By: Buckingham  S.B. No. 894          (In the Senate - Filed February 14, 2017; February 28, 2017,   read first time and referred to Committee on Health & Human   Services; March 22, 2017, reported adversely, with favorable   Committee Substitute by the following vote:  Yeas 9, Nays 0;   March 22, 2017, sent to printer.)Click here to see the committee vote     COMMITTEE SUBSTITUTE FOR S.B. No. 894 By:  Buckingham     A BILL TO BE ENTITLED   AN ACT     relating to the Health and Human Services Commission's strategy for   managing audit resources, including procedures for auditing and   collecting payments from Medicaid managed care organizations.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 533, Government Code, is amended by   adding Subchapter B to read as follows:   SUBCHAPTER B.  STRATEGY FOR MANAGING AUDIT RESOURCES          Sec. 533.051.  DEFINITIONS. In this subchapter:                (1)  "Accounts receivable tracking system" means the   system the commission uses to track experience rebates and other   payments collected from managed care organizations.                (2)  "Agreed-upon procedures engagement" means an   evaluation of a managed care organization's financial statistical   reports or other data conducted by an independent auditing firm   engaged by the commission as agreed in the managed care   organization's contract with the commission.                (3)  "Experience rebate" means the amount a managed   care organization is required to pay the state according to the   graduated rebate method described in the managed care   organization's contract with the commission.                (4)  "External quality review organization" means an   organization that performs an external quality review of a managed   care organization in accordance with 42 C.F.R. Section 438.350.          Sec. 533.052.  APPLICABILITY AND CONSTRUCTION OF   SUBCHAPTER. This subchapter does not apply to and may not be   construed as affecting the conduct of audits by the commission's   office of inspector general under the authority provided by   Subchapter C, Chapter 531, including an audit of a managed care   organization conducted by the office after coordinating the   office's audit and oversight activities with the commission as   required by Section 531.102(q), as added by Chapter 837 (S.B. 200),   Acts of the 84th Legislature, Regular Session, 2015.          Sec. 533.053.  OVERALL STRATEGY FOR MANAGING AUDIT   RESOURCES. The commission shall develop and implement an overall   strategy for planning, managing, and coordinating audit resources   that the commission uses to verify the accuracy and reliability of   program and financial information reported by managed care   organizations.          Sec. 533.054.  PERFORMANCE AUDIT SELECTION PROCESS AND   FOLLOW-UP.  (a)  To improve the commission's processes for   performance audits of managed care organizations, the commission   shall:                (1)  document the process by which the commission   selects managed care organizations to audit;                (2)  include previous audit coverage as a risk factor   in selecting managed care organizations to audit; and                (3)  prioritize the highest risk managed care   organizations to audit.          (b)  To verify that managed care organizations correct   negative performance audit findings, the commission shall:                (1)  establish a process to:                      (A)  document how the commission follows up on   negative performance audit findings; and                      (B)  verify that managed care organizations   implement performance audit recommendations; and                (2)  establish and implement policies and procedures   to:                      (A)  determine under what circumstances the   commission must issue a corrective action plan to a managed care   organization based on a performance audit; and                      (B)  follow up on the managed care organization's   implementation of the corrective action plan.          Sec. 533.055.  AGREED-UPON PROCEDURES ENGAGEMENTS AND   CORRECTIVE ACTION PLANS.  To enhance the commission's use of   agreed-upon procedures engagements to identify managed care   organizations' performance and compliance issues, the commission   shall:                (1)  ensure that financial risks identified in   agreed-upon procedures engagements are adequately and consistently   addressed; and                (2)  establish policies and procedures to determine   under what circumstances the commission must issue a corrective   action plan based on an agreed-upon procedures engagement.          Sec. 533.056.  AUDITS OF PHARMACY BENEFIT MANAGERS. To   obtain greater assurance about the effectiveness of pharmacy   benefit managers' internal controls and compliance with state   requirements, the commission shall:                (1)  periodically audit each pharmacy benefit manager   that contracts with a managed care organization; and                (2)  develop, document, and implement a monitoring   process to ensure that managed care organizations correct and   resolve negative findings reported in performance audits or   agreed-upon procedures engagements of pharmacy benefit managers.          Sec. 533.057.  COLLECTION OF COSTS FOR AUDIT-RELATED   SERVICES. The commission shall develop, document, and implement   billing processes in the Medicaid and CHIP services department of   the commission to ensure that managed care organizations reimburse   the commission for audit-related services as required by contract.          Sec. 533.058.  COLLECTION ACTIVITIES RELATED TO PROFIT   SHARING. To strengthen the commission's process for collecting   shared profits from managed care organizations, the commission   shall develop, document, and implement monitoring processes in the   Medicaid and CHIP services department of the commission to ensure   that the commission:                (1)  identifies experience rebates deposited in the   commission's suspense account and timely transfers those rebates to   the appropriate accounts; and                (2)  timely follows up on and resolves disputes over   experience rebates claimed by managed care organizations.          Sec. 533.059.  USE OF INFORMATION FROM EXTERNAL QUALITY   REVIEWS. (a)  To enhance the commission's monitoring of managed   care organizations, the commission shall use the information   provided by the external quality review organization, including:                (1)  detailed data from results of surveys of Medicaid   recipients and, if applicable, child health plan program enrollees,   caregivers of those recipients and enrollees, and Medicaid and, as   applicable, child health plan program providers; and                (2)  the validation results of matching paid claims   data with medical records.          (b)  The commission shall document how the commission uses   the information described by Subsection (a) to monitor managed care   organizations.          Sec. 533.060.  SECURITY AND PROCESSING CONTROLS OVER   INFORMATION TECHNOLOGY SYSTEMS. The commission shall:                (1)  strengthen user access controls for the   commission's accounts receivable tracking system and network   folders that the commission uses to manage the collection of   experience rebates;                (2)  document daily reconciliations of deposits   recorded in the accounts receivable tracking system to the   transactions processed in:                      (A)  the commission's cost accounting system for   all health and human services agencies; and                      (B)  the uniform statewide accounting system; and                (3)  develop, document, and implement a process to   ensure that the commission formally documents:                      (A)  all programming changes made to the accounts   receivable tracking system; and                      (B)  the authorization and testing of the changes   described by Paragraph (A).          SECTION 2.  As soon as practicable after the effective date   of this Act, the executive commissioner of the Health and Human   Services Commission shall adopt the rules necessary to implement   Subchapter B, Chapter 533, Government Code, as added by this Act.          SECTION 3.  This Act takes effect September 1, 2017.     * * * * *