2012 OIG Audit Finds that TMHP Misled HHSC on Medicaid Orthodontic Pre-Approvals

Austin Texas CapitolBefore the Thanksgiving long weekend, TDMR received a copy of the August 2012 audit conducted by the HHSC Office of the Inspector General on the Texas Medicaid and Healthcare Partnership. As far as we know this is the first time this audit has been made public. TMHP, a division of Xerox, was the state’s private contractor responsible for pre-approving all orthodontic applications from Medicaid dentists across Texas from 2004 to early 2012 when managed care organizations took over.

Brief History Recap
In 2011, WFAA in its series of investigative reports on orthodontic spending in Texas had reported on deficiencies in TMHP’s handling of the pre-approval applications; specifically that the TMHP dental director did not review the vast majority of the applications and that TMHP pre-approval staff did not have any dental training and were under deadline pressure to rubber stamp the pre-approvals. The dental director, Dr. Jerry Felkner, resigned shortly afterwards.

It seemed that the Texas government was caught unawares of the situation with TMHP. But HHSC did know because OIG had conducted an audit in 2008 which discovered those deficiencies in TMHP’s processes and recommended that they be corrected. That audit wasn’t publicly known about either and didn’t come to light until OIG was in administrative court with a dental provider in early 2012.

Apparently after the intense media scrutiny and legislative hearings by both the House Public Health Committee and the Senate Committee on Health and Human Services, OIG conducted a review of whether or not TMHP had addressed the deficiencies revealed in 2008.

This audit was first mentioned publicly in testimony before the House Public Health Committee on October 15th, 2012. Inspector General Douglas Wilson, his deputy for enforcement Jack Stick, HHSC Deputy Director Chris Traylor and Deputy Attorney General John Scott spoke about the audit and presented slides (pg. 16). Scott even testified that in his opinion TMHP had breached their contract with the state. However this audit had had very limited distribution, being only given to TMHP and kept within HHSC per the attachments of the audit itself.

What does the audit conclude?
Here are some excerpts.

Background
National Heritage Insurance Corporation (NHIC) was responsible for reviewing PA requests prior to TMHP assuming the contract. NHIC had a process whereby an NHIC Dentist/Orthodontist reviewed all Dental/Orthodontist Prior Authorization requests submitted. When TMHP took over the contract, this process changed. Under TMHP’s process, providers were required to submit Dental Orthodontic PA requests in the same manner as the NHIC contract required. However, TMHP did not require the Dental Director to review all Dental Orthodontic PA requests. Under the TMHP process, the Dental Orthodontic PA specialists reviewed provider/client eligibility, the supporting documentation, and if the Handicapping Labio-Lingual Deviation (HLD) score sheet equaled 26 or above. If these requirements were met, the claim was deemed medically necessary and approved. This contributed too [sic] millions being expended on Medicaid Orthodontics in 2010.

Finding 1 – TMHP is not hiring medically knowledgeable personnel
TMHP is not hiring medically knowledgeable personnel to process dental PA requests as required by the contract… As a result, more orthodontic PAs were approved, which has resulted in the State of Texas spending excessive dollars for orthodontic procedures…The duty is on TMHP to comply with all laws and regulations. The law requires that a dentist make the determination of medical necessity. The prior claims administrator complied with the law and the prior claims administrator worked with TMHP for a transition period. HHSC indicates that it has repeatedly attempted to work with TMHP to ensure compliance with the contract requirements.

Finding 2 – Dental Director is not approving all orthodontic PAs
…Through dialogue with TMHP staff and in reading the audit and SAR [State Action Request]responses, HHSC staff believed TMHP was applying the approved medical policy requirements and criteria in making decision to approve or deny the orthodontic PAs. It now appears that TMHP staff never reviewed the diagnostic tools required to be submitted that were necessary to enable TMHP to make a determination of medical necessity. It also appears that the diagnostic tools were never imaged and that some were destroyed.

TMHP further states that they did not receive any additional direction from HHSC as a result of the audit [2008] or the findings to change the prior authorization process. HHSC disagrees with this statement. HHSC began meeting with TMHP in April 2009 to address the audit and issues related to non-compliance with the contract. TMHP has repeatedly misled HHSC as to what has been occurring.

Finding 3 – The Quality Assurance Review tool does not address medical necessity
The Quality Assessment Prior Authorization Tool is inadequate for meeting the intended purpose of satisfying the HHSC requirements of evaluating “medica! necessity.”

Finding 5 – There are control weaknesses in the PA request approval process
…The database contains PA requests that were initially denied, but later approved. These requests show dollars paid while still showing a deny reason code. Auditors sampled 95 of 3,796 PA’s with a deny reason code and dollars paid. Further discussion with PA management confirmed that the PA requests were subsequently approved and paid and the deny code was not removed.

Finding 6 – Duplicate PAs
PA Specialists were approving duplicate PA’s. OIG obtained a listing of 428 orthodontic PA’s with an anesthesia code from TMHP. While the originai intent of reviewing these PA’s was not to identify duplicate payment, Auditors identified three of the 428 PA’s reviewed with anesthesia codes that had duplicate payments on the same PA.

No Harm, No Foul
There are no recommendations from the auditors to further investigate TMHP or seek to recover any funds. All the recommendations surround TMHP changing their processes.  However, the Medicaid orthodontic pre-approval process was taken over by the dental managed care organizations earlier in the year so such changes would basically be irrelevant.

While OIG has gone after orthodontic Medicaid providers for “credible allegations of fraud” and program violations in an attempt to get back monies, there is no indication so far that they have attempted to do the same with TMHP.  While some dental Medicaid providers have been put into bankruptcy or near financial collapse without ever having their day in court in regards to their guilt, TMHP/ACS has received another $100 million contract from the Texas government for the Department of Transportation.

But as Jack Stick pointed out in March of 2012 in a webinar he participated in on Medicaid fraud.

“What we did was rather than developing an antagonistic relationship with the MCO’s, we have tried to do everything that we can to be cooperative with them. We view their special investigative unit, really as offshoots of our unit here in the Inspector General’s Office. They give us leads, they can do a lot of the investigations. In fact the law provides them authority to investigate cases below $100,000 unless we intervene and take them over.”

Even when their processes are apparently flawed, it appears the state’s contractors are not held financially accountable. Only the providers are, even when they are found not guilty of fraud or misrepresentation.

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