This morning the San Antonio Express published a feature article headlining the case of Harlingen Family Dentistry and Dr. Juan Villarreal and his fight against the Office of Inspector General and their “credible allegation of fraud” payment holds. Reporter Jeremy Roebuck does a wonderful job telling the story of the excesses and deficiencies of OIG’s handling of these investigations and their subsequent payment holds which lead to financial hardship and sometimes bankruptcy for providers without anything being proven in court.
The following is the text of the article which is available on the Express website.
In Medicaid, docs guilty until proven innocent
Since its start in 1983, his Harlingen Family Dentistry practice has emerged as a top provider of dental care to low-income patients, treating as many as 200 a day. And with each improved smile, the former Army Reservist and ex-appointee to the state board of dental examiners saw his reputation grow.
Until the day two years ago that state investigators arrived at his doorstep.
In quick succession, Villarreal learned he’d been accused of Medicaid fraud, would be partly barred from billing the government-funded health care program for the poor and ordered to pay back $7.8 million that he purportedly owed the state — all before he had a chance to determine the specific allegations against him or challenge them in court.
“They wouldn’t tell me what was going on,” he said. “I knew I hadn’t done anything wrong. I was just thinking, ‘I’ll just wait for this to blow over.’”
Two years and dozens of court hearings later, he’s still waiting. And he’s not alone.
Using what’s known as a “credible allegation of fraud” payment hold, Texas’ Medicaid watchdogs have frozen millions in provider payments and curtailed billings for 112 doctors, dentists and other health care professionals based on unverified accusations of malfeasance.
Even as Gov. Rick Perry has decried Medicaid as a “broken system” and dug in his heels against an estimated $100 billion expansion of the program proposed under the federal Affordable Care Act, his administration has emerged as one of the leading proponents of a fraud prevention tool created under the law.
Using what’s known as a “credible allegation of fraud” payment hold, Texas’ Medicaid watchdogs have frozen millions in provider payments and curtailed billings for 112 doctors, dentists and other health care professionals based on unverified accusations of malfeasance.
The state office charged with investigating Medicaid misspending — the Texas Health and Human Services Commission’s Office of the Inspector General — hails the holds as one of the most effective weapons for investigators, allowing them to stop payments as soon as wrongdoing is suspected.
But Villarreal’s own experience illustrates the bureaucratic nightmare dozens of providers across the state say they have faced.
With little more than an anonymous fraud hotline call or a data analysis flagging their billing as unusual, many have found their funding cut off, their practices crippled and their patients left in limbo — all while investigators take months, or even years to prove, or rule out, fraud.
“There’s no doubt that there’s fraud taking place across the state,” said state Sen. Juan “Chuy” Hinojosa, a McAllen Democrat and critic of the inspector general’s recent tactics. “But that doesn’t mean you can wage a total war on providers, take down innocent businesses and ruin reputations. That’s not the way justice works.”
What’s more, they say, the allegations lodged against them often amount to little more than routine mistakes such as using an incorrect billing code, misplacing records and, in at least one case, using blue ink on a form that requires black.
“There’s no doubt that there’s fraud taking place across the state,” said state Sen. Juan “Chuy” Hinojosa, a McAllen Democrat and critic of the inspector general’s recent tactics. “But that doesn’t mean you can wage a total war on providers, take down innocent businesses and ruin reputations. That’s not the way justice works.”
It’s enough to make some providers abandon Medicaid patients altogether.
“There are days you think, do I really want to deal with the hassles of Medicaid anymore,” Villarreal said. “But this is wrong. What happened to due process?”
How much recovered?
But mention “credible allegation of fraud” holds inside the office of Inspector General Doug Wilson and you’re likely to be greeted with a host of statistics.
Last year alone, Wilson’s division placed holds on nearly 100 health care providers and identified $531 million in potentially recoverable misspending — nearly 19 times the $28 million targeted the year before.
Millions more have been saved in money that might have been paid to bad providers if not for his staff, he said.
In two years since taking the helm, Wilson has more than tripled the number of investigators charged with probing provider fraud, cut the time to build a case from years down to weeks and shifted focus toward cases with the largest potential for recovery.
“Normally, we would have waited until we had really got into a case and conducted a good chunk of a full-scale investigation before making a fraud determination. We stopped doing that,” Wilson’s deputy for enforcement Jack Stick explained during a training session for Medicaid watchdogs in other states last year. “Moving the … fraud hold determination earlier in the process has enabled us to stanch the flow of money to bad providers and increase the amount of our recoveries.”
Wilson and Stick have quoted potential recovery figures as high as $996.5 million in 2012. But when asked to divulge how much money they actually have wrung out of fraudulent Medicaid providers, they are less forthcoming.
The numbers have caught the attention of budget-conscious legislators. Yet the true impact to the state’s nearly $30 billion annual Medicaid budget remains hazy.
Wilson and Stick have quoted potential recovery figures as high as $996.5 million in 2012. But when asked to divulge how much money they actually have wrung out of fraudulent Medicaid providers, they are less forthcoming.
It can take years to recover money in a fraud case, Wilson said. But figures released by the office suggest actual recoveries of less than $10 million.
When asked during a state legislative hearing in February to provide a hard number, Wilson deflected, conceded the figure was “nothing compared to what we’ve identified.”
“A hundred thousand?” one lawmaker asked.
The inspector general replied, “It’s bigger than that.”
What constitutes fraud?
Much of the tension that has erupted between the inspector general’s office and Medicaid providers during the past two years centers on what exactly constitutes a credible fraud allegation.
The Texas Medical Association, a doctor advocacy group, fears that in an effort to increase recoveries, Wilson and his staff have cast too wide a net.
“We’re all for preventing fraud,” said Rocky Wilcox, the association’s legal counsel. “But in their efforts to get bad actors, they have picked up hundreds of dentists and physicians that have done no wrong.”
“We’re all for preventing fraud,” said Rocky Wilcox, the association’s legal counsel. “But in their efforts to get bad actors, they have picked up hundreds of dentists and physicians that have done no wrong.”
The federal law that created the payment holds remains vague, citing only examples such as a call to a tip line, an ongoing law enforcement investigation or a data analysis that suggests fraud with “an indicia of reliability.”
Wilson has resisted attempts to further define those terms within state law, but said his staff conducts a thorough preliminary review of all complaints and solicits input from expert contractors before putting any payment hold in place.
That’s what led the inspector general’s office to Harlingen Family Dentistry in 2011.
That year, the Dallas television station WFAA aired a series of critical reports investigating the $703 million Texas spent on Medicaid orthodontics during the previous four years. Much of the billing, sources quoted in the series concluded, was not only medically unnecessary but in some cases actually harmed children.
The stories set off a wave of outrage at the Statehouse and prompted a series of investigations, like the one that led to the federal conviction of Amarillo orthodontist Dr. Michael David Goodwin, who was sentenced in April to more than four years in prison and ordered to pay back $1.8 million for dozens of unneeded treatments.
The inspector general reacted quickly, too, conducting data pattern analysis on 25 of the state’s top providers of Medicaid orthodontics, reviewing them for aberrant billings.
“It’s the same play run again and again across all sectors of the medical industry,” said Jason Ray, an Austin attorney who has represented several Medicaid providers facing payment holds, including Villarreal. “They find a high level of money being spent on Medicaid patients and go after the doctors billing the most.”
With one of the largest Medicaid patient bases in Texas and $5 million in billings for general dentistry and orthodontia a year, Harlingen Family Dentistry became one of 38 Texas practices eventually placed on payment holds. Only later did Villarreal learn that his high case load — not an actual allegation of fraud — was what first attracted investigators’ attention.
“It’s the same play run again and again across all sectors of the medical industry,” said Jason Ray, an Austin attorney who has represented several Medicaid providers facing payment holds, including Villarreal. “They find a high level of money being spent on Medicaid patients and go after the doctors billing the most.”
‘Like a shakedown’
More troubling than what constitutes a credible allegation under the new regime, providers say, is what passes for fraud.
Fraud, which implies criminal intent, may be more difficult to prove, but as Villarreal said investigators told him, when he questioned the allegations lodged against him: “If Jesus Christ was doing Medicaid, even he would have program violations we could find.”
Many doctors and dentists targeted by holds say they have been labeled as criminals for violations such as accidentally misplacing documents, simple missteps in filling out forms or billing one code when another is preferred — unintentional mistakes known in Medicaid jargon as “program violations.”
Fraud, which implies criminal intent, may be more difficult to prove, but as Villarreal said investigators told him, when he questioned the allegations lodged against him: “If Jesus Christ was doing Medicaid, even he would have program violations we could find.”
While he declined to discuss specific cases, Wilson acknowledged the word “fraud” has at times been used too liberally to describe some of the violations his office pursues.
However, he said, program violations are no less worthy of stamping out.
“The vast majority of providers have gotten advice — maybe bad advice — and done things that are unintentional,” he said.
Yet, such distinctions matter little to a doctor or dentist with his practice and reputation on the line.
In Villarreal’s case, months passed between his first notification of the payment hold and when the specific allegations against him were outlined.
After reviewing 85 of Harlingen Family Dentistry’s patient files, a consultant hired by the inspector general concluded Villarreal and his orthodontists had repeatedly performed unnecessary procedures — with a billing error rate as high as 99 percent.
But as Villarreal would later argue, the case against him boiled down to a difference of medical opinion. Each of the questioned procedures had been pre-approved by the Texas Medicaid and Healthcare Partnership, a state appointed contractor charged with reviewing medical necessity for Medicaid patients.
And Dr. James Orr, the state’s former Medicaid dental director, reviewed Villarreal’s files and testified that in his opinion nearly all of the practice’s questioned billing fell within Medicaid guidelines.
Still, Villarreal, like dozens of other providers who’ve faced fraud holds, said he considered settling. At several points, the inspector general’s office offered to lift the hold against him and walk away if he would agree to pay $2.4 of the $7.8 million it claimed he owed the state.
“But even that was quite a lot of money,” he said. “And to me, this was about more than that. It was the principle. They had accused me of fraud, and I was innocent.”
Villarreal steeled himself for a costly legal battle to follow. But for many others, the financial strain of protracted litigation with an uncertain outcome proves too daunting, said David DeGroot, a McAllen attorney who has represented providers in negotiations with the inspector general’s office.
“It’s like a shakedown,” he said. “The OIG never has to prove its case, and generally providers can’t afford to fight it. They fold — they either pay up or just stop treating Medicaid patients.”
After being flagged for a credible allegation of fraud hold, providers are presented with a stunningly large sum they are told they owe the state, he said. Investigators later offer to accept a much smaller payment to end the investigation. And again and again, his clients have accepted.
“It’s like a shakedown,” he said. “The OIG never has to prove its case, and generally providers can’t afford to fight it. They fold — they either pay up or just stop treating Medicaid patients.”
Ruling: No fraud
Perhaps for that reason, when Villarreal’s case finally came before a state administrative law court in April 2012, it was the first challenge to a credible allegation of fraud hold to make it in front of a judge.
The hearing went poorly for the inspector general’s office.
Judge Shannon Kilgore agreed. In a blistering opinion, she found “no evidence that is either credible, reliable or verifying … that Harlingen Family Dentistry committed fraud or misrepresentation.”
Villarreal’s lawyers demonstrated that the consultant used to analyze Harlingen Family Dentistry’s files had never before treated Medicaid patients and had no prior experience judging cases under program rules.
What’s more, the dentist’s lawyers argued, since all of Villarreal’s billings were pre-approved, the worst their client could be accused of was a handful of mistakes missed by regulators in the past.
Judge Shannon Kilgore agreed. In a blistering opinion, she found “no evidence that is either credible, reliable or verifying … that Harlingen Family Dentistry committed fraud or misrepresentation.”
And as if passing wholesale judgment on the inspector general’s new tactics, Kilgore added: “That Harlingen Family Dentistry was a large and growing Medicaid utilizer is not, by itself, evidence of fraud.”
But Villarreal’s legal fight is hardly over.
Within days of the decision, the inspector general returned to his office — this time to probe his general dentistry billings. Investigators began showing up on his patient’s doorsteps, asking children to explain the treatments they had received.
Throughout his time on payment hold, he continued to treat Medicaid patients. But when he sought to have the nearly $1.5 million he says he is owed for work during that time, the inspector general’s office fought to keep it to offset the remaining $7.8 million balance they it says he owes for fraudulent billings.
Villarreal filed a separate suit challenging that argument. Meanwhile, two years after first finding himself in investigators’ crosshairs, he’s still awaiting a hearing on his challenge to the inspector general’s demands for overpayments.
Meanwhile, the state has placed credible allegation of fraud holds on 38 more providers this year. A handful have challenged the allegations against them and hope to follow Villarreal’s success in court. Others already have paid to settle their claims.
Earlier this year, that anxiety caught the attention of state lawmakers, prompting two new laws — which seem to take conflicting views on the use of the credible allegation of fraud holds.
The first, sponsored by state Sen. Jane Nelson, R-Flower Mound, empowered the inspector general’s office to expand its staff and use of data analysis.
The other, backed by Hinojosa, the McAllen state senator, sought to safeguard due process rights for providers facing fraud holds.
“The bottom line is this is affecting the kids,” he said. “There are too few providers accepting Medicaid as it is. But I didn’t get into Medicaid for the money, and I’m used to fighting for what I believe in.”
Wilson said he hopes the new statutes will help to mend the strained relationship between his office and the provider community.
“We’ve ruffled some feathers with our increased activity,” he said. “We’re shaking the trees and letting people know we’re there. By my measuring stick, that’s a win.”
Villarreal is less hopeful. But he has vowed to continue his fight for both himself and his patients.
“The bottom line is this is affecting the kids,” he said. “There are too few providers accepting Medicaid as it is. But I didn’t get into Medicaid for the money, and I’m used to fighting for what I believe in.”
jroebuck@express-news.net
Twitter: @jeremyrroebuck