Without a Provider Network, Medicaid Expansion is Moot

There’s a great deal of talk today about Medicaid Expansion. Texas’ Governor and both of its U.S. Senators have proclaimed their opposition to it; Texas Democrats and progressives have duly noted their support. But regardless of whether or not Governor Perry takes federal money to expand Medicaid, and regardless of what form that expansion takes, the point is moot. Because as our experience has shown, the whole Texas Medicaid provider network is in peril.

Buried within the nearly one thousand pages of the Patient Protection and Affordable Care Act (popularly known as “Obamacare”) is a reference to a new regulatory tool: the “credible allegation of fraud payment hold”, or “CAF hold.” This tool has been delineated in the Code of Federal Regulations and made available to state, as well as federal regulators. But nobody has yet made use of it with the zeal of the Texas Office of the Inspector General, Health and Human Services Commission (“OIG”).

A majority-Medicaid practice can go bankrupt within as little as two months from when they’re put on payment hold; the absence of cash flow makes it impossible to pay expenses, and the provider shuts down. Under the guidance of its Director of Enforcement, Jack Stick, OIG has used the CAF hold to unilaterally shut down Medicaid providers around the state — especially dental providers. OIG has in fact acted capriciously in their aggressive pursuit of their mandate; recent testimony to the legislature by Mr. Fread Houston, former Director of Sanctions at OIG, was most instructive in this regard.

In his explosive statement, Mr. Houston related that:

* OIG has used experts with little to no Medicaid experience
* OIG has edited expert’s testimony to remove statements supportive of providers
* OIG has retroactively applied a “new Medicaid policy… regarding ectopic eruptions”, enabling 100% payment holds on practices despite “no evidence of actual fraud.”

OIG’s retroactive application of a new policy was pivotal in recent administrative law findings. In the case of Harlingen Family Dentistry (“HFD”) — the only CAF hold to be legally vetted in the State Office of Administrative Hearings — OIG’s experts were found to be “not credible.” HFD’s CAF hold was accordingly reduced from 40% to 9%. That is to say, they went from 60% compliant to 91% compliant. The decision held up to OIG’s appeal.

There are many more ways in which OIG has bent the meaning of the word “credible”: amongst others are their strange statistical extrapolations, or suddenly authoritative statements on policies that providers had striven to clarify for years. Yet for all the reputed “fraud” that OIG has identified — variously running from $300 million to $500 million dollars — they have collected a mere $1.8 million. But that is, perhaps, not the real point of OIG’s actions.

If we are to judge OIG by their fruits rather than their claims, we are left with a simple fact: they’ve destroyed many, many dental Medicaid providers. That they have done so without any apparent due process has Texas doctors worried, to say the least. In September of 2012, the Texas Medical Association wrote to HHSC on this issue; unfortunately, few (if any) of their recommendations have been acted on in the current legislative session.

Without some effort by the state to restore trust in providers, it’s unlikely that anybody will want to provide Medicaid in a state in which regulators have, in the words of a prominent defense attorney, “run amok.” The providers that have already been ruined in OIG’s witchunt have little recourse at this point except to litigate. But those who would, or wouldn’t, expand Medicaid in Texas are well-advised to consider what the future will look like if the continued arbitrary actions of this agency are allowed to continue unabated.

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