Pubdate: Sun, 28 Dec 2003
Source: Lexington Herald-Leader (KY)
Copyright: 2003 Lexington Herald-Leader
Author: Bill Estep


Dealers Use Low-Copay Drug Cards To Tap Supply

Now serving a seven-year term for drug trafficking, Zola Starnes said she 
bought OxyContin from a Medicaid recipient who got them with his drug card 
for a minimal co-pay. She then resold them at a profit.

PIKEVILLE - When Zola Starnes was dealing drugs in Pike County last year, 
she says, she had millions of silent partners helping to ensure her supply: 

Starnes knew a man who was entitled to a state Medicaid card, giving him 
access to the $3.8 billion public-health program that pays for doctor 
visits and prescription drugs for poor and disabled people.

Through Medicaid, the man got 90 20-milligram OxyContin pain pills each 
month for a negligible co-payment, then sold Starnes the pills for $15 
apiece. She then sold them for $25 each.

"That's how it works. It happens a lot," said Starnes, 43, who began 
serving a seven-year prison sentence in July for drug trafficking.

In rural Kentucky, where abuse of prescription pain-killers has swamped 
courts, overrun treatment centers and caused dozens of overdose deaths, 
many police and prosecutors agree that the tax-financed Medicaid program is 
a significant source of drugs that find their way into the black market.

And while Medicaid is contributing to the problem, it-doesn't do much to 
help provide a solution: In Kentucky, unlike 29 other states, the program 
will not pay for drug treatment for most adult addicts who qualify for 

"Government's subsidizing the addiction. They ought to pony up some money 
for the treatment," said Eugene Sisco of ASAP Consulting in Pikeville, 
which provides alcohol and drug counseling.

If Medicaid is stingy with treatment, by law it's more generous in one 
respect: Recipients caught selling drugs typically aren't barred from the 
program even after conviction.

It's impossible to estimate the degree to which the Medicaid program 
underwrites rural Kentucky's prescription-drug trafficking.

Some police say diversion from Medicaid is among the biggest sources of 
street-level drugs they see. Others cite such pipelines as Mexican 
pharmacies or "doctor shopping" -- going to several physicians to get 
duplicate prescriptions -- a practice the Medicaid program forbids.

But it's clear that a good number of the painkillers and other drugs for 
sale on the street got there courtesy of taxpayers:

. When Beattyville Police Detective Matt Easter sent an informant out to 
make an undercover drug buy last fall, the informant asked the suspect why 
he had the generic version of a much-abused painkiller.

Because, the man said on tape, "I've got my medical card to pay for 'em."

. Jamestown police arrested a 67-year-old grandmother in July 2002 after 
she sold an informant one OxyContin and five tablets of Adderall, a drug 
used to treat attention deficit-hyperactivity disorder. The Adderall, which 
can be abused as a stimulant, was prescribed to the woman's grandson and 
provided through a state medical card, Police Chief Joey Hoover said.

In a separate case last August, Jamestown police bought drugs three times 
from a man who receives Medicaid benefits. Police made two of the three 
drug buys the same day the man filled his prescription for painkillers, 
Hoover said.

. In a survey this year by the Appalachia High Intensity Drug Trafficking 
Area, substance-abuse treatment providers in the Appalachian areas of 
Kentucky, West Virginia and Tennessee said their clients were increasingly 
using government-assistance programs to finance drug habits because of a 
rising preference for prescription drugs.

State leans heavily on federal aid

Generally, the 672,000 people served by Medicaid in Kentucky are low-income 
children and their parents or guardians, and elderly, blind or disabled people.

Roughly 177,000 gain automatic access to Medicaid because they have low 
incomes, few assets and are considered disabled under the federal 
Supplemental Security Income program.

SSI, which supplies monthly cash benefits to its enrollees, is well used in 
Kentucky. Statewide, the percentage of people on the program is double the 
national average. In some poor, rural counties it is five times the 
national average or more.

The maximum monthly SSI benefit is $564 for a single person, but a state 
medical card can provide an avenue to make far more.

Some prescriptions that Medicaid recipients get for a co-pay of only a 
dollar can be worth thousands on the street. OxyContin, for instance, is 
worth up to $1.50 per milligram on the street, meaning an 80-milligram pill 
is worth $120.

"If it's something they can supplement their income on, let's face it, the 
temptation's there," said Hoover, the Jamestown police chief.

Court records show many people arrested on charges of selling drugs in 
Eastern and Southern Kentucky receive federal disability payments -- a 
strong indication that they're also Medicaid recipients.

Of 31 people charged in a drug roundup by state police in McCreary County 
last July, for instance, court records listed one-third as disabled. And of 
62 people indicted in October 2002 in Wayne County after an investigation 
by the Lake Cumberland Area Drug Task Force, more than 20 were listed as 

There is no way to tell from public records in many cases whether someone 
listed as disabled receives SSI, or benefits from another source, such as 
private insurance or workers' compensation.

And while police and prosecutors emphasize that many honest, truly needy 
welfare recipients don't abuse state and federal aid programs, the high 
number of people on disability who are charged with dealing drugs causes 

"It's just no question the Medicaid system, which is strapped for funds, is 
financing a large degree of this stuff," said Larry Rogers, commonwealth's 
attorney for Wayne and Russell counties.

Drug costs add to budget shortfall

Kentucky's Medicaid program faces a $500 million shortage next year -- in 
part because prescription drug costs have shot higher over the past several 
years, officials say.

Prescription narcotics make up a small, but steadily growing, part of the 
program's cost. Over the last two fiscal years, Medicaid spending on 
prescription drugs with the most potential to be abused went up from $14.9 
million to $19.7 million, state officials say.

Medicaid spending on some of the most popular painkillers -- including 
OxyContin, Lortab and Vicodin -- went from $1.1 million in 1997 to about $6 
million in 2002, according to a state database of prescription records.

Some police officers and lawmakers think kicking drug dealers who abuse 
Medicaid out of the program would deter the abuse -- and save some money.

"You cut five or 10 people off and put that in the paper, it would cause a 
bigger ripple than arresting 75 people in one county," said Capt. Mike 
Reichenbach, head of the Kentucky State Police drug-enforcement unit that 
covers the eastern half of Kentucky.

Ten years ago, after a legislative study aired concerns about pill dealing, 
state Rep. Jack Coleman, D-Burgin, successfully pushed legislation intended 
to give Medicaid officials authority to cut off benefits for people caught 
abusing the program.

"That's what we wanted to have done," he said. "They absolutely need to be 
cut off the program."

But the knife never came down. State officials say federal law bars them 
from ending benefits for recipients based on criminal convictions in state 
court. Only the U.S. Department of Health and Human Services, the agency 
that oversees state Medicaid programs, can kick people out of the program 
- -- and then for only a limited set of federal violations and a limited 
time, officials have said.

The rules for Medicaid and SSI bar paying benefits to people while they are 
in prison -- but in Kentucky courts, drug dealers are often sentenced to 
probation, meaning they wouldn't lose their benefits.

And even when recipients go to jail, by law they can resume benefits when 
they get out if they still meet Medicaid and SSI eligibility criteria on 
income and disability.

Similarly, a drug conviction would not be grounds for terminating a 
person's SSI benefits, said Jason Cornett, spokesman for the Social 
Security Administration in Kentucky.

However, the program includes tight limits on other sources of income, 
which recipients are supposed to report. If the Social Security 
Administration found out a person had made money from any other source, 
including drugs, administrators could reduce or suspend checks for a time.

SSI lacking in enforcement

The Kentucky Medicaid program refers suspected fraud to other agencies for 
possible criminal investigation and uses several methods to try to control 
abuse, including a "lock-in" program that restricts recipients to using 
only one doctor or pharmacy.

Officials plan to have a new online system ready soon that will allow 
doctors and pharmacists to look at recipients' claims history, and have 
revised a state regulation to try to make it easier to recoup money from 
recipients in cases of fraud or overpayment.

Reichenbach's office began making extra efforts earlier this year to give 
Social Security investigators information about potential abuses by SSI 
recipients, providing a list each month of arrests by state police 
narcotics detectives covering the eastern half of the state, with the 
amount of drugs purchased and how much police paid for them.

Spokesmen for Social Security and its Inspector General's Office would not 
comment on whether those referrals led to any criminal charges, new 
investigations, suspensions or attempts to recoup money.

A Social Security spokesman told the Herald-Leader last year that efforts 
by the agency's two investigators helped federal prosecutors win fraud 
convictions against seven people in the eastern half of Kentucky from 2000 
to 2002.

Law officers note that even though fraud in Medicaid and SSI is significant 
in the aggregate, the amount of money involved in any individual case 
probably wouldn't be much. That means the cases take a back seat to 
attempts to police health care providers.

Still, a greater emphasis on pursuing abuses by SSI and Medicaid by 
recipients would pay off by reducing waste and fraud, some police and 
prosecutors think.

"A couple of investigators would pay for themselves in a week," said 
Rogers, the prosecutor for Wayne and Russell counties.

Nationwide, the Social Security Administration hasn't done as much as it 
should to try to root out fraud in SSI and recoup overpayments, the General 
Accounting Office said last year. The report did not deal specifically with 
recipients selling drugs.

GAO, the investigative arm of Congress, designated SSI as a high-risk 
program in 1997, saying the program was vulnerable to overpayments.

In a 2002 update, GAO said Social Security had improved its oversight, but 
still had some problems, including underused penalties for SSI recipients 
who violated rules.

In one 20-month period, the GAO said, Social Security field offices 
referred 3,000 cases of suspected fraud to the agency's investigators. But 
investigators sent most of the cases back, saying among other things that 
they involved too little money to prosecute.

The administrators who got the cases back had imposed sanctions, such as 
reducing or suspending benefits, in only 21 cases as of January 2002, the 
GAO report said.
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MAP posted-by: Keith Brilhart