Performance audit, 21CT fallout bring wave of changes to Texas HHSC

Weeks after a no-bid contract scandal embroiled the Texas Health and Human Services Commission (HHSC) and the state's Office of Inspector General (OIG) and forced the resignation of top officials within the agency, the state has hired a new inspector general, initiated sweeping changes aimed at changing the way the HHSC investigates fraud and offered up legislation that alters the way contacts are awarded throughout the state.

Jack Stick, who was at the center of the 21CT no-bid contract scandal, began as the deputy inspector general of the HHSC in 2012 before transitioning to his former position as general counsel. As deputy inspector general, Stick instituted a program that required general investigators to produce a monthly caseload totaling $35,000, and investigations into Medicaid overpayments had to be completed within 16 months, according to the Texas Tribune.

Although investigators identified $500 million in overpayments in 2013, the program was criticized in a report by the Sunset Advisory Commission in October, and then in a follow-up report in December. Now, according to the Tribune, the HHSC will throw out the monthly monetary targets and readjust expectations for investigators.

"We are looking at those performance targets and plan to change them," HHSC spokeswoman Stephanie Goodman told the Tribune. "You want to set clear expectations for investigators in terms of workload, but you also have to guard against any incentive to push through cases just to meet a target."

Meanwhile, Texas Gov. Gregg Abbott (R) announced last week that Stuart W. Bowen Jr., a former aide to President George W. Bush and special inspector general for Iraq reconstruction, will be appointed as inspector general for the Texas HHSC. Bowen oversaw a $62 billion budget for Iraq's reconstruction, secured $2 billion in taxpayer benefits and obtained more than 90 convictions, according to the announcement.

Additionally, state Sen. Jane Nelson (R-Flower Mound) submitted a bill Monday aimed at reorganizing the way that Texas awards state contracts. Under Nelson's legislation, any contract valued at more than $1 million would require the signature of the agency's board chair. Additionally, employees involved in the contract's procurement or management would be required to disclose any possible conflicts of interest.

The bill comes on the heels of the $110 million contract with Austin-based 21CT, a software company hired to detect fraud. Stick resigned from HHSC after it was revealed he unfairly awarded the contract to 21CT, FierceHealthPayer: AntiFraud previously reported. 

Last week, the Austin American-Statesman reported that the FBI was launching an investigation into the contract. Days later, state Rep. Garnet Coleman (D-Houston) called for 21CT's CEO to disclose all of the company's investors, according to the Houston Chronicle. CEO Irene Williams responded in a blog post, saying 21CT is a "100 percent self-funded successful technology company with no outside investors."

For more:
- read the Texas Tribune article
- here's Gov. Gregg Abbot's announcement
- see Sen. Jane Nelson's bill
- read the American-Statesman article, the Houston Chronicle article and 21CT's blog post

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