review and analysis of the medicaid and public assistance fraud oversight task force

7/31/2019 Review and Analysis of the Medicaid and Public Assistance Fraud Oversight Task Force

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Special ReportDecember 2006

REVIEW AND ANALYSIS OF

THE MEDICAID AND PUBLIC

ASSISTANCE FRAUD

OVERSIGHT TASK FORCE

CAROL E KE E T ON ST RAY HORN

Te x a s Co m p t r o l l e r


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December 14, 2006

Members of the Texas Medicaid and Public Assistance

Fraud Oversight Task Force

Fellow Members:

Since the passage of House Bill (H.B.) 2292 in 2003, the Medicaid and Public Assistance Fraud Oversight

Task Force has operated in a signicantly different environment than it had prior to the bill. H.B. 2292

consolidated twelve autonomous health and human service agencies into ve interconnected agencies. The

administrative and policy making infrastructure for these 12 agencies were collapsed into the Health and

Human Services Commission. In addition, the fraud prevention efforts across the entire health and human

service enterprise were consolidated into a single entity of the Ofce of Inspector General (OIG), which is

under the HHSC executive commissioner.

This dramatic change to the HHSC organization necessitated a review of the structure and mission of the

Medicaid and Public Assistance Fraud Oversight Task Force. This report offers recommendations that willimprove the effectiveness of the Task Force as well as the overall fraud and abuse prevention efforts of

the states. Most notably, this report recommends that the OIG currently under the purview of the HHSC

executive commissioner be made an independent entity solely reporting to the Governor.

I am pleased to present to the Task Force the review and analysis of the Medicaid and Public Assistance

Fraud Oversight Task Force. The review analyzes the enabling legislation, current membership and

organizational structure. It provides concrete recommendations to improve and strengthen the Task Force.

If you have questions or comments, please feel free to contact my staff, Will Counihan, by e-mail at

[email protected] or by phone at 1-800-531-5441, extension 6-0758.

Sincerely,

Carole Keeton Strayhorn

Texas Comptroller

Chairman, Texas Medicaid and Public Assistance Fraud Oversight Task Force

Carole Keeton StrayhornTexas Comptroller of Public Accounts

512/463-4000

FAX: 512/463-4965

P.O. BOX 13528

AUSTIN, TEXAS 78711-3528

512/463-4000

FAX: 512/463-4965

P.O. BOX 13528

AUSTIN, TEXAS 78711-3528

OFFICE

OFTHECOMP

TROLLE

R

TEXAS


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Medicaid and Public Assistance Fraud Oversight Task Force

Special ReportSpecialMed ica id and Pub l i c Ass i s tance F raud Ove rs i gh t Task Fo rce

ReportDecember 2006

REVIEW AND ANALYSIS OF THE

MEDICAID AND PUBLIC ASSISTANCE

FRAUD OVERSIGHT TASK FORCE

the Office of Attorney General (OAG) gained sig-nificant resources for fighting fraud. The OAGs

Criminal Law Enforcement Division includes

the Medicaid Fraud Control Unit (MFCU), Cyber

Crime Unit, Money Laundering and White Collar

Crime Units. According to the director of MFCU,

the unit has grown from just under 40 staff to

200 staff since September , 2003. MFCU has 200

employees, 50 of whom are commissioned Texas

peace officers.2 HHSC-OIG has more than 500

employees dedicated to the investigation and pre-

vention of Medicaid fraud and sends MFCU leads

on Medicaid provider fraud issues.

The consolidation drastically changed the envi-

ronment in which the Task Force operates and

necessitated a thorough review of its structure

and mission. To ensure the appropriateness and

timeliness of this review, the Texas Comptroller

of Public Accounts, as chair of the Task Force,

contacted the Association of Certified Fraud

Examiners (ACFE). ACFE recommended an

independent and certified fraud examiner, to con-

duct the review.

The independent and certified fraud examiners

review included analysis of enabling legislation,

current membership, organizational structure

and recommendations for improvement. The

review also included interviews of Task Force

members, experts and stakeholders with knowl-

BACKGROUND:

Senate Bill 30, passed in 997 by the 75th Texas

Legislature, established the Texas Medicaid and

Public Assistance Fraud Oversight Task Force

(Task Force). The Legislature created the Task

Force to help the Texas Health and Human

Services Commission (HHSC) combat fraud in

public assistance programs. Section 53.07 of

the Texas Government Code delineates the Task

Forces responsibilities, membership and pow-

ers. The Task Force meets on a quarterly basis

to provide a forum for members to discuss the

recent fraud prevention, detection and prosecu-

tion efforts of their agencies, retailer and pro-

vider concerns and the latest developments in

technology.

In 2003, the 78th Texas Legislature passed House

Bill (H.B.) 2292, which consolidated 2 autono-

mous health and human service agencies into five

interconnected agencies. The administrative and

policy making infrastructure for these 2 agen-

cies was collapsed into HHSC. In addition, thefraud prevention efforts were consolidated into

a single entity, the Office of Inspector General

(OIG), which is under the HHSC executive com-

missioner.

In addition to the health and human service con-

solidation brought on by H.B. 2292, both OIG and


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2 Special Report: REVIEW AND ANALYSIS OF THE MEDICAID AND PUBLIC ASSISTANCE FRAUD OVERSIGHT TASK FORCE December 2006

Special Report: REVIEW AND ANALYSIS OF THE MEDICAID AND PUBLIC ASSISTANCE FRAUD OVERSIGHT TASK FORCE

edge of the public assistance process, the cre-

ators of the Task Force and regular attendees of

the Task Force public meetings.3

TheHealth Care Fraud and Abuse Compliance

Manual4

and the ACFE publicationRed Flagsof Insurance Fraud5 were used for this review.

Information from the public testimony of the

Comptroller General David Walker and Leslie G.

Aronovitz of the U.S. Government Accountability

Office (GAO)6 and HHSC Inspector General Brian

Flood7 was also included in this review.

The report that follows represents the informa-

tion and recommendations of the Task Force

members, appropriate shareholders and the certi-

fied fraud examiner engaged for this review tomake the Texas Medicaid and Public Assistance

Fraud Oversight Task Force a more efficient and

effective tool in the fight against public assis-

tance fraud and abuse.

FINDINGS:

Overall, members of the Texas Medicaid and Pub-

lic Assistance Fraud Oversight (MPAFO) Task

Force view the organization as an effective com-

munication forum rather than an effective fraud

solution. The following findings support this

theory.

The Task Force Organizational Structure

Has Not Changed Since Its Inception

The 997 legislation creating the Task Force was

focused on the coordination of fraud prevention

efforts among the Health and Human Service

agencies. With the passage of HB 2292 in 2003,

many of these agencies that were once on theTask Force no longer exist and their functions

were merged into one of the five new agencies.

The organizational structure of the Task Force

has not kept up with the HHSC consolidation.

The new environment at HHSC changed fraud

detection and prevention operations by combin-

ing the investigative and audit responsibilities

of the original 2 agencies. The only change to

the original membership was when the Bureau

of Vital Statistics (BVS) was added in 2003. The

fraud prevention function for vital statistics once

done at BVS is now performed by OIG, making

the BVS membership on the Task Force no longerrelevant.

Although there are state agencies on the Task

Force that are not in the HHSC enterprise, the

current membership does not include all state

agencies and organizations that could benefit

from the collective experience of the Task

Force.

The Task Force Does not have Guiding

Principles in Place

The Task Force does not have established vision

and mission statements to guide them. This

dilutes the effectiveness of the organization and

supports the overall finding that the Task Force

is more of a communication forum rather than an

effective fraud solution for the state.

The Task Force Cannot Share Confidential

Information

The current organizational structure and statu-tory rules of the Task Force foster the sharing of

information between government agencies and

the private sector. However, this structure and

the rules prevent confidential information shar-

ing between governmental agencies on criminal

investigations and broader efforts to target and

reduce fraud in Texas.

Texas Government Code Section 55 indicates

specific statutory authorizations for closed (exec-

utive) sessions as: 551.071 Consultation with Attorney to

seek advice of your attorney about pending

or contemplated litigation or a settlement

offer;

551.076 Deliberation Regarding Security

Device to deliberate the deployment, or

specific implementation, of security person-

nel or devices;


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Medicaid and Public Assistance Fraud Oversight Task Force 3


551.084 Exclusion of Witness during

investigation hearing a governmen-

tal body that is investigating a matter may

exclude a witness from hearing during the

examination of another witness in the investi-

gation; and 551.074 Personnel Matters Governmen-

tal bodies can meet in closed session to hear

a complaint or charge against an officer or

employee.

Many Task Force members are concerned about

sharing confidential information in meetings

because they are open to the public. While open

public meetings help ensure public awareness

and participation, they keep Task Force members

from openly discussing fraud or abuse cases.The absence of a government only forum limits

the Task Force to a quarterly meeting process in

which agencies simply report program statistics.

There is No Coordinated Approach

to Fighting Fraud

There is no coordinated standards-setting group

for state efforts in fighting fraud. Many entities

exist that investigate, prevent, detect and pros-

ecute fraud, such as the investigative or audit

groups at state agencies. However, there is no

current provision for these efforts to be coordi-

nated statewide, outside of the health and human

services enterprise, often there is only informal

communications between agencies.

The intent of the 997 legislation that authorized

the Task Force was for the member agencies to

coordinate fraud prevention and detection. Now

that the government landscape has changed in

the last nine years, the approach to fighting fraud

will need to change along with it.

The Office of the Inspector General

is Not Independent

The HHSC Inspector General (IG) reports to the

HHSC Commissioner and to the Governor.

An IG, by definition, is created to be independent

of management to ensure agency compliance.

For example, the IG of the U.S. Postal Service is

appointed by and reports directly to the gover-

nors of the Postal Service and is independent of

postal management. OIG primarily investigatesand evaluates programs and operations of the

Postal Service to ensure the efficiency and integ-

rity of the postal system.8

Because the Texas IG is not independent, he or

she must carry out the directives of the manage-

ment the IG must investigate. This influence, and

sometimes conflict of interest, affects the overall

quality and effectiveness of the Texas fraud pro-

gram.

There are 57 autonomous federal OIGs. While

these OIGs operate independently, their efforts

to detect and prevent fraud, waste, abuse and

mismanagement of government programs and

operations of their parent organizations, they

share information and coordinate their efforts

through the Presidents Council on Integrity and

Efficiency (PCIE) and the Executive Council on

Integrity and Efficiency (ECIE).9

The Appointment Term of the Inspector

General is Too Short

The Governor appoints the Inspector General

and approves the term yearly. An appointment

term of one year is too short for optimum conti-

nuity, effectiveness and efficiency.

The Office of the Inspector General Does

Not Employ Commissioned Texas Peace

Officers

Investigators at HHSC are not eligible to be com-missioned as Texas peace officers limiting their

ability to effectively prevent, detect and combat

fraud. More than a dozen other state agencies

have investigators that are commissioned Texas

peace officers, including the Office of the Attor-

ney General Medicaid Fraud Control Unit.


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RECOMMENDATIONS:

Expand the scope of the Task Force and

update the Task Force membership.

Most state agencies operate in a pay and chaseenvironment where they have little time or

resources to implement methods to prevent

fraud. There are also organizations that have

fraud issues but have limited or no resources to

address them. A state task force that focuses on

fraud prevention in all state agency programs

would be more effective at preventing fraud than

focusing on fraud prevention in only the govern-

ment assistance programs.

A change of the name of the Texas Medicaid andPublic Assistance Fraud Oversight Task Force

to the Texas Fraud Task Force would open the

scope of the Task Force.

By expanding the scope of the Task Force, the

members would provide guidance for all state

agencies and their fraud investigators. They

would develop more uniform standards and pro-

active programs targeting fraud investigation and

prevention.

The current membership of the Task Force is

governed by Section 53.07 (b) of the Texas

Government Code. Section 53.07 (b) specifi-

cally appoints one member from each of the fol-

lowing state agencies to serve on the task force:

Attorney generals office;

Comptrollers office;

Texas Department of Public Safety;

State Auditors office;

Texas Health and Human Services

Commission;

Texas Health Departments Bureau of VitalStatistics;

Texas Department of Human Services; and

Texas Department of Insurance.

In order to accomplish a broader state effort to

prevent and combat fraud, the statute should be

changed to allow the membership of the Task

Force to include representatives from:

the Texas Workforce Commission;

the State Agency Internal Audit Forum;

the Texas Department of Information

Resources; the Employee Retirement System;

institutions of higher learning in Texas that

specialize in criminal justice programs;

the Texas State Board of Public Accountancy;

the Texas Board of Medical Examiners;

the Texas Medical Association; and

the Texas Hospital and Dental Associations.

Create clear guiding principles for the

Texas Medicaid and Public Assistance Fraud

Oversight Task Force.

The Task Force should be the States leading

experts in fraud prevention, detection, investiga-

tion and prosecution. The organization will oper-

ate more effectively with clear vision and mis-

sion statements that guide them and focus their

efforts.

The vision of the Task Force should be Elimi-

nate fraud in Texas government through innova-

tive solutions.

The mission of the task force should be The

Task Force coordinates the expertise and

resources of the public and private sectors to

analyze state practices and eliminate opportuni-

ties for fraud.

Rename the Medicaid and Public Assistance

Fraud Oversight Task Force to the Texas

Fraud Oversight Task Force.

The Task Forces name should reflect its expand-ed responsibilities and membership.

Enact legislation that allows the Task Force

to have closed executive sessions.

Holding executive sessions would allow the gov-

ernment members of the Task Force to discuss


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ongoing fraud investigations and sensitive fraud

prevention strategies. These meetings would

allow the state to work in unison to combat

fraud. It would allow them to stay one step ahead

of would-be criminals instead of one step behind.

Coordinate the states fraud prevention

efforts.

The approach to fighting fraud is constantly

changing. When a fraud prevention or detec-

tion measure is put into place, the criminals find

another way around them. With increased pres-

sure on the State to do more with less, the fraud

prevention measures become even more impor-

tant in assuring the protection of state assets

and tax dollars. Coordination among agencies toprevent, detect, investigate and prosecute fraud

is essential.

There are several steps to coordinating the

efforts of the multiple state agencies. The initial

step is in the first recommendation of the Special

Report Expand the scope of the Task Force

and update the Task Force membership. Other

opportunities exist for the state to improve their

fraud prevention efforts.

Pool the expertise across agencies and

create subcommittees within the Task

Force.A separate subcommittee should

exist for prevention, investigation, detec-

tion and prosecution. There are a multitude

of professional support organizations in the

fraud prevention, and the Task Force is not

taking advantage of them because it has no

formal program for reviewing or sharing the

benefits these groups provide. Many Task

Force members are involved in or are mem-

bers of these organizations, and they have astrong working knowledge of the support the

specific organization could provide, such as

fraud prevention, investigation, detection and

prosecution programs, statistical-based stud-

ies and other fraud-related best practices. By

establishing these subcommittees, each one

would define best practices and be a resource

to the Task Force members as experts in their

respective fields.

Ensure the Task Force members belong

to national fraud organizations. Mem-

bers of the Task Force should learn fromprofessionals in their field by joining national

associations that are a repository of experi-

ence and knowledge. Membership in these

associations would enable the Task Force to

engage in national fraud efforts and lead the

nation in fraud prevention. At a minimum, the

Task Force members should join the:

National White Collar Crime Center;

Regional Organized Crime Center; and the

Association of Certified Fraud Examiners

(ACFE).

These groups would provide specific informa-

tion to help Texas reduce fraud in their many

programs.

Grant the Task Force the authority to

serve as the fraud standards-setting

organization for state agencies. The Task

Force should be the states fraud direction

and standards-setting group.

The Task Force would look for the best fraud

prevention strategies and establish best

practices and standards. For example, the

recently released Comprehensive Medicaid

Integrity Plan, from the Center for Medi-

care and Medicaid Services (CMS), is a new

national strategy for detecting and preventing

fraud and abuse in these programs. The Task

Force would review this plan once the federal

government finalizes it and determines how it

could benefit specific Texas state agencies.

The Texas OIG has played an important role

in the recently released CMS integrity plan

and has testified before Congress on fraud

prevention efforts in Texas. OIG has placed

Texas in the national spotlight for its progres-

sive techniques for fraud detection. Utilizing

existing OIG resources and expertise, the


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Task Force could improve the States anti-

fraud efforts by establishing standards and

moving forward to prevention and deterrence

while maintaining successful detection and

prosecution practices.

Change Texas statute to make the Office of

Inspector General an independent entity

reporting solely to the Governor.

TheAssociation of Inspector Generals states the

Inspector Generals (IG) independence should

be protected. The report indicates that the

best way to protect the independence of the IG

is to limit its direct report responsibility to one

person. The Office of Inspector General should

therefore report only to the governor.

A model for this reporting structure was estab-

lished by legislation in the state of New York,

which adopted an independent office of Medicaid

inspector general, reporting directly to the secre-

tary for the governor for a five-year term. Numer-

ous Medicaid-related audit responsibilities were

also transferred to this new Medicaid inspector

general.

This recommendation is important because the

IG is a key member of the Task Force. At a mini-

mum, the IG should be independent of the HHSC

commissioner.

Lengthen the term of the IG.

The term of the IG should be lengthened from

one year to between five and seven years as rec-

ommended by the Association of Inspector Gen-

erals. According to the Association of Inspector

Generals, the term of Inspector Generals should

be long enough to make them immune to politicalpressure and to provide consistency and stability

to the fraud detection, investigation and pros-

ecution process. The Association of Inspector

Generals recommends appointment terms of five

to seven years, for optimum efficiency and effec-

tiveness.0 It is not unusual for investigations to

take several years and leadership continuity is

important in preventing fraud.

Commission investigators at the Texas

Health and Human Services Commission as

Texas peace officers.

Investigators at HHSC are not eligible to be com-

missioned as Texas peace officers. More thana dozen other state agencies have investigators

that are commissioned Texas peace officers,

including MFCU at the OAG.

By commissioning HHSC investigators as Texas

peace officers they would have:

the authorization to draft criminal subpoena

requests for judicial approval to gain informa-

tion;

extensive training in de-escalation of poten-

tially violent situations; access to more criminal data bases such as

the FBIs National Crime Information Center

and the financial crimes data base hosted by

the OAG;

better standing in the law enforcement com-

munity, which could lead to more assistance

and support during investigations and put

them on par with the commissioned investi-

gators at the other state agencies;

more and better training opportunities,

including cultural diversity, special investiga-

tions and crisis intervention training; and

access to other states law enforcement

groups and national law enforcement associa-

tions, for example the Regional Organized

Crime Information Center, which provides

extensive investigation and litigation support

for investigators.

Investigators commissioned as Texas peace offi-

cers will have to maintain the standards of the

Texas Commission on Law Enforcement Officers

Standards and Education.

The recommendations in this Special Report are

designed to improve the current Task Force and

bring overall enhancement to the States fraud

prevention efforts.


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END NOTES

Texas Government Code 53.07Medicaid and Public

Assistance Fraud Oversight Task Force, 997.

2

See attached list of people interviewed for this study.3 Fleps, Christina W., (2005)Health Care Fraud and Abuse

Compliance Manual New York, New York: Aspen Publishers.

4 Morehead, Juliana, (2006, April) Red Flags of Insurance Fraud.

Association of Certified Fraud Examiners. Retrieved April 6,

2006 from .

5 Testimony by Leslie G. Aronovitz, Director, Health Care,

United States Government Accountability Office, for the

Subcommittee on Federal Financial Management, Government

Information, and International Security, Committee on

Homeland Security and Governmental Affairs, U.S. Senate,

March 28, 2006.

6 Testimony by Brian Flood, Inspector General, Texas Health

and Human Services Commission, for the Subcommittee on

Federal Financial Management, Government Information, and

International Security, Committee on Homeland Security andGovernmental Affairs, U.S. Senate, March 28, 2006.

7 Association of Inspector Generals,Principals and Standards

for Office of Inspector General May 6, 200. Available at

.

8 Association of Certified Fraud Examiners (2004)Report to the

Nation, available at .

9 Attached copy of letter dated October 28, 2005, provided by

Texas Comptroller of Public Accounts.

0 Pennsylvania Association of Certified Public Accountants,

January 2003, Fraud Detection: SAS 99 Increases Auditors

Responsibilities.

Morehead, Juliana, (2006, April) Red Flags of Insurance Fraud.

Association of Certified Fraud Examiners. Retrieved April 6,2006 from .


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This publication is not copyrighted and

may be reproduced. The Comptroller of

Public Accounts would appreciate credit

for material used and a copy of the reprint.

Special Reports

Carole Keeton Strayhorn

Texas Comptroller of Public Accounts

P.O. Box 13528

Austin, TX 78711-3528

For more information, call -800-53-544.This publication is also available on

the World Wide Web by accessing

the Comptrollers Window on State

Government Web site at

.

Texas Comptroller of Public Accounts

publication #96-239, December 2006.

Special ReportMedicaid and Public Assistance Fraud Oversight Task Force

review and analysis of the medicaid and public assistance fraud oversight task force

Documents