Senate Approves Bill That Targets Medicaid Fraud

Sen. Jane Nelson R-Flower Mound, listens to testimony during a Health and Human Services committee hearing on February 19th, 2013
Sen. Jane Nelson R-Flower Mound, listens to testimony during a Health and Human Services committee hearing on February 19th, 2013

Updated, April 15, 3:30 p.m.: 

The Texas Senate on Monday approved legislation that aims to tackle Medicaid fraud.

"Fraud robs us of the resources we need to care for our most vulnerable citizens and breaches the trust of taxpayers," Sen. Jane Nelson, R-Flower Mound, the author of Senate Bill 8, said in a statement. "This bill will make it tougher for fraudulent providers to take advantage of the system."

Thirty senators voted in favor of the bill, while Sen. Kirk Watson, D-Austin, abstained from the vote. The bill now moves to the House.

The Senate also approved two amendments to the legislation, one filed by Nelson that clarifies restrictions on transportation services and another filed by Sen. Carlos Uresti, D-San Antonio, that would clarify who has the authority to represent children enrolled in a state health plan. 

Chris Hooks contributed reporting to this story.

Original story, Feb. 19:

The Senate Health and Human Services Committee gave its endorsement Tuesday to legislation that tackles Medicaid fraud and could save the state millions of dollars.

Senate Bill 8 will “reduce the epidemic levels of fraud waste and abuse that are plaguing our health and human services,” said Sen. Jane Nelson, R-Flower Mound, the author of the bill and chairwoman of the Senate health committee. She added that “no amount of fraud is tolerable, but given our recent budget challenges it is inexcusable” that the Office of Inspector General has identified more than $6 billion in fraud from 2004 to 2011 tied to Medicaid, the state health program for poor residents.

The legislation will now go to the full Senate.

The committee approved a substitute of the original bill. The approved measure would set up a data analysis team within the Texas Health and Human Services Commission to detect trends in Medicaid claims and take a proactive approach to identifying potential fraud; ensure providers found guilty of Medicaid fraud in Texas or other states would be barred from participating in the state’s program; strengthen prohibitions against directly soliciting Medicaid patients for treatments; and reduce transportation fraud by adding medical transportation services to managed care and setting up a relationship between the Texas Department of Transportation and the Health and Human Services Commission to verify the eligibility of a Medicaid patient for transportation services.

The state comptroller anticipates the actions called for in SB 8 would save $14 million annually in state funds after 2015, and shrink state employment by nearly 300 full-time positions.

“We don’t like doctors that mistreat the system any more than you do, and we want it stopped,” said Dr. Charles Moser of South Texas Dental, who spoke Tuesday in support of the legislation before the committee. “We see rampant use of gift cards and other illegal incentives” by other dental practices to lure Medicaid patients, he said.

Texas has stepped up Medicaid fraud investigations recently, and it has relied on the help of private whistleblowers — who can receive up to 25 percent of a fraud settlement by referring a case — to help resolve cases. The Texas attorney general's office and the HHSC Office of the Inspector General, which investigates fraud among health providers paid to treat poor children and the disabled, set up a joint task force in 2012 to respond aggressively to heightened allegations of dental and orthodontic fraud in Medicaid.

Although no one challenged the intent of SB 8 on Tuesday, a handful of dental and medical transportation providers testified to the committee that they had concerns about how the specific language of the bill would affect the existing practices of nonfraudulent organizations. For example, medical transportation providers said they feared the measures could impact their ability to bid for new contracts or limit patients' access to transportation services.

Concerns were also raised by a Dallas dentist with Smile Texas that the proposed anti-solicitation laws would prevent the company from sending materials home with children that target all parents, including parents with children enrolled in Medicaid, to sign up their children for dental services. Smile Texas treats children at 251 Texas school districts, and provides some subsidized services for children without health insurance, he said.

“I think the committee substitute will help alleviate some of the concerns,” Nelson said. After hearing additional testimony, she later added, “It’s the unknown that some people are concerned about, and we want to make sure they’re comfortable with this as we move forward.”

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