By: Huffman S.B. No. 1803
A BILL TO BE ENTITLED
AN ACT
relating to the office of inspector general of the Health and Human
Services Commission.
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" means an allegation of
Medicaid fraud 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) "Credible allegation of fraud" means an allegation
of fraud that has been verified by the state. An allegation is
considered to be credible when the commission has:
(A) verified that the allegation has indicia of
reliability; and
(B) reviewed all allegations, facts, and
evidence carefully and acts judiciously on a case-by-case basis.
(4) "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.
(5) [(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.
(6) "Payment hold" [(3) "Hold on payment"] means the
temporary denial of reimbursement under the Medicaid program for
items or services furnished by a specified provider.
(7) "Physician" includes an individual licensed to
practice medicine in this state, 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.
(8) [(4)] "Practitioner" means a physician or other
individual licensed under state law to practice the individual's
profession.
(9) [(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.
(10) [(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.
SECTION 2. Section 531.102, Government Code, is amended by
amending Subsections (f) and (g) and adding Subsections (l), (m),
and (n) to read as follows:
(f)(1) If the commission receives a complaint of Medicaid
fraud or abuse from any source, the office must conduct a
preliminary investigation [an integrity review] to determine
whether there is a sufficient basis to warrant a full
investigation. A preliminary 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. A preliminary investigation [An integrity review]
shall be completed not later than the 90th day after it began.
(2) If the findings of a preliminary investigation [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 preliminary investigation [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 shall impose without prior notice a
payment 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 [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 payment
hold [on payment] in accordance with 42 C.F.R. Section 455.23(b).
In addition to the requirements of 42 C.F.R. Section 455.23(b), the
notice of payment hold provided under this subsection shall also
include:
(A) the specific basis for the hold, including
identification of the claims supporting the allegation at that
point in the investigation and a representative sample of any
documents that form the basis of the hold; and
(B) a description of administrative and judicial
due process remedies, including an informal review, a formal
administrative appeal hearing, or both.
(3) On timely written request by a provider subject to
a payment hold [on payment] under Subdivision (2), other than a hold
requested by the state's Medicaid fraud control unit, the office
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
subdivision not later than the 30th [10th] day after the date the
provider receives notice from the office under Subdivision (2).
Unless otherwise determined by the administrative law judge for
good cause at the administrative hearing, the state and the subject
provider shall each be responsible for one-half of the costs
charged by the State Office of Administrative Hearings, for
one-half of the costs for transcribing the hearing, and for each
party's own additional costs related to the administrative hearing,
including costs associated with discovery, depositions, subpoenas,
services of process and witness expenses, preparation for the
administrative hearing, investigation costs, travel expenses,
investigation expenses, and all other costs, including attorney's
fees, associated with the case. The executive commissioner and the
State Office of Administrative Hearings shall jointly adopt rules
that require a provider, before a hearing, to advance security for
the costs for which the provider is responsible under this
subdivision.
(4) Following an administrative hearing under
Subdivision (3), a provider subject to a payment hold, other than a
hold requested by the state's Medicaid fraud control unit, may
appeal a final administrative order by filing a petition for
judicial review in a district court in Travis County.
(5) The executive commissioner [commission] shall
adopt rules that allow a provider subject to a [hold on] payment
hold under Subdivision (2), other than a hold requested by the
state's Medicaid fraud control unit, to seek an initial informal
resolution of the issues identified by the office in the notice
provided under that subdivision. A provider must request [seek] an
initial informal resolution meeting under this subdivision not
later than the deadline prescribed by Subdivision (3). On receipt
of a timely request, the office shall schedule an initial informal
resolution meeting not later than the 60th day after the date the
office receives the request from the provider, but the office shall
schedule the meeting on a later date as determined by the office if
requested by the provider. The office shall give notice to the
provider of the time and place of the initial informal resolution
meeting not later than the 30th day before the date the initial
informal resolution meeting is to be held. A provider may request a
second informal resolution meeting not later than the 20th day
after the date of the initial informal resolution meeting. On
receipt of a timely request, the office shall schedule a second
informal resolution meeting not later than the 45th day after the
date the office receives the request from the provider, but the
office shall schedule the meeting on a later date as determined by
the office if requested by the provider. The office shall give
notice to the provider of the time and place of the second informal
resolution meeting not later than the 20th day before the date the
second informal resolution meeting is to be held. A provider shall
have an opportunity to provide additional information before the
second informal resolution meeting for consideration by the office.
A provider's decision to 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.
(6) [(5)] The office shall, in consultation with the
state's Medicaid fraud control unit, establish guidelines under
which payment holds [on payment] or program exclusions:
(A) may permissively be imposed on a provider; or
(B) shall automatically be imposed on a provider.
(l) The office shall employ a medical director who is a
licensed physician under Subtitle B, Title 3, Occupations Code, and
the rules adopted under that subtitle by the Texas Medical Board,
and who preferably has significant knowledge of the Medicaid
program. The medical director shall ensure that any investigative
findings based on medical necessity or quality of medical care have
been reviewed by a qualified expert as described by the Texas Rules
of Evidence before the office imposes a payment hold or seeks
recoupment of an overpayment, damages, or penalties.
(m) The office shall employ a dental director who is a
licensed dentist under Subtitle D, Title 3, Occupations Code, and
the rules adopted under that subtitle by the State Board of Dental
Examiners, and who preferably has significant knowledge of the
Medicaid program. The dental director shall ensure that any
investigative findings based on the necessity of dental services or
the quality of dental care have been reviewed by a qualified expert
as described by the Texas Rules of Evidence before the office
imposes a payment hold or seeks recoupment of an overpayment,
damages, or penalties.
(n) To the extent permitted under federal law, the office,
acting through the commission, shall adopt rules establishing the
criteria for initiating a full-scale fraud or abuse investigation,
conducting the investigation, collecting evidence, accepting and
approving a provider's request to post a surety bond to secure
potential recoupments in lieu of a payment hold or other asset or
payment guarantee, and establishing minimum training requirements
for Medicaid provider fraud or abuse investigators.
SECTION 3. Subchapter C, Chapter 531, Government Code, is
amended by adding Sections 531.118, 531.119, 531.120, 531.1201, and
531.1202 to read as follows:
Sec. 531.118. PRELIMINARY INVESTIGATIONS OF ALLEGATIONS OF
FRAUD OR ABUSE. (a) The commission shall maintain a record of all
allegations of fraud or abuse against a Medicaid provider
containing the date the allegation of fraud or abuse was received or
identified and the source of the allegation, if available. This
record shall remain confidential under Sections 531.1021(g) and
(h).
(b) If the commission receives an allegation of fraud or
abuse against a Medicaid provider from any source, the office must
conduct a preliminary investigation of each allegation of fraud or
abuse to determine whether there is sufficient basis to warrant a
full investigation. A preliminary investigation must begin not
later than the 30th day after the date the commission receives or
identifies an allegation of fraud or abuse.
(c) A preliminary investigation shall consist of a review of
all allegations, facts, and evidence by the commission's office of
inspector general and must result in a preliminary investigation
report documenting the allegations, evidence reviewed, if
available, procedures utilized to conduct the preliminary
investigation, findings of the preliminary investigation, and the
office's determination of whether a full investigation is warranted
before the allegation proceeds to a full investigation.
(d) If the Medicaid fraud control unit or other law
enforcement agency accepts a fraud referral from the office for
investigation, a payment hold based upon a credible allegation of
fraud may be continued until such time as that investigation and any
associated enforcement proceedings are completed, or until the
Medicaid fraud control unit, other law enforcement agency, or other
prosecuting authorities determine that there is insufficient
evidence of fraud by the provider.
(e) If the Medicaid fraud control unit or any other law
enforcement agency declines to accept the fraud referral for
investigation, a payment hold based upon a credible allegation of
fraud must be discontinued unless the commission has alternative
federal or state authority by which it may impose a payment hold or
unless the office makes a fraud referral to another law enforcement
agency.
(f) On a quarterly basis, the office must request a
certification from the state's Medicaid fraud control unit or other
law enforcement agency 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 payment hold is
warranted.
Sec. 531.119. WEBSITE POSTING. The office shall post on its
publicly available website a description in plain English of, and a
video explaining, the processes and procedures that the office uses
to determine whether to impose a payment hold on a provider under
this subchapter.
Sec. 531.120. INFORMAL RESOLUTION OF PROPOSED
OVERPAYMENTS. (a) The commission or the commission's office of
inspector general must provide a provider with written notice of
intent to recover any proposed overpayment or debt amount and any
related damages or penalties arising out of a fraud or abuse
investigation. The notice shall include the specific basis for
overpayment, a description of facts and supporting evidence, a
representative sample of any documents that form the basis of the
overpayment, extrapolation methodology, calculation of the
overpayment amount, damages and penalties, if applicable, and a
description of administrative and judicial due process remedies,
including the provider's right to request informal resolution
meetings under this section, a formal administrative appeal
hearing, or both.
(b) A provider must request an initial informal resolution
meeting under this section not later than the 30th day after the
date the provider receives notice under Subsection (a). On receipt
of a timely request, the office shall schedule an initial informal
resolution meeting not later than the 60th day after the date the
office receives the request from the provider, but the office shall
schedule the meeting on a later date as determined by the office if
requested by the provider. The office shall give notice to the
provider of the time and place of the initial informal resolution
meeting not later than the 30th day before the date the initial
informal resolution meeting is to be held. A provider may request a
second informal resolution meeting not later than the 20th day
after the date of the initial informal resolution meeting. On
receipt of a timely request, the office shall schedule a second
informal resolution meeting not later than the 45th day after the
date the office receives the request from the provider, but the
office shall schedule the meeting on a later date as determined by
the office if requested by the provider. The office shall give
notice to the provider of the time and place of the second informal
resolution meeting not later than the 20th day before the date the
second informal resolution meeting is to be held. A provider shall
have an opportunity to provide additional information before the
second informal resolution meeting for consideration by the office.
Sec. 531.1201. RECOUPMENT OF OVERPAYMENTS OR RECOUPMENT OF
DEBT; APPEALS. (a) A provider must request an appeal under this
section not later than the 15th day after the date the provider is
notified that the commission or the commission's office of
inspector general will seek to recover an overpayment or debt from
the provider. On receipt of a timely written request by a provider
who is the subject of a recoupment of overpayment or recoupment of
debt arising out of a fraud or abuse investigation, the office of
inspector general shall file a docketing request with the State
Office of Administrative Hearings or the Health and Human Services
Commission appeals division, as requested by the provider, for an
administrative hearing regarding the proposed recoupment amount
and any associated damages or penalties. The office shall file the
docketing request under this section not later than 60 days after
the provider's request for an administrative hearing or not later
than 60 days after the completion of the informal resolution
process, if applicable. Unless otherwise determined by the
administrative law judge at the administrative hearing under this
subsection for good cause, the state and the subject provider shall
each be responsible for one-half of the costs charged by the State
Office of Administrative Hearings, for one-half of the costs for
transcribing the hearing, and for each party's own additional costs
related to the administrative hearing, including costs associated
with discovery, depositions, subpoenas, services of process and
witness expenses, preparation for the administrative hearing,
investigation costs, travel expenses, investigation expenses, and
all other costs, including attorney's fees, associated with the
case. The executive commissioner and the State Office of
Administrative Hearings shall jointly adopt rules that require a
provider, before a hearing, to advance security for the costs for
which the provider is responsible under this subsection.
(b) Following an administrative hearing under Subsection
(a), a provider who is the subject of a recoupment of overpayment or
recoupment of debt arising out of a fraud or abuse investigation may
appeal a final administrative order by filing a petition for
judicial review in a district court in Travis County.
Sec. 531.1202. PRESENCE OF NEUTRAL THIRD PARTY AT INFORMAL
RESOLUTION MEETINGS. The commission shall employ a person whose
salary is paid by the commission and who is independent of the
commission's office of inspector general to attend the informal
resolution meetings held under Sections 531.102(g)(5) and
531.120(b) as a neutral third-party observer. The person shall
report to the executive commissioner on the proceedings and outcome
of each informal resolution meeting.
SECTION 4. Section 32.0291, Human Resources Code, is
amended to read as follows:
Sec. 32.0291. PREPAYMENT REVIEWS AND PAYMENT [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 payment
[postpayment] hold on [payment of] future claims submitted by a
provider [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]. The
department must notify the provider of the payment [postpayment]
hold not later than the fifth working day after the date the hold is
imposed.
(c) A payment hold authorized by this section is governed by
the requirements and procedures specified for a payment hold under
Section 531.102, Government Code, including the notice
requirements under Subsection (g) of that section [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 the 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.