Texas Paid Millions for Unallowable Medicaid Orthodontic Services

The Texas Health and Human Services Commission (State agency) did not ensure that requests for prior authorization of Medicaid orthodontic services were approved in accordance with State Medicaid guidelines. On the basis of our sample results, we estimated that the State agency paid at least $191.4 million ($133.4 million Federal share) for unallowable orthodontic services. Of 106 sampled orthodontic prior-authorization requests, 17 were approved by the Texas Medicaid & Healthcare Partnership (TMHP) in accordance with State Medicaid guidelines and 89 were not. Of the 89 improperly approved prior authorizations, 78 did not qualify for orthodontic services and 11 did not have sufficient documentation to determine whether they qualified.

These deficiencies occurred because the State agency did not ensure that (1) TMHP properly reviewed each prior-authorization request to determine qualification for orthodontic services and (2) the TMHP dental director followed State Medicaid policies and procedures for determining qualification. As a result, TMHP approved requests for prior authorization of unallowable services.

Although TMHP failed to approve requests for prior authorization of Medicaid orthodontic services in accordance with State Medicaid guidelines, the State agency is ultimately responsible for contractor compliance. Therefore, we recommended that the State agency (1) refund $133.4 million to the Federal Government, (2) determine and refund the Federal share of any additional amounts related to orthodontic prior authorizations that the State agency improperly claimed after our audit period, and (3) monitor the orthodontic program to ensure that it is in compliance with State Medicaid guidelines. The State agency provided information on actions that it had taken or planned to take to address our recommendations.