Medicaid is a jointly funded state and federal health care program. The program was established in Texas in 1987. It is administered by the State of Texas, namely the Health and Human Services Commission (HHS).


As of July 2013, one in seven Texans (3.7 million) relied on Medicaid “for health coverage or long-term services and supplies.” There are approximately 57,000 Medicaid providers in this state.


Medicaid Expenditures in Texas Surpass 25 Billion


In State Fiscal Year 2013, federal and state expenditures for Medicaid was $25.8 billion—or slightly more than 26 percent of the Texas budget. These expenditures paid for the following health care services:


  • Physician, midwife and nurse practitioner services;
  • Inpatient/outpatient hospital services;
  • Early and periodic screening, diagnosis and treatment for children up to age 21;
  • Family planning and services and supplies;
  • Laboratory and x-ray services;
  • Pharmacy;
  • Home and community-based services;
  • Nursing facilities services; and
  • Services provided in Intermediate Care Facilities for Individuals with an intellectual Disability or Related Conditions for people age 65 and older and those with disabilities.


Common Allegations Made in Medicaid Fraud Cases


According to HHS, hundreds of millions of dollars are lost from the state’s Medicaid program each year through fraud, abuse or waste. The following is a list of examples of fraud provided by the Texas Attorney General’s Office:


  • Billing Medicaid for e-rays, blood tests and other procedures that were never performed or falsifying a patient’s diagnosis to justify unnecessary tests;
  • Giving a patient a generic drug and billing or the name-brand version of the medication;
  • Giving a recipient a motorized scooter and billing for an electric wheelchair, which can cost three times more;
  • Billing Medicaid for care not given, for care given to patients who have died or who are no longer eligible, or for care given to patients who have transferred to another facility;
  • Transporting Medicaid patients by ambulance when it is not medically necessary;
  • Requiring vendors to “kick back” part of the money they receive for rendering services to Medicaid patients (kickbacks may also include vacations, and merchandize, etc.); and
  • Billing patients or services already paid for by Medicaid.


State Law Enforcement Agencies Investigating Fraud


There are three primary state agencies that investigate these types of fraud. The Texas Attorney General oversees a Medicaid Fraud Control Unit (MFCU) which conducts criminal investigations; the Office of Inspector General oversees the Civil Medicaid Fraud Division (CMF) which investigates civil fraud; and the Health and Human Services Commission (HHSC) in the Office of the Inspector General which conducts administrative reviews and on-site provider verification. The legislature has instructed these three agencies to share information about Medicaid fraud.


There are three primary state statutes under which Medicaid fraud cases are prosecuted.


Medicaid Fraud Prosecutions Serious


First, there is the theft statute (Tex. Penal Code § 31.01) whose punishment depends upon the amount of the loss. This can mean a first degree felony with a prison term from 5 to 99 years or life imprisonment and a fine up to $10,000, if the state alleges losses of more than $200,000.00. Given the expensive costs of medical treatment and equipment, it is not unusual for prosecutions to alleged losses that surpass this benchmark and become the most serious of felonies.


Second, there is the Securing the Execution of a Document by Deception (Tex. Penal Code § 32.46) which is the intent to defraud or harm a person by deception. The punishment range for this offense is the same as theft.


Thirdly, there is the relatively new Medicaid Fraud statute (Tex. Penal Code § 35A.02) that deals with false Medicaid claims by anyone including health care providers. Again, the punishment range is same as the theft statute depending upon the loss involved.


Medicare Fraud Program Flawed


But all is not well on the Medicaid fraud prosecution front in Texas. Just last year the Houston Chronicle reported that Kyle Janek, the Executive Commissioner of the HHSC appointed a “special assistant” to audit the state’s Medicaid anti-fraud program. A spokesperson for Janek said the commissioner wanted to “make sure policies and processes are fair and effective and clearly communicated to providers.”


State lawmakers hailed the move, which came on the heels of an audit released by the state Sunset Advisory Commission which exposed serious flaws in the Medicaid anti-fraud program. This commission found that the HHSC’s handling of number of human services programs was “fragmented,” including the Medicaid program.


Some lawmakers have become increasingly critical of the HHSC’s slow pace in conducting its fraud investigations, some of which take up to three years. These state officials said, as the Chronicle reported, that between 2007 and 2012 some $823 million was spent on medically unnecessary procedures in the Medicaid program.


Honest Mistakes Are Not Fraud


We embrace badly needed reforms in the state’s Medicaid anti-fraud program, but not as an encouragement for the Attorney General’s office and state prosecutors to gin up a witch hunt fraud cases. We agree with other criminal defense attorneys who say the current system is “abusive,” but we’re also concerned that honest mistakes and reasonable disagreements between providers and the program will become “fraud.”


At the federal level, we have witnessed too many Medicare and Medicaid fraud cases that were nothing more than civil disputes prosecuted as crimes, ruining the lives of many health care professionals. We don’t want to see reform turned into a prosecution crusade in this state.