Senator Talks of "Lost Confidence" in Health Agency Watchdog

Amid scrutiny of how the state's largest health agency has awarded contracts to private vendors, state lawmakers said Wednesday they had "lost confidence" in the office of the agency that investigates fraud.

At the Senate Health and Human Services Committee's first meeting of the legislative session, members heard from Texas Health and Human Services executive staff, including Commissioner Kyle Janek, who said the agency had taken steps to bolster oversight of state contracts.

“Y’all are really a contracting agency now,” committee Chairman Charles Schwertner, R-Georgetown, said of HHSC. "I think the bright spotlight of the entire state is really on the health care agencies to get it right."

The scrutiny of contracting centers on a $110 million award, made outside of the competitive bidding process, to 21CT for software to help HHSC's Office of Inspector General root out Medicaid fraud. After the original $20 million award, HHSC canceled the contract's $90 million extension.

Janek said contract oversight could be improved if the five agencies he heads were streamlined into a single "mega-agency," a recommendation lawmakers will consider this session.

Agency officials testified Wednesday that the health system's "fragmented" structure, consisting of four separate agencies under the umbrella of the health commission made oversight — and even counting the exact number of contracts, which they estimated at 36,000 — difficult.

"We don’t have a systemic way of finding that in one source," said John Scott, HHSC's chief operating officer. "We’ve got four legacy systems that are operating. ... We have got to fix that."

Schwertner reserved his toughest criticism for the Office of Inspector General, which was represented Wednesday by Quinton Arnold, an administrator. The most recent Inspector General, Doug Wilson, was asked to resign by former Gov. Rick Perry over the 21CT contract.

"The bottom line is, I think the Legislature, and I personally, have lost confidence in the Medicaid OIG," Schwertner said.

But Janek said the issues Schwertner raised with the OIG, which were discussed in a report by the Sunset Advisory Commission when it investigated the efficiency of the agency, could be addressed with the proposed restructuring.

"This goes to the heart of what Sunset said about the relationship between the Office of Inspector General and HHSC," he said. Currently, "they're too close, yet not close enough."

This story was produced in partnership with Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.