HBA-TYH S.B. 1590 76(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 1590 By: Zaffirini Business & Industry 5/13/1999 Engrossed BACKGROUND AND PURPOSE Currently, it is possible for a person or a health care provider to fraudulently obtain or deny a workers' compensation medical benefit or payment for a medical service. The comptroller states in the Health Care Claims Study that the State Office of Risk Management (office) has no authority to sanction providers who do not comply with the requirements of the state's workers' compensation system. Subsequently, the comptroller recommended providing the office with sanctioning authority. S.B. 1590 establishes the provisions for the investigation and prosecution of fraud in the workers' compensation program for state employees. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the risk management board of the State Office of Risk Management in SECTION 1 (Section 412.064, Labor Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 412, Labor Code, by adding Subchapter G, as follows: SUBCHAPTER G. FRAUD INVESTIGATION AND PREVENTION REGARDING MEDICAL BENEFITS Sec. 412.061. DEFINITIONS. Defines "fraudulent act" and "program." Sec. 412.062. CLAIM REVIEW BY OFFICE. Requires the State Office of Risk Management (office) to conduct periodic reviews of claims for medical benefits as necessary to determine the medical necessity and appropriateness of the provided services. Requires the office, in addition to periodic reviews, to conduct a claim review that involves the receipt of psychiatric services or in which the use of prescription drugs appears inappropriate. Authorizes the office to withhold payments to a health care provider who does not provide certain documentation necessary to verify a medical service related to a claim. Requires the risk management board (board) to establish criteria that trigger medical care coordination based on the date of injury, the amount paid in medical benefits, and the existence of inappropriate treatment patterns. Requires the office to implement measures for medical care coordination to ensure that the injured workers receive appropriate treatment for reported injuries. Sec. 412.063. CLAIMS AUDIT. Requires the director of the office (director) to conduct an annual audit of claims for medical benefits as provided by this section. Requires the director to select random claims submitted under the program for medical benefits in a statistically significant sample and to audit the claims to determine validity. Requires the director, in performing the audit, to interview the claimant in person or by telephone to ensure that the health care services were received. Requires the audit to include a review of the claimant's medical history and medical records. Authorizes the director to contract with a private entity for performance of the audit. Sec. 412.064. PREPAYMENT AUDIT. Requires the board, by rule, to require the office to implement prepayment audit procedures that compares the diagnosis code submitted on the bill for health care service to the code for the injured body part, and that verifies the appropriateness of the diagnosis code of the health care services provided. Sec. 412.065. TRAINING CLASSES IN FRAUD PREVENTION. Requires the director to implement annual training classes for appropriate members of the staffs of state agencies and contractors or administering firms who process workers' compensation claims submitted under the program to assist the attendees in identifying potential misrepresentation or fraud in the operation of the program. Authorizes the director to contract with the Health and Human Services Commission (commission) or with a private entity for the operation of the training classes. Sec. 412.066. ACTION BY OFFICE; COOPERATION REQUIRED. Requires the office to take action against a provider who was determined to have obtained payment through a fraudulent act. Requires the office to report in writing any action to the commission. Requires each participating state agency and health care provider, as a condition of participation, to cooperate in any investigation conducted by the director. Provides that notwithstanding any other provision of law, the director is entitled to access to patient medical records for the limited purpose provided by this subchapter and is a "governmental agency" for purposes of Section 5.08 (Physician-Patient Communication), Article 4495b (Medical Practice Act), V.T.C.S. Provides that any medical record submitted to the director is confidential and not subject to disclosure. Sec. 412.067. FRAUDULENT ACTS BY CLAIMANTS OR PROVIDERS. Requires the director to investigate each complaint alleging fraud by a claimant, a health care provider, or a state agency regarding a participating provider or claimant who is participating in the program. Requires the director to terminate the investigation if, after an initial investigation, the director determines that the complaint is unfounded. Requires the director, if further action is warranted, to refer the complaint to the commission and provide information regarding the complaint to the commission. Requires the commission to initiate promptly administrative proceedings or criminal prosecution on each complaint referred by the director, and, on a finding of fraud or overpayment, to require restitution to the office in addition to any other penalty assessed or action taken. Sec. 412.068. REPORTS. Requires the commission and office to report to the legislature at the beginning of each session the specified statistics and other information regarding the amount of prosecutions, restitutions, referrals, fraud, and collected restitution on providers. SECTION 2. Requires the office to implement the training classes under Section 412.065, Labor Code, by January 1, 2000. SECTION 3. Requires the board to conduct a study regarding the use of fraud detection software. Authorizes the study to include an analysis of the fraud detection program used by the Health and Human Services Commission under Chapter 22 (General Functions of Department of Human Services), Human Resources Code, for the detection of fraud in the Medicaid program. Requires the board to report the results of its study by February 1, 2001. SECTION 4. Effective date: September 1, 1999. SECTION 5.Emergency clause.