Delivery of Care

Is the role of Optum an optimal role?

As the state considers its re-procurement of Managed Care Organizations [MCOs] for managing the health of some 300,000 Medicaid members, will R.I. EOHHS investigate problems with the company and the way it uses software to make decisions around health care delivery?

Image courtesy of New York Times website

The New York Times digital story from its website on the Justice Department lawsuit to block United Health's acquisition of Change Healthcare in an antitrust action.

By Richard Asinof
Posted 2/28/22
The U.S. Department of Justice antitrust lawsuit filed against UnitedHealth, focused on the $13 billion acquisition Change Healthcare, raises questions about the way that Optum has been deployed by two of the current MCOs in Rhode Island. So, too, does a study that found that the algorithms used by Optum allegedly embedded racism in how decisions were being made around the delivery of health care.
Would R.I. EOHHS be able to create a condition where none of the future MCOs doing business in Rhode Island would be deploying Optum software, given questions about how its algorithms were being used? Does the state have the capability within its numerous health and human service agencies to manage the process of how algorithms are deployed to make health care decisions about who receives services? Will the R.I. General Assembly have the courage to conduct an audit of the current MCOs managing the health care for nearly 300,000 Rhode Islanders to find out if state money is being well spent? Who is responsible for holding Accountable Entities and Accountable Care Organizations “accountable” at the state level?
The former director of the R.I. Department of Human Services, Courtney Hawkins, promised ConvergenceRI that she would be writing a book about her experiences in managing the Deloitte contract under UHIP, which the state would prefer for you to call RI Bridges. The full story of what happened with UHIP, much like the full story of what happened with 38 Studios, remains a mystery – in large part because there was no willingness to undertake any kind of lessons learned analysis of what went wrong and how to avoid such snafus from happening in the future.
The biggest problem with both UHIP and 38 Studios, it would appear, was human: the arrogance and hubris of state officials. Recall the infamous line of the former communications director for Gov. Donald Carcieri, who declared, “In Schilling we trust.” Or, the budget analyst working at what was then known as the R.I. Economic Development Corporation, who said that the 38 Studios deal received less financial scrutiny than a $10,000 micro loan.

PART Two

PROVIDENCE – At the same time that there are serious questions being raised about the state’s failure to raise the extremely low Medicaid rates of reimbursement for providers, the state is pursuing a long-term strategic reorganization of the way that Medicaid services are delivered through what are known as Managed Care Organization, or MCOs.

• The state re-procurement of the Managed Care Organizations – currently UnitedHealthcare, Neighborhood Health Plan of Rhode Island, and Tufts Health Plan – is underway, seeking to choose which health plans will be responsible for managing the health care for most of the enrolled Medicaid members in Rhode Island. At least two new potential bidders, including Blue Cross and Blue Shield of Rhode Island, have indicated interest.

Translated, for an health insurance plan to become an MCO, it is a bit like enabling  them to have the capability to print money, because it gives them access to a steady stream of revenue from a  captive audience, through which they receive a guaranteed share of the take.

One issue that may cloud the re-procurement process is the role that Optum, a wholly owned subsidiary of UnitedHealth, currently plays in managing the care of patients for both Neighborhood Health Plan of RI and UnitedHealthcare.

In may sound a bit in the weeds, but what Optum does is to provide software tools to manage the delivery of care -- deciding who is eligible for what services and how much it costs -- based on algorithms.

Members of the special legislative Senate Commission members exploring the future role of the R.I. Executive Office of Health and Human Services have asked agency officials directly about whether the role of Optum posed a conflict of interest. In turn, behavioral health service providers have testified about the problems posed when Optum has been involved in setting rates for services covered by the two different MCOs -- often making it difficult to arrange for services and then to get paid for them in a timely fashion.

How problematic is the use of Optum? The U.S. Department of Justice filed an antitrust lawsuit on Thursday, Feb. 24, challenging UnitedHealth Group Inc.’s $13 billion acquisition of the health-technology firm, Change Healthcare, Inc., including the handling of claims under UnitedHealth’s Optum health services arm.  The problem: it would provide OPtum with an unfair, anti-competitive advantage in being able to access data flow frompotential competitors in the health care management market.

As Reuters reported, Rep, David Cicilline [D-R.I.]said that he was “glad to see” the Justice Department challenge the deal, which he said would “raise health care costs and expand a corporate giant.” At issue is how the transaction would give UnitedHealth’s Optum control of a critical data highway of health insurance claims. What is the old chestnut? Informaton is money.

A second, potentially more troubling issue for Optum involves an investigative story by STAT, published on Oct. 13, 2020, by reporter Casey Ross, entitled, “From a small town in North Carolina to big-city hospitals, how software infuses racism into U.S. health care.”

The reporting details how a recent study of software built by Optum offered a rare look under the hood of how algorithms used to assess patients’ needs churn in the back offices of health systems nationwide, out of view of patients who are not privy to their predictions and how they are being applied. [See link below to STAT story, “How software infuses racism into U.S. health care.”]

The details of the STAT investigation were covered by ConvergenceRI in its story, “RI Foundation launches $8.5M Equity Leadership Initiative to tackle racial disparities,” which reported how nearly one-third of the entire population of Rhode Island, capturing many of the state’s most vulnerable residents as well as a large number of children and families of color, may have been subjected to a different kind of racial equity lens because of how IT algorithms deployed by Optum were being applied by health insurers to manage costs.  Call it having a different kind of uncomfortable conversation about racial equity in Rhode Island. [See link to Convergence story below.]

Here are some excerpts from the STAT story:

• “A STAT investigation found that a common method of using analytics software to target medical services to patients who need them most is infusing racial bias into decision-making about who should receive stepped-up care. While a study published last year [in 2019 had] documented bias in the use of an algorithm in one health system, STAT found the problems arose from multiple algorithms used in hospitals across the country. The bias is not intentional, but it reinforces deeply rooted inequities in the American health care system, effectively walling off low-income Black and Hispanic patients from services that less sick white patients routinely receive.”

• “These algorithms are running in the background of most Americans’ interaction with the health care system. They sift data on patients’ medical problems, prior health costs, medication use, lab results, and other information to predict how much their care will cost in the future and inform decisions such as whether they should get extra doctor visits or other support to manage their illnesses at home. The trouble is, these data reflect long-standing racial disparities in access to care, insurance coverage, and use of services, leading the algorithms to systematically overlook the needs of people of color in ways that insurers and providers may fail to recognize.”

• “Nobody says, ‘Hey, understand that Blacks have historically used health care in different patterns, in different ways than whites, and therefore are much less likely to be identified by our algorithm,” said Christine Vogeli, director of population health evaluation and research at Mass General Brigham Healthcare in Massachusetts, and co-author of the study that found racial bias in the use of an algorithm developed by health services giant Optum.”

• “There are at least a half dozen other commonly used analytic products that predict costs in a similar way as Optum’s does. The bias results from the use of this entire generation of cost-prediction software to guide decisions about which patients with chronic illnesses should get extra help to keep them out of the hospital. Data on medical spending is used as a proxy for health need – ignoring the fact that people of color who have heart failure or diabetes tend to get fewer checkups and tests to manage their conditions, causing their costs to be a poor indicator of their health status.”

Missing data on costs
One of the tools that have apparently been missing as part of the state’s re-procurement process has been the lack of an actual state audit conducted on the costs and expenses incurred by the current Managed Care Organizations.


In PART One, ConvergenceRI looked at the way that very low reimbursement rates paid to providers by R.I. Medicaid had contributed to the fraying of the the safety net for many of the most vulnerable Rhode Islanders.

In PART Two, ConvergenceRI showed how management software algorithms deployed by Optum, a wholly owned subsidiary of UnitedHealth, was found to have embedded racism into its decisions about which patients receive health care services.

In PART Three, ConvergenceRI reports on how data on cost trends for accountable entities, mandated by the Reinvention of Medicaid law enacted in 2015, seem to hae rewarded the hospital-based programs, despite having the highest cost trends.

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