A state senator wrote a letter on his official legislative stationery in August urging the city to settle a six-figure billing dispute with a private company, and eight days later the company donated $2,000 to the senator’s campaign, according to city and campaign spending records.
The $2,000 donation brought Automated HealthCare Solutions’ cumulative contributions to Sen. Josh Green to $4,000, the maximum allowed during an election cycle for a senatorial candidate, the records show. Green, a Hawaii County physician and chairman of the Senate’s Health Committee, easily won re-election last week.
Only one other lawmaker in the 76-member Legislature received any campaign contributions from Automated HealthCare during the just-concluded election cycle, the records show.
Green did not answer Star-Advertiser questions about his intervention on behalf of Automated HealthCare, which according to Green’s letter was owed more than $600,000 by the city in injured worker medication claims as of the end of May.
The city of Honolulu is disputing the claims, citing inflated prices and other issues.
Florida-based Automated HealthCare provides billing software for physicians who dispense drugs directly to patients rather than giving them prescriptions to be filled at pharmacies. Direct dispensing in Hawaii generally is limited to doctors who treat patients covered by workers compensation or auto insurance.
A leader in the physician-dispensing market nationally, Automated HealthCare pays doctors up front for their medication claims and bills the insurance carriers or government agencies, making money on those collections. The company has been the subject of controversy and media reports nationally because of the money it contributes to state lawmakers.
Green (D, Kailua-Kona) told the city in his Aug. 9 letter that physician-dispensing services improve care for injured workers by allowing them to get necessary medication at the point of care without having to travel to a pharmacy and risk denial due to insurance verification problems or other issues.
"I have a record of fighting for fair reimbursements for health care providers, and I will continue to stand up to insurance companies and other institutions to help get doctors and nurses the timely reimbursements they need to stay open and keep caring for patients in Hawaii," Green said in a statement to the newspaper.
He did not address Star-Advertiser questions about why he used his legislative position to intervene on behalf of a private company, whether that intervention and the company’s subsequent campaign contribution were connected, and whether he shares the city’s concerns related to inflated medication prices.
Douglas Chin, the city’s managing director, told Green in an Oct. 29 letter that the city considers the Automated HealthCare matter an internal billing dispute and urged the senator to use his position to investigate what Chin characterized as abuse in the dispensing of prescription medications by physicians.
That abuse, Chin wrote, has caused exponential increases in prescription drug costs for the city and state. He cited multiple examples, including one in which Automated HealthCare billed the city $832.37 for a muscle relaxant that cost the physician $14.40 and that a local pharmacy sells for $57.65 — about 14 times less than what Automated HealthCare charged.
"How can the government justify this expense to taxpayers?" Chin wrote in explaining one of the main reasons the city is disputing the company’s billings. Chin, through a spokesman, declined comment for this story.
In Green’s Aug. 9 letter, the senator asked the city to "kindly settle up" with Automated HealthCare by Aug. 24 at the latest.
He did not explicitly take the company’s side but cited its data to indicate that Automated HealthCare had lost nearly $380,000 since 2010 because of the city’s unpaid bills.
"What’s most disturbing is that for the current year, you have only paid 1 percent of your outstanding invoices," Green wrote.
He also said the city’s settlement offer of 20 cents on the dollar was unreasonable and unsustainable and that the company has "graciously agreed" to accept a reasonable discount on outstanding payments and future claims.
Automated HealthCare spokeswoman Alia Faraj-Johnson told the Star-Advertiser that the city has partially reimbursed the company for only 23 of 1,884 medications provided by doctors using the company’s system to the city’s injured workers in 2012 but has not paid a dime for the other 1,861.
"Notwithstanding the city’s failure to reimburse AHCS, we are committed to ensuring the city’s injured workers continue to receive the medications they need to get better — at no cost to the patient," Faraj-Johnson said in a statement.
She did not address questions about the company’s campaign contributions.
Chin told Green that the city couldn’t agree to the company’s discount offer and said the city’s counter-offer was generous, based on local pharmacy pricing and prices available through the city’s pharmacy benefit management program.
When the city asked Automated HealthCare for more documentation to justify its charges, the company refused to provide it, Chin added.
Because the company has taken the matter to the state Department of Labor and Industrial Relations, which oversees workers’ compensation disputes, the city intends to present its case to the agency once the formal resolution process begins, Chin wrote.
Adding to the city’s arguments, Chin told Green that some dispensing physicians now appear to prescribe compound drugs that are of dubious therapeutic value.
He cited the case of a physician who prescribed what was essentially diluted Ben Gay to a city claimant who didn’t want the drug and didn’t use it, even though the physician insisted that the patient after each visit take a few tubes anyway, according to Chin. The city was billed $299 per tube, he said. The patient stacked the tubes in his garage, and the collective tab for the diluted compound topped $8,600, Chin added.
According to the city, only a few physicians engage in direct dispensing, and the practice does not exist under group health plans like HMSA or federally funded programs such as Medicare and Medicaid.
But the problem of inflated prices seems to be growing, according to some insurers, who unsuccessfully sought to get a bill passed at the Legislature this year to cap prices of such drugs.
The bill, which passed the House, died in a Senate committee headed by Sen. Clayton Hee, the only other legislator to get campaign contributions from Automated HealthCare, according to campaign spending records.
Hee told the Star-Advertiser previously that he killed the bill for several reasons, none of which related to the campaign contributions he received — but didn’t solicit — from opponents of the legislation.
Drug-dispensing physicians say insurers are highlighting extreme examples to undermine a long-standing practice that leads to better patient compliance with treatment regimens, shorter periods away from work and lower overall medical costs.
Green, in his letter to the city, also raised the notion of meeting basic commitments.
"I appreciate the fiscal strain that our government agencies have been under over recent years, but I also appreciate the fact that budgets have increased recently and also the simple fact that one needs to pay one’s bills," he wrote.
Green said the city’s nonpayment of bills already has adversely affected care to injured city workers because physicians are reluctant to dispense certain needed medications because of the uncertainty of not being albe to recoup their costs.
Chin said doctors dispense drugs and then "wash their hands" by passing the claims to companies like AHCS. The companies use lobbying and campaign contributions as a strategy to influence receptive politicians, according to Chin.
In addition to the August donation, Green’s campaign received $1,000 from Automated HealthCare in October 2011 and $1,000 this past June, according to his campaign spending records.
Letter to Senator Joshua Booth Green M D From Managing Director Douglas S Chin Dated 10-29-12 Re Automated …
