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

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

---

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

---

83R26670 EES-F
By: West S.B. No. 1803
()
Substitute the following for S.B. No. 1803: No.

A BILL TO BE ENTITLED
AN ACT
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.
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:
(A) a practice by a provider that is inconsistent
with sound fiscal, business, or medical practices and that results
in:
(i) an unnecessary cost to the Medicaid
program; or
(ii) the reimbursement of services that are
not medically necessary or that fail to meet professionally
recognized standards for health care; or
(B) a practice by a recipient that results in an
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 on:
(A) a fraud hotline complaint;
(B) claims data mining;
(C) data analysis processes; or
(D) a pattern identified through provider
audits, civil false claims cases, or law enforcement
investigations.
(3) "Credible allegation of fraud" means an allegation
of fraud that has been verified by the state. An allegation is
considered to be credible when the commission has:
(A) verified that the allegation has indicia of
reliability; and
(B) reviewed all allegations, facts, and
evidence carefully and acts judiciously on a case-by-case basis.
(4) "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 applicable federal or state law.
(5) [(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.
(6) "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.
(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 Subsections (f) and (g) and adding Subsections (l), (m),
and (n) to read as follows:
(f)(1) If the commission receives a complaint or allegation
of Medicaid fraud or abuse from any source, the office must conduct
a preliminary investigation as provided by Section 531.118(c) [an
integrity review] to determine whether there is a sufficient basis
to warrant a full investigation. A preliminary investigation [An
integrity review] must begin not later than the 30th day after the
date the commission receives a complaint or allegation or has
reason to believe that fraud or abuse has occurred. A preliminary
investigation [An integrity review] shall be completed not later
than the 90th day after it began.
(2) If the findings of a preliminary investigation [an
integrity review] give the office reason to believe that an
incident of fraud or abuse involving possible criminal conduct has
occurred in the Medicaid program, the office must take the
following action, as appropriate, not later than the 30th day after
the completion of the preliminary investigation [integrity
review]:
(A) if a provider is suspected of fraud or abuse
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, which investigation may lead to the
imposition of appropriate administrative or civil sanctions; or
(B) if there is reason to believe that a
recipient has defrauded the Medicaid program, the office may
conduct a full investigation of the suspected fraud, subject to
Section 531.118(c).
(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 shall impose without prior notice a
payment 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 on the determination that a
credible allegation of fraud exists, subject to Subsections (l) and
(m), as applicable [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 payment hold [on payment] in
accordance with 42 C.F.R. Section 455.23(b). In addition to the
requirements of 42 C.F.R. Section 455.23(b), the notice of payment
hold provided under this subdivision must also include:
(A) the specific basis for the hold, including
identification of the claims supporting the allegation at that
point in the investigation and a representative sample of any
documents that form the basis for the hold; and
(B) a description of administrative and judicial
due process remedies, including the provider's right to seek
informal resolution, a formal administrative appeal hearing, or
both.
(3) On timely written request by a provider subject to
a payment 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 administrative
hearing under this subdivision not later than the 30th [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 expedited administrative hearing,
the state and the provider shall each be responsible for:
(A) one-half of the costs charged by the State
Office of Administrative Hearings;
(B) one-half of the costs for transcribing the
hearing;
(C) the party's own costs related to the hearing,
including the costs associated with preparation for the hearing,
discovery, depositions, and subpoenas, service of process and
witness expenses, travel expenses, and investigation expenses; and
(D) all other costs associated with the hearing
that are incurred by the party, including attorney's fees.
(4) The executive commissioner and the State Office of
Administrative Hearings shall jointly adopt rules that require a
provider, before an expedited administrative hearing under
Subdivision (3), to advance security for the costs for which the
provider is responsible under that subdivision.
(5) Following an expedited administrative hearing
under Subdivision (3), a provider subject to a payment hold, 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.
(6) The executive commissioner [commission] shall
adopt rules that allow a provider subject to a [hold on] payment
hold 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 initial
informal resolution meeting under this subdivision not later than
the deadline prescribed by Subdivision (3) for requesting an
expedited administrative hearing. On receipt of a timely request,
the office shall schedule an initial informal resolution meeting
not later than the 60th day after the date the office receives the
request, but the office shall schedule the meeting on a later date,
as determined by the office, if requested by the provider. The
office shall give notice to the provider of the time and place of
the initial informal resolution meeting not later than the 30th day
before the date the meeting is to be held. A provider may request a
second informal resolution meeting not later than the 20th day
after the date of 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, but the office shall schedule
the meeting on a later date, as determined by the office, 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 meeting is
to be held. A provider must have an opportunity to provide
additional information before the second informal resolution
meeting for consideration by the office. A provider's decision to
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.
(7) [(5)] The office shall, in consultation with the
state's Medicaid fraud control unit, establish guidelines under
which payment 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,
and who preferably has significant knowledge of the Medicaid
program. The medical director shall ensure that any investigative
findings based on medical necessity or the quality of medical care
have been reviewed by a qualified expert as described by the Texas
Rules of Evidence who preferably has knowledge of Medicaid program
rules and requirements before the office imposes a payment hold or
seeks recoupment of an overpayment, damages, or penalties.
(m) The office shall employ a dental director who is a
licensed dentist under Subtitle D, Title 3, Occupations Code, and
the rules adopted under that subtitle by the State Board of Dental
Examiners, and who preferably has significant knowledge of the
Medicaid program. The dental director shall ensure that any
investigative findings based on the necessity of dental services or
the quality of dental care have been reviewed by a qualified expert
as described by the Texas Rules of Evidence who preferably has
knowledge of Medicaid program rules and requirements before the
office imposes a payment hold or seeks recoupment of an
overpayment, damages, or penalties.
(n) The executive commissioner shall, in conjunction with
the office and in consultation with the state's Medicaid fraud
control unit, adopt rules for the office that establish:
(1) criteria for initiating a full fraud or abuse
investigation, conducting the investigation, and collecting
evidence;
(2) training requirements for Medicaid provider fraud
or abuse investigators; and
(3) criteria for:
(A) partially suspending payments to a provider;
and
(B) for good cause and in accordance with state
and federal law, converting payment holds imposed in whole to
partial payment holds.
SECTION 3. Subchapter C, Chapter 531, Government Code, is
amended by adding Sections 531.118, 531.119, 531.120, 531.1201, and
531.1202 to read as follows:
Sec. 531.118. PRELIMINARY INVESTIGATIONS OF ALLEGATIONS OF
FRAUD OR ABUSE AND FRAUD OR ABUSE REFERRALS. (a) The commission
shall maintain a record of all allegations of fraud or abuse against
a provider containing the date each allegation was received or
identified and the source of the allegation, if available. The
record is confidential under Section 531.1021(g) and is subject to
Section 531.1021(h).
(b) If the commission receives an allegation of fraud or
abuse against a provider from any source, the commission's office
of inspector general shall conduct a preliminary investigation of
the allegation as provided by Section 531.102(f)(1).
(c) In conducting a preliminary investigation, the office
must review the allegations of fraud or abuse and all facts and
evidence relating to the allegation and must prepare a preliminary
investigation report before the allegation of fraud or abuse may
proceed to a full investigation. The preliminary investigation
report must document the allegation, the evidence reviewed, if
available, the procedures used to conduct the preliminary
investigation, the findings of the preliminary investigation, and
the office's determination of whether a full investigation is
warranted.
(d) If the state's Medicaid fraud control unit or any other
law enforcement agency accepts a fraud referral from the office for
investigation, a payment hold based on a credible allegation of
fraud may be continued until:
(1) that investigation and any associated enforcement
proceedings are complete; or
(2) the state's Medicaid fraud control unit, another
law enforcement agency, or other prosecuting authorities determine
that there is insufficient evidence of fraud by the provider.
(e) If the state's Medicaid fraud control unit or any other
law enforcement agency declines to accept a fraud referral from the
office for investigation, a payment hold based on a credible
allegation of fraud must be discontinued unless the commission has
alternative federal or state authority under which it may impose a
payment hold or 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 and
other law enforcement agencies as to whether each matter accepted
by the unit or agency 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 commission's office of
inspector general shall post on its publicly available website a
description in plain English of, and a video explaining, the
processes and procedures the office uses to determine whether to
impose a payment hold on a provider under this subchapter.
Sec. 531.120. NOTICE AND INFORMAL RESOLUTION OF PROPOSED
RECOUPMENT OF OVERPAYMENT OR DEBT. (a) The commission or the
commission's office of inspector general shall provide a provider
with written notice of any proposed recoupment of an overpayment or
debt and any damages or penalties relating to a proposed recoupment
of an overpayment or debt arising out of a fraud or abuse
investigation. The notice must include:
(1) the specific basis for the overpayment or debt;
(2) a description of facts and supporting evidence;
(3) a representative sample of any documents that form
the basis for the overpayment or debt;
(4) the extrapolation methodology;
(5) the calculation of the overpayment or debt amount;
(6) the amount of damages and penalties, if
applicable; and
(7) a description of administrative and judicial due
process remedies, including the provider's right to seek informal
resolution, a formal administrative appeal hearing, or both.
(b) The executive commissioner shall adopt rules that allow
a provider who is the subject of a proposed recoupment of an
overpayment or debt to seek informal resolution of the issues
identified in the notice provided under Subsection (a).
(c) The rules adopted under Subsection (b) must require a
provider who seeks informal resolution of the issues identified in
the notice provided under Subsection (a) to request an initial
informal resolution meeting not later than the 30th day after the
date the provider receives the notice. On receipt of a timely
request, the office shall schedule the initial informal resolution
meeting not later than the 60th day after the date the office
receives the request, but the office shall schedule the meeting on a
later date, as determined by the office, if requested by the
provider. The office shall give notice to the provider of the time
and place of the initial informal resolution meeting not later than
the 30th day before the date the meeting is to be held.
(d) The rules adopted under Subsection (b) must allow a
provider to request a second informal resolution meeting not later
than the 20th day after the date of 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, but the office shall
schedule the meeting on a later date, as determined by the office,
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 meeting is
to be held. A provider must have an opportunity to provide
additional information before the second informal resolution
meeting for consideration by the office.
(e) Not later than the 60th day after the date of the initial
informal resolution meeting or, if a second informal resolution
meeting is requested by the provider, after the second informal
resolution meeting, the commission or the office shall provide a
provider with written notice of the commission's or office's final
determination of whether the commission or office will seek to
recoup an overpayment or debt from the provider.
(f) If a provider does not request an informal resolution
meeting under this section, not later than the 60th day after the
date the provider receives the notice under Subsection (a), the
commission or the office shall provide the provider with written
notice of the commission's or office's final determination of
whether the commission or office will seek to recoup an overpayment
or debt from the provider.
(g) Nothing in this section shall be construed to require a
provider to request an informal resolution meeting under this
section before requesting an appeal under Section 531.1201 of the
commission's or office's final determination to recoup an
overpayment or debt from the provider.
Sec. 531.1201. APPEAL OF DETERMINATION TO RECOUP
OVERPAYMENT OR DEBT. (a) If, after a final determination, the
commission or the commission's office of inspector general seeks to
recoup from a provider an overpayment or debt arising out of a fraud
or abuse investigation in an amount that is less than $1 million,
the provider may appeal the determination not later than the 15th
day after the date the provider receives the notice under Section
531.120(e) or (f), as applicable, by requesting in writing that the
commission or office set an administrative hearing on the
determination. On receipt of a timely written request for an
administrative hearing from the provider under this section, the
commission or the office shall file a docketing request with the
State Office of Administrative Hearings or the appeals division of
the commission, as requested by the provider, for an administrative
hearing on the final determination to recoup the overpayment or
debt and any associated damages and penalties.
(b) A provider may appeal a final administrative order
issued by the State Office of Administrative Hearings or the
appeals division of the commission under Subsection (a) by filing a
petition for judicial review in a district court in Travis County.
(c) If, after a final determination, the commission or the
commission's office of inspector general seeks to recoup an
overpayment or debt arising out of a fraud or abuse investigation in
an amount of $1 million or more from a provider, the provider may
appeal the determination not later than the 15th day after the date
the provider receives the notice under Section 531.120(e) or (f),
as applicable, by requesting in writing that the commission or
office:
(1) file a docketing request with the State Office of
Administrative Hearings for an administrative hearing on the final
determination to recoup an overpayment or debt and any associated
damages and penalties; or
(2) allow the provider to file a petition for an appeal
of the final determination to recoup an overpayment or debt and any
associated damages and penalties in a district court in Travis
County to be conducted by the court by trial de novo.
(d) If the commission or office grants a provider's request
for an administrative hearing under Subsection (c)(1), the provider
may not appeal any administrative order issued by an administrative
law judge relating to the commission's or office's final
determination to recoup an overpayment or debt and any associated
damages and penalties from the provider in a district court.
(e) If the commission or office does not grant a provider's
request to file a petition for an appeal of the commission's or
office's final determination to recoup an overpayment or debt and
any associated damages and penalties from the provider in a
district court under Subsection (c)(2), the commission or office
shall file a docketing request with the State Office of
Administrative Hearings for an administrative hearing on the
determination. Following an administrative hearing under this
subsection, the provider may file a petition for an appeal of the
final administrative order on the determination in a district court
in Travis County. The appeal shall be conducted by the court by
trial de novo.
(f) Unless otherwise determined by the administrative law
judge for good cause, at any administrative hearing under this
section before the State Office of Administrative Hearings, the
state and the provider shall each be responsible for:
(1) one-half of the costs charged by the State Office
of Administrative Hearings;
(2) one-half of the costs for transcribing the
hearing;
(3) the party's own costs related to the hearing,
including the costs associated with preparation for the hearing,
discovery, depositions, and subpoenas, service of process and
witness expenses, travel expenses, and investigation expenses; and
(4) all other costs associated with the hearing that
are incurred by the party, including attorney's fees.
(g) The executive commissioner and the State Office of
Administrative Hearings shall jointly adopt rules that require a
provider, before an administrative hearing under this section
before the State Office of Administrative Hearings, to advance
security for the costs for which the provider is responsible under
Subsection (f).
Sec. 531.1202. PRESENCE OF NEUTRAL THIRD PARTY AT INFORMAL
RESOLUTION MEETINGS. The commission shall employ a person whose
salary is paid by the commission and who is independent of the
commission's office of inspector general to attend the informal
resolution meetings held under Sections 531.102(g)(6) and
531.120(c) and (d) as a neutral third-party observer. The person
shall report to the executive commissioner on the proceedings and
outcome of each informal resolution meeting.
SECTION 4. The heading to Section 32.0291, Human Resources
Code, is amended to read as follows:
Sec. 32.0291. PREPAYMENT REVIEWS AND PAYMENT [POSTPAYMENT]
HOLDS.
SECTION 5. Sections 32.0291(b) and (c), Human Resources
Code, are amended to read as follows:
(b) Subject to Section 531.102, Government Code, and
notwithstanding [Notwithstanding] any other law, 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 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.]
SECTION 6. Section 32.0291(d), Human Resources Code, is
repealed.
SECTION 7. 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 8. This Act takes effect September 1, 2013.