The largest Medicaid insurance company in the North Carolina is accused of spending money on big salaries, upscale retreats, lavish parties and private flights.
Cardinal Innovations Healthcare Solutions insures more than one in every four North Carolinian and receives $500 million in Medicaid and other state money each year.
An audit done by the state found that Cardinal spent money on retreats, meetings and Christmas parties at upscale venues, such as the Belmond Charleston Place hotel, the Ballantyne hotel and Whitehead Manor in south Charlotte. One of the events cost $55,000 while another topped $78,000, according to the audit.
Action 9 investigator Jason Stoogenke asked Cardinal’s chief administrative officer, Amy Kendall, how the company justifies those kinds of activities.
“Federal rules allow Medicaid managed care companies, such as Cardinal, to operate within 15 percent of an administrative spend,” Kendall said.
That means that Cardinal can spend 15 percent of its revenue on administrative costs. Cardinal said its get-togethers and other social activities add up to .34 percent, so less than 1 percent.
“Looks bad though, doesn’t it?” Jason questioned.
“I think that’s in the eye of the beholder,” Kendall answered.
“Viewers will probably look and say, ‘Those are some fancy places.’ You don’t agree?’ Jason asked.
“Again, I point back to the fact that it’s .34 percent of total spending,” Kendall said.
The state audit also questioned certain credit card expenses, including thousands of dollars for alcohol.
“How do you justify that?” Jason asked.
“Again, those were all charges within that .34 percent of total spending,” Kendall answered.
The audit criticized Cardinal for chartering four flights to the eastern part of North Carolina and for how much the company paid its CEOs.
The audit said the state sets the maximum salary at $187,000 per year. But the CEOs have made $260,000, $400,000, $516,000 and, most recently, $635,000 per year.
“That salary range has not been supplied to Cardinal before, before this audit, and it’s certainly not available on the website,” Kendall said.
“So this is the first you’ve heard of $187,000, period?” Jason questioned.
“Yes,” Kendall replied.
“What do you do now? Do you lower his salary?” Jason questioned.
Kendall said no. They way Cardinal sees it, the state recommends $187,000 but doesn’t require it, according to Kendall. She said Cardinal wants its salaries to be competitive with other companies.
Jason asked if Cardinal plans to make any immediate changes based on the audit. The company didn’t give specifics, saying it will continue to focus on patients.
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