Special Investigative Unit – Blue Cross and Blue Shield

The audit objective was to evaluate the effectiveness of Blue Cross’s Special Investigative Unit (SIU) performance in (a) preventing, detecting, and investigating fraud, waste, and abuse and (b) reporting accurate information on SIU activities, results, and recoveries to the Texas Health and Human Services Office of Inspector General (OIG).

Blue Cross did not operate an effective SIU program or comply with requirements to prevent, detect, investigate fraud, waste, and abuse or to report SIU activities, results, and recoveries to the Texas HHS OIG.

No process to identify, report, or remit 50 percent of fraud and abuse recoveries to the OIG; $535,148 of $548,485 in 2024 recoveries were not considered fraud or abuse.

Overpayment recoveries in 2024 totaled $548,485; only $64,799 were SIU recoveries; $13,337 were SIU fraud and abuse recoveries; $483,686 originated outside SIU; Blue Cross could not demonstrate why those recoveries were not fraud or abuse.

In 2023-2024, CHIP-specific fraud, waste, and abuse activities were not conducted; CHIP investigations not clearly identified; data analysis not CHIP-specific.

Preliminary investigations were not completed with required elements or within timelines for 10 sampled investigations.

Expanded investigations did not meet sample size requirements in 5 of 7 tested; sampling processes did not meet Texas Admin Code specifications.

Subcontractor SIUs were not adequately overseen; insufficient evidence of subcontractor SIU processes and compliance; no active monitoring.

Data analytics were ineffective; six routines not tailored to Texas Medicaid/CHIP; 53 data-analytic SIU investigations produced $26,351 recovered; average $497 per investigation.

MCO Open Case List and the Annual Report on Certain Fraud and Abuse Recoveries contained inaccuracies; six SIU investigations and nine recoveries were not reported; misalignment between case management and source documents.

Training not tailored to job functions; plan to implement role-specific training by 2026.

Classify, report, and refer to the OIG all discoveries of fraud, waste, and abuse. Remit 50 percent of all money recovered as the result of the discovery of fraud and abuse in Medicaid and CHIP.

Perform required SIU activities for CHIP, including data analysis and fraud, waste, and abuse investigations.

For preliminary investigations, implement a process to perform and document all required elements and complete investigations within required timeframes.

For expanded investigations, implement a process to meet and document the timelines to complete all expanded investigation elements (sample selection within 15 days, records request within 15 days, review within 45 days) and to select samples according to size requirements.

Implement a process to oversee subcontractors’ SIU functions effectively.

Improve processes to report complete and accurate information to the OIG on the MCO Open Case List Report and the Annual Report on Certain Fraud and Abuse Recoveries; maintain source documentation and accurately capture information in its case management system.

Expand its data analysis program to effectively identify potential fraud, waste, and abuse in Texas’ Medicaid and CHIP populations, including strengthening data analytics to generate leads for further investigation.

For employees involved in Medicaid or CHIP roles, provide fraud, waste, and abuse training tailored to their areas of responsibility.