New Texas law aims to improve fraud investigations, weed out clerical errors

The inspector general for the Texas Health and Human Services Commission (HHSC) hopes a new law that goes into effect in September will improve Medicaid fraud investigations in the state, according to The Texas Tribune.

Steven Bowen was appointed inspector general of the state's HHSC in January following a $110 million no-bid contract scandal with federal defense contractor 21CT that led to the resignation of the agency's two top officials. A scathing state audit released in April found that organizational mismanagement and failure to adhere to internal policies led to the no-bid contract.

However, Bowen hopes that Senate Bill 207 will serve as one of many changes that will revamp the agency's reputation and improve Medicaid fraud investigations. He told The Tribune that in the past, simple administrative errors were treated as fraud. The new law restructures the definition of fraud so that small clerical errors don't bog down the system, fulfilling a recommendation made by the Sunset Advisory Commission in October. The commission also reported that program officials had misused their authority to freeze Medicaid payments.

"Providers ended up having to spend significant sums defending themselves from allegations of fraud that seemed to not have substantial weight," he told The Tribune.

Bowen added that he has reduced the backlog of fraud investigations by 45 percent in addition to reaching settlements with other active investigations. In September, the new law will require the HHSC to investigate fraud cases within 180 days.

Other states have developed improved definitions of fraud, often excluding clerical errors from inciting a government investigation. In California, SB 119, passed in 2012, "imposes specific requirement on an audit of pharmacy services provided to beneficiaries of a health plan" and prohibits the state from recouping funds for a clerical or record-keeping error. In 2011, the Centers for Medicare & Medicaid Services released an informational bulletin defining a "credible allegation of fraud" and detailing what circumstances allow states to suspend Medicare payments.

For more:
- read The Tribune article
- here's Senate Bill 207

Related Articles:
Performance audit, 21CT fallout bring wave of changes to Texas HHSC
Medicaid analytics deal in Texas raises eyebrows
Cleaning up the mess in Texas requires a culture change
Texas state audit reveals 'operational defects' led to 21CT deal
Auditors: Texas must ramp up Medicaid anti-fraud efforts

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