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.