By Zaffirini S.B. No. 1590 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.