cross Blue Shield Association, a frequent political ally of the American Hospital Association and the American Medical Association.
"'No sooner had the ink dried on that compromise than we began . . . to have horror stories," says Richard Kusserow, inspector general in the Department of Health and Human Services from 1982-1991. For every abuse the government tried to stop, says Kusserow, three would appear in its place.
Bilking Medicare became so lucrative that professional criminals got involved. In 1993, Gabriel Hernandez, a former "logistics coordinator" for the Medellin, Colombia, cocaine cartel, opened a chain of Florida health clinics that billed Medicare and state Medicaid programs for fictitious patients with phony ailments. Over two years, he received checks for more than $1.7 million.
"Everything was easy compared with being in the trafficking business," he says. "All I was doing was picking up checks every week. And I got caught, but I didn't get killed."
Hernandez was convicted in April 1997 of racketeering and spent five years in prison.
Three years ago, the General Accounting Office (GAO) cited "fundamental" conflicts of interest as a factor in the watchdogs' poor performance.
Hospitals and doctors not only help select their overseers, they go into business with them. Many of these companies also run health maintenance organizations. The HMOs funnel business to hospitals and doctors that the insurers may regulate.
Some of the companies even own hospitals. For example, one subsidiary of Cigna Corp. reviews and pays Medicare claims for doctors. Another subsidiary owns Lovelace Health Systems, a hospital and physician group in Albuquerque, N. M. Last month,. Lovelace agreed to pay $24.5 million to settle a whistle- blower suit charging that the company had submitted tens of millions of dollars in false claims to Medicare over 10 years. Cigna did not review the Lovelace claims.
And when a private insurer and Medicare cover the same patient, the insurer is primarily responsible for paying the patient's claims, with Medicare picking up anything left over. But some insurers exploit their Medicare roles by making Medicare the primary payer, a violation that has cost the national Blue Cross Blue Shield Association, Transamerica, Travelers and other insurers more than $100 million in legal settlements.
"Government contractors policing themselves," says Kusserow, "is not a very healthy situation to have."
CORPORATE ABUSE OF SYSTEM.....(read on...if it doesn't make you queasy !)
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<b>ace....take a look at what happens to the rest of the money that enters the wide end of the funnel.....all of the medical insurance premiums paid to the "for profit" insurance "providers". How much of insureds' premium payments do you think is spent on IPO's, mergers and acquisitions lawyers, bankers, and advisors, secondary stock offerings, bond issuance, on investor relations, Sarbanes-Oxley compliance, tax accountants, determination and disbursement of dividends, and on issuance of stock options to executives that are dilutive to common stock holders?
How much of the premium payments is spent on advertising, marketing, sales, entertaining clients and prospective clients....the decision makers in the HR depts. at large employers who select the health plans offered to employees. How much is spent negotiating medical procedure payment rates with large hospital corporations like....HCA?
How much is spent paying interest on corporate borrowing, on dividends, on executive salaries, and how much ends up as net earnings available to common stock (total number of common shares divided by net earnings total= EPS)....???
Let's take a peek, shall we ???:</b>
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Aetna Inc. (AET)
http://finance.yahoo.com/q/pr?s=AET
KEY EXECUTIVES
Pay Exercised
Mr. Ronald A. Williams , 57
Chairman, Chief Exec. Officer, Pres, Chairman of Exec. Committee and Member of Investment & Fin. Committee $ 2.70M $ 24.00M
Mr. Alan M. Bennett , 56
Chief Financial Officer and Sr. VP $ 1.09M $ 7.54M
Mr. Timothy A. Holt , 53
Chief Investment Officer, Chief Enterprise Risk Officer and Sr. VP $ 928.00K $ 13.92M
Mr. Craig R. Callen , 51
Sr. VP - Strategic Planning and Bus. Devel. $ 1.14M $ 0
http://finance.yahoo.com/q/ks?s=AET
Net Income Avl to Common (ttm): 1.73B
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<b>Aetna managed to dilute it's shareholder holdings by issuing stock options worth over $45 million to just three top executives in just one year, and earned $1.73 billion...which is the difference between premiums collected minus premiums paid, total expenses, and taxes paid, plus a contribution to a premium reserve.</b>
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Unitedhealth Group, Inc. (UNH)
http://finance.yahoo.com/q/ks?s=UNH
Income Statement
Net Income Avl to Common (ttm): 3.96B
Balance Sheet
Total Cash (mrq): 9.92B
http://finance.yahoo.com/q/pr?s=UNH
KEY EXECUTIVES
Pay Exercised
Mr. Stephen J. Hemsley , 54
Chief Exec. Officer, Pres, Chief Operating Officer and Exec. Director $ 3.45M $ 0
Dr. William W. McGuire M.D., 58
Former Chief Exec. Officer and Chairman of Exec. Committee $ 8.01M $ 0
Mr. Richard H. Anderson , 52
Pres of New Commercial Services Group $ 1.20M $ 0
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Here is the "story" of the experience of HCA, a company started by former senate majority leader, Bill Frist's (R-TN) father, and managed by his brother. After spending some time ago, whatever it cost for an IPO to take the company "public", now they've spent another slug of money on investment banking fees, financial advisors, and lawyers, to take the company private again, in a merger transaction.....The Frist family's holdings are reported here:
Quote:
http://uk.biz.yahoo.com/060810/323/gj6je.html
Thursday August 10, 05:13 PM
<b>Shareholders to vote on HCA deal</b><
.... The next day, the offer was upped to $50.50 per share, which the special committee also rejected, but said it would consider a proposal at $52 per share, it said.
Later that day, Merrill Lynch representatives contacted the special committee and said the potential buyers would submit their 'best and final' offer of $50.75 per share. The special committee said it would only pursue a proposal at $51 per share, which buyers finally agreed to, it said.
The SEC filing also contained details of the expected buyout of shares.
<b>It said that Thomas Frist Jr., who co-founded the hospital chain in 1968 with his physician-father, would put nearly 16 million shares of HCA stock back into the company.
Frist owns about 4 percent of HCA shares, but after the pending buyout he would own about 15 percent of the company.
Thomas Frist Jr. is the brother of Senate Majority Leader Bill Frist, who is under federal investigation for selling HCA shares last year around the time insiders were selling and when the stock price hit a 52-week high.</b>
At least six members of HCA's senior management would invest a total of at least $46.5 million in cash or roll over a portion of their stock options into the deal, according to the SEC filing.
Of these executives, Chairman and Chief Executive Jack Bovender Jr., would put up the most -- about $20 million -- giving him 0.47 percent ownership of HCA after the buyout.
Richard M. Bracken, HCA's president and chief operating officer, would invest at least $10 million, for a 0.23 percent stake.....
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Quote:
http://phx.corporate-ir.net/phoenix....l-fundsnapshot
HCA owns and operates approximately 179 hospitals and approximately 104 freestanding surgery centers in 21 states, England and Switzerland. We are dedicated to providing healthcare services that meet each community's local healthcare needs. We seek to integrate various services to deliver patient care with maximum quality and efficiency. Our approach includes focusing on quality; streamlining operations; sharing technology, equipment and personnel where appropriate; and using economies of scale when contracting for medical supplies and administrative services.
11/16/06
HCA Shareholders Approve Merger With Private Equity Consortium632
Income From Total Operations (mil) (FYE) 1,424.00
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Quote:
http://www.tennessean.com/apps/pbcs....334/1003/RSS03
Monday, 01/08/07
Firms cash in on merger mania
Midstate bankers, lawyers, accountants collect hefty fees
By GETAHN WARD
Staff Writer
....The biggest was the purchase of hospital chain HCA by three private equity firms and the Frist family for $33 billion, the second largest leveraged buyout in history.
Beneficiaries included the law firm Bass, Berry & Sims of Nashville, which offered HCA legal advice and had a share in an estimated $62 million of legal and consulting fees.
"We did several billion dollar-plus deals (nationwide). That's very unusual," said Jim Cheek, a senior partner in Bass, Berry & Sims. "The amount of private equity money and the ability to leverage that money with significant debt-financing have been unparalleled."
In such transactions, lawyers and other professionals play various roles. Lawyers help with negotiating terms, reviewing contracts, advising directors and preparing regulatory filings.
Investment bankers help in structuring the transactions, including determining the appropriate price and arranging funding sources.
Accountants help to verify that financial information provided by a seller to a buyer is accurate, offer tax advice on structuring the transaction, and might help a party with negotiations.
In Nashville, fees lawyers can earn for work on such transactions range from $135-$140 an hour for younger attorneys up to $400-$500 an hour for senior partners. New lawyers in larger cities such as New York, Chicago and Atlanta can earn $200 an hour and senior partners $600 to $650 an hour, said George Bishop, a partner in corporate mergers and acquisitions with the law firm Waller Lansden Dortch & Davis.
A big deal doesn't always mean more work, he said, adding that parties might not have the time to review every contract and that much information might already be available.
Nationwide, cash-flush private equity firms — with an ability to put down so little of their own money and borrow more than ever before — are a major force behind the mergers and acquisitions boom that kicked off in 2003.
But a Bloomberg analysis of last year's 246 Tennessee deals shows that only 29 involved such equity firms,with a total acquisition value of more than $36 billion. Most deals were acqui sitions of companies by another player in their industries, including foreign companies involved in 37 deals worth more than $3 billion.
Health-care and pharmaceutical companies accounted for 47 deals worth $83 billion, making Nashville's signature industry the most active sector in terms of total dollar volume.....
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<b>It seems to me that Mr. Bush represents only the few folks at the bottom "narrow end" end of the private health insurance and private health care provider industry....the end where the money all flows back out....and into the pockets of executives, major investors, M&A advisors and investment bankers, lawyers and accountants, ad agencies and a whole bunch of other "feeders" off this industry who add nothing to insureds' paid premium "value". In their spare time, these greedy, selfish, unethical parasites, along with some doctors and other healthcare providers, also rip off the medicare insurance trust, fix prices, and engage in phantom fraudulant billing, and they get to write checks from our medicare trust fund...to themselves.
But your convinced that the "private sector" does it better than government, even though 45 million are now uninsured, and Bush's "solution: is to tax the benefits received by employees, and take care of his politcal patrons at the narrow end of this upside down pyramid scheme.
Don't ever forget, the "liberals" are socialists, and the republicans are your friends !
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