This comment under a recent post about Christian health sharing ministries raises a very good point which should be addressed in greater detail. Here's the full comment:
The point I would stress here is that there seems to be a strange exception to the normal vetting process that occurs in dealing with these "ministries".
If a member of your church came to you for advice, and said they had been watching a televangelist with big hair at 2 a.m. on cable TV asking for money, and they had decided to send him $300 per month, you would raise an eyebrow, and politely start asking vetting questions about how the oversight board is appointed, actuarial audits, who is being paid how much, etc. These "health-sharing ministries" tend to get a free pass. Try getting real data, not summary un-audited financials--good luck. They shouldn't get less scrutiny than the company that insures your house, for pete's sake. The new law gives a break--finally!--to large families. Go to healthsherpa.org or kaiser subsidy calculator.org, and see for yourself.
"They shouldn't get less scrutiny than the company that insures your house" is right on, and that's why I decided to place a call to Samaritan Ministries...
Each Christian health sharing ministry must answer this commenter's questions according to their specific organization. While writing these posts, I've been in regular communication with Samaritan Ministries and they've worked hard and cheerfully to answer all my questions. So focussing on Samaritan Ministries in this particular post, here is a Samaritan Ministries page that talks about accountability.
To begin with, Samaritan only requires you to send your monthly share amount to Samaritan Ministries itself once a year. That means that only 8.3% of your total share amount goes to Samaritan Ministries to cover their administrative costs. Your other eleven monthly shares are sent directly to other members of the program. In other words, the vast majority of the money that exchanges hands with Samaritan Ministries goes directly from member to member, and not to Samaritan Ministries itself.
While that greatly reduces the possibility of Samaritan Ministries misusing funds, it doesn't remove the possibility entirely. So there are a number of important ways in which Samaritan submits itself to outside accountability.
- Audits. Samaritan Ministries is independently audited each year. That's standard practice among large non-profits, so it's not all that special. Their yearly audit is a public document, and will be made available to you upon request. I asked for their 2013 audit and they were happy to provide it to me.
- 990s. As a 501(c)3 non-profit, Samaritan Ministries' 990s are also a matter of public record. You can view them here:
- 2012 (has not yet been released)
- Board of Directors. The board of directors for Samaritan Ministries is member-controlled. Six directors are required to be taken from Samaritan members and are prohibited from receiving financial compensation from the ministry for their service on the board. The remaining three board members are the founder and two others he appoints. Any of Samaritan's member may be nominated to serve on the board. The open period for nominations begins in June and runs for about three months. The qualifications for board membership are listed in the guidelines. The names of the current board members are listed in the current guidebook and Samaritan profiles a board member in their monthly newsletters.
- Board Meeting Minutes. Board meetings are attended by members of the board and by a leadership team. In all, about 20 people attend board meetings, though only official board members may vote. Members may request minutes and the board will consider the request. The board is not obligated to release the minutes, though they may do so with redactions, etc. This is not uncommon and is in accordance with Illinois law.
- Monthly share raises. If the total dollar amount of needs submitted in a given month exceeds the shares for that month, all needs are prorated and everyone who submitted a need will receive an amount of money that is less than the total amount that they requested. In other words, they may, perhaps, have 90% of their bills covered instead of 100%. If needs exceed shares for three consecutive months, then the board is required to propose an increase in monthly shares. Such a proposal must be voted on by the members and requires a 3/5 majority vote of the members to pass. (Family member ballots count for 3 votes, single-parent households 2.5, couples 2, and singles 1.)
The list that I've mentioned above sounds pretty good, but I still haven't addressed the big question everyone has when they first begin to learn about Samaritan Ministries: "You want me to send money each month to a complete stranger? How in the world can I be sure that they aren't taking my money and using it to buy chocolate milkshakes?" It's a good question. How does Samaritan Ministries prevent fraud?
The problem of avoiding medical fraud is not unique to Samaritan Ministries. Regular health insurance companies, not to mention the other health sharing ministries, must all have policies to prevent fraud and deal with it when it happens. What is unique about Samaritan Ministries, however, is where you send your money. That's what makes people feel uncomfortable.
In the case of a traditional health insurance company, it goes something like this:
- You pay your monthly premium to your health insurance provider.
- You have a medical need and go to the doctor. You flash your health insurance card, and simply pay the deductible and/or copay.
- Your medical provider then submits the bill to your insurance company. It's highly unlikely that you ever see the cost of your visit to the doctor.
- Your medical insurance company negotiates the price of your medical services with your medical provider and pays the bill.
With Samaritan, there are no "premiums" that are paid to Samaritan. Instead, here's what happens when a medical issue comes up with a Samaritan member:
- The member goes to the doctor and receives a bill for the service.
- The member collects an itemized list of the bill(s), and has a church leader sign it for verification. The member sends the itemized list of the bill(s) to Samaritan.
- Samaritan hands the bills over to the Karis Group for negotiations with the medical provider. The Karis Group verifies the legitimacy of the bills, and negotiates the bills down.
- Once the Karis Group has finished with negotiations, they send the reduced bill back to Samaritan and the member with the need. Samaritan then publishes the need in their newsletter, and assigns the need to various Samaritan members who then send checks directly to the needy member.
So where do the various players have the opportunity to profit fraudulently?
- Samaritan certainly profits off of new members joining the ministry but they have no way to profit when medical needs are submitted or paid. The major thing to remember is that monthly shares are paid directly to other members, and not to Samaritan Ministries. I cannot overstate the significance of that fact. Furthermore, it is in their best interest to keep medical bills low, as that keeps the monthly share amount low, also, thereby making the ministry attractive to prospective members. If, for some reason, Samaritan itself conspired to funnel more money to a particular individual than what was due them, it would simply mean that monthly shares overall would be made higher.
- Individuals could attempt to commit fraud by falsifying medical bills and simply pocketing the difference in either scenario. Though it is technically possible in either scenario, it is difficult to pull off. In the case of Samaritan, they must get sign-off from their pastor. But in both cases (Samaritan and a normal health insurance company) bills are verified and negotiated by a third party (the Karis Group for Samaritan and the health insurance company for regular insurance).
- Medical providers always have an incentive to overcharge, but it's arguably more difficult for them to get away with it when they're dealing with what amount to self-pay patients—people who actually have a strong incentive to pay attention to their costs and keep them low.
So, in the end, it seems to me that it would be no easier to commit fraud with Samaritan than it would be for someone to commit fraud with a regular health insurance company. Still, I think I have demonstrated that Samaritan is open to accountability. I am not an accountant, however, and I don't really know anything about corporate governance or financial accountability for multi-billion dollar corporations, so I really can't compare Samaritan with regular health insurance companies.
For a little fun, and as an addendum, let's compare the salaries of Ted Pittenger, the president of Samaritan Ministries, with those of the CEOs of the major health insurance companies. According to their 990, Mr. Pittenger received roughly $130,000 from Samaritan Ministries during their fiscal year ending on June 30, 2012. Compensation for health insurance company CEOs aren't even in the same galaxy. Here is some data from 2012:
- Cigna CEO, David Cordani: $12,758,410
- Humana CEO, Michael McCallister: $8,433,985
- Tenet Healthcare CEO, Trevor Fetter: $8,133,229
You can view some older data (2008-2009) here. It pays to be a health insurance CEO. Who is paying for those salaries? The people buying the insurance.
Oh yeah, US taxpayers, now.