(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 CHIP 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 sample for further review. The sample must consist of a minimum of 50 recipients or 15% of a provider's claims related to the suspected waste, abuse, and fraud; provided, however, that if the MCO selects a sample based upon 15% of the claims, the sample must include claims relating to at least 50 recipients. The MCO must:
      (i) within 15 working days of the selection of the sample, request medical or dental records and encounter data for the sample recipients.
      (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;
      (ii) Recipients are using more than one provider to obtain similar treatments and /or medications;
      (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 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 health care MCOs, 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) - (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. The procedures must include but are not limited to:
      (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) Utilizing the HHSC-OIG fraud referral form, the assigned officer or director must report and refer all possible acts of waste, abuse or fraud to the HHSC-OIG within 30 working days of receiving the reports of possible acts of waste, abuse or fraud from the SIU. The report and referral must include an investigative report identifying the allegation, statutes/regulations violated or considered, and the results of the investigation; copies of program rules and regulations violated for the time period in question; the Cont'd...