Where Does the Money Go? - From New York State Medicaid, Nearly Everywhere

The New York Times just published the results of a massive investigative reporting effort documenting amazing levels of Medicaid mis-spending in the state, amounting to billions of dollars.
New York's state Medicaid program, started in 1966 under Governor Nelson Rockefeller, has become the most expensive in the US, spending $44.5 billion annually. Yet the Times reported that it is "so lightly policed that it is easily exploited." The retired chief state investigator of Medicaid fraud estimated that 10% of that amount goes to fraud, and another 20-30% to abusive, if not frankly illegal spending.
Examples the Times noted spanned a large spectrum. They did include a Russian-trained physician who prescribed $11.5 million worth of the drug Serostim in one year, much of which may have been diverted to the black market for body-builders. However, some of the less usual suspects included:

• A dentist who once billed for 991 procedures in a single day, and who, with an associate, billed Medicaid for more than $5 million a year. After the Times told the Medicaid Fraud Control Unit about this case, the two dentists were indicted for grand larceny.
• Ambulette services that often billed for more than 100 rides a year for a single individual, or billed for rides for fully mobile patients. Very few of these services have even been audited by Medicaid.
• Multiple public school systems which can bill Medicaid for services such as speech therapy for their students. Medicaid paid $1.2 billion to public schools for speech therapy over eight years. The Times reported how school officials literally rubber-stamped documents stating that thousands of students needed such therapy, without evaluating more than a fraction of them. 86% of claims from New York City schools were unsupported by any explanation of the need for services. However, the US Justice Department suspended its inquiry into this matter after complaints from politicians like Senator Charles Schumer (Democrat - New York).
• Executives and owners of nursing homes. Nursing homes in NY get more than two-thirds of their revenue from Medicaid. 70 nursing home executives made more than $500,000 in 2002, and 25 made more than $1 million. New York nursing homes have at times been known for their poor care, according to the Times, and have lower than average staffing levels.

This story is a telling illustration of how health care dollars can be siphoned off in multiple directions. Health care practitioners, unfortunately, must share a good chunk of the responsibility, but a variety of other people and organizations clearly account for a major part of the problem. What is most striking is how this particular government "single payer" system seemed so oblivious to where its money was going.