Texas Paid Millions for Unallowable Medicaid Orthodontic Services

Transcript

[Matt Moore] I'm Matt Moore, an audit manager in Dallas, speaking with Eugena Newton, a senior auditor who is also in our Dallas office. Eugena, your audit team conducted two audits to determine whether Texas ensured that requests for prior authorizations of Medicaid orthodontic services were approved in accordance with State Medicaid guidelines. First of all, why did you choose to audit Texas?

[Eugena Newton] We saw that payments for Medicaid orthodontic services in Texas increased by more than 3,000 percent - from $6.5 million dollars in 2003 to a whopping $220.5 million in 2010. Obviously, that's a huge increase in Medicaid payments. By comparison, Texas Medicaid enrollment increased by a relatively modest 33 percent during the same period.

[Matt Moore] Could you explain a little about the orthodontic services covered under Medicaid?

[Eugena Newton] Sure. In general, The Medicaid benefit for children provides dental coverage. At a minimum, the program must provide relief of pain and infections, restoration of teeth, maintenance of dental health, and medically necessary orthodontic services. States are required to have procedures in place to ensure orthodontic services are medically necessary.

[Matt Moore] How does Texas handle this program?

[Eugena Newton] In Texas, the Health and Human Services Commission, which we'll refer to as the State agency, administers the Texas Health Steps program. And Texas uses something called the prior-authorization process, which involves confirming that certain medical conditions exist, such as malocclusion - which is a severe teeth alignment problem - before performing orthodontic services.

[Matt Moore] Why is prior authorization so important?

[Eugena Newton] When done properly, these authorizations can prevent unnecessary procedures, which can undermine the well-being of the children in Medicaid. Also, they prevent taxpayers from having to foot the bill for services kids don't need.

[Matt Moore] What did you find in the first report?

[Eugena Newton] We found that the State agency did not ensure that the prior authorization process was used to determine medical necessity. The State agency used a contractor that processed Medicaid provider requests for prior authorization to perform orthodontic services. We found that the contractor's dental director did not follow State Medicaid policies and procedures when determining the medical necessity of orthodontic services and reviewing prior-authorization requests.

[Matt Moore] What did you find in the second report?

[Eugena Newton] The second report focuses on the extent and financial impact of the issues we found in our first audit. We randomly selected 106 approved orthodontic prior-authorization requests and determined whether they were approved in accordance with State Medicaid guidelines. We found that only 17 requests for prior authorization had been approved in accordance with State Medicaid guidelines.

[Matt Moore] Only 17 prior-authorization requests out of a 106 were properly approved?

[Eugena Newton] Yes - the remaining 89 were not approved according to the guidelines. Most of those requests were associated with beneficiaries who did not qualify for orthodontic services. We estimated that the State agency improperly paid at least $191 million dollars to orthodontic providers over a 33-month period that ended in May 2011. The Federal share of those improper payments is about $133 million dollars.

[Matt Moore] Do we know why these problems occurred?

[Eugena Newton] Two reasons. First, the State agency did not ensure that the contractor properly reviewed each prior-authorization to make sure it was both medically necessary and that the beneficiary qualified for orthodontic services. Second, the State agency did not ensure the contractor's dental director followed State Medicaid policies and procedures for determining medical necessity, and if a beneficiary qualified for orthodontic services.

[Matt Moore] What did you recommend to the State agency to address the results of this review?

[Eugena Newton] We recommended several things. First, we asked the State agency to refund $133 million dollars to the Federal Government. Second, the State agency should improve its oversight of the orthodontic prior-authorization process to ensure medical necessity and ensure that people making the prior-authorization decisions follow State Medicaid policies and procedures. Third, we asked the State agency to refund the Federal share of any additional amounts related to orthodontic prior authorizations that the State agency improperly claimed after our audit period. Finally, we recommended that the State agency monitor the orthodontic program to ensure that it's in compliance with State Medicaid guidelines.

[Matt Moore] How did the State agency respond to your findings and recommendations?

[Eugena Newton] The State agency mostly agreed, and described what it's already done, as well as its future plans to address these issues. However, the State agency disagreed that the contractor deficiencies were due to a lack of State agency oversight. Because the State agency is responsible for contractor compliance, we maintain that the deficiencies were due to a lack of State agency oversight.

[Matt Moore] Thanks, Eugena, for sharing the results of your work with us today.