Private vendor cost State of Texas millions; feds hold agency accountable

An investigation by the US Department of Health and Human Services’ Inspector General revealed that a private firm managing a state Medicaid program cut corners when processing pre-authorization requests by dentists seeking to fit Medicaid patients with braces.

As a result, the Medicaid program likely spent hundreds of millions of dollars on fraudulent or improper Medicaid claims.

The investigation also found that the Texas Health and Human Services Commission (HHSC), which oversees the Medicaid program, failed to ensure that the company followed Medicaid guidelines, which allow for Medicaid payments only when the braces are a medical necessity.

According to the Inspector General, Xerox, which until May managed the program that processes Medicaid claims for the state, used clerks designated as dental specialists in place of registered dental assistants and technicians to determine whether most of the pre-authorization requests were a medical necessity.

The Inspector General’s report said that, the clerks “simply examined the paper work (required from the dentist) for a bar code indicating that the submitted request included the required diagnostics, but they never took the diagnostics out of the packaging for examination unless the HLD Index (an index used for measuring the imperfect positioning of teeth) was less the 26.”

These clerks were supposed to have doctors and dentist who they could use as resources to help them determine medical necessity, but Xerox didn’t provide any.

All determination of medical necessity were supposed to be reviewed by a licensed dentist or the Xerox dental director, but Xerox didn’t hire any licensed dentists to review  determinations and the dental director, according to the report, made final determination of medical necessity on only 10 (percent) to 20 percent of prior authorization requests “and he did so without using Medicaid criteria.”

Even though Xerox’s contract with HHSC states that the company must hire a sufficient number of medically knowledgable personnel to process requests, Xerox chose to assign most of the work to clerical staff.

When asked by the Inspector General to justify its position, representatives of Xerox said that the contract did not sufficiently define the term “medically knowledgable.”

The Inspector General began delving into the Texas Medicaid dental program after noticing a substantial growth in the amount that the program was paying for orthodontic services (fitting patients with braces). In 2003, Texas Medicaid paid $6.5 million for orthodontic services. In 2010, it paid $220.5 million, or more than 3000 percent above what was paid in 2003.

Over the same period, Medicaid enrollment increased only 33 percent.

Because of the hefty increase in payments, the Inspector General suspected that fraud, waste, or abuse might be involved.

While the Inspector General was finalizing the report on Texas’ Medicaid dental program, HHSC in May fired Xerox, and the Texas Office of the Attorney General filed suit against the company.

According to the Dallas Morning News, the Office of Attorney’s suit, blamed Xerox for “an unprecedented loss of Medicaid funds to predatory and unscrupulous dental providers.” The suit goes on to say that Xerox has cost the state hundreds of millions of dollars.

According to an HHSC media release explaining why Xerox was fired, the company approved thousands of requests for braces that didn’t meet Medicaid guidelines.

However, the Inspector General said that the firing of Xerox was an action that was too little and too late and that HHSC did not properly oversee the work of Xerox.

“Although (Xerox) failed to properly use the prior-authorization process to determine the medical necessity of orthodontic services, the State agency is ultimately responsible for contract compliance,” said the Inspector General’s report.

In responding to the Inspector General’s findings, HHSC took exception to the conclusion that it did not properly oversee the contractors work.

According to HHSC, it shouldn’t be held accountable because it, “reasonably relied upon Xerox’s assurances regarding its compliance with HHSC policies.”

” When HHSC questioned Xerox’s administration of the Program as part of its monitoring process, Xerox made repeated written and oral assurances that it was complying with HHSC’s approved policies and procedures to determine medical necessity,” wrote Dr. Kyle Janek, HHSC’s executive commissioner in his response to the Inpector General’s findings. “HHSC trusted Xerox’s representations regarding its management of the Program.”


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