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Texas Medicaid fraud investigators aimed at $1 billion, fell way short

OIG administrators pushed aggressive approach to overpayment recovery, even though true numbers barely scratched surface

The Texas Health and Human Services Commission (HHSC), still dealing with the fallout from the 21CT no-bid contract that led to a criminal investigation and altered the reputation of the agency, now faces another controversy: A video in which former HHSC supervisors urge investigators to find $1 billion in fraudulent Medicaid payments, even though actual recoveries didn't even reach eight figures. That left state leaders disenfranchised with the agency, according to the Texas Tribune.

A 2013 video obtained by the Tribune shows former HHSC Deputy Inspector General Jack Stick speaking to newly hired fraud investigators at a training presentation. In it, he claims that HHSC's goal is to find $1 billion in overpayments over the next year.

"If there's anything you can think of that will make your job easier or better, come tell me. Let me know. That's what I'm here for," he says in the video. "I'm here to help you get from where we are right now to a billion dollars."

Later, Lynn Blackmore, former director of the Officer of Inspector General's Medicaid Fraud Unit, jokes that he thought about "packing my stuff and moving out of my office," when he was first told about the $1 billion goal. He later explained that each of the 53 investigators must bring in $18.8 million each year, or $1.5 million per month, to reach the billion-dollar goal.

In truth, the agency never came close. A state Office of Inspector General (OIG) report claims to have recovered more than $600 million from providers in 2012 and 2013--but a report published by the Sunset Advisory Commission in December and updated in January found that the OIG collected just $5.5 million in overpayments during those two years. According to the Sunset report, collections didn't come from OIG investigations but, rather, from HHSC contractors that sifted through Medicaid claims to see if patients were covered by private insurers.  

The OIG's budget has jumped 30 percent in the last three years, to $48.9 million, according to the Tribune, and there's no evidence that the money was spent wisely. According to two stories published by the newspaper in February, Stick spent $36,000 on elaborate investigator badges and nearly $6,000 on two leather chairs.

"The bottom line is, I think the Legislature, and I personally, have lost confidence in the Medicaid OIG," Sen. Charles Schwertner (R-Georgetown), chairman of the Senate Health and Human Services Committee, told the Tribune.

New OIG leadership under Stuart W. Bowen Jr. will move away from performance-based targets instituted by Stick, FierceHealthPayer: AntiFraud previously reported. Bowen's confirmation by lawmakers last month provides a necessary culture change to improve Medicaid fraud investigations in Texas.  

For more:
- read the latest Tribune story
- read the OIG report (.pdf) and the Sunset report (.pdf)

Related Articles:
Performance audit, 21CT fallout bring wave of changes to Texas HHSC
Cleaning up the mess in Texas requires a culture change
Medicaid analytics deal in Texas raises eyebrows