Using Scandal to Make a Point: Cuomo and Nonprofit Executive Salaries

August 10, 2011; Source: Crain’s New York | There is no question that the State of New York had plenty of evidence to raise questions about the million-dollar salaries paid to the two brothers running the Young Adult Institute. Governor Andrew Cuomo quickly followed up on a New York Times article about YAI’s Levy brothers to create a task force to establish salary guidelines for nonprofits receiving Medicaid funds. In our Newswire coverage of the story NPQ suggested that the state might want to aim equal scrutiny at the salaries (and profits) of YAI’s for-profit competitors. Abuse of Medicaid, as the public knows all too well, is hardly a problem limited to the nonprofit sector.

But Crain’s New York suggests that Governor Cuomo’s use of the YAI scandal might have been a bit too convenient. Jim Sheehan, the outgoing Medicaid inspector general who was pushed to resign last month by Cuomo, said that the YAI case was hardly news. Sheehan was quoted in Crain’s saying that the state was “on to YAI a long time ago. . . . We already had a corporate integrity agreement in place, and were getting periodic reports.”

A corporate integrity agreement, or CIA, is typically part of the settlement of a federal investigation of a health care provider. According to the U.S. Department of Health and Human Services, in a CIA, “(p)roviders or entities agree to the obligations and, in exchange, the OIG [Office of the Inspector General] agrees not to seek their exclusion from participation in Medicare, Medicaid or other Federal health care programs.” The CIA that Sheehan negotiated with YAI was posted in January. It outlined what YAI had to do to remain a Medicaid-subsidized vendor—essentially, what it had to do to survive and stay in business.

The governor still might have been on to something. Despite the posted CIA, the firm that had been hired to monitor the Institute’s compliance is expected to report soon that YAI wasn’t keeping its end of the bargain. Nonetheless, rather than “suddenly” discovering the self-indulgent compensation levels of the Levy brothers, Cuomo might have given more credit to the regulators who were already on the case. The problem is that even with that oversight, the Levy brothers were still able to behave in a manner contrary to what Medicaid, HHS, and the public thought proper.—Rick Cohen