Medicare, Big Pharma & Hospital Fraud: Rampant

Many of us are aware of the TIME magazine investigation about hospitals charging us $12 for those little paper pill cups. Those little cups add up to millions of dollars a year; but those little red and blue pills that Big Pharma pushes on us add up to billions. And many times the taxpayers are illegally billed for those little cups and pills. But because of budget cuts, the Inspector General may no longer investigate these abuses and fraud. It seems the healthcare industry, just like the banks, will be left to police themselves -- so expect profits soar. Unless of course, the GOP shuts down the government.

Health and Human Services Inspector General Daniel Levinson said the public should be "outraged" to hear that government warnings to avoid using the anti-psychotic drugs on people in nursing homes with dementia often went unheeded. He went on to accuse manufacturers of putting profits before safety by aggressively marketing these drugs for just such uses.

An audit in 2011 found that almost 305,000 of over 2 million elderly persons who lived in nursing homes in the first six months of 2007 had a prescription for at least one atypical anti-psychotic drug.

The OIG report said that 88 percent of these prescriptions were written "off-label," meaning the drugs were being used for purposes that had not been approved by the Food and Drug Administration. In some cases, pills were prescribed despite warnings from the FDA that using them for treating dementia patients could be dangerous. In all, unapproved uses and improperly documented claims for these drugs cost Medicare $116 million in one six-month period, the report found.

Eli Lilly & Co. had once urged doctors to prescribe one such drug (Zyprexa) for elderly patients with dementia, an unapproved use for the anti-psychotic, even though the drug maker had evidence the medicine didn't work for such patients. As a matter of fact, the drug could even be deadly. Four years after Lilly sent study results to the U.S. Food and Drug Administration (showing that Zyprexa didn't alleviate dementia symptoms in older patients) it began marketing the drug to those very people, according to documents unsealed in insurer suits against the company for overpayment.

In the past Lilly had pleaded guilty to a federal misdemeanor charge of illegally marketing Zyprexa for off-label uses to elderly consumers. The company admitted illegal promotions from September 1999 through March 2001, while denying such practices beyond that date. But because corporations enjoy "limited liability", no particular individuals within the company are ever personally held accountable, and the incorporated company (with "personhood") is usually let off with a small fine in proportion to the profits they make off of such practices. A cost-to-risk analysis is calculated beforehand, so therefore, paying a fine for marketing unsafe products is just part of the cost of doing business (just as when the banks are fined for their fraud in home mortgages, when no banker was ever actually prosecuted).

Haldol is another such drug used on nursing home residents and a study last year says Haldol is even more deadly than other anti-psychotics. Everyday we are inundated with ads where the list of side effects clearly will make someone suffer, if not outright kill them. Marketing new drugs, or trying to sell bad drugs for new purposes, to the elderly in nursing homes for profit is nothing new, but appears endemic to the U.S.

Russian dissidents in the USSR were once tortured with Haldol, but in the U.S. it is routinely used to control people in nursing homes. In Gitmo these drugs were also used on detainees, as well as by ICE on undocumented immigrants during deportation. Lawsuits were filed on behalf of 356 deportees who had been sedated with Haldol from 2002-2008. The side effects of this drug are literally torturous, and will make someone want to "rip off their skin". And we give these drugs to our elderly, because in America we have corporations who profit from pain --- because after all, "no pain, no gain".

Yet the Inspector General's investigative unit recently cited major budget and staffing cuts for scrapping new audits to identify these type of abuses on our elderly in nursing homes. (Big Pharma wins while old people lose big time.)

Also, in related medical fraud news: hospitals grab at least $1 billion in extra fees for emergency room visits, suggesting facilities have taken advantage of government's failure to set billing standards. The growth of electronic medical records has helped ease the path to inflate medical bills as billing software helps medical professionals document higher fees.

According to the Center for Public Integrity, U.S. Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder fired off a stern letter to five prominent medical groups threatening criminal prosecution for applying the technology to bill for more complex and costly services than merited --- a practice is known as "upcoding."

Doctors and hospitals have collected billions in questionable Medicare fees. One investigation suggests costs from upcoding and other abuses is massive fraud. Thousands of doctors and other medical professionals have steadily billed higher rates for treating elderly patients on Medicare over the last decade --- adding $11 billion or more to their fees and signaling a possible rise in medical billing abuse. (The GOP wants to cut Medicare insurance for elderly patients, rather than investigate the corporate fraud.)

CNN and Time magazine investigated hospital billing and found a family that was charged hundreds of thousands of dollars. Hospitals are charging us $12 for those little paper pill cups and paying their hospital CEO's over $9 million a year. People who are fully insured, or those on Medicare, have their medical costs negotiated, and even though there is fraud in billing to the government, at least those patients aren't being bilked to death, at least, not like those who are either under-insured or can not afford any health insurance at all.

We now spend 20 percent of our GDP --- an estimated $2.8 trillion --- on health care every year. And we know the real reasons why, don't we? Corporate greed.

In the United States a neurosurgeon must complete four years of college, four years of medical school, a one year internship, and at least five years of a neuro-surgery residency. According to the U.S. Bureau of Labor Statistics, the top neurosurgeons made an annual median salary of $225,390 in 2010. But the CEO of a hospital or pharmaceutical company only needs a business degree and a willingness to steal at the risk of seriously harming or killing people.

Among the highest-paid "public employees" in California was at the Palomar Pomerado Hospital. Chief Executive Michael Covert's pay totaled $1.04 million in 2009. The hospital's chief executive, Nancy Farber, was the second-highest-paid official and was paid about $874,000. The healthcare publication Payers & Providers reported that the average compensation for "private hospital" chief executives averaged $732,000 a year, and far surpassed the annual salary of $225,390 that a top neurosurgeon might earn.

But even the "average" of $732,000 a year for a hospital's CEO is a paltry sum when compared to what many others earn in the healthcare industry. Here are but a few examples of excessive annual CEO salaries in the healthcare industry, and another reason why the cost of healthcare might be so high:

• John Hammergren of McKesson Pharmaceuticals - $131.2 million
• George Paz at Express Scripts Healthcare - $51.5 million
• Stephen Hemsley at UnitedHealth Group - $48.8 million
• John C. Martin of Gilead Sciences (Biotech) - $42.7 million
• David Pyott at Allergan Pharmaceuticals - $33.8 million
• Gregory Lucier of Life Technologies (Biotech) - $33.8 million

And when they earn stock options as part of their pay, these CEOs also pay a lower tax rate that many other American workers will pay on their ordinary salaries --- such as neurosurgeons, who might pay the top tax rate while the CEOs might pay a lesser rate than Warren Buffett's secretary. In other words, we are paying people less who save lives than the people who are willing to risk lives.

Our healthcare system, from the top down, seems more driven by "profits" and "pay" than about "health" or "care". It seems that healthcare itself is more of a by-product of patented medicines, medical devices made in China, CEO compensation packages and Medicare fraud.

Average working Americans are paying for this corporate fraud. As the decades have gone by, Americans have been spending more and more on health care, largely through their health insurance premiums, to the point that many families cannot afford the kinds of health insurance plans in which middle- and upper-income families take part.

Working Americans are paying for corporate fraud in the way of jobs as well. In looking at the totality of the Affordable Care Act, the most important component of the act is what it will do to the costs of medical care. For the last 25 years (according to a study from the National Federation of Independent Business), small businesses have ranked the cost of health insurance as the most critical problem they face. The link between health costs and employment is increasingly clear. A study shows that industries that provided health care to more of their workers in 1986 had significantly lower employment growth between 1987 and 2005.

Could bribery and political corruption be behind Medicare and hospital billing fraud? The top 2 U.S. counties in which doctors billed the highest percentage of the two most expensive Medicare codes for established patients in 2008 were in Republican Florida Governor Rick Scott's state of Florida.

Governor Rick Scott (who was once accused of Medicare fraud) recently suspended Miami Lakes Mayor Michael Pizzi and Sweetwater Mayor Manuel Marono from office after they were both arrested by the FBI on public corruption charges for taking bribes (Both mayors are Republican, but the reason for the pending charges are as yet unclear). U.S. Attorney Wifredo A. Ferrer said, "Our democracy suffers in these cases when elected officials use their power and political influence for personal gain instead of the public good."

As "Mister" Rick Scott, he ran a company that paid a record fine for committing Medicare fraud. But as Republican "Governor" Rick Scott, he cut millions from health care benefits for Florida's poor. Now Florida's chief economist has warned the staff of Governor Rick Scott that his Medicaid cost estimates are all wrong, but Rick Scott keeps using them anyway. (PolitiFact has investigated claims against both Rick Scott and Mitt Romney about Medicare fraud during their business careers.)

More and more we're discovering that healthcare costs have been more driven by greed (and many times fraud) than anything else, plain and simple. Richard Scrushy was once the superstar CEO of HealthSouth, a huge provider of outpatient rehab services until federal prosecutors accused him of masterminding a $2.7 billion fraud.

In the U.S. about $70 billion is lost to heathcare fraud every year. And these people who cheated Medicare, most likely also cheated on their income tax return too (tax evasion costs us another $337 billion every year.)

Thousands of medical professionals have steadily billed Medicare for more complex and costly healthcare over the past decade --- adding $11 billion or more to their fees --- despite little evidence that elderly patients required more treatment. While Mitt Romney was a director of the Damon Corporation, the company was defrauding Medicare out of millions, and yet Romney's and Paul Ryan's plan would have ended Medicare for the elderly as we know it.

To his rare credit, Mitt Romney has dismissed the GOP strategy of shutting down the government in their efforts to de-fund Obamacare. Bain Capital greatly profits from government contracts. Senators Marco Rubio of Florida (Rick Scott's state), Ted Cruz of Texas (George W. Bush's state) and Mike Lee of Utah (home state of Romney's church) are urging Republicans to swear off voting for any year-end spending bill that includes money for the president's healthcare law. Parts of the federal government would shut down on October 1st if Congress doesn't approve a short-term funding bill before then.

Mitt Romney also opposes Obamacare because of the 3.8% surtax on his capital gains to fund Obama's healthcare plan. Romney earns, on average, about $20 million a year from capital gains on his "deferred interest". But because most Americans don't have the same access to good affordable healthcare as people like Romney do, that might also be another reason why the rich live longer than the poor.

The ultra-wealthy don't want to help fund Obamacare because they'll never need Obamacare --- they've been installing full-fledged emergency rooms right inside their homes, each complete with an array of medical gear that mirrors what the White House has available for the President. They even have them installed on their yachts and private jets. Some hospitals are specifically competing for wealthy clients by offering them perks like butlers, fancy beds, beautiful views, and fine food. But if you're poor with a tooth ache, you might need an old rusty pair of pliers and a bottle of cheap whiskey. And if you're elderly in a U.S. nursing home, you might prefer euthanasia. But the hospitals and nursing homes will keep grandpa and grandma alive for as long as possible, because they are more profitable alive, even if they may be living as vegetables.

A few other examples of healthcare fraud (too numerous to list here)

• CEO Earnest Gibson III of Riverside General Hospital, along with his son and five others, were arrested by the FBI as part a national Medicare fraud sweep involving $430 million in bogus billings and 91 healthcare providers in seven states.
• Kent Thiry, who's paid $15 million a year as CEO of DaVita Inc., defrauded the government by over-billing Medicare and Medicaid "hundreds of millions, easily!"
• Marcus Jenkins, the owner of several Detroit-area businesses that housed severely mentally-disabled Medicare recipients pleaded guilty for his role in a $13.2 million fraud scheme.
• Texas psychiatrist, Anthony Francis Valdez, wrongly billed over $42 million in medical procedures.
• Abshir Ahmed, operator of a home healthcare agency in northeast Minneapolis was charged with filing bogus Medicaid billings totaling more than $400,000.

In other medical related news: Colorado, California and Washington, including 16 other states, enjoy freedom under state law to operate legal medical marijuana-cannabis businesses. But with billions of dollars in the bank, the pharmaceutical companies pay millions for anti-marijuana lobbying efforts to sway Congress not to legalize marijuana under federal law --- even though the pharmaceutical industry is now marketing an FDA approved cannabis medicine to undercut the growing market dominated by the states.