Health Commission Ditching Anti-Fraud Initiative Started by Stick

After Jack Stick joined the Health and Human Services Commission's Office of Inspector General, he incorporated sales quota-like performance standards for investigators. The effort got results, but reviews have been mixed and the initiative is being shut down.

Jack Stick in the evidence room of the state Office of Inspector General in Austin on June 18, 2012.

When Jack Stick became the deputy inspector general of the Texas Health and Human Services Commission in 2012, he saw an opportunity to help investigators beef up their production in bringing potential fraud cases forward.

For the first time, general investigators — who review whether recipients of food stamps, Children’s Medicaid and other programs were overpaid — had to produce cases totaling at least $35,000 each month. For those investigating Medicaid overpayments to health care providers, cases had to be completed within 16 weeks — some cases had previously languished for years — unless they could show more time was needed.

The program got results. 

In 2011, there were 12 cases worth $28 million completed by Medicaid investigators. In 2013, after Stick’s performance standards were in place, 108 cases worth more than $500 million were completed. And the time it took investigators to complete those cases did quicken.

“They were certainly identifying more fraud,” said Stephanie Goodman, a spokeswoman for the health commission.

But reviews of what the higher performance standards accomplished are mixed, and were subjected to heavy criticism by the Sunset Advisory Commission in a report last month. The actual amounts recovered from Medicaid providers, health commission data shows, has not changed dramatically over time. A lag time of years can occur between when overpayments are identified and when they are recovered. But since 2004, the amount of Medicaid overpayments to health care providers recovered by the health commission has remained roughly in the $300 million to $400 million range annually. 

And as the health commission and three other teams review contracting procedures following a deal Stick helped foster, the agency said Friday it will throw out the sales quota-like targets in the Office of Inspector General.

“We are looking at those performance targets and plan to change them. 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,” Goodman said.

The inspector general’s office, the health commission's audit division, was created in 2003 to investigate fraud, waste and abuse in state-administered benefits: Medicaid; the Supplemental Nutrition Assistance Program (SNAP), or food stamps; Children’s Medicaid, or CHIP; the Women, Infants and Children (WIC) nutrition program; and Temporary Assistance for Needy Families, or TANF.

OIG investigators look into either one of two types of overpayments: those made to health care providers and those made to recipients. Overpayments can occur through a simple error or by design — either by the beneficiary or the provider.

Before Stick ramped up performance standards, investigators were merely given credit for each case on their desk each month. 

Last fall, Goodman said, the agency was examining how investigators were being evaluated as part of an overall management review. That review was in motion before news reports broke about a $110 million software deal the agency struck at Stick’s urging with 21st Century Technologies, or 21CT. Stick’s ties to a lobbyist with 21CT halted the contract after $20 million – most of that federal dollars – was spent on 21CT’s software tool, which is designed to help speed up fraud investigations.

“We want a strong OIG, but it should also be fair, accountable and as transparent as possible,” Goodman said.

In an interview with The Texas Tribune, Stick defended the change in performance standards. 

"Nobody liked it," Stick said. "But they met it." 

Before he came on, investigators who looked into potential recipient fraud earned points based on the program and the type of fraud.

“WIC was automatically two points. If you had a SNAP [food stamps], it was two points,” explained Albert Olguin, a former OIG investigation manager who is contesting his dismissal under Stick’s tenure.

Recipient fraud investigators had to come up with cases equal to 1o points a month, Olguin said. 

But getting credit for having a case on your desk seemed too easy to game, according to Stick. So six months after he arrived at OIG, he applied a dollar amount in upping the standard to "temper the urge a normal person would have to get their 20 cases done or whatever the number was." 

In an April 22, 2013, email to a deputy, Stick reiterated the standards he set. 

"Investigators must meet production standards each month and must recognize these production standards are critical to the mission of the agency," Stick wrote then.

Stick added that the standard wasn't as hard to meet and allowed that not everyone would be able to reach it.

"I didn't want a system based entirely on dollars," he said. And he expected to modify the system as the staff gained more experience with it.

Goodman said it is not known if the dollar quotas could have affected casework quality. "We don't know that," she said.

In a 2013 presentation to the Texas House Committee on Government Efficiency and Reform, then-Inspector General Doug Wilson touted to lawmakers how his division had upped the number of completed investigations of Medicaid providers, from 12 in the fiscal year that ended Aug. 30, 2011, to 108 in 2012. He also pointed to how his team had shortened investigative timeframes from four years to eight to 10 weeks.

But 11 months later, a Sunset Advisory Committee staff report on HHSC pointed out weaknesses in the way the OIG fraud caseload was managed and monitored.

Among its first findings was that “OIG’s investigative processes, especially Medicaid provider investigations, lack structure, data and performance measures needed for overall management and evaluation, resulting in limited outcomes.”

The staff report went on to say that while OIG has improved policies to encourage quicker completion of cases, the office “does not track its performance or come close to meeting its performance goals.”

Stick told the Tribune that the lack of a case management system at OIG was well-known at the agency. He said he and staff told the Sunset Committee staff that better tracking was needed.

The Sunset staff also pulled a sample of 2013 OIG investigations that indicated the division averaged three years to complete a case, far longer than the eight to 10 weeks that Wilson trumpeted.

Last month, Wilson resigned at the request of then-Gov. Rick Perry.

Reference
  • Jack Stick Memo Outlining Fraud Case Targets