Kyle L. Janek, M.D.
Executive Commissioner

Date: March 17, 2014
Contact: Stephanie Goodman, 512-424-6951

OIG Reaches $3.75 Million Settlement with Carousel

AUSTIN – Carousel Pediatrics has agreed to repay the state $3.75 million after an investigation by the Health and Human Services Commission Office of Inspector General (OIG) found a pattern of billing errors.

“This agreement will help ensure that children with Medicaid coverage can get quality health care services and that the state pays only for services that are necessary and provided to the child,” Inspector General Douglas Wilson said. “Those were our primary goals in this investigation, and I’m pleased that we’ve been able to reach a settlement that serves both the children of the State of Texas and taxpayers.”

“We’ve said all along Carousel may have made billing errors but they were not intentional or for the purpose of overbilling Medicaid,” said Dan Gattis, the attorney representing Carousel. “We understand why OIG suspected fraud, and we think it acted reasonably under the facts as they knew them. Fortunately, they listened to us, understood our approach and worked out a repayment agreement that protects the state’s interests, Carousel’s interests and also protects the kids Carousel serves.” 

Carousel Pediatrics currently provides primary care for more than 25,000 Texas children.  OIG’s medical reviews demonstrated the quality of care Carousel provided was often similar to other Medicaid providers, but its billing practices meant that it billed the state too much for those services. 

“The law requires us to put a payment hold in place when we find evidence of an overpayment, and we did that in this case,” Wilson said. “But that’s not the end of our review. We continued to gather information and look at all the facts. Carousel came to the table to correct the overpayment and make changes in its billing practices to comply with state rules. The process the Legislature outlined worked.”

The agreement calls for Carousel to make an initial payment of nearly $614,000, followed by monthly payments until it reimburses the state for the full $3.75 million. 

The Legislature created the Texas Health and Human Services Office of Inspector General in 2003 to combat waste, fraud and abuse in health and human services programs.  In 2012, the last year for which figures are available, the OIG completed 108 investigations and identified more than $530 million in potential overpayments to providers.

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