80R2997 YDB-D

By: Dukes H.B. No. 668

A BILL TO BE ENTITLED

AN ACT

relating to the office of inspector general.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 531, Government Code, is amended by adding Subchapter M to read as follows: SUBCHAPTER M. INSPECTOR GENERAL

Sec. 531.451. DEFINITIONS. In this subchapter:

(1) "Fraud" has the meaning assigned by Section 531.1011.

(2) "Inspector general" means the inspector general appointed under this subchapter.

(3) "Office" means the Office of the Inspector General.

(4) "Provider" has the meaning assigned by Section 531.1011.

(5) "Review" includes an inspection, investigation, audit, or similar activity.

(6) "State funds" or "state money" includes federal funds or money received and appropriated by the state or for which the state has oversight responsibility.

Sec. 531.452. REFERENCE IN OTHER LAW. Notwithstanding any other provision of law, a reference in law or rule to the commission's office of inspector general or the commission's office of investigations and enforcement means the Office of the Inspector General.

Sec. 531.453. OFFICE OF INSPECTOR GENERAL; ADMINISTRATIVE ATTACHMENT. (a) The office of inspector general is responsible for:

(1) the investigation of fraud, waste, and abuse in the provision or funding of health or human services by this state;

(2) the enforcement of state law relating to the provision of those services to protect the public; and

(3) the prevention and detection of crime relating to the provision of those services.

(b) The office is administratively attached to the commission. The commission shall provide to the office administrative support services from the commission and from the health and human services agency.

Sec. 531.454. SERVICE LEVEL AGREEMENT; FUNDS. (a) The commission and the office shall enter into a service level agreement that establishes the performance standards and deliverables with regard to administrative support by the commission.

(b) The service level agreement must be reviewed at least annually to ensure that services and deliverables are provided in accordance with the agreement.

(c) The commission shall request, apply for, and receive for the office any appropriations or other money from this state or the federal government.

(d) The commission shall provide to the office for the state fiscal biennium beginning September 1, 2007, the same level of administrative support the commission provided to the office established under former Section 531.102 for the state fiscal biennium beginning September 1, 2005. This subsection expires January 1, 2010.

Sec. 531.455. DUTIES OF COMMISSION. (a) The commission shall:

(1) provide administrative assistance to the office; and

(2) coordinate administrative responsibilities with the office to avoid unnecessary duplication of duties.

(b) The commission may not take an action that affects or relates to the validity, status, or terms of an interagency agreement or a contract to which the office is a party without the office's approval.

Sec. 531.456. INDEPENDENCE OF OFFICE. (a) Except as otherwise provided by this chapter, the office and inspector general operate independently of the commission.

(b) The inspector general and the office staff are not employees of the commission.

Sec. 531.457. INSPECTOR GENERAL: APPOINTMENT AND TERM. (a) The governor shall appoint an inspector general to serve as director of the office.

(b) The inspector general serves a two-year term that expires on February 1 of each odd-numbered year.

Sec. 531.458. CONFLICT OF INTEREST. (a) The inspector general may not serve as an ex officio member on the governing body of a governmental entity.

(b) The inspector general may not have a financial interest in the transactions of the office, a health and human services agency, or a health or human services provider.

Sec. 531.459. RULEMAKING BY INSPECTOR GENERAL. (a) Notwithstanding Section 531.0055(e) and any other law, the inspector general shall adopt the rules necessary to administer the functions of the office, including rules to address the imposition of sanctions and penalties for violations and due process requirements for imposing sanctions and penalties.

(b) A rule, standard, or form adopted by the executive commissioner, commission, or a health and human services agency that is necessary to accomplish the duties of the office is considered to also be a rule, standard, or form of the office and remains in effect as a rule, standard, or form of the office until changed by the inspector general.

(c) The office may submit proposed rules to the commission for publication. The executive commissioner or commission may not amend or modify a rule submitted by the office.

(d) The rules must include standards for the office that emphasize:

(1) coordinating investigative efforts to aggressively recover money;

(2) allocating resources to cases that have the strongest supportive evidence and the greatest potential for recovery of money; and

(3) maximizing opportunities for referral of cases to the office of the attorney general.

Sec. 531.460. EMPLOYEES; TRAINING. (a) The inspector general may employ personnel as necessary to implement the duties of the office.

(b) The inspector general shall train office personnel to pursue priority Medicaid and other health and human services fraud, waste, and abuse cases efficiently and as necessary.

(c) The inspector general may contract with certified public accountants, management consultants, or other professional experts necessary to enable the inspector general and office personnel to independently perform the functions of the inspector general's office.

(d) The inspector general may require employees of health and human services agencies to provide assistance to the office in connection with the office's duties relating to the investigation of fraud, waste, and abuse in the provision of health and human services.

Sec. 531.461. REVIEW AND AUDIT AUTHORITY. (a) The inspector general may evaluate any activity or operation of a health and human services agency, health or human services provider, or person in this state that is related to the investigation, detection, or prevention of fraud or employee misconduct in a state or state-funded health or human services program. A review may include an investigation or other inquiry into a specific act or allegation of, or a specific financial transaction or practice that may involve, impropriety, malfeasance, or nonfeasance in the obligation, spending, receipt, or other use of state money.

(b) The executive commissioner, commission, or a health and human services agency of this state may not impair or prohibit the inspector general from initiating or completing a review.

(c) The inspector general may audit and review the use and effectiveness of state funds, including contract and grant funds, administered by a person or state agency receiving the funds in connection with a state or state-funded health or human services program.

Sec. 531.462. INITIATION OF REVIEW. The inspector general may initiate a review:

(1) on the inspector general's own initiative;

(2) at the request of the commission or executive commissioner; or

(3) based on a complaint from any source concerning a matter described by Section 531.461.

Sec. 531.463. INTEGRITY REVIEW. (a) The office shall conduct an integrity review to determine whether there is sufficient basis to warrant a full investigation on receipt of any complaint of fraud, waste, or abuse of funds in the state Medicaid program from any source.

(b) An integrity review must begin not later than the 30th day after the date the office receives a complaint or has reason to believe that Medicaid fraud, waste, or abuse has occurred. An integrity review shall be completed not later than the 90th day after the date the review began.

(c) If the findings of an integrity review give the office reason to believe that an incident of fraud involving possible criminal conduct has occurred in the state Medicaid program, the office must take the following action, as appropriate, not later than the 30th day after the completion of the integrity review:

(1) if a provider is suspected of fraud involving criminal conduct, the office must refer the case to the state's Medicaid fraud control unit, provided that the criminal referral does not preclude the office from continuing its investigation of the provider or preclude the imposition of appropriate administrative or civil sanctions; or

(2) if there is reason to believe that a recipient of funds has defrauded the Medicaid program, the office may conduct a full investigation of the suspected fraud.

Sec. 531.464. ACCESS TO INFORMATION. (a) To further a review conducted by the office, the inspector general is entitled to access all books, accounts, reports, vouchers, or other information, including confidential information, electronic data, and internal records relevant to the functions of the office, maintained by a person, health and human services agency, or health or human services provider in connection with a state or state-funded health or human services program.

(b) The inspector general may not access data or other information the release of which is restricted under federal law unless the appropriate federal agency approves the release to the office or its agent.

Sec. 531.465. COOPERATION REQUIRED. To further a review conducted by the inspector general's office, the inspector general may require medical or other professional assistance from the executive commissioner, the commission, a health and human services agency, or an auditor, accountant, or other employee of the commission or agency.

Sec. 531.466. REFERRAL TO STATE MEDICAID FRAUD CONTROL UNIT. (a) At the time the office learns or has reason to suspect that a health or human services provider's records related to participation in the state Medicaid program are being withheld, concealed, destroyed, fabricated, or in any way falsified, the office shall immediately refer the case to the state's Medicaid fraud control unit.

(b) A criminal referral under Subsection (a) does not preclude the office from continuing its investigation of a health or human services provider or the imposition of appropriate administrative or civil sanctions.

Sec. 531.467. HOLD ON CLAIM REIMBURSEMENT PAYMENT; EXCLUSION FROM PROGRAMS. (a) In addition to other instances authorized under state or federal law, the office shall impose without prior notice a hold on payment of claims for reimbursement submitted by a health or human services provider to compel production of records related to participation in the state Medicaid program or on request of the state's Medicaid fraud control unit, as applicable.

(b) The office must notify the health or human services provider of the hold on payment not later than the fifth working day after the date the payment hold is imposed.

(c) The office shall, in consultation with the state's Medicaid fraud control unit, establish guidelines under which holds on payment or exclusions from a state or state-funded program:

(1) may permissively be imposed on a health or human services provider; or

(2) shall automatically be imposed on a provider.

(d) A health or human services provider subject to a hold on payment or excluded from a program under this section is entitled to a hearing on the hold or exclusion. A hearing under this subsection is a contested case hearing under Chapter 2001. The State Office of Administrative Hearings shall conduct the hearing. After the hearing, the office, subject to judicial review, shall make a final determination. The commission, a health and human services agency, and the office of the attorney general are entitled to intervene as parties in the contested case.

Sec. 531.468. REQUEST FOR EXPEDITED HEARING. (a) On timely written request by a health or human services provider subject to a hold on payment under Section 531.467, other than a hold requested by the state's Medicaid fraud control unit, the office shall file a request with the State Office of Administrative Hearings for an expedited administrative hearing regarding the hold.

(b) The health or human services provider must request an expedited hearing not later than the 10th day after the date the provider receives notice from the office under Section 531.467(b).

Sec. 531.469. INFORMAL RESOLUTION. (a) The inspector general shall adopt rules that allow a health or human services provider subject to a hold on payment under Section 531.467, other than a hold requested by the state's Medicaid fraud control unit, to seek an informal resolution of the issues identified by the office in the notice provided under that section.

(b) A health or human services provider must seek an informal resolution not later than the 10th day after the date the provider receives notice from the office under Section 531.467(b).

(c) A health or human services provider's decision to seek an informal resolution does not extend the time by which the provider must request an expedited administrative hearing under Section 531.468.

(d) A hearing initiated under Section 531.467 shall be stayed at the office's request until the informal resolution process is completed.

Sec. 531.470. EMPLOYEE REPORTS. The inspector general may require employees at the commission or a health and human services agency to report to the office information regarding fraud, waste, misuse or abuse of funds or resources, corruption, or illegal acts.

Sec. 531.471. SUBPOENAS. (a) The inspector general may issue a subpoena to compel the attendance of a relevant witness or the production, for inspection or copying, of relevant evidence in connection with a review conducted under this subchapter.

(b) A subpoena may be served personally or by certified mail.

(c) If a person fails to comply with a subpoena, the inspector general, acting through the attorney general, may file suit to enforce the subpoena in a district court in this state.

(d) On finding that good cause exists for issuing the subpoena, the court shall order the person to comply with the subpoena. The court may hold in contempt a person who fails to obey the court order.

(e) The reimbursement of the expenses of a witness whose attendance is compelled under this section is governed by Section 2001.103.

Sec. 531.472. INTERNAL AUDITOR. (a) In this section, "internal auditor" means a person appointed under Section 2102.006.

(b) The internal auditor for a health and human services agency shall provide the inspector general with a copy of the agency's internal audit plan to:

(1) assist in the coordination of efforts between the inspector general and the internal auditor; and

(2) limit duplication of effort regarding reviews by the inspector general and internal auditor.

(c) The internal auditor shall provide to the inspector general all final audit reports concerning audits of any:

(1) part or division of the agency;

(2) contract, procurement, or grant; and

(3) program conducted by the agency.

Sec. 531.473. COOPERATION WITH LAW ENFORCEMENT OFFICIALS AND OTHER ENTITIES. (a) The inspector general may provide information and evidence relating to criminal acts to the state auditor's office and appropriate law enforcement officials.

(b) The inspector general may refer matters for further civil, criminal, and administrative action to appropriate administrative and prosecutorial agencies, including the attorney general.

(c) The inspector general may enter into a memorandum of understanding with a law enforcement or prosecutorial agency, including the office of the attorney general, to assist in conducting a review under this subchapter.

Sec. 531.474. COOPERATION AND COORDINATION WITH STATE AUDITOR. (a) The state auditor may, on request of the inspector general, provide appropriate information or other assistance to the inspector general or office, as determined by the state auditor.

(b) The inspector general may meet with the state auditor's office to coordinate a review conducted under this subchapter, share information, or schedule work plans.

(c) The state auditor is entitled to access all information maintained by the inspector general, including vouchers, electronic data, internal records, and information obtained under Section 531.464 or subject to Section 531.481.

(d) Any information obtained or provided by the state auditor under this section is confidential and not subject to disclosure under Chapter 552.

Sec. 531.475. PREVENTION. (a) The inspector general may recommend to the commission and executive commissioner policies on:

(1) promoting economical and efficient administration of state funds administered by an individual or entity that received the funds from a health and human services agency; and

(2) preventing and detecting fraud, waste, and abuse in the administration of those funds.

(b) The inspector general may provide training or other education regarding the prevention of fraud, waste, or abuse to employees of a health and human services agency. The training or education provided must be approved by the presiding officer of the agency.

Sec. 531.476. RULEMAKING BY EXECUTIVE COMMISSIONER. The executive commissioner may adopt rules governing a health and human services agency's response to reports and referrals from the inspector general on issues identified by the inspector general related to the agency or a contractor of the agency.

Sec. 531.477. ALLEGATIONS OF MISCONDUCT AGAINST PRESIDING OFFICER. If a review by the inspector general involves allegations that a presiding officer of a health and human services agency has engaged in misconduct, the inspector general shall report to the governor during the review until the report is completed or the review is closed without a finding.

Sec. 531.478. PERIODIC REPORTING TO STATE AUDITOR AND EXECUTIVE COMMISSIONER REQUIRED. The inspector general shall timely inform the state auditor and the executive commissioner of the initiation of a review of a health and human services agency program and the ongoing status of each review.

Sec. 531.479. REPORTING OFFICE FINDINGS. The inspector general shall report the findings of the office to:

(1) the executive commissioner;

(2) the governor;

(3) the lieutenant governor;

(4) the speaker of the house of representatives;

(5) the state auditor's office; and

(6) appropriate law enforcement and prosecutorial agencies, including the office of the attorney general, if the findings suggest the probability of criminal conduct.

Sec. 531.480. FLAGRANT VIOLATIONS; IMMEDIATE REPORT. The inspector general shall immediately report to the executive commissioner, the governor's general counsel, and the state auditor a particularly serious or flagrant problem relating to the administration of a program, operation of a health and human services agency, or interference with an inspector general review.

Sec. 531.481. INFORMATION CONFIDENTIAL. (a) Except as provided by this section, Sections 531.103, 531.477 through 531.480, and 531.482, all information and material compiled by the inspector general during a review under this subchapter is:

(1) confidential and not subject to disclosure under Chapter 552; and

(2) not subject to disclosure, discovery, subpoena, or other means of legal compulsion for release to anyone other than the state auditor's office, the commission, or the office or its agents involved in the review related to that information or material.

(b) As the inspector general determines appropriate, information relating to a review may be disclosed to:

(1) a law enforcement agency;

(2) the attorney general's office;

(3) the state auditor's office; or

(4) the commission.

(c) A person that receives information under Subsection (b) may not disclose the information except to the extent that disclosure is consistent with the authorized purpose for which the person first obtained the information.

Sec. 531.482. DRAFT OF FINAL REVIEW REPORT; AGENCY RESPONSE. (a) Except in cases in which the office has determined that potential fraud exists, the office shall provide a draft of the final review report of any investigation, audit, or review of the operations of a health and human services agency to the presiding officer of the agency before publishing the office's final review report.

(b) The health and human services agency may provide a response to the office's draft report in the manner prescribed by the office not later than the 10th day after the date the draft report is received by the agency. The inspector general by rule shall specify the format and requirements of the agency response.

(c) Notwithstanding Subsection (a), the office may not provide a draft report to the presiding officer of the agency if in the inspector general's opinion providing the draft report could negatively affect any anticipated civil or criminal proceedings.

(d) The office may include any portion of the agency's response in the office's final report.

Sec. 531.483. FINAL REVIEW REPORTS; AGENCY RESPONSE. (a) The inspector general shall prepare a final report for each review conducted under this subchapter. The final report must include:

(1) a summary of the activities performed by the inspector general in conducting the review;

(2) a determination of whether wrongdoing was found; and

(3) a description of any findings of wrongdoing.

(b) The inspector general's final review reports are subject to disclosure under Chapter 552.

(c) All working papers and other documents related to compiling the final review reports remain confidential and are not subject to disclosure under Chapter 552.

(d) Not later than the 60th day after the date the office issues a final report that identifies deficiencies or inefficiencies in, or recommends corrective measures in the operations of, a health and human services agency, the agency shall file a response that includes:

(1) an implementation plan and timeline for implementing corrective measures; or

(2) the agency's rationale for declining to implement corrective measures for the identified deficiencies or inefficiencies or the office's recommended corrective measures, as applicable.

Sec. 531.484. STATE AUDITOR AUDITS, INVESTIGATIONS, AND ACCESS TO INFORMATION NOT IMPAIRED. This subchapter or other law related to the operation of the inspector general does not prohibit the state auditor from conducting an audit, investigation, or other review or from having full and complete access to all records and other information, including witnesses and electronic data, that the state auditor considers necessary for the audit, investigation, or other review.

Sec. 531.485. AUTHORITY OF STATE AUDITOR TO CONDUCT TIMELY AUDITS NOT IMPAIRED. This chapter or other law related to the operation of the inspector general does not take precedence over the authority of the state auditor to conduct an audit under Chapter 321 or other law.

Sec. 531.486. BUDGET. (a) The inspector general shall submit a budget in accordance with the reporting requirements of the General Appropriations Act.

(b) The inspector general shall submit to the commission a legislative appropriations request and an operating budget in accordance with the service level agreement entered into under Section 531.454 and applicable law.

(c) The commission shall submit the office's appropriations request and, if required by or under law, operating budget to the legislature. The request or budget is not subject to review, alteration, or modification by the commission or executive commissioner before submission to the legislature.

Sec. 531.487. COSTS. (a) The inspector general shall maintain information regarding the cost of reviews.

(b) The inspector general may cooperate with appropriate administrative and prosecutorial agencies, including the office of the attorney general, in recovering costs incurred under this subchapter from nongovernmental entities, including contractors or individuals involved in:

(1) violations of applicable state or federal rules or statutes;

(2) abusive or wilful misconduct; or

(3) violations of a provider contract or program policy.

Sec. 531.488. ADMINISTRATIVE OR CIVIL PENALTY; INJUNCTION. (a) The office may:

(1) act for a health and human services agency in the assessment by the office of administrative or civil penalties the agency is authorized to assess under applicable law; and

(2) request that the attorney general obtain an injunction to prevent a person from disposing of an asset identified by the office as potentially subject to recovery by the office due to the person's fraud, waste, or abuse.

(b) If the office imposes an administrative or civil penalty under Subsection (a) for a health and human services agency:

(1) the health and human services agency may not impose an administrative or civil penalty against the same person for the same violation; and

(2) the office shall impose the penalty under applicable rules of the office, this subchapter, and applicable laws governing the imposition of a penalty by the health and human services agency.

SECTION 2. Section 531.001, Government Code, is amended by adding Subdivision (4-a) to read as follows:

(4-a) "Inspector general" means the inspector general appointed under Subchapter M.

SECTION 3. Section 531.008(c), Government Code, is amended to read as follows:

(c) The executive commissioner shall establish the following divisions and offices within the commission:

(1) the eligibility services division to make eligibility determinations for services provided through the commission or a health and human services agency related to:

(A) the child health plan program;

(B) the financial assistance program under Chapter 31, Human Resources Code;

(C) the medical assistance program under Chapter 32, Human Resources Code;

(D) the nutritional assistance programs under Chapter 33, Human Resources Code;

(E) long-term care services, as defined by Section 22.0011, Human Resources Code;

(F) community-based support services identified or provided in accordance with Section 531.02481; and

(G) other health and human services programs, as appropriate;

(2) [the office of inspector general to perform fraud and abuse investigation and enforcement functions as provided by Subchapter C and other law;

[(3)] the office of the ombudsman to:

(A) provide dispute resolution services for the commission and the health and human services agencies; and

(B) perform consumer protection functions related to health and human services;

(3) [(4)] a purchasing division as provided by Section 531.017; and

(4) [(5)] an internal audit division to conduct a program of internal auditing in accordance with [Government Code,] Chapter 2102.

SECTION 4. Section 531.103(a), Government Code, is amended to read as follows:

(a) The [commission, acting through the commission's] office of inspector general[,] and the office of the attorney general shall enter into a memorandum of understanding to develop and implement joint written procedures for processing cases of suspected fraud, waste, or abuse, as those terms are defined by state or federal law, or other violations of state or federal law under the state Medicaid program or other program administered by the commission or a health and human services agency, including the financial assistance program under Chapter 31, Human Resources Code, a nutritional assistance program under Chapter 33, Human Resources Code, and the child health plan program. The memorandum of understanding shall require:

(1) the office of inspector general and the office of the attorney general to set priorities and guidelines for referring cases to appropriate state agencies for investigation, prosecution, or other disposition to enhance deterrence of fraud, waste, abuse, or other violations of state or federal law, including a violation of Chapter 102, Occupations Code, in the programs and maximize the imposition of penalties, the recovery of money, and the successful prosecution of cases;

(1-a) the office of inspector general to refer each case of suspected provider fraud, waste, or abuse to the office of the attorney general not later than the 20th business day after the date the office of inspector general determines that the existence of fraud, waste, or abuse is reasonably indicated;

(1-b) the office of the attorney general to take appropriate action in response to each case referred to the attorney general, which action may include direct initiation of prosecution, with the consent of the appropriate local district or county attorney, direct initiation of civil litigation, referral to an appropriate United States attorney, a district attorney, or a county attorney, or referral to a collections agency for initiation of civil litigation or other appropriate action;

(2) the office of inspector general to keep detailed records for cases processed by that office or the office of the attorney general, including information on the total number of cases processed and, for each case:

(A) the agency and division to which the case is referred for investigation;

(B) the date on which the case is referred; and

(C) the nature of the suspected fraud, waste, or abuse;

(3) the office of inspector general to notify each appropriate division of the office of the attorney general of each case referred by the office of inspector general;

(4) the office of the attorney general to ensure that information relating to each case investigated by that office is available to each division of the office with responsibility for investigating suspected fraud, waste, or abuse;

(5) the office of the attorney general to notify the office of inspector general of each case the attorney general declines to prosecute or prosecutes unsuccessfully;

(6) representatives of the office of inspector general and of the office of the attorney general to meet not less than quarterly to share case information and determine the appropriate agency and division to investigate each case; and

(7) the office of inspector general and the office of the attorney general to submit information requested by the comptroller about each resolved case for the comptroller's use in improving fraud detection.

SECTION 5. Sections 531.106(f) and (g), Government Code, are amended to read as follows:

(f) The commission shall refer cases identified by the technology to the [commission's] office of inspector general [investigations and enforcement] or the office of the attorney general, as appropriate.

(g) Each month, the learning or neural network technology implemented under this section must match bureau of vital statistics death records with Medicaid claims filed by a provider. If the commission determines that a provider has filed a claim for services provided to a person after the person's date of death, as determined by the bureau of vital statistics death records, the commission shall refer the case for investigation to the [commission's] office of inspector general [investigations and enforcement].

SECTION 6. Section 531.1061(a), Government Code, is amended to read as follows:

(a) The office of inspector general [commission] shall use an automated fraud investigation tracking system [through the commission's office of investigations and enforcement] to monitor the progress of an investigation of suspected fraud, abuse, or insufficient quality of care under the state Medicaid program.

SECTION 7. Sections 531.107(a) and (f), Government Code, are amended to read as follows:

(a) The Medicaid and Public Assistance Fraud Oversight Task Force advises and assists [the commission and] the [commission's] office of inspector general [investigations and enforcement] in improving the efficiency of fraud investigations and collections.

(f) At least once each fiscal quarter, the [commission's] office of inspector general [investigations and enforcement] shall provide to the task force:

(1) information detailing:

(A) the number of fraud referrals made to the office and the origin of each referral;

(B) the time spent investigating each case;

(C) the number of cases investigated each month, by program and region;

(D) the dollar value of each fraud case that results in a criminal conviction; and

(E) the number of cases the office rejects and the reason for rejection, by region; and

(2) any additional information the task force requires.

SECTION 8. Section 531.108(a), Government Code, is amended to read as follows:

(a) The [commission's] office of inspector general [investigations and enforcement] shall compile and disseminate accurate information and statistics relating to:

(1) fraud prevention; and

(2) post-fraud referrals received and accepted or rejected from the [commission's] case management system of the office of inspector general [or the case management system of a health and human services agency].

SECTION 9. Sections 531.113(b) through (d), Government Code, are amended to read as follows:

(b) Each managed care organization subject to this section shall adopt a plan to prevent and reduce fraud and abuse and annually file that plan with the [commission's] office of inspector general for approval. The plan must include:

(1) a description of the managed care organization's procedures for detecting and investigating possible acts of fraud or abuse;

(2) a description of the managed care organization's procedures for the mandatory reporting of possible acts of fraud or abuse to the [commission's] office of inspector general;

(3) a description of the managed care organization's procedures for educating and training personnel to prevent fraud and abuse;

(4) the name, address, telephone number, and fax number of the individual responsible for carrying out the plan;

(5) a description or chart outlining the organizational arrangement of the managed care organization's personnel responsible for investigating and reporting possible acts of fraud or abuse;

(6) a detailed description of the results of investigations of fraud and abuse conducted by the managed care organization's special investigative unit or the entity with which the managed care organization contracts under Subsection (a)(2); and

(7) provisions for maintaining the confidentiality of any patient information relevant to an investigation of fraud or abuse.

(c) If a managed care organization contracts for the investigation of fraudulent claims and other types of program abuse by recipients and service providers under Subsection (a)(2), the managed care organization shall file with the [commission's] office of inspector general:

(1) a copy of the written contract;

(2) the names, addresses, telephone numbers, and fax numbers of the principals of the entity with which the managed care organization has contracted; and

(3) a description of the qualifications of the principals of the entity with which the managed care organization has contracted.

(d) The [commission's] office of inspector general may review the records of a managed care organization to determine compliance with this section.

SECTION 10. Section 533.001, Government Code, is amended by adding Subdivision (3-a) to read as follows:

(3-a) "Inspector general" means the inspector general appointed under Subchapter M, Chapter 531.

SECTION 11. Section 533.005(a), Government Code, is amended to read as follows:

(a) A contract between a managed care organization and the commission for the organization to provide health care services to recipients must contain:

(1) procedures to ensure accountability to the state for the provision of health care services, including procedures for financial reporting, quality assurance, utilization review, and assurance of contract and subcontract compliance;

(2) capitation rates that ensure the cost-effective provision of quality health care;

(3) a requirement that the managed care organization provide ready access to a person who assists recipients in resolving issues relating to enrollment, plan administration, education and training, access to services, and grievance procedures;

(4) a requirement that the managed care organization provide ready access to a person who assists providers in resolving issues relating to payment, plan administration, education and training, and grievance procedures;

(5) a requirement that the managed care organization provide information and referral about the availability of educational, social, and other community services that could benefit a recipient;

(6) procedures for recipient outreach and education;

(7) a requirement that the managed care organization make payment to a physician or provider for health care services rendered to a recipient under a managed care plan not later than the 45th day after the date a claim for payment is received with documentation reasonably necessary for the managed care organization to process the claim, or within a period, not to exceed 60 days, specified by a written agreement between the physician or provider and the managed care organization;

(8) a requirement that the commission, on the date of a recipient's enrollment in a managed care plan issued by the managed care organization, inform the organization of the recipient's Medicaid certification date;

(9) a requirement that the managed care organization comply with Section 533.006 as a condition of contract retention and renewal;

(10) a requirement that the managed care organization provide the information required by Section 533.012 and otherwise comply and cooperate with the [commission's] office of inspector general;

(11) a requirement that the managed care organization's usages of out-of-network providers or groups of out-of-network providers may not exceed limits for those usages relating to total inpatient admissions, total outpatient services, and emergency room admissions determined by the commission;

(12) if the commission finds that a managed care organization has violated Subdivision (11), a requirement that the managed care organization reimburse an out-of-network provider for health care services at a rate that is equal to the allowable rate for those services, as determined under Sections 32.028 and 32.0281, Human Resources Code;

(13) a requirement that the organization use advanced practice nurses in addition to physicians as primary care providers to increase the availability of primary care providers in the organization's provider network;

(14) a requirement that the managed care organization reimburse a federally qualified health center or rural health clinic for health care services provided to a recipient outside of regular business hours, including on a weekend day or holiday, at a rate that is equal to the allowable rate for those services as determined under Section 32.028, Human Resources Code, if the recipient does not have a referral from the recipient's primary care physician; and

(15) a requirement that the managed care organization develop, implement, and maintain a system for tracking and resolving all provider appeals related to claims payment, including a process that will require:

(A) a tracking mechanism to document the status and final disposition of each provider's claims payment appeal;

(B) the contracting with physicians who are not network providers and who are of the same or related specialty as the appealing physician to resolve claims disputes related to denial on the basis of medical necessity that remain unresolved subsequent to a provider appeal; and

(C) the determination of the physician resolving the dispute to be binding on the managed care organization and provider.

SECTION 12. Section 533.012(c), Government Code, is amended to read as follows:

(c) The [commission's] office of inspector general [investigations and enforcement] shall review the information submitted under this section as appropriate in the investigation of fraud in the Medicaid managed care program. The comptroller may review the information in connection with the health care fraud study conducted by the comptroller.

SECTION 13. Section 32.070(d), Human Resources Code, is amended to read as follows:

(d) This section does not apply to a computerized audit conducted using the Medicaid Fraud Detection Audit System or an audit or investigation of fraud and abuse conducted by the Medicaid fraud control unit of the office of the attorney general, the office of the state auditor, the office of [the] inspector general appointed under Subchapter M, Chapter 531, Government Code, or the Office of Inspector General in the United States Department of Health and Human Services.

SECTION 14. Section 33.015(e), Human Resources Code, is amended to read as follows:

(e) The department shall require a person exempted under this section from making a personal appearance at department offices to provide verification of the person's entitlement to the exemption on initial eligibility certification and on each subsequent periodic eligibility recertification. If the person does not provide verification and the department considers the verification necessary to protect the integrity of the food stamp program, the department shall initiate a fraud referral to the [department's] office of inspector general appointed under Subchapter M, Chapter 531, Government Code.

SECTION 15. Sections 531.102 and 531.1021, Government Code, are repealed.

SECTION 16. (a) The repeal by this Act of Section 531.102, Government Code, does not affect the validity of a complaint, investigation, or other proceeding initiated under that section before the effective date of this Act. A complaint, investigation, or other proceeding initiated under that section is continued in accordance with the changes in law made by this Act.

(b) The repeal by this Act of Section 531.1021, Government Code, does not affect the validity of a subpoena issued under that section before the effective date of this Act. A subpoena issued under that section before the effective date of this Act is governed by the law that existed when the subpoena was issued, and the former law is continued in effect for that purpose.

SECTION 17. (a) The person serving as inspector general under Section 531.102(a-1), Government Code, on the effective date of this Act shall serve as the inspector general appointed under Subchapter M, Chapter 531, Government Code, as added by this Act, until February 1, 2009, and may be reappointed under Subchapter M, Chapter 531, if the person has the qualifications required under that subchapter.

(b) Not later than February 1, 2009, the governor shall appoint an inspector general for the Office of the Inspector General under Subchapter M, Chapter 531, Government Code, as added by this Act, to a term expiring February 1, 2011.

SECTION 18. On the effective date of this Act:

(1) all functions, activities, employees, rules, forms, money, property, contracts, memorandums of understanding, records, and obligations of the office of inspector general under Section 531.102(a-1), Government Code, become functions, activities, employees, rules, forms, money, property, contracts, memorandums of understanding, records, and obligations of the Office of the Inspector General appointed under Subchapter M, Chapter 531, Government Code, as added by this Act, without a change in status; and

(2) all money appropriated for the office of inspector general under Section 531.102(a-1), Government Code, including money for providing administrative support, is considered appropriated to the Office of the Inspector General appointed under Subchapter M, Chapter 531, Government Code, as added by this Act.

SECTION 19. This Act takes effect September 1, 2007.