Bill Text: TX SB1803 | 2013-2014 | 83rd Legislature | Comm Sub

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relating to investigations of and payment holds relating to allegations of fraud or abuse and investigations of and hearings on overpayments and other amounts owed by providers in connection with the Medicaid program or other health and human services programs.

Spectrum: Slight Partisan Bill (Republican 2-1)

Status: (Passed) 2013-06-14 - Effective on 9/1/13 [SB1803 Detail]

Download: Texas-2013-SB1803-Comm_Sub.html

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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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