WELLPOINT: Congressmen Allege Conflict Of Interest
Four U.S. congressmen from California are saying that a state contract with Wellpoint Health Networks Inc. "to administer a major new health insurance program while serving as a provider creates an unacceptable conflict of interest," the Sacramento Bee reports. U.S. Reps. Pete Stark (D-Hayward) and Bob Matsui (D-Sacramento) recently sent a letter to the Health Care Financing Administration asking that "the agency block the contract with Wellpoint" to run the state's Healthy Families program. HCFA approved the contract last Friday. Stark and Matsui wrote, "We are very concerned that allowing a private health plan to both run this program and simultaneously participate in it creates an obvious conflict of interest." Reps. George Miller (D-Pleasant HIll) and Henry Waxman (D-Los Angeles) joined Stark and Matsui in a separate letter "asking their California Democratic colleagues to pressure HCFA to reject the contract."
Cynthia Coulter, a spokesperson for Wellpoint, said the contract contains provisions designed to prevent the company from "benefit[ing] from its dual role." These provisions range from independent auditing of Wellpoint to "recording all telephone calls with potential customers." She said, "There are some very clear fire walls in the program ... so that we don't get an advantage." She noted that Wellpoint has had similar roles in other contracts with the state. "It's actually a very cost-effective way for the state to run this," she said. However, Matsui said yesterday that the arrangement would allow Wellpoint to steer customers to itself. He said, "I think it could lead to some self-dealing. All parties may start to act in good faith, but the real problem is you can't control employee behavior. There obviously will be some cases where bias will be shown." He added, "The whole purpose of this (system) is to foster competition, and to allow one company participating in the program to serve as the administrator defeats that purpose." He added that he intends to file a lawsuit to block the contract if HCFA does not reject it (Bernstein, 3/5).