1-1     By:  Zaffirini                                        S.B. No. 1590
 1-2           (In the Senate - Filed March 12, 1999; March 15, 1999, read
 1-3     first time and referred to Committee on State Affairs;
 1-4     March 29, 1999, rereferred to Committee on Human Services;
 1-5     April 6, 1999, reported adversely, with favorable Committee
 1-6     Substitute by the following vote:  Yeas 4, Nays 0; April 6, 1999,
 1-7     sent to printer.)
 1-8     COMMITTEE SUBSTITUTE FOR S.B. No. 1590               By:  Zaffirini
 1-9                            A BILL TO BE ENTITLED
1-10                                   AN ACT
1-11     relating to the prevention, investigation, and prosecution of fraud
1-12     in the workers' compensation program for state employees.
1-14           SECTION 1.  Chapter 412, Labor Code, is amended by adding
1-15     Subchapter G to read as follows:
1-17                         REGARDING MEDICAL BENEFITS
1-18           Sec. 412.061.  DEFINITIONS.  In this subchapter:
1-19                 (1)  "Fraudulent act" means any act that violates a
1-20     penal law and is committed or attempted to be committed to obtain
1-21     or deny a workers' compensation medical benefit or payment for a
1-22     service provided in conjunction with a medical benefit.
1-23                 (2)  "Program" means the workers' compensation program
1-24     for state employees administered under Chapter 501.
1-25           Sec. 412.062.  CLAIM REVIEW BY OFFICE.  (a)  The office shall
1-26     conduct periodic reviews of claims for medical benefits as
1-27     necessary to determine the medical necessity and appropriateness of
1-28     the provided services.
1-29           (b)  In addition to the periodic reviews under Subsection
1-30     (a), the office shall conduct a claim review on each appropriate
1-31     claim:
1-32                 (1)  that involves the receipt of psychiatric services;
1-33     or
1-34                 (2)  in which the use of prescription drugs appears
1-35     inappropriate.
1-36           (c)  The office may withhold payments to be made to a health
1-37     care  provider who does not provide, in the manner prescribed by
1-38     the board, documentation requested by the office necessary to
1-39     verify a medical service related to a claim.
1-40           (d)  The board shall establish criteria that trigger medical
1-41     care coordination based on the date of injury, the amount paid in
1-42     medical benefits, and the existence of treatment patterns
1-43     inappropriate for the condition.
1-44           (e)  The office shall implement measures for medical care
1-45     coordination to ensure that injured workers receive appropriate
1-46     treatment for reported injuries.
1-47           Sec. 412.063.  CLAIMS AUDIT.  (a)  The director shall conduct
1-48     an annual audit of claims for medical benefits as provided by this
1-49     section.
1-50           (b)  The director shall randomly select claims submitted
1-51     under the program  for medical benefits, in a percentage of total
1-52     claims made during the year set by the board as necessary to obtain
1-53     a statistically significant sample, and shall audit the claims to
1-54     determine the validity of the claims.  In performing the audit, the
1-55     director shall interview the claimant in person or by telephone to
1-56     ensure that the health care services were received.  The audit must
1-57     also include a review of the claimant's medical history and medical
1-58     records.
1-59           (c)  The director may contract with a private entity  for
1-60     performance of the audit.
1-61           Sec. 412.064.  PREPAYMENT AUDIT.  The board by rule shall
1-62     require the office to implement a prepayment audit procedure that:
1-63                 (1)  compares the diagnosis code submitted on the bill
1-64     for health care services to the code for the injured body part; and
 2-1                 (2)  verifies the appropriateness of the diagnosis code
 2-2     for the health care services provided.
 2-3           Sec. 412.065.  TRAINING CLASSES IN FRAUD PREVENTION.
 2-4     (a)  The director shall implement annual training classes for
 2-5     appropriate members of the staffs of state agencies and contractors
 2-6     or administering firms who process workers' compensation claims
 2-7     submitted under the program for medical benefits to assist those
 2-8     persons in identifying potential misrepresentation or fraud in the
 2-9     operation of the program.
2-10           (b)  The director may contract with the Health and Human
2-11     Services Commission or with a private entity  for the operation of
2-12     the training classes.
2-13           Sec. 412.066.  ACTION BY OFFICE; COOPERATION REQUIRED.
2-14     (a)  If the office determines that a health care provider has
2-15     obtained payments under the program through a fraudulent act, the
2-16     office shall take action against the provider as provided by this
2-17     subchapter.  The office shall report any action taken in writing to
2-18     the commission.
2-19           (b)  Each state agency and health care provider who
2-20     participates in the program shall, as a condition of that
2-21     participation, cooperate fully in any investigation of a fraudulent
2-22     act that is conducted by the director, including providing to the
2-23     director timely access to patient medical records determined by the
2-24     director to be necessary to conduct an investigation.
2-25           (c)  Notwithstanding any other law regarding the
2-26     confidentiality of patient records, the director is entitled to
2-27     access to patient medical records for the limited purpose provided
2-28     by this subchapter and is a "governmental agency" for purposes of
2-29     Section 5.08, Medical Practice Act (Article 4495b, Vernon's Texas
2-30     Civil Statutes).  A medical record submitted to the director under
2-31     this subsection is confidential and is not subject to disclosure
2-32     under Chapter 552, Government Code.
2-34     (a)  The  director shall investigate each complaint alleging a
2-35     fraudulent act made by a claimant, a health care provider, or a
2-36     state agency regarding a health care provider or claimant who is
2-37     participating in the program.
2-38           (b)  If, after initial investigation, the director determines
2-39     that the complaint is unfounded, the director shall terminate the
2-40     investigation.  If the director determines that further action is
2-41     warranted, the director shall refer the complaint to the commission
2-42     for appropriate sanctions or administrative action and shall
2-43     provide information regarding the complaint to the commission.
2-44           (c)  The commission shall promptly initiate administrative
2-45     proceedings or criminal prosecution on each complaint referred by
2-46     the director and, on a finding of fraud or overpayment, shall
2-47     require restitution to the office in addition to any other penalty
2-48     assessed or action taken.
2-49           Sec. 412.068.  REPORTS.  (a)  The commission shall report to
2-50     the legislature at the beginning of each regular legislative
2-51     session:
2-52                 (1)  the number of referrals received from the office
2-53     during the biennium;
2-54                 (2)  the number of prosecutions completed on referrals
2-55     from the office; and
2-56                 (3)  the total restitution ordered to the office on
2-57     successful prosecutions.
2-58           (b)  The office shall report to the legislature at the
2-59     beginning of each regular legislative session:
2-60                 (1)  the number of referrals made to the commission
2-61     during the biennium;
2-62                 (2)  the total amount of the fraud or overpayment
2-63     alleged in the cases referred; and
2-64                 (3)  the total amount collected from restitution orders
2-65     entered after prosecution by the commission.
2-66           SECTION 2.  The State Office of Risk Management shall
2-67     implement the training classes required under Section 412.065,
2-68     Labor Code, as added by this  Act, not later than January 1, 2000.
2-69           SECTION 3.  The risk management board of the State Office of
 3-1     Risk Management shall conduct a study regarding the use of fraud
 3-2     detection software.  The study may include an analysis of the fraud
 3-3     detection program used by the Health and Human Services Commission
 3-4     under Chapter 22, Human Resources Code, for the detection of fraud
 3-5     in the Medicaid program.  The risk management board shall report
 3-6     the results of its study to the 77th Legislature not later than
 3-7     February 1, 2001.
 3-8           SECTION 4.  This Act takes effect September 1, 1999.
 3-9           SECTION 5.  The importance of this legislation and the
3-10     crowded condition of the calendars in both houses create an
3-11     emergency and an imperative public necessity that the
3-12     constitutional rule requiring bills to be read on three several
3-13     days in each house be suspended, and this rule is hereby suspended.
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