2007 Legislative Compendium: Medicaid, CHIP, and the Uninsured

Omnibus Medicaid Reform

Senate Bill 10 by Sen. Jane Nelson (R-Lewisville) and Rep. Diane Delisi (R-Temple) is the omnibus Medicaid reform bill for 2007. The bill contains numerous provisions to test promising new approaches in the financing and delivery of Medicaid services, which included promoting prevention and wellness initiatives to improve patients' health status at lower costs. SB 10 also outlined a new "health opportunity pool" to use Medicaid dollars as a financing tool to expand private health insurance to low-income Texans. TMA worked closely with bill authors, primary care specialty societies, and other stakeholders to ensure the legislation would promote high-quality patient care without imposing new administrative burdens and costs on patients or physicians. The bill also includes safeguards to protect the financial viability of safety-net institutions that would contribute funds to help finance the low-income pool.

Provisions in SB 10 of importance to medicine include:

1. Directs HHSC to establish a pilot in one region of the state to provide positive incentives to Medicaid patients who adopt healthier lifestyles, such as participating in weight management and smoking cessation programs or participating in disease management initiatives. The rewards may include setting up individual accounts that allow Medicaid patients to earn credits to exchange for health-related items not covered by Medicaid or other positive incentives that promote healthy lifestyles. By Dec. 1, 2010, HHSC must submit a report to the legislature on the results of the pilot.

2. Allows HHSC to develop and implement incentives to encourage children to obtain timely Early Periodic Screening Diagnosis and Treatment (EPSDT) visits. The EPSDT program is called "Texas Health Steps" in Texas. HHSC also must develop incentives for Medicaid health plans and participating physicians and providers to deliver and document complete EPSDT screenings.

3. Directs HHSC, if cost-effective and feasible, to test a voluntary health savings account (HSA) model for adult Medicaid patients. TMA requested that children be exempt. Patients who opt to participate in an HSA but subsequently change their mind may return to traditional Medicaid, though they would forfeit any money in the account. The HSA pilot must be implemented by Sept. 1, 2008.

4. Allows HHSC to seek a federal Medicaid waiver to establish "tailored benefit packages" to meet the specific needs of each Medicaid population. The goal is to improve health outcomes and access to care, reduce costs, and increase efficiency, and reduce administrative complexity of delivering benefits. Under the provision, HHSC is required to develop a tailored benefit model for children with special health care needs (CSHCN). Other populations that HHSC may target are children and families, adults with special health needs or disabilities, and the elderly. With the exception of the CSHCN initiative, HHSC may not implement tailored benefits packages before Sept. 1, 2009.

The state has two specialized Medicaid managed care plans: STAR, which is geared toward children, pregnant women, and low-income parents; and STAR+PLUS, which targets patients who are elderly or have disabilities. The intent of the provision is to augment and expand these efforts by developing a tailored-benefit model geared toward children with special health care needs or disabilities. The bill specifies that HHSC has broad discretion in developing the tailored benefit packages, and must:

a. Provide a basic set of benefits across all benefit packages;
b. Include additional benefits customized to meet the health care needs of patients covered by the plan;
c. Include, as appropriate, services to integrate acute and long-term care services; and
d. Increase the state's flexibility with respect to Medicaid funding.

HHSC may not reduce benefits available under the state Medicaid plan. However, HHSC may add benefits not included under the Medicaid state plan or under any federal waiver, such as preventive health or wellness services. Further, at the request of TMA, the bill stipulates that any package developed for children must include at least the services required by the EPSDT program. If HHSC develops tailored benefit packages, it must submit a report to standing oversight committees of the legislature. The report must detail the benefits and services available. HHSC also may develop tailored benefit packages for non-Medicaid populations. 

Lastly, the provision states that tailored benefit provisions do not apply to waiver programs or similar packages implemented prior to Sept. 1, 2007 (e.g., the women's health waiver).

5. Establishes a new "Texas Health Opportunity Pool" (THOP) as a means to expand health insurance coverage for low-income Texans. Under the proposal, HHSC is authorized to pursue a federal Medicaid waiver to establish the pool. Funding for the pool would come from (1) Medicaid disproportionate share (DSH) and upper payment limit (UPL) programs, which are used currently to offset hospital uncompensated care costs; (2) money provided by the federal government in lieu of some or all of the hospital supplemental payments; or (3) a combination approach. Funding for the physician UPL payments made to state medical schools will not be included in the THOP. HHSC also may identify other state and local spending not currently being matched with federal funds and explore using those dollars to draw down additional federal monies. Funding for the pool - as much as $62 million in general revenue over the next two years - also will be generated from a new $5 per customer fee on certain sexually oriented businesses as required by House Bill 1751.

To protect the financial viability of safety-net facilities, any waiver pursued by HHSC must include safeguards to ensure that aggregate federal DSH and UPL funding for safety-net hospitals does not decline below existing funding levels and, to the extent allowed by federal law or regulation, preserves federal supplemental payments to hospitals. HHSC must seek within the waiver, though it is not a requirement, maximum flexibility with respect to using the money in the pool as well as annual adjustments to account for inflation, population, and other demographic factors that impact the availability of funding within the pool.

Once established, monies designated for the pool would be placed in an account outside the treasury. In general, funds may be used for the following unless specified otherwise within the federal waiver: (1) offset, at least partially, hospitals' uncompensated care costs; (2) reduce the number of uninsured Texans; and (3) reduce the need for uncompensated health care provided by hospitals by expanding the pool of insured patients. Unless otherwise specified by the waiver, the bill states that to be eligible for funding from the pool to help offset uncompensated care costs, hospitals or political subdivisions must use a portion of the funds in the pool (to be specified via rule) on implementing strategies to reduce uncompensated outpatient and inpatient hospital care as well as ER usage, including:

a. Fostering primary care systems of care that promote a "medical home";
b. Promoting premium payment assistance initiatives, such as three-share models;
c. Making contributions to eligible patients' health savings accounts; and
d. Improving health care efficiency by promoting use of electronic medical records.

In other words, SB 10 aims to redirect Medicaid funding for indigent care from institutions to the community. Additionally, up to 10 percent of the funds in the pool may be used to improve the physician and provider infrastructure needed to care for the Medicaid and uninsured population and to promote efficiency in health care such as through greater use of health information technology (HIT). To reduce the number of uninsured, hospitals may implement strategies such as premium assistance programs, contributions to health savings accounts, or other innovative mechanisms.

In developing the federal waiver, HHSC must seek broad stakeholder input. Once the waiver is approved, HHSC must also seek stakeholder input on the rules relating to allocation of funds from THOP. To oversee the development of the waiver, including implementation of the THOP and other reforms outlined within the bill, SB 10 directs the lieutenant governor and speaker of the House to appoint no later than Oct. 1, 2007, a joint Legislative Oversight Committee consisting of four senators and four representatives.

6. Allows county commissioners to establish regional or local health care programs, also known as "three-share" models, for employees of small employers. Programs may be established in a single county or in a multi-county alliance. The bill specifies the governance of the local or regional programs, participation requirements for small employers, and the health care services and benefits. Funds from the new THOP may be used to facilitate the local or regional health care programs, subject to meeting eligibility criteria. HHSC also may establish a grant program to support the program's development.

7. HHSC and the Texas Department of Insurance (TDI) are charged with jointly developing premium assistance programs such as three-share initiatives, and adopting rules specifying eligibility, premium levels, and reporting requirements.

8. Directs HHSC and TDI to conduct a joint study on small employer premium assistance programs to provide financial assistance for small employers to purchase health insurance.

9. Directs HHSC, if feasible and cost-effective, to implement copayments for patients who use the ER for non-emergent needs when an alternative, lower-cost provider is available. The Deficit Reduction Act gave states the option to apply this provision to all Medicaid patients, including those living below poverty. However, according to information provided by HHSC in the SB 10 fiscal note, cost sharing will be limited to patients with incomes above 100 percent of poverty. For higher income patients, cost sharing will be on a sliding scale basis: $5 for patients between 100 percent to 150 percent of poverty and $15 for those with higher incomes. SB 10 specifies that HHSC may not reduce hospital payments to reflect anticipated collection of copayments.

10. Requires HHSC to include within Medicaid HMO contracts outcomes-based performance measures and incentives that facilitate and increase patients' access to appropriate health care. The measures may be graduated, promoting incremental and continued improvement over time. Additionally, directs HHSC to assess the feasibility and cost-effectiveness of including in Medicaid HMO contracts provisions that require plans to provide to participating physicians and hospitals pay-for-performance "opportunities" to support quality improvement. At TMA's request, HHSC may consult physicians and hospitals in assessing the feasibility of pay for performance and must base the assessment on publicly available, scientifically valid, evidence-based criteria appropriate to the Medicaid population. Pay for performance may include incentives for physicians and providers who offer after-hours care or participate in the EPSDT program. If HHSC determines that pay for performance is cost-effective, it must establish a pilot in at least one region of the state.

Specifies that HHSC must, to the extent feasible, encourage Medicaid HMOs to offer additional benefits that have the potential to improve the health status of patients. Contractually, Medicaid HMOs already have this authority, so this provision of the bill is not clear.

Requires HHSC to post on its Web site in a comprehensive and understandable format the financial statistical data of each Medicaid HMO. The data will allow the public to determine how much each HMO spends on administration versus direct patient care.

11. Expands the number of women who may receive treatment under the Breast and Cervical Cancer Treatment Act (BCCTA). Currently, a woman must be screened by a designated provider to be eligible for treatment. The provision specifies that a woman eligible for Medicaid coverage may receive treatment even if the screen was not performed by a designated BCCTA provider, and even if federal matching funds are not available. HB 1 allocates state general revenue to provide additional coverage.

12. Allows HHSC to adopt rules to permit, facilitate, and implement use of health information technology within Medicaid, including use of electronic mechanisms to verify eligibility and enrollment, obtain prior approval for health services, update practice information, and promote exchange of information via e-prescribing or electronic health records.  The provision also specifies that HHSC may promote the adoption of HIT, including incentives for physicians and providers, and must ensure than a paper record is not required if it is permitted or required to be filed electronically. HHSC is required to consult with physicians and other stakeholders prior to developing any rules regarding use of HIT.

13. Directs HHSC to develop and implement a pilot program, if funding is appropriated, to promote adoption of EHRs by participating high-volume primary care physicians and providers. Participation would be voluntary. A report on the pilot must be submitted to the legislature by Dec. 1, 2008.

14. Directs HHSC to implement outreach efforts to inform patients who have access to group health insurance about the Medicaid Health Insurance Premium Payment (HIPP) program. Under HIPP, if group health premiums are at or below what Medicaid would have paid, the state will pay the patient's premiums. This allows the patient to enroll in the employer-sponsored plan instead of Medicaid. Medicaid also pays for the patient's cost sharing and copayments, and provides "wrap around" services not covered by the employer plan.

15. Allows Medicaid patients who have access to group health insurance to "opt out" of Medicaid entirely. Similar to HIPP, under this provision, Medicaid would pay the employee's premium up to the amount Medicaid would have paid. However, the patient would be responsible for any amount exceeding what Medicaid pays and any cost-sharing requirements such as deductibles. Under HIPP, patients do not pay cost sharing. Opting out of Medicaid would be voluntary. Prior to the patient leaving Medicaid, HHSC would be required to offer extensive counseling to inform the patient of his or her cost-sharing obligations in an opt-out arrangement. Additionally, HHSC would be required to adopt guidelines specifying under what conditions a patient may return to Medicaid (e.g., such as loss of job). Patients who elect to opt out would be limited to the benefits covered by their employer-sponsored plan. The provision specifies that patients who choose this option will remain eligible for Medicaid community-based long-term care services.

16. Allows Medicaid patients to obtain covered nonsurgical eye care from an ophthalmologist or therapeutic optometrist without a referral from a primary care physician or provider, or obtaining any other prior approval. HHSC may require the ophthalmologist or optometrist to forward to the patient's PCP information about the eye care provided. The section specifies that nothing in the provision may be construed to expand the scope of eye health services provided under Medicaid. For patients enrolled in PCCM or an HMO, they may choose to obtain nonsurgical eye care without a referral from any in-network ophthalmologist or therapeutic optometrist.

17. Directs HHSC to evaluate the feasibility and cost-effectiveness of expanding the Integrated Care Management (ICM) model to rural communities and urban communities where STAR+PLUS is not available. Directs HHSC to actively encourage Medicaid health plans to offer value-added benefits and services that may improve the health of patients.

18. Directs HHSC, if cost-effective and feasible, to require patients enrolled in traditional Medicaid to select a primary care physician. Under Medicaid managed care, patients would continue to follow PCP selection requirements of either the HMO or PCCM model.

19. Directs the governor's Texas Health Care Policy Council, in coordination with health science centers and TMB, to study mechanisms for increasing the number of medical residency programs in the state and the number of physicians practicing in medical specialties. The study must examine the feasibility of using a percentage of physician licensing fees to increase the number of medical residency programs and medical residents in the state. Additionally, it must emphasize how to increase medical residency programs in underserved communities and for physicians who ultimately practice in those areas. Lastly, the study must determine the number of medical residents that obtain a license after completing a residency in Texas. The study must be submitted by Dec. 1, 2008.

20. Establishes a study to assess the feasibility of using technology to improve detection and deterrence of fraud within Medicaid, including using technology to verify a person's citizenship and eligibility for coverage. Given Texas' extensive fraud and abuse detection system, it is not immediately clear what additional measures are envisioned.

21. Requires HHSC to conduct a study on the feasibility of using a "medical passport" in children's Medicaid and CHIP to promote integrated health records.

22. Establishes a legislative committee to study and recommend measures to promote the purchase of health and long-term care insurance. This includes mechanisms to reduce the need for patients to rely on Medicaid coverage and to provide incentives to expand improve coverage for the uninsured. The committee will include chairs of the respective House and Senate health and insurance committees and three business leaders appointed by the governor. The comptroller and commissioners of insurance and health and health services will serve ex-officio.

Other important provisions of SB 10:

  • Directs HHSC to promote Medicaid patient access to federally qualified health centers (FQHCs) and rural health clinics as well as appropriate payments for those centers.
  • Establishes a "billing coordination system" that identifies electronically and within 24 hours of submission of a fee-for-service claim any third-party payer who has primary responsibility for paying for the Medicaid patient's care. The provision specifies that the system may not increase the Medicaid claims payment error rates. If it is determined to be cost-effective and feasible, HHSC must implement the system on or before Mar. 1, 2008.
  • Requires HHSC to establish a standard definition for hospital uncompensated care and to establish hospital reporting requirements. HHSC must establish a workgroup to help develop the new requirements. The bill also specifies that hospitals that fail to report as required may be penalized.
  • Reestablishes that HHSC shall directly supervise the administration and operation of the Medicaid medical transportation program (now managed by the Texas Department of Transportation). TX DOT must transfer responsibility for the medical transportation program by Sept. 1, 2008.
  • Allows Bexar County to establish a needle exchange program to prevent spread of HIV, hepatitis B or C, and other infectious diseases.
  • Allows HHSC to establish a "physician-centered" nursing facility pilot to determine whether paying enhanced Medicaid rates to nursing homes with onsite, continuous supervision by a geriatric physician improves residents' health and lowers costs by reducing hospitalizations and pharmacy costs.
  • Specifies that former foster children up to age of 23 who are enrolled in a Texas institution of higher education are eligible to receive Medicaid coverage.
  • Requires TDI to conduct a study on a "Healthy Texas Program" under which small employer health plan coverage would be offered to persons eligible for that coverage. The study must include a market analysis to assist in identifying underserved segments of the voluntary small employer group health plan market. HHSC must submit a study to the legislature by Nov. 1, 2008, that includes advantages and disadvantages of the program, prospective structure, function, design and administration, eligibility criteria, and potential economic impact on the small employer insurance market.

Children's Health Insurance Program Eligibility Improvements
House Bill 109 by Rep. Sylvester Turner (D-Houston) and Sen. Kip Averitt (R-Waco) restores most of the eligibility changes made to CHIP in 2003 in the wake of a severe budget shortfall. The bill had broad bipartisan support. While the complete list of HB 109 authors and sponsors is too lengthy to list, some merit specific mention: Reps. John Davis (R-Houston) and Patrick Rose (D-Dripping Springs) and Sen. Leticia Van de Putte, all of whom worked tirelessly to pass the bill.

Medicine, working side-by-side with consumer advocates, business leaders, hospitals, and health plans, advocated vigorously for the bill, which passed overwhelmingly in the House with strong bipartisan support. However, the bill lingered in the Senate for weeks after the lieutenant governor raised concerns about extending 12 months' continuous coverage to all children covered under CHIP.

In the end, the Senate overwhelmingly approved the bill after the two sides struck a compromise in the waning hours of the 80 th legislative session: HB 109 ensures 12 months' continuous coverage for children in a family up to 185 percent of poverty ($31,765 per year/$2,647 per month for a family of three in 2007). Review of a family's income for higher-income children is at six months. The review may include electronic verification if "accurate and appropriate." If a family's income appears to exceed 200 percent of poverty, the state must contact the family to ascertain if the information is correct. If the child is found to be no longer eligible, HHSC must give families at least 30 days' notice before terminating the child's coverage. The goal of the new review process is to use electronic, third-party databases to check income. To ensure that the new review process is accurate and reliable, HHSC will phase it in over the next year, with full implementation by Sept. 1, 2008.

Other provisions of the HB 109:

  • Requires HHSC to conduct a community-outreach campaign, in collaboration with community-based organizations, about the availability and importance of child health insurance. The campaign must be conducted in English and Spanish and must include a toll-free hotline for families to call for more information.
  • Allows families to deduct child care expenses from their gross incomes in accordance with Medicaid policy: $200 per month for each child under age 2 and $175 per month for each older child.
  • Increases the asset limit from $5,000 to $10,000 (the asset test only applies to families with incomes between 150 percent and 200 percent of poverty) and increases the exemption value for cars: $18,000 for the first vehicle and $7,500 for an additional vehicle (if a car is worth more, the amount is applied to the $10,000 asset limit). HB 109 also clarifies that some cars, such as those modified for patients with disabilities, are fully exempt.
  • Reestablishes the original 90-day waiting period, meaning that only children who have had health insurance within the past three months must wait to obtain coverage, with certain exceptions (e.g., the child involuntarily loses coverage due to a parent's job loss, or the health insurance premiums exceed 10 percent of net income). Since the 2003 changes, all children, even those who have never had insurance, were required to wait 90 days for coverage.
  • Requires in statute that the state verify a family's reported income. (HHSC has been doing this all along, but the requirement is now statutory.)

HHSC estimates that HB 109 will result in an additional 127,500 children obtaining coverage. This forecast is higher than the LBB forecast of 96,396. If caseload reaches the higher level, with LBB approval, HHSC may transfer funds to avoid enacting a waiting list.

HHSC Integrated Eligibility and Benefits Determination System
House Bill 3575 by Representative Rose and Senator Nelson is in response to serious deficiencies in the state's efforts to implement an integrated eligibility system using private contractors. The bill specifies that contracts for the provision of call centers or written communications must include performance standards relating to effectiveness, promptness, and accuracy, including measures for clients needing language assistance.

The bill outlines the goals for an "enhanced eligibility system": better quality of and access to services, more efficient business processes that reduce application processing times, and an enrollment process and application that are simpler and enhance program integrity. HB 3575 establishes a transition plan for moving from the previous contractor to a more fully functional system no later than Jan. 1, 2009. The state auditor must establish an independent validation and verification program for the eligibility system during the transition to assure that HHSC meet its goals.

Lastly, the bill establishes a seven-member legislative oversight committee to oversee the continued implementation of the integrated eligibility system. Members of the committee include three senators, three representatives, and one member appointed by the governor.

Efforts to Prevent Gaps in Coverage in Children's Medicaid or CHIP
HB 1, the 2008-09 appropriations act, includes two important budget riders sponsored by Rep. Garnet Coleman (D-Houston) and Rep. Eliot Naishtat (D-Austin) directing HHSC to minimize gaps in coverage for children transitioning from Medicaid to CHIP or vice versa. HHSC is required to provide simultaneous screening for children who apply to either CHIP or children's Medicaid using a consolidated application. Children who are found to be eligible for either Medicaid or CHIP must be enrolled automatically without further application. If HHSC finds that a child is no longer eligible for children's Medicaid, the state must, before terminating coverage, determine whether the child is eligible for CHIP using currently available information. If the child is eligible, he or she must be enrolled unless the parent objects. If the state finds a child is no longer eligible for CHIP, the state must assess whether the child qualifies for Medicaid and enroll the child if found eligible. The riders further specify that HHSC must ensure that Medicaid and CHIP applications and redeterminations are completed within state and federal timeliness standards

Due to the termination of HHSC's contract with Accenture, who was hired to manage the eligibility call centers and other functions, a separate rider within HB 1 gives HHSC the ability to add eligibility workers to replace contracted workers and meet all federal performance standards.

Electronic Data Exchange in Medicaid

Electronic Database of Participating Physicians and Providers
House Bill 2042 by Rep. Dawnna Dukes (D-Austin) and Senator Nelson will establish an Internet-based, searchable database of all physicians and providers who participate in Medicaid. The database will include, at a minimum, the physician's or provider's name; specialty; location; telephone number; office hours, including after-hours services; and whether the physician or provider is accepting new Medicaid recipients and Medicaid managed care plans. Additionally, the database will describe any practice limitations, such as what age ranges are accepted; which languages, other than English, are spoken; and a list of the medical assistance programs in which the physician or provider participates, such as Texas Health Steps (the preventive health component of Medicaid).

Patients, physicians, and providers will be able to search the database by managed care plan or by name of the physician or provider. To make the database easy to update, participating physicians/providers will be allowed to update their practice information electronically via the Internet. HHSC is required to post updates to the database at least once a month. The bill allows the executive commissioner to contract for the development and maintenance of the database, though the executive commissioner will retain the ability to oversee the contractor's activities. Access to the database will be free for Medicaid patients, physicians, and providers. TMA and the Texas Primary Care Coalition helped draft the bill with input from HHSC. HHSC anticipates the database will be operational by September 2007.

Authorization to Use Electronic Signatures
House Bill 3261 by Rep. Norma Chavez (D-El Paso) and Senator Nelson directs HHSC to establish standards for the use of electronic signatures within Medicaid. The standards must be in accordance with the Uniform Electronic Transactions Act. The intent of the legislation is to reduce the paperwork burden of the Medicaid program and to make it easier for physicians, providers, and patients to use the system. The provision takes effect Sept. 1, 2007.

Importation of Electronic Eligibility Information
House Bill 321 by Representative Dukes and Sen. Robert Deuell, MD (R-Greenville), directs HHSC to establish a pilot in at least one urban area to import electronic eligibility information obtained by the regional indigent care collaborative system.

Reimbursement for After-Hours Care
House Bill 1579 by Rep. Ryan Guillen (D-Rio Grande City) and Senator Deuell specifies that when a Medicaid managed care enrollee - either in an HMO or Primary Care Case Management model - receives after-hours care in a federally qualified health center, rural health clinic, or public health clinic, the clinic shall be reimbursed its allowable rate without having to obtain prior approval from the patient's primary care physician or provider. TMA advocated that the bill be broadened to include private practicing physicians, but that change caused HHSC to include a fiscal note on the bill. TMA will continue to work with the state to address issues regarding after-hours coverage and payment.

Public/Private Outreach Initiatives
House Bill 3571 by Representative Rose and Sen. Carlos Uresti (D-San Antonio) requires HHSC to develop a pilot project in South Texas allowing a private retail business that participates in the food stamp program to enter into an agreement with HHSC to support outreach and eligibility determinations. HHSC may require the business to provide informational materials, including eligibility guidelines, and provide space for HHSC or contractors to conduct outreach efforts. Important to medicine, the agreement may also authorize the business to implement strategies to encourage food stamp and Medicaid recipients to engage in healthy behaviors or provide incentives for children to obtain timely Texas Health Step services. HHSC must submit a report on the pilot by Dec. 1, 2008.

Expedited Medicaid Eligibility for Members of the Armed Forces
House Bill 1633 by Rep. Charlie Green (R-Ft. Worth) and Senator Deuell requires HHSC to develop and implement expedited eligibility and enrollment processes for patients who are active duty members of the armed forces, reserves, or National Guard, or are the spouse or dependent of that person.

"Insure Texas Kids" License Plates
Senate Bill 1032 by Senator Uresti and Rep. Pat Haggerty (R-El Paso) requires the Texas Department of Transportation to issue specialty license plates stating "Insure Texas Kids." Funds collected from selling the specialty plates, after deducting the department's administrative costs, will be available for HHSC to fund outreach efforts designed to insure more Texas children.

Medicaid Fair Hearing Process
House Bill 2256 by Rep. Jim McReynolds (D-Lufkin) and Senator Deuell requires HHSC to put in place a fair hearing process for services that require prior authorization. The bill also specifies that HHSC must provide a patient 10 days' notice prior to terminating or reducing Medicaid services. HHSC also must notify the patient of the fair hearing mechanism. Federal regulations require Medicaid to provide an opportunity for a fair hearing to any patient who believes the agency has erroneously terminated, suspended, or reduced a Medicaid service. Under the federal rules, states must continue the service until it has been reviewed. Current HHSC rules exempt services that require prior authorization, including private duty nursing. If a client requests a hearing, the state will not maintain the nursing services pending the outcome of the hearing.

Administrative and Judicial Review Regarding Decisions Relating to Public Benefits
HB 75 by Representative Naishtat and Sen. Jeff Wentworth (R-San Antonio) specifies that applicants for Medicaid, food stamps, or other public benefits who have been denied coverage may request an administrative review to contest the decision. The applicant may also file a petition with the district court in Travis County.

Medicaid Fraud Prevention and Detection

Violation of False Claims Act
House Bill 889 by Rep. Dianne Delisi (R-Temple) and Sen. Robert Nichols (R-Jacksonville) specifies that any violation of the federal False Claims Act is also a violation of the Texas Medicaid Fraud Prevention Act.

State Funding for Medicaid Fraud Recovery
Senate Bill 362 by Sen. Kyle Janek, MD (R-Houston), and Rep. Dan Gattis (R-Georgetown) brings Texas into compliance of Section 1909 of the Social Security Act relating to fraud prevention, making Texas eligible to qualify for additional monies recovered under the Medicaid False Claims Act. Specifically, the bill increases the minimum penalties per false claim from $1,000 to $5,000 and makes clear that the individual whistleblower may prosecute the case on his own if the State declines to take over the case. On June 20, 2007, the Office of Inspector General of the U.S. Department of Health and Human Services approved the amended plan, thus allowing Texas to be eligible for an increase of 10 percentage points in its share of any amounts recovered under a State action brought under such a law.

Fraud Investigations and Criminal Offenses Involving the Medicaid Program
Senate Bill 1694 by Senator Nelson and Rep. Jim Jackson (R-Carrollton) allows state agencies that license, regulate, register, or certify health professionals or managed care organizations that participate in Medicaid to share information with each other. This includes the Office of the Attorney General regarding a health care professional or managed care organization that is the subject of a fraud investigation. An agency that receives a request for information shall provide the information unless releasing it would jeopardize an investigation or is prohibited by law. An agency that discovers fraud or abuse by a health care professional or managed care organization may provide that information to any other participating agency unless the law prohibits its release. Confidential information shared with another agency is subject to the same confidentiality requirements and legal restrictions as the originating agency.

SB 1694 expands fraudulent behavior to include receiving an inducement (not just providing one). The bill strengthens the penalties for securing execution of a document by deception. It increases the punishment to the next higher category of offense if it involves the State Medicaid program. The bill makes it a State jail felony to obstruct an investigation and broadens the acts that qualify for obstruction of investigation violations.

The law currently states that illegal conduct involving amounts ranging from $1,500 to $20,000 is a State jail felony. The bill amends this provision to make any conduct that involves an amount of payment or value of benefit that cannot be reasonably ascertained  automatically a State jail felony.

Language throughout this section changed to include "claims for payment made," which presumably was altered to include situations in which payment is not actually made or is made in an amount that is less than the claim filed. Finally, the bill would make any property used or intended to be used in the commission of a felony under Chapter 32 of the Human Resources Code or 35A (the Medicaid fraud provision) of the Penal Code fall into the definition of  "contraband."

TMA Medicaid/CHIP/Uninsured Staff Team:

Legislative: Michelle Romero
Policy: Helen Kent Davis and Rich Johnson
Legal: Kelly Walla and Rocky Wilcox

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