89R18109 JG-D     By: Noble H.B. No. 2886     Substitute the following for H.B. No. 2886:     By:  Hull C.S.H.B. No. 2886       A BILL TO BE ENTITLED   AN ACT   relating to administrative remedies for certain fraud and abuse   violations under Medicaid; providing administrative penalties.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Sections 544.0205(a) and (b), Government Code,   as effective April 1, 2025, are amended to read as follows:          (a)  The commission may grant an award to an individual who   reports activity that constitutes fraud or abuse of Medicaid funds   or who reports Medicaid overcharges if the commission determines   that the disclosure results in the recovery of a remedy [an   administrative penalty] imposed under Section 32.039, Human   Resources Code.  The commission may not grant an award to an   individual in connection with a report if the commission or   attorney general had independent knowledge of the activity the   individual reported.          (b)  The commission shall determine the amount of an   award.  The award may not exceed five percent of the amount of the   remedy [administrative penalty] imposed under Section 32.039,   Human Resources Code, that resulted from the individual's   disclosure.  In determining the award amount, the commission:                (1)  shall consider how important the disclosure is in   ensuring the fiscal integrity of Medicaid; and                (2)  may consider whether the individual participated   in the fraud, abuse, or overcharge.          SECTION 2.  The heading to Section 32.039, Human Resources   Code, is amended to read as follows:          Sec. 32.039.  ADMINISTRATIVE REMEDIES [DAMAGES AND   PENALTIES].          SECTION 3.  Section 32.039(a), Human Resources Code, is   amended by amending Subdivision (1) and adding Subdivision (3-a) to   read as follows:                (1)  "Claim" means an application, request, or demand   for a benefit or payment [of health care services] under Title XIX   of the [federal] Social Security Act (42 U.S.C. Section 1396 et   seq.) [that is submitted by a person who is under a contract or   provider agreement with the commission].                (3-a) "Material" means having a natural tendency to   influence or to be capable of influencing.          SECTION 4.  Section 32.039, Human Resources Code, is amended   by adding Subsections (a-1), (a-2), (c-1), and (c-2) and amending   Subsections (b), (c), (d), (f), (g), (h), (i), (k), (l), (m), (n),   (o), (p), (q), (r), (s), and (x) to read as follows:          (a-1)  For purposes of this section, a person acts knowingly   with respect to information if the person:                (1)  has knowledge of the information;                (2)  acts with conscious indifference to the truth or   falsity of the information; or                (3)  acts in reckless disregard of the truth or falsity   of the information.          (a-2)  Proof of the person's specific intent to commit a   violation under this section is not required in a civil or   administrative proceeding to show that the person acted "knowingly"   with respect to information under this section.          (b)  A person commits a violation if the person:                (1)  knowingly submits [presents] or causes to be   submitted [presented to the commission] a claim that contains:                      (A)  a false statement;                      (B)  a misrepresentation; or                      (C)  an omission of a material fact   [representation the person knows or should know to be false];                (2) [(1-a)]  engages in conduct that violates Section   102.001, Occupations Code;                (3) [(1-b)]  solicits or receives, directly or   indirectly, overtly or covertly any remuneration, including any   kickback, bribe, or rebate, in cash or in kind for referring an   individual to a person for the furnishing of, or for arranging the   furnishing of, any item or service for which payment may be made, in   whole or in part, under the medical assistance program, provided   that this subdivision does not prohibit the referral of a patient to   another practitioner within a multispecialty group or university   medical services research and development plan (practice plan) for   medically necessary services;                (4) [(1-c)]  solicits or receives, directly or   indirectly, overtly or covertly any remuneration, including any   kickback, bribe, or rebate, in cash or in kind for purchasing,   leasing, or ordering, or arranging for or recommending the   purchasing, leasing, or ordering of, any good, facility, service,   or item for which payment may be made, in whole or in part, under the   medical assistance program;                (5) [(1-d)]  offers or pays, directly or indirectly,   overtly or covertly any remuneration, including any kickback,   bribe, or rebate, in cash or in kind to induce a person to refer an   individual to another person for the furnishing of, or for   arranging the furnishing of, any item or service for which payment   may be made, in whole or in part, under the medical assistance   program, provided that this subdivision does not prohibit the   referral of a patient to another practitioner within a   multispecialty group or university medical services research and   development plan (practice plan) for medically necessary services;                (6) [(1-e)]  offers or pays, directly or indirectly,   overtly or covertly any remuneration, including any kickback,   bribe, or rebate, in cash or in kind to induce a person to purchase,   lease, or order, or arrange for or recommend the purchase, lease, or   order of, any good, facility, service, or item for which payment may   be made, in whole or in part, under the medical assistance program;                (7) [(1-f)]  provides, offers, or receives an   inducement in a manner or for a purpose not otherwise prohibited by   this section or Section 102.001, Occupations Code, to or from a   person, including a recipient, provider, employee or agent of a   provider, third-party vendor, or public servant, for the purpose of   influencing or being influenced in a decision regarding:                      (A)  selection of a provider or receipt of a good   or service under the medical assistance program;                      (B)  the use of goods or services provided under   the medical assistance program; or                      (C)  the inclusion or exclusion of goods or   services available under the medical assistance program;                (8)  knowingly makes or causes to be made a false   statement or misrepresentation of a material fact to permit a   person to receive a benefit or payment under the medical assistance   program that is not authorized or that is greater than the benefit   or payment that is authorized;                (9)  knowingly conceals or fails to disclose   information that permits a person to receive a benefit or payment   under the medical assistance program that is not authorized or that   is greater than the benefit or payment that is authorized;                (10)  knowingly applies for and receives a benefit or   payment on behalf of another person under the medical assistance   program and converts any part of the benefit or payment to a use   other than for the benefit of the person on whose behalf it was   received;                (11)  knowingly makes, causes to be made, induces, or   seeks to induce the making of a false statement or   misrepresentation of a material fact concerning the conditions or   operation of a facility in order that the facility may qualify for   certification or recertification under the medical assistance   program, including certification or recertification as:                      (A)  a hospital;                      (B)  a nursing facility or skilled nursing   facility;                      (C)  a hospice provider;                      (D)  an intermediate care facility for   individuals with an intellectual disability;                      (E)  an assisted living facility; or                      (F)  a home and community support services agency;                (12)  knowingly makes, causes to be made, induces, or   seeks to induce the making of a false statement or   misrepresentation of a material fact concerning information   required to be provided under a federal or state law, rule,   regulation, or provider agreement pertaining to the medical   assistance program;                (13)  knowingly presents or causes to be presented a   claim for payment for a product provided or a service rendered by a   person who:                      (A)  is not licensed to provide the product or   render the service, if a license is required; or                      (B)  is not licensed in the manner claimed;                (14)  knowingly makes or causes to be made a claim for:                      (A)  a service or product that has not been   approved or accepted by a treating physician or health care   practitioner;                      (B)  a service or product that is substantially   inadequate or inappropriate as compared to generally recognized   standards within the particular discipline or within the health   care industry; or                      (C)  a product that has been adulterated, debased,   or mislabeled, or that is otherwise inappropriate;                (15)  makes a claim and knowingly fails to indicate the   type of license of the provider who actually provided the service;                (16)  makes a claim and knowingly fails to indicate the   identification number of the licensed provider who actually   provided the service;                (17)  knowingly obstructs the office of inspector   general from carrying out the office's duties under Section   544.0103, Government Code;                (18)  knowingly makes, uses, or causes the making or   use of a false record or statement material to an obligation to pay   or transmit money or property to this state under the medical   assistance program, or knowingly conceals or knowingly and   improperly avoids or decreases an obligation to pay or transmit   money or property to this state under the medical assistance   program;                (19) [(2)]  is a managed care organization that   contracts with the commission to provide or arrange to provide   health care benefits or services to individuals eligible for   medical assistance and:                      (A)  fails to provide to an individual a health   care benefit or service that the organization is required to   provide under the contract with the commission;                      (B)  fails to provide to the commission or other   appropriate agency information required to be provided by law,   commission or agency rule, or contractual provision;                      (C)  engages in a fraudulent activity in   connection with the enrollment in the organization's managed care   plan of an individual eligible for medical assistance or in   connection with marketing the organization's services to an   individual eligible for medical assistance; or                      (D)  engages in actions that indicate a pattern   of:                            (i)  wrongful denial of payment for a health   care benefit or service that the organization is required to   provide under the contract with the commission; or                            (ii)  wrongful delay of at least 45 days or a   longer period specified in the contract with the commission, not to   exceed 60 days, in making payment for a health care benefit or   service that the organization is required to provide under the   contract with the commission; [or]                (20) [(3)]  fails to maintain documentation to support   a claim for payment in accordance with the requirements specified   by commission rule or medical assistance program policy; or                (21)  engages in any other conduct that a commission   rule has defined as a violation of the medical assistance program.          (c)  A person who commits a violation under Subsection (b) is   liable to the commission for the following administrative remedy:                (1)  the amount paid or benefit received, if any,   directly or indirectly as a result of the violation, including any   payment made to a third party, and interest on that amount   determined at the rate provided by law for legal judgments and   accruing from the date on which the payment was made; and                (2)  payment of an administrative penalty of an amount   not to exceed twice the amount paid, if any, as a result of the   violation, plus an amount:                      (A)  not less than $5,000 or more than $15,000 or   the maximum dollar amount imposed as provided by 31 U.S.C. Section   3729(a)(1), if that amount exceeds $15,000, for each violation that   results in injury to an elderly person, as defined by Section   48.002(a)(1), a person with a disability, as defined by Section   48.002(a)(8)(A), or a person younger than 18 years of age; or                      (B)  not more than $10,000 or the maximum dollar   amount imposed as provided by 31 U.S.C. Section 3729(a)(1), if that   amount exceeds $10,000, for each violation that does not result in   injury to a person described by Paragraph (A).          (c-1)  For purposes of Subsection (c)(2), each day a person   violates Subsection (b)(17), (18), or (19) constitutes a separate   violation.          (c-2)  Notwithstanding Subsection (c), a person who commits   a violation described by Subsection (b)(20) is liable to the   commission for, as determined by the commission, either:                (1)  the amount paid in response to the claim for   payment; or                (2)  the payment of an administrative penalty in an   amount not to exceed $500 for each violation.          (d)  Unless the provider knowingly submitted false or   misleading information to the commission for use in preparing a   voucher [that the provider knew or should have known was false] or   knowingly failed to correct false or misleading information [that   the provider knew or should have known was false] when provided an   opportunity to do so, this section does not apply to a claim based   on the voucher if the commission calculated and printed the amount   of the claim on the voucher and then submitted the voucher to the   provider for the provider's signature. In addition, the provider's   signature on the voucher does not constitute fraud.  The executive   commissioner shall adopt rules that establish a grace period during   which errors contained in a voucher prepared by the commission may   be corrected without penalty to the provider.          (f)  If after an examination of the facts the commission   concludes that the person committed a violation, the commission may   issue a preliminary report stating the facts on which it based its   conclusion, recommending that an administrative remedy [penalty]   under this section be imposed and recommending the amount of the   proposed remedy [penalty].          (g)  The commission shall give written notice of the report   to the person charged with committing the violation. The notice   must include:                (1)  a brief summary of the facts;                (2)  [,] a statement of the amount of the recommended   remedy;                (3)  [penalty, and] a statement of the person's right to   an informal review of:                      (A)  the alleged violation;                      (B)  [,] the amount of the recommended remedy;   [penalty,] or                      (C)  both the alleged violation and the amount of   the recommended remedy; and                 (4)  a description of the administrative and judicial   due process remedies available to the person [penalty].          (h)  Not later than the 30th [10th] day after the date on   which the person charged with committing the violation receives the   notice, the person may either give the commission written consent   to the report, including the recommended remedy [penalty], or make   a written request for an informal review by the commission.          (i)  If the person charged with committing the violation   consents to the remedy [penalty] recommended by the commission or   fails to timely request an informal review, the commission shall   assess the remedy [penalty]. The commission shall give the person   written notice of its action. The person shall pay the remedy   [penalty] not later than the 30th day after the date on which the   person receives the notice.          (k)  Not later than the 30th [10th] day after the date on   which the person charged with committing the violation receives the   notice prescribed by Subsection (j), the person may make to the   commission a written request for a hearing.  The hearing must be   conducted in accordance with Chapter 2001, Government Code.          (l)  If, after informal review, a person who has been ordered   to pay a remedy [penalty] fails to request a formal hearing in a   timely manner, the commission shall assess the remedy [penalty].   The commission shall give the person written notice of its action.   The person shall pay the remedy [penalty] not later than the 30th   day after the date on which the person receives the notice.          (m)  Within 30 days after the date on which the commission's   order issued after a hearing under Subsection (k) becomes final as   provided by Section 2001.144, Government Code, the person shall:                (1)  pay the amount of the remedy [penalty];                (2)  pay the amount of the remedy [penalty] and file a   petition for judicial review contesting the occurrence of the   violation, the amount of the remedy [penalty], or both the   occurrence of the violation and the amount of the remedy [penalty];   or                (3)  without paying the amount of the remedy [penalty],   file a petition for judicial review contesting the occurrence of   the violation, the amount of the remedy [penalty], or both the   occurrence of the violation and the amount of the remedy [penalty].          (n)  A person who acts under Subsection (m)(3) within the   30-day period may:                (1)  stay enforcement of the remedy [penalty] by:                      (A)  paying the amount of the remedy [penalty] to   the court for placement in an escrow account; or                      (B)  giving to the court a supersedeas bond that   is approved by the court for the amount of the remedy [penalty] and   that is effective until all judicial review of the commission's   order is final; or                (2)  request the court to stay enforcement of the   remedy [penalty] by:                      (A)  filing with the court a sworn affidavit of   the person stating that the person is financially unable to pay the   amount of the remedy [penalty] and is financially unable to give the   supersedeas bond; and                      (B)  giving a copy of the affidavit to the   executive commissioner by certified mail.          (o)  If the executive commissioner receives a copy of an   affidavit under Subsection (n)(2), the executive commissioner may   file with the court, within five days after the date the copy is   received, a contest to the affidavit. The court shall hold a hearing   on the facts alleged in the affidavit as soon as practicable and   shall stay the enforcement of the remedy [penalty] on finding that   the alleged facts are true. The person who files an affidavit has   the burden of proving that the person is financially unable to pay   the amount of the remedy [penalty] and to give a supersedeas bond.          (p)  If the person charged does not pay the amount of the   remedy [penalty] and the enforcement of the remedy [penalty] is not   stayed, the commission may forward the matter to the attorney   general for enforcement of the remedy [penalty] and interest as   provided by law for legal judgments. An action to enforce a remedy   [penalty] order under this section must be initiated in a court of   competent jurisdiction in Travis County or in the county in which   the violation was committed.          (q)  Judicial review of a commission order or review under   this section assessing a remedy [penalty] is under the substantial   evidence rule. A suit may be initiated by filing a petition with a   district court in Travis County, as provided by Subchapter G,   Chapter 2001, Government Code.          (r)  If a remedy [penalty] is reduced or not assessed, the   commission shall remit to the person the appropriate amount plus   accrued interest if the remedy [penalty] has been paid or shall   execute a release of the bond if a supersedeas bond has been posted.   The accrued interest on amounts remitted by the commission under   this subsection shall be paid at a rate equal to the rate provided   by law for legal judgments and shall be paid for the period   beginning on the date the remedy [penalty] is paid to the commission   under this section and ending on the date the remedy [penalty] is   remitted.          (s)  A remedy [damage, cost, or penalty] collected under this   section is not an allowable expense in a claim or cost report that   is or could be used to determine a rate or payment under the medical   assistance program.          (x)  Subsections (b)(3) [(b)(1-b)] through (7) [(1-f)] do   not prohibit a person from engaging in:                (1)  generally accepted business practices, as   determined by commission rule, including:                      (A)  conducting a marketing campaign;                      (B)  providing token items of minimal value that   advertise the person's trade name; and                      (C)  providing complimentary refreshments at an   informational meeting promoting the person's goods or services;                (2)  the provision of a value-added service if the   person is a managed care organization; or                (3)  other conduct specifically authorized by law,   including conduct authorized by federal safe harbor regulations (42   C.F.R. Section 1001.952).          SECTION 5.  Section 32.0391(a), Human Resources Code, is   amended to read as follows:          (a)  A person commits an offense if the person intentionally   or knowingly commits a violation under Section 32.039(b)(3), (4),   (5), (6), or (7) [32.039(b)(1-b), (1-c), (1-d), (1-e), or (1-f)].          SECTION 6.  Section 36.006, Human Resources Code, is amended   to read as follows:          Sec. 36.006.  APPLICATION OF OTHER LAW. The application of a   civil remedy under this chapter does not preclude the application   of another common law, statutory, or regulatory remedy, except that   a person may not be liable for a civil remedy under this chapter and   an administrative remedy [civil damages or a penalty] under Section   32.039 if the civil remedy and administrative remedy [civil damages   or penalty] are assessed for the same act.          SECTION 7.  The following provisions of the Human Resources   Code are repealed:                (1)  Section 32.039(a)(4); and                (2)  Section 32.039(b-1).          SECTION 8.  Section 32.039, Human Resources Code, as amended   by this Act, applies only to a violation that occurs on or after the   effective date of this Act. A violation that occurs before the   effective date of this Act is governed by the law in effect on the   date the violation occurred, and that law is continued in effect for   that purpose.          SECTION 9.  If before implementing any provision of this Act   a state agency determines that a waiver or authorization from a   federal agency is necessary for implementation of that provision,   the agency affected by the provision shall request the waiver or   authorization and may delay implementing that provision until the   waiver or authorization is granted.          SECTION 10.  This Act takes effect September 1, 2025.