The MacNeil/Lehrer Report; Medicaid Fraud

ROBERT MaCNEIL: Good evening. Jim Lehrer is off tonight. There are a lot of angry doctors around the country this week, and some who may be scared; but sorting out which are which is the puzzle of the week. On Monday the Department of Health, Education and Welfare in Washington issued a report stating that more than 2500 doctors and dentists, laboratories and pharmacies had earned more than $100,000 last year from Medicaid. Even the doctors` names and addresses were given including one running methadone clinics in New York who was paid $75,000. What was that supposed to mean? Was the report a polite way of saying the doctors were ripping off the Medicaid program? Oh, no, said HEW. The amounts "should not be construed as any evidence of wrongdoing." So why was the report issued? That`s what we consider tonight, along with fresh reports of New York City hospitals over- billing on Medicaid and admitting Medicaid patients unnecessarily. One of the doctors whose name appeared on the list is Dr. Robert Nelson. He is a primary care specialist who`s been practicing in the Washington, D.C. area for almost 30 years. According to the HEW list, Dr. Nelson was paid $156,000 by the Medicaid program last year. Dr. Nelson, is that figure accurate?

Dr. ROBERT NELSON: Yes, I think it`s probably accurate.

MaCNEIL: How do you explain earnings of that much from Medicaid program?

NELSON: Well, actually I see a huge number of patients per day; when I say "I" I mean my office. I run a primary care center in which I have trained six physician`s assistants full-time and I also have one part-time physician`s assistant. We-actually work 12 hours in the office, and we`re even open on Wednesdays and Saturdays. It`s just a matter of we`re just sitting there and the patient just come in -- you must treat them, that`s all.

MacNEIL: I see. So are the salaries of your assistants included in that money?

NELSON: Oh, not only my assistants; I have to pay radiologists, I have to pay surgeons, I have to pay an eye doctor, I have to pay the laboratory about 2000 a month.

MacNEIL: I see. The point is that those don`t represent your personal earnings from Medicaid.

NELSON: I`d sure hope they did, but unfortunately they don`t.

MacNEIL: (Laughing.) I see. What is your reaction to the figures being published -- released?

NELSON: Actually, it doesn`t make any difference to me one way or the other. I`m just doing my job, and if they want to publish it it`s up to them; it makes no difference to me one way or the other.

MacNEIL: Are you at all worried that people, including your patients, might suspect that you`re ripping them off, seeing such a large figure published?

NELSON: I doubt it very much; I can give you a little thing that happened last night. Last night a new patient came in, so my wife said, "Haven`t I seen you before?" -- because she was with me.

She said, "No, I knew," she said; "I looked in the paper and saw that there`s a doctor who seemed to be rolling. So that`s why I`m here. I don`t want anybody who doesn`t know what they`re doing -I want a doctor who`s really rolling." And she was not Medicaid; she paid.

MacNEIL: (Laughing.) I see. Do you have any understanding of why HEW releases these figures?

NELSON: Well, I have some strong suspicions, but I don`t really know.

MacNEIL: What are your suspicions?

NELSON: My suspicions are that HEW is attempting to intimidate the doctors, to make them look bad, to make them look like they are crooks; and probably the information can be used to foster some type of organized, governmental type of total control over medicine, which they have in mind.

MacNEIL: Why would they want to make the doctors look bad?

NELSON: Well, it`s always good, if you`re anxious to take over somebody who`s been doing a good job for years, it`s always good to tear down what they have done. It`s done in other countries. The first thing you do is to make the existing facilities, or the existing physicians, or the existing government look bad; then you can walk in and say, "We have something good. They`re all bad; they`re a bunch of crooks."

MaCNEIL: So you think this is, in effect, a plot to sort of further socialize medicine in this country, do you?

NELSON: I really think so.

MacNEIL: That`s interesting -- we`ll take that up in a moment. Thank you. We`d hoped to get a representative from HEW on the program tonight, but a Department spokesman said they "must decline this offer. The list was released in response to a Freedom of Information request." And they added, "We have declined to comment on other television networks. We`re simply responding to the law. The list does not connote any wrongdoing, it does not list how many staff members or other employees are included in the Medicaid bill." When our reporter, Crispin Campbell, pursued that -- tried to find out who had stimulated the Freedom of Information request -- they gave her the name of a lady in Maine. When we contacted that lady in Maine, she said she`d written a letter two or three weeks ago and that had produced this report of 346 pages. Further pressing revealed that this report is prepared at the request of Congress, but we still don`t understand why HEW released it and why they are so reluctant to discuss it in public. While HEW has been reluctant to discuss the release of the list, the American Medical Association was quick to denounce it. Dr. John Budd, a family physician from Columbus, Ohio, and the President-elect of the AMA is also in our Washington studio. Dr. Budd, the AMA, I gather, is pretty unhappy about this list. Why are they, if the HEW says it connotes n0 wrongdoing?

Dr. JOHN BUDD: That was in rather small type, that comment. I think what we`re upset about is the implication that making this amount of money in some way is dishonest. I would agree that one dishonest physician is one too many, but the mere fact of earning money by hard work, by government schedules of fees, in no way connotes dishonesty. If there is, we would like to see about it and investigate it, and do everything we can to eliminate it. But so far, the evidence is rather lacking.

MacNEIL: If this is guilt by innuendo, which the AMA in its statement the day the report was released said it was, how are the public to know which doctors to apply the innuendo to and which not to?

BUDD: That, of course, is one of the real important questions because I think that particularly in poor areas, or so-called ghetto areas, it`s going to be rather discouraging for a doctor -- dedicated doctors, thousands of them, who work in those areas, are going to be rather discouraged to take that type of jobs; and the ultimate loser would be the patient, who would be deprived of these services. It`s impossible to say who is honest, except it`s pretty obvious to me that the majority of doctors are honest. Maybe I`m biased, but I have good reason to be biased.

MacNEIL: What`s the AMA feeling about why HEW prepared and published this list?

BUDD: Dr. Nelson expressed some of the feelings that we have. I think in addition an important part of it is that everybody is concerned about the great cost of medical care, which is indeed very high. I think it is an example of government promising more than they realized that they would have to pay for. Years ago, the government said, "We want to take care of these poor people, provide medical care for them and send me the bill." So the patient has, now, a rich uncle, and doctors were encouraged to send the uncle the bill; the bill came and he was rather thunderstruck at the amount of it. I think it`s probably the first time that some accurate book has been kept on how much many, many doctors used to do for little or no payment before; and it`s just very expensive, and we are concerned about the cost of medical care -- we`d like to do what we can to control it. But I don`t think this is a very effective way of doing it.

MacNEIL: I guess there are problems in Medicaid; it`s frequently come out that there are. Is the problem with individual doctors, or is it more in institutions and so-called "Medicaid mills?"

BUDD: Well, I think probably the so-called Medicaid mill is the largest amount of it; of the money that`s spent about 40 percent of it goes to institutions like that, about 40 percent to hospitals. The doctor part is less than -- is probably ten percent at most, and I`m sure that the Medicaid mill has developed because many doctors will not take on the job of taking care of Medicaid patients for various reasons: of the dangerous areas in which he may have to live, the inadequate reimbursement; and so many doctors not being into it, some unscrupulous ones will get into it and be in cahoots, maybe, with some entrepreneurs who own the offices. Now, I`m not making any reference to doctors that we`re talking about tonight, because I`ve talked to some of these men and I`m really very impressed that they are running a very legitimate operation and are working very hard. The AMA has offered and urged the HEW in any evidence of malefaction to prosecute; we`ll do everything we can to help them and cooperate.

MacNEIL: Thank you, sir; we`ll come back. Dr. Thomas Travers works with the New York City Health Department as Director of Institutional Ambulatory Care. Part of his job is to audit more than 350 so-called Medicaid mills in New York City. Dr. Travers, will this list do harm to doctors in the Medicaid system?

Dr. THOMAS TRAVERS: I think generically, yes. There is no need, I don`t think, to have that list published. There is no information contained in that list that we do not have available al ready. It`s virtually similar to publishing people who are brought in front of a grand jury; it`s a virtual scare tactic, I`m afraid. Rather than create the kind of monitoring, I`m afraid, the list was published to scare people out of Medicaid in response to the pressures put on the federal, state and local governments to control the Medicaid fraud, which is, to a great extent, rampant in the program.

MacNEIL: What would be the motive of wanting to scare doctors out of Medicaid?

TRAVERS: Perhaps a little bit different than both Dr. Budd and Dr. Nelson - - I don`t think that there is somebody rationally saying that "we will scare them out of Medicaid and hence have a national health insurance." I think it is an unfortunate bureaucratic response, again, to the pressures put on the people responsible for that program. Medicare, I believe...

MacNEIL: In other words, Congress and the press come to HEW and say, "What`s going on in Medicaid?" and they turn out this great gush of information.

TRAVERS: The New York City Health Department has come under the same kind of strains as a result of such reports as the Moss Report, which -- while it has a great deal of problems - expresses generally many of the problems of Medicaid in New York City. We responded in a certain way to that; I don`t think we would have responded in the way that HEW responded. It`s "Why wasn`t the list for Medicare practitioners promulgated and distributed at the same time as Medicaid?

Why not Blue Cross? Why not Blue Shield?

MaCNEIL: And why not amounts less than $100,000?

TRAVERS: Precisely. There`s nothing magic about $100,000; if there`s going to be fraud, it could be fraud of a practitioner earning $5,000. I think it was quite discriminatory, and -- again -- it has no effect but to perhaps scare people who are already frightened by an overladen bureaucracy out of a program that is, for many patients, the only source of health care.

MacNEIL: Is the abuse in Medicaid found among individual doctors who might have been on that list -- not necessarily those doctors, but doctors who practice in it -- overcharging or abusing the thing, or more by institutions?

TRAVERS: The New York City Department of Health -- this is ambulatory care that our division is responsible for...

MacNEIL: People who can walk around.

TRAVERS: Yes. The kind of care you normally receive from a physician in his office, or a dentist, etcetera. In terms of institutions for in-patient care, obviously, as Dr. Budd referred to, the expense under Medicaid is extraordinary to those institutions; and for the most part there has been a limited effort, because of the public fanfare about the Medicaid mills, to look into the institutions. In August of this year we completed and released a preliminary audit -- again, I have to stress that; preliminary audit -- about out-patient departments, and there is quite a bit of abuse. Not necessarily with the same motivation but an abuse; and when you take a ten percent factor and apply it not to $100 million which the shared health facilities receive in New York City, but to $300 million...

MacNEIL: I don`t get the ten percent factor.

TRAVERS: If there was a ten percent abuse in terms of a private practitioner, and if we were to total all private practitioners in New York City together, despite Senator Moss` findings of $300 million worth of fraud we don`t spend $300 million; we spent in 1975 approximately $120 million in shared health facilities. If ten percent of that was fraudulent you`re dealing with $12 million worth of fraud; if ten percent of the out- patient department billings which we`ve identified was irregular -- I won`t say fraudulent -- you`re dealing with $30 million. If you take ten percent of the in-patient, you`re dealing with $70 million. So the differences are entirely appropriate for the in ... and not in terms of public attention. If the public attention that was put on Medicaid mills was put on some of our institutions...

MacNEIL: Meaning our hospitals.

TRAVERS: Exactly -- there would be just as much concern over our ... with different, again, motivations, but just as much concern.

MacNEIL: Thank you. Dr. Alfred Moldovan looks at medical practice from a different view. He`s Chairman of the Medicaid Subcommittee of the New York County Medical Society and its peer review group. The peer review groups were set up so that doctors could monitor their own profession to make sure the highest standards of medical practice were being maintained. Dr. Moldovan, what`s your opinion on why this famous list was published?

Dr. ALFRED MOLDOVAN: I think it`s a classical red herring attack attacking the wrong people at the wrong time for the wrong reason. The Medicaid program -- and I can only speak of New York City -- has been an abysmal failure from the outset from a point of view of the bureaucracy involved and the methodologies. A billion and a half dollars are spent in New York on Medicaid; ten percent of that amount -- $150 million -- is allocated to the so-called "provider" doctor, dentist pharmacist, podiatrist, etcetera. That`s $150 million, of which $75 million, approximately, is the physician. Now, you`re talking about ten percent of a billion and a half dollars; if there`s going to be fraud -- there`s going to be a "rip-off," so-called -- let`s look at, in the words of Willie Sutton, "let`s go where the money is." The money is in the institutions. The difficulties are in the institutions. Now, you asked a very interesting question: why do they pick on the doctors? This seems to be...

MacNEIL: You`re asking that question; I asked why they released the list.

MOLDOVAN: Okay, we`ll put it that way. Why did they release the list? I think they released the list because they wanted to pick on the doctors; because it`s a lot easier than attacking the institutions, who have all kinds of connections and all kinds of other factors going for them. It`s a lot easier to attack a group of unsupported practitioners, whether they are dentists or podiatrists or pharmacists. And I think Dr. Travers pointed out very carefully that if you analyzed and if there was a total fraud involved -- a total fraud involved -- in the Medicaid program, and every dollar given to a Medicaid physician was fraudulently obtained, that would amount to $75 million. You`re dealing with a billion and a half dollars going to institutions; now where does this match, and why the attack in this small area -- this small area of Medicaid?

MacNEIL: You`re in no doubt that it is an attack?

MOLDOVAN: Absolutely.

MacNEIL: That it`s not just bureaucratic accident...

MOLDOVAN: Oh, no.

MacNEIL: ...but it`s by design.

MOLDOVAN: Design is a peculiar term; I don`t believe in the cabal concept of government. I don`t think a group of men get together and say, "Let`s go get the doctors," but I think it`s a lot easier in our society over the last ten, fifteen, twenty years to attack the medical profession; for various and sundry historical reasons the physician, who was sacrosanct before, has now become open prey, and maybe properly so -- and I`m not proposing that these physicians be sacrosanct, but there seems to be some reason why the physician is constantly being attacked.

MacNEIL: And do you think the motive is simply so that they can say to whoever is putting the pressure on them to clean up Medicaid, "Yes, we`re looking into it; here are the names of these physicians," rather than to really attack the physicians. Is that what you think the case is?

MOLDOVAN: I think they`re doing it to becloud the issue -that it`s a lot easier and a lot more newsworthy, and it makes bigger headlines, to mention X number of physicians than to mention a large, prestigious institution, many of which can be mentioned.

MacNEIL: Well, we`ve had a variety of motives suggested here for HEW in preparing and releasing, under whatever circumstances it was released; everything from a plot to lead to socialized medicine in the country to a way of avoiding investigating the hospitals.

Let`s, however, concentrate here on what is actually wrong in the Medicaid system. I think you all agree that the individual doctor is not the main culprit; if he is not, and the abuse is in the hospitals, what needs to be done to eradicate that fraud, Dr. Budd?

BUDD: One point I`d like to make first is, I resent this emphasis on doctor, because the term "doctor" as has been mentioned includes many other providers -- podiatrists, dentists, chiropractors, osteopathic physicians, pharmacists, administrators of programs, etcetera -- and I think that is a wrong thing to do. To be constructive, or what could be done to improve this, I think several things can be done; Medicaid, I think, should be revised in some way. One of the sources of problem is to identify medical care between long-term custodial care, which is a very difficult thing to do, but if that were separated it would be quite helpful. Another thing I think...

MacNEIL: That would remove the nursing homes for the aged from this...

BUDD: For custodial-type care, which is really not a medical problem. It may be necessary, but it not part of medical care and is usually excluded from policies. The other thing which I think would be constructive is to put the administration of this in the hands of voluntary health insurance industry, which I think has done a better job than the government and can do it more cheaply on the basis of experience. Another thing that should be done is to make it illegal to run these Medicaid mills where a doctor will be exploited by a landlord who will give him rent in return for part of the share of his profits. And the fourth thing would be that Medicaid paid promptly and adequately for the services rendered, which would entice more highclass physicians to render that type of service.

MacNEIL: Do you find, Dr. Nelson, delays in Medicaid payment?

NELSON: Yes, there`s roughly a 60-day delay. And also I`d like to mention that Medicaid pay is actually 80 percent of the existing fee in Washington in 1968. 80 percent of `68.

MacNEIL: And how much have your costs gone up since that time? NELSON: Oh, double. In fact, my fees have doubled in that time for my regular patients.

MacNEIL: So Medicaid is paying you four fifths of half of what you would charge today to a regular patient -- 80 percent of half, roughly?

NELSON: That`s about right.

MacNEIL: I see. Dr. Travers, what do you think needs to be done to get at these larger problems of abuse -- fraud is, perhaps, too strong a word -- but the larger problems of misuse? There were stories just this week, following this list of the earnings of these various people, lists released by the New York State Department of Health on the over admission -- unnecessary admission -- of patients under Medicaid in hospital because, it was alleged, the hospitals wanted to earn that money. What do you think needs to be done?

TRAVERS: Well, as far as -- it`s categorical -- as far as the admissions and some of the findings, both in terms of the out-patient departments, our own findings in August, the State Health Department`s recent one this week, that you allude to, and not too long ago the Health and Hospitals Corporation in New York City more or less admitting that they were hospitalizing Medicaid patients for the bed per diem -- the cost -- and therefore unnecessary hospitalization was occurring. Until the program -- until the country has adequate direction toward ambulatory care, keeping the patients out of the hospital, until we have decisive regulations which will control Medicaid mills, New York City, as a microcosm but perhaps one of the worst microcosms of Medicaid in terms of controlling, in terms of the fraud, is a classical example. We have no regulations over shared health facilities; New York City Health Department has closed ten of them this summer.

MacNEIL: Can you spell that out? You have no regulations over "shared health facilities" -- what does that mean?

TRAVERS: There is no legal definition of a shared health facility.

MacNEIL: What is a shared health facility?

TRAVERS: A Medicaid mill. I`m sorry; that is our euphemism, or -- maybe I can reverse it -- a shared health facility is our name and Medicaid mill the media`s euphemism for a group of practitioners that are practicing in a central setting, etcetera, and otherwise known as Medicaid mills. Half of them -- of the 350 -- are probably providing very good care, in our estimation, for cheaper cost than the out-patient departments are providing. In fact, we have ample information now that shows they`re not only providing it cheaper but it is better care than are being provided in our more prestigious institutions. But they go unregulated; there are still groups of private practitioners, despite a number of attempts by the city and state, and including the medical societies, grouping together to get some regulation -- to require them to register. Right now, we virtually have to scour the streets to identify a shared health facility, and therefore register it ourselves. We, the City Health Department, are the only people that consider a shared health facility an institution; and therefore they`re grouped under the division `that I`m the director of. If we were to control them better we could then afford to reduce the hospitalizations to spread the patients from the out-patient departments to the cheaper and often better sources of primary care.

MaCNEIL: Dr. Moldovan, what is your solution to ending this problem, which you also placed in the institutions?

MOLDOVAN: There are a number of things that the federal, state and city governments have to do; first of all, they have to recognize that the original concept of Medicaid was to provide medical care to the needy. In order to do that you have to have a source for medical care; in other words, there has to be somebody to deliver it -- you need a front-line soldier, whether it`s a dentist, a physician or a pharmacist, in the ghetto areas of New York City. In order to attract people there you have to pay them a living wage; you have to pay adequately. Now, the figures that were mentioned by the other doctor from Washington...

MacNEIL: Dr. Nelson.

MOLDOVAN: Dr. Nelson -- is perfectly valid. It`s sheer nonsense to ask a man to deliver a baby today at Medicaid rates, which is about $90. Now, nobody -- and nobody in his right mind - can deliver a baby for $90, when you think that the malpractice insurance for an obstetrician has gone from $500 to $5000, his office rent has doubled, his salaries have doubled and tripled. How it can be expected that any proper practitioner would go into the ghetto to deliver babies for $90.... Take this and multiply it on all levels and you find Gresham`s law as being applied to medicine. The bad doctors are forcing out the good, and the government is primarily responsible because they will not recognize the need for good medicine in the ghetto and the indigent areas.

MacNEIL: Could I quickly go round to each of you as we conclude this, just to ask you, is a national health insurance scheme -- which would bring in, presumably, the elements of Medicare and the elements of Medicaid -- is this the way to sort all this out, or do you think so, Dr. Travers?

TRAVERS: I think, obviously we do need some national policy; it terms of a national health insurance, the coverage, the way it would be handled by fiscal intermediaries, et cetera, that`s debatable and something that can be worked out. But until we have a national health insurance or a national health policy the continued abuses will virtually be part of the program or anything we set up.

MacNEIL: Do you agree with that?

MOLDOVAN: Well, I don`t have an answer; I had an answer 25 years ago, when I was very young and idealistic. I don`t have an answer any more; but I think we need an answer and the only way to find an answer is to look for an answer, and that is to allow all kinds of methodologies to work -- to allow the private practitioner group practice within the ghetto, shared health facilities properly controlled, institutions properly controlled, and then after a proper length of time, analyze this and see which supplies the best.

MacNEIL: Thank you. Dr. Budd, quickly, your view on that.

BUDD: Nobody that needs medical care should go without it because he cant pay for it. There 13 a logical place for government for people who need that kind of help; I have not been impressed with the government`s track record in being economical in most other areas in which they have operated.

MacNEIL: Thank you. Can I have a final word from Dr. Nelson? Do you think that a national plan -- I gather from your talk about socialized medicine you don`t -- do you think a national plan is the solution to this?

NELSON: Yes, I do.

MacNEIL: You do.

NELSON: And I do think that the national plan in which the providers will be primarily physicians will be the cheapest one. I have very little faith in HMO. There`s an HMO in my area, and HEW should be really embarrassed and disgusted with themselves.

MacNEIL: I`m afraid, on that controversial note, we`re going to have to leave that, and it`s a pity that we didn`t have someone from HEW to talk with us this evening. I`ll be back tomorrow evening. Thank you; good night.