Senate Research Center

S.B. 1787


By: Hinojosa; Schwertner


Health & Human Services




As Filed






The purpose of S.B. 1787 is to lend clarity to the performance of legal services, maintenance of confidentiality, use of technology to identify fraud, and receipt of recovered money from fraudulent payments for the Office of Inspector General (OIG).


Specifically, S.B. 1787:


         Clarifies which OIG functions are to be conducted independent of the executive commissioner of Health and Human Services Commission (HHSC) and which legal services are to be provided by HHSC in the same manner as other parts of the system.


         Clarifies that OIG's confidentiality applies to inspections, in addition to audits and investigations.


         Grants OIG flexibility in the type of technology it uses to identify fraud in the Medicaid program.


         Specifies that for all fraud recoveries identified by managed care organizations (MCOs) over $100,000 that OIG and the MCO both receive half of the recovery regardless of which entity investigates and recovers the fraudulent payment.


As proposed, S.B. 1787 amends current law relating to the functions and administration of the Health and Human Services Commission and the commission's office of inspector general in relation to fraud, waste, and abuse and other investigations in health and human services.




This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.




SECTION 1. Amends Section 531.102, Government Code, by amending Subsections (a-3), (a-6), (j), and (k) and adding Subsection (a-7), as follows:


(a-3) Includes legal services subject to Subsection (a-7), rather than legal services, in the list of administrative support services functions that the executive commissioner of the Health and Human Services Commission (executive commissioner) is responsible for providing for the Office of the Inspector General-Health and Human Services Commission (OIG-HHSC).


(a-6) Requires OIG-HHSC to conduct, independent of the executive commissioner and HHSC, investigations of HHSC employees and programs, rather than conduct investigations independent of the executive commissioner and HHSC.


(a-7) Defines "legal services."


(j) Requires OIG-HHSC to prepare a final report to each audit, inspection, or investigation conducted. Makes conforming changes.


(k) Makes conforming changes.


SECTION 2. Amends Section 531.1021(g), Government Code, to make a conforming change.


SECTION 3. Amends the heading to Section 531.106, Government Code, to read as follows:




SECTION 4. Amends Sections 531.106(a), (c), and (g), Government Code, as follows:


(a) Requires HHSC to use learning, neural network, or other technology to identify and deter Medicaid fraud.


(c) Requires the data used for data processing, rather than neural network processing, to be maintained as an independent subset for security purposes.�


(g) Requires the technology, rather than the learning or neural network technology, implemented under this section to, each month, match vital statistics unit death records with Medicaid claims filed by a provider.


SECTION 5. Amends Section 531.1061(b), Government Code, to require the automated fraud investigation tracking system to, for each case of certain violations identified by the technology required under Section 531.106, rather than the learning or neural network technology required under Section 531.106, take certain actions. Makes a conforming change.


SECTION 6. Amends Section 531.1131, Government Code, by amending Subsections (a), (b), and (c) and adding Subsections (c-1) and (c-2), as follows:


(a) Requires the managed care organization (MCO), rather than the MCO's special investigative unit under Section 531.113(a)(1), or a certain entity to, if an MCO or certain entity discovers fraud or abuse in Medicaid or the child health plan program, to:


(1) immediately submit written notice to, rather than immediately and contemporaneously notify, OIG-HHSC and the office of the attorney general (OAG), in the form and manner prescribed by OIG-HHSC, containing certain information;


(2) and (3) makes no changes to these subdivisions.


(b) Makes conforming changes.


(c) Authorizes an MCO to retain one-half of certain recovered money, rather than any certain recovered money. Requires the MCO to remit the remaining amount of money recovered under Subsection (a)(2) to OIG-HHSC. Makes a conforming change.


(c-1)� Provides that, if OIG-HHSC or the OAG notifies an MCO under Subsection (b) and that office proceeds with recovery efforts, the MCO is entitled to one-half of each payment the MCO identified as required by Subsection (a)(1). Prohibits the MCO from receiving more than one-half of the total amount of money recovered.


(c-2) Authorizes OIG-HHSC, notwithstanding any provision of this section, if OIG-HHSC discovers fraud, waste, or abuse in Medicaid or the child health plan program in the performance of its duties,� to recover and retain payments made to a provider as a result of the fraud, waste, or abuse as otherwise provided by this subchapter (Medicaid and Other Health and Human Services Fraud, Abuse, or Overcharges).


SECTION 7. Requires a state agency, if necessary for implementation of a provision of this Act, to request a waiver or authorization from a federal agency, and authorizes a delay of implementation until such a waiver or authorization is granted.


SECTION 8. Makes application of Section 531.1131, Government Code, as amended by this Act, prospective.


SECTION 9. Effective date: upon passage or September 1, 2017.