MEDICARE FRAUD: Texas Investigation Targets Rx Kickbacks

      Saturday's Dallas Morning News featured a report on mail-order Medicare prescription drug fraud, taking a close look at pharmacies that reportedly have been offering inducements for Medicare business -- a practice that is illegal. "Industry lawyers say North Texas' U.S. attorney, Paul Coggins, is investigating a nationwide set of firms that specialize in mail-order drug sales to senior citizens," the Dallas Morning News reported. While Texas investigators will not name the firms under scrutiny, some officials "say more than two dozen companies may be affected," and some "reportedly may be asked to pay $20 million or more to settle potential lawsuits by Mr. Coggins' office." While industry lawyers say the recent "investigation alone has already halted the kickbacks," some pharmacies continue to deny the charges of illegal activity, claiming their Medicare business was obtained "under legitimate marketing and sales contracts." But Coggins called such contracts "shams designed to cover up the kickback payments." He further said, "The buying and selling of Medicare patients puts businesses that play by the rules at a disadvantage and drives up the costs of health care for everyone." Linda Little, Dallas regional inspector general for the U.S. Department of Health and Human Services, said, "It's really a cause for concern that someone in the industry would complain that they can't do business without breaking the law."

Window Of Opportunity
      Medicare kickbacks, some argue, are symptomatic of loopholes within the government's Medicare drug-pricing laws. Medicare patients are a tremendously lucrative source of business for pharmacies: "Medicare pays two to nine times what doctors and pharmacies do for the few medicines it covers." These artificially high prices "cost taxpayers an estimated $667 million annually, according to the Medicare agency's office of inspector general." Further, the high reimbursement rates may prompt providers to overprescribe certain drugs, leading to potential "deadly overtreatment of Medicare's 38 million beneficiaries." The Clinton administration last year attempted to close the loophole, but efforts were bogged down in Congress "after what Republicans and Democrats alike described as a major lobbying effort by firms and doctors that benefit from Medicare's generosity." Peter Winn, coordinator of the North Texas U.S. Attorney's office, expressed concern "that kickbacks may soon reappear in the guise of temporary employment contracts or other business deals." To date, the Dallas Morning News reports, federal investigators are processing all charges through civil court proceedings. Federal investigators said, however, that criminal charges are not out of the question in Dallas or elsewhere (Rodrigue, 2/28).