HBA-JRA H.B. 2072 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2072 By: Maxey Public Health 3/19/1999 Introduced BACKGROUND AND PURPOSE The National Heritage Insurance Company (NHIC), through a contract with the Texas Department of Health (TDH), processes most of the state's Medicaid paperwork in the form of claims submitted by approved health care providers seeking reimbursement for services. According to the Healthcare Claims Study, conducted by the Comptroller of Public Accounts to determine areas of possible fraud and overpayment, NHIC processed 32 million claims from more than 164,000 providers serving more than 2 million individuals in fiscal 1997. TDH processes claims for prescription drugs through its Vendor Drug Program. The study estimated that 10.5 percent of the claims, or $250 million, could have been overpayments or fraudulent. H.B. 2072 implements systems to detect fraud, waste, and abuse in the state medicaid program. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Health and Human Services Commission in SECTION 3 and SECTION 4 (Section 531.102 and 531.110, Government Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter B, Chapter 32, Human Resources Code, by adding Section 32.0242 and 32.0243, as follows: Sec. 32.0242. VERIFICATION OF CERTAIN INFORMATION. Requires the Health and Human Services Commission (HHS) to verify an applicant's physical residential address on determination that the applicant is eligible for medical assistance. Sec. 32.0243. PERIODIC REVIEW OF ELIGIBILITY FOR CERTAIN RECIPIENTS. Requires HHS, in cooperation with the United States Social Security Administration, to periodically review the eligibility of a recipient of medical assistance who is eligible on the basis of the recipient's eligibility for Supplemental Security Income (SSI) benefits. Requires HHS, in reviewing the eligibility of a recipient, to ensure that only recipients who reside in this state and who continue to be eligible for SSI benefits remain eligible for medical assistance. SECTION 2. Amends Section 403.026(a), Government Code, as added by Chapter 1153, Acts of the 75th Legislature, Regular Session, 1997, to require the Comptroller of Public Accounts (comptroller) to conduct a study each biennium to determine the need for changes to the eligibility system used under the state Medicaid program. Redesignates existing Subdivisions (1)-(3) to Paragraphs (A)-(C). SECTION 3. Amends Section 531.102, Government Code, by adding Subsections (e) and (f), as follows: (e) Requires HHS to assign the highest priority for investigation of potential fraud to claims submitted for reimbursement for outpatient hospital, ancillary, emergency room, and home health care services. (f) Requires HHS, by rule, to set specific claims criteria that, when met, require the office to begin an investigation. Provides that the claims criteria must be based on a total dollar amount or a total number of claims submitted for services to a particular recipient during a specified amount of time that indicates a high potential for fraud. SECTION 4. Amends Subchapter C, Chapter 531, Government Code, by adding Section 531.109, 531.110, and 531.111, as follows: Sec. 531.109. SELECTION AND REVIEW OF CLAIMS. Requires HHS to randomly select and review a statistically significant sample of claims for reimbursement under the state Medicaid program, including the vendor drug program, for potential cases of fraud, waste or abuse on an annual basis. Requires HHS, in performing the review, to directly contact the recipient to verify that the services for which a claim for reimbursement was submitted were received. Requires HHS to determine the types of claims at which HHS resources for fraud and abuse detection should be primarily directed based on the results of the annual review. Sec. 531.110. ELECTRONIC DATA MATCHING PROGRAM. (a) Requires HHS to conduct electronic data matches for a recipient of assistance under the state Medicaid program at least quarterly to verify the identity, income, employment status, and other factors that affect the eligibility of the recipient. (b) Provides that the electronic data matching must match information provided by the recipient with information contained in certain databases in order to verify eligibility. (c) Requires the Texas Department of Human Services to cooperate with HHS by providing data or any other assistance necessary to conduct the required electronic data matches. (d) Authorizes HHS to contract with a public or private entity to conduct the electronic data matches. (e) Requires HHS, by rule, to establish procedures to verify the electronic data matches. Requires the Texas Department of Human Services to remove from eligibility a recipient who is determined ineligible by the 20th day after the electronic data match is verified. (f) Requires HHS to report biennially to the legislature the results of the electronic data matching program. Provides that the report must include a summary of the number of applicants who were removed from eligibility as a result of an electronic data match conducted under this section. Sec. 531.111. FRAUD DETECTION TECHNOLOGY. Authorizes HHS to contract with a contractor who specializes in developing technology capable of identifying patterns of fraud exhibited by Medicaid recipients to develop and implement the fraud detection technology and determine if a pattern of fraud by Medicaid recipients is present in the recipients' eligibility files maintained by the Texas Department of Human Services. SECTION 5. Requires HHS, in cooperation with the office of inspector general of the Texas Department of Human Services, to study and consider for implementation fraud detection technology. SECTION 6. Requires the Texas Department of Health (TDH) to contract with a contractor who specializes in Medicaid claims payment systems by December 31, 1999, to perform tests on a Medicaid claims payment system considered for implementation by TDH to ensure the smooth and timely payment of claims, ensure accuracy of claims payments, and reveal inconsistencies in the payment system. Provides that the contract must require the contractor to perform tests before initial implementation and before implementation of any change to the operation of the system. SECTION 7. (a) Requires the Texas Department of Human Services (department) to develop a Medicaid eligibility confirmation letter that is not easily duplicated by January 1, 2000, and to begin using that confirmation letter in place of the letter used on the effective date of this Act. Provides that the new confirmation letter must be used until a permanent system for eligibility confirmation is implemented as required by this Act. (b) Requires the department to identify and consider for implementation alternative methods for a recipient to prove eligibility under the state Medicaid program to a provider on the effective date of this Act. Requires the department to consider the methods used by other states. (c) Requires the department to implement a permanent system for a recipient to prove eligibility under the state Medicaid program to a provider that is designed to reduce the potential for fraudulent claims of eligibility by September 1, 2000. SECTION 8. Requires a state agency affected by any provision of this Act, if the agency determines that a waiver or authorization from a federal agency is necessary for implementation of that provision, to request the waiver or authorization and authorizes that agency to delay implementation until the waiver or authorization is granted. SECTION 9. Effective date: September 1, 1999. SECTION 10. Emergency clause.