Legislators Seek Action on Medicaid Fraud Measures

^{*Correction appended.}

After the discovery that the state was spending millions of dollars on fraudulent Medicaid dental and orthodontic care, state lawmakers held hearings ahead of the legislative session to identify what went wrong and how to prevent future fraud. And this session, lawmakers have filed a handful of bills to reform how Texas addresses Medicaid fraud. But the bills aren’t progressing as fast as some would like.

“I thought that there was a heightened awareness, but I’m not seeing a lot of movement,” said state Rep. Lois Kolkhorst, R-Brenham, the chairwoman of the House Public Health Committee.

In 2010, Texas paid more for Medicaid orthodontic services — $184 million — than the other top 10 most populous states combined. After WFAA-TV in Dallas reported that some corporate-run dental clinics were billing Medicaid for questionable services, the Office of Inspector General at the Health and Human Services Commission ramped up efforts to crack down on fraud and recover millions in overpayments to Medicaid providers.

In response, some providers have closed shop, stopped accepting Medicaid patients and accused the state of denying their due process rights by withholding payments without sufficient evidence of fraud. The Texas State Board of Dental Examiners was also accused of ineptitude, as many advocates argued the underfunded and understaffed agency did not have enough regulatory power to deter fraudulent providers. 

The Legislature is considering bills that would strengthen the power of the OIG, address the due process rights of accused Medicaid providers and increase regulatory oversight of corporate-run dental clinics by the dental board. 

Sen. Jane Nelson, R-Flower Mound, the chairwoman of the Senate Health and Human Services Committee, has filed the most comprehensive Medicaid fraud legislation, Senate Bill 8, which was approved this month by the full Senate. Kolkhorst said the House Public Health Committee would soon consider the measure. “That’s where the focus needs to be right now,” she said.

The bill would set up a “data analysis unit” within the HHSC to detect overutilization of services and identify other data trends to proactively seek out fraudulent providers. SB 8 also strengthens prohibitions on the direct solicitation of Medicaid clients, even though it’s already illegal to solicit patients in most circumstances. 

The OIG has completed more than 36 investigations of orthodontic providers, identified more than $303 million in potential overpayments, and placed 28 orthodontic providers on payment holds in fiscal year 2012. The office has also identified $154 million in overpayments for other dental services and $31 million in potential overpayments to hospitals in fiscal year 2012.

As a result of the OIG's fraud investigations, more than 100 Medicaid providers have had payments withheld. Many of the accused providers argue they’ve been targeted by the state because they handle a large population of Medicaid clients.

“There’s been some very negatively impacted that have had to take out huge loans just to keep their doors open,” said state Rep. Bobby Guerra, D-Mission.

Guerra authored House Bill 1536, which would allow some Medicaid providers to appeal a state administrative court decision and seek a new trial in a Travis County district court to determine whether the provider committed fraud. He said his bill would bring the same standards to Medicaid fraud proceedings as the standards for other administrative hearings. The bill has been approved by a House committee, but has not been scheduled for a debate on the House floor.

Senate Bill 1803, authored by Sen. Joan Huffman, R-Houston, and approved this month by the full Senate, also allows providers to receive a new trial in a district court, but goes further than Guerra’s bill by defining the process for implementing — and challenging — payment holds put on providers.

Accused Medicaid providers are allowed to request an informal review before the OIG takes the case to an administrative judge, but currently, there are no laws regulating the timeframe for providers or the OIG to respond and take action. Some accused providers have complained that the state held payments for months without responding to the providers’ request for a hearing or informal review. SB 1803 would define the set timeframes for establishing informal reviews or taking cases before a state administrative court. It also requires the OIG to hire a medical director and dental director to ensure an expert reviews findings from fraud investigations.

Kolkhorst has filed House Bill 3201, which focuses on the Texas State Board of Dental Examiners. The bill would restructure the board similarly to the Texas Medical Board and would create an $80 fee on licenses and license renewals to raise revenue for hiring additional experts to review allegations of misconduct.  

During committee hearings, representatives from the Texas Dental Association and the Board of Dental Examiners also expressed concern that the board did not have sufficient authority to regulate corporate-run dental clinics that have been at the center of the fraud allegations.

The clinics in question often serve only Medicaid patients and pay one dentist to act as a prop by claiming ownership, as Texas law requires dental clinics to be run by licensed dentists, a dentist with the Texas Dental Association testified at legislative hearings. The real owners of the clinics — usually private equity firms — are in the dental business for profit, and encourage overutilization of Medicaid services by dictating treatment plans or setting quotas for the number of procedures that dentists should perform.

House Bill 1480 by state Rep. Senfronia Thompson, D-Houston, would require corporations to register with the state if they are offering administrative and other nondental services to help dentists operate clinics.

The Texas Coalition of Dental Support Organization, in defense of dental clinics that contract with corporations for administrative services, argues that the legislation is “an exercise in excessive regulation,” and that dentists contract the companies to aid the efficiency of their businesses, allowing them to concentrate on providing quality care. Many of the dental clinics that would be affected by the new regulations in HB 1480 do not participate in Medicaid, the coalition argues, and have not been implicated by the Medicaid fraud investigations.  

“HB 1480 does nothing to stop dentists who commit Medicaid fraud in Texas,” Bill Noble, a spokesperson for the coalition said in an email to the Tribune. “It merely pits dentists who do not use administrative support services against those who do.”

Kolkhorst indicated that HB 1480 was left pending in the Public Health Committee because Thompson is expected to offer a committee substitute that factors in additional input from stakeholders.

^{*This story has been updated to clarify the position of the Texas Coalition of Dental Support Organizations, which was also originally misidentified the Texas Association of Dental Service Organizations.}