SECTION 353.502. Managed Care Organization's Plans and Responsibilities in Preventing and Reducing Waste, Abuse, and Fraud

(a) Each managed care organization (MCO) subject to this section must develop a plan to prevent and reduce waste, abuse, and fraud and submit that plan annually to the Health and Human Services Commission (HHSC), Office of Inspector General (OIG) for approval.

(b) The MCO is responsible for investigating possible acts of waste, abuse, or fraud for all services, including those that the MCO subcontracts to outside entities.

(c) The plan submitted to the HHSC-OIG must include the following information to be considered for approval.

(1) A description of the MCO's procedures for detecting possible acts of waste, abuse, and fraud by providers. The description must address each of the following requirements:

(A) use of audits to monitor compliance and assist in detecting and identifying Medicaid program violations and possible waste, abuse, and fraud overpayments through data matching, analysis, trending, and statistical activities;

(B) monitoring of service patterns for providers, subcontractors, and recipients;

(C) use of a hotline or another mechanism to report potential or suspected violations;

(D) use of random payment review of claims submitted by providers for reimbursement to detect potential waste, abuse, or fraud;

(E) use of edits or other evaluation techniques to prevent payment for fraudulent or abusive claims;

(F) use of routine validation of MCO data; and

(G) verification that MCO members actually received services that were billed.

(2) A description of the MCO's procedures for investigating possible acts of waste, abuse, and fraud by providers. The procedures must satisfy the requirements in subparagraphs (A) - (C) of this paragraph.

(A) The MCO must conduct a preliminary investigation within 15 working days of the identification or reporting of suspected or potential waste, abuse, or fraud.

(B) The preliminary investigation must include the following:

(i) Determining if the MCO has received any previous reports of incidences of suspected waste, abuse, or fraud or conducted any previous investigations of the provider in question. If so, the investigation should include a review of all materials related to the previous investigations, the outcome of the previous investigations, and a determination of whether the new allegations are the same or relate to the previous investigation.

(ii) Determining if the service provider has received any educational training from the MCO in regard to the allegation.

(iii) Conducting a review of the provider's billing pattern to determine if there are any suspicious indicators.

(iv) Reviewing the provider's payment history for the past three years, if available, to determine if there are any suspicious indicators.

(v) Reviewing the policies and procedures for the program type in question to determine if what has been alleged is a violation.

(C) If it is determined that suspicious indicators of possible waste, abuse, or fraud exist, within 15 working days from the conclusion of subparagraphs (A) and (B) of this paragraph, the MCO must select a minimum of 30 recipients or 15% of a provider's claims related to the suspected waste, abuse, and fraud; provided, however, that if the MCO selects 15% of the claims, the MCO must include claims relating to at least 30 recipients. The MCO may confirm the suspicious indicators of fraud, waste, and abuse with a review of fewer recipients or claims, provided that the MCO submits, as part of the MCO's referral, a written justification for the decision to substantiate the waste, abuse, or fraud with fewer recipients or claims. Once the MCO selects the recipients or claims for review, the MCO must:

(i) within 15 working days of the selection of the recipients or claims for review, request medical or dental records and encounter data; and must

(ii) review the requested medical or dental records and encounter data within 45 working days of receipt of the records to:

(I) validate the sufficiency of service delivery data and to assess utilization and quality of care;

(II) ensure that the encounter data submitted by the provider is accurate; and

(III) evaluate if the review of other pertinent records is necessary to determine if waste, abuse, or fraud has occurred. If the review of additional records is necessary then conduct such review.

(3) A description of the MCO's procedures for detecting possible acts of waste, abuse, and fraud by recipients. The description must address the following:

(A) Review of claims when waste, abuse, or fraud is suspected or reported to determine if:

(i) Treatment(s) and/or medication(s) prescribed by more than one provider appears to be duplicative, excessive, or contraindicated; and

(ii) Recipients are using more than one provider to obtain similar treatments and/or medications; and

(iii) Providers other than the assigned Primary Care Provider (PCP) are treating the recipient, and there is no evidence that the recipient was treated by the assigned PCP for a similar or related condition; and

(iv) The recipient has a high volume of emergency room visits with a non-emergent diagnosis.

(B) Review of medical or dental records for the recipients in question if claims review does not clearly determine if waste, abuse, or fraud has occurred.

(C) For a health care MCO, use of edits or other evaluation techniques to identify possible overuse or abuse of psychotropic or controlled medications by recipients who are allegedly treated at least monthly by two or more physicians. A physician includes: psychiatrists, pain management specialists, anesthesiologists, and physical medicine and rehabilitation specialists.

(4) A description of the MCO's procedures for investigating possible acts of waste, abuse, and fraud by recipients. The procedures must satisfy the requirements in subparagraphs (A) and (B) of this paragraph, as applicable.

(A) An MCO must conduct a preliminary investigation within 15 working days of the identification or reporting of suspected or potential waste, abuse, or fraud.

(B) For a health care MCO, a preliminary investigation must include the following:

(i) Review of acute care and emergency room claims submitted by providers for the recipient suspected of waste, abuse, or fraud.

(ii) Analysis of pharmacy claim data submitted by providers for the recipient suspected of waste, abuse, or fraud to determine possible abuse of controlled or non-controlled medications. If the MCO does not have the data necessary to conduct the pharmacy claims review, the MCO must request the data within 15 working days of the initial identification or reporting of the suspected or potential waste, abuse, or fraud.

(iii) Analysis of claims submitted by providers to determine if the diagnosis is appropriate for the medications prescribed.

(5) A description of the MCO's internal procedures for referring possible acts of waste, abuse, or fraud to the MCO's Special Investigative Unit (SIU) and the mandatory reporting of possible acts of waste, abuse, or fraud by providers or recipients to the HHSC-OIG. The procedures must satisfy the requirements in subparagraphs (A) - (E) of this paragraph.

(A) Assign an officer or director the responsibility and authority for reporting all investigations resulting in a finding of possible acts of waste, abuse, or fraud to the OIG. An officer could be but is not limited to a Compliance Officer, a Manager of Government Programs, or a Regulatory Compliance Analyst.

(B) Provide specific and detailed internal procedures for officers, directors, managers, and employees to report possible acts of waste, abuse, and fraud to the MCO's SIU. The procedures must include but are not limited to:

(i) Guidance regarding what information must be reported to the MCO's SIU.

(ii) A requirement that information must be reported to the MCO's SIU within 24 hours of identification or reporting of suspected waste, abuse, and fraud.

(C) Provide specific and detailed internal procedures for the SIU to report investigations resulting in a finding of waste, abuse, or fraud to the assigned officer or director.

(i) Guidance regarding what information must be reported to the assigned officer or director.

(ii) A requirement that possible acts of waste, abuse, or fraud be reported to the assigned officer or director must occur within 15 working days of making the determination.

(D) Within 30 working days of the completion of the SIU investigation and receiving reports of possible acts of waste, abuse, or fraud from the SIU, the assigned officer or director must notify and refer all possible acts of waste, abuse or fraud to the HHSC-OIG. All reports and referrals of possible acts of waste, abuse, and fraud, with the exception of an expedited referral, must include the following information related to the referrals:

(i) the provider's enrollment/credentialing documents;

(ii) the complete SIU investigative file on the provider, which must include:

(I) an investigative report identifying the allegation, statutes/regulations/rules violated or considered, and the results of the investigation;

(II) the estimated overpayment identified;

(III) a summary of interviews conducted; and

(IV) a list of all claims and associated overpayments identified by the preliminary investigation;

(iii) a summary of all past investigations of the provider conducted by the MCO or the MCO's SIU. Upon request, the MCO shall provide the complete investigative files or any other information regarding those past investigations to the HHSC-OIG investigator;

(iv) copies of HHSC program and MCO policy, contract, and other requirements, as well as statutes/regulations/rules, alleged to be violated for the time period in question;

(v) all education letters (including education documents) and/or recoupment letters issued to the provider by the MCO or the MCO's SIU at any time;

(vi) all medical records;

(vii) all clinical review reports/summaries generated by the MCO;

(viii) any and all correspondence and/or communications between the MCO, the MCO's subcontractors, and any of their employees, contractors, or agents, and the provider related to the investigation. This should include but not be limited to agents, servants and employees of the MCO, regardless of whether those agents, servants and employees are part of the SIU who investigated the provider;

(ix) copies of all settlement agreements between the MCO and its contractors and the provider; and

(x) if the referral contains fewer recipients or claims than the minimum described in paragraph (2)(C) of this subsection, a written justification for the decision to substantiate the waste, abuse, or fraud with fewer recipients or claims. The justification will be subject to review and approval by HHSC-OIG, who may require the MCO to provide further information.

(E) An expedited referral is required when the MCO has reason to believe that a delay may result in:

(i) harm or death to patients

(ii) the loss, destruction, or alteration of valuable evidence; or

(iii) a potential for significant monetary loss that may not be recoverable; or

(iv) hindrance of an investigation or criminal prosecution of the alleged offense.

(6) A description of the MCO's procedures for educating recipients and providers and training personnel to prevent waste, abuse, and fraud. The procedures must satisfy the requirements in subparagraphs (A) - (H) of this paragraph.

(A) On an annual basis, the MCO must ensure that waste, abuse, and fraud training is provided to each employee and subcontractor who is directly involved in any aspect of Medicaid. At a minimum, training is required for all individuals responsible for data collection, provider enrollment or disenrollment, encounter data, claims processing, utilization review, appeals or grievances, quality assurance, and marketing.

(B) The training must be specific to the area of responsibility for the MCO and subcontractor staff receiving the training and contain examples of waste, abuse, or fraud in their particular area of interest.

(C) The MCO must ensure that general training is provided to all Medicaid managed care staff of the MCO and its subcontractors who are not directly involved with the areas listed in subparagraph (A) of this paragraph. The general training must provide information about the definition of waste, abuse, and fraud; how to report suspected waste, abuse, and fraud; and to whom the suspected waste, abuse, and fraud is reported.

(D) The organization must provide waste, abuse, and fraud training to all new MCO and subcontractor staff that will be directly involved with any aspect of Medicaid within 90 days of the employee's employment date.

(E) Provide updates to all affected areas when changes to policy and/or procedure may affect their area(s). The updates must be provided within 20 working days of the changes occurring.

(F) Educate recipients, providers, and employees about their responsibilities, the responsibility of others, the definition of waste, abuse, and fraud and how and where to report it. Appropriate methods of educating recipients, providers, and employees may include but are not limited to newsletters, pamphlets, bulletins, and provider manuals.

(G) The MCOs will maintain a training log for all training pertaining to waste, abuse, and/or fraud in Medicaid. The log must include the name and title of the trainer, names of all staff attending the training, and the date and length of the training. The log must be provided immediately upon request to the HHSC-OIG, Office of the Attorney General's (OAG)-Medicaid Fraud Control Unit (MFCU) and OAG-Civil Medicaid Fraud Division (CMFD), and the United States Health and Human Services-Office of Inspector General (HHS-OIG).

(H) Written standards of conduct, and written policies and procedures that include a clearly delineated commitment from the MCOs for detecting, preventing and investigating waste, abuse, and fraud.

(7) The name, title, address, telephone number, and fax number of the assigned officer or director responsible for carrying out the plan.

(A) The person carrying out the plan should be but is not limited to a Compliance Officer, a Manager of Government Programs, Regulatory Compliance Analyst, Director of Quality Integrity, or a person in senior management.

(B) When the person that is responsible for carrying out the plan changes, the required information is to be reported to HHSC-OIG within 15 working days of the change.

(8) A description, process flow diagram, or chart outlining the organizational arrangement of the MCO's personnel responsible for investigating and reporting possible acts of waste, abuse, or fraud.

(9) Advertising and marketing materials utilized by the MCOs must be complete and accurately reflect the information about the MCO. Marketing materials includes any informational materials targeted to recipients.

(d) Each MCO must satisfy the requirements in paragraphs (1) - (3) of this subsection related to investigations of waste, abuse, and fraud conducted by the MCO's SIU.

(1) On a monthly basis, submit to the HHSC-OIG a report listing all investigations conducted that resulted in no findings of waste, abuse, or fraud. The report must include the allegation, the investigated recipient's or provider's Medicaid number, the source, the time period in question, and the date of receipt of the identification and/or reporting of suspected and/or potential waste, abuse, or fraud.

(2) Maintain a log of all incidences of suspected waste, abuse and fraud received by the MCO regardless of the source. The log must contain the subject of the complaint, the source, the allegation, the date the allegation was received, the recipient's or provider's Medicaid number, and the status of the investigation.

(3) The log should be provided at the time of a reasonable request to the HHSC-OIG, OAG-MFCU, OAG-CMFD, and the HHS-OIG. A reasonable request means a request made during hours that the business or premises is open for business.

(e) MCOs must maintain the confidentiality of any patient information relevant to an investigation of waste, abuse, or fraud.

(f) MCOs must retain records obtained as the result of an investigation conducted by the SIU for a minimum period of five years or until all audit questions, appealed hearings, investigations, or court cases are resolved.

(g) Failure of the provider to supply the records requested by the MCO will result in the provider being reported to the HHSC-OIG as refusing to supply records upon request and the provider may be subject to sanction or immediate payment hold.

Source Note: The provisions of this §353.502 adopted to be effective August 8, 2004, 29 TexReg 7301; amended to be effective March 1, 2012, 37 TexReg 1291; amended to be effective July 18, 2019, 44 TexReg 3543