By: Hinojosa S.B. No. 1435
A BILL TO BE ENTITLED
AN ACT
relating to providers' rights to due process under the Medicaid
program.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 531.1011, Government Code, is amended to
read as follows:
Sec. 531.1011. DEFINITIONS. For purposes of this
subchapter:
(1) "Abuse" means provider practices that are
inconsistent with sound fiscal, business, or medical practices, and
result in an unnecessary cost to the Medicaid program, or in
reimbursement for services that are not medically necessary or that
fail to meet professionally recognized standards for health care,
including beneficiary practices that result in unnecessary cost to
the Medicaid program.
(2) "Allegation of fraud or abuse" means an allegation
of Medicaid fraud or abuse received by the commission from any
source, that has not been verified by the state, including an
allegation based upon fraud hotline complaints, claims mining data,
data analysis processes or patterns identified through provider
audits, civil false claims cases, and law enforcement
investigations.
(3) "Anonymous allegation" means an allegation of
fraud or abuse that lacks sufficient information to independently
verify the source of the allegation.
(4) "Credible allegation of fraud" means an allegation
of fraud that has been verified by the state.
(5)[(1)] "Fraud" means an intentional deception or
misrepresentation made by a person with the knowledge that the
deception could result in some unauthorized benefit to that person
or some other person, including any act that constitutes fraud
under applicable federal or state law.
(6)[(2)] "Furnished" refers to items or services
provided directly by, or under the direct supervision of, or
ordered by a practitioner or other individual (either as an
employee or in the individual's own capacity), a provider, or other
supplier of services, excluding services ordered by one party but
billed for and provided by or under the supervision of another.
(7)[(3)] "Hold on payment" means the temporary denial
of reimbursement under the Medicaid program for items or services
furnished by a specified provider.
(8) "Physician" means an individual licensed to
practice medicine in this state.
(9) "Physician organization" means a professional
association composed solely of physicians, a single legal entity
authorized to practice medicine owned by two or more physicians, a
nonprofit health corporation certified by the Texas Medical Board
under Chapter 162, Occupations Code, or a partnership composed
solely of physicians.
(10)[(4)] "Practitioner" means a physician or other
individual licensed under state law to practice the individual's
profession.
(11) "Prima facie" means sufficient to establish a
fact or raise a presumption unless disproved.
(12)[(5)] "Program exclusion" means the suspension of a
provider from being authorized under the Medicaid program to
request reimbursement of items or services furnished by that
specific provider.
(13)[(6)] "Provider" means a person, firm, partnership,
corporation, agency, association, institution, or other entity
that was or is approved by the commission to:
(A) provide medical assistance under contract or
provider agreement with the commission; or
(B) provide third-party billing vendor services
under a contract or provider agreement with the commission.
(14) "Verified by the state" means the office has
conducted an integrity review in accordance with Section 531.118
and a determination has been made that prima facie evidence exists
to support an allegation of fraud or abuse.
SECTION 2. Section 531.102, Government Code, is amended by
amending subsections (f) and (g) to read as follows:
(f)(1) If the commission receives an allegation[complaint]
of Medicaid fraud or abuse from any source, the office must conduct
an integrity review in accordance with Section 531.118 to determine
whether there is sufficient basis to warrant a full
investigation[An integrity review must begin not later than the
30th day after the date the commission receives a complaint or has
reason to believe that fraud or abuse has occurred. An integrity
review shall be completed not later than the 90th day after it
began].
(2) If the findings of an integrity review give the
office reason to believe that an incident of fraud or abuse
involving possible criminal conduct has occurred in the Medicaid
program, the office must take the following action, as appropriate,
not later than the 30th day after the completion of the integrity
review:
(A) if a provider is suspected of fraud or abuse
involving criminal conduct, the office must refer the case to the
state's Medicaid fraud control unit, provided that the criminal
referral does not preclude the office from continuing its
investigation of the provider, which investigation may lead to the
imposition of appropriate administrative or civil sanctions; or
(B) if there is reason to believe that a
recipient has defrauded the Medicaid program, the office may
conduct a full investigation of the suspected fraud.
(g)(1) Whenever the office learns or has reason to suspect
that a provider's records are being withheld, concealed, destroyed,
fabricated, or in any way falsified, the office shall immediately
refer the case to the state's Medicaid fraud control unit. However,
such criminal referral does not preclude the office from continuing
its investigation of the provider, which investigation may lead to
the imposition of appropriate administrative or civil sanctions.
(2) In addition to other instances authorized under
state or federal law, the office may [shall] impose without prior
notice a hold on payment of claims for reimbursement submitted by a
provider to compel production of records, when requested by the
state's Medicaid fraud control unit, or upon the determination that
a credible allegation of fraud exists in accordance with Section
531.118[or on receipt of reliable evidence that the circumstances
giving rise to the hold on payment involve fraud or wilful
misrepresentation under the state Medicaid program in accordance
with 42 C.F.R. Section 455.23, as applicable]. The office must
notify the provider of the hold on payment in accordance with 42
C.F.R. Section 455.23(b).
(3) On timely written request by a provider subject to
a hold on payment under Subdivision (2), other than a hold requested
by the state's Medicaid fraud control unit to compel production of
records, the office shall file a request with the State Office of
Administrative Hearings for an expedited administrative hearing
regarding the hold on payment. The provider must request an
expedited hearing under this subdivision not later than the 10th
day after the date the provider receives notice from the office
under Subdivision (2).
(4) On timely written request by a provider who is the
subject of a hold on payment under Subdivision (2), other than a
hold requested by the state's Medicaid fraud control unit to compel
production of records, the office shall provide the provider with a
copy of the office's preliminary report described under Subdivision
531.118(c)(3) and a calculation of any proposed recoupment amount
and any associated damages or penalties.
(5) Following an administrative hearing under
Subdivision (3), a provider subject to a hold on payment, other than
a hold requested by the state's Medicaid fraud control unit to
compel records, may appeal an order by the State Office of
Administrative Hearings by filing a petition for judicial review in
a district court in Travis County.
(6) The executive commissioner shall adopt rules that
allow a provider subject to a hold on payment under Subdivision (2),
other than a hold requested by the state's Medicaid fraud control
unit to compel records, to seek an informal resolution of the issues
identified by the office in the notice provided under that
subdivision. A provider must request[seek] an informal resolution
under this subdivision not later than the deadline prescribed by
Subdivision (3). A provider's decision to request [seek] an
informal resolution under this subdivision does not extend the time
by which the provider must request an expedited administrative
hearing under Subdivision (3). However, a hearing initiated under
Subdivision (3) shall be stayed at the office's request until the
informal resolution process is completed.
(7) The office shall, in consultation with the state's
Medicaid fraud control unit, establish guidelines under which holds
on payment or program exclusions:
(A) may permissively be imposed on a provider; or
(B) shall automatically be imposed on a provider.
(8) A provider in a case in which a hold on payment was
imposed under this subsection who ultimately prevails in a hearing
or, if the case is appealed, on appeal, is entitled to prompt pay of
all payments held pursuant to a hold on payment.
(9) Subject to the availability of federal matching
funds as provided by Section 32.002, Human Resources Code, a
provider who is entitled in accordance with Subdivision (8) to
prompt payment of all payments held is also entitled to interest on
such held payments at a rate equal to the prime rate, as published
in the Wall Street Journal on the first day of each calendar year
that is not a Saturday, Sunday or legal holiday, plus one percent.
SECTION 3. Subchapter C, Chapter 531, Government Code, is
amended by adding Sections 531.118, 531.119, 531.120, and 531.1201.
Sec. 531.118. INTEGRITY REVIEWS OF ALLEGATIONS OF FRAUD OR
ABUSE. (a) The commission may not accept anonymous allegations of
fraud or abuse. The commission shall maintain a record of all
allegations of fraud or abuse containing information sufficient to
independently verify the source of the allegation of fraud or abuse
and the date the allegation of fraud or abuse was received or
identified.
(b) If the commission receives an allegation of fraud or
abuse from any source, the office must conduct an integrity review
of each allegation of fraud or abuse to determine whether there is
sufficient basis to warrant a full investigation. An integrity
review must begin not later than the 30th day after the date the
commission receives or identifies an allegation of fraud or abuse.
An integrity review shall be completed not later than the 90th day
after the date it began.
(c) An integrity review shall consist of a review of all
allegations, facts, and evidence by the office and must include:
(1) documentation of the source of the allegation of
fraud or abuse;
(2) completion of a preliminary investigation by the
office of the allegation of fraud or abuse;
(3) preparation of a preliminary investigation report
documenting the allegations, evidence reviewed, procedures
utilized to conduct the preliminary investigation, and findings of
the preliminary investigation, including any potential overpayment
amount, potential damages or penalties, the office's determination
of whether a full investigation is warranted and, subject to
Subdivision (4), whether a credible allegation of fraud exists; and
(4) if the subject of the allegation of fraud or abuse
is a physician or a physician organization, a review and final
written determination by an expert physician panel, in accordance
with Section 531.120, as to whether a credible allegation of fraud
exists. Notwithstanding Subdivision (3), the office shall be bound
by the expert physician panel's final written determination as to
whether credible allegation of fraud exists.
(d) Upon the completion of an integrity review, the office
of inspector general:
(1) may not impose a hold on payment unless the office
determines that a credible allegation of fraud exists.
(2) may impose a partial hold on payment on the subject
provider not later than the 10th day after the date a determination
that a credible allegation of fraud exists is made. A partial hold
on payment imposed under this subdivision shall not exceed 50
percent of the reimbursement due a provider under the Medicaid
program for items or services furnished by the subject provider.
Notwithstanding Subdivision 531.102(f)(2), the office must refer
the case to the state's Medicaid fraud control unit not later than
the next business day after a partial hold on payment is imposed,
provided that the referral of a credible allegation of fraud does
not preclude the office from continuing its investigation, which
may lead to the imposition of appropriate administrative or civil
sanctions.
(e) The duration of a partial hold on payment imposed under
Subdivision (d)(2) shall not exceed 30 days after the date the
partial payment hold is imposed.
(f) If the state's Medicaid fraud control unit declines or
fails to accept the referral of a credible allegation of fraud
before the 30th day after the date of the referral, the partial hold
on payment shall terminate upon the earlier of:
(1) the date that the state's Medicaid fraud control
unit declines to accept the referral; or
(2) the 30th day after the date the partial hold on
payment was imposed.
(g) If the state's Medicaid fraud control unit accepts the
referral of a credible allegation of fraud, the state's Medicaid
fraud control unit may request:
(1) that the duration of a partial hold on payment be
extended;
(2) that a partial hold on payment hold to the subject
provider be increased or decreased; or
(3) that a hold on payment not be imposed.
(h) Any hold on payment extended under Subdivision (g)(1) or
imposed under Subdivision (g)(2) shall terminate upon the earlier
of the following:
(1) the 180th day after the date the state's Medicaid
fraud control unit's request to extend or impose a hold on payment
pursuant to Subsection (g), unless, the state's Medicaid fraud
control unit certifies in writing that its continuing investigation
of the credible allegation of fraud warrants continuation of the
hold on payment;
(2) the date the state's Medicaid fraud control unit
discontinues its investigation of a credible allegation of fraud or
fails to certify that continuation of a payment hold is warranted in
accordance with Subsection (j);
(3) the date the office or the state's Medicaid fraud
control unit determines that there is insufficient evidence of
fraud;
(4) the date an administrative law judge or judge of
any court of competent jurisdiction orders the office to lift the
hold on payment in whole or in part; or
(5) the date the legal proceedings related to the
alleged fraud are completed.
(i) Subject to Subsection (j), a continuation of a hold on
payment pursuant to Subdivision (h)(1) shall not exceed 90 days
after the date the 180-day period expires.
(j) On a quarterly basis, the office must request a
certification from the state's Medicaid fraud control unit that any
matter accepted on the basis of a credible allegation of fraud
referral continues to be under investigation and that the
continuation of the hold on payment is warranted.
Sec. 531.119. EXPERT PHYSICIAN REVIEW PANEL. (a) The
executive commissioner, in consultation with the Texas Medical
Board, by rule shall provide for an expert physician panel
appointed by the executive commissioner to assist with integrity
reviews in accordance with Subdivision 531.118(c)(4). Each member
of the expert physician panel must be a physician actively engaged
in the practice of medicine in this state. Each member of the
expert physician panel must also be authorized to provide services
under the Medicaid program. The rules adopted under this section
must include provisions governing:
(1) the composition of the panel;
(2) the qualifications for membership on the panel;
(3) length of time a member may serve on the panel;
(4) grounds for removal from the panel;
(5) the avoidance of conflicts of interest, including
situations in which the subject physician and the panel member live
or work in the same geographical area or are competitors; and
(6) the duties to be performed by the expert physician
panel.
(b) The executive commissioner's rules governing duties
performed by the expert physician panel must include provisions
requiring that when a physician or a physician organization is the
subject of an allegation of fraud or abuse the allegation is
reviewed and a determination is made by an expert physician panel of
physicians authorized to provide services under the Medicaid
program that practice in the same or similar specialty as the
subject physician or physician organization. The executive
commissioner's rules governing appointment of panel members to act
as expert physician reviewers must include a requirement that the
office randomly select, to the extent permitted by Section
531.120(a) and the conflict of interest provisions adopted under
this subsection, expert physician panel members to review an
allegation of fraud or abuse.
Sec. 531.120. REVIEW BY EXPERT PHYSICIAN PANEL. (a) If a
physician or a physician organization is the subject of an
allegation of fraud or abuse, the allegation shall be reviewed in
accordance with this section by an expert physician panel created
under Section 531.119 consisting of physicians who are authorized
to provide services under the Medicaid program and practice in the
same or similar specialty as the physician or physician
organization that is the subject of the allegation of fraud or
abuse.
(b) A physician on the expert physician panel who is
selected to review an allegation of fraud or abuse pursuant to
Subdivision 531.118(c)(4) shall:
(1) review the office's preliminary investigation
report, including the medical records relevant to the report;
(2) make a preliminary determination as to a credible
allegation of fraud exists; and
(3) issue a written preliminary determination of such
finding.
(c) A second expert physician reviewer shall review the
first expert physician's preliminary determination and other
information associated with the allegation of fraud or abuse. If
the second expert physician agrees with the first expert
physician's preliminary determination, the first expert physician
shall issue a final written determination.
(d) If the second expert physician does not agree with the
first expert physician's preliminary determination, a third expert
physician reviewer shall review the preliminary determination and
information associated with the allegation of fraud or abuse and
decide between the determinations reached by the first two expert
physicians. The final written determination shall be issued by the
third expert physician or the expert physician with whom the third
physician concurs.
(e) In reviewing an allegation of fraud or abuse, the
selected expert physician reviewers may consult and communicate
with each other about the allegation in formulating their opinions
and determinations.
(f) This subchapter does not create a cause of action
against a physician who serves on the expert physician panel
created under Section 531.119. A physician participating on the
expert physician panel is immune from administrative, civil or
criminal liability arising from the information reviewed or
determinations made while acting as an expert physician reviewer
under this section.
Sec. 531.1201. RECOUPMENT OF OVERPAYMENTS OR RECOUPMENT OF
DEBT; APPEALS. (a) On timely written request by a provider who is
the subject of a recoupment of overpayment or recoupment of debt,
the office of inspector general shall provide the provider with a
copy of the office's preliminary report described under Subdivision
531.118(c)(3) and a calculation of the proposed recoupment amount
and any associated damages or penalties.
(b) On timely written request by a provider who is the
subject of a recoupment of overpayment or recoupment of debt, the
office of inspector general shall file a request with the State
Office of Administrative Hearings for an administrative hearing
regarding the proposed recoupment amount and any associated damages
or penalties.
(c) Following an administrative hearing under Subsection
(b), a provider who is the subject of a recoupment of overpayment or
recoupment of debt may appeal an order by the State Office of
Administrative Hearings by filing a petition for judicial review in
a district court in Travis County.
SECTION 4. Section 32.0291, Human Resources Code, is
amended by amending subsection (b) to read as follows:
Sec. 32.0291. PREPAYMENT REVIEWS AND POSTPAYMENT HOLDS.
(a) Notwithstanding any other law, the department may:
(1) perform a prepayment review of a claim for
reimbursement under the medical assistance program to determine
whether the claim involves fraud or abuse; and
(2) as necessary to perform that review, withhold
payment of the claim for not more than five working days without
notice to the person submitting the claim.
(b) Notwithstanding any other law and subject to Section
531.102, Government Code, the department may impose a postpayment
hold on payment of future claims submitted by a provider upon the
determination that a credible allegation of fraud exists in
accordance with Section 531.118, Government Code[if the department
has reliable evidence that the provider has committed fraud or
wilful misrepresentation regarding a claim for reimbursement under
the medical assistance program].
(c) A postpayment hold authorized by this section is
governed by the requirements and procedures specified for a hold on
payment under Section 531.102, Government Code, including the
notice requirements pursuant to Subsection 531.102(f), Government
Code[(c) On timely written request by a provider subject to a
postpayment hold under Subsection (b), the department shall file a
request with the State Office of Administrative Hearings for an
expedited administrative hearing regarding the hold. The provider
must request an expedited hearing under this subsection not later
than the 10th day after the date the provider receives notice from
the department under Subsection (b). The department shall
discontinue the hold unless the department makes a prima facie
showing at the hearing that the evidence relied on by the department
in imposing the hold is relevant, credible, and material to the
issue of fraud or wilful misrepresentation.
[(d) The department shall adopt rules that allow a provider
subject to a postpayment hold under Subsection (b) to seek an
informal resolution of the issues identified by the department in
the notice provided under that subsection. A provider must seek an
informal resolution under this subsection not later than the
deadline prescribed by Subsection (c). A provider's decision to
seek an informal resolution under this subsection does not extend
the time by which the provider must request an expedited
administrative hearing under Subsection (c). However, a hearing
initiated under Subsection (c) shall be stayed at the department's
request until the informal resolution process is completed].
SECTION 5. If before implementing any provision of this Act
a state agency determines that a waiver or authorization from a
federal agency is necessary for implementation of that provision,
the agency affected by the provision shall request the waiver or
authorization and may delay implementing that provision until the
waiver or authorization is granted.
SECTION 6. This Act takes effect September 1, 2013.