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. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Chapter 412, Labor Code, is amended by adding 1-5 Subchapter G to read as follows: 1-6 SUBCHAPTER G. FRAUD INVESTIGATION AND PREVENTION 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. 4-11 Sec. 412.067. FRAUDULENT ACTS BY CLAIMANTS OR PROVIDERS. 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.