August 29th, 2008 3:10 pm

Texas still leads nation in rate of uninsured residents

By Jason Roberson / Dallas Morning News

Texas once again led the nation with the highest percentage of residents without health insurance, a U.S. Census Bureau report showed Tuesday, although the same study also reports a slight dip last year in the percentage without coverage across the nation.

Almost one of every four Texas residents – 24.8 percent – were uninsured in 2006 and 2007, based on an average of the rates for those two years. That's up from 23.9 percent for 2004 and 2005.

The national number also increased a bit for the two-year period to 15.5 percent. However, looking at 2007 by itself, the percentage of uninsured in the country fell from 15.8 percent in 2006 to 15.3 percent in 2007. (State percentages were given only for two-year periods.)

California still has the highest number – not percentage – of uninsured residents at 6.7 million, compared with 5.7 million Texans. The Texas number is up from 5.5 million in 2006.

McCain adviser

But the numbers are misleading, said John Goodman, president of the National Center for Policy Analysis, a right-leaning Dallas-based think tank. Mr. Goodman, who helped craft Sen. John McCain's health care policy, said anyone with access to an emergency room effectively has insurance, albeit the government acts as the payer of last resort. (Hospital emergency rooms by law cannot turn away a patient in need of immediate care.)

"So I have a solution. And it will cost not one thin dime," Mr. Goodman said. "The next president of the United States should sign an executive order requiring the Census Bureau to cease and desist from describing any American – even illegal aliens – as uninsured. Instead, the bureau should categorize people according to the likely source of payment should they need care.

"So, there you have it. Voila! Problem solved."

Mr. Goodman's analysis drew a sharp response from the Center for Public Policy Priorities, an Austin-based think tank focusing on poverty issues. "That is not the same thing as having health insurance," said Eva Deluna, a budget analyst for the center. People without insurance are less likely to seek care, and when they do, the cost to the health system is greater, she said.

Fight on statistics

According to Mr. Goodman, only people who are denied care are truly uninsured – everyone who gets care is effectively insured by some mechanism. "So instead of producing worthless statistics that people fling around in vacuous editorials and pointless debates, the Census Bureau should produce meaningful numbers, identifying all of the sources of funds people will draw on if they need medical care," he said.

Ms. Deluna argued that the situation actually is worse now than the Census Bureau reported. The just-released data does not reflect the recent economic downturn, she said.

It makes no sense, she continued, for Texas to have the nation's highest percentage of uninsured residents, while having one of the nation's strongest economies for job growth.

In luring jobs to Texas, state and local officials have simply focused on the number of jobs, rather than on quality jobs offering health insurance, Ms Deluna said.

"People are working harder than ever, but the jobs they have don't provide health insurance," she said.

The number of Texans receiving health insurance through their jobs dropped to 11.9 million last year, from 12.1 million the year before, according to the Census Bureau.

Nationally, the overall number without insurance fell to 45.7 million last year, from 47 million in 2006.

The decline came as more Americans shifted to government Medicaid and Medicare coverage, said Ron Pollack, executive director of Families USA, a nonprofit health care advocacy group in Washington D.C.

An estimated 1.3 million additional people signing up for Medicaid and 1 million more signing up for Medicare were the main drivers of the lower uninsured rate, he said. "Ironically, this all happened while the president was trying to cut back on Medicaid," Mr. Pollack said.

Household incomes

In other findings, the report said:

• The nation's official poverty rate in 2007 was 12.5 percent, unchanged from 2006. However, the number of Americans living in poverty grew to 37.3 million in 2007, up from 36.5 million in 2006.

• Real median income, adjusted for inflation, rose for both black and non-Hispanic white households between 2006 and 2007, representing the first real increase in annual household income for each group since 1999.

• Among racial groups, black households had the lowest median income in 2007 at $33,916. That compares with a median of $54,920 for non-Hispanic white households. Asian households had the highest median income, $66,103. The median income for Hispanic households was $38,679.

August 8th, 2008 2:11 pm

Drug prices up 100% - or higher

Spikes bring legal, political scrutiny

By Julie Appleby / USA Today

Drug companies are quietly pushing through price hikes of 100% — or even more than 1,000% — for a very small but growing number of prescription drugs, helping to drive up costs for insurers, patients and government programs.

The number of brand-name drugs with increases of 100% or more could double this year from four years ago, researchers from the University of Minnesota say. Many of the drugs are older products that treat fairly rare, but often serious or even life-threatening, conditions.

Among the examples: Questcor Pharmaceuticals last August raised the wholesale price on Acthar, which treats spasms in babies, from about $1,650 a vial to more than $23,000. Ovation raised the cost of Cosmegen, which treats a type of tumor, from $16.79 to $593.75 in January 2006.

The average wholesale price of 26 brand-name drugs jumped 100% or more in a single cost adjustment last year, up from 15 in 2004, the university study found. In the first half of this year, 17 drugs made the list.

"This does drive up the price of health care," says Alan Goldbloom, president of Children's Hospitals and Clinics of Minnesota. "Hospitals are either eating the cost or passing it along to insurers, so you and I are paying it in increased premiums."

Some of the drugs are administered in hospitals, which bill insurers, patients or government programs for them. Insured patients pay either a flat dollar amount, such as $20, or a percentage of the drug's cost.

Last year, prices rose about 7.4% on average for 1,344 brand-name drugs, according to Express Scripts, which manages drug benefits for large employers and insurers.

Reasons for the larger increases are varied, researchers say.

"There's no simple explanation," says Stephen Schondelmeyer, director of the PRIME Institute at the University of Minnesota, which studies drug industry economics. "Some companies seem to figure no one is watching so they can get away with it."

The price increases are drawing legal and political scrutiny:

•In a decision awaiting approval by the 9th U.S. Circuit Court of Appeals, drugmaker Abbott agreed last week to pay up to $27.5 million to settle a lawsuit over a 400% price increase on its HIV/AIDS drug Norvir. Settlement did not lower the price.

•Sen. Amy Klobuchar, D-Minn., and Sen. Charles Schumer, D-N.Y., asked the Government Accountability Office last week to investigate large price hikes. Klobuchar asked the Federal Trade Commission in April to investigate Ovation Pharmaceuticals, which raised prices on four drugs in 2006 by up to 3,436%.

Drug companies say the price hikes cover the costs of keeping the drugs on the market. They say the drugs are often less costly than alternative treatments, such as surgery or newer, high-tech medicines.

Questcor says on its website that it had to raise Acthar's price after struggling for years to "keep (it) financially viable."

Ovation says it needed to cover its 2005 purchase of the drugs and facility upgrades. "We feel we made an important investment in keeping these older products alive," says spokeswoman Sally Benjamin Young.

August 8th, 2008 2:08 pm

3 Southern California hospitals accused of using homeless for fraud

Facilities in Los Angeles and Tustin allegedly churned thousands of indigents through their sites and billed Medicare and Medi-Cal for costly and unjustified medical procedures.

By Cara Mia DiMassa, Richard Winton and Rich Connell / Los Angeles Times

On a Sunday afternoon two years ago, five homeless people being dropped off on Los Angeles' skid row by an ambulance caught the attention of police officers.

The officers videotaped what they thought was a case of hospitals dumping patients in a section of the city where few would notice or care.

But as investigators began to unravel the incident, they say they found something far different: a massive scheme to defraud taxpayer-funded healthcare programs of millions of dollars by recruiting homeless patients for unnecessary medical services.

The elaborate enterprise churned thousands of indigents through hospitals over the last four years and billed Medicare and Medi-Cal for costly and unjustified medical procedures, federal, state and local investigators said Wednesday.

Those involved in the alleged conspiracy "ranged from street-level operatives to the chief executive of a hospital," U.S. Atty. Thomas P. O'Brien said.

After raids on three hospitals in Los Angeles and Orange counties Wednesday, one hospital chief executive faces criminal charges and executives at two other facilities were accused of fraudulent business practices in a related civil lawsuit filed by Los Angeles City Atty. Rocky Delgadillo.

Some of the homeless patients involved received tests or treatments that were potentially harmful, authorities said.

The "depravity" of the alleged scheme startled authorities, said Salvador Hernandez, assistant director in charge of the FBI's Los Angeles office.

"The defendants are accused of preying on the homeless and exploiting their desperate conditions for personal gain," he said.

Arrested on federal charges were Dr. Rudra Sabaratnam, an owner and chief executive of City of Angels Medical Center, and Estill Mitts, an alleged patient recruiter who operated a storefront facility called the Assessment Center in the heart of skid row. A 21-count grand jury indictment accuses the pair of healthcare fraud and receiving illegal kickbacks.

Mitts, who was released Wednesday afternoon on $25,000 bail and confined to his home, is also charged with money laundering and income tax evasion. His attorney declined to comment. Late Wednesday, Sabaratnam's attorney, John Vandevelde, argued at a court hearing that the charges against his client were "not that significant." But the doctor was being held in custody until another hearing today.

In addition to City of Angels, agents earlier Wednesday swarmed Los Angeles Metropolitan Medical Center and Tustin Hospital and Medical Center in Orange County. Pacific Health Corp., which owns both hospitals, said in a statement that it had cooperated with authorities and believed it would be cleared of any illegal conduct.

Officials said the investigation was continuing and additional defendants were expected to be charged. The total amount of the fraud was still being tallied, but prosecutors said Mitts' operation could have cost the government $11 million in improper payments and that City of Angels collected $5 million in federal healthcare reimbursements. City of Angels did not respond to requests for comment.

Delgadillo sued the three hospitals, their operators and several others. The hospitals used unfair business practices to fill empty beds in a bid to boost their finances, the suit claims.

The privately owned medical centers allegedly worked with patient recruiting operations on skid row that plucked homeless people from the streets and delivered them, with fake medical diagnoses, to the hospitals.

According to court filings, "runners" or "stringers" on skid row looked for homeless recruits. Prospects were offered small sums of money, typically $20 or $30, to be paid upon completion of a hospital stay of one to three days. The street recruiter typically received $40 for each homeless recruit with Medicare eligibility and $20 for each recruit with Medi-Cal benefits, according to the city attorney's lawsuit.

Some solicitations were direct, but others were coded, according to the city attorney's lawsuit. One alleged street pitch referred to the color scheme of the Medi-Cal eligibility card: "Red, white and blue, just make it do what it do, for me and you."

A person familiar with the workings of the alleged scheme told The Times last year that employees at the Assessment Center would recruit people on skid row to reach out to potential patients, who may or may not have needed medical treatment. The source, who spoke on the condition that he not be named, said some patients were reimbursed for their time with money, food or a pack of cigarettes -- what was called an "incentive."

In other instances, the source said, patients walked into the center on their own.

Recruiters "were looking for someone who was sick or immobile," the source said. "Someone who was in need of money, who was down and out, sleeping on the street, with nowhere to go."

The source said it didn't matter whether the patients were currently using drugs or not, or whether they had underlying psychiatric issues.

Delgadillo said patients received treatment for conditions including dehydration, a yeast infection and a cardiopulmonary disorder that "didn't exist." One patient, referred to in the city attorney's lawsuit as "Recruit X," suffered from a mental disorder and was sent by the Assessment Center to all three of the medical centers.

At one of the hospitals, the lawsuit says, the patient was given a nitroglycerin patch for a nonexistent cardiopulmonary condition, causing a precipitous drop in her blood pressure. The treatment, said Delgadillo "put her in peril."

Wednesday's crackdown sends a message that "those who would seek to defraud our healthcare system, and those who would callously exploit mentally impaired and drug-addicted homeless men and women to turn a profit will be prosecuted to the fullest extent of the law," Delgadillo said.

In addition to Mitts and Sabaratnam, the city attorney's civil lawsuit names Pacific Health Corp.; Los Angeles Doctors Hospital Corp., which operates Los Angeles Metropolitan Medical Center, corporation Chief Executive John Fenton and admitting physician Frederick Rundall; and Tustin Hospital and Medical Center, Chief Executive Daniel Davis, Chief Financial Officer Vincent Rubio and admitting physicians Kenneth Thaler and Al-Reza Tajik. Also named are Intercare Health Systems Inc., which owns and operates City of Angels Medical Center, and Robert Borseau, who, like Sabaratnam, was an owner/officer.

Most of the defendants could not immediately be reached for comment.

The Tustin hospital was allegedly guaranteed 40 to 50 patients a month; City of Angels got 25 to 30. Metropolitan Medical Center received patients whenever beds were available, according to the suit. City attorneys allege that the admitting Drs. Rundall, Thaler and Tajik did not see the patients until shortly before their discharge. City attorneys allege that for patient referrals, Mitts' group was paid $20,000 per month each from Metropolitan Medical Center and Tustin, while City of Angels paid between $400 to $1,000 a week to the recruiting group.

The suit also alleges that Rubio, the Tustin hospital's chief financial officer, personally received a $3,500-a-month kickback from Mitts' group to ensure that Tustin continued to take homeless patients from the skid row center.