Fraud Detection: The Austin Saga

Fraud Detection

Healthcare Fraud’s Big Business

Medcaid fraud is big business. Criminals are ripping off the system and its costing taxpayers billions of dollars annually.

Recognizing the serious flaws in the system, which are being exploited by providers and organized crime rings, the federal government’s expressed a willingness over the last couple years to “get after it” from a fraud detection, investigations, enforcement and prosecution standpoint. Clearly, that’s the right thing to do.

As a result, there have been increased numbers of investigations, prosecutions and convictions of players in the healthcare fraud arena.

We’re not nearly where we need to be with this effort yet but it’s definitely a step in the right direction.

Healthcare Fraud Detection

Correspondingly, while healthcare fraud’s big business, private sector healthcare fraud detection, and analytics, is also big business. The critical emphasis is on fraud detection tools which analyze large blocks of “big data” to pinpoint the red flags of fraud.

The major players in the fraud detection, analytics and investigations space all have assorted anti-fraud offerings which are marketed to federal and state governments around the country.

One of the keys to effective fraud detection/prevention is analyzing “real-time” information for decisioning vs. flagging historical claims data after the fact when the horses are already out of the stable.

21CT’s In The News

When indictments, arrests, prosecutions and convictions of healthcare fraud suspects occur it’s news and the media’s littered with those stories.

Currently, however, there’s a different kind of legal saga unfolding in Austin, TX. At issue, a $110,000,000, “no bid” Medicaid fraud detection contract previously awarded to Austin based 21CT by the State of Texas and other industry players are crying foul over the process!

The genesis: information provided to the American-Statesman about the government contract process lead them to conduct a “deep-dive” into the circumstances behind how the fraud detection contract was awarded.

During their underwater exploration, the Statesman not only dove into this contract but the Texas “no bid” contracting process, the government players involved and the relationships between those individuals and the ultimate contract recipient: 21CT.

In case, you haven’t seen the extensive news stories that have been written about it, here’s a chronology of critical dates, events and the links to their stories as reported by various news media outlets:

11.22.15: Reporters start to question State of Texas “No Bid” Contracts

12.12.15: State Cancels $90 Million Dollar 21CT Contract

12.12.15: State’s Top Lawyer Resigns

12.17.15: Second 21CT “No Bid” Contract Cancelled

12.18.15: State Senator Seeks Inquiry Into Contracts

12.18.15: DA and State Auditor Opening Investigations

12.19.15: IG Fired – 3 Others Put On Paid Leave

12.22.15: 21CT Sues Former Lobbyist

12.24.15: Health Chief Misled About “No Bid” Contract?

12.29.15: 21CT Laying Off Employees

12.31.15: State Official Had Close Ties to 21 CT Lobbyist

01.03.15: Political Donations Preceded Contract?

01.14.15: FBI’s Involved?

01.14.15: Questions surround date individuals first met

01.15.15: Third State Official Resigns – Married to State Lawyer

01.16.15: Fourth State Official Resigns -Questions About Lump Sum Student Loan Payout

01.16.15: Earlier Investigation Which May Have Been Delving Into “No Bid” Contracts Derailed

01.21.15: Lobbyist Fires Back At Company

01.22.15: Who Are The Investors?

01.22.15: CEO: “No Investors”

01.22.15: Company went from 35/60 on list of tech companies to 1st

01.23.15: Media Outlets Have Questions – Getting “Stonewalled” By State on Answers

01.23.15: CEO Defends Company’s Involvement in Bid Process

The Last Word

This story’s turned into quite an epic drama and the industry’s watching with interest to see how it plays out. Information reported suggests that investigations are underway. While several agencies have confirmed they’re looking, the FBI’s position is that they “neither confirm nor deny” the existence of ongoing investigations.

At this point, nothings been reported about any criminal charges so we’re in a “wait and see” mode while investigations are ongoing to determine if any are forthcoming. Meanwhile, let’s remember that everyone’s “presumed innocent” until proven guilty in a court of law.

Those are our insights. What are yours?

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