$90 Million Software Identifies $41 Million in Potential Medicaid Fraud in 2014

texas state emblem in capitolThe Austin American Statesman reported this weekend that the Texas Health and Human Services Commission Office of Inspector General is finalizing a deal with an Austin company for Medicaid fraud detection software.

The company involved, 21CT, is primarily a defense contractor and their “Torch” software that detects Medicaid fraud was only developed at the request of OIG in 2012 per the article.

The software will set back Texas taxpayers some $90 million dollars for three years of licensing.

OIG has been under the gun in both the media and the legislature because it only collected $5.5 million in the last year per the recent Texas Sunset Commission staff report despite claiming hundreds of millions of dollars of Medicaid fraud.

However, the Sunset Commission report looked at Torch and found that the software had only identified $41 million in Medicaid fraud so far for the fiscal year 2014 (pg 130 of the report).  This is a far cry from the hundreds of millions of dollars that OIG has been claiming is out there.  The report also finds that the implementation of the software is problematic due to OIG’s lack of priorities.

The report states:

“Additionally, the agency’s recent fraud initiatives for Medicaid provider investigations, together with a sophisticated new fraud identification system, Torch, compound the risk associated with a lack of priorities. Torch promises significant results for OIG, identifying $41 million in suspicious Medicaid payments for investigation in fiscal year 2014. However, the addition of such a substantial workload, without a demonstrated system for efficiently and effectively sorting and prosecuting cases in a way that maximizes monetary returns, jeopardizes the state’s return on investment for these significant, and expensive, fraud identification efforts.”




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