Lifemasters Bankruptcy: Will CMS Earn Reputation as a Good Business Partner or Thug?

In my post from Monday on LifeMasters seeking Chapter 11, I dropped a BTW comment.

The part that’s puzzling to me is the statement that LifeMasters owes $125 M to CMS.  That’s hard to figure…the company only participated in MHS for a few months, and to my knowledge MHS is the only Medicare demo that required guaranteed savings (i.e., payback if targets aren’t hit).  

I really have to stretch my imagination to compute how CMS ran the tab to such an astronomical number. It raises questions around CMS’ good faith as a business “partner”.

Let’s do the math.

  • LifeMasters participated in MHS from 8/05 through 12/06 — 17 months.
  • Estimated monthly “fees” advanced by CMS — under $40 M   (20,000 patients x .90 participation rate x $130 per patient per month x 17 months — this is a high estimate)

How do you explain the difference between $125 M (amount supposedly owed) and $40 M (estimated actual payments to LifeMasters)?

  • CMS claims LifeMasters can’t get out of the contract?
  • CMS not flexible on full 3 year comparison of intervention vs. control group?
  • CMS still insists on 5% savings from LifeMasters?  (even though it later allowed other MHSOs to back off to break even vs. 5% savings?
  • something else?

So how could LifeMasters wind up owing CMS $125 Million!!!???

The title of this series of blog posts has been “CMS Bumps Off Medicare Health Support”.  I think that’s the right imagery. 

Mr. O, CMS seems to be a good place to start with your campaign to reform government and make it transparent.


Updated: 3:30 PM, 9/17/09

A colleague called and politely tapped me on the shoulder about my back-of-the-envelope calculations about how LifeMasters owes $125M to CMS.

LifeMasters had 3 separate contracts with CMS; my math only accounted for LifeMasters Oklahoma Medicare Health Support (MHS) project.

While I wish that my colleague would have felt comfortable posting a comment on the blog or to the broader DM listserv, I understand there are many sensitivities involved. 

So, I stand corrected on my math.  My concerns about lack of transparency around MHS remain.

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