Stuart Bowen brings new approach to Texas' anti-Medicaid fraud unit

By J. David McSwane

Austin American-Statesman

If there is a poster child for dysfunction in Texas government, look no further than the agency Stuart Bowen inherited in January.

The Office of Inspector General over the state’s sprawling health agency, charged with investigating Medicaid fraud and waste, was the target of state and federal investigations into a multimillion-dollar, no-bid contract awarded with no oversight.

When the agency wasn’t buffeted by headlines on the snowballing contracting scandal, the state’s top lawmakers were hammering the agency for a track record of failures, including an astonishing backlog of 1,700 cases. What few cases made it to court were falling apart.

Bowen, a former top aide to George W. Bush both as governor and president, is polishing a 64-page report he hopes will mark a turning point for the agency and outline a vision that will make this office one you’ll have no reason to hear about — because it works.

That quarterly report, the first of its kind since 2011, will land on Gov. Greg Abbott’s desk Monday.

The symbolism of that is not lost on Bowen, who for nearly a decade served as the inspector general over the Iraq War reconstruction effort.

“We’ve made progress the last six months, turning this agency around,” he said. “The case backlog was horrendous.”

Bowen said he is eager to report to Abbott a reduced case backlog, a new leadership team and a new division focused on inspections — a sort of middle approach between a cumbersome audit and the force of an investigation.

Bowen’s message to the governor: This isn’t the same agency.

Good thing.

Last October, the hundreds of millions of dollars in fraud identified by the office under former Inspector General Doug Wilson, a Gov. Rick Perry appointee, had come under scrutiny. The agency recovered only pennies on the dollar, and the method investigators used to determine how much fraud had been committed by Medicaid providers had been largely discredited.

“Actual settlement amounts well below the identified over-payment are a likely indicator of an inconsistent and unfair process for providers,” said a report issued last year by the Sunset Advisory Commission. “While OIG is authorized to recoup the full amount, taking the harshest approach without regard to whether a case involves fraud or simple clerical errors is misleading to the public about the prevalence of intentional fraud.”

By December, the office’s lucrative contract with Austin tech company 21CT, which an American-Statesman investigation revealed skirted state purchasing laws, spurred calls for tightening the reins on billions of dollars in state contracts with private business. It became a top policy issue for Abbott in his first days in office.

To look into the 21CT morass, Abbott appointed a task force, which called the inspector general’s hiring of 21CT to help in Medicaid fraud investigations a “policy fiasco.”

At the height of the tumult, Abbott appointed Bowen, a graduate of St. Mary’s University School of Law in San Antonio.

An outsider

Bowen was an outsider, inheriting the monumental task of reforming an office in the cross hairs of controversy, as well as navigating an evolving Medicaid landscape under the Affordable Care Act, a chore complicated further by Texas lawmakers’ enthusiasm for undercutting the program.

From the Office of Inspector General’s new headquarters in North Austin, Bowen’s tone is reserved in contrast with that of his predecessor, whose swashbuckling pledges to hunt down physicians gaming Medicaid had failed in the eyes of the Legislature.

Those cases that can be settled out of court are being settled, Bowen said, about 24 cases so far, for a total of $9 million in recoveries.

“I don’t want to waste my time,” he said.

The implication being that taking some cases to court might be more trouble than they’re worth, a calculus any investigatory agency has to make.

Still, he balks at the suggestion that he might be perceived as less aggressive in taking down fraudsters.

“We’re going to be tough on the bad providers,” he said. “We’re going to be firm but fair. Those who are the ones gaming the system — well, we’re going to find them and we’re going to make them pay.”

To say morale was low among the agency’s 700 employees is perhaps an understatement.

“Investigators were paralyzed,” he said.

It’s improving, he said, in part because of his plan to rebuild the agency in the image of federal inspector general operations.

“There are three key areas,” he said. “Audit, investigate and inspect. All three areas were dysfunctional.”

Mending ties

Bowen has spent the past nine months mending ties with a Medicaid provider lobby that cried foul as his predecessor increased investigations of doctors and dentists, often invoking a “credible allegations of fraud” hold, which permits the investigating agency to stop Medicaid payments to a provider.

The new inspector general said he’s also avoiding what in previous years was a visibly strained relationship between his office, the independent overseer, with the Health and Human Services Commission, the overseen.

That umbrella agency is experiencing its own tides of change after the June resignation of former Executive Commissioner Kyle Janek, also a Perry appointee, who managed to hang on to his job even after Abbott’s task force found Health and Human Services Commission leaders “exercised judgment so poor” that they placed the agency’s credibility at risk.

“It is now more clear than ever that the Texas Health and Human Services Commission has been riddled with operational, managerial, structural and procedural problems that go far beyond any individual or contract,” the governor’s task force said of the agency under Janek’s command.

Bowen said he has confidence his office will keep the massive health agency’s administration of Medicaid in check as Chris Traylor takes over Janek’s job. But that doesn’t mean they have to be adversaries.

“I meet with Chris Traylor at least every other week,” he said.