Top Texas officials resign following fraud detection contract scrutiny

After months of scrutiny regarding subpar fraud prevention efforts, two top officials at the Texas Health and Human Services Commission's (THCC) Office of Inspector General (OIG) are out of jobs amid questions surrounding a $110 million Medicaid fraud software contract, according to The Texas Tribune.

On Friday, Gov. Rick Perry (R-Texas) asked for and received the resignation of Doug Wilson, inspector general of the HHSC. Wilson's resignation came a day after Sen. John Whitmire (D-Houston) asked that state's public integrity unit to investigate a $110 million contract that was awarded to 21CT, an Austin-based software company that was hired to detect Medicaid fraud.

A week earlier, Jack Stick, general counsel at HHSC, tendered his resignation, according to the latest in a series of investigative articles by the Austin American-Statesman, which found that Stick unfairly awarded the contract to 21CT without a formal bidding process. The state canceled the 21CT contract, along with another smaller contract the company had with the Department of Family and Protective Services.

Reflective Medical Information Systems, one of four other companies in competition with 21CT for the bid, analyzed three years of Texas Medicaid data and presented its analysis to HHSC officials, according to The Statesman. Reflective owner David Gibson, M.D., told the newspaper that when his analysts told the state OIG how poorly managed their fraud detection efforts were, Wilson threatened to sue the company if they released the report.

Gibson told The Statesman that the inspector general "could not track which Texans are eligible for services under Medicaid, where they live, their genders or their conditions," which led to fraudulent claims in as much as a quarter of the state's $23.8 billion Medicaid budget.

"They were paying claims for men who were giving births," Gibson told the newspaper.

The resignations of Wilson and Stick follow months of negative reports about fraud prevention efforts in the state. In October, an audit report found significant deficiencies with Texas HHSC OIG. Between 2011 and 2013, the agency recovered just $5.5 million out of $1.1 billion in identified Medicaid overpayments. In November, the Texas deal with 21CT began raising eyebrows as some questioned the company's limited experience with identifying Medicaid fraud.

For more:
- see the Texas Tribune story
- read the Austin American-Statesman article

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