On a rainy day in February three years ago, about 30 men and women recently hired by the state filed into a dull government classroom to begin a week of training for their new positions.
Texas channels a river of federal and state money — at that time $28 billion and change a year — to pay doctors, dentists, labs and other medical providers for treating Medicaid patients. There is little doubt, the trainees were told, that some percentage of it is wasted, paid out by mistake or flat-out stolen by fraudulent providers.
As Medicaid investigators for the Office of Inspector General, they were to track down that errant money and get it back for taxpayers.
“I want you to be aggressive,” they were instructed by Jack Stick, then deputy inspector general for the Health and Human Services Commission, according to a video of the Feb. 6, 2012, training obtained by The Texas Tribune. “I want you to go out there and find out what’s wrong and fix it.”
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As if to hammer the point home, Lynn Blackmore, director of the inspector general’s Medicaid fraud unit, told the new recruits that this was their money.
“If you’re a success, you’re protecting your own taxpayer dollars,” Blackmore said.
Stick set out a herculean task for his new charges: find $1 billion in Medicaid overpayments made to healthcare providers in Texas.
“I’m here to help you get from where we are now to a billion dollars — a billion dollars,” Stick told the group. “With your help, we’ll get there. Good luck, guys. Thank you.”
But records show that the annual goal set by Stick and other supervisors was not only lofty but also pointless for this watchdog unit created in 2003 and tasked with combing through claims data and investigating waste and fraud complaints.
Investigators with the inspector general’s Medicaid Program Integrity Unit, or MPI, haven’t come anywhere close to finding that much in annual overpayments despite pricey badges and $20 million in fraud-tracking software acquired by the health agency a year after the training video was made.
The department is facing a criminal investigation and two other reviews over how that software contract was awarded to Austin firm 21CT. And it is struggling to remain relevant as lawmakers discuss collapsing the department with the four other social services agencies it manages. Stick and his former boss, Inspector General Doug Wilson, were forced to resign over the contract.
Last month, Sen. Charles Schwertner, R-Georgetown, chairman of the Senate Health and Human Services Committee, told agency officials that they must do better.
“The bottom line is, I think the Legislature, and I personally, have lost confidence in the Medicaid OIG,” Schwertner said.
The office’s track record on its core duty — finding abuse, waste and fraud — has been suspect for years.
Less than 1 percent of the money that investigators find to be overpayments, whether caused by fraud or oversight, is actually collected, according to last year’s blistering Sunset Advisory Commission report.
The report proved for the first time since the office was created that the return on the investigators’ gumshoe efforts is minimal and that most of the legwork is done by government healthcare contractors paid to monitor their own billing records for the state.
“OIG reports that it identified $1.1 billion in Medicaid provider overpayments in fiscal years 2012 and 2013,” the Sunset Advisory Commission staff wrote. “But only $5.5 million in provider overpayments was collected in that time frame.”
Rep. Garnet Coleman, D-Houston, believes the inspector general’s preoccupation with fraud has done more harm than good.
He offered a more succinct analysis of the department’s track record: “It sounds like the juice isn’t worth the squeeze.”
For more than a decade, the unit has kept lawmakers and the public in the dark with fuzzy details about exactly how much it brings in, obscuring its results with financial buzzwords like total cost recovery and identified overpayments.
Neither term really tells anyone what was actually collected, the sunset commission staff confirmed to the Tribune.
For example, the Health and Human Services Commission pointed to a document in February, muddily named the “Summary of Cost Recovery and Cost Avoidance Dollars to Date,” as proof of what it has collected in Medicaid overpayments from 2004 to 2013.
Taken at face value, it indicates that the inspector general’s “total cost recovery” from medical providers was $300 million to $400 million each year.
Not exactly, according to the sunset commission staff.
What the office reported as recovered Medicaid funding, or “total cost recovery,” was actually what the office estimated would be collected, not what was actually collected. The best estimate of actual collection is $5.5 million in both fiscal 2012 and 2013, the commission said.
For years, the inspector general’s office has touted the work of its investigators, crediting them and the taxpayer-funded resources that lawmakers gave them as making a serious difference against Medicaid fraud.
In the past three years, the office’s entire budget has spiked 30 percent to $48.9 million in the fiscal year that ended in August, and it now boasts 770 employees, including the Medicaid investigators.
“We devoted more resources to our provider investigations to allow us a greater probability of recoupment of overpayments,” Wilson, then the inspector general, told the House Committee on Government Efficiency and Reform in 2013.
In that meeting with House lawmakers, Wilson talked about how a reorganization, the infusion of new staff, and a healthy assist from a new and untested software tool from contractor 21CT would pay dividends in tracking down Medicaid overpayments.
“We, as a result of those changes, experienced improvements in our productivity,” Wilson said.
He pointed out that the unit had only 12 Medicaid investigations in fiscal 2011. A year later, that number rose to a whopping 108.
But most of the eye-catching collection numbers — the few that sunset commission staffers have been able to find — have nothing to do with the investigators but come from the Health and Human Services Commission’s healthcare contractors.
Those contractors are constantly filtering Medicaid claims to make sure patients weren’t already covered by private insurance.
That happens when patients don’t know whether they have insurance. If, for instance, a teenager lands in an emergency room with a broken arm and has no clue what insurance his or her parents use, the hospital will file a claim under Medicaid.
When the contractors review Medicaid claims, they find out whether a private insurer covered the teen and they get the money back from the insurance company.
In defense of the inspector general’s office, Coleman, the Houston lawmaker, said it likely struggles to recover money because it was never designed to get results. Its creation was more about appearances, he said.
“I think that it didn’t matter if OIG was working to get results,” Coleman said. “That wasn’t the objective. It was the optics.”
Health commission spokeswoman Stephanie Goodman concedes that the shortcomings noted in the sunset report are valid.
“Sunset points out that there are inefficiencies, that we’re not using this resource in the most effective way,” she said.
But as the agency moves forward with a new inspector general — Stuart Bowen Jr., who was confirmed by lawmakers last month — the handling of Medicaid fraud investigations will undergo a number of reforms.
“We’ll be giving providers more guidance at the front end,” she said, to prevent overpayments from piling up.