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  By: Buckingham  S.B. No. 894
         (In the Senate - Filed February 14, 2017; February 28, 2017,
  read first time and referred to Committee on Health & Human
  Services; March 22, 2017, reported adversely, with favorable
  Committee Substitute by the following vote:  Yeas 9, Nays 0;
  March 22, 2017, sent to printer.)
Click here to see the committee vote
 
  COMMITTEE SUBSTITUTE FOR S.B. No. 894 By:  Buckingham
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to the Health and Human Services Commission's strategy for
  managing audit resources, including procedures for auditing and
  collecting payments from Medicaid managed care organizations.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Chapter 533, Government Code, is amended by
  adding Subchapter B to read as follows:
  SUBCHAPTER B.  STRATEGY FOR MANAGING AUDIT RESOURCES
         Sec. 533.051.  DEFINITIONS. In this subchapter:
               (1)  "Accounts receivable tracking system" means the
  system the commission uses to track experience rebates and other
  payments collected from managed care organizations.
               (2)  "Agreed-upon procedures engagement" means an
  evaluation of a managed care organization's financial statistical
  reports or other data conducted by an independent auditing firm
  engaged by the commission as agreed in the managed care
  organization's contract with the commission.
               (3)  "Experience rebate" means the amount a managed
  care organization is required to pay the state according to the
  graduated rebate method described in the managed care
  organization's contract with the commission.
               (4)  "External quality review organization" means an
  organization that performs an external quality review of a managed
  care organization in accordance with 42 C.F.R. Section 438.350.
         Sec. 533.052.  APPLICABILITY AND CONSTRUCTION OF
  SUBCHAPTER. This subchapter does not apply to and may not be
  construed as affecting the conduct of audits by the commission's
  office of inspector general under the authority provided by
  Subchapter C, Chapter 531, including an audit of a managed care
  organization conducted by the office after coordinating the
  office's audit and oversight activities with the commission as
  required by Section 531.102(q), as added by Chapter 837 (S.B. 200),
  Acts of the 84th Legislature, Regular Session, 2015.
         Sec. 533.053.  OVERALL STRATEGY FOR MANAGING AUDIT
  RESOURCES. The commission shall develop and implement an overall
  strategy for planning, managing, and coordinating audit resources
  that the commission uses to verify the accuracy and reliability of
  program and financial information reported by managed care
  organizations.
         Sec. 533.054.  PERFORMANCE AUDIT SELECTION PROCESS AND
  FOLLOW-UP.  (a)  To improve the commission's processes for
  performance audits of managed care organizations, the commission
  shall:
               (1)  document the process by which the commission
  selects managed care organizations to audit;
               (2)  include previous audit coverage as a risk factor
  in selecting managed care organizations to audit; and
               (3)  prioritize the highest risk managed care
  organizations to audit.
         (b)  To verify that managed care organizations correct
  negative performance audit findings, the commission shall:
               (1)  establish a process to:
                     (A)  document how the commission follows up on
  negative performance audit findings; and
                     (B)  verify that managed care organizations
  implement performance audit recommendations; and
               (2)  establish and implement policies and procedures
  to:
                     (A)  determine under what circumstances the
  commission must issue a corrective action plan to a managed care
  organization based on a performance audit; and
                     (B)  follow up on the managed care organization's
  implementation of the corrective action plan.
         Sec. 533.055.  AGREED-UPON PROCEDURES ENGAGEMENTS AND
  CORRECTIVE ACTION PLANS.  To enhance the commission's use of
  agreed-upon procedures engagements to identify managed care
  organizations' performance and compliance issues, the commission
  shall:
               (1)  ensure that financial risks identified in
  agreed-upon procedures engagements are adequately and consistently
  addressed; and
               (2)  establish policies and procedures to determine
  under what circumstances the commission must issue a corrective
  action plan based on an agreed-upon procedures engagement.
         Sec. 533.056.  AUDITS OF PHARMACY BENEFIT MANAGERS. To
  obtain greater assurance about the effectiveness of pharmacy
  benefit managers' internal controls and compliance with state
  requirements, the commission shall:
               (1)  periodically audit each pharmacy benefit manager
  that contracts with a managed care organization; and
               (2)  develop, document, and implement a monitoring
  process to ensure that managed care organizations correct and
  resolve negative findings reported in performance audits or
  agreed-upon procedures engagements of pharmacy benefit managers.
         Sec. 533.057.  COLLECTION OF COSTS FOR AUDIT-RELATED
  SERVICES. The commission shall develop, document, and implement
  billing processes in the Medicaid and CHIP services department of
  the commission to ensure that managed care organizations reimburse
  the commission for audit-related services as required by contract.
         Sec. 533.058.  COLLECTION ACTIVITIES RELATED TO PROFIT
  SHARING. To strengthen the commission's process for collecting
  shared profits from managed care organizations, the commission
  shall develop, document, and implement monitoring processes in the
  Medicaid and CHIP services department of the commission to ensure
  that the commission:
               (1)  identifies experience rebates deposited in the
  commission's suspense account and timely transfers those rebates to
  the appropriate accounts; and
               (2)  timely follows up on and resolves disputes over
  experience rebates claimed by managed care organizations.
         Sec. 533.059.  USE OF INFORMATION FROM EXTERNAL QUALITY
  REVIEWS. (a)  To enhance the commission's monitoring of managed
  care organizations, the commission shall use the information
  provided by the external quality review organization, including:
               (1)  detailed data from results of surveys of Medicaid
  recipients and, if applicable, child health plan program enrollees,
  caregivers of those recipients and enrollees, and Medicaid and, as
  applicable, child health plan program providers; and
               (2)  the validation results of matching paid claims
  data with medical records.
         (b)  The commission shall document how the commission uses
  the information described by Subsection (a) to monitor managed care
  organizations.
         Sec. 533.060.  SECURITY AND PROCESSING CONTROLS OVER
  INFORMATION TECHNOLOGY SYSTEMS. The commission shall:
               (1)  strengthen user access controls for the
  commission's accounts receivable tracking system and network
  folders that the commission uses to manage the collection of
  experience rebates;
               (2)  document daily reconciliations of deposits
  recorded in the accounts receivable tracking system to the
  transactions processed in:
                     (A)  the commission's cost accounting system for
  all health and human services agencies; and
                     (B)  the uniform statewide accounting system; and
               (3)  develop, document, and implement a process to
  ensure that the commission formally documents:
                     (A)  all programming changes made to the accounts
  receivable tracking system; and
                     (B)  the authorization and testing of the changes
  described by Paragraph (A).
         SECTION 2.  As soon as practicable after the effective date
  of this Act, the executive commissioner of the Health and Human
  Services Commission shall adopt the rules necessary to implement
  Subchapter B, Chapter 533, Government Code, as added by this Act.
         SECTION 3.  This Act takes effect September 1, 2017.
 
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