Texas Attorney General Ken Paxton announced that his office has recovered more than $200 million in improper or fraudulent payments to medical providers, suppliers, and drug companies by the state’s Medicaid system in fiscal year 2023.
The findings of the AG’s Medicaid Fraud Control Unit (MFCU) and Civil Medicaid Fraud Division, and the Texas Health and Human Services Office of the Inspector General (OIG), were released in a joint annual report.
Over $203 million in remedies, penalties, and fines were returned to the state as a result of the AG’s investigations and settlements, in 2023. In addition, the OIG recovered $532 million in overpayments to health care providers.
Criminal Prosecutions, Too
According to the report, the MFCU obtained 79 indictments and 61 convictions averaging 4.6 years on various Medicaid fraud charges.
For example, a pharmacy owner was sentenced to more than 17 years in federal prison for participating in a fraudulent opioid pill mill scheme involving diverted narcotics and fake prescriptions billed to government health care programs.
Paxton says his office is continuing to pursue major cases involving Medicaid fraud, including a lawsuit against Pfizer and Tris Pharma for providing adulterated drugs to children and making related misrepresentations to the Texas Medicaid program. In another case, Texas filed a lawsuit against Gilead Sciences, alleging the company engaged in unlawful marketing ploys to incentivize medical providers to prescribe its drugs over competing medications.
‘Rife With Fraud and Abuse’
The amount Paxton recovered is probably just a drop in the bucket compared to the actual losses, says Devon Herrick, a health economist who writes for the Health Bog of the Goodman Institute, which co-publishes Health Care News.
“Medicaid tends to be rife with fraud, and abuse that doesn’t rise to the level of fraud but is still inappropriate,” said Herrick.
“Here’s an example: dental fraud in the Texas program,” said Herrick. “Years ago, Texas got in trouble for not having a robust enough dental benefit for kids. So, the state began offering more benefits and the dentists began doing all kinds of fraudulent things. … (A)bout 20 years ago, someone I knew had a kid who qualified for benefits and took them in for routine dental work—it was baby teeth, and the dentist put crowns on all of them!”
“The teeth weren’t bad; but why would you put crowns on a baby tooth?” asked Herrick. “Those teeth will be gone in two years, so they didn’t need all that work done. They probably needed to check for cavities and that kind of stuff, so that wouldn’t be fraud, it would be abuse and torturous for the kid to go through all that unnecessary dental work.”
Gaming Government Health Care
In any public program, all the providers, including the scrupulous ones, are going to game that program and look for loopholes and anything they can to game it, says Herrick.
“What happens is the providers are not paid well for visits and services, so they try to make it up on volume,” said Herrick. “If you were the person paying the bill, you would scrutinize it and ask, ‘Does my kid really need eight crowns and to be tortured like that?’”
When people are not paying the bills, as in Medicaid, and they have lower family incomes, they might think that’s a great deal and subject their children to unnecessary procedures under the mistaken belief that they are getting something for nothing because it’s free at the point of sale, says Herrick.
“In the free market, prices are used to ration goods; but in Medicaid and Medicare, prices aren’t used for rationing goods, so they have to find other mechanisms,” said Herrick. “However, when you have other mechanisms than pricing, you also have stakeholders or advocates for kids, and so forth, trying to block that rationing system, and that’s when you have over-utilization and waste. But the waste is probably far worse than the fraud… and some of the waste, they don’t even call it fraud because it’s legal.”
Federal COVID Fraud
Medicaid and Medicare fraud are long-standing problems, says John Dale Dunn, M.D., J.D., a physician and policy advisor to The Heartland Institute, which publishes Health Care News.
“I would also say that the Texas Medicaid scam is small time compared to the scam that stole billions from the Feds on COVID relief projects,” said Dunn.
A look at earmark projects in budget bills makes the Medicaid scam a penny-ante theft compared to other examples of fraud on the government, says Dunn.
“The magnitude of fraud in the matter of COVID funds is a much, much bigger rip-off of the taxpayers,” said Dunn. “When government gets big and hands out lots of money, what’s the surprise that there would be people taking some? As Willie Sutton explained, he robbed banks because that’s where the money was. Well, federal programs with big budgets are certainly a place where the money is, and the money is not well-managed and secured from theft.”
Kenneth Artz (KApublishing@gmx.com) writes from Tyler, Texas.