The problems that resulted in the state taking over Charlotte-based Cardinal Innovations Healthcare can be boiled down to one word: Excessive.
Excessive executive pay, excessive parties, excessive resort retreats. Some of it violated state law – and none of it looked good for a taxpayer-funded organization that serves people with intellectual and developmental disabilities in 20 counties.
And when it comes to services, some the families that depend on Cardinal accuse it of penny-pinching.
Rebecca Biggs happily bounces into the house in her teal shirt and sparkly black sweater. She’s just returned from a few hours greeting people at the YMCA.
Rebecca is 28 but requires a lot of help. She has cerebral palsy, a seizure disorder and an intellectual disability. She loves to exercise and proud of her competition in the Special Olympics.
And as she excitedly heads into her room to get her medals Linda explains why she can’t compete in the Special Olympics anymore.
“See how she is kind of humped over a little bit," said Linda. "Her physical condition has deteriorated quite a bit.”
Linda takes care of her. But she can’t do it without the help of the aides that come to her house and help Rebecca with daily activities like brushing her teeth, hair, tying her shoe laces and going to the bathroom. She also gets help with social skills like not touching people in stores and mental acuity like practicing her colors and numbers. Cardinal Innovations Healthcare approves those services that cost more than $75,000 this year. Rebecca and thousands of others with intellectual and developmental disabilities get these services through Cardinal, which operates like an insurance company for Medicaid patients with behavioral health care needs.
“When services are cut someone has to be here," said Linda. "So that would be me. I’m a single parent now. So I’d have to be home with my daughter to make sure that she is safe and cared for.”
Her and Rebecca were part of a class action lawsuit in 2011 alleging patients weren’t being given their rights to appeal service cut decisions. Linda testified that Cardinal employees told her the organization “does not like it” when families challenge decisions and they are “set in stone."
As part of a 2014 settlement, Cardinal and the six other like organizations in the state were required to stop discouraging families from appealing service cuts and clearly explain how to appeal them. And based evaluations each patient gets a base budget which is a guideline of how much they should be spending on services. The settlement says if it’s medically necessary that a patient gets services that cost more than that budget Local Management Entities Managed Care Organizations or LME/MCOs should give them those services. But Linda said not much has changed for her, since the settlement.
“It’s pretty much a given almost every single year, my daughter's services are denied at first," she said.
Not all the services, but portions of her request. Vicki Smith heard this a lot. She is with Disability Rights North Carolina, the advocacy organization that was part of the lawsuit. She said immediately after the settlement things were getting better. But then this summer, as the monitoring period was coming to a close.
“We [were] getting a significant number calls from people in the Cardinal area," she said. "Complaining about service reductions when their annual plan is renewed.”
She got calls about other LME/MCOs as well. Patients like Rebecca who have intellectual and developmental disabilities are an expensive group to serve even though they make up a small percentage of Cardinal's members.
Research from the Kaiser Family Foundation shows 40 percent of people in the home and community based services Medicaid program nationwide have intellectual and development disability but they account for about three quarters of spending. These caregiver services are very important to Linda because she says Rebecca can’t be left at home alone. And a steady stream of support is vital to her ability to hold down a job.
“It’s frustrating. It’s scary," Linda said. "Because nobody chooses to have this kind of life. And the services help my quality of life.”
Linda and Rebecca are part of a new legal action that Disability Rights North Carolina filed in December. Smith explains it alleges Cardinal and other similar organizations violated the terms of the settlement.
“As long as LME/MCOs are focusing on the budget and saving money instead of serving people. Than North Carolina has a problem.”
Cardinal disputes the allegations in the lawsuit. Cardinal said it has been in discussions on the implementation of the 2014 state-wide settlement with the North Carolina Department of Health and Human Services and advocacy groups. It a statement Cardinal said it is "our understanding is that this suit is intended to protect member rights while these discussions continue."
The organization also said it provides and promotes multiple ways to file an appeal or grievance. And Cardinal’s Director of Regulatory Affairs Andrea Misenheimer said there is flexibility in an individual’s budget.
“These are not limits. These are not cost caps,” they are guidelines Misenheimer said, “To inform the planning process.”
For example, Rebecca gets services totaling about $15,000 more than her initial budget. But the problem is that’s still a reduction from last year, and Linda said she needs more help. She knows Cardinal has the money in part because of the recent scandal which revealed Cardinal paid its previous CEO about a million dollars more than state law allows.
There were also excessive severance packages and lavish board retreats. Cardinal claims that money couldn’t be spent on services because it came from the administrative budget. But the state auditor found that is not true. In her May 2017 audit of Cardinal she said based on a letter from the Centers of Medicare and Medicaid services, the organization isn’t required to spend that money exclusively on administration, if Cardinal had chosen it could spend part or all of that to provide more behavioral healthcare services.