By:  Zaffirini                                        S.B. No. 1590
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to the prevention, investigation, and prosecution of fraud
 1-2     in the workers' compensation program for state employees.
 1-4           SECTION 1.  Chapter 412, Labor Code, is amended by adding
 1-5     Subchapter G to read as follows:
 1-7                         REGARDING MEDICAL BENEFITS
 1-8           Sec. 412.061.  DEFINITIONS.  In this subchapter:
 1-9                 (1)  "Fraudulent act" means any act that violates a
1-10     penal law and is committed or attempted to be committed to obtain
1-11     or deny a workers' compensation medical benefit or payment for a
1-12     service provided in conjunction with a medical benefit.
1-13                 (2)  "Program" means the workers' compensation program
1-14     for state employees administered under Chapter 501.
1-15           Sec. 412.062.  CLAIM REVIEW BY OFFICE.  (a)  The office shall
1-16     conduct periodic reviews of claims for medical benefits as
1-17     necessary to determine the medical necessity and appropriateness of
1-18     the provided services.
1-19           (b)  In addition to the periodic reviews under Subsection
1-20     (a), the office shall conduct a claim review on each appropriate
1-21     claim:
1-22                 (1)  that involves the receipt of psychiatric services;
1-23     or
1-24                 (2)  in which the use of prescription drugs appears
 2-1     inappropriate.
 2-2           (c)  The office may withhold payments to be made to a health
 2-3     care  provider who does not provide, in the manner prescribed by
 2-4     the board, documentation requested by the office necessary to
 2-5     verify a medical service related to a claim.
 2-6           (d)  The board shall establish criteria that trigger medical
 2-7     care coordination based on the date of injury, the amount paid in
 2-8     medical benefits, and the existence of treatment patterns
 2-9     inappropriate for the condition.
2-10           (e)  The office shall implement measures for medical care
2-11     coordination to ensure that injured workers receive appropriate
2-12     treatment for reported injuries.
2-13           Sec. 412.063.  CLAIMS AUDIT.  (a)  The director shall conduct
2-14     an annual audit of claims for medical benefits as provided by this
2-15     section.
2-16           (b)  The director shall randomly select claims submitted
2-17     under the program  for medical benefits, in a percentage of total
2-18     claims made during the year set by the board as necessary to obtain
2-19     a statistically significant sample, and shall audit the claims to
2-20     determine the validity of the claims.  In performing the audit, the
2-21     director shall interview the claimant in person or by telephone to
2-22     ensure that the health care services were received.  The audit must
2-23     also include a review of the claimant's medical history and medical
2-24     records.
2-25           (c)  The director may contract with a private entity  for
2-26     performance of the audit.
 3-1           Sec. 412.064.  PREPAYMENT AUDIT.  The board by rule shall
 3-2     require the office to implement a prepayment audit procedure that:
 3-3                 (1)  compares the diagnosis code submitted on the bill
 3-4     for health care services to the code for the injured body part; and
 3-5                 (2)  verifies the appropriateness of the diagnosis code
 3-6     for the health care services provided.
 3-7           Sec. 412.065.  TRAINING CLASSES IN FRAUD PREVENTION.
 3-8     (a)  The director shall implement annual training classes for
 3-9     appropriate members of the staffs of state agencies and contractors
3-10     or administering firms who process workers' compensation claims
3-11     submitted under the program for medical benefits to assist those
3-12     persons in identifying potential misrepresentation or fraud in the
3-13     operation of the program.
3-14           (b)  The director may contract with the Health and Human
3-15     Services Commission or with a private entity  for the operation of
3-16     the training classes.
3-17           Sec. 412.066.  ACTION BY OFFICE; COOPERATION REQUIRED.
3-18     (a)  If the office determines that a health care provider has
3-19     obtained payments under the program through a fraudulent act, the
3-20     office shall take action against the provider as provided by this
3-21     subchapter.  The office shall report any action taken in writing to
3-22     the commission.
3-23           (b)  Each state agency and health care provider who
3-24     participates in the program shall, as a condition of that
3-25     participation, cooperate fully in any investigation of a fraudulent
3-26     act that is conducted by the director, including providing to the
 4-1     director timely access to patient medical records determined by the
 4-2     director to be necessary to conduct an investigation.
 4-3           (c)  Notwithstanding any other law regarding the
 4-4     confidentiality of patient records, the director is entitled to
 4-5     access to patient medical records for the limited purpose provided
 4-6     by this subchapter and is a "governmental agency" for purposes of
 4-7     Section 5.08, Medical Practice Act (Article 4495b, Vernon's Texas
 4-8     Civil Statutes).  A medical record submitted to the director under
 4-9     this subsection is confidential and is not subject to disclosure
4-10     under Chapter 552, Government Code.
4-12     (a)  The  director shall investigate each complaint alleging a
4-13     fraudulent act made by a claimant, a health care provider, or a
4-14     state agency regarding a health care provider or claimant who is
4-15     participating in the program.
4-16           (b)  If, after initial investigation, the director determines
4-17     that the complaint is unfounded, the director shall terminate the
4-18     investigation.  If the director determines that further action is
4-19     warranted, the director shall refer the complaint to the commission
4-20     for appropriate sanctions or administrative action and shall
4-21     provide information regarding the complaint to the commission.
4-22           (c)  The commission shall promptly initiate administrative
4-23     proceedings or criminal prosecution on each complaint referred by
4-24     the director and, on a finding of fraud or overpayment, shall
4-25     require restitution to the office in addition to any other penalty
4-26     assessed or action taken.
 5-1           Sec. 412.068.  REPORTS.  (a)  The commission shall report to
 5-2     the legislature at the beginning of each regular legislative
 5-3     session:
 5-4                 (1)  the number of referrals received from the office
 5-5     during the biennium;
 5-6                 (2)  the number of prosecutions completed on referrals
 5-7     from the office; and
 5-8                 (3)  the total restitution ordered to the office on
 5-9     successful prosecutions.
5-10           (b)  The office shall report to the legislature at the
5-11     beginning of each regular legislative session:
5-12                 (1)  the number of referrals made to the commission
5-13     during the biennium;
5-14                 (2)  the total amount of the fraud or overpayment
5-15     alleged in the cases referred; and
5-16                 (3)  the total amount collected from restitution orders
5-17     entered after prosecution by the commission.
5-18           SECTION 2.  The State Office of Risk Management shall
5-19     implement the training classes required under Section 412.065,
5-20     Labor Code, as added by this  Act, not later than January 1, 2000.
5-21           SECTION 3.  The risk management board of the State Office of
5-22     Risk Management shall conduct a study regarding the use of fraud
5-23     detection software.  The study may include an analysis of the fraud
5-24     detection program used by the Health and Human Services Commission
5-25     under Chapter 22, Human Resources Code, for the detection of fraud
5-26     in the Medicaid program.  The risk management board shall report
 6-1     the results of its study to the 77th Legislature not later than
 6-2     February 1, 2001.
 6-3           SECTION 4.  This Act takes effect September 1, 1999.
 6-4           SECTION 5.  The importance of this legislation and the
 6-5     crowded condition of the calendars in both houses create an
 6-6     emergency and an imperative public necessity that the
 6-7     constitutional rule requiring bills to be read on three several
 6-8     days in each house be suspended, and this rule is hereby suspended.