Managed care organization special investigative unit fails to consistently comply with fraud detection requirements

October 10, 2023

A recent audit determined that Parkland Community Health Plan had not consistently met Texas Medicaid requirements aimed at preventing, detecting and investigating fraud, waste and abuse. Managed care organizations like Parkland are required to establish dedicated sections known as special investigative units (SIU) staffed by a full-time manager and credentialed investigators to reduce misuse of the Medicaid program.

During the review, auditors tested 12 preliminary investigations from fiscal year 2022 to determine if 15 working day deadlines were met and whether the investigations contained all required elements. Specifically, the investigation must include:

If the MCO has received any previous reports of suspected fraud, waste or abuse or if it has conducted any previous investigations of the provider in question.
If the provider has received educational training from the MCO regarding the allegation.
A review of the provider's billing patterns for any suspicious indicators.
A review of the provider's payment history for the past three years, if available, to identify any suspicious indicators.
A Determination if the investigated allegation is a violation of program policy or procedure.

Auditors determined that none of the 12 preliminary investigations had met the required deadline, instead averaging 60 working days to complete the review. Additionally, only two investigations included all the required information.

If, during the preliminary investigation, the SIU detects indicators of fraud, an extensive investigation must be completed. Of the previous 12 investigations, eight contained suspicious indicators requiring Parkland to request a sample of claims from the provider for a records review. For the review, Parkland can request 15% of claims so long as a minimum of 30 Medicaid claims or 50 claims to the Children's Health Insurance Plan are reviewed.

Extensive investigations must be completed within 15 working days. However, auditors found that two extensive investigations that identified potential fraud took an average of 88 working days to notify the OIG. Additionally, all eight extensive investigations contained at least one error that could impair Parkland's ability to mitigate fraud, waste or abuse. Among the errors were delays in completing reviews, limited sample sizes and incomplete records. Specifically:

Seven sample selections did not support meeting the 15-working day deadline.
Four medical record requests did not support meeting the 15-working day deadline.
Four medical record reviews did not support meeting the 45-working day deadline.
One sample did not meet size requirements.
Two investigations did not include three required elements of review.
Auditors also found that Parkland had not conducted fraud, waste or abuse training in a timely manner for two employees.

Following the review, the OIG presented the findings to Parkland, who agreed with the findings and agreed to implement auditor recommendations. Including:

Strengthen processes and controls to include all required elements of preliminary investigations.
Develop and implement processes and controls to complete preliminary investigations within required timeframes.
Develop and implement processes and controls to complete extensive investigations within required timeframes and document dates of completion.
Select samples that meet minimum size requirements.
Strengthen processes and controls to include all required elements of extensive investigations.
Complete timely notification and referrals of possible acts of fraud, waste or abuse to the OIG as required.
Strengthen processes and controls to provide employees directly involved with Texas Medicaid or CHIP with fraud, waste and abuse training within 90 days of employment.