OIG Reaches $3.75 Million Settlement with Carousel

Justice for Medicaid providersThe Health and Human Services Commission issued a press release this afternoon that OIG has now settled with Carousel Pediatrics of Austin on claims of Medicaid fraud, now deemed billing errors, for $3.75 million.

$22.1 million settled for $3.75 million
OIG early in 2013 was seeking $18 million in overpayments plus a $4.1 million penalty although the Texas Medical Association in its own review found that Carousel was doing nothing wrong. Back at that time, Carousel was servicing some 40,000 children. This has apparently dropped over the last year to 25,000 per the release.

Dr. Glenn Wood, the head of Carousel, testified before several legislative committees early last year about the allegations and how this was adversely affecting the children his clinics were treating.

The Austin American Statesman had the following to say about the allegations:

“The Carousel investigation reflects the health agency’s beefed-up efforts to cut Medicaid costs by finding waste and fraud in the program’s vast system of health care providers — including raising the number of investigators in the inspector general’s Medicaid integrity unit from 27 to 63.

“Wilson declined to discuss details of a continuing investigation but said the Carousel probe involved providing a representative sample of business records to a medical expert, hired as an outside consultant, to review.

“The consultant concluded that Carousel billed Medicaid for treatments that were not given or not needed over 4½ years, then calculated an error rate that was extrapolated to all Carousel claims to derive a dollar amount of allegedly fraudulent billing, Wilson said.

“Wood disputed Wilson’s claim, saying the inspector general’s office “cherry picked” from among Carousel’s sickest patients, who account for about 5 percent of its business but 46 percent of cases reviewed, to reach a statistically invalid conclusion.

“Wood also said the government consultant made numerous mistakes, such as miscounting the number of vaccines administered, recommending the use of out-0f-date medicines and disputing asthma treatments that have been standard for more than a decade.”

No fraud, just billing errors
The following is the press release.

AUSTIN – Carousel Pediatrics has agreed to repay the state $3.75 million after an investigation by the Health and Human Services Commission Office of Inspector General (OIG) found a pattern of billing errors [emphasis ours].

“This agreement will help ensure that children with Medicaid coverage can get quality health care services and that the state pays only for services that are necessary and provided to the child,” Inspector General Douglas Wilson said. “Those were our primary goals in this investigation, and I’m pleased that we’ve been able to reach a settlement that serves both the children of the State of Texas and taxpayers.”

“We’ve said all along Carousel may have made billing errors but they were not intentional or for the purpose of overbilling Medicaid,” said Dan Gattis, the attorney representing Carousel. “We understand why OIG suspected fraud, and we think it acted reasonably under the facts as they knew them. Fortunately, they listened to us, understood our approach and worked out a repayment agreement that protects the state’s interests, Carousel’s interests and also protects the kids Carousel serves.”

Carousel Pediatrics currently provides primary care for more than 25,000 Texas children. OIG’s medical reviews demonstrated the quality of care Carousel provided was often similar to other Medicaid providers, but its billing practices meant that it billed the state too much for those services.

“The law requires us to put a payment hold in place when we find evidence of an overpayment, and we did that in this case,” Wilson said. “But that’s not the end of our review. We continued to gather information and look at all the facts. Carousel came to the table to correct the overpayment and make changes in its billing practices to comply with state rules. The process the Legislature outlined worked.”

The agreement calls for Carousel to make an initial payment of nearly $614,000, followed by monthly payments until it reimburses the state for the full $3.75 million.

The Legislature created the Texas Health and Human Services Office of Inspector General in 2003 to combat waste, fraud and abuse in health and human services programs. In 2012, the last year for which figures are available, the OIG completed 108 investigations and identified more than $530 million in potential overpayments to providers.

OIG Reaches $3.75 Million Settlement with Carousel.

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