HOUSTON, Texas -- Behind a chain-link fence at the corner of Quitman and Gano, in front of a motley building with the number "1219" scrawled in spray paint, Houston's mentally ill bide their time slouched in plastic patio chairs or crouched on the concrete waiting their turn for treatment.
This clinic and nearly two dozen others across Harris County collect millions in Medicare dollars each year, according to a Houston Chronicle investigation, but require no license to operate in Texas.
What the patients lack in lucidity and liquid cash, they carry in purses and pockets: a coveted Medicare card, a one-way ticket past the sleepy eyes of a bulky bureaucracy rich in taxpayer funds and into the hands of for-profit clinics, touted as the last option for the severely mentally ill.
At this intersection, the car-less, mostly poor clientele arrive by ambulance and van, some patients too impaired to ask questions or without families or guardians who could. At treatment time, staff members clad in medical scrubs guide the patients from the outdoor waiting room to the Cadwalder-Quitman Clinic across the street on another dank corner north of downtown.
Of the $49 million in Medicare paid in 2010 to outpatient psychiatric programs in Texas, such as this one, more than 75 percent is spent at for-profit clinics in Harris County, where more than half are located.
Labeled by the federal government as "community mental health centers" or "partial hospitalization programs," their patients are rounded up across the county and overflow in the parking lots and driveways of residential neighborhoods, strip centers and mid-rises across the Houston region.
A Chronicle report Sunday documented Houston's burgeoning private ambulance industry capitalizing on the mentally vulnerable, ferrying patients to just such therapy sessions by costly emergency medical services transport.
Some of the EMS companies also bill the Centers for Medicare and Medicaid Services (CMS) even when patients don't qualify for a trip that is "medically necessary." Under Medicare rules, an ambulance should not be used if "some other means of transportation other than an ambulance could be used without endangering the individual's health."
Clinic patients, some poor, some near homeless, live in personal care homes, assisted living facilities or apartments arranged by caseworkers and caretakers who also keep tabs on their clients' Lone Star cards and what meager monthly money comes to them.
"They are in bed together," Joseph Prekker, Houston's top agent for the U.S. Health and Human Services' Office of Inspector General, said of EMS companies and psychiatric therapy centers.
Clinic owners, however, have repeatedly said they have no part in arranging the ambulance traffic.
"We don't order ambulance service," said Bob Rouse, the interim chief operating officer for Westbury Community Hospital's clinic in Gulfton. "We simply take care of people who are brought to us."
Like the private EMS industry, mental health clinics collect millions in federal Medicare dollars.
And yet - other than a one-time inspection conducted by Medicare when clinics start operating - these programs have no detailed standards or "conditions of participation" that must be met before filing claims and collecting taxpayer money.
"There's been no other provider in Medicare operating without conditions of participation," confirmed Chuck Ingoglia, vice president of public policy for the National Council for Community Behavioral Healthcare in Washington, D.C., whose members are mostly not-for-profit or government organizations like the Mental Health and Mental Retardation Authority of Harris County.
Medicare's billing contractors oversee payments. But no government agency directly oversees patient care.
The U.S. Department of Health and Human Services flagged the problem earlier this year, saying "no regulatory basis exists to ensure basic levels of quality and safety" for CMHC care.
Nor does anybody else.
Neither local nor state authorities conduct inspections, review treatments, check employee backgrounds or monitor how patients are selected for treatment, transported and monitored.
By Medicare's own admission, "it is difficult to improve quality of care at poorly performing (community mental health centers) because there is no mechanism to terminate them from Medicare participation."
Clinic owners insist they provide a lifeline of last resort in a stingy nation that offers few options for the mentally ill.
"We got a population of people here who are compromised folks," explained Nathan Ingram, a former child protective services worker from Tennessee whose two mental health companies own all three buildings at the Quitman and Gano intersection.
The programs at these clinics are designed as an intensive outpatient alternative to hospitalization, requiring daily attendance for hours of therapy.
In just one day last year, Medicare records show, the Quitman clinic treated 92 people, collecting $13,695.
Together, Ingram's businesses collected at least $4.5 million from Medicare last year for the services he and others say the government fails to provide. In addition to the Quitman clinic, Ingram and his wife, Lyndy, have taken over Cadwalder Behavioral Services, which owns several houses in Tomball, where dozens of mentally ill are treated each day.
In Texas, a state that ranks 49th in mental health spending, the impoverished sick are less likely to find public help - except in unlicensed, mostly for-profit community mental health centers.
Records show that in 2009, Medicare paid $287 million on these programs nationwide, 74 percent of them located in the three states that have no state licensing requirements: Florida, Louisiana and Texas.
Earlier this month, federal investigators listed community mental health and partial hospitalization program spending as a top issue, for the second year running.
"Past OIG work has identified vulnerabilities in Medicare payments to (clinics and programs), finding weaknesses in the fraud detection and investigation activities of Medicare program integrity contractors and in CMS's oversight ...," the U.S. Health and Human Services Office of Inspector General noted in 2011.
They are most often housed in strip shopping centers, some of them in sign-less buildings like one behind a Kroger and next to an accordion store on West Bellfort.
For more than a year, ambulances every morning delivered the mentally ill to the center's doorstep. Mike and Elia Gabbanelli, who own the accordion store, wondered for months what their business neighbor was operating. Sometimes patients wandered into their store, asking customers for coffee money, lighters or batteries.
"One came in and said he was going to be killed," Mike Gabbanelli recalled. "I don't know how to handle those kind of people."
After watching the center's ambulance traffic in 2010, a Chronicle reporter in April visited to ask about the clinic, Behavioral Medicine of Houston.
Days later, the entire operation had vacated the building, moving to its headquarters near the Westpark Tollway in Houston. Behavioral Medicine of Houston staffer Ann Castillo told the Chronicle they moved for renovations. But months later, the building on Bellfort is still empty.
The clinic collected at least $2.2 million from Medicare last year.
Another clinic is tucked deep inside Gulfton's densely-packed medical ghettoes, beyond the day cares and pediatric clinics and behind the phalanx of farmacias and dental, urgent care and chiropractic offices on Bellaire. The sign reads Continuum Mental Health Center, but is now part of Westbury Community Hospital.
Between 10 a.m. and 2 p.m., the sick and near homeless can be found on the sidewalks or at a handful of picnic tables or metal chairs waiting for therapy.
Last year, this clinic received more than $6 million in Medicare payments, the most in Texas. Clinic operators insist whatever money they receive barely reimburses them for the work they do.
"We have a heart for the mentally ill," said Jeff Parsons, Westbury's chief executive. "If you don't have a heart for this business, it'll eat you alive."
Westbury officials allowed the Chronicle to interview five patients, all of whom said they like the services, come daily at the recommendation of social workers or assisted living operators and have benefited from Medicare support. One is battling a crack-cocaine addiction. Others, depression or bipolar diagnoses. At least one has been hospitalized at the state's psychiatric hospital in Vernon.
"I like this place," said a former PepsiCo employee whose cerebral palsy eventually forced him on disability and then led to depression.