In analyst call, Clover reveals it doesn’t have the customers it said it did during IPO

Why Clover Health Chose a SPAC, Not an IPO, to Go Public | Barron's

When it planned to go public through a SPAC merger, insurance startup Clover Health told investors that it already had 200,000 direct contracting lives under contract for 2021. But in new guidance shared on Monday, the company now plans to end the year just 70,000 to 100,000 covered lives from direct contracting. 

After telling investors that it would more than quadruple its membership base in a year, insurance startup Clover Health is cutting its projections in half.

The insurance startup now plans to end the year with between 70,000 and 100,000 covered lives from direct contracting, a new payment program launched last by the Centers for Medicare and Medicaid (CMS) services last year, according to its most recent earnings report. 

Last year, when Clover announced plans to go public through a merger with a special-purpose acquisition company backed by “SPAC King” Chamath Palihapitiya, the company told investors it already had 200,000 direct contracting lives under contract for 2021, according to a slide deck.

But its projections call into question the veracity of those shared when the company was looking to go public. In fact, Kevin Fischbeck, an analyst with Bank of America, called out the discrepancy when he asked the company about estimates that it would have nearly half-a-million members covered through direct contracting by 2023.

Clover could only manage a feeble response, with CFO Joe Wagner saying it was “too early to say in future years exactly where we’re going to end up.”

It’s not the only big question that Clover faces about its future. After a scathing report from a short-seller earlier this year, the startup confirmed it had received a request for information from the Department of Justice, which it hadn’t disclosed previously. A day later, the company received notice of an investigation from the Securities and Exchange Commission.

When asked about the current status of the investigation, co-founder and CEO Vivek Garipalli said it was the company’s policy not to comment on pending inquiries.

In an unusual move, the company fielded questions from Reddit during the investor call, alongside those from analysts.

Clover is one of 53 companies selected to participate in CMS’ direct contracting programs in 2021. The value-based payment models were created under the previous administration, which would allow the startup to strike contracts with doctors who are caring for patients under the traditional Medicare program and manage their care.

Under the new administration, CMS has stopped taking applications for the new direct contracting models, which are slated to launch next year. It also paused the rollout of an alternative model that would tie payments to the population health and cost outcomes for all residents of a specific location.

In the meantime, most of Clover’s business still comes from its Medicare Advantage plans, where it has 66,300 members, an 18% increase year-over-year. It brought in $200.3 million in revenue in the first quarter, up 21%, but its net loss jumped more than 70% to $48.4 million.

The company also decreased its revenue projections from what it originally told investors last year. The startup said it expects to bring in revenue of $810 million to $830 million by the end of 2021, a decrease from its previous projections of $880 million. A small portion of that, just $20 million to $30 million, would come from direct contracting.

California investigates Providence after physicians’ complaint of religious limits on care at Hoag

Hoag Memorial Hospital Presbyterian | Visit Newport Beach

Renton, Wash.-based Providence is being investigated by California’s attorney general, Xavier Becerra, over allegations that it inappropriately applied religious care restrictions at Hoag Memorial Hospital in Newport Beach, Calif., the Los Angeles Times reported March 3. 

Several women’s health specialists from Hoag submitted a confidential complaint to the attorney general’s office in October, prompting the investigation. The physicians claim Heritage Healthcare, Providence’s physician management division, refused to pay for contraceptive services for HMO patients at Hoag and delayed miscarriage treatment authorizations, among other allegations, according to the complaint referenced by the news outlet. 

The physicians also reported Heritage specifically referenced the Ethical and Religious Directives for Catholic Health Care Services, which are put forth by the United States Conference of Catholic Bishops, in at least one instance when it declined to pay for a patient’s intrauterine device insertion.   

Applying the directives would be in violation of conditions set by now-Vice President Kamala Harris, who approved an affiliation between Hoag and Irvine, Calif.-based St. Joseph Health, a Catholic healthcare system, when she was California’s attorney general in 2014. In 2016, St. Joseph merged with Providence, which required Providence to maintain the pre-merger conditions related to women’s health services at Hoag. The only service for which Hoag was subjected to a ban was “direct abortions,” according to the Los Angeles Times report. 

In a letter sent to the involved institutions March 2, Mr. Becerra requested Providence provide documents related to the issues by March 23. 

“This office is monitoring whether the Catholic Ethical and Religious Directives are or have been applied to any aspect of a service, procedure, or other activity associated with a medical billing code, with the exception of direct abortions, performed by Hoag obstetrician/gynecologists,” the letter reads. 

In an emailed statement to the Los Angeles Times, Providence said it “welcomes the Attorney General’s request for further information, and is confident that the review will demonstrate that Providence has always complied with all requirements under the merger conditions.”

In May, Hoag filed a lawsuit seeking to end its affiliation with Providence. 

To read the full Los Angeles Times report, click here. 

Citrus Health denies it’s violating compensation law; state says probe continues

https://www.miamiherald.com/news/politics-government/state-politics/article248806165.html

Mario Jardon, president and CEO of the Hialeah-based Citrus Health Network, made $574,660, which the state says includes $360,840 in excess compensation. The state says the agency also paid excessive compensation to two other executives at the community-based mental health center, for a total of $403,000 in excessive compensation. The company denies it.

The child welfare agency that serves Miami-Dade and Monroe counties pushed back Wednesday against allegations made by the governor’s chief inspector general, denying claims that it used taxpayer funds to pad excessively high salaries of top executives.

In a statement, Citrus Health Network President and CEO Mario Jardon and Citrus Health Network Board of Directors Chair Patricia Croysdale said that the state did not check with them before issuing the preliminary report and Jardon’s salary, and that of chief operating officer Maria Alonso, “do not come from state funds allocated to Citrus as the lead agency, and are provided at no cost to the state.”

Citrus Health Network, a mental health nonprofit, won a half-billion dollar contract in 2019 from the state Department of Children & Families to oversee child welfare cases in Miami-Dade and Monroe. The arrangement is part of the state program that has privatized state services to a patchwork of “lead agencies.”

According to the preliminary findings by the governor’s Chief Inspector General Melinda Miguel, Citrus Health was one of nine agencies that appear to be paying their executives more than the amount allowed by state law.

Florida law prohibits a community-based care lead agency that receives state and federal funding to provide welfare services from paying its executives more than 150% of what the Department of Children and Families secretary makes — a threshold estimated at $213,820.

In response to the Citrus Health comments, Meredith Beatrice, spokesperson for Gov. Ron DeSantis, said that the intent of the report was to highlight agencies that “were either in non-compliance or appeared to have excessive compensation” and will be investigated further.

“Nothing within the document is conclusory or final,’’ she said.

PRELIMINARY FINDINGS

The report says Jardon made $574,660, which the state says includes $360,840 in excess compensation. The state also said Alonso, Jardon’s partner, made $42,379 over the maximum, and the company’s chief information officer, Renan Llanes, made $172 over the limit.

“The Governor’s Office of Inspector General chose to release a preliminary report incorrectly alleging inappropriate use of state funds and excessive executive compensation without first confirming the information in the report directly with Citrus, and without utilizing other publicly available fiscal documents related to our company,’’ the company’s statement said.

The Citrus Health contract began in July 2019, but the state report appears to have used compensation data from tax documents ending in June 2019.

Citrus also pointed to its web site, which has posted a document that shows a 2020-21 budget that includes compensation of $207,711 with “other compensation” of $20,498 for its director. The company said that refers to Esther Jacobo, the director of the Citrus Health Family Care Network, who formerly was the interim secretary at DCF.

A footnote then adds that “CEO and COO are provided at no cost to [Citrus Family Care Network] and DCF.”

“At the beginning of operations as the lead agency, Citrus’ Board of Directors resolved not to burden the budget of the lead agency with the salaries of the CEO and COO of Citrus Health Network,” said Citrus Health Network spokesperson Leslie M. Viega in a statement. “Our CEO and COO’s salaries do not come from any funds allocated to Citrus as the lead agency, regardless of the source, including state-appropriated funds, state-appropriated federal funds, or private funds.”

The company says the salaries are paid through another division, its federally qualified health center which provides behavioral health, primary care, housing for the homeless, and other social services. The Herald/Times asked Citrus Health for a copy of the financial documents that demonstrate this claim but the organization has not provided them.

A NEW CONTRACT

In 2019, Citrus Health won the child welfare contract from a rival non-profit, Our Kids, after a bruising yearlong fight plagued by allegations that the selection process was marred by the appearance of conflicts of interest. The contract gave the company, which had never handled child welfare before, the job of overseeing about 3,000 vulnerable children in the state’s most populous region.

The inspector general’s investigation is the result of an executive order by DeSantis in February 2020 after the Miami Herald reported and a House of Representatives investigation found that the Florida Coalition Against Domestic Violence paid its chief executive officer, Tiffany Carr, more than $7.5 million over three years.

Carr, who is now a party to two lawsuits, including an attempt by the state to claw back the compensation she was awarded, is currently engaged in negotiations with the attorney general’s office over a mediated settlement.

But it was Carr’s ability to use her network of influential legislators and lobbyists, coupled with the lack of oversight by the Department of Children and Families, that provoked legislators and the governor’s investigators to look into how other non-profits are compensating their executives.

Carr persuaded her board of directors, a close-knit group whom she hand-selected, to approve her compensation package that included thousands of hours of paid leave which she converted to cash.. She justified her salary and bonuses by using comparable salaries of similar organizations but she is alleged to have misrepresented the size of her organization to make the comparisons work to her advantage.

Investigators also suspect Carr avoided declaring millions of dollars in deferred compensation on her tax forms by using a loophole in the tax code.

The inspector general’s report does not name executives but a spreadsheet provided to the Herald/Times from the governor’s office indicates the amounts of compensation by title. The Herald/Times used publicly available tax data to identify the individuals under investigation.

The governor’s office said the next phase of the investigation will be to meet with the nine community-based care organizations early next week “to explain the process” before the final report is completed by June 30.

“It is important to note that the entities impacted from this review will have an opportunity in late May to offer a written response to the draft of the final report,’’ Beatrice said. “Their responses will be included as an attachment to the final report presented to the governor.”

Spending millions on the Seema Verma Experience

https://mailchi.mp/365734463200/the-weekly-gist-september-11-2020?e=d1e747d2d8

$3,000 for a girls night at someone's home? I hope she at least hired  strippers. - the more you know post - Imgur

This week Politico broke the news of a scathing Congressional investigation into the lavish spending of Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma, centered around boosting her own “brand image” and position among inside-the-beltway Washington power brokers.

According to the report, Verma sidestepped the use of CMS’ internal public relations team, and instead engaged a handpicked group of consultants, who charged the government over $6M in less than two years for their work in polishing her public profile and personal brand, arranging meetings with media, and traveling with her to events around the country.

The spending line items included tens of thousands of dollars focused on “getting Seema on lists”, including Politico’s “50 Most Powerful People in DC” and Washingtonian’s “Most Powerful Women in Washington”. Consultants were paid to arrange op-eds and interviews for Ms. Verma, with outlets such as AARP, Christian Broadcasting Network, and Fox News, and $450 was spent on a makeup artist to ensure Ms. Verma was perfectly camera-ready for a two-minute video shoot. The outside advisers even charged nearly $3,000 to arrange a private “Girls’ Night” event held last November at the home of a USA Today bureau chief, to network Verma with other DC insiders.

This isn’t the first time that Verma’s spending has come under scrutiny. In July the Office of the Inspector General found that Verma’s publicity spending violated federal contracting rules, and she was widely criticized for filing a $47,000 expense request for personal items stolen on an official trip, including a $325 jar of moisturizer and a $5,900 Ivanka Trump-brand necklace.

Public relations expenses to educate the public and promote official initiatives are standard fare, but Verma’s lavish spending, often focused on boosting her personal image, shows a stunning lack of judgement, if not an overt misuse of taxpayer dollars. We’d rather see those dollars put to more worthwhile uses, like educating people on how to best shop for insurance, or how to access testing and other needed care services during the largest healthcare crisis of our lifetimes.