Court Invalidates Payment Hold for Minor Medicaid Violations
Written by Editor   
Wednesday, December 31, 2014 04:12 PM

The Texas Third Court of Appeals struck a major blow to the Texas Health & Human Services Commission (HHSC) Office of Inspector General's (OIG's) investigative framework. Judges invalidated rules that allowed the agency to place payment holds on Medicaid physicians for non-fraudulent program violations. The court also declared invalid a rule that allowed OIG to retain a health care professional's funds after termination of the payment hold period.  The appeals court's decision came after the Sunset Advisory Commission's scathing report on HHSC, which the court used to support its interpretation of Texas' Medicaid laws.

The report says OIG — tasked with preventing, detecting, and investigating fraud, waste, and abuse in the Medicaid system — fails at fraud prevention, takes more than three years to resolves cases, and wins back only a fraction of the amount of allegedly abusive or wasteful spending it identifies. According to the report, the OIG collected only $5.5 million in 2012 and 2013, during which it identified $1.1 billion in possible Medicaid overpayments.  The report states OIG uses payment holds as a bargaining tool, "even for cases that do not pose significant financial risks to the state." 

On December 10, the Sunset Advisory Commission adopted most of the report, recommending the legislature enact significant changes in the operation of OIG.  A workgroup chaired by Sen. Juan "Chuy" Hinojosa (D-McAllen) recommended — and the commission adopted — a change in the definition of Medicaid fraud "to clarify that the term does not include unintentional technical, clerical, or administrative errors. The amended definition would be read as follows: ‘Fraud’ means an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to that person or some other person, but does not include unintentional technical, clerical, or administrative errors."

Additionally, Sen. Charles Schwertner (R-Georgetown) made modifications directing HHSC to strengthen oversight and accountability for Medicaid HMO network adequacy.