There have been rumors flying by the last few weeks that Inspector General Stuart Bowen wants to make it easier to place “credible allegation of fraud” (CAF) payment holds against Medicaid providers. We had no idea that this was difficult at all for the state since MCNA seems able to do so without any problems.
However, we were directed to a recent public hearing and found it was true.
This past September 13 at a hearing before the Senate Committee on Health and Human Services, IG Stuart Bowen testified (see video) that because of SB207 his office has had a tough time placing CAF payment holds against Medicaid providers. In fact, he said it is a tool he hasn’t been able to use until recently and he wants to make it easier for him to use by changing the changes that SB207 made to government legislation.
SB207 is, of course, the Sunset review legislation that reformed the Office of Inspector General because of systemic abuses including the placement of CAF payment holds without apparently having the requisite scintilla of evidence that is necessary per federal law.
Testimony short and without specifics
Bowen’s testimony on the matter was short and he did not tell the committee as a whole or the attending public what exactly the problem was with the legislation. He apparently has done this only in private conversations with the committee chair Sen. Charles Schwertner and committee member Sen. Lois Kolkhorst.
He simply told the whole committee and public that Texas has a “one-in-a-nation” standard now that other states do not have.
What did SB 207 do?
This statement caused us to look up the exact changes that SB 207 made in government legislation on placing CAF holds and attempt to find what Bowen finds so objectionable and hampers his job. This is not a full legal review although we will seek this.
Because of SB 207, Government Code 531.102, as of August 2016, that governs of the Office of Inspector General, now states:
(g)(2) As authorized under state and federal law, and except as provided by Subdivisions (8) and (9), the office shall impose without prior notice a payment hold on claims for reimbursement submitted by a provider only to compel production of records, when requested by the state’s Medicaid fraud control unit, or on the determination that a credible allegation of fraud exists, subject to Subsections (l) and (m), as applicable. The payment hold is a serious enforcement tool that the office imposes to mitigate ongoing financial risk to the state. A payment hold imposed under this subdivision takes effect immediately.
So federal law, 42 CFR 455.23 (Code of Federal Regulations) is the following:
Suspension of payments in cases of fraud.
(a) Basis for suspension.
(1) The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.
(2) The State Medicaid agency may suspend payments without first notifying the provider of its intention to suspend such payments.
(3) A provider may request, and must be granted, administrative review where State law so requires.
Credible allegation of fraud is usually defined as:
A credible allegation of fraud may be an allegation, which has been verified by the State, from any source, including but not limited to the following:
(1) Fraud hotline complaints.
(2) Claims data mining.
(3) Patterns identified through provider audits, civil false claims cases, and law enforcement investigations. Allegations are considered to be credible when they have indicia of reliability and the State Medicaid agency has reviewed all allegations, facts, and evidence carefully and acts judiciously on a case-by-case basis.
What makes Texas different?
So what makes Texas different? Well, section 8 above is the same as federal regulation but section 9 is the following:
(9) The office may not impose a payment hold on claims for reimbursement submitted by a provider for medically necessary services for which the provider has obtained prior authorization from the commission or a contractor of the commission unless the office has evidence that the provider has materially misrepresented documentation relating to those services.
Also, (l) and (m):
(l) The office shall employ a medical director who is a licensed physician under Subtitle B, Title 3, Occupations Code, and the rules adopted under that subtitle by the Texas Medical Board, and who preferably has significant knowledge of Medicaid. The medical director shall ensure that any investigative findings based on medical necessity or the quality of medical care have been reviewed by a qualified expert as described by the Texas Rules of Evidence before the office imposes a payment hold or seeks recoupment of an overpayment, damages, or penalties.
(m) The office shall employ a dental director who is a licensed dentist under Subtitle D, Title 3, Occupations Code, and the rules adopted under that subtitle by the State Board of Dental Examiners, and who preferably has significant knowledge of Medicaid. The dental director shall ensure that any investigative findings based on the necessity of dental services or the quality of dental care have been reviewed by a qualified expert as described by the Texas Rules of Evidence before the office imposes a payment hold or seeks recoupment of an overpayment, damages, or penalties.
So what makes Bowen’s job so tough is that he can’t place a payment hold on services that received prior authorization UNLESS he has material evidence that the provider misrepresented something. That seems pretty fair.
Also, if the allegation is against a doctor or dentist, those allegations need to be reviewed by an expert to make sure the payment hold is valid. Considering past actions by OIG and waste of administrative court time in the Nazari and Rhoden cases, this seems quite reasonable.
Asked for comment
We have sent a request to the IG for comment on this.
Our job is not to prevent the finding of fraud and those committing it, but to ensure there is due process for all providers.