SECTION 371.1719. Recoupment of Overpayments Identified by Audit

(a) The OIG may recoup an overpayment if the overpayment was identified in an audit that found claims or cost reports resulted in money paid in excess of what the person is or was entitled to receive under an HHS program, contract, or grant. This section does not include overpayments identified by a Recovery Audit Contractor (RAC) pursuant to 42 C.F.R. §455.506.

(b) Audit procedures.

(1) An audit conducted by the OIG or its contractor must:

(A) be conducted and reported in accordance with Generally Accepted Governmental Auditing Standards (GAGAS) or other appropriate standards recognized by the United States Government Accountability Office;

(B) limit the period covered by an audit to five years;

(C) notify the person, and the person's corporate headquarters if the person is incorporated, of the impending audit not later than the seventh day before the date the site visit, if any, begins, except when an element of surprise is critical to the audit objective, such as surprise audits, cash counts, or fraud-related procedures; and

(D) permit the person to produce, for consideration, documentation to address any exception found during an audit not later than the tenth calendar day after the date the exit conference, if any, is completed, or by a later date as specified by the auditor.

(2) If an exit conference is conducted after the site visit, the auditor must allow the person to:

(A) orally respond to questions by the auditor; and

(B) orally comment on the initial findings of the auditor.

(c) Notice.

(1) Point of contact. A person may designate a specific address and individual point of contact to receive all correspondence related to the audit by sending the designated individual's contact information to the auditor and to the OIG Sanctions unit. The OIG begins sending all notices and correspondence to the designated point of contact within 30 calendar days after receiving the designation.

(2) Draft audit report. After the field work is completed, the OIG or its auditor delivers written notice of a draft audit report in accordance with §371.1609 of this subchapter (relating to Notice and Service).

(3) Revised draft audit report and additional revisions. The auditor may elect whether to issue a revised draft audit report or to issue a final report. The auditor may revise the draft audit report as needed to incorporate the management responses and reconsideration of any initial findings. A revised draft audit report is delivered to the person in accordance with §371.1609 of this subchapter.

(A) The auditor, in its discretion, may consider additional management or HHS agency staff responses to the revised draft audit report and make additional revisions.

(B) If additional revisions are made that modify the basis or rationale for determining that an overpayment exists or that increase the overpayment amount, the OIG or its auditor provides written notice of the revised draft audit report.

(4) Notice of final audit report. The OIG or its auditor delivers written notice of a final audit report in accordance with §371.1609 of this subchapter. The final audit report must include:

(A) a statement of the auditor's compliance with GAGAS;

(B) the management response, which may be summarized;

(C) the final determination of overpayment amount;

(D) reconsideration results and the revisions of any initial findings; and

(E) a recitation of the person's rights and obligations as set forth in subsections (d) and (e) of this section.

(5) Notice of appeal results. After the conclusion of any appeal hearing, the OIG delivers written notice of the appeal results in accordance with §371.1609 of this subchapter. The written notice identifies the final overpayment amount.

(d) Due process.

(1) Draft audit report. A person who is the subject of a draft audit report may request an informal appeal, may make a written management response, or both. The OIG or its auditor, as designated in the notice letter, must receive a written request for the informal appeal or written management response no later than the 30th calendar day after the date the person receives the draft audit report, or by the date specified by the auditor, whichever is earlier. The informal appeal, if requested, consists of a desk review by the auditing division or entity at the OIG or its auditor.

(2) Revised draft audit report. If the person is the subject of a revised draft audit report that modifies the basis or rationale for determining that an overpayment exists or that increases the overpayment amount, the person may request an informal appeal, may make a written management response, or both. The OIG or its auditor, as designated in the notice letter, must receive a written request for the informal appeal or written management response no later than the 30th calendar day after the date the person receives the revised draft audit report, or by the date specified by the auditor, whichever is earlier. The informal appeal, if requested, consists of a desk review by the auditing division or entity at the OIG or its auditor.

(3) Response to final audit report. A person who receives a final audit report must respond in one of the following ways:

(A) The person can refund the overpayment within 60 calendar days after receipt of the final audit report.

(B) The person can timely request and execute a final payment plan agreement that has been approved by the OIG. A written request for a final payment plan agreement must be received by the OIG within 15 calendar days after the person received the final audit report. The request must be signed by the person or its attorney and contain a statement that the person agrees not to dispute the findings of the final audit report for purposes of the overpayment recoupment sanction at issue and waives its right to an appeal of any findings for which a payment plan agreement is sought.

(i) The request for a final payment plan agreement is not binding upon the OIG. A resolution is not final until the person and the OIG execute a written final payment plan agreement.

(ii) A request for a final payment plan agreement does not abate the imposition of a final debt in accordance with subsection (e) of this section.

(iii) The OIG may agree to toll the repayment obligation deadline pending negotiations of payment plan terms. The OIG sends written notice to the person of any decision to toll the repayment obligations or to discontinue further payment plan negotiations.

(iv) The OIG retains discretion to determine when payment plan negotiations have been exhausted.

(C) The person can timely request an administrative hearing appeal. To request an appeal of the final audit report, the person must file a written request for an appeal, which must be received by the OIG within 15 calendar days after receipt of the final audit report. The request must:

(i) be signed by the person or its attorney;

(ii) contain a statement as to the specific issues, findings, or legal authority in the final audit report being challenged, and the basis for the person's contention that the specific issues or findings and conclusion are incorrect; and

(iii) with respect to any audit findings that are not being challenged, indicate whether the person intends to remit payment within 60 calendar days or whether the person seeks a payment plan in accordance with this section. Recoupment of overpayments at issue on appeal is not initiated by the OIG until the appeal has been finally determined.

(4) Request for a hearing to appeal. Upon timely receipt of a proper written request for appeal, the OIG notifies the HHSC Appeals Division of the provider's hearing request. The appeal then proceeds pursuant to Chapter 357, Subchapter I of this title (relating to Hearings Under the Administrative Procedure Act).

(e) Scope and effect.

(1) The effect of a final overpayment identified in an audit is to create a final debt in favor of the State of Texas.

(2) A final audit report becomes final and unappealable if a written request for an appeal is not received by the OIG within 15 calendar days after the person's receipt of the final audit report.

(3) If a duly requested final payment plan agreement is not executed by all parties or full restitution is not received within 60 calendar days after receipt by the person of an unappealed final audit report or final disposition of an administrative appeal, one or more vendor holds may be placed on the person's payment claims and account; however, the OIG may agree to toll the imposition of any vendor holds pending negotiations of payment plan terms. The OIG sends written notice to the person of any decision to toll the imposition of any vendor holds.

(4) If the person has duly requested an appeal, the contested amount of the overpayment becomes final 30 days after the person receives written notice of the appeal results. Recoupment of any overpayments at issue on appeal is not initiated until the appeal has been finally determined.

(f) Reporting.

(1) For purposes of refunding the federal share of any questioned costs, the final audit report constitutes the State's written notice of the identified overpayment amount. The date of the written notice of overpayment accompanying a final audit report constitutes the date of discovery.

(2) If a person appeals a final audit report, the State issues a written notice of the identified overpayment amount at the conclusion of the appeal, and the date of that notice of final audit report constitutes the date of discovery.

Source Note: The provisions of this §371.1719 adopted to be effective October 14, 2012, 37 TexReg 7989; amended to be effective April 15, 2014, 39 TexReg 2833; amended to be effective May 1, 2016, 41 TexReg 2941