OIG inspection of local mental health authority provides opportunity to improve contracting process

During a recent inspection of Tropical Texas Behavioral Health, a local mental health authority, the OIG reviewed a sample of six invoices representing 121 patient records for psychiatric hospitalizations and found they were billed correctly; however, not all contractual requirements for extending stays were always met.

As a Texas Health and Human Services provider, Tropical must develop policies and procedures that oversee how its three contracted private psychiatric hospitals handle patient admissions, service delivery, continuity of care, and patient discharge, including requesting an extension in a patient stay. Tropical’s policy grants an initial three-day authorization for patients and requires the hospital to submit a stay request that must be authorized in writing by the utilization manager. 

Of the 89 reviewed hospitalizations, 28 required continued stays  . Tropical could not provide documentation of requests as required by its policies and instead allowed the utilizations manager to approve $41,875 in continued stays in real-time. According to the report, this could have resulted in Tropical not having enough funds to pay for services provided.” 

Tropical also entered contracts with three other local mental health authorities that allowed the authorities to use Tropical’s funds to pay for private psychiatric beds. The agreement required these authorities to submit an invoice with all supporting documentation within ten days. However, Tropical paid $163,125 for hospitalizations without receiving the documentation. 

It was also found that Tropical paid $1,405,000 for treatment of patients at South Texas Behavioral Health without a properly executed contract. Although, Tropical continued to serve the patients within its community; this left Tropical unable to provide proper oversight and control patient treatment costs. Tropical provided evidence that it had attempted to receive the required signatures for the contract without a response from South Texas. 

Though inspectors did not find instances of noncompliance, they recommended that Tropical should implement controls to document evidence of advance approval requests for continued stays and ensure its contractors follow the established process for authorizing continued stays at private psychiatric hospitals and should revise the requirements in future contracts with other LMHAs, when applicable.