By: Huffman  S.B. No. 1803
         (In the Senate - Filed March 8, 2013; March 13, 2013, read
  first time and referred to Committee on Health and Human Services;
  April 2, 2013, reported adversely, with favorable Committee
  Substitute by the following vote:  Yeas 7, Nays 0; April 2, 2013,
  sent to printer.)
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 1803 By:  Huffman
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the office of inspector general of the Health and Human
  Services Commission.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 531.1011, Government Code, is amended to
  read as follows:
         Sec. 531.1011.  DEFINITIONS. For purposes of this
  subchapter:
               (1)  "Abuse" means provider practices that are
  inconsistent with sound fiscal, business, or medical practices, and
  result in an unnecessary cost to the Medicaid program, or in
  reimbursement for services that are not medically necessary or that
  fail to meet professionally recognized standards for health care,
  including beneficiary practices that result in unnecessary cost to
  the Medicaid program.
               (2)  "Allegation of fraud" means an allegation of
  Medicaid fraud received by the commission from any source, that has
  not been verified by the state, including an allegation based upon
  fraud hotline complaints, claims mining data, data analysis
  processes or patterns identified through provider audits, civil
  false claims cases, and law enforcement investigations.
               (3)  "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 Chapter 36, Human Resources Code, or applicable federal or
  state law.
               (4) [(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.
               (5) "Payment hold" [(3)  "Hold on payment"] means the
  temporary denial of reimbursement under the Medicaid program for
  items or services furnished by a specified provider.
               (6)  "Physician" includes an individual licensed to
  practice medicine in this state, a professional association
  composed solely of physicians, a single legal entity authorized to
  practice medicine owned by two or more physicians, a nonprofit
  health corporation certified by the Texas Medical Board under
  Chapter 162, Occupations Code, or a partnership composed solely of
  physicians.
               (7) [(4)]  "Practitioner" means a physician or other
  individual licensed under state law to practice the individual's
  profession.
               (8) [(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.
               (9) [(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 2.  Section 531.102, Government Code, is amended by
  amending Subsection (g) and adding Subsections (l) and (m) to read
  as follows:
         (g)(1)  Whenever the office learns or has reason to suspect
  that a provider's records 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. However,
  such criminal referral does not preclude the office from continuing
  its investigation of the provider, which investigation may lead to
  the imposition of appropriate administrative or civil sanctions.
               (2)  In addition to other instances authorized under
  state or federal law, the office may [shall] impose without prior
  notice a hold on payment of claims for reimbursement submitted by a
  provider to compel production of records, when requested by the
  state's Medicaid fraud control unit, or upon the determination that
  a credible allegation of fraud exists [on receipt of reliable
  evidence that the circumstances giving rise to the hold on payment
  involve fraud or wilful misrepresentation under the state Medicaid
  program in accordance with 42 C.F.R. Section 455.23, as
  applicable].  The office must notify the provider of the hold on
  payment in accordance with 42 C.F.R. Section 455.23(b).
  Notwithstanding the requirements of 42 C.F.R. Section 455.23(b),
  the notice of payment hold provided under this subsection shall
  also include:
                     (A)  the specific basis for the hold, including,
  if available, identification of the claims supporting the
  allegation at that point in the investigation; and
                     (B)  a description of administrative and judicial
  due process remedies, including an informal review, a formal
  administrative appeal hearing, or both.
               (3)  On timely written request by a provider subject to
  a hold on payment under Subdivision (2), 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. The provider
  must request an expedited hearing under this subdivision not later
  than the 10th day after the date the provider receives notice from
  the office under Subdivision (2). Unless otherwise determined by
  the administrative law judge for good cause at the administrative
  hearing, the state and the subject provider shall each be
  responsible for one-half of the costs charged by the State Office of
  Administrative Hearings, for one-half of the costs for transcribing
  the hearing, and for each party's own additional costs related to
  the administrative hearing, including costs associated with
  discovery, depositions, subpoenas, services of process and witness
  expenses, preparation for the administrative hearing,
  investigation costs, travel expenses, investigation expenses, and
  all other costs, including attorney's fees, associated with the
  case.
               (4)  Following an administrative hearing under
  Subdivision (3), a provider subject to a hold on payment, other than
  a hold requested by the state's Medicaid fraud control unit, may
  appeal a final administrative order by filing a petition for
  judicial review in a district court in Travis County.
               (5)  The executive commissioner [commission] shall
  adopt rules that allow a provider subject to a hold on payment under
  Subdivision (2), 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
  subdivision.  A provider must request [seek] an informal resolution
  meeting under this subdivision not later than the deadline
  prescribed by Subdivision (3).  On timely request, the office shall
  schedule an informal resolution meeting not later than the 60th day
  after the date the office receives the request from the provider,
  but may schedule a meeting later if requested by the provider.  The
  office shall give notice to the provider of the time and place of
  the informal resolution meeting not later than the 30th day before
  the date the informal resolution meeting is held. A provider may
  request a second informal resolution not later than 10 days after
  the date of the initial informal resolution meeting. Upon timely
  request, the office shall schedule a second informal resolution
  meeting not later than the 45th day after the date the office
  receives the request from the provider, but may schedule a meeting
  later if requested by the provider.  The office shall give notice to
  the provider of the time and place of the second informal resolution
  meeting not later than the 20th day before the date the second
  informal resolution meeting is held.  A provider shall have an
  opportunity to provide additional information before the second
  resolution meeting for consideration by the office. A provider's
  decision to request [seek] an informal resolution under this
  subdivision does not extend the time by which the provider must
  request an expedited administrative hearing under Subdivision (3).
  However, a hearing initiated under Subdivision (3) shall be stayed
  [at the office's request] until the informal resolution process is
  completed.
               (6) [(5)]  The office 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.
         (l)  The office shall employ a medical director who is a
  licensed physician under Subtitle B, Title 3, Occupations Code, and
  the rules adopted under that subtitle by the Texas Medical Board.
  The medical director shall ensure that any investigative findings
  based on medical necessity or quality of care have been reviewed by
  a qualified expert as described by the Texas Rules of Evidence
  before the office imposes a payment hold or seeks recoupment of an
  overpayment, damages, or penalties.
         (m)  The office, acting through the commission, shall adopt
  rules establishing the criteria for initiating a full-scale fraud
  or abuse investigation, conducting the investigation, collecting
  evidence, accepting and approving a provider's request to post a
  surety bond to secure potential recoupments in lieu of a payment
  hold or other asset or payment guarantee, and establishing minimum
  training requirements for Medicaid provider fraud or abuse
  investigators.
         SECTION 3.  Subchapter C, Chapter 531, Government Code, is
  amended by adding Sections 531.118, 531.119, 531.120, and 531.1201
  to read as follows:
         Sec. 531.118.  INTEGRITY REVIEWS OF ALLEGATIONS OF FRAUD.
  (a)  The commission shall maintain a record of all allegations of
  fraud against a Medicaid provider containing the date the
  allegation of fraud was received or identified and the source of the
  allegation, if available. This record shall remain confidential
  under Sections 531.1021 (g) and (h).
         (b)  If the commission receives an allegation of fraud
  against a Medicaid provider from any source, the office must
  conduct an integrity review of each allegation of fraud to
  determine whether there is sufficient basis to warrant a full
  investigation. An integrity review must begin not later than the
  30th day after the date the commission receives or identifies an
  allegation of fraud.
         (c)  An integrity review shall consist of a review of all
  allegations, facts, and evidence by the commission's office of
  inspector general and must result in a preliminary investigation
  report documenting the allegations, evidence reviewed, if
  available, procedures utilized to conduct the preliminary
  investigation, findings of the preliminary investigation, and the
  office's determination of whether a full investigation is warranted
  before the allegation proceeds to a full investigation.
         (d)  If the Medicaid fraud control unit or other law
  enforcement agency accepts a fraud referral from the office for
  investigation, a payment hold based upon a credible allegation of
  fraud may be continued until such time as that investigation and any
  associated enforcement proceedings are completed.
         (e)  If the Medicaid fraud control unit or any other law
  enforcement agency declines to accept the fraud referral for
  investigation, a payment hold based upon a credible allegation of
  fraud must be discontinued unless the commission has alternative
  federal or state authority by which it may impose a payment hold or
  unless the office makes a fraud referral to another law enforcement
  agency.
         (f) On a quarterly basis, the office must request a
  certification from the state's Medicaid fraud control unit or other
  law enforcement agency that any matter accepted on the basis of a
  credible allegation of fraud referral continues to be under
  investigation and that the continuation of the payment hold is
  warranted.
         Sec. 531.119.  WEBSITE POSTING.  The office shall post on its
  publicly available website a description, in plain English, of the
  processes and procedures that the office uses to determine whether
  to impose a hold on a payment to a provider under this subchapter.
         Sec. 531.120.  INFORMAL RESOLUTION OF PROPOSED
  OVERPAYMENTS. (a)  The commission or the commission's office of
  inspector general must provide a provider with written notice of
  intent to recover any proposed overpayment or debt amount and any
  related damages or penalties arising out of a fraud or abuse
  investigation.  The notice shall include the specific basis for
  overpayment, a description of facts and supporting evidence, if
  available, extrapolation methodology, the calculation of
  overpayment amount, damages and penalties, if applicable, and a
  description of administrative and judicial due process remedies,
  including an informal review, a formal administrative appeal
  hearing, or both.
         (b)  A provider must request an informal resolution meeting
  under this section not later than the 15th day after the date the
  provider receives notice under Subsection (a).  On receipt of a
  timely request, the office shall schedule an informal resolution
  meeting not later than the 60th day after the date the office
  receives the request from the provider, but may schedule a hearing
  later if requested by the provider.  The office shall give notice to
  the provider of the time and place of the informal resolution
  meeting not later than the 30th day before the date the informal
  resolution meeting is held. A provider may request a second
  informal resolution not later than 10 days after the initial
  informal resolution meeting. On receipt of a timely request, the
  office shall schedule a second informal resolution meeting not
  later than the 45th day after the date the office receives the
  request from the provider, but may schedule a meeting later if
  requested by the provider.  The office shall give notice to the
  provider of the time and place of the second informal resolution
  meeting not later than the 20th day before the date the informal
  resolution meeting is held.  A provider shall have an opportunity to
  provide additional information before the second resolution
  meeting for consideration by the office.
         Sec. 531.1201.  RECOUPMENT OF OVERPAYMENTS OR RECOUPMENT OF
  DEBT; APPEALS.  (a)  A provider must request an appeal under this
  section not later than the 15th day after the date the provider
  receives notice under Section 531.120(a).  On receipt of a timely
  written request by a provider who is the subject of a recoupment of
  overpayment or recoupment of debt arising out of a fraud or abuse
  investigation, the office of inspector general shall file a
  docketing request with the State Office of Administrative Hearings
  or the Health and Human Services Commission appeals division, as
  requested by the provider, for an administrative hearing regarding
  the proposed recoupment amount and any associated damages or
  penalties.  The office shall file the docketing request under this
  section not later than 60 days after the provider's request for an
  administrative hearing or not later than 60 days after the
  completion of the informal resolution process, if applicable.
  Unless otherwise determined by the administrative law judge at the
  administrative hearing under this subsection for good cause, the
  state and the subject provider shall each be responsible for
  one-half of the costs charged by the State Office of Administrative
  Hearings, for one-half of the costs for transcribing the hearing,
  and for each party's own additional costs related to the
  administrative hearing, including costs associated with discovery,
  depositions, subpoenas, services of process and witness expenses,
  preparation for the administrative hearing, investigation costs,
  travel expenses, investigation expenses, and all other costs,
  including attorney's fees, associated with the case.
         (b)  Following an administrative hearing under Subsection
  (a), a provider who is the subject of a recoupment of overpayment or
  recoupment of debt arising out of a fraud or abuse investigation may
  appeal a final administrative order by filing a petition for
  judicial review in a district court in Travis County.
         SECTION 4.  Section 32.0291, Human Resources Code, is
  amended to read as follows:
         Sec. 32.0291.  PREPAYMENT REVIEWS AND PAYMENT [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 and subject to Section
  531.102, Government Code, the department may impose a payment 
  [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 payment [postpayment]
  hold not later than the fifth working day after the date the hold is
  imposed.
         (c)  A payment hold authorized by this section is governed by
  the requirements and procedures specified for a payment hold under
  Section 531.102, Government Code, including the notice
  requirements under Subsection (g) of that section [On timely
  written request by a provider subject to a postpayment hold under
  Subsection (b), the department shall file a request with the State
  Office of Administrative Hearings for an expedited administrative
  hearing regarding the hold. The provider must request an expedited
  hearing under this subsection not later than the 10th day after the
  date the provider receives notice from the department under
  Subsection (b). The department shall discontinue the hold unless
  the department makes a prima facie showing at the hearing that the
  evidence relied on by the department in imposing the hold is
  relevant, credible, and material to the issue of fraud or wilful
  misrepresentation.
         [(d)     The department shall adopt rules that allow a provider
  subject to a postpayment hold under Subsection (b) to seek an
  informal resolution of the issues identified by the department in
  the notice provided under that subsection. A provider must seek an
  informal resolution under this subsection not later than the
  deadline prescribed by Subsection (c). A provider's decision to
  seek an informal resolution under this subsection does not extend
  the time by which the provider must request an expedited
  administrative hearing under Subsection (c). However, a hearing
  initiated under Subsection (c) shall be stayed at the department's
  request until the informal resolution process is completed].
         SECTION 5.  If before implementing any provision of this
  Act, a state agency determines that a waiver or authorization from a
  federal agency is necessary for the 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 6.  This Act takes effect September 1, 2013.
 
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