Medicare Fraud and DaVita Drug Waste – Is this an Ethical Problem?

In 2013, the total government Medicare outlay for patient care was about $492 billion. By the end of this year, we will be at around $524 billion. It is no small financial matter. We often wonder where all of these costs come from. The following story, involving DaVita Healthcare Partners, Inc. (the company with the dialysis centers) might give us a little indication of the origins of the costs and waste.

DaVitaIn an article for Reuters by Jonathan Stempel (May 4, 2015) entitled: “DaVita to pay $450 mln in Medicare fraud lawsuit over wasted drugs,” we get a glimpse into the unethical craziness that has become our healthcare system. Granted, a $450 million lawsuit is small potatoes compared to $492 billion, but it’s a decent start.

For those of you looking for an indictment of “Obamacare” in this ethical scandal, I am afraid you won’t find it here; it is more an indictment of the underlying attitudes that make getting our hands around the healthcare system so hugely difficult.

How does a company get slammed to the tune of a $450 million?  Is DaVita guilty of Medicare Fraud? According to the article:

“The lawsuit alleged that DaVita…used larger-than-necessary medicine vials or unnecessarily spread medicine dosages across multiple treatments, knowing that Medicare would pay for what it considered ‘unavoidable’ waste.

Although we believe strongly in the merits of our case, we decided it was in our stakeholders’ best interests to resolve it,” DaVita Chief Legal Officer Kim Rivera said in a statement. ‘The potential mandatory penalties for being found in the wrong in even a small percentage of instances were simply too large.’”

OK, uh-huh.

The case was blown open by two whistleblowers from the State of Georgia; a physician and a nurse, who tracked the waste starting from 2007.

In case the “waste” doesn’t make enough sense, picture yourself as the French fry cook at a fancy-schmansy French caterer. There is a huge dinner party that night for a very wealthy client.

There is a dish that calls for a tablespoon of expensive wine to be added to every gallon of soup, and other dishes where cheap wine would do just as well. The expensive wine comes in one liter bottles and five liter bottles. The customer is very wealthy and the catering company is looking to make big bucks on the deal. You notice the head chef working away with his snobby assistants and instead of taking the tablespoon of expensive wine from the one liter bottle, they are opening the five liter bottles.

Instead of using the cheap wine for the other dishes, they are needlessly opening up other five liter bottles of expensive wine and splashing the stuff all around. When they’re done, they pour what remains of the wine (which is most of it), right down the drain.

My apologies

I need to make apologies to French chefs everywhere and to the medical profession. I do not work at either craft. However, I do note bad ethics when I see it.

The DaVita Clinic in question was intentionally wasting medication and billing Medicare because they were saying that the waste was unavoidable.

They were using much more medication that was needed, they were using it unnecessarily and then discarding the excess. The medicine came in smaller vials than they were using; they went for the jumbo sizes.

From the quote issued by the company, my conjecture is that it was far more than just a few vials. My conjecture as well – and this is only in my opinion, of course – was that this practice may have involved more than one clinic. A $450 million lawsuit is significant.

The ethical considerations of this scandal are intriguing. At the top of this ethical pyramid is “Arrogance.” There was the arrogance that Medicare (that is you and me paying taxes), would pay for it.

There was “Greed.” Why bill for a small vial, when you can bill for a larger one.

There was “Complicity.” I don’t know how the organization works, but were there no people involved in patient care, purchasing, accounting or management who might have asked why so many large vials were being purchased? Or were they all aware of the scandal?

Then there is the question of good medicine that nags at me. Are there other decisions that are flawed? If any organization (not just this one) decides to cheat and cut corners in one area, are they not pre-disposed to other questionable actions?

DaVita’s biggest problem with this lawsuit is not so much a lack of character and good decision making, but a lack of ethics.

If I were part of upper management, my first step after shelling out the $450 million would be to put every DaVita employee through ethics training.

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