KAISER HEALTH NEWS: Centene showers politicians with millions as it courts contracts and settles overbilling allegations | News

Linda Rider

On Nov. 2, 2021, Nevada Gov. Steve Sisolak’s reelection campaign received 10 separate $10,000 contributions from what appeared to be unrelated health insurance plans from across the country.

The Buckeye Community Health Plan of Ohio, Louisiana Healthcare Connections, and Peach State Health Plan of Georgia were among the companies that sent money to the Democrat, according to state campaign finance records, even though only one, SilverSummit Healthplan, provided insurance in the Silver State.

But a thread connects the companies: Each is a subsidiary of Centene Corp., ranked 26th on the Fortune 500 list, and the nation’s largest private managed-care provider for Medicaid, the government insurance program for people with low incomes or disabilities.

Centene had already sealed Medicaid deals in Nevada through its SilverSummit subsidiary — yet a potential new line of business was on the horizon. Sisolak, who is up for reelection Nov. 8, had just approved a new public health plan option that would later open up to bidding from contractors such as SilverSummit.

And then, less than two months after Centene’s subsidiary contributions were made, Nevada settled with the company over allegations the insurer overbilled the state’s Medicaid pharmacy program. The state attorney general’s office did not publicly announce the $11.3 million settlement but disclosed it in response to a public records request from KHN.

Sisolak — who has accepted at least $197,000 from Centene, its subsidiaries, top executives, and their spouses since August 2018 — issued a statement through his campaign spokesperson Molly Forgey that said Medicaid contracts are awarded by an independent group. “There is zero correlation between Centene’s donations and how the governor legislates,” Forgey said. “The governor in no way acts unilaterally in decisions to award state contracts.”

The contract went before the Nevada Board of Examiners for final approval. Sisolak is one of three voting members.

Centene has similarly amplified campaign contributions to governors in New York and South Carolina, two states where it has profitable contracts and such giving by multiple subsidiaries is allowed. And despite having pledged to investors to disclose its political giving, Centene has revealed to shareholders only a portion of its contributions — omitting much of its subsidiary giving from reports on its website.

Under corporate law, each subsidiary is its own business, which allows companies to increase their political footprints in some states by giving the maximum allowed donations from more than one entity, said Ciara Torres-Spelliscy, a law professor at Stetson University in Florida.

“In some cases, they can increase it tenfold depending on how many subsidiaries and how much money they want to aim at a particular politician,” Torres-Spelliscy said. “They will exploit any loophole.”

Since 2015, the St. Louis-based insurance behemoth, its subsidiaries, its top executives, and their spouses have given more than $26.9 million to state politicians in 33 states, to their political parties, and to nonprofit fundraising groups, according to a KHN analysis of IRS tax filings and data from the nonpartisan, nonprofit group OpenSecrets. That total doesn’t include the millions of dollars Centene and its subsidiaries have given to state politicians’ political action committees because OpenSecrets doesn’t track those donations. The KHN analysis also does not include giving to congressional and presidential candidates.

It’s a purposeful political investment: Centene earns billions of dollars from governments and then uses its profits to back the campaigns of the officials who oversee those government contracts. The company has developed this sophisticated, multipronged strategy as it pursues even more state government-funded contracts and defends against sweeping accusations that it overbilled many of those very governments.

Centene declined to make a representative available for an interview and didn’t respond to specific questions about its political giving. But company spokesperson Suzy DePrizio said in a statement that the company follows all local, state, and federal laws and records all contributions from its political action committee. She said Centene’s contributions “are intended to serve as support to those who advocate for sound public policy healthcare decisions, which is evident by our nearly equal support of candidates from both parties.”

This year, according to IRS filings that go through Sept. 30, Centene has given $2.2 million, combined, to the Republican and Democratic governors’ associations, which help elect candidates from their respective parties. And Centene gave $250,000, combined, to the Republican Attorneys General Association and its Democratic counterpart.

Since last year, state attorneys general, whose campaigns are benefiting from the associations’ money, have negotiated massive settlements with Centene over accusations the company’s prescription drug programs overbilled Medicaid.

More than 20 states are investigating or have investigated Centene’s Medicaid pharmacy billing. The company has agreed to pay settlements to 13 of those states, with the total reaching about $596 million. And Centene told KHN in October that it is working to settle with Georgia and eight more states that it didn’t identify. It has denied wrongdoing in all the investigations.

KHN found that Centene, like many corporations, also pays dozens of lobbyists in state capitals across the country and in Washington, D.C. It courts officials with fundraising parties and perks such as tickets to sporting events like Sacramento Kings games. And it helps fund committees set up to pay for governors’ inaugural events — as it did for Sisolak, with a $50,000 donation, separate from its campaign contributions, according to the Nevada secretary of state’s office.

Executives and their family members make political contributions in their own names. For example, from 2015 through 2021, Centene’s then-CEO Michael Neidorff and his wife, Noémi, wrote at least $380,000 in personal checks to state candidates, with more than 60% going to California Gov. Gavin Newsom, a Democrat who governs a state where the insurer generated 11% of its revenue in 2019. The Neidorffs lived in St. Louis.

There’s no proof Centene’s contributions swayed politicians’ decisions, but campaign finance experts say money can translate into access and that can lead to influence.

“They’re trying to protect their market share,” said Gerald Kominski, a senior fellow at the UCLA Center for Health Policy Research. “They see it as necessary to maintain good relations with the agencies and with the individuals who are involved in decision-making because that’s the way government works.”

Billing Question Surfaces in Ohio

Health care industry players — from insurers, to doctor lobbying groups, to drug companies — routinely make large political donations. Centene rival Elevance Health, formerly known as Anthem, has spent at least $21.8 million on state political contributions since 2015, according to KHN’s analysis.

What makes Centene stand apart from competitors is the massive share of its business that is funded by taxpayers. Founded as a nonprofit in 1984 by a former hospital bookkeeper, Centene earned $126 billion in revenue last year — up from $5 billion a decade ago, according to the company’s annual reports.

Its rocketing revenue has been fueled by its thriving Medicaid managed-care business, takeovers of competitors, and growth in its Medicare Advantage membership and in enrollment in health plans it sells via the Affordable Care Act health insurance marketplaces. Centene’s Ambetter plans, available on the exchanges, have the highest enrollment nationally. The company has also locked up lucrative deals to deliver health care to state prisoners, military members, and veterans.

Centene has reported that two-thirds of its revenue comes from state Medicaid contracts that cover about 15 million people across the country.

So when Ohio Attorney General Dave Yost sued Centene in March 2021 over what he called a complex scheme of “corporate greed” to “fleece taxpayers out of millions,” other states took notice.

Ohio investigators accused Centene of overcharging the state’s Medicaid program through the company’s pharmacy benefit managers, which provided medications to Centene-managed Medicaid patients. Pharmacy benefit managers, known as PBMs, act as middlemen between drugmakers and health insurers and as intermediaries between health plans and pharmacies.

Centene denied wrongdoing but faced immediate consequences. Ohio officials froze its application to renew its contract to offer insurance to state Medicaid enrollees.

“Ohio had Centene over a barrel,” said Antonio Ciaccia, a consultant who worked with the state on the dispute.

The company settled three months later for $88.3 million. Its application was soon unfrozen, and it won a Medicaid contract that summer for its subsidiary Buckeye Health, whose lobbyists include Michael Kiggin, a law school buddy of Republican Gov. Mike DeWine.

Dan Tierney, a spokesperson for DeWine, said the state’s competitive bidding process was reviewed by a court, which “noted Buckeye Health Plan scored highly in the bid process.”

Since last year, 12 other states have settled with Centene over pharmacy services: Arkansas, Illinois, Kansas, Louisiana, Massachusetts, Mississippi, Nebraska, Nevada, New Hampshire, New Mexico, Texas, and Washington.

Of the states that have reached settlements so far, at least five have subsequently awarded government contracts to the company. Louisiana settled with the insurer in November 2021 for $64.2 million and just three months later awarded a statewide Medicaid contract to Centene’s subsidiary Louisiana Healthcare Connections. KHN learned of the settlement, which was not previously publicly announced, in October through a records request.

Nebraska officials also hadn’t publicly announced the state’s $29.3 million settlement with Centene in December until they received a recent KHN public records request. Nine months after the settlement, the state awarded Centene subsidiary Nebraska Total Care a Medicaid contract.

One reason Centene keeps winning contracts, Kominski said, is that such large insurers don’t have much competition in some parts of the country. “It’s not as if states can easily say, ‘OK, we’re going to have an open competition’ and then they have hundreds of insurers willing to participate in the marketplace,” Kominski said. “Health care is not, in general, a very competitive marketplace.”

Some politicians are tired of that playbook. In Mississippi, the state House of Representatives voted in February to prohibit Republican Gov. Tate Reeves’ administration from awarding a contract to any company that the state had settled with for more than $50 million. Centene paid Mississippi $55.5 million the year before.

“I am for doing away with our business to a company who took $55 million of our money that was supposed to be spent on the poor, the sick, the elderly, the mentally ill, the disabled,” Republican state Rep. Becky Currie, who authored the amendment, told her colleagues on the House floor.

The House adopted Currie’s amendment, but the Senate stripped it out of the bill.

Reeves’ gubernatorial campaign committee has received $210,000 from Centene since 2015, according to OpenSecrets data, and Mississippi lawmakers and party organizations have reaped at least $600,000. Reeves’ office did not respond to multiple requests for comment about the donations.

In August, just over a year after the settlement, Mississippi awarded Centene subsidiary Magnolia Health Plan a new Medicaid managed-care contract.

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