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January 31, 2001

The Honorable Rick Perry
The Honorable Bill Ratliff
The Honorable James E. “Pete” Laney
Members of the 77th Legislature

Fellow Texans:

I am pleased to deliver the Health Care Claims Study pursuant to my obligation under Government Code Section 403.028. This study measured the incidence of potential overpayments in the Medicaid acute care fee-for-service program and the state employees workers’ compensation program administered by the State Office of Risk Management. This study was conducted in consultation with the State Auditor’s Office and with the cooperation of many state agencies.

The study found that 7.24 percent of the paid amount of services were potentially overpaid in the Medicaid sample, and 8.09 percent were potentially overpaid in the state employees workers’ compensation sample. Annually, these potential overpayments could be as much as $217 million in the Medicaid program, and $3.2 million in the state employees workers’ compensation program.

The 1998 Health Care Claims Study found potential overpayment percentages of between 6 and 6.8 percent for the Medicaid program, and 21 percent for the state employees workers’ compensation program. Caution should be exercised in comparing these rates to the current study because of significant changes in the methodology.

The study recommends legislative changes to protect the confidentiality of medical records used in the study and provides technical recommendations to the affected agencies on ways to improve their payment processes.

This report is available at www.window.state.tx.us. If you have any questions about this report, please contact Cindy Wiley, of my Research and Policy Development Division, by e-mail at cindy.wiley@cpa.state.tx.us or by phone at 475-0155.

Sincerely,

[signed]

Carole Keeton Rylander
Texas Comptroller