Emails show complaints about Medicaid fraud detection system
HOUSTON (AP) – Former Texas health official Jack Stick tried to persuade dozens of other states to buy Austin technology company 21CT’s Medicaid fraud detection system even as he privately complained that the results it produced for Texas were worth “a bucket of warm spit,” according to his email messages.
The Houston Chronicle (http://bit.ly/1jvbFF8 ) reports Stick worked for months to push the Texas Health and Human Services Commission to buy 21CT’s system, the emails show. Then, after the company got a no-bid contract in 2012, he cited supposed successes to promote the system to at least 25 other states and the federal government
The messages, which were obtained by the Houston Chronicle after months of delays by the commission, illustrate how Stick helped 21CT before questions about favoritism forced him to resign last December. A half dozen other officials with ties to the $110 million project have since resigned.
Stick said the emails show he was “generally pleased with the work the state’s contractor was doing and did not hesitate to share that with other people when they asked” and “enthusiastic about a powerful and effective new investigative tool, and searched for ways to save the State of Texas and the federal government money.”
“Most importantly…,” he added, “I think they show that when I thought the state’s interests were not being well or properly served, I responded immediately and firmly. The state’s interests always remained my first priority.”
Mike Rosen, a 21CT spokesman, said the company “stands by the exceptional work” it did for Texas.
“While select emails might appear controversial and generate provocative headlines, they often draw a picture that is incomplete or inaccurate,” he said.
The emails reviewed by the Chronicle show that Stick collaborated closely with 21CT executives and engaged in an aggressive and at times misleading campaign of boasting.
Stick’s team sent confidential information to the Ohio health department as part of a sales pitch about 21CT’s system. He wrote the project manager early the morning after a Christmas to ask her to send documents to Florida officials considering the system. He told a California official he could get the company to conduct a demonstration there.
Most of all, he bragged.
“Other than my kids being born, Air Force One landing and Niagara Falls,” Stick wrote to Wisconsin’s anti-fraud watchdog. “I don’t think I’ve ever seen anything quite that impressive.”
In reality, according to the emails, the system struggled to conclusively identify much of any fraud, in part because of repeated delays in obtaining and ingesting several years of data from Managed Care Organizations (MCOs), which make up most of the Medicaid system in Texas.
The delays left Stick “sorely tested and keenly disappointed,” according to an April 2014 email he sent to the project manager and blindly copied to 21CT CEO Irene Williams.
“After one year of loading MCO data, we have 10 months ingested. 10 months. That is worth next to nothing. Not even a bucket of warm spit,” wrote Stick, who at the time was preparing to ask the federal Centers for Medicare and Medicaid Services to fund a project expansion. “How can I possibly ask CMS for more..They are properly going to ask where all the money went. This is going to be utterly humiliating when they find out.”
The project manager responded that she had been “working extremely hard” and felt the progress was “pretty impressive” given the newness of the system, size of the data and slowness by the MCOs to provide information.
A few weeks later, Stick not only asked federal officials for more money but urged them to expand the Texas system into a “regional hub” to identify fraud across several states.
When federal officials responded in June 2014 that they were “very interested” in the idea, Stick quickly forwarded the message to Williams.
“Confidential,” he wrote.
The regional hub never got off the ground; the expansion won tentative approval but collapsed when the project was canceled amid questions from the Chronicle and Austin American-Statesman. The contract now is under criminal investigation.
The project, which Stick led as the commission’s deputy inspector general, aimed to identify fraud as it happened with technology that could spot patterns across a wide range of data sets and social networks.
Stick told his boss he first viewed 21CT’s system in July 2011. Less than two months later, Stick said he planned to be “minutely involved in implementing and using the technology.”
“I’d like to push this hard,” Stick added.
Stick has said publicly that he pushed 21CT because he was smitten with its technology. In a May 2014 email to a 21CT staffer, however, he said “21CT got this deal because of Irene and Robert and Jim,” referring to Williams, her husband and another company executive.
The company has said that it followed processes set by the state. It has added that its system identified $200 million in potential fraud, although the commission has said it has not confirmed or recovered any of that.
A former lobbyist for the company, meanwhile, has said Stick was angling to get a job there, a charge Stick has denied.
Hoping to learn which explanation was accurate, The Chronicle first requested Stick’s emails shortly after he resigned. The commission initially refused, citing the criminal investigation.
The emails reviewed for this story include complaints from Stick and colleagues who were concerned that 21CT’s system was redundant.
In October 2013, a staffer wrote Stick to say a finding of potential fraud he had touted as a 21CT success had been discovered by the commission months earlier – and found to not be problematic after all.
“I am also curious as to why 21CT is recreating the existing (queries) that are being run and worked by (commission) staff when I thought they were going to be developing new methods,” the staffer added.
Stick also expressed unease with how much he was helping 21CT, including in January 2014 when an aide told him a company executive wanted to talk “about who you know in Oklahoma and Arizona.”
“I’m surprised at his ballsiness,” Stick responded to his secretary, comparing it to the executive saying, “‘Hey, Jack, will you be a salesman for us?’”
The exchange did not discourage Stick’s cooperation, however. Four days later, he emailed another 21CT executive a copy of a presentation he had given at a conference touting the company.
“Were they putty in your hands?” the executive asked.
“They were,” Stick said.
In addition to conferences, the emails show Stick promoted 21CT directly to dozens of other states – starting even before the project began.
In March 2012, nine months before signing the first purchase order, Stick touted 21CT’s “graph pattern analysis” technology in a webinar for the National Conference of State Legislatures.
Afterward, Stick told the moderator he wanted to continue to promote 21CT because it was “too good to hide.”
In another public pitch a year later, Stick emailed 18 other Medicaid watchdogs to say 21CT’s technology had already paid for itself “many times over.”
“It looks like LYNXeon will help us double or triple the total number and dollar value of cases we identify annually,” Stick wrote.
The follow-up questions flooded in, including from a Connecticut official.
Stick kept pushing 21CT to the official. One day he said he had just met with the company: “They once again blew me away,” he said.
Connecticut eventually gave 21CT a three-year contract worth an estimated $24 million – a purchase that represents the only success of Stick’s promotion campaign.
But the best illustration of the campaign centers on Florida.
That state got attention earlier this year because Stick’s calendar included a meeting at 21CT’s office to talk about a demonstration for Florida officials. Earlier this year, Stick said he attended to view 21CT’s presentation so he “could be certain no confidential recipient information was in it.”
The emails tell a different story, however, showing that Stick coached 21CT on the demo as part of a months-long sales pitch.
At one point, Stick told a 21CT staffer that the demo should “show them the future.” That same day, he emailed Florida Medicaid watchdog Rich Zenuch to say the event “should be good.”
Later, Stick kept trying to help 21CT get the deal by forwarding Williams news of the departure of another Florida official, giving the company a perfect score on a questionnaire and repeatedly asking the project manager to send documents to facilitate the purchase – including the day after Christmas.
The project manager responded with concern that Florida’s request for federal funding was going to be nearly identical to Texas’s.
“It looks like they copied ours,” she wrote. “They just need to personalize it.”
Florida ultimately chose a different company for the project.
The affair was not a total loss for 21CT, however. Last August, it hired Zenuch as its director of investigations and analysis.