DALLAS - Claims procedures discovered in a News 8 investigation of the Texas Medicaid Dental program may apply to the whole country, because of the payment process employed by a major government contractor.

In a series of investigative reports over the last several months, News 8 discovered hundreds of millions of dollars in Medicaid billing for orthodontics. Now it appears the problems, which have triggered a federal audit, may be linked as much to the way the claims are approved, as they are to the individual dentists involved.

It turns out that the claims examiners are paid by quantity, and not necessarily quality, under a program called Activity Based Compensation, or ABC. The more claims they process, the more money they make, creating a strong incentive not to take too much time with each one.

Your tax dollars aren't working, said a former claims specialist, one of several News 8 has interviewed. You're paying for [dental] services that shouldn't be paid for.

Texas paid out $184 million in Medicaid dental claims last year, as much as the rest of the nation combined.

Affiliated Computer Services, a multi-billion dollar company, processes Medicaid for several states, including Texas.

ACS declined to be interviewed about Activity Based Compensation, only to say in a written statement that 25,000 people under its worldwide workforce are under ABC. The program, the company says, is proprietary. An Affiliated Computer System web site said ABC boosts customer satisfaction, and drives employee behaviors.

In Texas, former employees say their behaviors have indeed been driven. Many have had their pay cut under ABC. They are paid by the volume of claims they process. And their compensation per claim has been cut over the last two years, the same period during which Medicaid Orthodontic outlays have ballooned.

Employees who might have been making $20 per claim two years ago, now are making $10 per claim. To take home the same pay, they have to push nearly twice as many claims through the system.

People didn't know how they were going to make their mortgage payment, their car payment, pay their babysitter because every time they turned around, their pay was being reduced again because corporate felt they were making too much money, a former employee said.

Former employees say ABC emphasizes volume, but there is no incentive for workers to detect Medicaid fraud. Workers say both ACS and Texas have systems in place to detect fraud, but how those programs work makes it difficult to detect on the individual level.

After a News 8 investigation reported the hundreds of millions of dollars Texas spends on Medicaid Orthodontics ($424 million over four years), the Office of the Inspector General announced an audit of the system.

Internal e-mails from within the Texas Department of Health and Human Services (HHS), obtained under the Texas Public Information Act, indicate the state recognized the huge growth of questionable Medicaid claims by some dental clinics nearly two years ago, but took no action.

The audit was launched in July on the federal level.

The state is actually a partner with Affiliated Computer Services in evaluating Medicaid claims at an office complex in Austin. The partnership is known as ACS/TMHP, with TMHP standing for Texas Medicaid Healthcare Partnership.

Billy Millwee oversees TMHP for the state. Despite the millions ACS garners from the state, Millwee is comfortable with the fact that ACS won't talk publicly.

Ultimately I am responsible for what ACS does, Millwee told News 8 in August. They are not independent agents out there. They work for us.

Now Millwee will not be interviewed about Activity Based Compensation. He says the on-going federal audit of ACS limits what he may say, though nothing about the company's pay policies were included in the announcement of the audit.

ACS is paid on a fixed-price contract by the State of Texas. Last year, ACS got paid more than $180 million for processing Texas Medicaid claims, including Medicaid Dental and Orthodontics.

Since ACS is paid a fixed amount, the more money it can cut on salaries, the higher its profits. Two years ago ACS was purchased by Xerox for more than $6 billion.


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