Auditors: State Medicaid fraud investigations poorly managed, unfair | Insurance News

The government agency charged with rooting out medical fraud and waste is poorly managed, occasionally is unfair to those it investigates and has failed to do an effective job identifying and recovering money lost to medical fraud, according to a critical report released Friday by state auditors.

The assessment by the Sunset Advisory Commission, charged with reviewing the performance of state agencies, blasted the Health and Human Service Commission’s Office of Inspector General for taking years to close its investigations into medical providers, failing to distinguish between serious misconduct and minor transgressions, and misusing its powerful authority to withhold government payments from providers as unfair leverage to compel financial settlements.

In what the Sunset staff acknowledged was “a rather harsh assessment,” the report concluded that the Office of Inspector General’s behavior had caused “a real harm” to medical providers and, ultimately, to taxpayers.

The scathing evaluation adds another chapter to a growing body of evidence that the state shares culpability for what it has asserted is the loss of hundreds of millions of dollars to fraud perpetrated by dentists and orthodontists who treat Medicaid patients. It also confirms findings of several American-Statesman investigations over the past year.

The evaluation of the Office of Inspector General was included in a larger assessment of the human services commission, and the latest development in a medical saga that started in 2007, when a class-action lawsuit settlement mandated that Texas spend more money on fixing poor children’s teeth. Over the next five years, spending on dental and orthodontic care soared.

State regulators in 2011 alleged massive fraud, charging that money was improperly paid to providers who either billed for procedures they did not perform or did work considered medically unnecessary and thus not covered by the government insurance plan. The Office of Inspector General targeted many of the state’s largest dental providers for investigation.

The agency has filed dozens of actions against dentists and orthodontists seeking to recover what it said were improper payments. In many instances, it has withheld Medicaid money for procedures already performed by the doctors, and that has forced several out of business.

Many of the providers have fought back, arguing in court that the contested orthodontic procedures, especially, were all preapproved by the private contractor hired by the state, Texas Medicaid and Health Partnership, owned by Xerox Corp. That claim gained a measure of credibility in May, when the Health and Human Services Commission canceled its contract with Xerox. The attorney general also filed a lawsuit against the company for failing to adequately vet the requests for procedures.

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