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. 1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-14 SECTION 1. Chapter 412, Labor Code, is amended by adding 1-15 Subchapter G to read as follows: 1-16 SUBCHAPTER G. FRAUD INVESTIGATION AND PREVENTION 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. 2-33 Sec. 412.067. FRAUDULENT ACTS BY CLAIMANTS OR PROVIDERS. 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. 3-14 * * * * *