Friday, August 19, 2005


Subject: $500,000 Per Hour
Date: 8/19/2005 5:44:51 PM Eastern Daylight Time
Sent from the Internet (Details)


By Henry J. Stern
August 19, 2005

Medicaid is not the most fascinating topic on the public agenda. But it is one of the most important, because of the enormous sums spent on providing medical care, not only for the poor but for parts of the middle class. The most outrageous aspect of the program is the prevalence of fraud and waste, which is estimated at about 10 per cent of the $44.5 billion spent each year in New York State for Medicaid. But even if fraud and gross waste were eliminated, we would still be spending $40 billion a year on what has become a very large item in the budget of the state, the city, and the 57 counties outside the city. There are other issues related to those costs and the way they are allocated between levels of government.

From July 18 to 21, we ran four columns, (available on our website at Nos. 235-238), commenting on the situation and linking to newspaper exposes of Medicaid fraud. Since then, the subject appears to have vanished from public view. We promised that we would keep up with it, and if no progress had been made, we would report that to you. We ran a fifth article on July 29, "Medicaid Fraud Exposed Last Week, But Is Anyone Doing Anything About It?"

Three weeks have passed, and what has transpired is some inter-party skirmishing on the issue of obtaining federal funds for New York State's Medicaid program. New York State spends more on Medicaid than any other state in the union, including California, which has almost twice as many residents as we do..

According to the governor's office, the state budget "will relieve counties and local taxpayers from the crushing burden of escalating Medicaid costs by capping county and New York City spending levels while providing a long-term strategy for a full State takeover of local Medicaid costs."

On August 9, in a speech in Glens Falls, Senator Schumer said "Gov. George Pataki deserves some credit for job growth upstate, but New York still must take action to help ease the local property tax burden. ...The Senator said the cost of the federal health program for the poor, Medicaid, is straining local budgets and driving up property taxes for businesses and homeowners. In New York, the federal government pays for half the cost of the program, while the state and counties split the other half. Some smaller counties devote half their tax levies to paying Medicaid bills.

"The state enacted a cap on the local share of Medicaid in this year's budget that will be phased in through 2008. But that doesn't go far enough,' Schumer said.

"'It prevented the water from going over your nostrils, but it didn't bring it down to waist level,' he said, urging New York to take over most or all of the local costs."

On August 18, Senator Bruno responded. We quote from his press release, which is headlined: SENATOR BRUNO CALLS ON SCHUMER & CLINTON TO SECURE MORE FEDERAL MEDICAID DOLLARS FOR NEW YORK.

Bruno asked the two senators "to secure a larger share of federal Medicaid dollars for New York State to ease the burden on county governments and local taxpayers and to support the State Senate's efforts to reform Medicaid and fight Medicaid fraud.

"'The 50 percent federal Medicaid share New York receives is lower than 37 other states and more than 10 per cent below the national average,' Senator Bruno said at a Capitol news conferences. 'If our United States Senators could even get New York up to 60 percent national average, we would receive almost $5 billion more aid that could be used to provide local property tax relief.'

"Senator Bruno responded to comments made by Senator Schumer at a forum on Glens Falls last week, where Schumer criticized State government for allegedly not doing enough to reduce the local share of Medicaid expenses."

Bruno's statement was picked up by one local paper, Newsday, on pA26. Under the apt title, MEDICAID WAR OF WORDS, Errol A. Cockfield, Jr. reported from Albany: "Yesterday, Bruno, a Republican from upstate Brunswick, sent Schumer and Clinton a letter detailing methods Gov. George Pataki and the Republican-led State Senate have proposed and implemented in recent months to ease costs and police fraud.

"'I get very frustrated and exasperated when people wander around in a cavalier way saying the Legislature ought to do something,' Bruno said."

Both Democratic senators issued a joint statement, an unusual event for two capable public servants whose ambitions and desires occasionally differ.

'Joe Bruno is knocking at the wrong door, as he knows we have been fighting for more funding for Medicaid while President Bush and the Republican-controlled Congress seek to cut Medicaid funding for New York,' their statement said."

So much for progress in the dog days of August. What has happened since the July expose is that Kimberly O'Connor has been named Medicaid Inspector General, but she is still in the process of transitioning from her old office in the State Division of Criminal Justice. When we called today, she was not in, but we were told she would be back Monday.

In May, the Senate passed reform measures to deal with Medicaid fraud, sponsored by Sen. Dean Skelos of Rockville Centre. The bills were not even introduced in the Assembly. A one-house bill is dead as a doornail. On Aug. 2, Skelos proposed that local district attorneys should receive information about Medicaid fraud, be authorized to sue providers, and keep for their counties a portion of the proceeds of the lawsuits. That idea is highly unlikely to get traction.

In mid-July, we estimated that the loss in New York State due to Medicaid fraud, estimated at 10 per cent on a $4,5 billion budget, averaged over $12,300,000 a day. We wondered how long the drainage would continue. More than five weeks have passed since the scandal broke, which means that about an additional $430 million has been stolen or wasted.

The speed with which public funds are being dissipated contrasts sharply with the apparent midsummer languor of public agencies charged with responsibility in this area. Where is the zeal we see exhibited with regard to other areas where wrongful acts are committed?

As far as we know, there have been no other public announcements on the subject by any of the agencies concerned. (If there have been, let us know and we will report them.) Nor have we seen any press inquiries following up on the mid-July revelations. It is possible that new approaches are being prepared, to be put linto effect after Labor Day. We await such an eventuality, we will maintain our vigil, and let you know if and when we see movement.

We are reminded of a story from Chelm, a small Jewish town in eastern Europe. It is about the man who was hired to sit on the wall at the edge of town to await the coming of the Messiah, and when that great day came, the man would sound the alarm to warn the townspeople, so they would not be caught doing anything inappropriate when the Messiah arrived.

The applicant for the position needed the job, but he complained to the town elder that the salary that was being offered was very low.

The elder replied, "It is true that the pay is low, but the work is steady."

Enjoy the weekend.

Henry J. Stern
New York Civic
520 Eighth Avenue
22nd Floor
New York, NY 10018
(212) 564-4441
(212) 564-5588 (fax)

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