76R12023 E
By Maxey H.B. No. 2315
Substitute the following for H.B. No. 2315:
By Maxey C.S.H.B. No. 2315
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the investigation and prosecution of fraud in certain
1-3 benefit programs operated by the state; providing administrative
1-4 penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 ARTICLE 1. POWERS AND DUTIES OF THE STATE OFFICE OF
1-7 RISK MANAGEMENT
1-8 SECTION 1.01. Chapter 412, Labor Code, is amended by adding
1-9 Subchapter G to read as follows:
1-10 SUBCHAPTER G. FRAUD INVESTIGATION AND PREVENTION
1-11 REGARDING MEDICAL BENEFITS
1-12 Sec. 412.061. DEFINITIONS. In this subchapter:
1-13 (1) "Fraudulent act" means any act that constitutes
1-14 fraud under an applicable state or federal law and is committed or
1-15 attempted to be committed to obtain or deny a workers' compensation
1-16 medical benefit or payment for a service provided in conjunction
1-17 with a medical benefit.
1-18 (2) "Program" means the workers' compensation program
1-19 for state employees administered under Chapter 501.
1-20 Sec. 412.062. CLAIM REVIEW BY OFFICE. (a) The office shall
1-21 conduct periodic reviews of claims for medical benefits as
1-22 necessary to determine the medical necessity and appropriateness of
1-23 the provided services.
1-24 (b) In addition to the periodic reviews under Subsection
2-1 (a), the office shall conduct a claim review on each claim:
2-2 (1) that involves the receipt of psychiatric services;
2-3 or
2-4 (2) in which the use of prescription drugs appears
2-5 inappropriate.
2-6 (c) The office may withhold payments to be made to a health
2-7 care provider who does not provide, in the manner prescribed by
2-8 the board, documentation requested by the office necessary to
2-9 verify a medical service related to a claim.
2-10 Sec. 412.063. CLAIMS AUDIT. (a) The director shall conduct
2-11 an annual audit of claims for medical benefits as provided by this
2-12 section.
2-13 (b) The director shall randomly select claims submitted
2-14 under the program for medical benefits, in a percentage of total
2-15 claims made during the year set by the board as necessary to obtain
2-16 a statistically significant sample, and shall audit the claims to
2-17 determine the validity of the claims. In performing the audit, the
2-18 director shall interview the claimant in person or by telephone to
2-19 ensure that the health care services were appropriate and were
2-20 received by the claimant. The audit must also include a review of
2-21 the claimant's medical history and medical records.
2-22 (c) The director may contract with a private entity for
2-23 performance of the audit.
2-24 Sec. 412.064. PREPAYMENT AUDIT. The board by rule shall
2-25 require each person who processes claims for the office to
2-26 implement a prepayment audit procedure that:
2-27 (1) compares the diagnosis code submitted on the bill
3-1 for health care services to the code for the injured body part; and
3-2 (2) verifies the appropriateness of the diagnosis code
3-3 for the health care services provided.
3-4 Sec. 412.065. TOLL-FREE TELEPHONE NUMBER. (a) The office
3-5 shall maintain a toll-free telephone number for the receipt of
3-6 complaints regarding alleged fraudulent acts by claimants or health
3-7 care providers.
3-8 (b) The director shall provide claimants with information
3-9 regarding the telephone number when a workers' compensation claim
3-10 is submitted and periodically shall notify state employees of the
3-11 telephone number in a manner determined to be appropriate by the
3-12 office.
3-13 Sec. 412.066. TRAINING CLASSES IN FRAUD PREVENTION.
3-14 (a) The director shall implement annual training classes for
3-15 appropriate members of the staff of state agencies and contractors
3-16 or administering firms who process workers' compensation claims
3-17 submitted under the program for medical benefits to assist those
3-18 persons in identifying potential misrepresentation or fraud in the
3-19 operation of the program.
3-20 (b) The director may contract with the Health and Human
3-21 Services Commission or with a private entity for the operation of
3-22 the training classes.
3-23 Sec. 412.067. ACTION BY OFFICE; COOPERATION REQUIRED.
3-24 (a) If the office determines that a health care provider has
3-25 obtained payments under the program through a fraudulent act, the
3-26 office shall take action against the provider as provided by this
3-27 subchapter. The office shall report any action taken in writing to
4-1 the commission.
4-2 (b) Each state agency and health care provider who
4-3 participates in the program shall, as a condition of that
4-4 participation, cooperate fully in any investigation of an alleged
4-5 fraudulent act that is conducted by the director, including
4-6 providing to the director timely access to patient medical records
4-7 determined by the director to be necessary to conduct the
4-8 investigation.
4-9 (c) Notwithstanding any other law regarding the
4-10 confidentiality of patient records, the director is entitled to
4-11 access to patient medical records for the limited purpose provided
4-12 by this subchapter and is a "governmental agency" for purposes of
4-13 Section 5.08, Medical Practice Act (Article 4495b, Vernon's Texas
4-14 Civil Statutes). A medical record submitted to the director under
4-15 this subsection is confidential and is not subject to disclosure
4-16 under Chapter 552, Government Code.
4-17 Sec. 412.068. FRAUDULENT ACTS BY CLAIMANTS OR PROVIDERS.
4-18 (a) The director shall investigate each complaint alleging a
4-19 fraudulent act made by a claimant, a health care provider, or a
4-20 state agency regarding a health care provider or claimant who is
4-21 participating in the program.
4-22 (b) If, after initial investigation, the director determines
4-23 that the complaint is unfounded, the director shall terminate the
4-24 investigation. If the director determines that further action is
4-25 warranted, the director shall refer the complaint to the commission
4-26 for appropriate sanctions or administrative action and shall
4-27 provide information regarding the complaint to the commission and
5-1 the Health and Human Services Commission.
5-2 (c) The commission shall promptly initiate administrative
5-3 proceedings or criminal prosecution on each complaint referred by
5-4 the director and, on a finding of fraud or overpayment, shall
5-5 require restitution to the office in addition to any other penalty
5-6 assessed or action taken.
5-7 Sec. 412.069. REPORTS. (a) The commission shall report to
5-8 the legislature at the beginning of each regular legislative
5-9 session:
5-10 (1) the number of referrals received from the office
5-11 during the biennium;
5-12 (2) the number of prosecutions completed on referrals
5-13 from the office; and
5-14 (3) the total restitution ordered to the office on
5-15 successful prosecutions.
5-16 (b) The office shall report to the legislature at the
5-17 beginning of each regular legislative session:
5-18 (1) the number of referrals made to the commission
5-19 during the biennium;
5-20 (2) the total amount of the fraud or overpayment
5-21 alleged in the cases referred; and
5-22 (3) the total amount collected from restitution orders
5-23 entered after prosecution by the commission.
5-24 Sec. 412.070. ADMINISTRATIVE PENALTY. (a) The board may
5-25 impose an administrative penalty on a health care provider or
5-26 claimant who commits a fraudulent act in obtaining a payment or a
5-27 medical benefit under Chapter 501.
6-1 (b) The amount of the penalty may not exceed $10,000, and
6-2 each day a violation continues or occurs is a separate violation
6-3 for the purpose of imposing a penalty. The amount shall be based
6-4 on:
6-5 (1) the seriousness of the violation, including the
6-6 nature, circumstances, extent, and gravity of the violation;
6-7 (2) the history of previous violations;
6-8 (3) the amount necessary to deter a future violation;
6-9 (4) efforts to correct the violation; and
6-10 (5) any other matter that justice may require.
6-11 (c) The enforcement of the penalty may be stayed during the
6-12 time the order is under judicial review if the person pays the
6-13 penalty to the clerk of the court or files a supersedeas bond with
6-14 the court in the amount of the penalty. A person who cannot afford
6-15 to pay the penalty or file the bond may stay the enforcement by
6-16 filing an affidavit in the manner required by the Texas Rules of
6-17 Civil Procedure for a party who cannot afford to file security for
6-18 costs, subject to the right of the board to contest the affidavit
6-19 as provided by those rules.
6-20 (d) The attorney general may sue to collect the penalty.
6-21 (e) Except as otherwise provided by this subsection, an
6-22 administrative penalty collected under this section shall be
6-23 transmitted by the office to the comptroller for deposit in the
6-24 general revenue fund. The comptroller shall deposit an amount not
6-25 to exceed $200,000 per state fiscal biennium in the state workers'
6-26 compensation account in the general revenue fund to be used for the
6-27 detection, investigation, and prosecution of fraudulent acts under
7-1 this subchapter.
7-2 (f) A proceeding to impose the penalty is considered to be a
7-3 contested case under Chapter 2001, Government Code.
7-4 SECTION 1.02. Section 501.0431, Labor Code, is amended to
7-5 read as follows:
7-6 Sec. 501.0431. DIRECTOR'S DUTIES [COMPILATION OF STATISTICS]
7-7 RELATING TO FRAUD. (a) The director shall maintain statistics on
7-8 the number, type, and disposition of fraudulent claims for medical
7-9 benefits under this chapter.
7-10 (b) The director shall maintain and regularly update a list
7-11 of the names and telephone numbers of all persons entitled to
7-12 medical benefits under this chapter. The list may be used to
7-13 confirm the delivery to each person of services for which medical
7-14 benefits are provided.
7-15 ARTICLE 2. POWERS AND DUTIES OF THE TEXAS DEPARTMENT OF
7-16 HUMAN SERVICES AND THE HEALTH AND HUMAN SERVICES COMMISSION
7-17 SECTION 2.01. Subchapter B, Chapter 32, Human Resources
7-18 Code, is amended by adding Sections 32.0242 and 32.0243 to read as
7-19 follows:
7-20 Sec. 32.0242. VERIFICATION OF CERTAIN INFORMATION. (a) The
7-21 department shall verify the applicant's residential address on
7-22 determination that an applicant is eligible for medical assistance.
7-23 (b) The department may accept a post office box number for
7-24 use as a mailing address only after the applicant has provided a
7-25 physical address that can be verified by the department as the
7-26 applicant's place of residence.
7-27 Sec. 32.0243. PERIODIC REVIEW OF ELIGIBILITY FOR CERTAIN
8-1 RECIPIENTS. (a) The department, in cooperation with the United
8-2 States Social Security Administration, shall periodically review
8-3 the eligibility of a recipient of medical assistance benefits who
8-4 is eligible on the basis of the recipient's eligibility for
8-5 Supplemental Security Income (SSI) benefits under 42 U.S.C.
8-6 Section 1381 et seq., as amended.
8-7 (b) In reviewing the eligibility of a recipient as required
8-8 by Subsection (a), the department shall ensure that only recipients
8-9 who reside in this state and who continue to be eligible for
8-10 Supplemental Security Income (SSI) benefits under 42 U.S.C.
8-11 Section 1381 et seq., as amended, remain eligible for medical
8-12 assistance benefits.
8-13 SECTION 2.02. Section 403.026, Government Code, as added by
8-14 Chapter 1153, Acts of the 75th Legislature, Regular Session, 1997,
8-15 is redesignated as Section 403.028 and amended to read as follows:
8-16 Sec. 403.028 [403.026]. HEALTH CARE FRAUD STUDY. (a) The
8-17 comptroller shall conduct a study each biennium to determine:
8-18 (1) the number and type of potentially fraudulent
8-19 claims for medical assistance or health care benefits submitted:
8-20 (A) [(1)] under the state Medicaid program,
8-21 including the Medicaid managed care program implemented under
8-22 Chapter 533;
8-23 (B) [(2)] under group health insurance programs
8-24 administered through the Employees Retirement System of Texas for
8-25 active and retired state employees; or
8-26 (C) [(3)] by or on behalf of a state employee
8-27 and administered by the attorney general under Chapter 501, Labor
9-1 Code; and
9-2 (2) the need for changes to the recipient eligibility
9-3 system used under the state Medicaid program.
9-4 (b) For purposes of the study conducted under this section,
9-5 the comptroller or, at the request of the comptroller, a state
9-6 agency that administers a program identified by Subsection (a) may
9-7 make telephone contact with a person identified as receiving
9-8 services for which benefits are provided under the program to
9-9 confirm the delivery of services to the person.
9-10 (c) A state agency that administers a program identified by
9-11 Subsection (a) shall cooperate with the comptroller and provide any
9-12 information required by the comptroller in connection with the
9-13 study. The information must be provided in the format required by
9-14 the comptroller to permit examination of both patient and health
9-15 care provider histories to identify unusual or suspicious claims or
9-16 patterns of claims. A state agency may enter into a memorandum of
9-17 understanding with the comptroller regarding the use and
9-18 confidentiality of the information provided. This subsection does
9-19 not require a state agency to provide confidential information if
9-20 release of the information is prohibited by law.
9-21 (d) Each state agency that administers a program identified
9-22 by Subsection (a), in consultation with the comptroller, shall
9-23 establish performance measures to be used to evaluate the agency's
9-24 fraud control procedures.
9-25 (e) [(c)] The comptroller shall report the results of the
9-26 study to each state agency that administers a program included in
9-27 the study so that the agency may modify its fraud control
10-1 procedures as necessary. The report must indicate whether the
10-2 level of fraud in each program included in the study has increased,
10-3 decreased, or remained constant since the last report of the
10-4 comptroller under this section.
10-5 SECTION 2.03. Section 531.102, Government Code, is amended
10-6 by adding Subsections (e), (f), and (g) to read as follows:
10-7 (e) In setting the priorities for the office as required by
10-8 Subsection (b), the commission shall assign priority for
10-9 investigation of potential fraud to:
10-10 (1) suspects identified by the learning or neural
10-11 network technology required under Section 531.106; and
10-12 (2) claims submitted for reimbursement for:
10-13 (A) outpatient hospital services;
10-14 (B) ancillary services;
10-15 (C) emergency room services; and
10-16 (D) home health care services.
10-17 (f) The commission by rule shall set specific claims
10-18 criteria that, when met, require the office to begin an
10-19 investigation. The claims criteria may include the total dollar
10-20 amount or the total number of claims submitted for services to a
10-21 particular recipient during a specified amount of time that
10-22 indicates a high potential for fraud.
10-23 (g) The commission shall ensure that each health and human
10-24 services agency that administers a part of the Medicaid program
10-25 maintains and regularly updates a list of the names and telephone
10-26 numbers of all Medicaid recipients. The list may be used to
10-27 confirm the delivery to each recipient of services for which
11-1 benefits are received.
11-2 SECTION 2.04. Subchapter C, Chapter 531, Government Code, is
11-3 amended by adding Sections 531.109, 531.110, and 531.111 to read as
11-4 follows:
11-5 Sec. 531.109. SELECTION AND REVIEW OF CLAIMS. (a) The
11-6 commission shall annually select and review a random, statistically
11-7 valid sample of all claims for reimbursement under the state
11-8 Medicaid program, including the vendor drug program, for potential
11-9 cases of fraud, waste, or abuse.
11-10 (b) In conducting the annual review of claims under
11-11 Subsection (a), the commission must directly contact a recipient by
11-12 telephone or in person, or both, to verify that the services for
11-13 which a claim for reimbursement was submitted by a provider were
11-14 actually provided to the recipient.
11-15 (c) Based on the results of the annual review of claims, the
11-16 commission shall determine the types of claims at which commission
11-17 resources for fraud, waste, or abuse detection should be primarily
11-18 directed.
11-19 Sec. 531.110. ELECTRONIC DATA MATCHING PROGRAM. (a) The
11-20 commission shall conduct electronic data matches for a recipient of
11-21 assistance under the state Medicaid program at least quarterly to
11-22 verify the identity, income, employment status, and other factors
11-23 that affect the eligibility of the recipient.
11-24 (b) To verify eligibility of a recipient for assistance
11-25 under the state Medicaid program, the electronic data matching must
11-26 match information provided by the recipient with information
11-27 contained in databases maintained by:
12-1 (1) the Texas Workers' Compensation Commission;
12-2 (2) the Texas Workforce Commission;
12-3 (3) the Texas Department of Criminal Justice;
12-4 (4) the Internal Revenue Service;
12-5 (5) the United States Social Security Administration;
12-6 and
12-7 (6) states that border this state.
12-8 (c) The Texas Department of Human Services shall cooperate
12-9 with the commission by providing data or any other assistance
12-10 necessary to conduct the electronic data matches required by this
12-11 section.
12-12 (d) The commission may contract with a public or private
12-13 entity to conduct the electronic data matches required by this
12-14 section.
12-15 (e) The commission by rule shall establish procedures to
12-16 verify the electronic data matches conducted under this section.
12-17 Not later than the 20th day after the date the electronic data
12-18 match is verified, the Texas Department of Human Services shall
12-19 remove from eligibility a recipient who is determined to be
12-20 ineligible for assistance under the state Medicaid program.
12-21 (f) The commission shall report biennially to the
12-22 legislature the results of the electronic data matching program.
12-23 The report must include a summary of the number of applicants who
12-24 were removed from eligibility for assistance under the state
12-25 Medicaid program as a result of an electronic data match conducted
12-26 under this section.
12-27 Sec. 531.111. FRAUD DETECTION TECHNOLOGY. The commission,
13-1 as applicable, shall leverage the use of fraud detection technology
13-2 specified under Section 531.106 and may contract with a contractor
13-3 who specializes in developing technology capable of identifying
13-4 patterns of fraud exhibited by Medicaid recipients to:
13-5 (1) develop and implement the Medicaid recipient fraud
13-6 detection technology; and
13-7 (2) determine if a pattern of fraud by Medicaid
13-8 recipients is present in the recipients' eligibility files
13-9 maintained by the Texas Department of Human Services.
13-10 ARTICLE 3. TRANSITION
13-11 SECTION 3.01. The State Office of Risk Management shall
13-12 implement the toll-free telephone number required under Section
13-13 412.065, Labor Code, as added by this Act, not later than January
13-14 1, 2000.
13-15 SECTION 3.02. The State Office of Risk Management shall
13-16 implement the training classes required under Section 412.066,
13-17 Labor Code, as added by this Act, not later than January 1, 2000.
13-18 SECTION 3.03. The risk management board of the State Office
13-19 of Risk Management shall conduct a study regarding the use of
13-20 proven fraud detection software. The study may include an analysis
13-21 of the fraud, waste, or abuse detection solution used by the Health
13-22 and Human Services Commission under Chapter 22, Human Resources
13-23 Code, for the detection of fraud in the Medicaid program. The risk
13-24 management board shall report the results of its study to the 77th
13-25 Legislature not later than February 1, 2001.
13-26 SECTION 3.04. The Health and Human Services Commission, in
13-27 cooperation with the office of inspector general of the Texas
14-1 Department of Human Services, shall study and consider for
14-2 implementation fraud detection technology or any other technology
14-3 that can identify information in the eligibility file of a Medicaid
14-4 recipient that indicates potential fraud and the need for further
14-5 investigation.
14-6 SECTION 3.05. (a) Not later than December 31, 2000, the
14-7 Texas Department of Health shall contract with a contractor who
14-8 specializes in Medicaid claims payment systems to perform tests on
14-9 the Medicaid claims payment system to:
14-10 (1) ensure the smooth and timely payment of claims;
14-11 (2) ensure accuracy of claims payments; and
14-12 (3) reveal inconsistencies in the payment system.
14-13 (b) The contract under Subsection (a) of this section must
14-14 require the contractor to perform independent tests on any
14-15 replacements for or enhancements to the Medicaid claims payment
14-16 system for which federal funds for enhancement have been requested.
14-17 The tests must be conducted before implementation of the
14-18 replacements or enhancements.
14-19 SECTION 3.06. (a) Not later than January 1, 2000, the Texas
14-20 Department of Human Services shall develop a Medicaid eligibility
14-21 confirmation letter that is not easily duplicated. The department
14-22 shall begin using the confirmation letter in place of the Medicaid
14-23 eligibility confirmation letter used on the effective date of this
14-24 Act to reduce fraudulent use of duplicate letters to receive
14-25 assistance under the state Medicaid program. The confirmation
14-26 letter developed under this subsection must be used until a
14-27 permanent system for eligibility confirmation is implemented as
15-1 required by this section.
15-2 (b) The Texas Department of Human Services shall identify
15-3 and consider for implementation alternative methods, including
15-4 electronic methods, to the method used by a recipient to prove
15-5 eligibility under the state Medicaid program to a provider on the
15-6 effective date of this Act. In identifying alternative methods,
15-7 the department shall consider the methods for proving eligibility
15-8 implemented by other states.
15-9 (c) Not later than September 1, 2000, the Texas Department
15-10 of Human Services shall implement a permanent system for Medicaid
15-11 eligibility confirmation for use by a recipient to prove
15-12 eligibility under the state Medicaid program to a provider. The
15-13 system must be designed to reduce the potential for fraudulent
15-14 claims of eligibility.
15-15 SECTION 3.07. If before implementing any provision of this
15-16 Act a state agency determines that a waiver or authorization from a
15-17 federal agency is necessary for implementation of that provision,
15-18 the agency affected by the provision shall request the waiver or
15-19 authorization and may delay implementing that provision until the
15-20 waiver or authorization is granted.
15-21 SECTION 3.08. This Act applies only to an administrative
15-22 penalty assessed for conduct that occurs on or after the effective
15-23 date of this Act. An administrative penalty assessed for conduct
15-24 that occurred before the effective date of this Act is governed by
15-25 the law as it existed immediately before the effective date of this
15-26 Act, and that law is continued in effect for that purpose.
15-27 ARTICLE 4. EFFECTIVE DATE; EMERGENCY
16-1 SECTION 4.01. This Act takes effect September 1, 1999.
16-2 SECTION 4.02. The importance of this legislation and the
16-3 crowded condition of the calendars in both houses create an
16-4 emergency and an imperative public necessity that the
16-5 constitutional rule requiring bills to be read on three several
16-6 days in each house be suspended, and this rule is hereby suspended.