Texas dental practice sues state over Medicaid program

Harlingen Family Dentistry has filed a lawsuit against the Texas Health and Human Services Commission (HHSC) and the Office of Inspector General, challenging their authority to withhold Medicaid payment over program violations.

The lawsuit, filed in Travis County District Court, seeks to strike two HHSC rules, according to a press release by Texas Dentists for Medicaid Reform (TDMR). The group, which includes several large dental service organizations, says legislation that increases oversight of their businesses produces regulations that are unnecessary and anticompetitive.

The first rule states that HHSC can impose a payment hold on a Medicaid provider for any alleged program violation, and the second allows the HHSC to retain any funds that have accumulated from a payment hold even if an administrative judge finds that the payment hold was not proper, the TDMR said.

Gov. Rick Perry recently signed into law new legislation designed to reduce Medicaid fraud in the state.

Texas has been rocked by allegations of fraud by dentists and orthodontists accused of bilking the state Medicaid program out of tens of millions of dollars. A 2102 report by HHSC revealed that Texas orthodontists charged Medicaid as much for services as the rest of the U.S. combined in 2010, and that the Texas Medicaid and Healthcare Partnership, tasked with evaluating and approving claims, was rubber stamping them.

The Attorney General's Office has racked up more than $1 billion in Medicaid fraud recoveries over the last 10 years. Of that, the state has recovered more than $400 million since 2002 resulting from its Medicaid fraud investigations.

Both federal and Texas law requires that a payment hold should be placed on a provider when the HHSC has received a credible allegation of fraud or willful misrepresentation. The challenged rules expand the authority to impose a payment hold for any alleged "program violation," the TDMR said.

The HHSC rules list more than 50 program violations, ranging from failing to maintain documentation, marketing violations, and receiving administrative sanctions from the provider's licensing board.

The lawsuit claims that the Texas Legislature spelled out the reasons and required the high evidentiary standard of "fraud or willful misrepresentation," as a prerequisite for imposing the "remedy" of a prehearing payment hold, so the HHSC does not have the power to redefine the standards for a payment hold, the TDMR said.

Because the rules that are challenged relate to all providers in the Medicaid program, the lawsuit also requests that the suit be sent directly to the Third Court of Appeals for a quick resolution.