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Why Health Care Costs Are Out of Control 04-06-05 Print E-mail
Written by David Batstone   

Due to the controversy swirling around Medicaid, I am surprised that one story I broke open in Saving the Corporate Soul never received national attention. I'm still waiting for 60 Minutes to call me about Zachary Bentley.

Zachary Bentley says he's no Ralph Nader. The business manager and corporate officer of a drug infusion service, Ven-A-Care, based in Key West, Florida, is shaking up the pharmaceutical industry all the same.

It's true; Zachary never planned to lead a crusade for corporate reform. In 1990 he simply was sitting at his desk wading through paperwork when he noticed something amiss with a Medicare payment. He received a $56 reimbursement for a pharmaceutical that had cost his company only ten dollars. In theory, 80 percent of the drug was to be paid for by Medicare and 20 percent by the beneficiary. Zachary did some quick math and figured that the beneficiary's co-payment alone surpassed the actual cost of the drug. Convinced that the Florida Medicare carrier had erred, he tore up the check and asked the agency to re-process the reimbursement.

Days later, the carrier got back to him and informed him that there was no mistake. Puzzled, Zachary searched for answers. What he found shocked him. More than a few doctors and clinics are billing Medicare based on "wholesale" prices that pharmaceutical companies give the government program. The pharmaceutical companies then sell the drugs to the health care providers at a much lower cost. The providers reap exorbitant profits and, because the windfall operates like a government-funded kickback, pharmaceutical companies also come out big winners.

Zachary reported his discovery to federal and state agencies, yet was troubled by their muted response. He knew intimately the impact of sky rocketing drug costs on people suffering from debilitating illness. At the time, Ven-A-Care primarily delivered intravenous drug care to clients in their homes as an alternative to visiting a hospital. Most of its business was AIDS-related, and Ven-A-Care gained local acclaim for extending treatment to patients even after their health insurance ran out.

In an ironic twist of fate, the kickback program would threaten the survival of Ven-A-Care a year later. It all started when National Medical Care, a leading kidney-dialysis chain then owned by W.R. Grace & Co., invited Ven-A-Care to join in a new business venture in 1991. The proposal included doctors who were in a position to prescribe expensive infusion drugs to AIDS patients. "They promised us that we would become wealthy if we shared drug revenues with the physicians because they would order large amounts of drugs that cost far less than the prices reported to Medicare," recalls Zachary. The scheme already had paid off handsomely for National Medical Care in the kidney dialysis business, he alleges, and they saw an opportunity to expand the model to AIDS treatment.

When Zachary and his partners declined to join the venture, National Medical Care went to Plan B. The corporation enticed several Key West physicians who up to that point in time had referred their clients almost exclusively to Ven-A-Care to order drugs directly through its system. In several cases, National Medical Care employees went into the doctors' offices and took over their billing practice. Ven-A-Care's business took a serious hit; the owners cut salaries and took out loans to keep the company afloat.

Convinced that it could not operate with integrity in its drug infusion practice, Ven-A-Care turned into a full-time whistleblower. "We were fed up, and decided to shine the light of day on these shady practices," says Zachary. His company has since been party to several lawsuits against major drug companies.

Rising healthcare costs in the United States have stabilized in the last few years with one exception, the price of prescription drugs. But Zachary clarifies that he is not fighting the escalating cost of drugs itself. He has a much more modest goal to demand drug companies to practice transparency in pricing. Once fair representation is achieved government and health insurance groups can make informed decisions about what they can afford to pay for.

Comments
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Germa`n Alvarado - HR Consultant
2005-04-06 16:00:00
You article point out the very sad state corporate America is in these days. Ethics and integrity have neen sacraficed on behalf of profit margins and shareholder return! Numerous coporations fall into this arena. Gov't is equally pathetic in how it provides governance! Standing up has a price and yet it must be paid if things are to change. Unfortuanetly this is not the only arena for which an accounting is demanded. See the Bank & Crddit Card Industry and consumers . . . one sector after another. "It's only money isn't it?"Who else will stand up?
Thank you for your column!
MARY CARLL - Retired Retail Clerk
2005-04-06 17:10:53
I couldn't believe what I was reading on this article. I am President of Retail Clerks Retiree's Club and know what we as retiree's are going through trying to afford our prescription drugs. Rising health care costs are a concern for everyone and retiree's on limited incomes suffer greatly. The government is just as responsible as the big corporations and they should ahng there heads in shame. What's one to do???
You have a wonderful column and I enjoy reading it. Very informative. Keep up the good work and God Bless.
Fran Post - retired
2005-04-06 18:16:31
So who is surprised, the system is corrupt, the rich get richer. As usual, it's the low income, poorly educated folks who have to deal with the consequences & suffer with the results. Thanks for keeping us informed.
Paul - American socialism
2005-04-07 06:57:22
MediAid has become the default medical care for many. The AMA is the world's best trade union - their gain is our loss.
dan briceland md - HC costs out of control
2005-04-10 19:36:51
I applaud the efforts of Mr. Bentley as I am sure all of organized medicine would. These drugs ( oncology & HIV in particular ) administered in a physician's office are included in Medicare part B pool of funds to reimburse all physicians for services. Therefore any abuses effectively reduce the payments to all providers as the Part B pool is diluted. The AMA would never "gain" from this as eluded in an earlier comment. Thank you for your article.
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