S.B. No. 1803
AN ACT
relating to investigations of and payment holds relating to
allegations of fraud or abuse and investigations of and hearings on
overpayments and other amounts owed by providers in connection with
the Medicaid program or other health and human services programs.
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:
(A) a practice by a provider that is inconsistent
with sound fiscal, business, or medical practices and that results
in:
(i) an unnecessary cost to the Medicaid
program; or
(ii) the reimbursement of services that are
not medically necessary or that fail to meet professionally
recognized standards for health care; or
(B) a practice by a recipient that results in an
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 on:
(A) a fraud hotline complaint;
(B) claims data mining;
(C) data analysis processes; or
(D) a pattern identified through provider
audits, civil false claims cases, or 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 partnership composed solely of
physicians, a single legal entity authorized to practice medicine
owned by two or more physicians, and a nonprofit health corporation
certified by the Texas Medical Board under Chapter 162, Occupations
Code.
(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 or allegation
of Medicaid fraud or abuse from any source, the office must conduct
a preliminary investigation as provided by Section 531.118(c) [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 allegation 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, subject to
Section 531.118(c).
(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 on the determination that a
credible allegation of fraud exists, subject to Subsections (l) and
(m), as applicable [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 subdivision must 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 for the hold; and
(B) a description of administrative and judicial
due process remedies, including the provider's right to seek
informal resolution, 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 administrative
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 an expedited administrative hearing,
the state and the provider shall each be responsible for:
(A) one-half of the costs charged by the State
Office of Administrative Hearings;
(B) one-half of the costs for transcribing the
hearing;
(C) the party's own costs related to the hearing,
including the costs associated with preparation for the hearing,
discovery, depositions, and subpoenas, service of process and
witness expenses, travel expenses, and investigation expenses; and
(D) all other costs associated with the hearing
that are incurred by the party, including attorney's fees.
(4) The executive commissioner and the State Office of
Administrative Hearings shall jointly adopt rules that require a
provider, before an expedited administrative hearing, to advance
security for the costs for which the provider is responsible under
that subdivision.
(5) Following an expedited 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.
(6) 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 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) for requesting an
expedited administrative hearing. 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, 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 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, 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 meeting is
to be held. A provider must 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.
(7) [(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 the 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 AND FRAUD REFERRALS. (a) The commission shall
maintain a record of all allegations of fraud or abuse against a
provider containing the date each allegation was received or
identified and the source of the allegation, if available. The
record is confidential under Section 531.1021(g) and is subject to
Section 531.1021(h).
(b) If the commission receives an allegation of fraud or
abuse against a provider from any source, the commission's office
of inspector general shall conduct a preliminary investigation of
the allegation to determine whether there is a 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) In conducting a preliminary investigation, the office
must review the allegations of fraud or abuse and all facts and
evidence relating to the allegation and must prepare a preliminary
investigation report before the allegation of fraud or abuse may
proceed to a full investigation. The preliminary investigation
report must document the allegation, the evidence reviewed, if
available, the procedures used to conduct the preliminary
investigation, the findings of the preliminary investigation, and
the office's determination of whether a full investigation is
warranted.
(d) If the state's Medicaid fraud control unit or any other
law enforcement agency accepts a fraud referral from the office for
investigation, a payment hold based on a credible allegation of
fraud may be continued until:
(1) that investigation and any associated enforcement
proceedings are complete; or
(2) the state's Medicaid fraud control unit, another
law enforcement agency, or other prosecuting authorities determine
that there is insufficient evidence of fraud by the provider.
(e) If the state's Medicaid fraud control unit or any other
law enforcement agency declines to accept a fraud referral from the
office for investigation, a payment hold based on a credible
allegation of fraud must be discontinued unless the commission has
alternative federal or state authority under which it may impose a
payment hold or 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 and
other law enforcement agencies as to whether each matter accepted
by the unit or agency 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 commission's office of
inspector general shall post on its publicly available website a
description in plain English of, and a video explaining, the
processes and procedures the office uses to determine whether to
impose a payment hold on a provider under this subchapter.
Sec. 531.120. NOTICE AND INFORMAL RESOLUTION OF PROPOSED
RECOUPMENT OF OVERPAYMENT OR DEBT. (a) The commission or the
commission's office of inspector general shall provide a provider
with written notice of any proposed recoupment of an overpayment or
debt and any damages or penalties relating to a proposed recoupment
of an overpayment or debt arising out of a fraud or abuse
investigation. The notice must include:
(1) the specific basis for the overpayment or debt;
(2) a description of facts and supporting evidence;
(3) a representative sample of any documents that form
the basis for the overpayment or debt;
(4) the extrapolation methodology;
(5) the calculation of the overpayment or debt amount;
(6) the amount of damages and penalties, if
applicable; and
(7) a description of administrative and judicial due
process remedies, including the provider's right to seek informal
resolution, 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, 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 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, 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 meeting is
to be held. A provider must have an opportunity to provide
additional information before the second informal resolution
meeting for consideration by the office.
Sec. 531.1201. APPEAL OF DETERMINATION TO RECOUP
OVERPAYMENT OR DEBT. (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 the 60th day
after the date of the provider's request for an administrative
hearing or not later than the 60th day after the completion of the
informal resolution process, if applicable.
(b) Unless otherwise determined by the administrative law
judge for good cause, at any administrative hearing under this
section before the State Office of Administrative Hearings, the
state and the provider shall each be responsible for:
(1) one-half of the costs charged by the State Office
of Administrative Hearings;
(2) one-half of the costs for transcribing the
hearing;
(3) the party's own costs related to the hearing,
including the costs associated with preparation for the hearing,
discovery, depositions, and subpoenas, service of process and
witness expenses, travel expenses, and investigation expenses; and
(4) all other costs associated with the hearing that
are incurred by the party, including attorney's fees.
(c) The executive commissioner and the State Office of
Administrative Hearings shall jointly adopt rules that require a
provider, before an administrative hearing under this section
before the State Office of Administrative Hearings, to advance
security for the costs for which the provider is responsible under
Subsection (b).
(d) 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. RECORD OF INFORMAL RESOLUTION MEETINGS. The
commission shall, at no expense to the provider who requested the
meeting, provide for an informal resolution meeting held under
Section 531.102(g)(6) or 531.120(b) to be recorded. The recording
of an informal resolution meeting shall be made available to the
provider who requested the meeting.
SECTION 4. The heading to Section 32.0291, Human Resources
Code, is amended to read as follows:
Sec. 32.0291. PREPAYMENT REVIEWS AND PAYMENT [POSTPAYMENT]
HOLDS.
SECTION 5. Subsections (b) and (c), Section 32.0291, Human
Resources Code, are amended to read as follows:
(b) Subject to Section 531.102, Government Code, and
notwithstanding [Notwithstanding] any other law, 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 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.]
SECTION 6. Subsection (d), Section 32.0291, Human Resources
Code, is repealed.
SECTION 7. The House Committee on Public Health, the House
Committee on Human Services, and the Senate Committee on Health and
Human Services shall periodically request and review information
from the Health and Human Services Commission and the commission's
office of inspector general to monitor the enforcement of and the
protections provided by the changes in law made by this Act and to
recommend additional changes in law to further the purposes of this
Act. In performing the duties required under this section, the
House Committee on Public Health and the House Committee on Human
Services shall perform the duties jointly and the Senate Committee
on Health and Human Services shall perform the duties
independently.
SECTION 8. 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 9. This Act takes effect September 1, 2013.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1803 passed the Senate on
April 9, 2013, by the following vote: Yeas 31, Nays 0; and that the
Senate concurred in House amendments on May 21, 2013, by the
following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1803 passed the House, with
amendments, on May 17, 2013, by the following vote: Yeas 119,
Nays 20, three present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor