Updated: Senate Finance Grills Doctor on Medicaid Fraud Allegations

“The Office of Inspector General shared with us some really harmful things that he told us are happening to children in some of our dental clinics,” said Nelson, raising her voice as she explained that one child received more than 10 pulpotomies — root canals on baby teeth — in one sitting. “I am going to be like a dog on a bone to make sure we don’t have any fraudulent activity on our whole dental and medical spectrum.”

Dr. Glenn Wood, a pediatrician who owns Carousel Pediatrics in Austin and was featured in a Tribune story about Medicaid providers pushing back on the Office of Inspector General’s fraud investigations, told Nelson he applauded accountability efforts by the state. 

“I have no problem with accountability. What I have a problem with is when there’s no due process,” he told Nelson. 

While the OIG remains silent about its fraud investigations, Wood said, the state keeps tens of thousands of dollars each month for Medicaid services performed at his clinic. He said the OIG pressured his company to waive its rights to an administrative hearing to contest the withheld payments by threatening to withhold all of the clinic's Medicaid payments — rather than 10 percent the state is currently holding — while it conducted a fraud investigation. The inspector's office also denied the company’s request for mediation, he said, and still has not responded to an 800-page rebuttal the provider sent in June to validate the Medicaid claims the OIG alleged were fraudulent. Wood said he has received support from the Texas Medical Association and Superior Health, a Medicaid managed care organization.

Nelson pressed Wood to say the rate of payment errors the OIG had identified in Carousel Pediatrics’ records, stressing that Doug Wilson, inspector general at the Health and Human Services Commission, testified that the average payment error rate for unjustifiable claims investigators have identified is above 90 percent. 

A toddler may need multiple crowns on occasion, Wood said, “because unfortunately, and we’re trying to do something about this, many kids are kept on the bottle too long and they literally come in with many, many teeth that are falling out of their head.”

Original story: Members of the Senate Finance Committee raised serious concerns about the state’s Medicaid fraud investigation tactics on Wednesday during testimony from Doug Wilson, the Health and Human Services Commission's inspector general. Some lawmakers accused HHSC's investigators of depriving accused Medicaid providers due process rights and forcing them out of business in the process.

“You paint with a broad brush and use the word 'fraud' very loosely. I’ve seen some of the cases myself,” said Sen. Juan "Chuy" Hinojosa, D-McAllen. “As a state we have a lot of power and [must be] careful not to abuse that power.”

Sen. Bob Deuell, R-Greenville, gave an example of one provider who was put on a payment hold for 11 months before finally being exonerated. “It essentially bankrupt their practice,” he said, adding that the Legislature should consider ways to improve the investigative process or increase the OIG’s resources to speed up investigations.

Wilson defended the agency’s actions, saying there is a “robust internal review process prior to placing a [payment] hold” on providers. The number of completed investigations jumped from a dozen in fiscal year 2011 to 108 in fiscal year 2012, he said, adding that the length of investigations had shortened drastically.

Sen. Jane Nelson, R-Flower Mound, who has filed Senate Bill 8 to curb Medicaid fraud, also defended the OIG’s work, pointing out that it’s not just about saving money. She said there are many instances of providers harming young children. In her questioning of Wilson, she said that fraudulent providers are often performing multiple root canals and crowns on baby teeth in children younger than two.

“I want to give people due process. I also think there are people who may be manipulating some of us that aren’t lawyers … to delay investigations and payments,” she said.

But Hinojosa accused the OIG of refusing providers’ requests for informal hearings to dispute evidence of fraud and insisting that providers hand over client files dating back 10 years, even though legally, providers are only required to keep client files for five years. He said the investigations drag on for months and are ruining innocent providers’ reputations and businesses.

As of the end of 2012, the OIG had put payment holds on nearly 100 providers, including 36 orthodontists, according to Wilson’s testimony.

The Texas Medical Association, which has stood by providers the organization believes have wrongfully been accused of fraud, is asking lawmakers to set up a panel of physicians to review cases before the OIG issues a payment hold.

“This physician panel review is similar to reforms instituted at the Texas Medical Board to aid their investigations,” Rocky Wilcox, vice president and general counsel for the TMA, said in an email to the Tribune. “Physicians are concerned that administrative errors are recast as fraud, when in actuality they are a consequence of an overly complex Medicaid payment system.”