Tuesday, August 2, 2011

Medicaid funds plundered by nonprofits in New York

The New York Times features an article today called "Reaping Millions in Nonprofit Care for Disabled" By Russ Buettner. It is one of a series of New York Times reports on treatment of the developmentally disabled and how money is spent on their care.

This installment is not as heartbreaking as past stories of rampant abuse of people with disabilities in some of New York's state run group homes and facilities, but the plundering of the Medicaid system by  non-profits and the lack of oversight of their activities is a significant part of the corruption of the system of care. I'm sure this problem is not unique to New York, but New York is a big state and it does corruption in a big way.

According to the article, New York spends $10 billion a year for care of people with developmental disabilities with more than half going to private providers with  little oversight of their spending.

The story focuses on the Young Adult Institute Network run by the Levy brothers from Brooklyn. They both earned close to $1 million a year each as top executives at the Medicaid-financed nonprofit. Public money paid for luxury cars and homes as well as for a year's worth of living expenses in graduate school for one of their daughters. From 2007 - 2009 the brothers also received consulting fees of $50,000 a year from one of the organization's affiliates.

For people who have been around the disability business for a long time, there are many details in the article that strike a familiar chord:

  • The organizations began to grow as a response to deinstitutionalization of people with developmental disabilities in the 1970s. As more money became available for community services, the organizations expanded, replacing parents who started the organizations with professionals skilled at fund raising. 
  • The power of the organizations matched the power of government agencies in determining services and funding. According to the article,  "The providers and officials from the Office of Mental Retardation and Developmental Disabilities — now called the Office for People With Developmental Disabilities — met monthly to agree on new programs, expansion of existing programs and reimbursement rates. Then, together with the agency officials, they would lobby the Legislature and the governor’s office for the money...The providers became powerful advocates for the people in their care, and savvy strategists, alert to opportunities to increase financing."
  • In the early 1980s the organizations got wind of a new state formula that greatly increased rates for people with vision problems. Suddenly, they reported large increases in the number of people who had trouble seeing." 'We called it the day everyone went blind,' said Mr. Castellani, the author of a book about the New York system of caring for the developmentally disabled. "
These and other financial shenanigans are covered thoroughly by the Times. Although there was little found to detract from the the good reputation that the Young Adult Institute has for providing quality care, there is also nothing that justifies the arrogance of the leaders of the nonprofit to exploit people with disabilities for their own enrichment.

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