Rocky Transition: Medicaid to Private HMOs

In the lawsuit, the government argued that between 2000 and 2004 Amerigroup received $232 million in taxes to pay for Medicaid health care benefits but spent little more than half of the money it received on patient care.

The lawsuit was filed by a former Amerigroup employee named Cleveland Tyson. Tyson's attorneys, Frederick H. Cohen and David Chizewer, told the court that Amerigroup Illinois selectively enrolled healthy patients in its HMO in order to receive payments from the state for each new enrollee. At the same time, Amerigroup allegedly avoided signing up patients who would need care.

Attorneys said one of the most damning moments in the trial came when the government played a portion of a videotaped deposition of Amerigroup's former Chief Marketing Officer Herman Wright.

On the tape, Wright told attorneys his "growth strategy was to bring in all the, all the folks out there who were 'healthies,' which were basically the majority of your population."

When asked if he focused on patients who were sick or already in the medical system, Wright replied, "Well, I'm from the health insurance industry. From day one I think one of the, if I had told anyone I was going to go out and enroll as many sick people as I could in health insurance I would be fired."

In October a jury found that Amerigroup Illinois and its parent company Amerigroup Corp. had violated the Federal False Claims act, a whistleblower law that allows an individual to sue on behalf of the government if he believes a company has defrauded the United States. The jury awarded the parties in the suit more than $300 million in damages. Amerigroup is appealing the verdict and the damage award.

Ted Olson, the former U.S. solicitor general, is representing Amerigroup on appeal. In a written statement from the company Olson said, "A few snippets of trial testimony from the Tyson case don't tell the full story, which is that Amerigroup's state partner knew about Amerigroup's marketing initiatives and approved them.

"Good Morning America" requested interviews with Amerigroup and the other major Medicaid HMOs. All declined the requests and referred reporters to America's Health Insurance Plans, the industry trade group.

In a wide-ranging interview, Pisano discussed issues such as profit caps and executive compensation.

Pisano told Chris Cuomo that she would not say whether or not HMO profits should be capped at maximum levels but did point out that some states have put limits on how much money the companies can make.

"I think that it is reasonable for states to look at what makes sense, to create a system that works for them," she said.

Pisano said rather than focusing on how much money Medicaid HMOs are making, critics should focus on the question of whether or not "people are getting better access to care."

Ellen Roberts, Mikeriya Ainsley's therapist, said in the case of her patients, the answer to Pisano's question is no. Roberts fears patients like Ainsley who are no longer getting therapy will one day burden society because they will not be able to hold a job.

"At this point, if she doesn't get the extra help," Roberts said, "she will probably just kind of give up."

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