Texas spent more than $500 million on medically unnecessary dental braces for children between 2004 and 2012, a News 8 investigation found.
A federal audit, two years in the making, says the problem happened because the Texas Medicaid Healthcare Partnership committed two errors over several years of the program.
TMHP is a vendor that approved Medicaid dental claims for the state, among them hundreds of thousands of claims for orthodontic braces on children that were not medically necessary, the audit said.
TMHP, which is controlled by Xerox, did not review each authorization for braces, and TMHP's dental director did not follow Medicaid polices in determining the medical necessity of orthodontic services.
Matt Moore, who was in charge of the audit for the Office of Inspector General of the Department of Health and Human Services, told News 8 TMHP "rubber-stamped" Medicaid orthodontic claims from Texas dentists.
Even Dr. Jerry Felkner, TMHP's dental director, described the program approval process as "loose."
A TMHP employee interviewed in the audit described the program as "out of control." It grew 3,000 percent between 2004 and 2010.
Felkner was the only dentist in TMHP's dental program. News 8 found that in 2010 Felkner approved more than 18,000 orthodontic claims for children under 12, something auditor Moore found "not humanly possible."
Felkner did have some "analysts" who assisted him. But what were the qualifications of those analysts?
"They didn't have any," Moore told News 8. "The didn't have any medical background. Most of them were high school graduates, no college. And they would get trained from TMHP. TMHP considered that to be medical knowledge."
Stephanie Goodman of the Texas Department of Health and Human Services told News 8 TMHP knew what was required under the contract, and did not perform.
"We know the vendor approved many requests for orthodontics that should not have been approved," Goodman told News 8. "We feel like we have strong contract standards in place, and we're suing them to recover that money."
The state now uses a managed care system to assess claims, and Xerox gets only a small portion of state business.
Texas is suing Xerox for what could be billions of dollars lost in the Medicaid orthodontics program. Xerox is fighting the lawsuit.
If it loses, the federal government will get some of the money back.