SENATE FINANCE COMMITTEE CONSIDERS MEDICAID FRAUD PREVENTION

The Senate Finance Committee today heard testimony from a former Harris County grand jury foreman claiming that Medicaid fraud in Texas is "running rampant" because providers are not subject to criminal background checks. Tricia Pollard was the head of a grand jury that handed down two indictments for individuals accused of bilking the state Medicaid program through overbilling. Also, both individuals had prior criminal records, but no background check was performed before they were licensed by the state as Medicaid providers.

Ms. Pollard sent a letter to the Finance Committee, alleging that fraud in the state's program to provide health care to underpriviledged familes is "widespread, massive, and repeated." Before the committee today , she testified that in the course of considering indictments, the grand jury learned that the only check on the criminal history of Medicaid provider license candidates was a box on the application form asking the applicant to note if he or she had been convicted of a crime. The state, she said, never checked those applications to find out if candidates lied or not. " We were very concerned that into this investigative void has crept the criminal element," said Pollard.

The committee also heard testimony from the Inspector General of the Health and Human Services Commission (HHSC), Brian Flood, who said the state has already taken measures to reduce Medicaid fraud. In 1997, the Legislature passed a law requiring that all Medicaid provider licensees undergo a criminal background check. While this law has been on the books for a number of years, there has been no mechanism or system to enforce the law within the HHSC. Flood said that beginning in December 2005, the agency began checking the backgrounds of applicants, which numbered about 1,500. Of those applicants, about 40 were found to have falsely checked that they did not have a criminal background. He added that he anticipates checks on more than 24,000 applicants in 2006.

As to background checks on the almost 118,000 licensed Medicaid providers in the state who were approved before December 2005, Flood said that his agency is undermanned and underequipped to carry out such a massive undertaking. He added that his agency is already considering outsourcing or hiring temporary workers to aid in this task.

According to a 1999 report from the Attorney General's office, some 17% of Medicaid claims are fraudulent. Texas budgets about $36 billion biannualy for Medicaid services. Committee Chair Steve Ogden of Bryan expressed concern that fraudulent claims are costing the state billions each year. Flood replied that he anticipates that the Inspector General's office will recover about $500 million this year from fraudulent claims.

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