Managed Care Organization (MCO) Fraud Investigations

Legal Counsel for Texas Healthcare Providers Under Investigation for Medicaid Fraud by Managed Care Organizations

As high-risk, capitated programs, Managed Care Organizations (MCOs) assume the responsibility of preventing waste, fraud, and abuse within their networks of Medicaid services providers. This means MCOs, rather than The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG), Centers for Medicare & Medicaid Services (CMS), or another government agency, initiate preliminary audits and investigations into potential Medicaid fraud.

If you have received a demand for repayment, request for records, or notice of an MCO audit or investigation, a timely response and carefully crafted defense strategy is critical to minimizing your liability.

MCOs have comprehensive systems for rooting out waste, fraud, and abuse and are incentivized to recover payment for as many incorrect or fraudulent claims as possible. Because MCO fraud investigations can be costly and time-consuming, and may be a catalyst for further enforcement action from government regulators, the time to act is now.

On This Page

• MCO Special Investigative Units & Medicaid Fraud
• Steps of an MCO Fraud Investigation
• How Hendershot Cowart P.C. Can Help

Managed Care Organizations Special Investigative Units & Medicaid Fraud

Medicaid MCOs contract with states to provide Medicaid program services to beneficiaries for a set per-member/per-month (capitated) payment.

In Texas, a number of MCOs contract with the state to serve Medicaid beneficiaries, including:

• Molina Healthcare
• Amerigroup
• Superior Health Plan
• Evercare / United
• Aetna
• Bravo HealthSpring

In arrangements where MCOs are contracted to provide Medicaid services, managed care entities assume the responsibility for program integrity.

As required by federal mandate, MCOs must:

1. Implement fraud and abuse detection and prevention programs;
2. Arrange for “special investigative units” to investigate fraudulent claims and other types of program abuse by recipients and providers.
3. Comply with reporting and referral requirements.

Per Texas Administrative Code § 353.502, MCOs must develop fraud and abuse prevention plans and submit plans annually to the HHS-OIG for approval. Texas allows MCOs to either establish special investigative units within their organization or contract with another entity for investigations.

Whether you receive notice of an investigation from the MCO or a third-party contractor, a timely response is crucial. MCOs have a vested interest in recovering overpayments and have obligations to refer cases for OIG investigation.

Many times, the Special Investigative Unit of one MCO will coordinate with other MCOs to target specific providers.

Bringing your matter to the attention of an attorney as soon as possible can help ensure you begin working immediately on a plan to limit liability.

Managed Care Organization Fraud Investigation Process

Generally, MCO fraud investigations proceed as follows:

1. Providers may be subject to pre- or post-payment audits that review billing practices for red flags.
2. Flagged claims are referred to a Special Investigations Unit either within the MCO or a contracted third-party.
3. In pre-payment audits, MCOs may request supporting documentation such as medical records, billing records, and information related to the coordination of benefits. If providers provide no documentation or insufficient documentation, claims will be denied.
4. In post-payment audits, MCOs may request documentation. If providers deny access or fail to provide documentation, contested claims paid by the MCO may become immediately due.
5. MCOs will send letters to announcing claim denials or demanding refund for overpayment amounts identified in audits. MCOs may require practices to create and submit a Corrective Action Plan (CAP) addressing issues of concern within a specified amount of time.
6. Providers who disagree with audit findings may have the right to appeal within 30 days of demand letters. Written appeals must include new information that has not been submitted or reviewed by investigators.
7. Upon receipt of a demand letter or any notice of an MCO audit or investigation, providers should seek legal counsel immediately. Delays in formulating a response or producing documents can result in demands for repayment and may limit your ability to circumvent more serious enforcement action.

Our attorneys at Hendershot Cowart P.C. have extensive experience helping clients navigate audits and investigations, and appeals. We can evaluate MCO audits, contested claims, and the prevailing agreement with the MCO to help determine your available options.

How Hendershot Cowart P.C. Can Help

Hendershot Cowart P.C. counsels healthcare clients in a range of matters related to regulatory compliance and fraud investigations. We are trusted by providers across Texas and beyond:

• Our health and medical law team offers proactive and responsive counsel.
• Our attorneys leverage over 100 years of collective experience.
• We prioritize immediate, aggressive action in initiating a defense.

Our attorneys develop tailored defense strategies that focus on limiting the scope of investigations, demands, and disruptions associated with MCO recoupment efforts, and reducing exposure to escalation, referrals, and career-altering repercussions.

We are prepared to help providers in MCO networks facing:

• Pre-payment or post-payment audits / reviews.
• Investigations by MCO Special Investigative Units.
• Requests or demands for documentation related to contested claims.
• Demands for refunds of MCO overpayment or denials of claims.
• Requirements for practices to implement a Corrective Action Plan (CAP).

To speak confidentially with an attorney, call (713) 783-3110 or contact us online.