By Maxey H.B. No. 1669
76R5068 PB-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the investigation and prosecution of fraud in the
1-3 workers' compensation program for state employees; providing
1-4 administrative penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Chapter 412, Labor Code, is amended by adding
1-7 Subchapter G to read as follows:
1-8 SUBCHAPTER G. FRAUD INVESTIGATION AND PREVENTION
1-9 REGARDING MEDICAL BENEFITS
1-10 Sec. 412.061. DEFINITIONS. In this subchapter:
1-11 (1) "Fraudulent act" means any act that violates a
1-12 penal law and is committed or attempted to be committed to obtain
1-13 or deny a workers' compensation medical benefit or payment for a
1-14 service provided in conjunction with a medical benefit.
1-15 (2) "Program" means the workers' compensation program
1-16 for state employees administered under Chapter 501.
1-17 Sec. 412.062. CLAIM REVIEW BY OFFICE. (a) The office shall
1-18 conduct periodic reviews of claims for medical benefits as
1-19 necessary to determine the medical necessity and appropriateness of
1-20 the provided services.
1-21 (b) In addition to the periodic reviews under Subsection
1-22 (a), the office shall conduct a claim review on each claim:
1-23 (1) that involves the receipt of psychiatric services;
1-24 or
2-1 (2) in which the use of prescription drugs appears
2-2 inappropriate.
2-3 (c) The office may withhold payments to be made to a health
2-4 care provider who does not provide, in the manner prescribed by
2-5 the risk management board, documentation requested by the office
2-6 necessary to verify a medical service related to a claim.
2-7 Sec. 412.063. CLAIMS AUDIT. (a) The director shall conduct
2-8 an annual audit of claims for medical benefits as provided by this
2-9 section.
2-10 (b) The director shall randomly select claims submitted
2-11 under the program for medical benefits, in a percentage of total
2-12 claims made during the year set by the board as necessary to obtain
2-13 a statistically significant sample, and shall audit the claims to
2-14 determine the validity of the claims. In performing the audit, the
2-15 director shall interview the claimant in person or by telephone to
2-16 ensure that the health care services were received. The audit must
2-17 also include a review of the claimant's medical history and medical
2-18 records.
2-19 (c) The director may contract with a private entity for
2-20 performance of the audit.
2-21 Sec. 412.064. PREPAYMENT AUDIT. The board by rule shall
2-22 require each person who processes claims for the office to
2-23 implement a prepayment audit procedure that:
2-24 (1) compares the diagnosis code submitted on the bill
2-25 for health care services to the code for the injured body part; and
2-26 (2) verifies the appropriateness of the diagnosis code
2-27 for the health care services provided.
3-1 Sec. 412.065. TOLL-FREE TELEPHONE NUMBER. (a) The office
3-2 shall maintain a toll-free telephone number for the receipt of
3-3 complaints regarding fraudulent acts by claimants or health care
3-4 providers.
3-5 (b) The director shall provide claimants with information
3-6 regarding the telephone number when a workers' compensation claim
3-7 is submitted and periodically shall notify state employees of the
3-8 telephone number in a manner determined to be appropriate by the
3-9 office.
3-10 Sec. 412.066. TRAINING CLASSES IN FRAUD PREVENTION.
3-11 (a) The director shall implement annual training classes for
3-12 appropriate members of the staff of state agencies and contractors
3-13 or administering firms who process workers' compensation claims
3-14 submitted under the program for medical benefits to assist those
3-15 persons in identifying potential misrepresentation or fraud in the
3-16 operation of the program.
3-17 (b) The director may contract with the Health and Human
3-18 Services Commission or with a private entity for the operation of
3-19 the training classes.
3-20 Sec. 412.067. ACTION BY OFFICE; COOPERATION REQUIRED.
3-21 (a) If the office determines that a health care provider has
3-22 obtained payments under the program through a fraudulent act, the
3-23 office shall take action against the provider as provided by this
3-24 subchapter. The office shall report any action taken in writing to
3-25 the commission.
3-26 (b) Each state agency and health care provider who
3-27 participates in the program shall, as a condition of that
4-1 participation, cooperate fully in any investigation of a fraudulent
4-2 act that is conducted by the director, including providing to the
4-3 director timely access to patient medical records determined by the
4-4 director to be necessary to conduct an investigation.
4-5 (c) Notwithstanding any other law regarding the
4-6 confidentiality of patient records, the director is entitled to
4-7 access to patient medical records for the limited purpose provided
4-8 by this subchapter and is a "governmental agency" for purposes of
4-9 Section 5.08, Medical Practice Act (Article 4495b, Vernon's Texas
4-10 Civil Statutes). A medical record submitted to the director under
4-11 this subsection is confidential and is not subject to disclosure
4-12 under Chapter 552, Government Code.
4-13 Sec. 412.068. FRAUDULENT ACTS BY PROVIDERS. (a) The
4-14 director shall investigate each complaint alleging a fraudulent act
4-15 made by a claimant, a health care provider, or a state agency
4-16 regarding a health care provider who is participating in the
4-17 program.
4-18 (b) If, after initial investigation, the director determines
4-19 that the complaint is unfounded, the director shall terminate the
4-20 investigation. If the director determines that further action is
4-21 warranted, the director shall refer the complaint to the risk
4-22 management board for appropriate sanctions or administrative action
4-23 and shall provide information regarding the complaint and the
4-24 action taken to the commission.
4-25 (c) Sanctions against a health care provider may include:
4-26 (1) exclusion from participation as a provider in the
4-27 program;
5-1 (2) withholding during the pendency of an
5-2 investigation payments to be made to the provider;
5-3 (3) recoupment of unauthorized payments from future
5-4 payments made to the provider; and
5-5 (4) restrictions on provider reimbursement.
5-6 Sec. 412.069. ADMINISTRATIVE PENALTY. (a) The risk
5-7 management board may impose an administrative penalty on a health
5-8 care provider or claimant who commits a fraudulent act in obtaining
5-9 a payment or a medical benefit under Chapter 501.
5-10 (b) The amount of the penalty may not exceed $10,000, and
5-11 each day a violation continues or occurs is a separate violation
5-12 for the purpose of imposing a penalty. The amount shall be based
5-13 on:
5-14 (1) the seriousness of the violation, including the
5-15 nature, circumstances, extent, and gravity of the violation;
5-16 (2) the history of previous violations;
5-17 (3) the amount necessary to deter a future violation;
5-18 (4) efforts to correct the violation; and
5-19 (5) any other matter that justice may require.
5-20 (c) The enforcement of the penalty may be stayed during the
5-21 time the order is under judicial review if the person pays the
5-22 penalty to the clerk of the court or files a supersedeas bond with
5-23 the court in the amount of the penalty. A person who cannot afford
5-24 to pay the penalty or file the bond may stay the enforcement by
5-25 filing an affidavit in the manner required by the Texas Rules of
5-26 Civil Procedure for a party who cannot afford to file security for
5-27 costs, subject to the right of the board to contest the affidavit
6-1 as provided by those rules.
6-2 (d) The attorney general may sue to collect the penalty.
6-3 (e) Except as otherwise provided by this subsection, an
6-4 administrative penalty collected under this section shall be
6-5 transmitted by the office to the comptroller for deposit in the
6-6 general revenue fund. The comptroller shall deposit an amount not
6-7 to exceed $200,000 per state fiscal biennium in the state workers'
6-8 compensation account in the general revenue fund to be used for the
6-9 detection and prosecution of fraud under this subchapter.
6-10 (f) A proceeding to impose the penalty is considered to be a
6-11 contested case under Chapter 2001, Government Code.
6-12 SECTION 2. The State Office of Risk Management shall
6-13 implement the toll-free telephone number required under Section
6-14 412.065, Labor Code, as added by this Act, not later than January
6-15 1, 2000.
6-16 SECTION 3. The State Office of Risk Management shall
6-17 implement the training classes required under Section 412.066,
6-18 Labor Code, as added by this Act, not later than January 1, 2000.
6-19 SECTION 4. The risk management board of the State Office of
6-20 Risk Management shall conduct a study regarding the use of fraud
6-21 detection software. The study may include an analysis of the fraud
6-22 detection program used by the Health and Human Services Commission
6-23 under Chapter 22, Human Resources Code, for the detection of fraud
6-24 in the Medicaid program. The risk management board shall report
6-25 the results of its study to the 77th Legislature not later than
6-26 February 1, 2001.
6-27 SECTION 5. This Act applies only to an administrative
7-1 penalty assessed for conduct that occurs on or after the effective
7-2 date of this Act. An administrative penalty assessed for conduct
7-3 that occurred before the effective date of this Act is governed by
7-4 the law as it existed immediately before the effective date of this
7-5 Act, and that law is continued in effect for that purpose.
7-6 SECTION 6. This Act takes effect September 1, 1999.
7-7 SECTION 7. The importance of this legislation and the
7-8 crowded condition of the calendars in both houses create an
7-9 emergency and an imperative public necessity that the
7-10 constitutional rule requiring bills to be read on three several
7-11 days in each house be suspended, and this rule is hereby suspended.