20/20 Hindsight

The Arizona Health Care Cost Containment System soap opera gets curiouser and curiouser. Federal investigations of AHCCCS continue to narrow their focus--and after a year of ignoring a scandal that could cost Arizona $200 million, the state's largest daily newspaper may actually get around to mentioning it.

Part one: the running cast and the plot so far: Agents from the Office of the Inspector General for the U.S. Department of Health and Human Services and the Department of Justice are pressing on with their joint investigation of AHCCCS and possible negligent oversight of the program by the Health Care Financing Administration, the body which distributes federal Medicare and Medicaid funds to the states and is responsible for seeing that those dollars are not wasted.

Sources inside AHCCCS have provided New Times with records indicating that at least two highly placed officials have spent many hours recently collecting records the feds have asked for--mostly reports known as HCFA-64s, quarterly statements prepared by AHCCCS detailing expenditures for which it is entitled to federal reimbursement.

The feds may be interested in the forms because the accuracy of AHCCCS' eligibility and other records has been questioned for some time by program employees. At least one AHCCCS employee who questioned eligibility records was fired.

Sources inside AHCCCS and at the Office of the Inspector General say investigators have asked for copies of AHCCCS' HCFA-64s dating from January 1990. HCFA sources say the federal government's potential recovery from the state could be up to $200 million.

AHCCCS, the state's alternative to a traditional Medicaid program, is a "capitated" health-care system with a budget of $2 billion a year. Health plans (such as Blue Cross and Blue Shield of Arizona, Samaritan Health System and CIGNA Healthcare of Arizona, Inc.) contract with the agency and receive monthly payments for members on their rolls, regardless of whether the patient requires care. AHCCCS has been touted as a model for national health-care reform.

In a series of stories beginning nearly a year ago, New Times has reported instances of improper payments, the awarding of questionable bids and the agency's dismissal of employees who dared to criticize fraud and waste.

Records the feds seek also detail instances in which health plans have repaid AHCCCS for improper payments; the agents are no doubt interested in whether the federal government received its share of the recoupments.

Critics long have complained that health plans routinely received payments for enrollees who were not eligible for AHCCCS. New Times found instances where health plans continued to receive monthly payments--sometimes for years--for AHCCCS enrollees who had died or had moved out of the state.

Sources say federal agents also are interested in the use of high-priced consultants for work which could be done by state employees; irregularities in health-plan bid awards; and other, more conventional forms of Medicaid fraud possibly committed by health plans which provide care for AHCCCS' still-sizable "fee for service" population. Rather than receiving an up-front monthly payment for each member, these plans are reimbursed after the fact. Fee-for-service systems are still the rule for state Medicaid agencies, and the notorious waste and inefficiency of such systems were among the reasons AHCCCS was established.

Records furnished to New Times by AHCCCS employees show that for years, some companies may have been overcharging the program for dialysis and other fee-for-service care.

New Times' telephone calls to the U.S. Department of Justice were not returned.

Part two: new faces and the Arizona Republic: After nearly a year of failing to mention investigations of AHCCCS by at least three federal agencies and the possibility of Arizona repaying the federal government $200 million in improperly disbursed AHCCCS funds, reporters at the state's largest daily are beginning to pay attention.

But it does not appear that it was the specter of massive waste at AHCCCS that got the attention of the Republic; nor was it the alleged systematic persecution of AHCCCS staffers who have called attention to it.

What may have piqued the Republic's interest was the arrival two weeks ago of a producer from the network television news magazine Dateline NBC. Several former AHCCCS employees were interviewed at length about their work experiences, and particular attention is said to have been paid to AHCCCS payments to health plans for deceased enrollees.

Sources inside and outside AHCCCS and at the Republic say the paper wants to report on the federal investigations before the program's dirty laundry hits the nation's airwaves--and has at least four staffers assigned to the story.

Sources also say the Republic has entered into a highly unusual written agreement with AHCCCSWATCH, the local Medicaid watchdog group that first brought many of these issues to the public's attention. The agreement reportedly stipulates that the Republic will not reveal any information about its AHCCCS sources that may lead to their termination or harassment.

The bad news for AHCCCS does not end there, however. In the past week or so, many of the same phones called by Dateline NBC have been ringing again--on the dialing end this time are representatives of the ABC news magazine 20/20.

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Dave Plank