Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, July 10, 2018

Texas: A Cautionary Tale for Medicaid Management and Managed Care Companies

MedicaidState Medicaid Agencies are required to have all medically necessary services accessible to beneficiaries, but also safeguard Medicaid from fraud, waste, or abuse of billing, which equates an intense and challenging balancing act.

"In 2010, Texas entered into a landmark settlement of a 14-year old lawsuit, Frew v. Hawkins.   The Frew litigation, originally filed as a class action in 1993, alleged that Texas had failed to ensure that children enrolled in Medicaid were receiving necessary preventative and specialty health care services." In essence, the plaintiff's alleged that reimbursement for services were low enough that it caused a shortage of Medicaid providers throughout the state.

The settlement required Texas to increase Medicaid to incentivize providers to enroll in the system and fund a 50% increase in dental reimbursement rates. One way Texas decided do implement this was to contract with private companies "including the responsibility for oversight and prevention of fraud waste and abuse; the state also insisted on contract provisions requiring the private companies to swiftly process and pay Medicaid claims to ensure an unimpeded flow of services."

This unfortunately led to more abuse, as initially revealed TV station WFAA-TV in Dallas. Ensuing federal and state audits found that Texas dental providers were being paid for pediatric orthodontic services that were beyond what was medically required or justified - at least $191.4 million.

See Ellyn Sternfield, Texas: A Cautionary Tale for Medicaid Management and Managed Care Companies, Health Law Policy Matters, July 8, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.


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