New Law Helps Tackle Health Agency Woes

After being accused of corruption, inefficiency and incompetence, the state health agency's Office of Inspector General is trying to get back on track, and hopes a new law will clarify and streamline its fraud investigations. This story is part of our 31 Days, 31 Ways series.

Health and Human Services Commission Inspector General Stuart Bowen
Health and Human Services Commission Inspector General Stuart Bowen  CSIS

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In January, Stuart Bowen took charge of a state office rocked by accusations of corruption, incompetence and inefficiency. Responsible for ferreting out fraud amid the programs and procedures of the sprawling Health and Human Services Commission, the office of Inspector General itself remains under a cloud.

He hopes a new law kicking in Sept. 1 will help revive the office's performance and perception.

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With more than 770 employees, the inspector general's office is charged with tracking down fraud and abuse in the state's Medicaid and food stamp programs. Bowen has also promised to target waste and abuse within the health agency's $37 billion social services empire.

Senate Bill 207 should help clarify the definition of fraud, speed up investigations and offer more protection for health care providers facing fraud accusations, Bowen said.

Bowen took the helm after Gov. Greg Abbott picked him to replace Doug Wilson, who was fired by former Gov. Rick Perry as the office came under investigation for its selection of 21st Century Technologies Inc., commonly known as 21CT, for a $110 million software contract.

“The 21CT controversy generated a lot of scrutiny from the legislature, and with that scrutiny came a recognition that there need to be some reforms here,” said Bowen, who spent nearly 10 years as special inspector general overseeing Iraq reconstruction.

The new law clarifies the definition of fraud to exclude unintentional clerical errors. In the past, the office had been accused of using accidental mistakes in billing documents as evidence of Medicaid fraud.

“Sometimes simple billing mistakes or administrative errors were treated as fraud, when in fact they were not,” Bowen said. “Providers ended up having to spend significant sums defending themselves from allegations of fraud that seemed to not have substantial weight.”

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The Sunset Advisory Commission, a group of legislators that periodically assesses state agency performance, recommended clarifying the definition of fraud in its review of the office. The review also found that the office allowed cases to languish, sometimes taking years to resolve them. Under the new law, it will have to fully investigate cases within 180 days.

Bowen said he is also working on his own to reduce the case backlog.

“I have, since arriving here five months ago, reduced the investigative backlog by 45 percent, and I have settled most of the cases that were in active litigation here when I arrived,” he said.

The new law will also restrict the office from imposing payment holds on providers under investigation except in “very serious circumstances,” Bowen said. The Sunset review found providers could lose significant money as their cases languished awaiting investigation.

State Sen. Juan “Chuy” Hinojosa, D-McAllen, the primary author of the bill, was motivated to reform the office because a large number of providers in his district were being affected by Medicaid fraud investigations, said Jennifer Saenz, the staffer who worked most closely with Hinojosa on the bill.

“I’ve spoken to many, many providers and they would complain about the same things — the lack of due process, the payment holds that were placed immediately without an investigation being done first,” Saenz said.

Sen. Jane Nelson, R-Flower Mound, who helped author the bill, said she believes the new law will help improve the office.

“It was a difficult balancing act, because on one hand we want the inspector to aggressively pursues fraud, waste and abuse,” Nelson wrote in a statement. “On the other hand, we have seen what can happen when an agency with this much independence abuses its authority. The legislation we passed will give this office the tools it needs to combat fraud in a fair, accountable matter.”

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