Texas Statutes
Subchapter C. Medicaid and Other Health and Human Services Fraud, Abuse, or Overcharges
Section 531.102. Office of Inspector General

Sec. 531.102. OFFICE OF INSPECTOR GENERAL. (a) The commission's office of inspector general is responsible for the prevention, detection, audit, inspection, review, and investigation of fraud, waste, and abuse in the provision and delivery of all health and human services in the state, including services through any state-administered health or human services program that is wholly or partly federally funded or services provided by the Department of Family and Protective Services, and the enforcement of state law relating to the provision of those services. The commission may obtain any information or technology necessary to enable the office to meet its responsibilities under this subchapter or other law.
(a-1) The governor shall appoint an inspector general to serve as director of the office. The inspector general serves a one-year term that expires on February 1.
(a-2) The executive commissioner shall work in consultation with the office whenever the executive commissioner is required by law to adopt a rule or policy necessary to implement a power or duty of the office, including a rule necessary to carry out a responsibility of the office under Subsection (a).
(a-3) The executive commissioner is responsible for performing all administrative support services functions necessary to operate the office in the same manner that the executive commissioner is responsible for providing administrative support services functions for the health and human services system, including functions of the office related to the following:
(1) procurement processes;
(2) contracting policies;
(3) information technology services;
(4) subject to Subsection (a-8), legal services;
(5) budgeting; and
(6) personnel and employment policies.
(a-4) The commission's internal audit division shall regularly audit the office as part of the commission's internal audit program and shall include the office in the commission's risk assessments.
(a-5) The office shall closely coordinate with the executive commissioner and the relevant staff of health and human services system programs that the office oversees in performing functions relating to the prevention of fraud, waste, and abuse in the delivery of health and human services and the enforcement of state law relating to the provision of those services, including audits, utilization reviews, provider education, and data analysis.
(a-6) The office shall conduct audits, inspections, and investigations independent of the executive commissioner and the commission but shall rely on the coordination required by Subsection (a-5) to ensure that the office has a thorough understanding of the health and human services system for purposes of knowledgeably and effectively performing the office's duties under this section and any other law.
(a-7) The chief counsel for the commission is the final authority for all legal interpretations related to statutes, rules, and commission policy on programs administered by the commission.
(a-8) For purposes of Subsection (a-3), "legal services" includes only legal services related to open records, procurement, contracting, human resources, privacy, litigation support by the attorney general, bankruptcy, and other legal services as detailed in the memorandum of understanding or other written agreement required under Section 531.00553, as added by Chapter 837 (S.B. 200), Acts of the 84th Legislature, Regular Session, 2015.
(b) The commission, in consultation with the inspector general, shall set clear objectives, priorities, and performance standards for the office that emphasize:
(1) coordinating investigative efforts to aggressively recover money;
(2) allocating resources to cases that have the strongest supportive evidence and the greatest potential for recovery of money; and
(3) maximizing opportunities for referral of cases to the office of the attorney general in accordance with Section 531.103.
(c) The commission shall train office staff to enable the staff to pursue priority Medicaid and other health and human services fraud and abuse cases as necessary.
(d) The commission may require employees of health and human services agencies to provide assistance to the office in connection with the office's duties relating to the investigation of fraud and abuse in the provision of health and human services. The office is entitled to access to any information maintained by a health and human services agency, including internal records, relevant to the functions of the office.
(e) The executive commissioner, in consultation with the inspector general, by rule shall set specific claims criteria that, when met, require the office to begin an investigation.
(f)(1) If the commission receives a complaint or allegation of Medicaid fraud or abuse from any source, the office must conduct a preliminary investigation as provided by Section 531.118(c) to determine whether there is a sufficient basis to warrant a full investigation. A preliminary investigation must begin not later than the 30th day, and be completed not later than the 45th day, after the date the commission receives a complaint or allegation or has reason to believe that fraud or abuse has occurred.
(2) If the findings of a preliminary investigation give the office reason to believe that an incident of fraud or abuse involving possible criminal conduct has occurred in Medicaid, the office must take the following action, as appropriate, not later than the 30th day after the completion of the preliminary investigation:
(A) if a provider is suspected of fraud or abuse involving criminal conduct, the office must refer the case to the state's Medicaid fraud control unit, provided that the criminal referral does not preclude the office from continuing its investigation of the provider, which investigation may lead to the imposition of appropriate administrative or civil sanctions; or
(B) if there is reason to believe that a recipient has defrauded Medicaid, the office may conduct a full investigation of the suspected fraud, subject to Section 531.118(c).
(f-1) The office shall complete a full investigation of a complaint or allegation of Medicaid fraud or abuse against a provider not later than the 180th day after the date the full investigation begins unless the office determines that more time is needed to complete the investigation. Except as otherwise provided by this subsection, if the office determines that more time is needed to complete the investigation, the office shall provide notice to the provider who is the subject of the investigation stating that the length of the investigation will exceed 180 days and specifying the reasons why the office was unable to complete the investigation within the 180-day period. The office is not required to provide notice to the provider under this subsection if the office determines that providing notice would jeopardize the investigation.
(g)(1) Whenever the office learns or has reason to suspect that a provider's records are being withheld, concealed, destroyed, fabricated, or in any way falsified, the office shall immediately refer the case to the state's Medicaid fraud control unit. However, such criminal referral does not preclude the office from continuing its investigation of the provider, which investigation may lead to the imposition of appropriate administrative or civil sanctions.
(2) As authorized under state and federal law, and except as provided by Subdivisions (8) and (9), the office shall impose without prior notice a payment hold on claims for reimbursement submitted by a provider only to compel production of records, when requested by the state's Medicaid fraud control unit, or on the determination that a credible allegation of fraud exists, subject to Subsections (l) and (m), as applicable. The payment hold is a serious enforcement tool that the office imposes to mitigate ongoing financial risk to the state. A payment hold imposed under this subdivision takes effect immediately. The office must notify the provider of the payment hold in accordance with 42 C.F.R. Section 455.23(b) and, except as provided by that regulation, not later than the fifth day after the date the office imposes the payment hold. In addition to the requirements of 42 C.F.R. Section 455.23(b), the notice of payment hold provided under this subdivision must also include:
(A) the specific basis for the hold, including identification of the claims supporting the allegation at that point in the investigation, a representative sample of any documents that form the basis for the hold, and a detailed summary of the office's evidence relating to the allegation;
(B) a description of administrative and judicial due process rights and remedies, including the provider's option to seek informal resolution, the provider's right to seek a formal administrative appeal hearing, or that the provider may seek both; and
(C) a detailed timeline for the provider to pursue the rights and remedies described in Paragraph (B).
(3) On timely written request by a provider subject to a payment hold under Subdivision (2), other than a hold requested by the state's Medicaid fraud control unit, the office shall file a request with the State Office of Administrative Hearings for an expedited administrative hearing regarding the hold not later than the third day after the date the office receives the provider's request. The provider must request an expedited administrative hearing under this subdivision not later than the 10th day after the date the provider receives notice from the office under Subdivision (2). The State Office of Administrative Hearings shall hold the expedited administrative hearing not later than the 45th day after the date the State Office of Administrative Hearings receives the request for the hearing. In a hearing held under this subdivision:
(A) the provider and the office are each limited to four hours of testimony, excluding time for responding to questions from the administrative law judge;
(B) the provider and the office are each entitled to two continuances under reasonable circumstances; and
(C) the office is required to show probable cause that the credible allegation of fraud that is the basis of the payment hold has an indicia of reliability and that continuing to pay the provider presents an ongoing significant financial risk to the state and a threat to the integrity of Medicaid.
(4) The office is responsible for the costs of a hearing held under Subdivision (3), but a provider is responsible for the provider's own costs incurred in preparing for the hearing.
(5) In a hearing held under Subdivision (3), the administrative law judge shall decide if the payment hold should continue but may not adjust the amount or percent of the payment hold. Notwithstanding any other law, including Section 2001.058(e), the decision of the administrative law judge is final and may not be appealed.
(6) The executive commissioner, in consultation with the office, shall adopt rules that allow a provider subject to a payment hold under Subdivision (2), other than a hold requested by the state's Medicaid fraud control unit, to seek an informal resolution of the issues identified by the office in the notice provided under that subdivision. A provider must request an initial informal resolution meeting under this subdivision not later than the deadline prescribed by Subdivision (3) for requesting an expedited administrative hearing. On receipt of a timely request, the office shall decide whether to grant the provider's request for an initial informal resolution meeting, and if the office decides to grant the request, the office shall schedule the initial informal resolution meeting. The office shall give notice to the provider of the time and place of the initial informal resolution meeting. A provider may request a second informal resolution meeting after the date of the initial informal resolution meeting. On receipt of a timely request, the office shall decide whether to grant the provider's request for a second informal resolution meeting, and if the office decides to grant the request, the office shall schedule the second informal resolution meeting. The office shall give notice to the provider of the time and place of the second informal resolution meeting. A provider must have an opportunity to provide additional information before the second informal resolution meeting for consideration by the office. A provider's decision to seek an informal resolution under this subdivision does not extend the time by which the provider must request an expedited administrative hearing under Subdivision (3). The informal resolution process shall run concurrently with the administrative hearing process, and the informal resolution process shall be discontinued once the State Office of Administrative Hearings issues a final determination on the payment hold.
(7) The office shall, in consultation with the state's Medicaid fraud control unit, establish guidelines under which program exclusions:
(A) may permissively be imposed on a provider; or
(B) shall automatically be imposed on a provider.
(7-a) The office shall, in consultation with the state's Medicaid fraud control unit, establish guidelines regarding the imposition of payment holds authorized under Subdivision (2).
(8) In accordance with 42 C.F.R. Sections 455.23(e) and (f), on the determination that a credible allegation of fraud exists, the office may find that good cause exists to not impose a payment hold, to not continue a payment hold, to impose a payment hold only in part, or to convert a payment hold imposed in whole to one imposed only in part, if any of the following are applicable:
(A) law enforcement officials have specifically requested that a payment hold not be imposed because a payment hold would compromise or jeopardize an investigation;
(B) available remedies implemented by the state other than a payment hold would more effectively or quickly protect Medicaid funds;
(C) the office determines, based on the submission of written evidence by the provider who is the subject of the payment hold, that the payment hold should be removed;
(D) Medicaid recipients' access to items or services would be jeopardized by a full or partial payment hold because the provider who is the subject of the payment hold:
(i) is the sole community physician or the sole source of essential specialized services in a community; or
(ii) serves a large number of Medicaid recipients within a designated medically underserved area;
(E) the attorney general declines to certify that a matter continues to be under investigation; or
(F) the office determines that a full or partial payment hold is not in the best interests of Medicaid.
(9) The office may not impose a payment hold on claims for reimbursement submitted by a provider for medically necessary services for which the provider has obtained prior authorization from the commission or a contractor of the commission unless the office has evidence that the provider has materially misrepresented documentation relating to those services.
(h) In addition to performing functions and duties otherwise provided by law, the office may:
(1) assess administrative penalties otherwise authorized by law on behalf of the commission or a health and human services agency;
(2) request that the attorney general obtain an injunction to prevent a person from disposing of an asset identified by the office as potentially subject to recovery by the office due to the person's fraud or abuse;
(3) provide for coordination between the office and special investigative units formed by managed care organizations under Section 531.113 or entities with which managed care organizations contract under that section;
(4) audit the use and effectiveness of state or federal funds, including contract and grant funds, administered by a person or state agency receiving the funds from a health and human services agency;
(5) conduct investigations relating to the funds described by Subdivision (4); and
(6) recommend policies promoting economical and efficient administration of the funds described by Subdivision (4) and the prevention and detection of fraud and abuse in administration of those funds.
(i) Notwithstanding any other provision of law, a reference in law or rule to the commission's office of investigations and enforcement means the office of inspector general established under this section.
(j) The office shall prepare a final report on each audit, inspection, or investigation conducted under this section. The final report must include:
(1) a summary of the activities performed by the office in conducting the audit, inspection, or investigation;
(2) a statement regarding whether the audit, inspection, or investigation resulted in a finding of any wrongdoing; and
(3) a description of any findings of wrongdoing.
(k) A final report on an audit, inspection, or investigation is subject to required disclosure under Chapter 552. All information and materials compiled during the audit, inspection, or investigation remain confidential and not subject to required disclosure in accordance with Section 531.1021(g). A confidential draft report on an audit, inspection, or investigation that concerns the death of a child may be shared with the Department of Family and Protective Services. A draft report that is shared with the Department of Family and Protective Services remains confidential and is not subject to disclosure under Chapter 552.
(l) The office shall employ a medical director who is a licensed physician under Subtitle B, Title 3, Occupations Code, and the rules adopted under that subtitle by the Texas Medical Board, and who preferably has significant knowledge of Medicaid. The medical director shall ensure that any investigative findings based on medical necessity or the quality of medical care have been reviewed by a qualified expert as described by the Texas Rules of Evidence before the office imposes a payment hold or seeks recoupment of an overpayment, damages, or penalties.
(m) The office shall employ a dental director who is a licensed dentist under Subtitle D, Title 3, Occupations Code, and the rules adopted under that subtitle by the State Board of Dental Examiners, and who preferably has significant knowledge of Medicaid. The dental director shall ensure that any investigative findings based on the necessity of dental services or the quality of dental care have been reviewed by a qualified expert as described by the Texas Rules of Evidence before the office imposes a payment hold or seeks recoupment of an overpayment, damages, or penalties.
(m-1) If the commission does not receive any responsive bids under Chapter 2155 on a competitive solicitation for the services of a qualified expert to review investigative findings under Subsection (l) or (m) and the number of contracts to be awarded under this subsection is not otherwise limited, the commission may negotiate with and award a contract for the services to a qualified expert on the basis of:
(1) the contractor's agreement to a set fee, either as a range or lump-sum amount; and
(2) the contractor's affirmation and the office's verification that the contractor possesses the necessary occupational licenses and experience.
(m-2) Notwithstanding Sections 2155.083 and 2261.051, a contract awarded under Subsection (m-1) is not subject to competitive advertising and proposal evaluation requirements.
(n) To the extent permitted under federal law, the executive commissioner, on behalf of the office, shall adopt rules establishing the criteria for initiating a full-scale fraud or abuse investigation, conducting the investigation, collecting evidence, accepting and approving a provider's request to post a surety bond to secure potential recoupments in lieu of a payment hold or other asset or payment guarantee, and establishing minimum training requirements for Medicaid provider fraud or abuse investigators.
(o) Nothing in this section limits the authority of any other state agency or governmental entity.
(p) The executive commissioner, in consultation with the office, shall adopt rules establishing criteria:
(1) for opening a case;
(2) for prioritizing cases for the efficient management of the office's workload, including rules that direct the office to prioritize:
(A) provider cases according to the highest potential for recovery or risk to the state as indicated through the provider's volume of billings, the provider's history of noncompliance with the law, and identified fraud trends;
(B) recipient cases according to the highest potential for recovery and federal timeliness requirements; and
(C) internal affairs investigations according to the seriousness of the threat to recipient safety and the risk to program integrity in terms of the amount or scope of fraud, waste, and abuse posed by the allegation that is the subject of the investigation; and
(3) to guide field investigators in closing a case that is not worth pursuing through a full investigation.
(q) The office shall coordinate all audit and oversight activities, including the development of audit plans, risk assessments, and findings, with the commission to minimize the duplication of activities. In coordinating activities under this subsection, the office shall:
(1) on an annual basis, seek input from the commission and consider previous audits and onsite visits made by the commission for purposes of determining whether to audit a managed care organization participating in Medicaid; and
(2) request the results of any informal audit or onsite visit performed by the commission that could inform the office's risk assessment when determining whether to conduct, or the scope of, an audit of a managed care organization participating in Medicaid.
(r) The office shall review the office's investigative process, including the office's use of sampling and extrapolation to audit provider records. The review shall be performed by staff who are not directly involved in investigations conducted by the office.
(s) The office shall arrange for the Association of Inspectors General or a similar third party to conduct a peer review of the office's sampling and extrapolation techniques. Based on the review and generally accepted practices among other offices of inspectors general, the executive commissioner, in consultation with the office, shall by rule adopt sampling and extrapolation standards to be used by the office in conducting audits.
(t) At each quarterly meeting of any advisory council responsible for advising the executive commissioner on the operation of the commission, the inspector general shall submit a report to the executive commissioner, the governor, and the legislature on:
(1) the office's activities;
(2) the office's performance with respect to performance measures established by the executive commissioner for the office;
(3) fraud trends identified by the office;
(4) any recommendations for changes in policy to prevent or address fraud, waste, and abuse in the delivery of health and human services in this state; and
(5) the amount of money recovered during the preceding quarter as a result of investigations involving peace officers employed and commissioned by the office for each program for which the office has investigative authority.
(u) The office shall publish each report required under Subsection (t) on the office's Internet website.
(v) In accordance with Section 533.015(b), the office shall consult with the executive commissioner regarding the adoption of rules defining the office's role in and jurisdiction over, and the frequency of, audits of managed care organizations participating in Medicaid that are conducted by the office and the commission.
(w) The office shall coordinate all audit and oversight activities relating to providers, including the development of audit plans, risk assessments, and findings, with the commission to minimize the duplication of activities. In coordinating activities under this subsection, the office shall:
(1) on an annual basis, seek input from the commission and consider previous audits and on-site visits made by the commission for purposes of determining whether to audit a managed care organization participating in Medicaid; and
(2) request the results of any informal audit or on-site visit performed by the commission that could inform the office's risk assessment when determining whether to conduct, or the scope of, an audit of a managed care organization participating in Medicaid.
(x) The executive commissioner, in consultation with the office, shall adopt rules establishing criteria for determining enforcement and punitive actions with regard to a provider who has violated state law, program rules, or the provider's Medicaid provider agreement that include:
(1) direction for categorizing provider violations according to the nature of the violation and for scaling resulting enforcement actions, taking into consideration:
(A) the seriousness of the violation;
(B) the prevalence of errors by the provider;
(C) the financial or other harm to the state or recipients resulting or potentially resulting from those errors; and
(D) mitigating factors the office determines appropriate; and
(2) a specific list of potential penalties, including the amount of the penalties, for fraud and other Medicaid violations.
(y) Repealed by Acts 2021, 87th Leg., R.S., Ch. 850 (S.B. 713), Sec. 7.02, eff. June 16, 2021.
Added by Acts 1997, 75th Leg., ch. 1153, Sec. 1.06(a), eff. June 20, 1997. Amended by Acts 1999, 76th Leg., ch. 1289, Sec. 3, eff. Sept. 1, 1999; Acts 2003, 78th Leg., ch. 198, Sec. 2.19(a), eff. Sept. 1, 2003.
Amended by:
Acts 2005, 79th Leg., Ch. 349 (S.B. 1188), Sec. 18(a), eff. September 1, 2005.
Acts 2011, 82nd Leg., R.S., Ch. 879 (S.B. 223), Sec. 3.11, eff. September 1, 2011.
Acts 2011, 82nd Leg., R.S., Ch. 980 (H.B. 1720), Sec. 3, eff. September 1, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 622 (S.B. 1803), Sec. 2, eff. September 1, 2013.
Acts 2013, 83rd Leg., R.S., Ch. 1311 (S.B. 8), Sec. 5, eff. September 1, 2013.
Acts 2015, 84th Leg., R.S., Ch. 1 (S.B. 219), Sec. 2.131, eff. April 2, 2015.
Acts 2015, 84th Leg., R.S., Ch. 1 (S.B. 219), Sec. 2.132, eff. April 2, 2015.
Acts 2015, 84th Leg., R.S., Ch. 1 (S.B. 219), Sec. 2.133, eff. April 2, 2015.
Acts 2015, 84th Leg., R.S., Ch. 837 (S.B. 200), Sec. 2.14, eff. September 1, 2015.
Acts 2015, 84th Leg., R.S., Ch. 945 (S.B. 207), Sec. 2, eff. September 1, 2015.
Acts 2017, 85th Leg., R.S., Ch. 277 (H.B. 2379), Sec. 1, eff. May 29, 2017.
Acts 2017, 85th Leg., R.S., Ch. 316 (H.B. 5), Sec. 27, eff. September 1, 2017.
Acts 2017, 85th Leg., R.S., Ch. 324 (S.B. 1488), Sec. 8.012, eff. September 1, 2017.
Acts 2017, 85th Leg., R.S., Ch. 324 (S.B. 1488), Sec. 24.001(17), eff. September 1, 2017.
Acts 2017, 85th Leg., R.S., Ch. 856 (H.B. 2523), Sec. 1, eff. June 15, 2017.
Acts 2019, 86th Leg., R.S., Ch. 596 (S.B. 619), Sec. 2.02(a), eff. June 10, 2019.
Acts 2021, 87th Leg., R.S., Ch. 850 (S.B. 713), Sec. 7.02, eff. June 16, 2021.
Acts 2021, 87th Leg., R.S., Ch. 855 (S.B. 799), Sec. 1, eff. September 1, 2021.

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