Thursday, October 26, 2006


PD: Insiders looted workers, BWC system

Again, the details of the MCO scandal is just starting to surface and Bob Paynter's powerful story in the Plain Dealer is going to make a lot of people squirm.

It's a tawdry tale of revolving doors, lobbyists, and corporate manipulations. It should be noted that the whole MCO thing was a privatization scheme introduced under the guise of "improving" BWC. Case management had been done internally by BWC staff, but Voinovich & Co. couldn't resist doling out rewards, at the expense of injured workers. It just sort of sums up everything that's wrong in Ohio:
The Dublin-based company now known as VocWorks didn't even exist in July 1998, 16 months after Republicans used their lock on power in Columbus to privatize the management of medical claims for the Ohio Bureau of Workers' Compensation.

But just three years later, state records show, the firm had grown into the third-biggest provider of medical services to Ohio's injured workers under the managed-care initiative. Bigger than University Hospitals. Bigger than the MetroHealth System. Bigger than the Cleveland Clinic.

VocWorks owed virtually all of that explosive growth to referrals from its sister company, CareWorks of Ohio - the largest and the most politically connected of the private managed-care organizations (MCOs) that are paid millions of dollars in public money each year to oversee medical care for injured workers.

VocWorks has received more than $55 million in payments under Ohio's managed-care program, bureau records show.

At least 97 percent of that money came through CareWorks.

. . .

Managed care was initially billed as a way to cut workers' comp costs by placing oversight of injured worker claims in the hands of private enterprise. But the program has had the opposite effect, bureau records show.

Operating costs -- the bureau's budget, plus the money paid to the MCOs -- have risen at twice the pace of inflation since 1997, The Plain Dealer reported last month, even while the number of claims to be managed has plummeted. Medical costs per claim -- after inflation -- have more than doubled as well.

As a result, the bureau has spent roughly $1.6 billion more under managed care than it would have if costs per claim had been held to only inflationary increases, according to the newspaper's analysis.

. . .

The MCOs get bonus money from the state based on how quickly they close injured worker cases, Anderson said, not necessarily on whether the workers get services they need most.

. . .

CareWorks -- headed by the longtime aide to a legendary Ohio politician and launched with the help of well-connected campaign contributors to both political parties -- had gotten $369 million. That's twice as much as its nearest competitor.

William Pfeiffer, the chairman and chief executive of CareWorks Holding -- the MCO's parent, held several top spots at the bureau while the managed-care initiative was being designed. Previously he was a top aide to former House Speaker Vern Riffe.

Court records show that Pfieffer had help in starting CareWorks from:

Paul Tipps, a former head of the Ohio Democratic Party, whose close ties to Riffe helped make him one of the premier lobbyists in Columbus.

Umberto Fedeli, an insurance broker, generous Republican contributor and former member -- appointed by then-Gov. George Voinovich -- of the Ohio Turnpike Commission.

Ken Seminatore and Jack Burry, the former outside lawyer and CEO respectively of Blue Cross & Blue Shield (now Medical Mutual) of Ohio -- a giant Cleveland-based health insurer.

. . .

Last month, the Toledo Blade identified more than $610,000 in campaign contributions to statewide political candidates by executives and associates of the 26 MCOs still doing business in Ohio. More than $208,000 -- or roughly a third -- came from various CareWorks officials, the Blade reported.


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