The Great Medicaid Scandal

For 25 million Americans, Medicaid is a godsend. The program provides medical services for the poor and their children, and nursing-home and extended hospital care for many indigent elderly--all financed by $12.6 billion in federal and state funds. Unfortunately, other less-deserving people have benefited handsomely from the Medicaid program. Spurred by newspaper stories, the U.S. General Accounting Office (GAO) and investigators in at least half a dozen states have been spending the past several months looking into charges that the program has been egregiously abused. Now they are finding that their suspicions were well founded. Inquiries in New York, California, Minnesota, Florida and Massachusetts reveal that a disturbingly large number of doctors, dentists, druggists and clinic and nursing-home operators are bilking state and federal governments--and their taxpayers--out of millions of dollars annually. Authorities in Illinois have uncovered even more bizarre activities and charged a Chicago dentist with arranging the murders of two Medicaid profiteers, one of whom he suspected of freezing him out of a lucrative business deal.

No Real Control. The responsibility for the growing scandal lies largely in Washington. The Federal Government has never exercised any real control over the Medicaid program. In an effort to promote local independence and avoid duplication of effort, the Government has allowed the states to disburse and control Medicaid expenditures within the structure of their own welfare programs. But most states are ill-equipped to administer such a massive undertaking, making it easier for cheaters to move in.

Legally, only the poor are eligible for Medicaid, but many others take advantage of the program, adding tens of millions to its costs every year. A recent GAO spot check revealed that 28% of those seeking benefits in New York City and Illinois' Cook County were actually ineligible. In California, young girls who do not wish to tell parents of their pregnancies are claiming poverty to obtain abortions under Medi-Cal, as that state's program is called. In Illinois, almost everyone who applied for admission to the state's $657 million Medicaid program was accepted without investigation.

Medical men have taken advantage of lax administration to bill the Medicaid program for goods and services that were never provided--and in some cases their take has been tremendous. In New York, investigators are looking into the activities of two chiropractors who ran nine ghetto clinics. These operators are suspected of submitting forged invoices and persuading doctors in their clinics to match the invoices with phony treatment charts. The case, which could involve as many as 100 physicians, is believed to have cost Medicaid $4 million. A San Jose, Calif, psychiatrist recently went to jail because he would regularly see eight or nine mental patients together, then bill Medi-Cal for separate sessions. Numerous indictments of doctors, clinic operators, druggists and other Medicaid providers are expected in Illinois.

Many of the "Medicaid mills" or clinics set up to handle poor patients in the nation's urban ghettos reap enormous profits by such practices as "Ping Ponging" (passing a patient along to all the other doctors in the clinic), "family ganging" (examining all members of a patient's family when only one comes in for a checkup), performing superfluous but costly services such as extra X rays and tests, overprescribing drugs and other medications and, in some cases, accepting kickbacks from pharmacies. Three New York podiatrists agreed to return 60% of the X-ray money they had received since starting their Medicaid practice after investigators found that they overused X rays by this amount.

Computer Screening. Some states are trying to eliminate such abuses by cracking down on suspected offenders. Georgia Governor George Busbee has ordered an investigation of some dentists whose bills seemed unusually large. Probers in Illinois are looking into possible connections between Medicaid profiteers and local officials. "It is almost unbelievable that corruption on such a large scale could exist without cooperation from the inside," says Robert O'Rourke, deputy to Illinois. Attorney General William Scott.

New York City, too, is belatedly moving to prevent further Medicaid abuses. The city has adopted regulations that will require Medicaid providers to keep accurate records of patient referrals and treatments given, and to identify any financial relationships they may have with the estimated 500 Medicaid facilities operating in the city. City authorities are employing a computer to screen invoices submitted by Medicaid providers and to look for instances of overbilling. The system appears to be working. Since it was adopted last year, the city has been demanding--and receiving--more than $100,000 a month in restitutions.

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