TIMES EXPOSÉ ALLEGES STATE MEDICAID PROGRAM
LOSES BILLIONS OF DOLLARS TO FRAUD AND WASTE


By Henry J. Stern
July 18, 2005

Today the New York Times' lead story was an investigative report by Clifford J. Levy and Michael Luo.  The headline, which is all too credible, is NEW YORK MEDICAID FRAUD MAY REACH INTO BILLIONS - Program for Poor, State's Biggest Expense, Becomes Target for Egregious Abuse.
 
The lede (that's what newspaper people call the first paragraph of a story) introduces the problem by describing Medicaid, a keystone of Lyndon Johnson's Great Society:

"It was created 40 years ago to provide health care for the poorest New Yorkers, offering a lifeline to those who could not afford to have a baby or a heart attack.  But in the decades since, New York State's Medicaid program has also become a $44.5 billion target for the unscrupulous and the opportunistic."
 
Levy's first case is a dentist, Dr. Dolly Rosen, of East 63rd Street, who appears to have done for dentistry what Dolly the Sheep did for cloning.  Dolly the dentist must have cloned herself, because she claimed that she performed 991 dental procedures in a single day, and demanded reimbursement for all of them.  The Times reported her to the state after looking through a computer analysis.  She and two buddies were subsequently indicted, accused of stealing more than $1 million.  But Dolly is far from alone in the annals of Medicaid fraud.
 
The Times story jumps from page A1 to two full pages in the Metro section, B4 and B5.  It is a comprehensive look at the way people steal from the state, perform unnecessary services or falsely claim to have done work they did not do on patients they never met.  
 
Cut to the chase: How did this horror go on for so many years?  You can start by blaming our gallivanting Governor, now traveling through the heartland of Iowa in anticipation of its early primary in 2008.  To run for President nowadays means you give up your day job, so his journeys lead to speculation that he will not run for re-election in 2006.  His oversight of state agencies has been less than intense in recent years, his first team of 1995 has long since departed Albany to make more money, and he is finishing his dozen years with an array of third-stringers.  As far as the Governor is concerned, Elvis has left the building.
 
We proceed to his Health Commissioner. Antonia G. Novello, M.D., who received her Bachelor of Science degree in 1965 and became a doctor of medicine in 1970 at the University of Puerto Rico.  She later earned the degrees of doctor and master of public health from the University of Johns Hopkins.  She was appointed Surgeon General by the first President Bush in 1990, serving until 1993.  Six years later, on June 15, 1999, Governor Pataki appointed her to head the Health Department, and she is now in her seventh year in that office.  

Although the possessor of a distinguished resume, Dr. Novello has never been particularly involved with Medicaid problems, and declined to speak to the New York Times for today's article.  She was apparently unable, unwilling or forbidden to defend her agency's oversight of Medicaid.  She also believes it will take three years to study infections in hospitals.  Her lackluster performance contrasts with that of Dr. Thomas Frieden, the city's energetic and innovative Health Commissioner.
 
Dr. Novello's game executive deputy, Dennis P. Whalen, spoke for the State Health Department:  "This continues to be an area where we think that we have made substantial progress, but by no means are we sitting back and resting on the accomplishments that we have made."  Please, Mr. Whalen, don't sit back and rest on those accomplishments just yet.

Levy reported Whalen's claim "that the state had saved $9.3 billion in recent years through investigations of providers, a new computer system and other measures."  The agency may have made progress, but so have the crooks who are fleecing us.  
 
Willie Sutton said he robbed banks because "that's where the money is."  In state government, Medicaid is where the big bucks are.  If Levy's story is half true, and we believe it is far more accurate than that, there remain acute problems of fraud and waste.  Most people believe that, and can justifiably ask why hasn't that much been done about a problem that goes back thirty years to the days of Bernard Bergman and his filthy, urine-soaked nursing homes.  
 
It is not unreasonable to spend one percent of the dollars used for a program to prevent waste and fraud.  That would be $445 million on a $44.5 billion expenditure.  That investment would be cost-effective at a rate of 5-1 if only five per cent of the dollars were found to be wasted.  Observers believe that the percentage of misused funds may be even higher.  The state provides inadequate resources to the effort to reduce fraud and punish cheats.

An added problem in Medicaid  is that so many parties are partners or enablers in the overbilling, the duplication of services, and the performance of unnecessary work.  Those abuses provide jobs, social services and other financial benefits.  The only parties injured are the taxpayers, who pay for the Federal, State and City share of the program.  But who speaks for them?
 
The health care colossus, similar in size and influence to the military-industrial complex described by President Eisenhower on January 17, 1961, three days before the inauguration of President Kennedy, involves hospitals, union, and the elected officials they purchase with their endorsements.  The parts work together in their mutual self-interest.  In many cases, patients are the beneficiaries of their efforts.  But patient welfare is not advanced by useless programs, and the resources that are wasted cannot be spent on more valuable services.  By cutting waste and fraud, you could even let taxpayers catch a break.

If you clip the article out of the Times, you will have illustrations and charts unavailable on the web.  You can link to it here, and then print it out, but do that promptly, since Times' articles are available free for just one week.  After that, single articles cost $3.95, although there are substantial quantity discounts.
 
In future comments on the series of Times articles, which continues tomorrow, we would like to look at what can be done to remedy this pathetic situation, in which the forces of fraud and waste rather decisively outgun those who are charged with responsibility to control avarice and  protect the patients and the public.

As always, your ideas on this subject are welcome, either e-mailed to StarQuest@nycivic.org, or posted directly on the blog website.