House Bill 1743 Senate Bill 826

1. House Bill 1743Senate Bill 826 By: Carla J. Cox Jackson Walker L.L.P. Austin, Texas (512) 236-2000

2. House Bill 1743Amendments to Sections 32.0321 regarding Medicaid Fraud Prepayment Reviews Prepayment reviews of a claim for Medicaid reimbursement to determine whether claim involves fraud or abuse Payment may be withheld for 5 working days for prepayment review without notice.

3. House Bill 1743Postpayment Reviews Postpayment holds on payment of future claims if department has reliable evidence of: • Fraud • Willful misrepresentation regarding a Medicaid claim Notice – Provider must be given notice of postpayment hold not later than 5th working day after imposition of hold Expedited administrative hearing is available on timely written request by provider. Hearing must be requested within 10 days of receipt of notice of hold.

4. House Bill 1743Postpayment Reviews (cont.) Hearing – Department only has to make a prima facie case that the evidence it relied on is relevant, reliable and credible and material to the issue of fraud. Department does not have to prove that fraud actually occurred. Informal resolution – Department to adopt rules to provide for informal resolution. Provider has 10 days from date of notice to seek informal resolution. Request for informal resolution does not extend deadline for requesting expedited hearing. Department (but not provider) may request that expedited hearing be stayed pending completion of informal review.

5. House Bill 1743Surety Bonds • Department shall adopt rule to require a Medicaid provider to post a surety bond in a “reasonable amount” if Department identifies: • Pattern of suspected fraud or abuse involving criminal conduct relating to Medicaid services. • There is a need for protection against future abuse.

6. House Bill 1743Fraud and Anti-kickback • Actions that are prohibited: • Knowingly presenting a false claim • 1-a) Engaging in conduct that violates Section 102.001 of the Occupations Code: • A person commits an offense if the person knowingly offers to pay or agrees to accept, directly or indirectly, overtly or covertly any remuneration in cash or in kind to or from another for securing or soliciting a patient or patronage for or from a person licensed, certified, or registered by a state health care regulatory agency. • 1-b) Soliciting, receiving any remuneration, in cash or in kind, for referring an individual to a Medicaid provider of goods or services.

7. House Bill 1743Fraud and Anti-kickback (cont.) Actions prohibited (continued): 1-c) Soliciting or receiving payments in cash or in kind to induce a person to purchase, lease or order items that are paid for by the Medicaid program. 1-d) Paying or offering to pay any remuneration to induce a person to refer an individual to another person for Medicaid services. 1-e) Paying or offering to pay any remuneration to induce a person to purchase, lease or order items that are paid for by the Medicaid program. 1-f) Providing an inducement to a individual, recipient, provider or employee of a provider for the purpose of influencing a decision regarding selection of a provider of Medicaid services or goods paid for by the Medicaid program.

8. House Bill 1743Activities that do not violate Fraud, Antikickback prohibitions Generally accepted business practices, as determined by department rule, including Conducting a marketing campaign Providing token items of minimal value that advertise a trade name Providing complimentary refreshments at an informational promotional meeting Conduct authorized by the federal safe harbor provisions

9. House Bill 1743Civil Penalties for FraudAbuse and Antikickback Violations The amount paid as a result of the violation plus interest; AND an administrative penalty = two times the amount paid; Plus $5,000-$15,000 for a violation that results in an injury to an elderly or disabled person and a 10 year exclusion from the Medicaid program; or Up to $10,000 for each violation that does not result in an injury to an elderly and a three year exclusion from the Medicaid program. Department may waive exclusion based on criteria to be set out by rule.

10. House Bill 1743Criminal Penalties for Fraud,Abuse and Antikickback Violations Violation is a state jail felony Attorney General can prosecute with the consent of local prosecutor

11. House Bill 1743Third Party Billing Vendors • If you use billing company to process and submit your Medicaid billing these new requirements will apply: • Third party billing vendor must have a contract with the department authorizing that activity • Third party billing vendors must provide the Attorney General with access to and copies of any records maintained by the vendor • Department will send notice of claim filed by third party vendor to provider • Provider is required to review the claim for accuracy • Provider must notify the department of any errors

12. House Bill 1743Investigation of Fraud or abuse by HHSC OIG Integrity Reviews • OIG must conduct an integrity review of each complaint of Medicaid fraud or abuse to determine whether there is sufficient basis to conduct full investigation • Integrity review must begin 60 days after receipt of complaint • Must be completed within 90 days from the date IR is begun

13. House Bill 1743Referral to Attorney General • If IR indicates fraud or abuse involving criminal conduct by a provider, OIG must refer to AG within 30 days • If IR indicates that a recipient has defrauded the Medicaid program, OIG may conduct full investigation

14. House Bill 1743Investigations of Falsification of Records • HHSC is required to refer cases to the Attorney General’s Medicaid Fraud Control Unit whenever the Commission learns or has reason to suspect that a provider’s records are being withheld, concealed, destroyed, fabricated, or in any way falsified. • HHSC is authorized to put a facility on vendor hold without prior notice to compel the production of records to either HHSC or the MFCU. • Unless vendor hold is requested by the AG’s MFCU, the provider is entitled to an expedited hearing on the basis for the vendor hold • Expedited hearing must be requested by provider not later than 10 days after the provider receives notice • Provider may also seek an informal resolution of the vendor hold • AG and HHSC to develop rules regarding vendor holds or program exclusions are mandatory or permissive.

15. House Bill 1743Attorney General’s Prosecutorial Authority • Attorney General has authority to prosecute the following crimes with the consent of the local prosecutor: • 31.03 Penal Code – Theft • 32.45 Penal Code – Misappropriation of Fiduciary Property • 32.46 Penal Code – Securing Execution of a Document by Deception • 37.10 Penal Code – Tampering with a Government Record

16. House Bill 1743Forfeiture of Contraband • Attorney representing state may seize as contraband any property that is used or intended to be used in the commission of a violation of any felony that involves the Medicaid program • Forfeited property to be transferred to HHSC for • Recovery of amounts wrongfully obtained by owner of property • Penalties and damages to which HHSC is otherwise entitled

17. Senate Bill 826Reporting Resident Deaths REPORTING RESIDENT DEATHS There are two different reporting requirements under Senate Bill 826 First Reporting Requirement: Article 49.24 of the Texas Code of Criminal Procedure Facility superintendent or general manager (i.e. the administrator or their designee) must report the death of Individual under the care, custody or control, or residing in the facility To the Attorney General’s Medicaid Fraud Control Unit whenever they are required by Article 49.04 to report the death to a justice of the peace.

18. Senate Bill 826Reporting Resident Deaths (cont.) Article 49.04 of the Texas Code of Criminal Procedure Requires that if a resident dies in a hospital or other health care facility and an attending physician is unable to certify the cause of death: Death must be reported to a justice of the peace of the precinct in which the facility is located.

19. Senate Bill 826Reporting Resident Deaths (cont.) First Rule of Reporting Resident Death – Report the death of a resident who dies in your facility to the Attorney General and to the Justice of the Peace if the resident’s attending physician is unable to certify the cause of death Educate your attending physicians: Many physicians do not actually certify a resident’s cause of death until after the reporting deadlines. Attending physicians need to be aware that if they are unable to certify a cause of death, the death will have to be reported. When a resident dies, ask the attending physician if he will be able to certify the resident’s cause of death. If the answer is no, file a report.

20. Senate Bill 826Reporting Resident Deaths (cont.) Second reporting requirement: Article 49.25 of the Texas Rules of Criminal Procedure When the general manager of an institution becomes aware of a patient/resident death under the circumstances set out in Section 6(a) of Article 49.25, the facility manager must notify: The medical examiner or the city or county police The Attorney General’s Medicaid Fraud Control Unit These reporting requirements apply if the administrator is aware of a death even if the death occurs outside the nursing home.

21. Senate Bill 826Reporting Resident Deaths (cont.) • Second Rule of Reporting Resident Death – When the administrator becomes aware of a death that occurs under the following circumstances, report the death to the medical examiner or the city or county police and the Attorney General’s Medicaid Fraud Control Unit: • When a person dies within twenty-four hours after admission to a hospital or institution; • When any person is killed; or from any cause dies an unnatural death, except under sentence of the law; or dies in the absence of one or more good witnesses;

22. Senate Bill 826Reporting Resident Deaths (cont.) • When the body or a body part of a person is found, the cause or circumstances of death are unknown, and: • The person is identified; or • The person is unidentified; • When the circumstances of the death of any person are such as to lead to suspicion that he came to his death by unlawful means; • When any person commits suicide, or the circumstances of his death are such as to lead to suspicion that he committed suicide;

23. Senate Bill 826Reporting Resident Deaths (cont.) • When a person dies without having been attended by a duly licensed and practicing physician, and the local health officer or registrar required to report the cause of death under Section 193.005, Health and Safety Code, does not know the cause of death. When the local health officer or registrar of vital statistics whose duty it is to certify the cause of death does not know the cause of death, he shall so notify the medical examiner of the county in which the death occurred and request an inquest; • When the person is a child who is younger than six years of age;

24. Senate Bill 826Reporting Resident Deaths (cont.) • When a person dies who has been attended immediately preceding his death by a duly licensed and practicing physician or physicians, and such physician or physicians are not certain as to the cause of death and are unable to certify with certainty the cause of death as required by Section 193.004, Health and Safety Code. In case of such uncertainty the attending physician or physicians, or the superintendent or general manager of the hospital or institution in which the deceased shall have died, shall so report to the medical examiner of the county in which the death occurred, and request an inquest.

25. Senate Bill 826Reporting Resident Deaths (cont.) Note: Subsection 8 above requires reporting of the death to the county medical examiner while Section 49.24 requires that the death be reported to the justice of the peace. Therefore, when the attending physician cannot be certain of the cause of death, it appears that you must report to the justice of the peace, the medical examiner and the Attorney General’s Medicaid Fraud Control Unit.

26. Senate Bill 826Reporting Resident Deaths (cont.) • Reporting Procedures: • Verbal report must be made within 24 hours of the death to the Attorney General’s Medicaid Fraud Control Unit. • A written report must be filed within 72 hours. • Reporting requirements do not replace and, are in addition to, existing reporting requirements for TDHS.

27. Senate Bill 826Reporting Resident Deaths (cont.) Medicaid Fraud Control Unit’s Web Site Requires provider to enter provider ID # in order to get copy of the form to fill out AG’s August 29, 2003 letter to providers States that the preferred method of filing is for the provider to fill out the form on-line and submit it electronically to the AG’s office Report may also be faxed to the AG’s office Suggest that you print out form and have it reviewed by appropriate corporate personnel or legal counsel before submitting

32. Who investigates Medicaid fraud and abuse? Medicaid Fraud Control Units of the Attorney General’s Office The Office of Investigations and Enforcement (HHSC) – this will become a part of the newly created Office of the Inspector General Newly created OIG is budgeted to have 316 FTE’s The Office of the Inspector General of the US Department of Health and Human Services (OIG) – Also investigates Medicare Fraud

33. What is the Medicaid Fraud ControlUnit of the Attorney General’s Office • The Texas Medicaid Fraud Control Unit was created in 1979 as a division of the Office of the Attorney General. The unit has three principal responsibilities: • Investigating criminal fraud by Medicaid providers • Investigating physical abuse and criminal neglect of patients in health care facilities • Assisting local and federal authorities with prosecution (and now, prosecuting such cases with the consent of local prosecutor)

34. As a result of the combined efforts of the MFCU, OIG and federal prosecutors, there were 44 Medicare/Medicaid fraud convictions in Texas in FY02 and over $17 million in recoveries. Nationwide in FY02, 3448 individuals and entities were excluded. The MFCU currently reviews all 2567s and the resolution of complaints of abuse. MFCU may independently investigate suspected abuse even if TDHS has cleared the facility.

35. What do you do when a MFCUinvestigator comes to your facility? Have a plan: 1. Establish a contact person and a backup contact person who will be the primary contact for the investigator. Require that the contact person or backup contact be contacted immediately when the investigator enters the facility. 2. Write down the name(s) and position(s) of the investigator or agent.  Determine if the investigator has a search warrant and, if so, request a copy of the search warrant. A copy of any search warrant should be immediately provided to legal counsel. 3. It may be prudent to contact legal counsel early on in the investigation.

36. What do you do when a MFCUinvestigator comes to your facility? (cont.) • Provide the AG representative with the material they request. • Do not permit them to remove any original documents from the facility. • Copies of the information the AG requests should be kept in a separate folder from the chart contents to easily identify what information was obtained by the AG representative. • Secure the chart/other requested information by placing it in a safe place where contents cannot inadvertently be misplaced, ie. Administrator’s office, DON’s office.

37. What do you do when a MFCUinvestigator comes to your facility? (cont.) • All employees of the facility who are requested to be interrogated by an AG representative are entitled to legal counsel if they so desire. Only the employee can assert a right to legal counsel. • Determine if legal counsel will ordinarily be provided for employees by the facility. • If the AG requests to interview a facility employee and the employee wishes to have legal counsel, they can request that the interview be delayed in order to make arrangements to have counsel present. • Never instruct employees not to talk to investigators as such instructions could constitute impeding the investigation.

38. What do you do when a MFCUinvestigator comes to your facility? (cont.) • Since many of the AG representatives are peace officers, they may arrive with a gun and handcuffs. • It may be prudent to meet with the department heads and staff and review the protocol and purpose of the AG representative’s visit. • The whereabouts of investigators should be monitored at all times.  Keep a record regarding the investigation.  • Prepare detailed notes on the files reviewed by the investigator, the employees interviewed, the questions asked and any other pertinent information regarding the manner in which the investigation was conducted. 

39. What do you do when a MFCUinvestigator comes to your facility? (cont.) • Try to find out as much as possible about the purpose of the investigation without interfering in the investigation process. • The investigator may interview employees in private with the employee's consent.  • Employees who have been interviewed should be debriefed as soon as possible by legal counsel and/or administrator.  • If an employee provides a written statement to the investigator, tell the employee that they may request a copy of their own statement from the investigator.