Texas 2025 - 89th Regular

Texas Senate Bill SB1038 Compare Versions

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Version 2 (New)

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1	1		By: Sparks S.B. No. 1038
2		-
3		-
	2	+	(In the Senate - Filed January 31, 2025; February 24, 2025,
	3	+	read first time and referred to Committee on Health & Human
	4	+	Services; March 24, 2025, reported adversely, with favorable
	5	+	Committee Substitute by the following vote: Yeas 7, Nays 1;
	6	+	March 24, 2025, sent to printer.)
	7	+	Click here to see the committee vote
	8	+	COMMITTEE SUBSTITUTE FOR S.B. No. 1038 By: Perry
4	9
5	10
6	11		A BILL TO BE ENTITLED
7	12		AN ACT
8	13		relating to administrative remedies for certain fraud and abuse
9	14		violations under Medicaid; providing administrative penalties.
10	15		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	16		SECTION 1. Sections 544.0205(a) and (b), Government Code,
12	17		as effective April 1, 2025, are amended to read as follows:
13	18		(a) The commission may grant an award to an individual who
14	19		reports activity that constitutes fraud or abuse of Medicaid funds
15	20		or who reports Medicaid overcharges if the commission determines
16	21		that the disclosure results in the recovery of a remedy [an
17	22		administrative penalty] imposed under Section 32.039, Human
18	23		Resources Code. The commission may not grant an award to an
19	24		individual in connection with a report if the commission or
20	25		attorney general had independent knowledge of the activity the
21	26		individual reported.
22	27		(b) The commission shall determine the amount of an
23	28		award. The award may not exceed five percent of the amount of the
24	29		remedy [administrative penalty] imposed under Section 32.039,
25	30		Human Resources Code, that resulted from the individual's
26	31		disclosure. In determining the award amount, the commission:
27	32		(1) shall consider how important the disclosure is in
28	33		ensuring the fiscal integrity of Medicaid; and
29	34		(2) may consider whether the individual participated
30	35		in the fraud, abuse, or overcharge.
31	36		SECTION 2. The heading to Section 32.039, Human Resources
32	37		Code, is amended to read as follows:
33	38		Sec. 32.039. ADMINISTRATIVE REMEDIES [DAMAGES AND
34	39		PENALTIES].
35	40		SECTION 3. Section 32.039(a), Human Resources Code, is
36	41		amended by amending Subdivision (1) and adding Subdivision (3-a) to
37	42		read as follows:
38	43		(1) "Claim" means an application, request, or demand
39	44		for a benefit or payment [of health care services] under Title XIX
40	45		of the [federal] Social Security Act (42 U.S.C. Section 1396 et
41	46		seq.) [that is submitted by a person who is under a contract or
42	47		provider agreement with the commission].
43	48		(3-a) "Material" means having a natural tendency to
44	49		influence or to be capable of influencing.
45	50		SECTION 4. Section 32.039, Human Resources Code, is amended
46	51		by adding Subsections (a-1), (a-2), (c-1), and (c-2) and amending
47	52		Subsections (b), (c), (d), (f), (g), (h), (i), (k), (l), (m), (n),
48	53		(o), (p), (q), (r), (s), and (x) to read as follows:
49	54		(a-1) For purposes of this section, a person acts knowingly
50	55		with respect to information if the person:
51	56		(1) has knowledge of the information;
52	57		(2) acts with conscious indifference to the truth or
53	58		falsity of the information; or
54	59		(3) acts in reckless disregard of the truth or falsity
55	60		of the information.
56	61		(a-2) Proof of the person's specific intent to commit a
57	62		violation under this section is not required in a civil or
58	63		administrative proceeding to show that the person acted "knowingly"
59	64		with respect to information under this section.
60	65		(b) A person commits a violation if the person:
61	66		(1) knowingly submits [presents] or causes to be
62	67		submitted [presented to the commission] a claim that contains:
63	68		(A) a false statement;
64	69		(B) a misrepresentation; or
65	70		(C) an omission of a material fact
66	71		[representation the person knows or should know to be false];
67	72		(2) [(1-a)] engages in conduct that violates Section
68	73		102.001, Occupations Code;
69	74		(3) [(1-b)] solicits or receives, directly or
70	75		indirectly, overtly or covertly any remuneration, including any
71	76		kickback, bribe, or rebate, in cash or in kind for referring an
72	77		individual to a person for the furnishing of, or for arranging the
73	78		furnishing of, any item or service for which payment may be made, in
74	79		whole or in part, under the medical assistance program, provided
75	80		that this subdivision does not prohibit the referral of a patient to
76	81		another practitioner within a multispecialty group or university
77	82		medical services research and development plan (practice plan) for
78	83		medically necessary services;
79	84		(4) [(1-c)] solicits or receives, directly or
80	85		indirectly, overtly or covertly any remuneration, including any
81	86		kickback, bribe, or rebate, in cash or in kind for purchasing,
82	87		leasing, or ordering, or arranging for or recommending the
83	88		purchasing, leasing, or ordering of, any good, facility, service,
84	89		or item for which payment may be made, in whole or in part, under the
85	90		medical assistance program;
86	91		(5) [(1-d)] offers or pays, directly or indirectly,
87	92		overtly or covertly any remuneration, including any kickback,
88	93		bribe, or rebate, in cash or in kind to induce a person to refer an
89	94		individual to another person for the furnishing of, or for
90	95		arranging the furnishing of, any item or service for which payment
91	96		may be made, in whole or in part, under the medical assistance
92	97		program, provided that this subdivision does not prohibit the
93	98		referral of a patient to another practitioner within a
94	99		multispecialty group or university medical services research and
95	100		development plan (practice plan) for medically necessary services;
96	101		(6) [(1-e)] offers or pays, directly or indirectly,
97	102		overtly or covertly any remuneration, including any kickback,
98	103		bribe, or rebate, in cash or in kind to induce a person to purchase,
99	104		lease, or order, or arrange for or recommend the purchase, lease, or
100	105		order of, any good, facility, service, or item for which payment may
101	106		be made, in whole or in part, under the medical assistance program;
102	107		(7) [(1-f)] provides, offers, or receives an
103	108		inducement in a manner or for a purpose not otherwise prohibited by
104	109		this section or Section 102.001, Occupations Code, to or from a
105	110		person, including a recipient, provider, employee or agent of a
106	111		provider, third-party vendor, or public servant, for the purpose of
107	112		influencing or being influenced in a decision regarding:
108	113		(A) selection of a provider or receipt of a good
109	114		or service under the medical assistance program;
110	115		(B) the use of goods or services provided under
111	116		the medical assistance program; or
112	117		(C) the inclusion or exclusion of goods or
113	118		services available under the medical assistance program;
114	119		(8) knowingly makes or causes to be made a false
115	120		statement or misrepresentation of a material fact to permit a
116	121		person to receive a benefit or payment under the medical assistance
117	122		program that is not authorized or that is greater than the benefit
118	123		or payment that is authorized;
119	124		(9) knowingly conceals or fails to disclose
120	125		information that permits a person to receive a benefit or payment
121	126		under the medical assistance program that is not authorized or that
122	127		is greater than the benefit or payment that is authorized;
123	128		(10) knowingly applies for and receives a benefit or
124	129		payment on behalf of another person under the medical assistance
125	130		program and converts any part of the benefit or payment to a use
126	131		other than for the benefit of the person on whose behalf it was
127	132		received;
128	133		(11) knowingly makes, causes to be made, induces, or
129	134		seeks to induce the making of a false statement or
130	135		misrepresentation of a material fact concerning the conditions or
131	136		operation of a facility in order that the facility may qualify for
132	137		certification or recertification under the medical assistance
133	138		program, including certification or recertification as:
134	139		(A) a hospital;
135	140		(B) a nursing facility or skilled nursing
136	141		facility;
137	142		(C) a hospice provider;
138	143		(D) an intermediate care facility for
139	144		individuals with an intellectual disability;
140	145		(E) an assisted living facility; or
141	146		(F) a home and community support services agency;
142	147		(12) knowingly makes, causes to be made, induces, or
143	148		seeks to induce the making of a false statement or
144	149		misrepresentation of a material fact concerning information
145	150		required to be provided under a federal or state law, rule,
146	151		regulation, or provider agreement pertaining to the medical
147	152		assistance program;
148	153		(13) knowingly presents or causes to be presented a
149	154		claim for payment for a product provided or a service rendered by a
150	155		person who:
151	156		(A) is not licensed to provide the product or
152	157		render the service, if a license is required; or
153	158		(B) is not licensed in the manner claimed;
154	159		(14) knowingly makes or causes to be made a claim for:
155	160		(A) a service or product that has not been
156	161		approved or accepted by a treating physician or health care
157	162		practitioner;
158	163		(B) a service or product that is substantially
159	164		inadequate or inappropriate as compared to generally recognized
160	165		standards within the particular discipline or within the health
161	166		care industry; or
162	167		(C) a product that has been adulterated, debased,
163	168		or mislabeled, or that is otherwise inappropriate;
164	169		(15) makes a claim and knowingly fails to indicate the
165	170		type of license of the provider who actually provided the service;
166	171		(16) makes a claim and knowingly fails to indicate the
167	172		identification number of the licensed provider who actually
168	173		provided the service;
169	174		(17) knowingly obstructs the office of inspector
170	175		general from carrying out the office's duties under Section
171	176		544.0103, Government Code;
172	177		(18) knowingly makes, uses, or causes the making or
173	178		use of a false record or statement material to an obligation to pay
174	179		or transmit money or property to this state under the medical
175	180		assistance program, or knowingly conceals or knowingly and
176	181		improperly avoids or decreases an obligation to pay or transmit
177	182		money or property to this state under the medical assistance
178	183		program;
179	184		(19) [(2)] is a managed care organization that
180	185		contracts with the commission to provide or arrange to provide
181	186		health care benefits or services to individuals eligible for
182	187		medical assistance and:
183	188		(A) fails to provide to an individual a health
184	189		care benefit or service that the organization is required to
185	190		provide under the contract with the commission;
186	191		(B) fails to provide to the commission or other
187	192		appropriate agency information required to be provided by law,
188	193		commission or agency rule, or contractual provision;
189	194		(C) engages in a fraudulent activity in
190	195		connection with the enrollment in the organization's managed care
191	196		plan of an individual eligible for medical assistance or in
192	197		connection with marketing the organization's services to an
193	198		individual eligible for medical assistance; or
194	199		(D) engages in actions that indicate a pattern
195	200		of:
196	201		(i) wrongful denial of payment for a health
197	202		care benefit or service that the organization is required to
198	203		provide under the contract with the commission; or
199	204		(ii) wrongful delay of at least 45 days or a
200	205		longer period specified in the contract with the commission, not to
201	206		exceed 60 days, in making payment for a health care benefit or
202	207		service that the organization is required to provide under the
203	208		contract with the commission; [or]
204	209		(20) [(3)] fails to maintain documentation to support
205	210		a claim for payment in accordance with the requirements specified
206	211		by commission rule or medical assistance program policy; or
207	212		(21) engages in any other conduct that a commission
208	213		rule has defined as a violation of the medical assistance program.
209	214		(c) A person who commits a violation under Subsection (b) is
210	215		liable to the commission for the following administrative remedy:
211	216		(1) the amount paid or benefit received, if any,
212	217		directly or indirectly as a result of the violation, including any
213	218		payment made to a third party, and interest on that amount
214	219		determined at the rate provided by law for legal judgments and
215	220		accruing from the date on which the payment was made; and
216	221		(2) payment of an administrative penalty of an amount
217	222		not to exceed twice the amount paid, if any, as a result of the
218	223		violation, plus an amount:
219	224		(A) not less than $5,000 or more than $15,000 or
220	225		the maximum dollar amount imposed as provided by 31 U.S.C. Section
221	226		3729(a)(1), if that amount exceeds $15,000, for each violation that
222	227		results in injury to an elderly person, as defined by Section
223	228		48.002(a)(1), a person with a disability, as defined by Section
224	229		48.002(a)(8)(A), or a person younger than 18 years of age; or
225	230		(B) not more than $10,000 or the maximum dollar
226	231		amount imposed as provided by 31 U.S.C. Section 3729(a)(1), if that
227	232		amount exceeds $10,000, for each violation that does not result in
228	233		injury to a person described by Paragraph (A).
229	234		(c-1) For purposes of Subsection (c)(2), each day a person
230	235		violates Subsection (b)(17), (18), or (19) constitutes a separate
231	236		violation.
232	237		(c-2) Notwithstanding Subsection (c), a person who commits
233	238		a violation described by Subsection (b)(20) is liable to the
234	239		commission for, as determined by the commission, either:
235	240		(1) the amount paid in response to the claim for
236	241		payment; or
237	242		(2) the payment of an administrative penalty in an
238	243		amount not to exceed $500 for each violation.
239	244		(d) Unless the provider knowingly submitted false or
240	245		misleading information to the commission for use in preparing a
241	246		voucher [that the provider knew or should have known was false] or
242	247		knowingly failed to correct false or misleading information [that
243	248		the provider knew or should have known was false] when provided an
244	249		opportunity to do so, this section does not apply to a claim based
245	250		on the voucher if the commission calculated and printed the amount
246	251		of the claim on the voucher and then submitted the voucher to the
247	252		provider for the provider's signature. In addition, the provider's
248	253		signature on the voucher does not constitute fraud. The executive
249	254		commissioner shall adopt rules that establish a grace period during
250	255		which errors contained in a voucher prepared by the commission may
251	256		be corrected without penalty to the provider.
252	257		(f) If after an examination of the facts the commission
253	258		concludes that the person committed a violation, the commission may
254	259		issue a preliminary report stating the facts on which it based its
255	260		conclusion, recommending that an administrative remedy [penalty]
256	261		under this section be imposed and recommending the amount of the
257	262		proposed remedy [penalty].
258	263		(g) The commission shall give written notice of the report
259	264		to the person charged with committing the violation. The notice
260	265		must include:
261	266		(1) a brief summary of the facts;
262	267		(2) [,] a statement of the amount of the recommended
263	268		remedy;
264	269		(3) [penalty, and] a statement of the person's right to
265	270		an informal review of:
266	271		(A) the alleged violation;
267	272		(B) [,] the amount of the recommended remedy;
268	273		[penalty,] or
269	274		(C) both the alleged violation and the amount of
270	275		the recommended remedy; and
271	276		(4) a description of the administrative and judicial
272	277		due process remedies available to the person [penalty].
273	278		(h) Not later than the 30th [10th] day after the date on
274	279		which the person charged with committing the violation receives the
275	280		notice, the person may either give the commission written consent
276	281		to the report, including the recommended remedy [penalty], or make
277	282		a written request for an informal review by the commission.
278	283		(i) If the person charged with committing the violation
279	284		consents to the remedy [penalty] recommended by the commission or
280	285		fails to timely request an informal review, the commission shall
281	286		assess the remedy [penalty]. The commission shall give the person
282	287		written notice of its action. The person shall pay the remedy
283	288		[penalty] not later than the 30th day after the date on which the
284	289		person receives the notice.
285	290		(k) Not later than the 30th [10th] day after the date on
286	291		which the person charged with committing the violation receives the
287	292		notice prescribed by Subsection (j), the person may make to the
288	293		commission a written request for a hearing. The hearing must be
289	294		conducted in accordance with Chapter 2001, Government Code.
290	295		(l) If, after informal review, a person who has been ordered
291	296		to pay a remedy [penalty] fails to request a formal hearing in a
292	297		timely manner, the commission shall assess the remedy [penalty].
293	298		The commission shall give the person written notice of its action.
294	299		The person shall pay the remedy [penalty] not later than the 30th
295	300		day after the date on which the person receives the notice.
296	301		(m) Within 30 days after the date on which the commission's
297	302		order issued after a hearing under Subsection (k) becomes final as
298	303		provided by Section 2001.144, Government Code, the person shall:
299	304		(1) pay the amount of the remedy [penalty];
300	305		(2) pay the amount of the remedy [penalty] and file a
301	306		petition for judicial review contesting the occurrence of the
302	307		violation, the amount of the remedy [penalty], or both the
303	308		occurrence of the violation and the amount of the remedy [penalty];
304	309		or
305	310		(3) without paying the amount of the remedy [penalty],
306	311		file a petition for judicial review contesting the occurrence of
307	312		the violation, the amount of the remedy [penalty], or both the
308	313		occurrence of the violation and the amount of the remedy [penalty].
309	314		(n) A person who acts under Subsection (m)(3) within the
310	315		30-day period may:
311	316		(1) stay enforcement of the remedy [penalty] by:
312	317		(A) paying the amount of the remedy [penalty] to
313	318		the court for placement in an escrow account; or
314	319		(B) giving to the court a supersedeas bond that
315	320		is approved by the court for the amount of the remedy [penalty] and
316	321		that is effective until all judicial review of the commission's
317	322		order is final; or
318	323		(2) request the court to stay enforcement of the
319	324		remedy [penalty] by:
320	325		(A) filing with the court a sworn affidavit of
321	326		the person stating that the person is financially unable to pay the
322	327		amount of the remedy [penalty] and is financially unable to give the
323	328		supersedeas bond; and
324	329		(B) giving a copy of the affidavit to the
325	330		executive commissioner by certified mail.
326	331		(o) If the executive commissioner receives a copy of an
327	332		affidavit under Subsection (n)(2), the executive commissioner may
328	333		file with the court, within five days after the date the copy is
329		-	received, a contest to the affidavit. The court shall hold a
330		-	hearing on the facts alleged in the affidavit as soon as practicable
331		-	and shall stay the enforcement of the remedy [penalty] on finding
332		-	that the alleged facts are true. The person who files an affidavit
333		-	has the burden of proving that the person is financially unable to
334		-	pay the amount of the remedy [penalty] and to give a supersedeas
335		-	bond.
	334	+	received, a contest to the affidavit. The court shall hold a hearing
	335	+	on the facts alleged in the affidavit as soon as practicable and
	336	+	shall stay the enforcement of the remedy [penalty] on finding that
	337	+	the alleged facts are true. The person who files an affidavit has
	338	+	the burden of proving that the person is financially unable to pay
	339	+	the amount of the remedy [penalty] and to give a supersedeas bond.
336	340		(p) If the person charged does not pay the amount of the
337	341		remedy [penalty] and the enforcement of the remedy [penalty] is not
338	342		stayed, the commission may forward the matter to the attorney
339	343		general for enforcement of the remedy [penalty] and interest as
340	344		provided by law for legal judgments. An action to enforce a remedy
341	345		[penalty] order under this section must be initiated in a court of
342	346		competent jurisdiction in Travis County or in the county in which
343	347		the violation was committed.
344	348		(q) Judicial review of a commission order or review under
345	349		this section assessing a remedy [penalty] is under the substantial
346	350		evidence rule. A suit may be initiated by filing a petition with a
347	351		district court in Travis County, as provided by Subchapter G,
348	352		Chapter 2001, Government Code.
349	353		(r) If a remedy [penalty] is reduced or not assessed, the
350	354		commission shall remit to the person the appropriate amount plus
351	355		accrued interest if the remedy [penalty] has been paid or shall
352	356		execute a release of the bond if a supersedeas bond has been posted.
353	357		The accrued interest on amounts remitted by the commission under
354	358		this subsection shall be paid at a rate equal to the rate provided
355	359		by law for legal judgments and shall be paid for the period
356	360		beginning on the date the remedy [penalty] is paid to the commission
357	361		under this section and ending on the date the remedy [penalty] is
358	362		remitted.
359	363		(s) A remedy [damage, cost, or penalty] collected under this
360	364		section is not an allowable expense in a claim or cost report that
361	365		is or could be used to determine a rate or payment under the medical
362	366		assistance program.
363	367		(x) Subsections (b)(3) [(b)(1-b)] through (7) [(1-f)] do
364	368		not prohibit a person from engaging in:
365	369		(1) generally accepted business practices, as
366	370		determined by commission rule, including:
367	371		(A) conducting a marketing campaign;
368	372		(B) providing token items of minimal value that
369	373		advertise the person's trade name; and
370	374		(C) providing complimentary refreshments at an
371	375		informational meeting promoting the person's goods or services;
372	376		(2) the provision of a value-added service if the
373	377		person is a managed care organization; or
374	378		(3) other conduct specifically authorized by law,
375	379		including conduct authorized by federal safe harbor regulations (42
376	380		C.F.R. Section 1001.952).
377	381		SECTION 5. Section 32.0391(a), Human Resources Code, is
378	382		amended to read as follows:
379	383		(a) A person commits an offense if the person intentionally
380	384		or knowingly commits a violation under Section 32.039(b)(3), (4),
381	385		(5), (6), or (7) [32.039(b)(1-b), (1-c), (1-d), (1-e), or (1-f)].
382	386		SECTION 6. Section 36.006, Human Resources Code, is amended
383	387		to read as follows:
384	388		Sec. 36.006. APPLICATION OF OTHER LAW. The application of a
385	389		civil remedy under this chapter does not preclude the application
386	390		of another common law, statutory, or regulatory remedy, except that
387	391		a person may not be liable for a civil remedy under this chapter and
388	392		an administrative remedy [civil damages or a penalty] under Section
389	393		32.039 if the civil remedy and administrative remedy [civil damages
390	394		or penalty] are assessed for the same act.
391	395		SECTION 7. The following provisions of the Human Resources
392	396		Code are repealed:
393	397		(1) Section 32.039(a)(4); and
394	398		(2) Section 32.039(b-1).
395	399		SECTION 8. Section 32.039, Human Resources Code, as amended
396	400		by this Act, applies only to a violation that occurs on or after the
397	401		effective date of this Act. A violation that occurs before the
398	402		effective date of this Act is governed by the law in effect on the
399	403		date the violation occurred, and that law is continued in effect for
400	404		that purpose.
401	405		SECTION 9. If before implementing any provision of this Act
402	406		a state agency determines that a waiver or authorization from a
403	407		federal agency is necessary for implementation of that provision,
404	408		the agency affected by the provision shall request the waiver or
405	409		authorization and may delay implementing that provision until the
406	410		waiver or authorization is granted.
407	411		SECTION 10. This Act takes effect September 1, 2025.
	412	+	* * * * *