By: Delisi, et al. H.B. No. 1743
A BILL TO BE ENTITLED
AN ACT
relating to prevention of fraud and abuse under the medical
assistance program; creating an offense.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 32, Human Resources Code,
is amended by adding Section 32.0291 to read as follows:
Sec. 32.0291. PREPAYMENT REVIEWS AND POSTPAYMENT HOLDS.
(a) Notwithstanding any other law, the department may:
(1) perform a prepayment review of a claim for
reimbursement under the medical assistance program to determine
whether the claim involves fraud or abuse; and
(2) as necessary to perform that review, withhold
payment of the claim for not more than five working days without
notice to the person submitting the claim.
(b) Notwithstanding any other law, the department may
impose a postpayment hold on payment of future claims submitted by a
provider if the department has reliable evidence that the provider
has committed fraud or wilful misrepresentation regarding a claim
for reimbursement under the medical assistance program. The
department must notify the provider of the postpayment hold not
later than the fifth working day after the date the hold is imposed.
SECTION 2. Section 32.032, Human Resources Code, is amended
to read as follows:
Sec. 32.032. PREVENTION AND DETECTION OF FRAUD AND ABUSE.
The department shall adopt reasonable rules for minimizing the
opportunity for fraud and abuse, for establishing and maintaining
methods for detecting and identifying situations in which a
question of fraud or abuse in the program may exist, and for
referring cases where fraud or abuse appears to exist to the
appropriate law enforcement agencies for prosecution.
SECTION 3. Section 32.0321(a), Human Resources Code, is
amended to read as follows:
(a) The department by rule may require each provider of
medical assistance in a provider type that has demonstrated
significant potential for fraud or abuse to file with the
department a surety bond in a reasonable amount. The department by
rule shall require a provider of medical assistance to file with the
department a surety bond in a reasonable amount if the department
identifies a pattern of suspected fraud or abuse involving criminal
conduct relating to the provider's services under the medical
assistance program that indicates the need for protection against
potential future acts of fraud or abuse.
SECTION 4. Section 32.039(a), Human Resources Code, is
amended by adding Subdivision (1-a) to read as follows:
(1-a) "Inducement" includes a service, cash in any
amount, entertainment, or any item of value.
SECTION 5. Section 32.039, Human Resources Code, is amended
by amending Subsections (b), (u), and (v) and adding Subsections
(w) and (x) to read as follows:
(b) A person commits a violation if the person:
(1) presents or causes to be presented to the
department a claim that contains a statement or representation the
person knows or should know to be false;
(1-a) engages in conduct that violates Section
102.001, Occupations Code;
(1-b) solicits or receives, directly or indirectly,
overtly or covertly any remuneration, including any kickback,
bribe, or rebate, in cash or in kind for referring an individual to
a person for the furnishing of, or for arranging the furnishing of,
any item or service for which payment may be made, in whole or in
part, under the medical assistance program, provided that this
subdivision does not prohibit the referral of a patient to another
practitioner within a multispecialty group or university medical
services research and development plan (practice plan) for
medically necessary services;
(1-c) solicits or receives, directly or indirectly,
overtly or covertly any remuneration, including any kickback,
bribe, or rebate, in cash or in kind for purchasing, leasing, or
ordering, or arranging for or recommending the purchasing, leasing,
or ordering of, any good, facility, service, or item for which
payment may be made, in whole or in part, under the medical
assistance program;
(1-d) offers or pays, directly or indirectly, overtly
or covertly any remuneration, including any kickback, bribe, or
rebate, in cash or in kind to induce a person to refer an individual
to another person for the furnishing of, or for arranging the
furnishing of, any item or service for which payment may be made, in
whole or in part, under the medical assistance program, provided
that this subdivision does not prohibit the referral of a patient to
another practitioner within a multispecialty group or university
medical services research and development plan (practice plan) for
medically necessary services;
(1-e) offers or pays, directly or indirectly, overtly
or covertly any remuneration, including any kickback, bribe, or
rebate, in cash or in kind to induce a person to purchase, lease, or
order, or arrange for or recommend the purchase, lease, or order of,
any good, facility, service, or item for which payment may be made,
in whole or in part, under the medical assistance program;
(1-f) provides or offers an inducement in a manner or
for a purpose not otherwise prohibited by this section or Section
102.001, Occupations Code, to an individual, including a recipient,
provider, or employee of a provider, for the purpose of influencing
a decision regarding selection of a provider or receipt of a good or
service under the medical assistance program or for the purpose of
otherwise influencing a decision regarding the use of goods or
services provided under the medical assistance program; or
(2) is a managed care organization that contracts with
the department to provide or arrange to provide health care
benefits or services to individuals eligible for medical assistance
and:
(A) fails to provide to an individual a health
care benefit or service that the organization is required to
provide under the contract with the department;
(B) fails to provide to the department
information required to be provided by law, department rule, or
contractual provision;
(C) engages in a fraudulent activity in
connection with the enrollment in the organization's managed care
plan of an individual eligible for medical assistance or in
connection with marketing the organization's services to an
individual eligible for medical assistance; or
(D) engages in actions that indicate a pattern
of:
(i) wrongful denial of payment for a health
care benefit or service that the organization is required to
provide under the contract with the department; or
(ii) wrongful delay of at least 45 days or a
longer period specified in the contract with the department, not to
exceed 60 days, in making payment for a health care benefit or
service that the organization is required to provide under the
contract with the department.
(u) Except as provided by Subsection (w), a [A] person found
liable for a violation under Subsection (c) that resulted in injury
to an elderly person, as defined by Section 48.002(a)(1)
[48.002(1)], a disabled person, as defined by Section
48.002(a)(8)(A) [48.002(8)(A)], or a person younger than 18 years
of age may not provide or arrange to provide health care services
under the medical assistance program for a period of 10 years. The
department by rule may provide for a period of ineligibility longer
than 10 years. The period of ineligibility begins on the date on
which the determination that the person is liable becomes final.
[This subsection does not apply to a person who operates a nursing
facility or an ICF-MR facility.]
(v) Except as provided by Subsection (w), a [A] person found
liable for a violation under Subsection (c) that did not result in
injury to an elderly person, as defined by Section 48.002(a)(1)
[48.002(1)], a disabled person, as defined by Section
48.002(a)(8)(A) [48.002(8)(A)], or a person younger than 18 years
of age may not provide or arrange to provide health care services
under the medical assistance program for a period of three years.
The department by rule may provide for a period of ineligibility
longer than three years. The period of ineligibility begins on the
date on which the determination that the person is liable becomes
final[. This subsection does not apply to a person who operates a
nursing facility or an ICF-MR facility].
(w) The department by rule may prescribe criteria under
which a person described by Subsection (u) or (v) is not prohibited
from providing or arranging to provide health care services under
the medical assistance program. The criteria may include
consideration of:
(1) the person's knowledge of the violation;
(2) the likelihood that education provided to the
person would be sufficient to prevent future violations;
(3) the potential impact on availability of services
in the community served by the person; and
(4) any other reasonable factor identified by the
department.
(x) Subsections (b)(1-b) through (1-f) do not prohibit a
person from engaging in:
(1) generally accepted business practices, as
determined by department rule, including:
(A) conducting a marketing campaign;
(B) providing token items of minimal value that
advertise the person's trade name; and
(C) providing complimentary refreshments at an
informational meeting promoting the person's goods or services;
(2) the provision of a value-added service if the
person is a managed care organization; or
(3) other conduct specifically authorized by law.
SECTION 6. Subchapter B, Chapter 32, Human Resources Code,
is amended by adding Section 32.0391 to read as follows:
Sec. 32.0391. CRIMINAL OFFENSE. (a) A person commits an
offense if the person commits a violation under Section
32.039(b)(1-b), (1-c), (1-d), or (1-e).
(b) An offense under this section is a state jail felony.
(c) If conduct constituting an offense under this section
also constitutes an offense under another provision of law,
including a provision in the Penal Code, the person may be
prosecuted under either this section or the other provision.
(d) With the consent of the appropriate local county or
district attorney, the attorney general has concurrent
jurisdiction with that consenting local prosecutor to prosecute an
offense under this section.
SECTION 7. Subchapter B, Chapter 32, Human Resources Code,
is amended by adding Section 32.060 to read as follows:
Sec. 32.060. THIRD-PARTY BILLING VENDORS. (a) A
third-party billing vendor may not submit a claim with the
department for reimbursement on behalf of a provider of medical
services under the medical assistance program unless the vendor has
entered into a contract with the department authorizing that
activity.
(b) To the extent practical, the contract shall contain
provisions comparable to the provisions contained in contracts
between the department and providers of medical services, with an
emphasis on provisions designed to prevent fraud or abuse under the
medical assistance program. At a minimum, the contract must
require the third-party billing vendor to:
(1) provide documentation of the vendor's authority to
bill on behalf of each provider for whom the vendor submits claims;
(2) submit a claim in a manner that permits the
department to identify and verify the vendor, any computer or
telephone line used in submitting the claim, any relevant user
password used in submitting the claim, and any provider number
referenced in the claim; and
(3) subject to any confidentiality requirements
imposed by federal law, provide the department, the office of the
attorney general, or authorized representatives with:
(A) access to any records maintained by the
vendor, including original records and records maintained by the
vendor on behalf of a provider, relevant to an audit or
investigation of the vendor's services or another function of the
department or office of attorney general relating to the vendor;
and
(B) if requested, copies of any records described
by Paragraph (A) at no charge to the department, the office of the
attorney general, or authorized representatives.
(c) On receipt of a claim submitted by a third-party billing
vendor, the department shall send a remittance notice directly to
the provider referenced in the claim. The notice must:
(1) include detailed information regarding the claim
submitted on behalf of the provider; and
(2) require the provider to review the claim for
accuracy and notify the department promptly regarding any errors.
(d) The department shall take all action necessary,
including any modifications of the department's claims processing
system, to enable the department to identify and verify a
third-party billing vendor submitting a claim for reimbursement
under the medical assistance program, including identification and
verification of any computer or telephone line used in submitting
the claim, any relevant user password used in submitting the claim,
and any provider number referenced in the claim.
SECTION 8. Subchapter C, Chapter 531, Government Code, is
amended by adding Section 531.1011 to read as follows:
Sec. 531.1011. DEFINITIONS. For purposes of this
subchapter:
(1) "Fraud" means an intentional deception or
misrepresentation made by a person with the knowledge that the
deception could result in some unauthorized benefit to that person
or some other person, including any act that constitutes fraud
under applicable federal or state law.
(2) "Furnished" refers to items or services provided
directly by, or under the direct supervision of, or ordered by a
practitioner or other individual (either as an employee or in the
individual's own capacity), a provider, or other supplier of
services, excluding services ordered by one party but billed for
and provided by or under the supervision of another.
(3) "Hold on payment" means the temporary denial of
reimbursement under the Medicaid program for items or services
furnished by a specified provider.
(4) "Practitioner" means a physician or other
individual licensed under state law to practice the individual's
profession.
(5) "Program exclusion" means the suspension of a
provider from being authorized under the Medicaid program to
request reimbursement of items or services furnished by that
specific provider.
(6) "Provider" means a person, firm, partnership,
corporation, agency, association, institution, or other entity
that was or is approved by the commission to:
(A) provide medical assistance under contract or
provider agreement with the commission; or
(B) provide third-party billing vendor services
under a contract or provider agreement with the commission.
SECTION 9. Section 531.102, Government Code, is amended by
amending Subsections (a) and (d) and adding Subsections (f) and (g)
to read as follows:
(a) The commission, through the commission's office of
investigations and enforcement, is responsible for the
investigation of fraud and abuse in the provision of health and
human services and the enforcement of state law relating to the
provision of those services.
(d) The commission may require employees of health and human
services agencies to provide assistance to the commission in
connection with the commission's duties relating to the
investigation of fraud and abuse in the provision of health and
human services.
(f)(1) If the commission receives a complaint of Medicaid
fraud or abuse from any source, it must conduct an integrity review
to determine whether there is sufficient basis to warrant a full
investigation. An integrity review must commence not later than 60
days after the commission receives a complaint or has reason to
believe that fraud or abuse has occurred. An integrity review shall
be completed not later than 90 days after it has commenced.
(2) If the findings of an integrity review give the
commission reason to believe that an incident of fraud or abuse
involving possible criminal conduct has occurred in the Medicaid
program, the commission must take the following action, as
appropriate, not later than 30 days after the completion of the
integrity review:
(A) if a provider is suspected of fraud or abuse
involving criminal conduct, the commission must refer the case to
the state's Medicaid fraud control unit, provided that such
criminal referral does not preclude the commission from continuing
its investigation of the provider, which investigation may lead to
the imposition of appropriate administrative or civil sanctions; or
(B) if there is reason to believe that a
recipient has defrauded the Medicaid program, the commission may
conduct a full investigation of the suspected fraud.
(g)(1) In addition to other instances authorized under
state or federal law, the commission shall impose without prior
notice a hold on payment of claims for reimbursement submitted by a
provider to compel production of records or when requested by the
state's Medicaid fraud control unit, as applicable. The commission
must notify the provider of the hold on payment not later than the
fifth working day after the date the payment hold is imposed.
(2) The commission shall, in consultation with the
state's Medicaid fraud control unit, establish guidelines under
which holds on payment or program exclusions:
(A) may permissively be imposed on a provider; or
(B) shall automatically be imposed on a provider.
(3) Whenever the commission learns or has reason to
suspect that a provider's records are being withheld, concealed,
destroyed, fabricated, or in any way falsified, the commission
shall immediately refer the case to the state's Medicaid fraud
control unit. However, such criminal referral does not preclude
the commission from continuing its investigation of the provider,
which investigation may lead to the imposition of appropriate
administrative or civil sanctions.
SECTION 10. Subchapter C, Chapter 531, Government Code, is
amended by adding Section 531.1021 to read as follows:
Sec. 531.1021. SEIZURE OF ASSETS. (a) The commission,
through the commission's office of investigations and enforcement,
may seize assets owned by a person if:
(1) the commission determines through an
investigation that there is a substantial likelihood that the
person has engaged in conduct that constitutes fraud or abuse under
the medical assistance program; and
(2) the seizure of assets is necessary to protect the
commission's ability to recover amounts wrongfully obtained by the
person and associated damages and penalties to which the commission
may otherwise be entitled by law.
(b) The commission shall provide a person whose assets are
seized with an opportunity for a hearing at which the person may
contest the seizure.
(c) The commission may not dispose of seized assets until:
(1) the person is determined to have engaged in
conduct that constitutes fraud or abuse under the medical
assistance program; and
(2) the commission's entitlement to the assets is
confirmed in accordance with due process.
SECTION 11. Section 531.103(f), Government Code, is amended
to read as follows:
(f) A [The] district attorney, county attorney, city
attorney, or private collection agency may collect and retain costs
associated with a [the] case referred to the attorney or agency and
20 percent of the amount of the penalty, restitution, or other
reimbursement payment collected.
SECTION 12. Section 531.104, Government Code, is amended by
adding Subsection (c) to read as follows:
(c) The memorandum of understanding must ensure that no
barriers to direct fraud referrals to the state's Medicaid fraud
control unit by Medicaid agencies or unreasonable impediments to
communication between Medicaid agency employees and the state's
Medicaid fraud control unit will be imposed.
SECTION 13. Section 531.107(b), Government Code, is amended
to read as follows:
(b) The task force is composed of a representative of the:
(1) attorney general's office, appointed by the
attorney general;
(2) comptroller's office, appointed by the
comptroller;
(3) Department of Public Safety, appointed by the
public safety director;
(4) state auditor's office, appointed by the state
auditor;
(5) commission, appointed by the commissioner of
health and human services;
(6) Texas Department of Human Services, appointed by
the commissioner of human services; [and]
(7) Texas Department of Insurance, appointed by the
commissioner of insurance; and
(8) Texas Department of Health, appointed by the
commissioner of public health.
SECTION 14. Section 31.03, Penal Code, is amended by adding
Subsection (j) to read as follows:
(j) With the consent of the appropriate local county or
district attorney, the attorney general has concurrent
jurisdiction with that consenting local prosecutor to prosecute an
offense under this section that involves the state Medicaid
program.
SECTION 15. Section 32.45, Penal Code, is amended by adding
Subsection (d) to read as follows:
(d) With the consent of the appropriate local county or
district attorney, the attorney general has concurrent
jurisdiction with that consenting local prosecutor to prosecute an
offense under this section that involves the state Medicaid
program.
SECTION 16. Section 32.46, Penal Code, is amended by adding
Subsection (e) to read as follows:
(e) With the consent of the appropriate local county or
district attorney, the attorney general has concurrent
jurisdiction with that consenting local prosecutor to prosecute an
offense under this section that involves the state Medicaid
program.
SECTION 17. Section 37.10, Penal Code, is amended by adding
Subsection (i) to read as follows:
(i) With the consent of the appropriate local county or
district attorney, the attorney general has concurrent
jurisdiction with that consenting local prosecutor to prosecute an
offense under this section that involves the state Medicaid
program.
SECTION 18. (a) The Medicaid and Public Assistance Fraud
Oversight Task Force, with the participation of the Texas
Department of Health's Bureau of Vital Statistics and other
agencies designated by the comptroller, shall study procedures and
documentation requirements used by the state in confirming a
person's identity for purposes of establishing entitlement to
Medicaid and other benefits provided through health and human
services programs.
(b) Not later than December 1, 2004, the Medicaid and Public
Assistance Fraud Oversight Task Force, with assistance from the
agencies participating in the study required by Subsection (a) of
this section, shall submit a report to the legislature containing
recommendations for improvements in the procedures and
documentation requirements described by Subsection (a) of this
section that would strengthen the state's ability to prevent fraud
and abuse in the Medicaid program and other health and human
services programs.
SECTION 19. Not later than December 1, 2003, the Office of
the Attorney General and the Health and Human Services Commission
shall amend the memorandum of understanding required by Section
531.104, Government Code, as necessary to comply with Section
531.104(c), Government Code, as added by this Act.
SECTION 20. The changes in law made by this Act through
amending Section 32.039(b), Human Resources Code, and adding
Section 32.0391, Human Resources Code, apply only to a violation
committed on or after the effective date of this Act. For purposes
of this section, a violation is committed on or after the effective
date of this Act only if each element of the violation occurs on or
after that date. A violation committed before the effective date of
this Act is covered by the law in effect when the violation was
committed, and the former law is continued in effect for that
purpose.
SECTION 21. If before implementing any provision of this
Act a state agency determines that a waiver or authorization from a
federal agency is necessary for implementation of that provision,
the agency affected by the provision shall request the waiver or
authorization and may delay implementing that provision until the
waiver or authorization is granted.
SECTION 22. Section 531.103(e), Government Code, is
repealed.
SECTION 23. (a) Except as otherwise provided by Subsection
(b) of this section, this Act takes effect September 1, 2003.
(b) Section 32.060, Human Resources Code, as added by this
Act, takes effect January 1, 2004.