Saturday, March 21, 2009

Just Another Scam

California Attorney General Jerry Brown has found another reason health care costs are skyrocketing: private medical labs which charge for tests on a rather interesting sliding scale. From the Los Angeles Times.

California is seeking to recover hundreds of millions of dollars -- possibly approaching $1billion -- from private medical laboratories accused of bilking the state Medi-Cal program by drastically overcharging for various tests, Atty. Gen. Jerry Brown said Friday.

Under a scheme involving what Brown called "massive Medi-Cal fraud and kickbacks," seven companies, including five based in Los Angeles County, charged the state up six times more than they charged some other customers for such services as urine analysis and blood count tests. ...

A state investigation showed that for the last 15 years, the companies' laboratories provided deep discounts when they were being paid directly by doctors, patients or hospitals, Brown said.

Prices were often lower than the labs' cost, and some tests were free. In exchange for the discount, the companies expected customers to refer all of their other patients, including those with private insurance, Medicare and Medi-Cal, Brown said. Under California law, this constitutes an illegal kickback," he said.

Medi-Cal, the state's program for providing health care to the poor, was being billed $8.59 to perform a complete blood count. Some of the other customers were only paying $1.43. I suspect Medicare was billed at the same rate as Medi-Cal, and private insurers somewhere in the middle of the range. While the article unfortunately doesn't mention what it actually costs a lab to run a CBC, it's hard to imagine it costing much more than $2. If the issue is actually litigated, we're obviously going to get that information.

Critics of the Attorney General (and former governor) will no doubt accuse Mr. Brown of grandstanding as he prepares for another run for the governorship. They may be right, but, so? Health care costs are an exceptional burden, whether that burden is borne by individual citizens or by government programs. Going after those who gouge is one way to start easing that burden.

While he's at it, I hope Attorney General Moonbeam also focuses some attention on some of the other crooks, like the shady durable medical equipment providers and out-patient surgical centers who operate like the private labs currently under investigation. That's the only way we're going to get health care costs under control.

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