Tagged Medicaid

Couple Makes Millions Off Medicaid Managed Care As Oversight Lags

CHULA VISTA, Calif. — Norma Diaz and her husband, Joseph Garcia, have dedicated their careers to running a nonprofit health insurer that covers some of California’s neediest residents.

For three decades, they have worked for a Medicaid managed-care plan, Community Health Group, serving nearly 300,000 poor and disabled patients in San Diego County under a state contract funded entirely by taxpayers. They’ve earned above-average ratings for patient care.

And in the process, they’ve made millions of dollars.

Together, Diaz and Garcia made $1.1 million in 2016 and received more than $5 million since 2012, according to the health plan’s tax returns and company data. Diaz’s compensation as CEO exceeded the pay of several peers at bigger plans in 2016.

Garcia, married to Diaz since 1997, is an outside consultant who serves as chief operating officer. Their health plan, with $1.2 billion in annual revenue, had a profit margin of 19 percent in 2016, the highest of any Medicaid insurer in California and more than six times the industry average.

“This is not only a conflict of interest but egregious overpayments,” Frank Glassner, chief executive of Veritas Executive Compensation Consultants in San Francisco, said after hearing of the payments from a reporter and reviewing the tax returns. “It’s the family-and-friends plan.”

The arrangement at this midsize California health plan raises broader questions about government oversight as states award billions of dollars in public money to private plans to cover patients on Medicaid, the federal-state insurance program for the poor.

Evidence is mounting that Medicaid’s rapid expansion under the Affordable Care Act has far outstripped the government’s ability to monitor the taxpayer money it turns over to insurers. In California, for instance, some health plans have reaped outsize profits, so large the state is now trying to claw back billions in overpayments, a recent Kaiser Health News investigation found.

Medicaid enrollment has soared to 74 million Americans, from 58 million before the ACA rollout. About 75 percent of them are assigned to plans like Community Health

Group, which receive a flat monthly fee per person to handle their medical care.

Increasingly, states have embraced managed care in hopes of controlling Medicaid costs. Insurers could see further growth as the Trump administration and Congress seek to cut federal spending on Medicaid and shift more of the fiscal burden onto states.

These managed-care contracts can be highly lucrative for the companies involved and their executives, like Diaz and Garcia. Any money left over after spending on medical care and administration is profit or “surplus,” depending on whether the plan is nonprofit.

Federal auditors have warned for years about lax oversight of Medicaid money, a task that primarily falls to states. A 2017 report found that even as managed care has grown in importance, states have fallen behind in collecting essential data from plans.

In the past year alone, government auditors and consultants criticized Illinois, Kansas and Mississippi for poor supervision of Medicaid insurers. Illinois auditors said the state didn’t properly monitor $7.1 billion paid to Medicaid plans in fiscal year 2016, leaving the program unable to determine what percentage of money went to medical care as opposed to administrative costs or profit.

An examination of Community Health Group in California points to systemic flaws in oversight.

For instance, California officials said they do not examine the companies’ public tax filings. As a social welfare nonprofit, Community Health does not pay taxes, but it is required to file returns with the federal government, known as 990s, which provide basic information about operations and finances.

In a review of Community Health’s recent returns, KHN discovered that the company falsely denied — on the 2015 and 2016 forms — that it was doing business with a family member.

In response, the insurer immediately said that was an error and it was amending the returns to reflect its relationship with Garcia. The company had disclosed the relationship in earlier years.

California’s Medicaid agency, in a statement, said insurers are allowed to set their own conflict-of-interest policies. Asked specifically about Community Health Group, it referred further questions back to the health plan.

Likewise, the state’s chief insurance regulators at the Department of Managed Health Care said in a statement that insurers are not required to submit information on executive compensation and the state does not set standards for that. They do review the pay of outside contractors.

Diaz and Garcia, sitting together at a conference table in the CEO’s office on a recent weekday, said they were proud of their long record of helping disadvantaged people. The couple insists there’s nothing wrong with mixing work and family.

Community Health Group, with $1.2 billion in annual revenue, had a profit margin of 19 percent in 2016, the highest of any Medicaid insurer in California and more than six times the industry average. (Chad Terhune/California Healthline)

Diaz, 56, said her husband reports not to her but to a fellow executive, the associate CEO, and his consultant’s role was approved by the health plan’s board. “I don’t feel for me it’s a conflict of interest because he was here for many years long before we ever got married, so we got used to a working relationship,” she said.

Garcia, 66, served as the company’s on-staff chief operating officer for about 15 years and then switched in 2011 to the role of consultant (acting as COO), which ultimately raised his pay. He said the couple has never tried to hide their personal relationship from the state or anyone else.

“I understand from the outside someone might say ‘Oh my God. That’s a conflict.’ But it’s not. It’s irrelevant that I’m her husband,” he said. “I don’t see how it’s a misuse of public funds. The expense for a chief operating officer would be made no matter what, and my compensation is fair.”

His total compensation reached $487,386 in 2016, according to the insurer. From 2012 to 2016, the health plan paid him a total $2.3 million.

Under his consulting agreement, Garcia is paid $275 an hour and can make as much as $572,000 annually, according to documents obtained by KHN through a public records request. The health plan had requested the information be kept confidential, but the state released it.

In September, regulators at the managed-care department asked Community Health Group how Garcia’s pay was determined. The company submitted a pay range for chief operating officers that it said was drawn from industry surveys.

Community Health said it picked the maximum figure in the range, $442,863, to reflect Garcia’s “many years of experience in health plan operations.” It then increased his pay range by 30 percent because it said Garcia doesn’t receive benefits. The plan called his current salary — which in 2016 fell below the maximum allowed — “both fair and competitive.”

An agency spokesman said the state’s review of the matter is closed.

In early 2012, the insurer hired a new executive as COO, but he left the following year. Garcia stayed on as a consultant during that time at roughly $400,000 annually, then resumed his COO duties. His current consulting agreement runs through 2021.

“We don’t want to lose Joseph. He has a tremendous amount of knowledge,” said Albert Vitela, a retired San Diego police detective who is the plan’s co-founder and chairman.

As for Diaz, she has received $2.8 million in salary, benefits and other compensation over the five years ending in 2016. Her 2016 pay of $604,502 exceeded that of the CEO of the Inland Empire Health Plan in Southern California, which has four times the enrollment.

(Story continues below.)

Last year, federal auditors examined compensation for the 133 top paid executives at managed-care organizations in seven states, focused on health plans that get more than half of their revenue from Medicaid.

For 2015, the top executives earned $314,278, on average — more than double what state Medicaid directors earned, according to the report. Auditors didn’t find major differences in pay between for-profit and nonprofit Medicaid plans.

Executive compensation has risen as Community Health Group recorded hefty profits.

State officials had raised the rates paid to Medicaid plans in anticipation of the Affordable Care Act rollout in 2014, but the costs for newly insured patients weren’t as high as predicted. After the KHN investigation into insurer profits published in November, California’s Medicaid director, Jennifer Kent, vowed to recoup billions of dollars in excessive payments from insurers in coming months.

From 2014 to 2016, Community Health Group recorded profits of $344.2 million, according to state data obtained and analyzed by Kaiser Health News. Diaz said her insurer expects to return more than $100 million to the Medicaid program.

Robert Stern, a government ethics expert and former general counsel of California’s Fair Political Practices Commission, welcomed the scrutiny of Medicaid profits. But he said the business practices at Community Health Group suggest there is much more to be done.

“Taxpayer money should be spent as wisely as possible,” Stern said. “It’s not their money. It’s our money.”

Do you have a Medicaid managed care story? Contact Senior Correspondent Chad Terhune at cterhune@kff.org or via Signal at 657-226-0625

Couple Makes Millions Off Medicaid Managed Care As Oversight Lags

CHULA VISTA, Calif. — Norma Diaz and her husband, Joseph Garcia, have dedicated their careers to running a nonprofit health insurer that covers some of California’s neediest residents.

For three decades, they have worked for a Medicaid managed-care plan, Community Health Group, serving nearly 300,000 poor and disabled patients in San Diego County under a state contract funded entirely by taxpayers. They’ve earned above-average ratings for patient care.

And in the process, they’ve made millions of dollars.

Together, Diaz and Garcia made $1.1 million in 2016 and received more than $5 million since 2012, according to the health plan’s tax returns and company data. Diaz’s compensation as CEO exceeded the pay of several peers at bigger plans in 2016.

Garcia, married to Diaz since 1997, is an outside consultant who serves as chief operating officer. Their health plan, with $1.2 billion in annual revenue, had a profit margin of 19 percent in 2016, the highest of any Medicaid insurer in California and more than six times the industry average.

“This is not only a conflict of interest but egregious overpayments,” Frank Glassner, chief executive of Veritas Executive Compensation Consultants in San Francisco, said after hearing of the payments from a reporter and reviewing the tax returns. “It’s the family-and-friends plan.”

The arrangement at this midsize California health plan raises broader questions about government oversight as states award billions of dollars in public money to private plans to cover patients on Medicaid, the federal-state insurance program for the poor.

Evidence is mounting that Medicaid’s rapid expansion under the Affordable Care Act has far outstripped the government’s ability to monitor the taxpayer money it turns over to insurers. In California, for instance, some health plans have reaped outsize profits, so large the state is now trying to claw back billions in overpayments, a recent Kaiser Health News investigation found.

Medicaid enrollment has soared to 74 million Americans, from 58 million before the ACA rollout. About 75 percent of them are assigned to plans like Community Health

Group, which receive a flat monthly fee per person to handle their medical care.

Increasingly, states have embraced managed care in hopes of controlling Medicaid costs. Insurers could see further growth as the Trump administration and Congress seek to cut federal spending on Medicaid and shift more of the fiscal burden onto states.

These managed-care contracts can be highly lucrative for the companies involved and their executives, like Diaz and Garcia. Any money left over after spending on medical care and administration is profit or “surplus,” depending on whether the plan is nonprofit.

Federal auditors have warned for years about lax oversight of Medicaid money, a task that primarily falls to states. A 2017 report found that even as managed care has grown in importance, states have fallen behind in collecting essential data from plans.

In the past year alone, government auditors and consultants criticized Illinois, Kansas and Mississippi for poor supervision of Medicaid insurers. Illinois auditors said the state didn’t properly monitor $7.1 billion paid to Medicaid plans in fiscal year 2016, leaving the program unable to determine what percentage of money went to medical care as opposed to administrative costs or profit.

An examination of Community Health Group in California points to systemic flaws in oversight.

For instance, California officials said they do not examine the companies’ public tax filings. As a social welfare nonprofit, Community Health does not pay taxes, but it is required to file returns with the federal government, known as 990s, which provide basic information about operations and finances.

In a review of Community Health’s recent returns, KHN discovered that the company falsely denied — on the 2015 and 2016 forms — that it was doing business with a family member.

In response, the insurer immediately said that was an error and it was amending the returns to reflect its relationship with Garcia. The company had disclosed the relationship in earlier years.

California’s Medicaid agency, in a statement, said insurers are allowed to set their own conflict-of-interest policies. Asked specifically about Community Health Group, it referred further questions back to the health plan.

Likewise, the state’s chief insurance regulators at the Department of Managed Health Care said in a statement that insurers are not required to submit information on executive compensation and the state does not set standards for that. They do review the pay of outside contractors.

Diaz and Garcia, sitting together at a conference table in the CEO’s office on a recent weekday, said they were proud of their long record of helping disadvantaged people. The couple insists there’s nothing wrong with mixing work and family.

Community Health Group, with $1.2 billion in annual revenue, had a profit margin of 19 percent in 2016, the highest of any Medicaid insurer in California and more than six times the industry average. (Chad Terhune/California Healthline)

Diaz, 56, said her husband reports not to her but to a fellow executive, the associate CEO, and his consultant’s role was approved by the health plan’s board. “I don’t feel for me it’s a conflict of interest because he was here for many years long before we ever got married, so we got used to a working relationship,” she said.

Garcia, 66, served as the company’s on-staff chief operating officer for about 15 years and then switched in 2011 to the role of consultant (acting as COO), which ultimately raised his pay. He said the couple has never tried to hide their personal relationship from the state or anyone else.

“I understand from the outside someone might say ‘Oh my God. That’s a conflict.’ But it’s not. It’s irrelevant that I’m her husband,” he said. “I don’t see how it’s a misuse of public funds. The expense for a chief operating officer would be made no matter what, and my compensation is fair.”

His total compensation reached $487,386 in 2016, according to the insurer. From 2012 to 2016, the health plan paid him a total $2.3 million.

Under his consulting agreement, Garcia is paid $275 an hour and can make as much as $572,000 annually, according to documents obtained by KHN through a public records request. The health plan had requested the information be kept confidential, but the state released it.

In September, regulators at the managed-care department asked Community Health Group how Garcia’s pay was determined. The company submitted a pay range for chief operating officers that it said was drawn from industry surveys.

Community Health said it picked the maximum figure in the range, $442,863, to reflect Garcia’s “many years of experience in health plan operations.” It then increased his pay range by 30 percent because it said Garcia doesn’t receive benefits. The plan called his current salary — which in 2016 fell below the maximum allowed — “both fair and competitive.”

An agency spokesman said the state’s review of the matter is closed.

In early 2012, the insurer hired a new executive as COO, but he left the following year. Garcia stayed on as a consultant during that time at roughly $400,000 annually, then resumed his COO duties. His current consulting agreement runs through 2021.

“We don’t want to lose Joseph. He has a tremendous amount of knowledge,” said Albert Vitela, a retired San Diego police detective who is the plan’s co-founder and chairman.

As for Diaz, she has received $2.8 million in salary, benefits and other compensation over the five years ending in 2016. Her 2016 pay of $604,502 exceeded that of the CEO of the Inland Empire Health Plan in Southern California, which has four times the enrollment.

(Story continues below.)

Last year, federal auditors examined compensation for the 133 top paid executives at managed-care organizations in seven states, focused on health plans that get more than half of their revenue from Medicaid.

For 2015, the top executives earned $314,278, on average — more than double what state Medicaid directors earned, according to the report. Auditors didn’t find major differences in pay between for-profit and nonprofit Medicaid plans.

Executive compensation has risen as Community Health Group recorded hefty profits.

State officials had raised the rates paid to Medicaid plans in anticipation of the Affordable Care Act rollout in 2014, but the costs for newly insured patients weren’t as high as predicted. After the KHN investigation into insurer profits published in November, California’s Medicaid director, Jennifer Kent, vowed to recoup billions of dollars in excessive payments from insurers in coming months.

From 2014 to 2016, Community Health Group recorded profits of $344.2 million, according to state data obtained and analyzed by Kaiser Health News. Diaz said her insurer expects to return more than $100 million to the Medicaid program.

Robert Stern, a government ethics expert and former general counsel of California’s Fair Political Practices Commission, welcomed the scrutiny of Medicaid profits. But he said the business practices at Community Health Group suggest there is much more to be done.

“Taxpayer money should be spent as wisely as possible,” Stern said. “It’s not their money. It’s our money.”

Do you have a Medicaid managed care story? Contact Senior Correspondent Chad Terhune at cterhune@kff.org or via Signal at 657-226-0625

Gap Between People Who Can’t Afford Health Care And Those Who Can Barely Afford It Stokes Resentment

For those that don’t qualify for Medicaid under the Affordable Care Act, the requirement for insurance coverage can seem unfair. Meanwhile, the congressional spending deal raises doubts about what lawmakers are doing to control health costs that are only expected to get worse.

Gap Between People Who Can’t Afford Health Care And Those Who Can Barely Afford It Stokes Resentment

For those that don’t qualify for Medicaid under the Affordable Care Act, the requirement for insurance coverage can seem unfair. Meanwhile, the congressional spending deal raises doubts about what lawmakers are doing to control health costs that are only expected to get worse.

Podcast: KHN’s ‘What The Health?’ What Do The Budget, Idaho And FDA Chief Scott Gottlieb Have In Common?

President Donald Trump released his first full budget proposal this week, with many recommended cuts and some major changes to health programs. But Congress has already agreed on most spending levels for next year, so this budget is even more likely to be ignored than a typical presidential budget plan.

Meanwhile, states are trying to cope with last year’s changes to the Affordable Care Act in very different ways. Several states, mostly led by Democrats, are considering whether to set penalties for people who don’t have insurance — a provision of the ACA that Congress repealed in December. Idaho, meanwhile, is offering to let insurers sell plans that don’t cover the ACA’s required set of benefits and discriminate against people with preexisting health conditions.

Plus, Scott Gottlieb, commissioner of the Food and Drug Administration, talks about getting generic drugs to market faster and how the agency is working with Congress on ways to help patients with terminal illnesses get easier access to experimental treatments.

This week’s panelists for KHN’s “What the Health?” are Julie Rovner of Kaiser Health News, Stephanie Armour of The Wall Street Journal, Paige Winfield Cunningham of The Washington Post and Margot Sanger-Katz of The New York Times.

Among the takeaways from this week’s podcast:

  • Even though few of the proposals in Trump’s budget are likely to be enacted, it does lay down some important markers for the administration. Those include backing sweeping changes to Medicaid and eliminating many of the ACA’s coverage requirements.
  •  Blue states considering stepping into the void left by Congress’ repeal of the individual insurance mandate penalties have limited time to act. Insurers start making decisions about whether to participate in the individual market in the spring.
  • The FDA’s Gottlieb tells Rovner and KHN’s Sarah Jane Tribble he expects there will be a compromise on Capitol Hill on “right-to-try” legislation that would make it easier for patients with terminal illnesses to gain access to experimental therapies.
  • Idaho is moving forward on its plan to allow insurers to offer policies that do not comply with the requirements of the Affordable Care Act. On Capitol Hill this week, Health and Human Services Secretary Alex Azar would not say whether the federal government will step up to stop them.

Plus, for “extra credit,” in honor of Valentine’s Day, the panelists offer their favorite “Health Policy Valentines” for 2018. You can see more by searching the hashtag #healthpolicyvalentines on Twitter.

Julie Rovner:

Stephanie Armour:

Paige Winfield Cunningham:

Margot Sanger-Katz:

To hear all our podcasts, click here.

And subscribe to What the Health? on iTunesStitcher or Google Play.

‘People Are Afraid’: Families Who Rely On Safety Net Programs Despair Over Trump’s Budget Proposal

The plan takes aim at programs like Medicaid that are designed to help struggling Americans. Those who receive benefits are afraid of what the proposed cuts means for them. Meanwhile, House Democrats are asking the HHS Secretary to reject states’ requests to enforce Medicaid work requirements, and Kentucky’s changes to its program will actually cost the state more money than if it didn’t touch it.

Work-For-Medicaid Lifts Off In Indiana, But Even Fans Fret About Red Tape

Indiana is one of the states poised to enact work requirements for some citizens with Medicaid coverage — a controversial policy and long-sought goal for Republicans. But advocates for the poor have protested loudly in recent months, saying many will lose coverage or be ensnared by bureaucratic mistakes. KHN’s Sarah Varney reports in collaboration with PBS NewsHour.

Read the full transcript:

Judy Woodruff: Republicans in Washington and around the nation are poised to achieve a long-sought goal: reshaping Medicaid. That’s medical assistance mainly for those with low incomes.

The Trump administration has given the go-ahead to Indiana and other states to require many adult Medicaid recipients to do work or community service in order to qualify.

The idea is popular in Indiana, but some exemptions will be granted for groups like caregivers, students, those in addiction recovery programs.

Still, as special correspondent Sarah Varney reports, advocates for the poor say they are worried that the requirements will jeopardize medical care for more than 30,000 people there.

This story was produced in collaboration with our partner Kaiser Health News.

Sarah Varney: Katie Josway is a songwriter and the front woman for the Indianapolis band Gypsy Moonshine. Over the past few years, she’s been covered by Medicaid. The public insurance program is largely free to patients in other states.

But, in Indiana, Josway pays about $25 a month. If she misses too many payments, the state will drop her insurance.

Katie Josway: I think that it’s fair to expect people to contribute based on their level of income and their ability to do so. So, I think that’s kind of what we do in a society. Right?

Varney: But Josway, who also works as a massage therapist, worries about changes coming to Medicaid in Indiana. And even though she earns about $16,000 a year, near the federal poverty level, she will have to prove that she’s working at least 20 hours a week to stay insured, a tough bet when her hours fluctuate each week.

Katie Josway: I’m trying to get people to book with me, but if they don’t, then I don’t want to be penalized and potentially lose my insurance as well. Like, that seems really harsh.

And I am concerned about that growing trend of assuming that anyone who is on an assistance program somehow is mooching off the government or doesn’t try hard enough.

Varney: Under former Gov. Mike Pence, now vice president, Indiana became the first state to enact a much more conservative approach to Medicaid.

But the idea of requiring most adults in the program to work was stopped by the Obama administration. Now the Trump White House is allowing Indiana to move ahead.

Seema Verma: What is going on in the Medicaid program today is that we have a very inflexible system.

Varney: The effort is being led by Seema Verma, whom President Trump appointed to lead the Centers for Medicare & Medicaid Services.

Verma once worked for Gov. Pence in Indiana, where she tested out her conservative policies, like coverage lockouts and monthly premiums. Now she’s taking her vision even further, by allowing states to impose work requirements and making smokers pay more for public insurance.

The administration has approved Kentucky and Indiana’s plans and at least eight other states have submitted similar requests. But advocates for the poor have protested loudly in recent months, saying many will lose coverage.

Nationwide, 60 percent of Medicaid recipients already work. And advocates say the ones that don’t usually have a good reason for not having a job, because they’re caregivers, students or in drug recovery.

At the heart of the debate are people like Antonio Berlanga. He’s 60 years old and lives in Clinton, Ind., and spent most of his adult life without health insurance. Indiana first expanded Medicaid coverage to a small number of poor adults in 2008, as the recession decimated the state’s economy.

Then, in 2015, Gov. Pence expanded it even further under the Affordable Care Act to about 442,000 adults. That allowed Berlanga, a janitor at a local church, to enroll in coverage. Now he’s been treated for severe shoulder pain, cirrhosis of the liver and hepatitis C at the Valley Professionals Community Health Center.

Like a lot of Hoosiers, he’s worried about what the changes could mean for him, but he’s willing to do his part.

Antonio Berlanga: Yes, I just don’t want it for nothing. If I’m still able to do something and give something back, then let’s go. I have still got a heart. I might not be able to, you know, totally do things. But I will do what I can, you know?

Varney: Dr. John Wernert, one of the architects of Indiana’s Medicaid plan, says that’s what he’s heard in every part of the state, that people on Medicaid want to feel like they’re contributing in some way.

Dr. John Wernert: It doesn’t have to be a lot of money for people to feel like they have some ownership and take some responsibility for the administration of their program.

One of the things I can say with confidence as a psychiatrist that has practiced for 30 years is, stigma is real. And there’s a great stigma that folks that are living at or near the poverty level don’t care about their health. Well, that’s completely wrong. They have just not been put in a position where they could take some ownership of that.

Varney: Revenues at Indiana’s hospitals have jumped as more Hoosiers have become insured.

The CEO of Margaret Mary Health, Tim Putnam, hired a company called ClaimAid to enroll uninsured patients into Medicaid and help them comply with Indiana’s complicated rules.

Now they will have to add the work requirements to their checklist. Putnam says the new rules aren’t designed to be punitive.

Tim Putnam: If it was purposefully trying to get people off of HIP, off of Medicaid and onto no coverage at all, that would be a detrimental program for us.

But as it is, it’s trying to get people to get work experience or get some job training to move on and transition to full employment, full insurance.

Varney: But Indiana’s conservative plan has added layers of bureaucracy that has ensnared people like Allen Wilson. He and his wife paid their monthly premium,but a paperwork glitch locked him out of coverage, to the point that his wife started to panic.

Allen Wilson: And she told them two or three times, I think you’re just trying to kill my husband, because he’s going to be too much money out of your pocket.

Varney: And you got stuck with thousands of dollars of bills.

Allen Wilson: Yes, I did. Yes, I did.

Varney: Some 25,000 Hoosiers were disenrolled from Medicaid from 2015 to 2017 because they didn’t pay their premiums. But it’s unclear why. Some may have moved out of state, found jobs with insurance, or even died.

Advocates like Alan Witchey say, now that Indiana is adding a work requirement, bureaucratic mistakes become much more common, especially for vulnerable populations like the homeless.

Alan Witchey: Even though we have been told there’s an exemption for homelessness, we haven’t heard, how is that going to work? What does that look like? How are we going to get it? What proof do you have to provide?

Varney: Those living in isolated rural areas, where jobs are few, have many of the same questions.

Niki Carty moved into her brother’s rented farmhouse here in the town of Dana after getting out of prison in 2015. She was convicted of selling meth, opioids and other drugs. Before prison, she became addicted to fentanyl prescribed by a doctor, and soon her two daughters were hooked on opioids as well.

Now the family is in recovery, and Carty is taking online classes to become an addiction counselor. But even though most students are exempt from the work requirement, Carty worries her courses won’t qualify, and she will be forced to drop out of school and get a dead-end job.

Niki Carty: I am concerned, because I got screwed once before. I really did get screwed.

Varney: In the 1990s, when Indiana forced people on welfare to work, Carty says the state didn’t recognize the classes she was taking then. She quit school and ended up getting injured on the job.

Niki Carty: I look at this way: If I had not had to go to a full-time job where I was being a full-time student then back in the ’90s, I would have never been in that factory to get hit by two forklifts. I mean, 20-some years later, I’m having this surgery, and this is pretty much the results.

Varney: State Rep. Ed Clere, a Republican from New Albany, is one of the few lawmakers raising these kinds of issues at the Statehouse.

I know one of your big concerns is creating more bureaucracy here in Indiana.

Rep. Ed Clere: Right. I think we have to be concerned about that and we need to be realistic. What it’s going to cost to administer this?

Varney: Clere says those added administrative costs will pull money away from medical care. And although he supports the work requirements in theory, he says the new rules are unlikely to improve health outcomes.

Rep. Ed Clere: And, in fact, it may over time take us in the other direction.

Varney: But many here say people who work live healthier lives and the changes will benefit the entire state.

Dr. John Wernert: We’re now starting to move the big battleship in a different direction, more towards what’s needed in our economy and what’s needed in our society now.

Varney: Back in Dana, a world away from the booming economy in Indianapolis, Niki Carty says the message from lawmakers to people like her is pretty clear.

Niki Carty: They think we’re trash, that we’re just garbage to throw away. They’re all worried about the money and all that. And I can understand that. But at the same time, there’s a lot of us that are trying to pick our lives up and put them back together.

Varney: For Carty, that means planning her weekly Narcotics Anonymous meeting with a local pastor. She’s determined, she says, to set her life straight and hopes the upcoming changes to Medicaid won’t get in her way.

For the “PBS NewsHour” and Kaiser Health News, I’m Sarah Varney in Indiana.

Trump’s Budget Proposal Swings At Drug Prices With A Glancing Blow

President Donald Trump’s new budget proposal flirts with combating high prescription drug prices, but industry watchers say the tweaks to Medicare and Medicaid do little more than dance around the edges of lowering the actual prices of drugs.

The White House’s proposal, which comes after Congress passed a two-year spending deal last week, though, sets the tone for the administration’s focus on prescription drugs.

“Drug costs are a populist issue for the president,” and he’s made it clear to his staff that progress needs to be made this year, said Dan Mendelson, president of Avalere Health, a health care consulting firm.

The proposal targets billions of drug spending cuts in the federal Medicare program, which provides health care for about 60 million people age 65 and older or younger patients with disabilities, and alters drug spending in Medicaid’s safety-net program for nearly 70 million Americans.

And the sheer size of the federal government’s Medicare and Medicaid programs means any drug pricing tweaks that do get made are meaningful — just not necessarily groundbreaking.

“The main question is, how far are they actually going to go in dealing with the underlying problem?” said Paul Van de Water, who spent nearly two decades in the Congressional Budget Office and is now a senior fellow at the Center on Budget and Policy Priorities. Most of the proposals for Medicare, for example, move money around rather than force decreased prices, Van de Water said.

Alex Azar, the newly appointed secretary of Health and Human Services, said the proposed budget supports the work his agency is already doing to reduce the high cost of prescriptions, “especially for America’s seniors.”

Just last month, the former Eli Lilly executive told Congress during his confirmation hearings that “all drug prices are too high in this country.”

Highlights from the proposals include:

— Passing on the discounts and rebates negotiated by pharmacy benefit managers, the financial middlemen between insurers and drugmakers, to seniors who buy drugs through Medicare Part D. The seniors would pay less out-of-pocket when buying their drugs but the proposal could potentially raise premiums because insurers wouldn’t be getting the discounts.

— Ensuring that low-income seniors in Medicare don’t pay for generics and capping out-of-pocket costs for beneficiaries who pass through the so-called doughnut hole, or coverage gap, and hit the catastrophic stage. Beneficiaries typically pay a 5 percent coinsurance in the catastrophic phase, but under the plan it would be decreased to zero.

— Moving some of the drugs paid for under Medicare Part B, which covers drugs administered in the doctor’s office such as chemotherapy and rheumatoid arthritis infusions, into the Part D part of the program to foster price negotiations. While the government pays sticker price for drugs under the Part B program, the Part D program allows insurers and pharmacy benefit managers to negotiate formularies.

— Creating a five-state pilot project to allow state Medicaid programs to negotiate prices with manufacturers and create their own drug formularies.

Trump entered office with blustering promises to bring drug prices “way down.” But critics have charged that the White House has failed to engage Congress on cost-cutting ideas, and that a leaked draft of an executive order last summer read like a wish list for the industry.

With the new budget, the administration is trying to recast that narrative at a time when Republicans in Congress may be willing to compromise.

“Americans want Washington to lower prescription drug prices, and our paper provides policy options that would make drugs more accessible to Americans, today and in the future,” wrote D.J. Nordquist, chief of staff for the president’s Council of Economic Advisers, in an email late Friday after the council released a 28-page report on reforming drug prices.

The CEA paper and the president’s budget come on the heels of Congress passing a spending pact Friday that includes a big benefit to Medicare enrollees at the expense of the pharmaceutical industry. The budget proposes closing the doughnut hole in 2019, a year earlier than expected.

Republicans “just showed a propensity to sort of take on the industry,” said Jayson Slotnik, a policy consultant and partner at Health Policy Strategies. And there is political upside for doing more since Republicans are concerned about this year’s November midterm elections approaching, Slotnik said: “They can run and [say] it’s something they have accomplished.”

Yet James Love, director of the nonprofit Knowledge Ecology International, said Trump’s proposals are not “insightful or original” and, referring to the council’s report, said it “could have been written by PhRMA,” the powerful D.C. lobbying firm for pharmaceutical manufacturers.

PhRMA released a statement late Monday applauding the provision to pass on rebates to Medicare beneficiaries but also raising concerns about other elements of the budget proposal, saying they would “limit access to innovative medicines.”

Experts from the academic and think-tank world said the district has seen several of these policies before. For example, the rebate and discount pass-through proposal has been a topic of discussion within the Centers for Medicare & Medicaid Services for more than a year and is already in the rulemaking process.

Another proposal that lowers reimbursement for Medicare Part B drugs that are new to the program is reminiscent of an Obama-era pilot that never got off the ground.

Tara O’Neill Hayes, who focuses on health policy at the conservative American Action Forum, said several Medicare proposals were also similar to those found in a June 2016 report by the Medicare Payment Advisory Commission. If all the Medicare proposals took effect — including one that calls for more flexibility in drug formularies — O’Neill Hayes said overall premiums could go up slightly for all Part D beneficiaries, but that would be offset by lowering out-of-pocket payments for the beneficiaries with the highest drug costs.

“You’re going to have winners and losers,” she said. “The real winners here are going to be the incredibly high-cost patients.”

Trump’s budget requires hospitals to provide a minimum level of charity care to get an additional payment adjustment under the 340B program, which requires pharmaceutical manufacturers to provide drugs at steep discounts to hospitals and clinics with a high ratio of low-income patients.

The administration lowered reimbursement amounts for hospitals earlier this year, and Mendelson at Avalere said he expects more changes.

In reviewing Trump’s budget and the council report, Allan Coukell, senior director of health programs at the Pew Charitable Trusts, said several of the proposals “have the potential to reduce out-of-pocket costs, several have the potential to increase competition within the programs and/or move people toward lower cost drugs. None of it changes the overall trajectory” of rising sticker prices.

Kentucky’s Medicaid Work Mandate Has Green Light, But Actually Implementing Is A Lot Trickier

Monitoring and enforcing the work requirements is a complex problem that officials are trying to wrap their arms around. The state will build a mobile-friendly website to help beneficiaries log their hours. Media outlets report on Medicaid news out of Iowa, Missouri, Michigan, Connecticut and Maryland, as well.

Kentucky’s Medicaid Work Mandate Has Green Light, But Actually Implementing Is A Lot Trickier

Monitoring and enforcing the work requirements is a complex problem that officials are trying to wrap their arms around. The state will build a mobile-friendly website to help beneficiaries log their hours. Media outlets report on Medicaid news out of Iowa, Missouri, Michigan, Connecticut and Maryland, as well.

Upsurge Of Suburban Poor Discover Health Care’s Nowhere Land

The promise of cheaper housing brought Shari Castaneda to Palmdale, Calif., in northern Los Angeles County, about nine years ago.

The single mom with five kids had been struggling to pay the bills. “I kept hearing that the rent was a lot cheaper out here, so I moved,” she said.

But when she developed health problems — losing her balance and falling — Castaneda found fewer care options in her new town. Unable to find local specialty care, she traveled nearly 65 miles to a public hospital in Los Angeles, where doctors discovered a tumor on her spine.

Then she had to drive nearly 75 miles to the City of Hope cancer center in Duarte, Calif., for an operation to remove the growth. The procedure left her partially paralyzed. “I walked into the hospital and I never really walked again.”

Castaneda, 58, receives Social Security disability payments and is enrolled in Medi-Cal, the state’s Medicaid program for low-income people. “There are no doctors available here,” said Castaneda. “I called every single one of them in the book, and nobody takes Medi-Cal out here.” Instead, Castaneda now sees doctors nearly 50 miles away in Northridge.

Suburbs in the United States, often perceived as enclaves of the affluent, are home to nearly 17 million Americans who live in poverty — more than in cities or rural areas — and growing demand for care strains the capacity of suburban health services to provide for them, according to a recent study in Health Affairs. Suburban areas have historically received a fraction of health funding that cities have, leaving them with inadequate infrastructure and forcing people like Castaneda to scramble for the medical attention they need.

The Health Affairs study found that about a fifth of the suburban poor are uninsured, and many who do have health insurance — especially people on Medi-Cal — either can’t find providers or must travel far for appointments.

The Affordable Care Act cut California’s uninsured rate from 17 percent in 2013 to about 7 percent last year due largely to the Medicaid expansion, which added more than 3.7 million adults to the state’s Medi-Cal rolls. But that has not ensured access to health care for millions of suburbanites, said Alina Schnake-Mahl, a doctoral candidate at the Harvard T.H. Chan School of Public Health in Boston, who was lead author of the Health Affairs study.

“That really goes against the idea that everyone in the suburbs is insured because everyone has a white-collar job with coverage,” she said.

Coverage doesn’t equate to care even for patients with Medi-Cal, as Castaneda can attest. Before the health law, they had trouble finding doctors who would see them because of Medi-Cal’s low payment rates. That problem intensified as millions more signed up for Medi-Cal, driving many enrollees to seek services at safety-net care facilities.

Health care services in the suburbs “are not robust enough to fill the needs” of a growing low-income population, said Charlie Gillig, supervising attorney at the Health Consumer Center of Neighborhood Legal Services of Los Angeles County, which has advised Castaneda about medical transportation services under Medi-Cal.

One-half of California’s 39 million residents live in suburbs, and rates of poverty among them range from nearly 25 percent around Bakersfield, in the Central Valley, to about 8 percent in the suburbs outside San Francisco, according to an analysis by Elizabeth Kneebone, research director at University of California-Berkeley’s Terner Center for Housing Innovation and a senior fellow at the Brookings Institution. The same analysis showed that 2.7 million suburban Californians lived below the poverty line in 2016, compared with 1.9 million in major cities.

Castaneda, who uses an oversized power wheelchair, says it’s difficult — “often impossible” — to arrange for a ride in a van. Getting to the doctor has become a long, painful ordeal.

And that’s if she can even schedule a visit, said Castaneda, noting that she also faces long wait times for her doctor in Northridge, a suburb that has seen an influx of patients from poorer areas. “You can’t get an appointment when you’re sick … so I’ve just been waiting and waiting,” she said. “They told me, ‘If you get sick enough, just go to the emergency room.’”

Of course, it can also be tough to get a clinic appointment or see a specialist in cities, but in the suburbs, Gillig said, “geography exacerbates an already existing problem.”

In his recent book on the changing geography of poverty, Scott Allard, a professor of public policy and governance at the University of Washington, showed that funding for human services was as much as eight times higher in urban areas than in the suburbs.

California’s metropolitan areas have had many decades to build up massive health care systems to serve the poor, including county hospitals, federally qualified health centers and community clinics. But the current scale of suburban poverty is a recent development.

Policymakers struggle to serve the health needs of cities in eastern Contra Costa County, about 50 miles from San Francisco. In Oakley, for example, business and community leaders lobbied hard for a new health center, which opened in 2011.

“There’s a huge need out here, especially for people who are undocumented or uninsured. They don’t have anywhere else to go,” said Leticia Cazares, regional manager for La Clinica, which operates the new health center. The clinic has two doctors and a nurse practitioner to serve 3,000 patients, most of whom are on Medi-Cal.

Many of the people who visit community clinics like the one in Oakley lack insurance, either because they are undocumented immigrants or because they make too much money to qualify for Medi-Cal — or subsidized coverage under Obamacare — and can’t afford it on their own.

Alex G.’s family fits both scenarios. Her husband, Edward, and 8-year-old son — also named Alex — are U.S. citizens, but she is an undocumented immigrant. The family lives in Brentwood, a town of about 60,000 in eastern Contra Costa County.

A 32-year-old community college student who declined to give her last name for fear of deportation, Alex has applied for permanent residency — a long process with an uncertain outcome.

Her husband has “a good job” as a programmer of industrial machines. He has employer-based insurance, but it covers only him. For Alex and her son to be covered, the family would have to pay $1,200 a month. Given California’s high cost of living, “we just can’t afford to pay that,” Alex said. Her husband’s salary of $70,000 is too high for Medi-Cal or Obamacare subsidies.

Alex recently experienced sharp stomach pains and had to wait several days for a mobile clinic that parks in front of a nearby community center once a week.

Whenever her son has an ear infection or a fever, Alex takes him to the free mobile clinic. “Not having insurance, I worry all the time about him getting sick,” she said.