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A High-Priced Hookup
The convenience of home infusion is a godsend. But abuses abound
By Mary Lord
Rather than miss his first day of college three years ago, John Delmonte Jr., a cancer patient from Methuen, Mass., arranged to have his final round of chemotherapy administered at home by a private provider. The $6,540 tab--more than 10 times what Boston's Beth Israel Hospital had charged for each previous infusion--enraged the family. "I can understand an extra $500 or $1,000, because they had to come to my house," fumes Delmonte's father, John, who withheld the insurance check to the firm for a year hoping to prompt an investigation. "We're talking about a rip-off."
Price gouging is just one of the nasty surprises in the burgeoning and virtually unregulated field of intravenous drug and nutrition services known as home-infusion therapy. Without careful monitoring, patients can develop adverse reactions to the drugs; as in a hospital, catheter sites can become infected. Nor is home infusion free of fraud: Federal investigators have unearthed dozens of schemes involving kickbacks by home-infusion companies to physicians for referrals, as well as false Medicare claims. At least six criminal grand-jury investigations are underway.
Few dispute the medical merits of home infusion. Propelled by the advent of small, programmable pumps in the 1980s, outpatient IV therapy has grown from a cottage industry providing "tube" feeding for people with digestive disorders to a $4 billion-a-year business serving half a million patients with ailments as diverse as AIDS and Lyme disease. Providers range from local pharmacies to international chains like Northbrook, Ill.-based Caremark International that provide 24-hour nursing services and patient billing assistance. All told, more than 20 different treatments, from pain control for cancer patients to infusions that thwart premature labor, are now available in-home--often at substantial savings over hospital or even out-patient care. Health reform promises to further fuel the industry's expansion as patients get discharged "quicker and sicker."
Home sooner. The growth of infusion therapy is hardly surprising. Properly administered, it offers substantial lifestyle advantages. Antibiotic therapy has enabled people with heart infections to go home in a few days rather than languish, essentially healthy, for two weeks in a hospital. For scleroderma patients like Kathryn Posey, 48, a former legal secretary from Reston, Va., whose intestines no longer can absorb food, home infusion allows her to resume such daily routines as fixing breakfast for her teenage son. Beyond that, it allows her to live. "It's this or starvation," she says, pointing to a plastic bag of milky nutritional formula and the catheter that slowly drips it directly into her chest. Indeed, at one point Posey, a petite 5 foot 3, was down to 75 pounds. Thrice-weekly infusions from a backpack-size device--and weekly blood monitoring by a Caremark nurse--now keep her above 100 pounds. In addition, Posey has learned to infuse herself with antibiotics for painful finger infections as well as inject herself twice a day with drugs to reduce bloating. "I was really intimidated at first," she says. "But if this is what I have to do to live, I'd rather live."
The price, however, is very high. As Health and Human Services Principal Deputy Inspector General Michael Mangano puts it: "The technology opened the door and then the bucks followed. This is a wonderfully well-paid service." Indeed, insurers like BlueCross BlueShield of the National Capital Area, based in Washington, D.C., have seen home-care and infusion charges double annually; today's $50 million represents some 3.3 percent of total claims--propelled in part by drug markups as high as 2,000 percent.
Patients, too, have been hit by sticker shock--particularly people with AIDS, who find home infusion a boon for administering the drugs needed to treat infections that plague people with impaired immune systems. While working in Seattle, musicologist Mike Seyfrit's bill for 45 days of medication to ward off blindness and infections came to $47,000--some 27 percent higher than the average cost of a whole year's dose and easily three times more than he paid at home in Oregon. His insurer shelled out $14,000 and now is dickering with the infusion service for Seyfrit. In a 1991 investigation, New York City's consumer affairs department found "Pentagon-style" markups as high as 1,200 percent; one home-care company charged $9.84 for sterile water that cost $2 at a pharmacy. "There are a lot of AIDS profiteers out there," says Henry Chang, director of research and development at Shared Medical Research Foundation, an AIDS clinical-trial group in Los Angeles. "I call it a major opportunistic infection," he grimly jokes. Indeed, AIDS treatments account for a quarter or more of the revenues at some infusion firms.
Equally lucrative, though medically far more controversial, are long-term antibiotic infusions for Lyme disease. Some doctors have put patients on IV therapy for three or four years in an effort to combat the debilitating joint pain, paralyzing headaches and lethargy associated with chronic Lyme, with home-infusion companies eager to accommodate. Trouble is, few Lyme experts believe that more than a month or two of infusions helps. And the potential complications can be significant. A dozen New Jersey youngsters with Lyme disease lost their gallbladders after lengthy infusions of Rocephin, an antibiotic commonly prescribed in 1990 and 1991. Physicians detected the problem and switched medications, and all recovered. However, such complications and cost concerns prompted the American College of Rheumatology to issue guidelines last fall limiting all antibiotic infusions for Lyme disease--a recommendation many insurers have adopted.
Caught in the crossfire are Lyme sufferers like the Galambos family of Piscataway, N.J., who discovered only belatedly that their coverage for home-IV benefits was limited and who are now suing their insurer for curtailing payments. Jim, a postal worker, has had numerous infusions over the years to combat pain and memory lapses so severe he has difficulty sorting mail. Daughter Dawn, 14, consulted several experts in 1991 and 1992 for complaints from a swollen knee to debilitating headaches only to be told she was depressed. Hospitalized last year for seizures, the once athletic teenager, by then on crutches and getting tutored at home, was finally diagnosed with Lyme disease and put on nine months of antibiotic infusions. "You've got to come up with something," says her pediatrician Dorothy Pietrucha of the Jersey Shore Medical Center in Neptune, N.J. "I take care of a lot of Lyme patients, and they are back to school and functioning. I call that a success."
Dawn returned to class, but specialist visits and infusion bills as high as $5,000 a week quickly depleted the Galamboses' savings account and credit card limits. Now, the family is going to court over $12,000 owed to infusion companies that insurance refused to cover. If it does not win, Dawn cannot resume treatment her physician says she still needs. "People with tuberculosis or acne get medication for years, and nobody asks any questions," complains mother Bonnie. "With Lyme disease, the red flag goes up."
The controversy hasn't hindered marketers of home-IV services. Physicians note with concern the spread of toll-free numbers that purport to be Lyme disease information hotlines but actually are fronts for infusion firms, some of which sponsor Lyme disease support groups. Federal investigators say some companies have paid physicians for referrals, often disguising the kickbacks as consulting fees, stock options or research grants. In New Jersey, the state board of medical examiners has temporarily suspended physician Vithaldis Shah's license for allegedly reckless treatment of 22 patients indiscriminately diagnosed with Lyme disease, then put on long-term IV antibiotics and narcotics. Two died. Moreover, Shah had referred them to infusion companies that reportedly paid him $150 a week per patient--which would violate the state's laws against self-referral.
In fact, physician self-referral is one of the major problems in the home infusion business. As early as 1989, a government study revealed that physicians who owned diagnostic labs ordered up to 45 percent more tests than those who did not. That helped spur federal legislation forbidding doctors from steering Medicare and Medicaid patients to an infusion service or other health care company in which they have a financial stake. Some 24 states also regulate ownership interests. Still, there's ample wriggle room.
While outright scams involving infusion are uncommon, Medicare abuses are mounting. Medicare spending on home infusion soared to over $369 million in 1992--up 45 percent in just two years. A recent Health and Human Services inspector general's probe for the Health Care Financing Administration found the government was paying "unreasonably high" and probably illegal "administration" fees of up to $180 a week--almost a quarter of the total tab for kidney dialysis patients to receive IV nutritional supplements that had no real benefit. Another investigation, conducted by the HHS inspector general's office in conjunction with the Federal Bureau of Investigation, uncovered a group of scammers who signed up elderly Hispanic nursing-home residents in Florida for "free milk"--then billed Medicare $14 million in milklike nutritional supplements, pumps and IV tubing.
Home-infusion providers blame such trickery on rapid growth compounded by lack of regulations or even billing standards. "This industry is still defining itself," says Alan Parver, president of the National Alliance for Infusion Therapy, a trade group in Washington, D.C. "It's not simply a truck pulling up to someone's house and throwing supplies on the doorstep."
Yet that is how most insurers and regulators traditionally have treated the industry. While most states have some kind of licensing requirements for pharmacies that prepare drugs and nutritional products for home infusion, only a handful, including California, Maryland and Washington--certify or license home-infusion agencies. Medicare, which accounts for 10 percent of all claims for nutritional-therapy infusion, does not have an explicit home-infusion benefit or legal definition of a provider. Instead, the government reimburses for the cost of equipment like pumps and tubing, drugs administered and nursing costs. Payments can vary widely from carrier to carrier.
Self-policing. Stung by bad publicity and increasingly pressed by insurers, many home-infusion companies have decided to police themselves. More than 1,300 providers have signed on with the Joint Commission on Accreditation of Healthcare Organizations, an industry group based in Oakbrook Terrace, Ill., that sets voluntary standards for equipment, staffing qualifications and safety procedures. At the same time, increased competition--some cities have dozens of infusion providers--is beginning to force down prices.
Insurers, for their part, are looking harder at home infusion bills and negotiating discounts. "We used to just pay whatever came in, figuring it was cheaper than the hospital," explains Mary Clark, director of national ancillary contracting for Metropolitan Life. Now the insurer is cutting deals with several national providers--all of whom must meet stiff quality guidelines--and saving an estimated one third of its former billings. Case managers assigned to each patient ensure that treatments are appropriate as well as cost effective. At Blue Cross and Blue Shield of Massachusetts, which recently won court approval to pursue similar group discounts of 50 percent, savings could top $10 million a year--or at least a quarter of overall costs. BlueCross BlueShield of the National Capital Area has set up a network of infusion companies willing to accept reimbursement up to 60 percent off their list price.
The federal government has begun cracking down as well. The Department of Health and Human Services, which levies a $2,000 fine for false Medicare claims, has hired six more investigators in addition to working more closely with FBI agents--a measure that will have a ripple effect in the infusion industry. To further ferret out fraud, a federal program now rewards tipsters with 30 percent of anything the government recoups in a lawsuit. Congress has approved legislation that would bar physician self-referrals for Medicare and Medicaid patients, and Ohio Rep. Sherrod Brown introduced a bill in March to regulate infusion-company safety standards and fees. Under the Clinton administration's health care plan, home-infusion services would be covered, but patients would be re-evaluated after 60 days.
Tougher laws. States, too, are shoring up regulation. Maryland began licensing home-infusion firms this January. New Jersey, which has long evaluated home health services for Medicare as well as carried out annual inspections, hopes to put together a statewide database of providers that one day might serve as a consumer report card.
Wide loopholes remain. Legislators rejected a proposal by California's Rep. Pete Stark to extend the protection of the federal ban on physician self referral to all payers, for instance. Even in the few states that license infusion companies, most of the regulations are so new that inspection often remains minimal. Frequently, investigators only hear about a scam when some disgruntled insider rats--usually long after consumers have been burned. "Physicians are testing the limits--even the good ones--and until it's written into law, they will continue to test," concludes Cathaleen Ahern, a home infusion analyst in the inspector general's office at HHS.
Ultimately, the same market forces that helped spark home infusion's dramatic growth may end up curbing its abuses. Stung by allegations of Medicare irregularities and several shareholder lawsuits, one of the nation's largest infusion chains, T2 Medical Inc. of Alpharetta, Ga., saw its stock prices plummet from around $60 in 1992 to less than $7 last year. At the same time, fiercer competition among infusion companies to cut deals with insurers has pared profits. Caremark, for instance, the nation's largest home-infusion provider, has seen profit margins shaved to under 10 percent, prompting the firm to diversify into the outpatient physical-therapy and discount-drug businesses. Home infusion now accounts for only a quarter of Caremark's revenues, compared with 100 percent less than a decade ago.
Economics may be no substitute for regulation or vigilance, of course. But it may allow more consumers to reap the medical benefits of home-infusion technology without jeopardizing their fiscal health in the process. For a week of nutritional and antibiotic therapy $1,660 For 1 session of chemotherapy $6,540 For 1 month of antibiotic therapy $12,500