The Brief: Dec. 18, 2014

The awarding of a no-bid Medicaid fraud detection contract to the 21CT company continues to draw scrutiny with three separate news reports published Wednesday evening.

By John Reynolds

Dec. 18, 20145 AM Central

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The Big Conversation

The awarding of a no-bid Medicaid fraud detection contract to the 21CT company continues to draw scrutiny with three separate news reports published Wednesday evening.

Reporters at the Houston Chronicle and the Austin American-Statesman dived deeply into the actions of Jack Stick, general counsel at the Health and Human Services Commission, who made sure that 21CT did not have to go through a regular bidding process to get the $110 million contract. Instead, the bid went through a contract program run out of the Department of Information Resources.

Stick resigned on Friday amid growing questions about the contract.

The Chronicle's Brian Rosenthal reported that Stick made use of a program, normally used for "small purchases, such as school printer cartridges," to help out 21CT. Why? Rosenthal wrote that it was "because (Stick) became so smitten with 21CT's ability to identify patterns within combined data sets that he thought formal bidding would waste time. That explanation appears far-fetched, however, according to experts who said most anti-fraud software is not radically different."

The Statesman's J. David McSwane, meanwhile, reported that one of 21CT's competitors had found severe problems with the inspector general's office at HHSC, which drew threat of legal action from the inspector general if the findings were released to the public.

Those findings "included the revelation that the inspector general couldn’t track which Texans are eligible for services under Medicaid, where they live, their genders or their conditions. This allowed for substantial cases of apparent fraud, as much as a quarter of the state’s $28.3 billion in annual Medicaid spending ... 'We had 9-year-olds getting tubal ligations and births,' said (Reflective Medical owner David) Gibson, a medical doctor, whose team of analysts includes former FBI investigators. 'We had women who were 198 years old who were getting testicular biopsies. Their eligibility files were so corrupted that they were paying for things that were totally implausible. They were paying claims for men who were giving births.'”

And the Tribune's Terri Langford and Bobby Blanchard reported that the same no-bid process was used on a smaller contract awarded to 21CT to help the Department of Family and Protective Services track families investigated for child abuse. That $452,000 contract was canceled on Wednesday, following the Tribune's inquiries.

State Sen. Judith Zaffirini, D-Laredo, told the Tribune that she hoped the coverage might spur lawmakers to action in the upcoming legislative session.

"Zaffirini said that while there normally is not a lot of interest in contracting legislation from other lawmakers, she hopes the controversy surrounding the 21CT contract will spark interest. 'It’s difficult to understand how this could happen in this day and age,' Zaffirini said. 'The process that was followed was legal — I don’t know of any law that was broken. But it just doesn’t pass the transparency test.'"

The Day Ahead

• Gov. Rick Perry is in College Station to help announce a business acquisition in the biotech field and later to address the commencement convocation ceremony at Texas A&M University.

• Gov.-elect Greg Abbott is in Tyler to meet with area legislators to discuss legislative priorities for the upcoming legislative session.

• U.S. Rep.-elect Will Hurd, R-San Antonio, drops by the Austin Club for a breakfast conversation with the Tribune. We will livestream the 8 a.m. discussion for those unable to attend in person.