By: Hinojosa S.B. No. 1435
 
 
 
   
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to providers' rights to due process under the Medicaid
  program.
         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 or abuse" means an allegation
  of Medicaid fraud or abuse 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)  "Anonymous allegation" means an allegation of
  fraud or abuse that lacks sufficient information to independently
  verify the source of the allegation.
               (4)  "Credible allegation of fraud" means an allegation
  of fraud that has been verified by the state.
               (5)[(1)] "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.
               (6)[(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.
               (7)[(3)] "Hold on payment" means the temporary denial
  of reimbursement under the Medicaid program for items or services
  furnished by a specified provider.
               (8)  "Physician" means an individual licensed to
  practice medicine in this state.
               (9)  "Physician organization" means 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.
               (10)[(4)] "Practitioner" means a physician or other
  individual licensed under state law to practice the individual's
  profession.
               (11)  "Prima facie" means sufficient to establish a
  fact or raise a presumption unless disproved.
               (12)[(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.
               (13)[(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.
               (14)  "Verified by the state" means the office has
  conducted an integrity review in accordance with Section 531.118
  and a determination has been made that prima facie evidence exists
  to support an allegation of fraud or abuse.
         SECTION 2.  Section 531.102, Government Code, is amended by
  amending subsections (f) and (g) to read as follows:
         (f)(1)  If the commission receives an allegation[complaint]
  of Medicaid fraud or abuse from any source, the office must conduct
  an integrity review in accordance with Section 531.118 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 a complaint or has
  reason to believe that fraud or abuse has occurred. An integrity
  review shall be completed not later than the 90th day after it
  began].
               (2)  If the findings of 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 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.
         (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 in accordance with Section
  531.118[or 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).
               (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 to compel production of
  records, the office shall file a request with the State Office of
  Administrative Hearings for an expedited administrative hearing
  regarding the hold on payment. 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).
               (4)  On timely written request by a provider who is the
  subject of a hold on payment under Subdivision (2), other than a
  hold requested by the state's Medicaid fraud control unit to compel
  production of records, the office shall provide the provider with a
  copy of the office's preliminary report described under Subdivision
  531.118(c)(3) and a calculation of any proposed recoupment amount
  and any associated damages or penalties.
               (5)  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 to
  compel records, may appeal an order by the State Office of
  Administrative Hearings by filing a petition for judicial review in
  a district court in Travis County.
               (6)  The executive commissioner 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 compel records, 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
  under this subdivision not later than the deadline prescribed by
  Subdivision (3). 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.
               (7)  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.
               (8)  A provider in a case in which a hold on payment was
  imposed under this subsection who ultimately prevails in a hearing
  or, if the case is appealed, on appeal, is entitled to prompt pay of
  all payments held pursuant to a hold on payment.
               (9)  Subject to the availability of federal matching
  funds as provided by Section 32.002, Human Resources Code, a
  provider who is entitled in accordance with Subdivision (8) to
  prompt payment of all payments held is also entitled to interest on
  such held payments at a rate equal to the prime rate, as published
  in the Wall Street Journal on the first day of each calendar year
  that is not a Saturday, Sunday or legal holiday, plus one percent.
         SECTION 3.  Subchapter C, Chapter 531, Government Code, is
  amended by adding Sections 531.118, 531.119, 531.120, and 531.1201.
         Sec. 531.118.  INTEGRITY REVIEWS OF ALLEGATIONS OF FRAUD OR
  ABUSE. (a) The commission may not accept anonymous allegations of
  fraud or abuse. The commission shall maintain a record of all
  allegations of fraud or abuse containing information sufficient to
  independently verify the source of the allegation of fraud or abuse
  and the date the allegation of fraud or abuse was received or
  identified.
         (b)  If the commission receives an allegation of fraud or
  abuse from any source, the office must conduct an integrity review
  of each allegation of fraud or abuse 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 or abuse.
  An integrity review shall be completed not later than the 90th day
  after the date it began.
         (c)  An integrity review shall consist of a review of all
  allegations, facts, and evidence by the office and must include:
               (1)  documentation of the source of the allegation of
  fraud or abuse;
               (2)  completion of a preliminary investigation by the
  office of the allegation of fraud or abuse;
               (3)  preparation of a preliminary investigation report
  documenting the allegations, evidence reviewed, procedures
  utilized to conduct the preliminary investigation, and findings of
  the preliminary investigation, including any potential overpayment
  amount, potential damages or penalties, the office's determination
  of whether a full investigation is warranted and, subject to
  Subdivision (4), whether a credible allegation of fraud exists; and
               (4)  if the subject of the allegation of fraud or abuse
  is a physician or a physician organization, a review and final
  written determination by an expert physician panel, in accordance
  with Section 531.120, as to whether a credible allegation of fraud
  exists. Notwithstanding Subdivision (3), the office shall be bound
  by the expert physician panel's final written determination as to
  whether credible allegation of fraud exists.
         (d)  Upon the completion of an integrity review, the office
  of inspector general:
               (1)  may not impose a hold on payment unless the office
  determines that a credible allegation of fraud exists.
               (2)  may impose a partial hold on payment on the subject
  provider not later than the 10th day after the date a determination
  that a credible allegation of fraud exists is made. A partial hold
  on payment imposed under this subdivision shall not exceed 50
  percent of the reimbursement due a provider under the Medicaid
  program for items or services furnished by the subject provider.
  Notwithstanding Subdivision 531.102(f)(2), the office must refer
  the case to the state's Medicaid fraud control unit not later than
  the next business day after a partial hold on payment is imposed,
  provided that the referral of a credible allegation of fraud does
  not preclude the office from continuing its investigation, which
  may lead to the imposition of appropriate administrative or civil
  sanctions.
         (e)  The duration of a partial hold on payment imposed under
  Subdivision (d)(2) shall not exceed 30 days after the date the
  partial payment hold is imposed.
         (f)  If the state's Medicaid fraud control unit declines or
  fails to accept the referral of a credible allegation of fraud
  before the 30th day after the date of the referral, the partial hold
  on payment shall terminate upon the earlier of:
               (1)  the date that the state's Medicaid fraud control
  unit declines to accept the referral; or
               (2)  the 30th day after the date the partial hold on
  payment was imposed.
         (g)  If the state's Medicaid fraud control unit accepts the
  referral of a credible allegation of fraud, the state's Medicaid
  fraud control unit may request:
               (1)  that the duration of a partial hold on payment be
  extended;
               (2)  that a partial hold on payment hold to the subject
  provider be increased or decreased; or
               (3)  that a hold on payment not be imposed.
         (h)  Any hold on payment extended under Subdivision (g)(1) or
  imposed under Subdivision (g)(2) shall terminate upon the earlier
  of the following:
               (1)  the 180th day after the date the state's Medicaid
  fraud control unit's request to extend or impose a hold on payment
  pursuant to Subsection (g), unless, the state's Medicaid fraud
  control unit certifies in writing that its continuing investigation
  of the credible allegation of fraud warrants continuation of the
  hold on payment;
               (2)  the date the state's Medicaid fraud control unit
  discontinues its investigation of a credible allegation of fraud or
  fails to certify that continuation of a payment hold is warranted in
  accordance with Subsection (j);
               (3)  the date the office or the state's Medicaid fraud
  control unit determines that there is insufficient evidence of
  fraud;
               (4)  the date an administrative law judge or judge of
  any court of competent jurisdiction orders the office to lift the
  hold on payment in whole or in part; or
               (5)  the date the legal proceedings related to the
  alleged fraud are completed.
         (i)  Subject to Subsection (j), a continuation of a hold on
  payment pursuant to Subdivision (h)(1) shall not exceed 90 days
  after the date the 180-day period expires.
         (j)  On a quarterly basis, the office must request a
  certification from the state's Medicaid fraud control unit 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 hold on payment is warranted.
         Sec. 531.119.  EXPERT PHYSICIAN REVIEW PANEL. (a) The
  executive commissioner, in consultation with the Texas Medical
  Board, by rule shall provide for an expert physician panel
  appointed by the executive commissioner to assist with integrity
  reviews in accordance with Subdivision 531.118(c)(4). Each member
  of the expert physician panel must be a physician actively engaged
  in the practice of medicine in this state. Each member of the
  expert physician panel must also be authorized to provide services
  under the Medicaid program. The rules adopted under this section
  must include provisions governing:
               (1)  the composition of the panel;
               (2)  the qualifications for membership on the panel;
               (3)  length of time a member may serve on the panel;
               (4)  grounds for removal from the panel;
               (5)  the avoidance of conflicts of interest, including
  situations in which the subject physician and the panel member live
  or work in the same geographical area or are competitors; and
               (6)  the duties to be performed by the expert physician
  panel.
         (b)  The executive commissioner's rules governing duties
  performed by the expert physician panel must include provisions
  requiring that when a physician or a physician organization is the
  subject of an allegation of fraud or abuse the allegation is
  reviewed and a determination is made by an expert physician panel of
  physicians authorized to provide services under the Medicaid
  program that practice in the same or similar specialty as the
  subject physician or physician organization. The executive
  commissioner's rules governing appointment of panel members to act
  as expert physician reviewers must include a requirement that the
  office randomly select, to the extent permitted by Section
  531.120(a) and the conflict of interest provisions adopted under
  this subsection, expert physician panel members to review an
  allegation of fraud or abuse.
         Sec. 531.120.  REVIEW BY EXPERT PHYSICIAN PANEL. (a) If a
  physician or a physician organization is the subject of an
  allegation of fraud or abuse, the allegation shall be reviewed in
  accordance with this section by an expert physician panel created
  under Section 531.119 consisting of physicians who are authorized
  to provide services under the Medicaid program and practice in the
  same or similar specialty as the physician or physician
  organization that is the subject of the allegation of fraud or
  abuse.
         (b)  A physician on the expert physician panel who is
  selected to review an allegation of fraud or abuse pursuant to
  Subdivision 531.118(c)(4) shall:
               (1)  review the office's preliminary investigation
  report, including the medical records relevant to the report;
               (2)  make a preliminary determination as to a credible
  allegation of fraud exists; and
               (3)  issue a written preliminary determination of such
  finding.
         (c)  A second expert physician reviewer shall review the
  first expert physician's preliminary determination and other
  information associated with the allegation of fraud or abuse. If
  the second expert physician agrees with the first expert
  physician's preliminary determination, the first expert physician
  shall issue a final written determination.
         (d)  If the second expert physician does not agree with the
  first expert physician's preliminary determination, a third expert
  physician reviewer shall review the preliminary determination and
  information associated with the allegation of fraud or abuse and
  decide between the determinations reached by the first two expert
  physicians. The final written determination shall be issued by the
  third expert physician or the expert physician with whom the third
  physician concurs.
         (e)  In reviewing an allegation of fraud or abuse, the
  selected expert physician reviewers may consult and communicate
  with each other about the allegation in formulating their opinions
  and determinations.
         (f)  This subchapter does not create a cause of action
  against a physician who serves on the expert physician panel
  created under Section 531.119. A physician participating on the
  expert physician panel is immune from administrative, civil or
  criminal liability arising from the information reviewed or
  determinations made while acting as an expert physician reviewer
  under this section.
         Sec. 531.1201.  RECOUPMENT OF OVERPAYMENTS OR RECOUPMENT OF
  DEBT; APPEALS. (a) On timely written request by a provider who is
  the subject of a recoupment of overpayment or recoupment of debt,
  the office of inspector general shall provide the provider with a
  copy of the office's preliminary report described under Subdivision
  531.118(c)(3) and a calculation of the proposed recoupment amount
  and any associated damages or penalties.
         (b)  On timely written request by a provider who is the
  subject of a recoupment of overpayment or recoupment of debt, the
  office of inspector general shall file a request with the State
  Office of Administrative Hearings for an administrative hearing
  regarding the proposed recoupment amount and any associated damages
  or penalties.
         (c)  Following an administrative hearing under Subsection
  (b), a provider who is the subject of a recoupment of overpayment or
  recoupment of debt may appeal an order by the State Office of
  Administrative Hearings by filing a petition for judicial review in
  a district court in Travis County.
         SECTION 4.  Section 32.0291, Human Resources Code, is
  amended by amending subsection (b) to read as follows:
         Sec. 32.0291.  PREPAYMENT REVIEWS AND 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 postpayment
  hold on payment of future claims submitted by a provider upon the
  determination that a credible allegation of fraud exists in
  accordance with Section 531.118, Government Code[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].
         (c)  A postpayment hold authorized by this section is
  governed by the requirements and procedures specified for a hold on
  payment under Section 531.102, Government Code, including the
  notice requirements pursuant to Subsection 531.102(f), Government
  Code[(c) 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 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.