C.S.H.B. 3204 78(R)    BILL ANALYSIS


C.S.H.B. 3204
By: Delisi
State Health Care Expenditures, Select
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Fraud and abuse within the Medicaid system has been estimated to cost as
much as fifteen percent of total program expenditures each year. While
Texas has been aggressive in policing fraud and abuse, the emergence of
modern technology enables the state to be much more effective in its
efforts. These same technologies will also reduce errors and
administrative costs for both the state and providers. It can also lead to
faster payments to service providers 

One particularly promising new technology involves the use of electronic
benefit transfer (EBT) cards that have been enhanced with biometric
smart-card technology. These new generation EBT cards contain a digitally
stored version of certain unique physical characteristics from the
cardholder, such as a scanned fingerprint. When a card-holder presents
their card to a provider for a service, the card is "swiped" by a terminal
and the card-holder's finger is scanned. Both the card information and the
finger scan information must match for the transaction to continue. As a
further safeguard, the service provider submits a card swipe and finger
scan at the same time to verify a service was provided. The scans are
taken at both the beginning and the end of the treatment session to verify
the amount of time spent with the service provider. 

The system provides a nearly foolproof method for preventing one of the
most common types of fraud, which is the Medicaid program being charged
for services that never occurred. This happens when an unscrupulous
provider obtains an unsuspecting Medicaid client's billing information and
submits invoices for visits, services, etc., the patient didn't receive.
The use of a swipe/scan system that requires the physical presence of the
recipient makes type of fraud exceedingly difficult. 

The promise this new technology holds for reducing fraud indicates it can
generate sufficient savings to pay for all startup costs during the first
biennium and still have a positive fiscal impact. This type of project is
eligible for an enhanced federal cash match of up to 90 percent. 

RULEMAKING AUTHORITY

It is the committee's opinion that rulemaking authority is expressly
granted to the Health and Human Services Commission in SECTION 1  (Section
32.060 (h), Human Resources Code) of this bill. 

ANALYSIS

The Health and Human Services Commission (HHSC) will, without cost to the
applicant, issue an identification card to every recipient of medical
assistance providers participating in the medical assistance program with
the appropriate equipment, including point-of-sale equipment, to
facilitate payment for medical assistance with an electronic benefits
transfer card. The card shall contain, in an encrypted digital format, the
fingerprint image of the recipient of medical assistance.  

The HHSC shall implement the system in the service delivery area
containing Harris County, and the service delivery area containing Dallas
County by January 1, 2004, make necessary changes to the system based upon
outcomes in the initial service delivery areas, and then implement the
revised system in the remainder of the state no later than January 1,
2005.  

The department may contract with public and private entities to carry out
implementation and operation of the system. The HHSC will seek enhanced
federal matching funds, to the extent they are available, to implement the
system. The HHSC may adjust the system through rule, if necessary,  for
the state to become eligible for such funds. 
 
The HHSC will close any EBT account that has not been used be the account
holder during the preceding 6 months. The comptroller shall withdraw any
unused benefits remaining in the account and disburse the benefits as
authorized by federal and state law. The identification card shall be
returned to the department when the person to whom it is issued is no
longer a recipient of medical assistance from the department.  

A private electronic benefits transfer operator with which the department
contracts to administer the system, shall establish procedures to maintain
records that monitor all debit transactions relating to system client
accounts under this section. 

EFFECTIVE DATE

This Act takes effect immediately if it receives a vote of two-thirds of
all the members elected to each house, as provided by Section 39, Article
III, Texas Constitution. If this Act does not receive the vote necessary
for immediate effect, this Act takes effect September 1, 2003.  

COMPARISON OF ORIGINAL TO SUBSTITUTE