Rocky Transition: Medicaid to Private HMOs

Booming Business and Spending

That's not the opinion on Wall Street. Profits for HMOs servicing Medicaid contracts have soared since 2000. In fact, in the last five years, the four companies whose primary business involves providing Medicaid services to states -- Wellcare, Centene Corp., Molina Healthcare and Amerigroup Corporation -- have made more than a billion dollars in profit combined. Stock prices for these companies have also surged.

It's not just the companies that are seeing a windfall. Todd Farha, the CEO of Wellcare, has been granted or sold stock and options worth more than $100 million since his company went public in 2004.

Centene Corp. CEO, Michael Neidorff, has been granted more than $30 million in company stock. According to filings with the Securities and Exchange Commission, Centene even pays for Neidorff to use a Bombardier Challenger jet for both business and personal travel.

In a written statement provided to "Good Morning America," Centene said its board provides the jet to Neidorff "for personal security, immediate access and the need to maintain confidentiality." It also said the jet makes "the most efficient use of" Neidorff's time.

And while the Cabinet secretaries and other government employees who oversee Medicaid typically use commercial airplanes for Medicaid-related business, Centene said its board requires Neidorff to use the plane for both personal travel and company trips. According to the lease agreement signed by the company, the plane includes an onboard espresso machine and an entertainment center.

Centene's spending extends past its executive offices.

The company has made contributions to several organizations unrelated to health care. For example, the company paid $200,000 for the naming rights to a Minor League Baseball stadium in Great Falls, Mont., and in 2004, Neidorff commissioned a sculpture of a large eagle holding a fish in its talons at the Great Falls International Airport. The sculpture was paid for by Centene.

Centene's Charitable Foundation -- which is funded directly by the company -- has also contributed money to the National Symphony Orchestra and the Kennedy Center Honors Gala in Washington over the past few years.

Centene employs approximately 100 workers at a medical claims processing facility in Great Falls, but it does not serve Medicaid recipients in either Montana or Washington, D.C..

In a written statement, Centene told "Good Morning America that "its "continued growth allows the company to support a wide variety of public institutions, nonprofits, arts and cultural organizations, health care initiatives, social service agencies and civic organizations." The company said it remains "committed to these activities and fervently believe they reflect the actions of a responsible and publicly focused company."

Industry spokeswoman Pisano said questions about the amount of money available to Medicaid HMOs and how the money is spent are "a legitimate public policy discussion." Yet she said studies demonstrate that those people receiving Medicaid through HMOs are better off under the new system and "that states are saving money" compared with when states ran Medicaid.

Critics of the system argue that was not the case in Illinois, where the federal and state governments, along with a corporate whistleblower, sued Amerigroup for fraud, and won, last year.

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