Fraud, waste and absurd charges a drag on Medicare

Medicare has a zombie problem.

An investigation by the U.S. Department of Health and Human Services found that the federal insurance program paid nearly $300,000 to cover HIV drugs for about 160 people. However, all those people were dead when their prescriptions were filled in 2012.

HIV drugs accounted at the time for only one-quarter of 1% of Medicare Part D drug coverage, investigators found. But the payments “have implications for all drugs,” they said, because Medicare processes most prescriptions the same way.

The report, released last week, was a reminder that Medicare’s struggles with fraud, waste and abuse remain a drain on the more than $580-billion insurance program.

It also brought to mind a conversation I had the other day with Earl Albert of Temple City, who related a story about how Medicare paid thousands of dollars for a Salisbury steak.

In light of the zombie drug report, Albert’s tale underlines the mismanagement, and possibly incompetence, that adds to Medicare’s long-term funding woes.

Albert, 69, said his wife, Charlotte, 77, broke her hip several years ago. She was treated at San Gabriel Valley Medical Center.

“We were very happy with the hospital,” Albert said. “They treated her very well.”

Months later, though, his wife’s doctor was concerned that she had developed a blood clot. So the couple hurried back to the medical center. An ultrasound confirmed the doctor’s diagnosis, and Charlotte was admitted to a hospital room.

As Albert tells it, his wife’s doctor arrived and explained that she’d have to undergo surgery to remove the clot. She wanted none of it.

“She refused,” Albert recalled. “She said she wanted to go home.”

While this drama was playing out, Charlotte was served a Salisbury steak for lunch. After the meal, a nurse came by and drew blood for a routine test.

Then she was discharged. Albert reckons they were in the hospital room no more than three hours.

The bill arrived a few months afterward. It was for $8,562.

To which the only possible response has to be: That’s some Salisbury steak.

“Well,” Albert said, chuckling, “we see it as $4,000 for the steak and $4,000 for the blood test.”

Obviously, it’s more than that. An ultrasound was performed, and that can run a few hundred bucks. There were undoubtedly charges related to being admitted to the hospital.

But considering that Albert’s wife left within three hours, $8,562 seems a little pricey.

The hospital bill, which Albert shared with me, didn’t itemize any of the charges. It just thanked Charlotte for allowing the facility “to meet your healthcare needs.”

A spokeswoman for San Gabriel Valley Medical Center declined to comment.

Albert said that he contacted the hospital after the bill arrived, worked his way up the administrative food chain and was told that the charges were legit.

Medicare apparently thought the same. The insurance program didn’t bat an eye about covering $4,700.26 of the $8,562 bill.

San Gabriel Valley Medical Center subsequently said it would be satisfied if it received an additional $1,132 from Charlotte. But getting money out of a woman who’s willing to walk away from needed surgery is easier said than done.

Albert said his wife refused on principle to pay a cent to the hospital. Even when it unleashed debt collectors a few months later, she held her ground. Eventually, the calls and letters from collectors stopped coming.

Still, Albert said he remained displeased that Medicare would so willingly accede to what he called an act of fraud.

“They paid $4,700 for a steak and a blood test,” he said. “No wonder they’re having money troubles.”

The Medicare Hospital Insurance trust fund, which finances about half the federal program, is projected to be fully depleted by 2030 unless Medicare is restructured.

Albert said he contacted Medicare to ask why the program’s overseers would approve a $4,700 claim for a steak and a blood test. “I didn’t get anywhere,” he said. “They didn’t seem to care at all.”

Having exhausted all other remedies, Albert finally got in touch with me — not because he believed I could do anything but just to grouse.

That’s why I sat up when I saw last week’s zombie drug report. No one should be surprised that any insurance program that pays thousands of dollars for a Salisbury steak also would pay the prescription-drug costs of dead people.

“Drugs for deceased beneficiaries are clearly not medically indicated,” the report said. It was unclear what happened to the dispensed drugs or whether taxpayers were reimbursed for the average $1,850 for each dead person covered.

In response to the report, the Centers for Medicare & Medicaid Services said it would tighten its claims-processing procedure to make it more difficult for dead people to fill prescriptions.

Medicare and Medicaid shelled out more than $62 billion in “improper payments” last year, according to the Government Accountability Office. These are payments that should not have been made or were for an incorrect amount. Losses to fraud are estimated to run an additional $60 billion a year.

Medicare’s inspector general manages to secure refunds in some cases. But tens of billions of dollars are still lost annually to fraud and waste, according to officials.

David Sayen, Medicare’s California regional administrator, declined to comment on Albert’s experience, saying only that the insurance program “is committed to paying claims in an accurate and timely manner while avoiding improper payments to the best of our ability.”

Sayen encouraged Medicare’s roughly 54 million beneficiaries to call (800) MEDICARE if they suspect a payment or claim was unwarranted.

That’s a start. It probably also wouldn’t hurt for there to be a few more pairs of bureaucratic eyes scanning claims and questioning the merit of all charges submitted.

At the very least, Medicare needs someone capable of pointing out that a Salisbury steak is really just meatloaf with sauce.

And no self-respecting insurance program should pay more than $1,000 for meatloaf.

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.