Texas Accuses EDS of Breach of Contract To Administer State’s Medicaid Claims

Electronic Data Systems Corp. allegedly breached its contract to administer Medicaid claims for the state of Texas, according to a Texas attorney general's office report released Tuesday, the Wall Street Journal reports. According to the report, National Heritage Insurance Co., the EDS division that administers the state's Medicaid claims, double-billed some claims, made "inappropriate payments" to providers who submitted incomplete billing information and paid performance bonuses to employees who missed deadlines. The report did not estimate the cost of the alleged breaches but recommended "additional audits ... and inquiries" into the company's performance. "To fully evaluate the contract will require constant, ongoing legal monitoring and accounting auditing," the report said. The report also said that the state may take legal action to resolve the allegations. Last June, EDS paid Texas $3.4 million, as well as legal costs and a $250,000 contract penalty, to settle separate allegations that the company inflated expenses by as much as $10 million over two years. Texas paid National Heritage $99 million in 2000 to manage about $3.5 billion in Medicaid claims, the Journal reports (Spagat, Wall Street Journal, 7/17). For more iHealth & Technology stories, visit iHealthBeat.org, a new Web publication sponsored by the California HealthCare Foundation.