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Lawmakers Want Answers on Dental, Orthodontic Fraud

Updated: As new details on Medicaid dental and orthodontic fraud investigations emerged at a House Public Health hearing on Monday, lawmakers warned that state agencies should not shirk responsibility.

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Updated Oct. 15, 9:40 p.m.:

As new details on Medicaid dental and orthodontic fraud investigations emerged at a House Public Health hearing on Monday, lawmakers warned that state agencies should not shirk responsibility for allowing the payment of millions of dollars in fraudulent Medicaid claims.

“We’ve had breaks in the accountability chain within our own agencies… but if we were more on top of our game we might have been able to stop a lot of this,” said Rep. Jodie Laubenberg, R-Parker. “I think we need to keep pointing the finger back at us.”

The Texas Health and Human Services Commision, that agency’s Office of Inspector General, and the Attorney General’s Office recently formed a joint task force to crack down on Medicaid dental and orthodontic fraud.

The task force is pursuing around 20 cases that deal with Medicaid orthodontic and dental fraud, which will have more than 400 dentists and orthodontists as defendants combined, said John Scott, the deputy attorney general for civil litigation and the chair of the task force. The task force is using all of its tools to get “the state of Texas’ money that has been stolen from it back,” he said.

Doug Wilson, the HHSC inspector general, said the agency currently has 27 open investigations and has put payment holds on 26 providers while investigators pursue allegations of fraud. The agency has also identified more than $370 million in potential overpayments for Medicaid dental and orthodontic services, he said.

The agency has also ramped up its Medicaid fraud team, and in so doing, reduced the duration of fraud investigations from four years to eight weeks, said Wilson. The agency is also planning to update the state’s data mining technology within the next few months. While the current system can only be used to look up information on providers the agency already suspects of fraud, the new system will use pattern analysis and other advanced tracking methods to identify fraudulent providers in real time.

“Obviously, we did not stem fraud in any form or fashion,” said Rep. Lois Kolkhorst, R-Brenham, the chair of the committee. She specifically pressed state authorities on why they did not identify the grand level of Medicaid dental and orthodontic fraud earlier, and asked whether the Texas Medicaid Healthcare Partnership, which the state contracted with to review and approve dental procedures, was liable for essentially rubber-stamping claims.

Wilson said an audit HHSC conducted of TMHP in 2008 indicated the contractor needed additional personnel to review prior authorizations for orthodontic services. “We were on to something, but perhaps didn’t know it,” he said.

State and federal auditors are currently conducting a joint audit of TMHP. By looking at a statewide sample of authorization records, both state and federal auditors hope to identify how much funding should be recovered for medically unnecessary claims.

Scott also said a financial litigator on the task force is investigating whether TMHP met its contractual obligation with the state to properly approve Medicaid claims. In his opinion, the company did not.

Original story: 

Through a new joint task force, the Texas attorney general’s office and the office of the Inspector General at the Health and Human Services Commission have teamed up to strengthen investigations of fraud and abuse in the state’s Medicaid dental program for children. And because the task force allows the agencies to coordinate limited resources, state officials say, the state can advance investigations and recover misused taxpayer funds more quickly. 

“The Medicaid and orthodontic fraud task force was convened to ensure the state had a comprehensive and coordinated response to a dramatic uptick in fraud by Medicaid providers,” said Daniel Hodge, the first assistant for Attorney General Greg Abbott“The highest levels of all affected agencies and divisions are actively involved in advancing the investigation as efficiently and effectively as possible."

John Scott, the deputy attorney general for enforcement litigation, chairs the task force, which also includes officials from the Medicaid Fraud Control Unit and Civil Medicaid Fraud Unit at the AG's office, and officials from the inspector general and other departments of the HHSC.

In 2010, Texas spent as much on orthodontic services as every other state combined, according to a report released in April by the U.S. House Committee on Oversight and Government Reform. "The state has admitted that widespread fraud was occurring and that the organization the state hired to assess prior authorization forms was essentially rubber stamping forms for approval," the report states. An orthodontist consulted by the inspector general's office at HHSC estimated that 95 percent of approved claims should have been denied, according to the report.

State officials said the task force, which was created this year, allows the agencies to take advantage of what each group brings to the table. For example, the inspector general’s office has software to monitor whether a provider’s claims data looks suspicious and can put payment holds on providers it suspects are committing fraud. And the AG has teams of lawyers from the two Medicaid fraud units who follow through on investigations, subpoena records and press charges. 

The state is also getting an assist from whistleblowers like Dr. Morna Staffel, a pediatric dentist in Fort Worth, who said she has stacks of evidence — in the form of patient records — of children being overtreated and, in effect, abused by dental clinics seeking to profit off the state’s dental program for low-income children.

On Monday, for example, she had to remove six teeth in a child’s mouth that had abscessed less than six months after Medicaid paid for the child to be treated at a nearby dental clinic. “When I see this type of situation, I’m pulling patient records, I’m keeping patient records, I’m calling the [Office of the Inspector General],” said Staffel.

Evidence turned over to the state by whistleblowers is filed under seal. And state officials cannot disclose how many investigations they are currently pursuing. But one provider, All Smiles, which was the focus of a WFAA-TV report in October that brought the allegations of fraud into the national spotlight, appears to be in their crosshairs.

State authorities familiar with the task force’s investigations said the group is committed to recovering all taxpayer funds lost to dental fraud, from both dental providers and the Texas Medicaid and Healthcare Partnership, which was responsible for evaluating the medical necessity of dental claims and approving payment.

The state audited TMHP’s process for evaluating dental claims in 2008 and recommended that the contractor increase the number of licensed dental professionals reviewing orthodontia claims, according to a State Office of Administrative Hearings report related to a recent allegation of Medicaid dental fraud. “TMHP responded to the audit’s recommendation by saying that an increase in the use of dental professionals would require a change in TMHP’s contract, which did not occur,” the report states. 

TMHP recently renewed its state contract, and state officials familiar with the investigations said they plan to work with the company on negotiations to recover state funds lost to medically unnecessary claims.

In an email to The Texas Tribune, Ken Ericson, a spokesman for TMHP, said, “Several providers are under state attorney general investigation — and we are cooperating with that investigation.”

Most of the rise in Medicaid dental claims was probably legitimate, said Stephanie Goodman, spokeswoman for HHSC, because the state had increased reimbursement rates by 50 percent to expand access to care. “Those other factors kind of masked the fact that there was also probably an increase of bad actors in the program,” she said.

Texas became a target for dental fraud after 2007, when the Legislature raised its allotment for Medicaid children’s dental services and appropriated $1.8 billion, as part of a legal agreement to increase access to care.

State authorities familiar with the task force's investigations confirmed it has found that some dental clinics have illegally solicited Medicaid patients by standing outside large retailers and grocery stores and handing out gift cards in exchange for signing up for a free dental exam. And the inspector general recently issued a statement that said, “Offering inducements to Medicaid clients is a violation of state and federal law and is subject to a penalty of up to $10,000 per violation.”

As the Tribune reported in July, the crackdown on orthodontic fraud has left many patients with untended braces, and a difficult transition to Medicaid managed care has exacerbated problems with access to care. The state is currently severing ties with Delta Dental, one of three Medicaid managed care plans, in part because state officials said the company failed to establish a computer system for providers to submit claims in a timely manner. In December, 1.1 million individuals enrolled with Delta Dental will be transferred to the other two managed care dental plans.

Staffel said the transition to managed care has limited the number of orthodontists willing to take referrals for Medicaid patients, and many patients have been left "hanging in limbo," after the state shut down their orthodontic clinic by withholding Medicaid payments while the state investigates allegations of fraud.

HHSC has informed orthodontic providers that the dental board can suspend or revoke their license for abandoning Medicaid patients. 

"We’ve worked really closely with the dental board on that issue," said Goodman, adding many orthodontists have also stepped up to help address the problem with access to care. "Even providers that didn’t normally take Medicaid patients have agreed to take a few."

Editor's note: This article originally contained a typo, and stated Texas increased Medicaid spending for dental services by $1.8 million, rather than $1.8 billion.

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