MEDICAID-PAID DRUG TREATMENT: VIDEO GAMES

Millions Are Spent On Children Under 10 Who Say They Weren't Substance
Abusers

Nine-year-old Ivory Brown and several other children at a northeast Houston
apartment complex believed their after-school program was a dream-come-true.

The children played pool and video games supplied by program officials, or
enjoyed snacks such as hot dogs, Popsicles, cake and cookies at the club
room. Sometimes they took field trips to the zoo or Children's Museum --
places they might not have visited otherwise.

They were little concerned, if they even knew, that their activities were
funded by tax money under the state-federal Medicaid program, designed to
provide medical care for the poor.

They ostensibly were being treated for drug addiction, and received some
drug counseling, even though many told program officials that they'd never
touched drugs. And now they have a medical record of chemical dependency
that could haunt them if they attempt to enlist in the military or obtain
private health insurance.

The children are among hundreds throughout Texas who participated in
similar Medicaid-funded programs -- despite regulations that prohibit
Medicaid payment for drug treatment of children under 10.

Medicaid began covering chemical dependency treatment in 1990, and last
fiscal year paid more than $7.2 million in claims, state records show.
During 1998, 4,645 Texas adolescents and children received Medicaid-funded
chemical dependency treatment.

The prohibition against Medicaid drug treatment for children under 10 has
been in effect at least since 1995.

Lifeway, the program that treated Ivory and many other Houston-area
children, received more than $2 million in 1997 and $341,226 in 1998 for
chemical dependency treatment of children and adolescents, records show.

In the three-year period of 1995-97, Lifeway received nearly $1 million
just for treatment of children under 10, according to Medicaid records
released by the state Health and Human Services Commission.

Officials of that agency, which oversees Medicaid programs, and the
National Heritage Insurance Corp., which processes Medicaid claims under
state contract, said they did not know how many youngsters under 10 have
received Medicaid-funded chemical dependency treatment.

The Chronicle requested the information several weeks ago under Texas open
records laws. Officials said then that providing a breakdown of Medicaid
drug treatment clients by age would require a costly, customized computer run.

But last week, the state agency announced that it would ask the contractor
to conduct a computer-assisted audit to identify chemical dependency
patients younger than 10, and suspend payments for their treatment.

The agency released a tally showing that during the 1995-97 period,
payments for patients under 10 totaled more than $1.5 million, which would
account for hundreds of children. Figures for 1998 and 1999 were not available.

In addition to Lifeway, at least 20 other providers statewide received
Medicaid payments for treatment of children under 10, according to the tally.

Various officials pointed out that the regulations are confusing and
sometimes contradictory, but NHIC conceded that there's no authority for
Medicaid funding of outpatient chemical dependency treatment of children
under 10 years of age.

Virginia Brooks, a spokeswoman for NHIC's parent company, said NHIC will
notify providers that as the state's claims contractor it no longer will
pay for such services.

"We will assess how many children under 10 were treated and whether those
payments should be reimbursed back to the Medicaid program," said Aurora
LeBrun, head of Medicaid fraud investigations for the Health and Human
Services Commission. "If Medicaid-paid money is in error then we will
recover it, even if it is an honest mistake."

Ivory Brown's mother now fears she and many other parents were misled by
Lifeway program officials, though medical records supplied by Lifeway show
she did sign a consent form admitting her son into treatment.

"The program people came door-to-door with fliers saying they would provide
a whole lot of fun activities for the neighborhood kids," said Erma Brown,
34, of the Sterlingshire Apartments.

"They got our Medicaid numbers and I recall filling out some paperwork, but
they never said they were treating my children for substance abuse or
chemical dependency."

The program did include at least some group and individual discussion of
drugs, the patients and their parents said, but the children spent most of
their time playing.

Lifeway abruptly ended its program at Sterlingshire last year, at least
partly because of confusing regulations, said Lifeway executive director
John Cates.

"We've been shut down for a year," he said. "This system is too crazy and
the program is unwieldy. It has ruined me."

Medicaid paid Lifeway between $1,600 and $3,322 for Ivory Brown's chemical
dependency treatment, according to partial Medicaid billing and payment
records obtained by the Chronicle with his mother's permission.

In addition to that treatment, records show that Medicaid was billed and
paid for mental health counseling for Ivory Brown and several other
children in the after-school program.

The records show that a drug counselor diagnosed the boy as having "CD
issues" -- apparently a reference to chemical dependency -- despite his
assertion that he didn't take drugs.

Several other children similarly diagnosed and treated said they told
program counselors that they never had even sampled drugs or alcohol.

Stephanie Goodman, a spokeswoman for the Texas Commission on Alcohol and
Drug Abuse, said chemical dependency occurs among young children, but is rare.

"TCADA staffers who worked in the business for decades say that in their
entire careers they can only name one or two young children who they could
say were chemically dependent," she said.

Cates said his program treated dozens of Houston-area children, some as
young as 6, for drug abuse or addiction. He said that his recovery program
provided necessary evaluations, counseling and treatment to many children
after their parents signed them into the program.

"We would have young people talk about being exposed to alcohol and other
mind-changing chemicals at a very early age," said Cates.

Goodman said state rules are quite clear that children under 10 years of
age are ineligible to receive Medicaid-funded chemical dependency treatment.

Cates said he initially thought he was permitted to provide Medicaid-funded
drug treatment to children age 6 through 10. When he found this was
incorrect, he began referring the children for mental health counseling,
which is covered.

Texas Medicaid requires that chemical dependency treatment providers be
licensed by TCADA, and that agency's rules generally limit chemical
dependency treatment to persons at least 13 years old, with exceptions in
special cases for children as young as 10.

"The rule is in place not to prohibit children from receiving care, but to
make sure they get the proper care," Goodman said. "And we do not believe
putting young children in an outpatient adolescent chemical dependency
treatment program may be the correct care."

TCADA licenses 296 facilities to conduct outpatient treatment of chemically
dependent adolescents, including 73 facilities that treat adolescents
exclusively.

TCADA funds drug treatment independent of Medicaid. And in contrast to
Medicaid, which paid for hundreds of children under 10, no one under 10 was
among 6,342 youths in TCADA's outpatient programs last year. Only 76 were
under 13.

Besides the age restrictions, patients must be diagnosed as chemically
dependent to be eligible for Medicaid-funded treatment, and state
guidelines set specific criteria for determining dependency. The criteria
include prolonged drug use, physical addiction, and reduction in important
social or recreational activities because of drug use.

"That is a very high standard for very young children," said Goodman, the
TCADA spokeswoman. "Medicaid doesn't cover treatment of patients for drug
abuse prevention or for those who abuse drugs but aren't diagnosed as
addicts," she said.

Whether they were addicted, the children in Lifeway and other programs now
are on official records as having been treated for drug addiction.

"This is reprehensible because at least some chemical dependency treatment
providers have exploited very young indigent children by billing for the
treatment of a chemical dependency the children never had," said David
Flores, a private health care consultant who is representing the families.

"The effects on these indigent children won't be felt for 10 to 15 years
when they attempt to enter the work force," Flores said.

State officials acknowledged that until the Chronicle inquired, they
probably never checked to see if the Lifeway program violated state rules
and procedures regarding minimum age restrictions.

LeBrun said payment of the claims resulted at least partly from confusing
regulations. "This is a rule conflict, and it is not the only conflict we
have seen," she said.

She said a medical advisory committee is reviewing thousands of conflicts
in Medicaid and state rules -- a project she said that could take three years.

The Medicaid provider procedures manual says Medicaid covers outpatient
counseling services for chemically dependent children and adolescents
"under age 21," LeBrun said. But the same manual requires providers to be
licensed by TCADA, which only grants licenses to adolescent and adult
chemical dependency treatment facilities.

"I'm sure the NHIC saw that Medicaid pays for anyone under 21 and simply
paid the bills," LeBrun said.

LeBrun said her office has 16 continuing investigations into drug treatment
providers suspected of falsifying diagnoses and billings to circumvent
state Medicaid regulators.

A Medicaid outpatient is limited each year to $3,382 of counseling,
including 135 hours of group counseling and 26 hours of individual counseling.

"Pizza and video games are not drug treatment," Goodman said. "It should
involve direct counseling and other direct education and treatment. You
don't want to put a (drug dependency) label on a child when they don't have
a problem."

Last year, two men received prison sentences after pleading guilty to
conspiracy and fraud charges alleging they fraudulently billed Medicaid for
more than $1.8 million in chemical dependency treatment of adolescents and
children.

Federal and state investigators found that the two men, who operated
clinics in several Texas cities, including Houston, billed for patients who
weren't addicted, and they created false client files and internal billing
records.

David Wayne Cloud, owner of Youth Enhancement Services, was sentenced to 27
months in federal prison, and Lawrence Vance Davis Jr., owner of Genesis
Advocacy Program, received a 24- month sentence.

But state officials say continuing investigations suggest fraud may still
be widespread in Medicaid-funded recovery programs.

"The worst thing about this from our point of view is that it puts a shadow
over legitimate programs who have really worked hard to have a thorough
program with aftercare and gets the family involved," Goodman said. "I
think some of these unscrupulous providers found a loophole."

A fraud investigator, who asked not to be identified, described a general
pattern:

"They will have a party and set up a game room, claiming it is a Medicaid
program for counseling kids," the official said. "That sounds good to a
Medicaid family to have your child or teen-ager in the program receiving
drug education and counseling.

"It is a place for kids to go that is drug-free," the investigator said.
But the parents may not realize that the programs generate official medical
records saying that their young patients are chemically dependent.

Several children in the Sterlingshire program said the program was
characterized as preventative.

"They asked me if I had taken drugs and I told them I hadn't," said Ivory
Brown's sister, Ashley, then 12. "They said it was a drug prevention
program and we would have a lot of fun."

Medicaid only funds treatment for addicts, not prevention programs for
children considered at-risk.

Even the strict guidelines, however, involve a measure of subjective
judgment in making the distinction between addicted and at-risk. This
creates an opening for unscrupulous providers and a complication for those
attempting to follow the rules.

"There is a thin, gray line between drug prevention, early abuse and
dependency," said Lifeway's Cates.

The fraud investigator said part of the blame for the uncertainty falls to
health officials and the Medicaid contractor, NHIC. "The program is
relatively new and is loosely run to say the least. All new programs are
given the benefit of the doubt ... It is not atypical of a Medicaid program
(in that regulators) don't see the problems until they are real."

In a series of articles over several years, the Chronicle has identified
other apparent deficiencies in Medicaid regulation, most notably failure to
act against providers who billed Medicaid for expensive, unnecessary and
even dangerous dental procedures.

Sterlingshire residents said Lifeway ended its program there without
announcement early last year, after participating youths had been promised
they would be picked up in a van for a trip to Six Flags Astroworld.

No one arrived to pick them up on the appointed Saturday morning.

"We were promised we would go on the Astroworld trip if we went to the
after-school program three straight days," recalled 14-year-old Veronica
Deroufselle. "But no one came and we haven't seen or heard from them since."

TCADA rules require a chemical dependency treatment provider to take
reasonable measures to ensure continuity of services, including a plan to
address patients' ongoing needs after they leave the program.

Deborah Johnson, manager of the Sterlingshire Apartments, said more than
half of the 30 youths participating in the program were under 10 years of age.

"When I used to go back (to the club room) the children would be drawing
and painting and playing video games," Johnson said. "I never saw any
counseling for drugs."

A former counselor for the Lifeway program said he was troubled by the
chemical dependency program at the Sterlingshire Apartments.

"We solicited the apartments door-to-door for kids six to 12 years of age
who were covered by Medicaid," said the counselor-intern, who declined to
be identified. "A counselor would do an assessment for treatment and would
always find that it was appropriate to put the kids in chemical dependency
treatment."

The counselor said the program would bill for an hour of work when much of
the time the kids were playing video games.

"You would ask them a few questions but they wanted to get back to the
video games. They would sign anything to get to the video games. They would
sign blank progress forms as if they had received counseling."

Cates said Lifeway tried to provide counseling and treatment to youths who
suffered from substance abuse or chemical dependency. He said the parents
signed documents verifying that they knew their children and teen-agers
were in treatment.

It isn't clear that Lifeway even was licensed to provide services at
Sterlingshire. Cates said he had an "extension service approval" for sites
outside his headquarters in southwest Houston. But TCADA officials said
their records show no such approval.

Lifeway told TCADA during a 1997 review that parents of youths enrolled in
Lifeway's program attended evening meetings and participated in the
treatment process.

This was not noted on charts reviewed by TCADA that year, and several
parents said they did not recall participating in the program.

Records show that TCADA provided Lifeway with a copy of its rules. Among
them were the regulations stating that outpatient chemical dependency
treatment was limited to adolescents 13 through 17 years of age, with the
possibility of special exceptions for children 10 through 12 years of age
if the "individuals' needs, experiences, and behavior are similar to those
of adolescent clients."

The TCADA reviewer didn't discover that a number of children in the program
were under 10 years of age.

Cates said he was visited earlier this year by investigators with the state
attorney general's office, which looks into Medicaid fraud allegations
along with the Health and Human Services Commission. He has not heard from
them since, he said.

Health and Human Services officials said agency policy forbids them from
confirming or denying whether Lifeway or any other provider is under
investigation.

But speaking generally, agency fraud investigator LeBrun described Medicaid
fraud as a "cottage industry" that exploits the poor.

"It gets real intense during the summer months when the children are at
home from school," she said.

"They prey on families in the barrios and inner city where Medicaid is
prevalent. They prey on the parents' ignorance in some cases."