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ACT No. 568
Regular Session, 2014
HOUSE BILL NO. 1200
BY REPRESENTATIVE STOKES
AN ACT1
To enact Subpart E of Part VI-A of Chapter 3 of Title 46 of the Louisiana Revised Statutes2
of 1950, to be comprised of R.S. 46:440.11 through 440.16, relative to the Medicaid3
recovery audit program; to provide for legislative findings and purposes; to provide4
definitions; to establish requirements for entities that contract with the Department5
of Health and Hospitals to recover medical assistance program funds; to provide for6
a structure of payments by the Department of Health and Hospitals; to provide for7
appeals by healthcare providers enrolled in the Medicaid program; to provide for8
contractor oversight and penalties; to provide for promulgation of rules; to require9
submittal of Medicaid state plan amendments; to provide for effectiveness; and to10
provide for related matters.11
Be it enacted by the Legislature of Louisiana:12
Section 1. Subpart E of Part VI-A of Chapter 3 of Title 46 of the Louisiana Revised13
Statutes of 1950, comprised of R.S. 46:440.11 through 440.16, is hereby enacted to read as14
follows:15
SUBPART E. RECOVERY AUDIT CONTRACTORS16
§440.11. Legislative findings; declaration; purpose17
A. The legislature hereby finds all of the following:18
(1) States are required to implement provisions of the Patient Protection and19
Affordable Care Act, comprised of Public Laws 111-148 and 111-152, relative to20
Medicaid recovery audit contractors.21
(2) The recovery audit function is a useful tool for improving Medicaid22
program integrity and ensuring that public monies are used for appropriate and23
necessary healthcare services.24 ENROLLEDHB NO. 1200
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(3) Healthcare providers are subject to numerous audits from the state and1
federal health agencies and reviews by Medicaid managed care companies which2
result in increased administrative costs that raise costs to all healthcare consumers.3
B. The legislature hereby declares that simplifying and standardizing4
Medicaid recovery audit functions is necessary and in the best interest of this state.5
Therefore, the purpose of this Subpart is to provide for greater Medicaid program6
integrity by establishing a standardized recovery audit contractor program.7
§440.12. Definitions8
As used in this Subpart, the following terms have the meaning ascribed in this9
Section:10
(1) "Adverse determination" means any decision rendered by the recovery11
audit contractor that results in a payment to a provider for a claim or service being12
reduced either partially or completely.13
(2) "Contractor" and "recovery audit contractor" mean a Medicaid recovery14
audit contractor selected by the department to perform audits for the purpose of15
ensuring Medicaid program integrity in accordance with the provisions of 42 CFR16
455 et seq.17
(3) "Department" means the Department of Health and Hospitals.18
(4) "Medicaid" and "medical assistance program" mean the medical19
assistance program provided for in Title XIX of the Social Security Act.20
(5) "Provider" means any healthcare entity enrolled with the department as21
a provider in the Medicaid program.22
§440.13. Recovery audit contractor program established; rulemaking23
A. There is hereby established within the department a recovery audit24
contractor program. The program shall adhere to the requirements provided in this25
Subpart.26
B. The department shall promulgate all rules in accordance with the27
Administrative Procedure Act and shall submit all Medicaid state plan amendments28
as are necessary to implement the provisions of this Subpart.29 ENROLLEDHB NO. 1200
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§440.14. Recovery audit contractors; required functions and tasks1
A. Notwithstanding any other provision of law to the contrary, the2
department shall require that its recovery audit contractor perform all of the3
following functions and tasks:4
(1) Review claims within three years of the date of their initial payment.5
(2) Send a determination letter concluding an audit within sixty days of6
receipt of all requested materials from a provider.7
(3) Furnish in any records request to a provider adequate information for the8
provider to identify the patient, including but not limited to claim number, medical9
record number, patient name, and service dates.10
(4) Exclude all of the following from its scope of review:11
(a) Claims processed or paid within ninety days of implementation of any12
Medicaid managed care program.13
(b) Claims processed or paid through a capitated Medicaid managed care14
program.15
(c) Medical necessity reviews in which the provider has obtained prior16
authorization for the service.17
(5) Develop and implement a process to ensure that providers receive or18
retain the appropriate reimbursement amount for claims within the lookback period19
in which the contractor determines that services delivered have been improperly20
billed, but were reasonable and necessary.21
(6)(a) Prohibit the recoupment of overpayments by the contractor until all22
informal and formal appeals processes have been completed.23
(b) Nothing in this Paragraph shall apply to claims that the contractor24
suspects to be fraudulent.25
(7) Refer claims it suspects to be fraudulent directly to the department for26
investigation.27
(8) Provide a detailed explanation in writing to a provider for any adverse28
determination that would result in partial or full recoupment of a payment to the29 ENROLLEDHB NO. 1200
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provider. The written notification provided for in this Paragraph shall include, at1
minimum, all of the following:2
(a) The reason for the adverse determination.3
(b) The specific medical criteria on which the adverse determination was4
based.5
(c) An explanation of the provider's appeal rights.6
(d) If applicable, an explanation of the appropriate reimbursement7
determined in accordance with the provisions of Paragraph (5) of this Subsection.8
(9)(a) Limit records requests in a ninety-day period to not more than one9
percent of the number of claims filed by the provider for the specific service being10
reviewed in the previous state fiscal year, not to exceed two hundred records.11
(b) The contractor shall allow a provider no less than forty-five days to12
comply with and respond to a record request.13
(c) If the contractor can demonstrate a significant provider error rate relative14
to an audit of records, the contractor may make a request to the department to initiate15
an additional records request relative to the issue being reviewed for the purposes of16
further review and validation. The contractor shall not make the request to the17
department until the time period for the informal appeals process has expired, and18
the provider shall be given the opportunity to contest to the department the second19
records request.20
(10) Utilize provider self-audits only if mutually agreed to by the contractor21
and provider.22
(11) Schedule any onsite audits of a low-risk provider with advance notice23
of not less than ten business days and make a good-faith effort to establish a24
mutually agreed upon date and time.25
(12) Publish on its Internet website department-approved issues for review.26
Information concerning such issues shall include, at minimum, the name and27
description of the issue, type of provider, review period, and applicable policy28
relative to the review.29 ENROLLEDHB NO. 1200
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(13) On a semiannual basis, develop, implement, and publish on its Internet1
website metrics related to its performance. Such metrics shall include but not be2
limited to the following:3
(a) The number and type of issues reviewed.4
(b) The number of medical records requested.5
(c) The number of overpayments and underpayments identified by the6
contractor.7
(d) The aggregate dollar amounts associated with identified overpayments8
and underpayments.9
(e) The duration of audits from initiation to time of completion.10
(f) The number of adverse determinations and the overturn rates of those11
determinations at each stage of the informal and formal appeal process.12
(g) The number of informal and formal appeals filed by providers,13
categorized by disposition status.14
(h) The contractor's compensation structure and dollar amount of15
compensation.16
(14) Post on its Internet website its contract with the department for recovery17
audit services.18
(15)(a) Perform a semiannual review of recovery audit issues and identify19
any potential opportunities for improvement and correction of medical assistance20
program policies, procedures, and infrastructure that would result in proactive and21
efficient minimization of improper payments.22
(b) The contractor shall submit the reviews provided for in this Paragraph23
to the department and publish such reviews on its Internet website.24
(16) At least semiannually, perform educational and training programs for25
providers that encompass all of the following:26
(a) A recapitulation of audit results, common issues and problems, and27
mistakes identified through audits and reviews.28
(b) A discussion of opportunities for improvement in provider performance29
with respect to claims billing and documentation.30 ENROLLEDHB NO. 1200
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(17)(a) Allow providers to submit in electronic format the records requested1
in association with an audit.2
(b) If a provider must reproduce records manually because no electronic3
format is available, or because the contractor requests a nonelectronic format, the4
contractor shall make reasonable efforts to reimburse to the provider the cost of5
medical records reproduction consistent with the provisions of R.S. 42 CFR 476.78.6
B. In any contract between the department and a recovery audit contractor,7
the payment or fee provided to the contractor for identification of Medicaid provider8
overpayments shall be equal to that provided for identification of Medicaid provider9
underpayments.10
§440.15. Healthcare provider appeals process11
A. A provider shall have a right to the informal and formal appeals processes12
for determinations made by the recovery audit contractor as provided in this Section.13
B. The contractor shall establish an informal appeals process that conforms14
with all of the following guidelines:15
(1) From the date of receipt of the initial findings letter by the contractor,16
there shall be an informal discussion and consultation period wherein the provider17
and contractor may communicate regarding any determinations for reasons including18
but not limited to policies, criteria, and program rules pertinent to the determination.19
(2)(a) Within forty-five days of receipt of a notification of an adverse20
determination from the contractor, a provider shall have the right to request an21
informal hearing of such findings, or a portion thereof, with the contractor and the22
Medicaid program integrity division of the department by submitting a request in23
writing to the contractor.24
(b) The informal hearing provided for in this Paragraph shall occur within25
thirty days of the provider's request.26
(c) At the informal hearing, the provider shall have all of the following27
rights:28
(i) The right to present information orally and in writing.29
(ii) The right to present documents.30 ENROLLEDHB NO. 1200
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(iii) The right to have the department and the contractor address any inquiry1
the provider may make concerning the reason for the adverse determination.2
(d) A provider may be represented by an attorney or authorized3
representative at the informal hearing if written notice of representation identifying4
the attorney or representative is submitted with the request for the informal hearing.5
(3) The contractor and medical assistance program integrity division of the6
department shall issue a final decision related to the informal appeal to the provider7
within fifteen days of the closure of the appeal.8
C. Within thirty days of the issuance of a final decision or determination9
pursuant to an informal appeal conducted in accordance with Subsection B of this10
Section, a provider may request an administrative appeal of the final decision by11
requesting a hearing before the health and hospitals section of the division of12
administrative law and providing a copy of the appeal to the Medicaid program13
integrity division of the department.14
§440.16. Contractor performance oversight; penalties; protections15
A. If more than twenty-five percent of the contractor's adverse16
determinations are overturned on appeal in any six-month period, then the House17
Committee on Health and Welfare and the Senate Committee on Health and Welfare,18
jointly, shall hold an oversight hearing to evaluate the contractor's performance and19
provide the medical assistance program with direction related to corrective action20
plans and future reevaluation of performance.21
B. The department shall, with input from healthcare providers and in22
accordance with the Administrative Procedure Act, promulgate rules relative to23
appropriate and inappropriate determinations by recovery audit contractors, and to24
establish penalties and sanctions to be associated with inappropriate determinations25
by those contractors.26
C. If the department or the hearing officer in a formal appeal finds that the27
recovery audit contractor's determination was unreasonable, frivolous, or without28
merit, then the contractor shall reimburse to the provider the provider's costs29
associated with the appeals process.30 ENROLLEDHB NO. 1200
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Section 2.(A) This Section and Section 1 of this Act shall become effective on1
August 15, 2014.2
(B) Any provision of Section 1 of this Act that requires a Medicaid state plan3
amendment in order to be implemented shall be null, void, and unenforceable until the date4
of approval of the state plan amendment necessary for implementation, and shall become5
enforceable upon the date of federal approval of such state plan amendment.6
SPEAKER OF THE HOUSE OF REPRESENTATI VES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: