On May 9, the Texas Attorney General filed a lawsuit against Xerox, alleging that its subsidiary, the Texas Medicaid and Health Partnership (TMHP), allowed dentists to overbill for hundreds of millions of dollars in questionable Medicaid dental work.

At the same time, the Texas Health and Human Services Commission (HHSC) announced it has prematurely canceled Xerox’s five-year claims administration contract, worth about $759 million.

The lawsuit alleges that Xerox allowed dentists to provide expensive treatment for thousands of children who did not meet the required criteria. Medicaid covers treatment only when a child’s teeth are so badly aligned as to cause difficulty in eating or breathing.

“Xerox’s unlawful acts resulted in a substantial breach of safeguards intended to protect taxpayer dollars, maintain the integrity of Medicaid policies, and ensure the appropriate delivery of services to Medicaid clients,” the state’s legal complaint alleges. “Xerox permitted an unprecedented loss of Medicaid funds to predatory and unscrupulous dental providers. As a result of the conduct of both Xerox and these providers, the Medicaid program was deeply compromised.”

You may remember previous allegations of Medicaid dental fraud in Texas. In 2010, a report by the U.S. House Committee on Oversight and Government Reform showed that Texas spent as much on orthodontic services as every other state combined. And in 2012, an audit showed that TMHP was “essentially rubber-stamping forms for approval,” and had only one dentist on staff to evaluate thousands of claims each month.

Xerox’s response

Xerox stated that the lawsuit is misdirected and the dentists who exploited the system should be held accountable instead. The company strongly denied any fraudulent activity and asserted that it has always maintained complete transparency in its operations.

While disappointed with the state’s decision to drop them as Medicaid administrator, Xerox has promised uninterrupted service to Texas Medicaid beneficiaries during the transition period.

What happens next?

HHSC states they are finalizing an agreement with Accenture, the largest subcontractor under Xerox, to take over as the lead vendor until the state can competitively rebid the work. Accenture has managed the Medicaid claims payment system under the contract since 2004.

The state will perform a competitive bidding process to select a new contractor. State officials have selected Accenture LLP, the leading subcontractor under Xerox, to handle Medicaid claim processing during the transitional phase.

“It’s a major contract, and changing vendors is a complex process,” HHSC spokesperson Stephanie Goodman told the Texas Tribune. “If we made a change too quickly, we would put services for 3.8 million people with Medicaid coverage at risk.”

The state plans to divide that contract into four or five smaller contracts, according to Goodman. “You have a lot of eggs in one basket, and so it does make it hard to take a quick action on the contract,” she said.

What about long-term care?

If you’re like us, your first question might be: What does this mean for long-term care facilities in Texas?

The good news is that this situation appears to directly affect only dental claims processing. In addition, HHSC appears to have a plan in place to continue paying Medicaid claims while it realigns vendor contracts.

The bad news is that, with this many vendors involved — not to mention hundreds of millions of dollars in contracts at stake — there are likely to be a few bumps in the road ahead for all of us.

With hundreds of Texas customers, SimpleLTC has always worked closely with TMHP and the Department of Aging and Disability Services (DADS) to ensure that our customers’ interests are represented. We have reached out to HHSC and TMHP to ensure that our customers are not forgotten as new contracts are negotiated that will affect the flow of data and reimbursement dollars.

SimpleLTC will continue to strongly advocate for our customers throughout this process and keep you informed as things progress. Please feel free to contact us with any concerns or questions.