Medicaid Providers Seek Regulatory Balance with SB 1803

Senate Bill 1803 Medicaid Due Process RightsAUSTIN, (April 30th, 2013) — Medicaid providers will speak out today in favor of Senate Bill 1803 before the Human Services Committee of the Texas House of Representatives. The bill provides for more thorough vetting of fraud claims by the Office of the Inspector General, Health and Human Services Commission (“OIG”). OIG has put many providers on payment hold based on “credible allegations of fraud.” These “CAF holds” are a new tool for Medicaid regulators, having been created by the Patient Protection and Affordable Care Act.

“Nobody’s in favor of fraud,” said Chuck Young, spokesperson for Texas Dentists for Medicaid Reform (“TDMR”). “That’s obvious. But in the words of one prominent defense attorney, OIG is an agency ‘running amok’. Law enforcement — even administrative law enforcement — needs to abide by rules and procedures; otherwise we’re living in a state of tyranny.”

Dr. Juan Villareal, TDMR’s chairman and head of Harlingen Family Dentistry, recently had his practice’s CAF hold substantially reduced in a protracted hearing process before administrative law judges. “CAF holds are a terrible hardship on Medicaid providers,” said Villarreal. “Once instituted, they’re very hard to remove. Our biggest concern is that recent revelations from OIG employees have convinced us that these holds are being placed indiscriminately as a pure money-grab, without any real indicia of criminal misconduct.”

“The allegations by Fread Houston have proven to us that OIG must be reined in,” said Young. Mr. Houston was formerly the Director of Sanctions at OIG. In testimony before the Texas legislature, he stated 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.”

“These so-called ‘credibile allegations of fraud’ are generally incredible,” said Young. “It’s hard to trust an agency whose chief enforcer, Jack Stick, has been out on bond on a DWI charge for months. In fact, we’re still wondering how that’s possible. Other law enforcement officials, like Travis County District Attorney Rosemary Lehmberg, have been held to account on similar charges.”

Young claimed that there are further revelations to come, from both current and former OIG employees.

“Mr. Houston isn’t the only person at OIG raising alarms,” Young continued. “Since Mr. Houston’s statements, we’ve heard more and more rumblings about malfeasance at OIG. The trouble is, where do we take these concerns? There seems to be very little accountability at the Capitol in these matters. This is a big political football, with billions of dollars at stake.”

Medicaid, and specifically Medicaid expansion, has emerged as a leading issue in the current Texas legislative session. The Governor and Texas’ two Republican Senators, supported by leading conservative policymakers, have spoken out against Medicaid expansion. Meanwhile, a compromise bill by John Zerwas (R, 28th district) has been stirring up debate.

“We don’t know what the outcome of the session will be as far as Medicaid reform and/or expansion,” said Young. “We do know that, under the current regime at OIG, medical professionals would be well advised to steer clear of Medicaid. The capricious application of CAF holds has led to a situation in which the risks of being a Medicaid provider far outweigh any potential upside.”

Background: Texas Dentists for Medicaid Reform is a 501(c)4 founded by dental practitioners “concerned about the future of dental care for the over three million Texas children eligible for Medicaid.” See (

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