State documents incoming speaker's inflated Medicaid charges

AUGUSTA — In 2001, Trues Pharmacy in Oakland, owned by incoming Speaker of the House Robert Nutting, bought medical gloves for $4.39 per package. By the time Trues sold them to a Medicaid provider, the price had gone up to $11.11.

That markup — 153 percent — was much more than was allowed by Maine’s Medicaid program, known as MaineCare, which permits only a 40 percent markup.

Nutting contended in state hearings that his use of a different formula to calculate the markup — a formula which put more money in his pocket — was the accepted method.

Although the state ruled its Medicaid formula — not Nutting’s — should have been followed, the state said that even if it allowed Nutting’s formula, Trues still “overcharged MaineCare 100 percent of the time ...”

Such inflated charges — multiplied by thousands of gloves, adult diapers and other supplies — and the failure to keep adequate records led to the state’s finding that Nutting’s pharmacy overbilled the state $1.6 million, of which he failed to pay back $1.2 million after the pharmacy went bankrupt.

Nutting is the presumptive speaker of the House, selected by fellow Republican legislators two weeks ago. His election to the third most powerful post in state government will not become official until he is approved by the full Legislature in January.

Despite the recent revelations that Nutting left the state and federal Medicaid programs with the $1.2 million in bad debt, Republicans and even some Democrats have said it will not harm his chance to become speaker.

The debt sparked a state investigation.

The records of the state Department of Human Services, as it was called 10 years ago, show that Nutting’s pharmacy pushed its prices up that high in two steps:

First, Trues charged the 40 percent markup allowed by Medicaid, but based it on the sales price of the product. Medicaid rules say the markup should be based on the acquisition cost — what it cost the pharmacy to buy the product from the supplier.

Second, Trues then added another markup.

Take the medical gloves, for example.

In 2001, Nutting bought 4,800 packages of latex and other medical gloves for $4.39 per package. If he had followed state regulations, he would have sold them to a Medicaid provider, such as a nursing home, for no more than $6.22 — a 40 percent markup.

But Nutting told the state he used a different formula — one he had learned in pharmacy school — that is based on the sales price, not the acquisition price, to set the markup. He did that by dividing what he paid for the product by 0.6.

That is contrary to state regulations. If he had used that improper 0.6 formula, he would have sold the gloves for $7.31 per package.

In fact, the state said he sold them for much more. He sold the packages of gloves for $11.11, a markup of $6.72, or 153 percent.

When the state added up all the gloves Trues billed Medicaid for between 1997 and 2001, it concluded, “ ... Medicaid overpaid Trues by $531,792.73.”

The state’s research of pricing formulas cited a survey that would appear to partially support one part of Nutting’s markup method.

Of 23 New England pharmacies responding to a poll, 16 used Trues’ 0.6 markup formula and six marked up prices the way the state mandates. But the survey was not related to Medicaid charges.

A DHS audit of 13 medical suppliers like Trues showed that none used the 0.6 formula that Trues used.

In interviews, Nutting said the overbillings were “honest,” “unintentional” and the result of “confusing regulations.”

John Christie is the publisher and senior report for The Maine Center for Public interest Reporting, a nonpartisan journalism organization based in Hallowell. Email: mainecenter@gmail.com . Web: pinetreewatchdog,org. Steve Mistler of the Sun Journal contributed to this report.

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Comments

 's picture

HAhahahahaha Small Crook

HAhahahahaha Small Crook (nutting) gets sued by big Crook (The medicaid program) Oh jeez, wait, that's not the half of it. How about new DHS buildings getting ALL brand new office furniture , even though we have warehouses full of....you guessed it.....brand new office furniture. What about.....printing contracts.....since the biggest output in Augusta is useless paper.....who gets THOSE contracts? Jeez, lets not talk about DOT's construction of bridges, or roads. Lets not talk about ANY worker's comp program suppliers (lots of education so we can be safe) who get no bid contracts and who get paid FULL boat prices, no bidding. Lets talk about the Maine Dept of Labor's survey's on labor statistics, or a survey from DHS on Ems Resources inventory, which can be got by simply contacting another dept in Augusta. Oh lets talk about.......Dept of Environmental Protection....wow there is a good one. Who, came out with a new rule stating all or anyone involved in home renovations can be fined for not having a lead renovation (whatever certificate) to the tune of $37'000.00 for a first offense for not having one, and in effect condemned and devalued more than 60 % of the housing stock in Maine. Which created INSTITTES for safety training to the tune of $100-400 per student. I could go on and on and on and on, why weren't the DEMS scrutinized in this way. We may have traded one set of crooks for another, we'll see. And in a coupla years we may have to boot these out too. Personally, I want to see the job Baldacci takes after he is governor, and work it back from there. That will be revealing and give light to what he has been selling the last few months.

 's picture

leadership, GOP style

“overcharged MaineCare 100 percent of the time ...” He's a crook, plain and simple.

 's picture

Who really Know any more

Do any of you really take this or any of these storys for the truth.
I don't ,I am sure there is some other facts about this story .

For one ,if this guy Robert Nutting was doing a bang up job of billing the state out of its tax money why did the Pharmcy go Bankrupt?

All the news is tanted these days.
Nothing is what it seems any more most of all the TV news and the News papers!!!

 's picture

Exactly

I would be willing to bet, he was billing but the state wasn't paying the cost plus 44% never mind what he was billing any more than they are paying the hospitals. I would bet that in addition to the cluster F*** they made of the rules/law that makes them unenforceable, since the state never paid they probably actually still owe him anyway he doesn't owe the state. I would be willing to bet his business went bankrupt because the state didn't even pay the cost plus 44% puting him out of business and his employees out of jobs along with wiping out the income tax revenue, personal property tax revenue and property tax revenue that came from the business and its employees.

KELLY SCOTTI's picture

Common Sense that doesn't

Common Sense that doesn't make sense. Obviously the state paid as his company still OWES the money. His business went bankrupt because he didn't have the cash to pay the debt back. Your logic regarding the lost tax revenue lost also doesn't make sense. As long as the person is putting money in the state coffers he gets a free pass on his behavior?

 's picture

John Christie should be writing for SJ

This whole story has smelled fishing from the beginning so I checked it out, thanks to John Christie, I had some a specific example to provide you of an item with the numbers to go along with the explaination. First of all the reason no one including Mr. Nutting is being prosecuted for this billing issue is the state can't prosecute anyone becuase of issues with the law. I reality, the state cannot prove Mr. Nutting did anything wrong. Here's why. Mr. Nutting buys the gloves from his supplier for $4.39 just like the article says. Normaly he would use his 0.6 multiplier to calculate his markup to any customer. This is the standard industry markup he learned in pharmacy school (which is not my field) which would put the package of gloves at $7.31 for general sale. No problem so far. The state law says he is allowed to markup 44%, problem is the law is vague on markup form what base price which is why the state can't prosecute Nutting or any of the other Pharmacies that over charged. What Nutting did was add the 44% the state law says he is allowed to markup to his $7.31 price to arrive at $11.11. Now had the state law been clear and read that he was only permitted to add 44% to his aquisition price also known as cost the state could have prosecuted him and all the other suppliers who where using formulas other than 44% add to cost. Given the expense, aggravation and delays associated with trying to collect from Mainecare it would not be a surprise for there to be a premier built in to compensate suppliers for the added cost of accepting MaineCare in order to keep them in the program. Look at the backlog on hospital payments that is public. Do you think pharmacies are paid in an anymore timely manner? I don't fool myself into thinking so, they just aren't big enough or joined together to have a loud enough voice to make it public what they are owed. This is another example of really bad legislation not necessarily bad people breaking the law.

 's picture

dumb

Almost the dumbest thing ever written. Did it say in the rules just keep markin' em up until you get the price you want?

 's picture

nice try...

Common sense, your attempt to protect your Republican ally falls short. The reason no one is being charged in this case is because it was a business transaction problem and he claimed bankruptcy, his pharmacy no longer exists. I'm sure he set up his business to protect his personal finances as most all businesses do. You go on to some how claim that the market conditions should have allowed for him to charge anything he wanted, which obviously is not the case. There were rules to follow and he didn't follow them correctly. I can almost believe he didn't intentionally screw the state, but he should not be rewarded the speaker position considering what he did to the state.

 's picture

Every pharmacy that used the

Every pharmacy that used the .60 multiplier also overcharged if you go by what they state now says was the "intent" of the rules. They just openly broke the rules since they obviously knew they were overcharging using the .60 instead of adding 44% to cost.

Confusing!!!!!

This guy is a liar and a thief...He should pay it all back and never be allowed to sell another thing to the state or anyone else for thatg matter..and he lied about it to boot...what a loser he is, and he probably still doesn't get it...

RONALD RIML's picture

Let's see how long the Republican House overlooks this

Before they replace him as Speaker.

It will be a true measure of their character.

 's picture

they all do this

they ALL do it!!

 's picture

i work in a prison

and right now i have a guy doing 18 months for writing $2200 worth of bad checks. total incarceration cost to taxpayers 18months x 28 days average per month x $120 a day = $60,480. if were willing to spend 60 grand punishing someone stealing $2200 why arent we going after this guy?

RAYMOND FRECHETTE's picture

While it may be fun to flog

While it may be fun to flog the Republicans in Maine let us not forget that poor Mr. Obama had problems with some of his choices to fill important posts in Washington. Politicians do not always meet our high ideals and standards, especially when they are the opposition.

 's picture

Question

I wonder which nursing homes paid the unbelievable inflated price that Nutting charged? Maybe, the nursing homes and hospitals should do a review of what they pay for medical items. We all know how expensive it is to be in a nursing home, and what it costs for an aspirin in the hospital. Money could probably be saved if these places went out to bid.
I, personally, believe that Nutting should not be allowed to be the next Speaker of the House. If you wish to contact your Representative here is the site to find out how to do so http://www.maine.gov/legis/house/

DANNY FITZSIMMONS's picture

I hope they research this and

I hope they research this and enventualy throw him in jail from where he will need all the diapers and, he will get his full of latex too.

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