45th legislature - STATE OF NEW MEXICO - first session, 2001

RELATING TO MEDICAID; CREATING THE MEDICAL ASSISTANCE DEPARTMENT; TRANSFERRING RESPONSIBILITY FOR THE MEDICAID PROGRAM FROM THE HUMAN SERVICES DEPARTMENT TO THE MEDICAL ASSISTANCE DEPARTMENT; ENACTING THE MEDICAL ASSISTANCE DEPARTMENT ACT AND THE MEDICAL ASSISTANCE APPEALS ACT; AMENDING AND ENACTING SECTIONS OF THE NMSA 1978.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 7 of this act may be cited as the "Medical Assistance Department Act".

Section 2. [NEW MATERIAL] DEFINITIONS.--As used in the Medical Assistance Department Act:

A. "department" means the medical assistance department;

B. "medical assistance" means the services and supplies furnished to medicaid-eligible recipients pursuant to Title 19 and Title 21 of the Social Security Act; and

C. "secretary" means the secretary of medical assistance.

Section 3. [NEW MATERIAL] DEPARTMENT ESTABLISHED.-- There is created in the executive branch the "medical assistance department". The department shall be a cabinet department and shall be responsible for the administration of the medicaid program pursuant to Title 19 and Title 21 of the Social Security Act. The department shall coordinate with other state departments and agencies for the administration of medical assistance; provided that nothing in this section authorizes a department or agency other than the medical assistance department to establish, maintain and revise eligibility criteria pursuant to Title 19 or Title 21 of the Social Security Act.

Section 4. [NEW MATERIAL] SECRETARY OF MEDICAL ASSISTANCE--APPOINTMENT.--

A. The administrative head of the medical assistance department is the "secretary of medical assistance", who shall be appointed by the governor with the consent of the senate and who shall serve in the executive cabinet.

B. The appointed secretary shall serve and have all the duties, responsibilities and authority of that office during the period of time prior to final action by the senate confirming or rejecting his appointment.

Section 5. [NEW MATERIAL] SECRETARY--DUTIES AND GENERAL POWERS.--

A. The secretary is responsible to the governor for the operation of the department. It is his duty to manage all operations of the department and to administer and enforce the laws with which he or the department is charged.

B. To perform his duties, the secretary has every power expressly enumerated in the laws, whether granted to the secretary or the department or any division of the department, except where authority conferred upon any division is explicitly exempted from the secretary's authority by statute. In accordance with these provisions, the secretary shall:

(1) except as otherwise provided in the Medical Assistance Department Act, exercise general supervisory and appointing authority over all department employees, subject to any applicable personnel laws and rules; (2) delegate authority to subordinates as he deems necessary and appropriate, clearly delineating such delegated authority and the limitations thereto;

(3) organize the department into divisions or other organizational units he deems will enable it to function most effectively and efficiently, subject to any provisions of law requiring or establishing specific organizational units;

(4) within the limitations of available appropriations and applicable laws, employ and fix the compensation of those persons necessary to discharge his duties;

(5) take administrative action by issuing orders and instructions, not inconsistent with the law, to ensure implementation of and compliance with the provisions of law for which administration or execution he is responsible and to enforce those orders and instructions by appropriate administrative action in the courts;

(6) conduct research and studies that will improve the operations of the department and the provision of services to the citizens of the state;

(7) provide courses of instruction and practical training for employees of the department and other persons involved in the administration of programs with the objective of improving the operations and efficiency of administration;

(8) prepare an annual budget of the department;

(9) provide cooperation, at the request of heads of administratively attached agencies, in order to:

(a) minimize or eliminate duplication of services and jurisdictional conflicts;

(b) coordinate activities and resolve problems of mutual concern; and

(c) resolve by agreement the manner and extent to which the department shall provide budgeting, record-keeping and related clerical assistance to administratively attached agencies;

(10) appoint, with the governor's consent, a "director" for each division. These appointed positions are exempt from the provisions of the Personnel Act. Persons appointed to these positions shall serve at the pleasure of the secretary;

(11) give bond in the penal sum of twenty-five thousand dollars ($25,000) and require directors to each give bond in the penal sum of ten thousand dollars ($10,000) conditioned upon the faithful performance of duties as provided in the Surety Bond Act. The department shall pay the costs of these bonds; and

(12) require performance bonds of such department employees and officers as he deems necessary as provided in the Surety Bond Act. The department shall pay the costs of these bonds.

C. The secretary may apply for and receive, with the governor's approval, in the name of the department any public or private funds, including United States government funds, available to the department to carry out its programs, duties or services.

D. Where functions of departments overlap or a function assigned to one department could better be performed by another department, the secretary may recommend appropriate legislation to the next session of the legislature for its approval.

E. The secretary may make and adopt such reasonable and procedural rules as may be necessary to carry out the duties of the department and its divisions. No rule promulgated by the director of any division in carrying out the functions and duties of the division shall be effective until approved by the secretary unless otherwise provided by statute. Unless otherwise provided by statute, no rule affecting any person or agency outside the department shall be adopted, amended or repealed without a public hearing on the proposed action before the secretary or a hearing officer designated by him. The public hearing shall be held in Santa Fe unless otherwise permitted by statute. Notice of the subject matter of the rule, the action proposed to be taken, the time and place of the hearing, the manner in which interested persons may present their views and the method by which copies of the proposed rule, proposed amendment or repeal of an existing rule may be obtained shall be published once at least thirty days prior to the hearing date in a newspaper of general circulation and mailed at least thirty days prior to the hearing date to all persons who have made a written request for advance notice of the hearing.

F. In the event the secretary anticipates that adoption, amendment or repeal of a rule will be required by a cancellation, reduction or suspension of federal funds or order by a court of competent jurisdiction:

(1) if the secretary is notified by appropriate federal authorities at least sixty days prior to the effective date of such cancellation, reduction or termination of federal funds, the department is required to promulgate rules through the public hearing process to be effective on the date mandated by the appropriate federal authority; or

(2) if the secretary is notified by appropriate federal authorities or court less than sixty days prior to the effective date of such cancellation, reduction or suspension of federal funds or court order, the department is authorized without a public hearing to promulgate interim rules effective for a period not to exceed ninety days. Such interim rules shall not be promulgated without first providing a written notice twenty days in advance to providers of medical services and beneficiaries of department programs. At the time of the promulgation of the interim rules, the department shall give notice of the public hearing on the final rules in accordance with Subsection E of this section.

G. If the secretary certifies to the secretary of finance and administration and gives contemporaneous notice of such certification that the department has insufficient state funds to operate any of the programs it administers and that reductions in services or benefit levels are necessary, the secretary may engage in interim rulemaking. Notwithstanding any provision to the contrary in the State Rules Act, interim rulemaking shall be conducted pursuant to Subsection E of this section, except:

(1) the period of notice of public hearing shall be fifteen days;

(2) the department shall also send individual notices of the interim rulemaking and of the public hearing to affected providers and beneficiaries;

(3) rules promulgated under this subsection shall be in effect not less than five days after the public hearing;

(4) rules promulgated under this subsection shall not be in effect for more than ninety days; and

(5) if final rules are necessary to replace the interim rules, the department shall give notice of intent to promulgate final rules at the time of notice herein. The final rules shall be promulgated not more than forty-five days after the public hearing filed in accordance with the State Rules Act.

At the time of the promulgation of the interim rules, the department shall give notice of the public hearing on the final rules in accordance with Subsection E of this section.

H. All rules shall be filed in accordance with the State Rules Act.

Section 6. [NEW MATERIAL] ORGANIZATIONAL UNITS OF DEPARTMENT--POWERS AND DUTIES SPECIFIED BY LAW--ACCESS TO INFORMATION.--Those organizational units of the department and the officers of those units specified by law shall have all of the powers and duties enumerated in the specific laws involved. However, the carrying out of those powers and duties shall be subject to the direction and supervision of the secretary, and he shall retain the final decision-making authority and responsibility for the administration of any such laws as provided in Section 5 of the Medical Assistance Department Act. The department shall have access to all records, data and information of other state departments, agencies and institutions, including its own organizational units not specifically held confidential by law.

Section 7. [NEW MATERIAL] COOPERATION WITH THE FEDERAL GOVERNMENT--AUTHORITY OF SECRETARY--SINGLE STATE AGENCY STATUS.--

A. The department is authorized to cooperate with the federal government in the administration of the medicaid and medical assistance programs in which financial or other participation by the federal government is authorized or mandated under federal laws, regulations, rules or orders. The secretary may enter into agreements with agencies of the federal government to implement these medicaid and medical assistance programs subject to availability of appropriated state funds and any provisions of state laws applicable to such agreements or participation by the state.

B. The governor or the secretary may by appropriate order designate the department or any organizational unit of the department as the single state agency for the administration of a medicaid or medical assistance program when such designation is a condition of federal financial or other participation in the program under applicable federal law, regulation, rule or order. Whether or not a federal condition exists, the governor may designate the department or any organizational unit of the department as the single state agency for the administration of a medicaid or medical assistance program. No designation of a single state agency under the authority granted in this section shall be made in contravention of state law.

Section 8. Section 9-8-9 NMSA 1978 (being Laws 1977, Chapter 252, Section 10, as amended) is amended to read:

"9-8-9. DIRECTORS.--The secretary shall appoint with the approval of the governor "directors" of divisions established within the department. The positions so appointed are exempt from the Personnel Act with the exception of the director of the child support enforcement division, [and the director of the medical assistance division] who [each] shall be covered under the Personnel Act."

Section 9. Section 27-1-3 NMSA 1978 (being Laws 1937, Chapter 18, Section 4, as amended) is amended to read:

"27-1-3. ACTIVITIES OF HUMAN SERVICES DEPARTMENT.--The [human services] department shall be charged with the administration of all the welfare activities of the state as provided in Chapter 27 NMSA 1978, except as otherwise provided for by law. The [human services] department shall, except as otherwise provided by law:

A. administer old age assistance, aid to dependent children, assistance to the needy blind and otherwise handicapped and general relief;

B. administer all aid or services to crippled children, including the extension and improvement of services for crippled children, insofar as practicable under conditions in this state, provide for locating children who are crippled or who are suffering from conditions which lead to crippling, provide corrective and any other services and care and facilities for diagnosis, hospitalization and after-care for children who are crippled or who are suffering from conditions which lead to crippling, and supervise the administration of those services which are not administered directly by the department;

C. administer and supervise all child welfare activities, service to children placed for adoption, service and care of homeless, dependent and neglected children, service and care for children in foster family homes or in institutions because of dependency or delinquency and care and service to any child who because of physical or mental defect may need such service;

D. formulate detailed plans, make rules [and regulations] and take action deemed necessary or desirable to carry out the provisions of Chapter 27 NMSA 1978 and which is not inconsistent with the provisions of that chapter;

E. cooperate with the federal government in matters of mutual concern pertaining to public welfare and public assistance, including the adoption of such methods of administration as are found by the federal government to be necessary for the efficient operation of the plan for public welfare and assistance;

F. assist other departments, agencies and institutions of local, state and federal governments when so requested, cooperate with such agencies when expedient in performing services in conformity with the purposes of Chapter 27 NMSA 1978 and cooperate with medical, health, nursing and welfare groups, any state agency charged with the administration of laws providing for vocational rehabilitation of physically handicapped persons and organizations within the state;

G. act as the agent of the federal government in welfare matters of mutual concern in conformity with the provisions of Chapter 27 NMSA 1978 and in the administration of any federal funds granted to this state, to aid in furtherance of any such functions of the state government;

H. establish in counties or in districts, which may include two or more counties, local units of administration to serve as agents of the department;

I. at its discretion, establish local boards of public welfare for such territory as it may see fit and by rule [and regulation] prescribe the duties of the local board;

J. administer such other public welfare functions as may be assumed by the state after the effective date of this section;

K. carry on research and compile statistics relative to the entire public welfare program throughout the state, including all phases of dependency, defectiveness, delinquency and related problems, and develop plans in cooperation with other public and private agencies for the prevention as well as treatment of conditions giving rise to public welfare problems; and

L. inspect and require reports from all private institutions, boarding homes and agencies providing assistance, care or other direct services to children who are crippled, neglected, delinquent or dependent, the aged, blind, feeble-minded and other dependent persons.

Nothing contained in this section shall be construed to authorize the department to establish or prescribe standards or [regulations] rules for or otherwise regulate programs or services to children in group homes as defined in Section 9-8-13 NMSA 1978. Nothing contained in this section shall be construed to authorize the department to establish or prescribe rules for or otherwise regulate programs or services pursuant to Title 19 or Title 21 of the federal Social Security Act or other program that is administered by the medical assistance department."

Section 10. Section 27-1-3.1 NMSA 1978 (being Laws 1980, Chapter 83, Section 1) is amended to read:

"27-1-3.1. ACUTE CARE BED USAGE--FUNDING AUTHORIZATION.--The [human services] medical assistance department is authorized to accept and use federal grants or matching funds for the purpose of reimbursement to certain rural hospitals for using empty acute care beds for intermediate care and skilled nursing care, as defined in federal statutes and regulations, subject to federal approval and the availability of funds. The medical assistance department is authorized to use funds from existing appropriations for matching federal funds for the purposes of this [act] section."

Section 11. Section 27-2-2 NMSA 1978 (being Laws 1973, Chapter 376, Section 2, as amended) is amended to read:

"27-2-2. DEFINITIONS.--As used in the Public Assistance Act:

A. "department" means the human services department;

B. "board" means the human services department;

C. "director" means the secretary of human services;

D. "local office" means the county or district office of the human services department;

E. "public welfare" or "public assistance" means any aid or relief granted to or on behalf of an eligible person under the Public Assistance Act and [regulations] rules issued pursuant to that act but does not mean medical assistance that is administered by the medical assistance department;

F. "applicant" means a person who has applied for assistance or services under the Public Assistance Act;

G. "recipient" means a person who is receiving public assistance or [services under the Public Assistance Act] medical assistance;

H. "federal act" means the federal Social Security Act, as may be amended from time to time, and regulations issued pursuant to that act; [and]

I. "secretary" means the secretary of human services; and

J. "medical assistance" means the services and supplies furnished to individuals pursuant to Title 19 or Title 21 of the Social Security Act."

Section 12. Section 27-2-9 NMSA 1978 (being Laws 1973, Chapter 376, Section 13) is amended to read:

"27-2-9. PAYMENT FOR HOSPITAL CARE.--

A. Consistent with the federal act, the medical assistance department shall provide necessary hospital care for recipients of public assistance other than those eligible under the general assistance program authorized by Section [10 of the Public Assistance Act] 27-2-7 NMSA 1978. The rate of payment for in-patient hospital services shall be based either on the reasonable cost or the customary cost of such services, whichever is less. In determining reasonable cost under this section, the [board] medical assistance department shall adopt [regulations] rules establishing a formula consistent with the federal act. The medical assistance department shall apply that formula to determine the amount to which each hospital is entitled as reimbursement for providing in-patient hospital services.

B. To receive reimbursement for providing in-patient hospital services, a hospital shall file annually with the medical assistance department such information as the medical assistance department may reasonably require to determine reasonable costs or the hospital's customary cost of in-patient hospital services.

C. Any hospital entitled to reimbursement for in-patient hospital services shall be entitled to a hearing, pursuant to [regulations] rules of the [board] medical assistance department consistent with applicable state law, if the hospital disagrees with the medical assistance department's determination of the reimbursement the hospital is to receive."

Section 13. Section 27-2-12 NMSA 1978 (being Laws 1973, Chapter 376, Section 16, as amended) is amended to read:

"27-2-12. MEDICAL ASSISTANCE PROGRAMS.--Consistent with the federal act and subject to the appropriation and availability of federal and state funds, the medical assistance [division of the human services] department may by [regulation] rule provide medical assistance, including the services of licensed doctors of oriental medicine and licensed chiropractors, to persons eligible for [public] medical assistance programs under the federal act."

Section 14. Section 27-2-12.3 NMSA 1978 (being Laws 1987, Chapter 269, Section 1, as amended) is amended to read:

"27-2-12.3. MEDICAID REIMBURSEMENT--EQUAL PAY FOR EQUAL PHYSICIANS', DENTISTS', OPTOMETRISTS', PODIATRISTS' AND PSYCHOLOGISTS' SERVICES.--The [human services] medical assistance department shall establish a rate for the reimbursement of physicians, dentists, optometrists, podiatrists and psychologists for services rendered to medicaid patients that provides equal reimbursement for the same or similar services rendered without respect to the date on which such physician, dentist, optometrist, podiatrist or psychologist entered into practice in New Mexico, the date on which the physician, dentist, optometrist, podiatrist or psychologist entered into an agreement or contract to provide such services or the location in which such services are to be provided in the state; provided, however, that the requirements of this section shall not apply when the [human services] medical assistance department contracts with entities pursuant to Section 27-2-12.6 NMSA 1978 to negotiate a rate for the reimbursement for services rendered to medicaid patients in the medicaid managed care system."

Section 15. Section 27-2-12.4 NMSA 1978 (being Laws 1987, Chapter 214, Section 1) is amended to read:

"27-2-12.4. LONG-TERM CARE FACILITIES--NONCOMPLIANCE WITH STANDARDS AND CONDITIONS--SANCTIONS.--

A. In addition to any other actions required or permitted by federal law or regulation, the [human services] medical assistance department shall impose a hold on state medicaid payments to a long-term care facility thirty days after the [health and environment] department of health notifies the [human services] medical assistance department in writing pursuant to an on-site visit that the long-term care facility is not in substantial compliance with the standards or conditions of participation promulgated by the federal department of health and human services pursuant to which the facility is a party to a medicaid provider agreement, unless the substantial noncompliance has been corrected within that thirty-day period or the facility's medicaid provider agreement is terminated or not renewed based in whole or in part on the noncompliance. The written notice shall cite the specific deficiencies that constitute noncompliance.

B. The [human services] medical assistance department shall remove the payment hold imposed under Subsection A of this section when the [health and environment] department of health, pursuant to an on-site visit, certifies in writing to the [human services] medical assistance department that the long-term care facility is in substantial compliance with the standards or conditions of participation pursuant to which the facility is a party to a medicaid provider agreement.

C. The [human services] medical assistance department shall not reimburse any long-term care facility during the payment hold period imposed pursuant to Subsection A of this section for any medicaid [recipient-patients] recipients who are new admissions and who are admitted on or after the day the hold is imposed and prior to the day the hold is removed.

D. If a long-term care facility is certified in writing to be in noncompliance pursuant to Subsection A of this section for the second time in any twelve-month period, the [human services] medical assistance department shall cancel or refuse to execute the long-term care facility's medicaid provider agreement for a two-month period, unless it can be demonstrated that harm to the [patients] medicaid recipients would result from this action or that good cause exists to allow the facility to continue to participate in the medicaid program. The provisions of this subsection are subject to appeal procedures set forth in federal regulations for nonrenewal or termination of a medicaid provider agreement.

E. A long-term care facility shall not charge medicaid [recipient-patients] recipients, their families or their responsible parties to recoup any payments not received because of a hold on medicaid payments imposed pursuant to this section.

F. This section shall not be construed to affect any other provisions for medicaid provider agreement termination, nonrenewal, due process and appeal pursuant to federal law or regulation.

G. As used in this section:

(1) "day" means a twenty-four hour period beginning at midnight and ending one second before midnight;

(2) "long-term care facility" means any intermediate care facility or skilled nursing facility [which] that is licensed by the [health and environment] department of health and [which] that is medicaid certified;

(3) "new admissions" means medicaid recipients who have never been in the long-term care facility or, if previously admitted, had been discharged or had voluntarily left the facility. [The term] "New admissions" does not include:

(a) [individuals] persons who were in the long-term care facility before the effective date of the hold on medicaid payments and became eligible for medicaid after that date; and

(b) [individuals] persons who, after a temporary absence from the facility, are readmitted to beds reserved for them in accordance with federal regulations; and

(4) "substantial compliance" means the condition of having no cited deficiencies or having only those cited deficiencies [which] that:

(a) are not inconsistent with any federal statutory requirement;

(b) do not interfere with adequate patient care;

(c) do not represent a hazard to the patients' health or safety;

(d) are capable of correction within a reasonable period of time; and

(e) are ones [which] that the long-term care facility is making reasonable plans to correct."

Section 16. Section 27-2-12.5 NMSA 1978 (being Laws 1989, Chapter 83, Section 1, as amended) is amended to read:

"27-2-12.5. MEDICAID-CERTIFIED NURSING FACILITIES--RETROACTIVE ELIGIBILITY--REFUNDS--PENALTY.--

A. Medicaid payment for a medicaid-eligible patient shall be accepted by a medicaid-certified nursing facility from the first month of medicaid eligibility, regardless of whether the eligibility is retroactive. The nursing facility shall refund to the [patient] medicaid recipient or responsible party all out-of-pocket money except for required medical-care credits paid to the nursing facility for that [patient's] medicaid recipient's care on and after the date of medicaid eligibility for services covered by the medicaid program. Within thirty days after notification by the [human services] medical assistance department of the patient's medicaid eligibility, the nursing facility shall make any necessary refund to the [patient] medicaid recipient or responsible party required under this section.

B. In any cause of action brought against a nursing facility because of its failure to make a refund to the [patient] medicaid recipient or responsible party as required under Subsection A of this section, the [patient] medicaid recipient or responsible party may be awarded triple the amount of the money not refunded or three hundred dollars ($300), whichever is greater, and reasonable attorneys' fees and court costs."

Section 17. Section 27-2-12.6 NMSA 1978 (being Laws 1994, Chapter 62, Section 22) is amended to read:

"27-2-12.6. MEDICAID PAYMENTS--MANAGED CARE.--

A. The medical assistance department shall provide for a statewide, managed care system to provide cost-efficient, preventive, primary and acute care for medicaid recipients by [July 1, 1995].

B. The managed care system shall ensure:

(1) access to medically necessary services, particularly for medicaid recipients with chronic health problems;

(2) to the extent practicable, maintenance of the rural primary care delivery infrastructure;

(3) that the medical assistance department's approach is consistent with national and state health care reform principles; and

(4) to the maximum extent possible, that [medicaid-eligible individuals] medicaid recipients are not identified as such except as necessary for billing purposes.

C. The medical assistance department may exclude nursing homes, intermediate care facilities for the mentally retarded, medicaid in-home and community-based waiver services and residential and community-based mental health services for children with serious emotional disorders from the provisions of this section."

Section 18. Section 27-2-12.7 NMSA 1978 (being Laws 1980, Chapter 86, Section 1) is amended to read:

"27-2-12.7. MEDICAID--[HUMAN SERVICES] MEDICAL ASSISTANCE DEPARTMENT EMPLOYEES--STANDARDS OF CONDUCT--ENFORCEMENT.--

A. As used in this section:

(1) "business" means a corporation, partnership, sole proprietorship, firm, organization or [individual] person carrying on a business;

(2) "department" means the [human services] medical assistance department;

(3) "employee" means [any] a person who has been appointed to or hired for [any] a department office, including the human services department, connected with the administration of medicaid funds and who receives compensation in the form of salary;

(4) "employee with responsibility" means an employee who is directly involved in or has a significant part in the medicaid decision-making, regulatory, procurement or contracting process; and

(5) "financial interest" means an interest held by [an individual] a person, his spouse or minor child [which] that is:

(a) an ownership interest in business; or

(b) [any] an employment or prospective employment for which negotiations have already begun.

B. No employee with responsibility shall, for twenty-four months following the date on which he ceases to be an employee, act as agent or attorney for [any other] another person or business in connection with a judicial or administrative proceeding, application, ruling, contract, claim or other matter relating to the medicaid program with respect to which the employee made an investigation, rendered [any] a ruling or was otherwise substantially and directly involved during the last year he was an employee and which was actually pending under his responsibility within that period.

C. No [department] secretary of medical assistance, secretary of human services or [income support] division director [or medical assistance bureau chief or their deputies] of the medical assistance department or the human services department shall, for twelve months following the date on which he ceases to be an employee, participate [in any manner] with respect to a judicial or administrative proceeding, application, ruling, contract, claim or other matter relating to the medicaid program and pending before the department.

D. No employee with responsibility shall participate [in any manner] with respect to a judicial or administrative proceeding, application, ruling, contract, claim or other matter relating to the medicaid program and involving his spouse, minor child or [any] a business in which he has a financial interest unless prior to [such] the participation:

(1) full disclosure of his relationship or financial interest is made in writing to the secretary of [the department] medical assistance; and

(2) a written determination is made by the secretary of medical assistance that the disclosed relationship or financial interest is too remote or inconsequential to affect the integrity of the services of the employee.

E. Violation of any of the provisions of this section by an employee is grounds for dismissal, demotion or suspension. A former employee who violates [any of the provisions] a provision of this section [shall be] is subject to assessment by the department of a civil money penalty of two hundred fifty dollars ($250) for each violation. The department shall promulgate [regulations] rules to provide for an administrative appeal of any assessment imposed."

Section 19. Section 27-2-16 NMSA 1978 (being Laws 1974, Chapter 31, Section 1, as amended) is amended to read:

"27-2-16. COMPLIANCE WITH FEDERAL LAW.--

A. Subject to the availability of state funds, the [human services] medical assistance department may provide assistance to aged, blind or disabled [individuals] persons in the amounts consistent with federal law to enable the state to be eligible for medicaid funding. [Individuals] A person shall be determined to be aged, blind or disabled according to [regulations] rules of the [human services] medical assistance department.

B. If drug product selection is permitted by Section 26-3-3 NMSA 1978, reimbursement by the medicaid program shall be limited to the wholesale cost of the [lesser] less expensive therapeutic equivalent drug generally available in New Mexico plus a reasonable dispensing fee of at least three dollars sixty-five cents ($3.65)."

Section 20. Section 27-2-23 NMSA 1978 (being Laws 1969, Chapter 232, Section 1) is amended to read:

"27-2-23. [THIRD PARTY] THIRD-PARTY LIABILITY.--

A. The [health and social services] medical assistance department shall make reasonable efforts to ascertain any legal liability of third parties who are or may be liable to pay all or part of the medical cost of injury, disease or disability of an applicant for or recipient of medical assistance pursuant to the provisions of Chapter 27 NMSA 1978.

B. When the medical assistance department makes medical assistance payments [in] on behalf of a recipient, the medical assistance department is subrogated to any right of the recipient against a third party for recovery of medical expenses to the extent that the medical assistance department has made payment."

Section 21. Section 27-2-25 NMSA 1978 (being Laws 1937, Chapter 18, Section 11j, as amended) is amended to read:

"27-2-25. FUNERAL EXPENSES.--

A. On the death of:

(1) a recipient of financial assistance under Section [13-17-9 or Section 13-17-10 NMSA 1953] 27-2-6 or 27-2-7 NMSA 1978 or under the federal supplemental security income program; or

(2) an individual living in a nursing home or an intermediate care facility, the payment for whose care is made in whole or in part pursuant to Title 19 of the federal act;

funeral expenses up to two hundred dollars ($200) shall be paid by the [health and social services] medical assistance department if the deceased's available resources, as defined by [regulation] rules of the [board] medical assistance department, are insufficient to pay the funeral expenses, the persons legally responsible for the support of the deceased are unable to pay the funeral expenses and no other person will undertake to pay [said] those expenses.

B. No payment shall be made by the medical assistance department when resources available from all sources to pay the funeral expenses total six hundred dollars ($600) or more. When the resources are less than six hundred dollars ($600), the medical assistance department shall pay the difference between six hundred dollars ($600) and the resources, or two hundred dollars ($200), whichever is less."

Section 22. Section 27-2-26 NMSA 1978 (being Laws 1975, Chapter 220, Section 2) is amended to read:

"27-2-26. MONEY RECEIVED FROM OTHER SOURCES--DUTY AND LIABILITY OF FUNERAL DIRECTOR.--Should any funeral director accept payment from sources other than the medical assistance department for burial of a deceased person for whom a claim for burial expenses has been made to the medical assistance department, he shall immediately notify the medical assistance department of [said] the payment. The medical assistance

department [will] shall consider [said] the payment in determining the amount of any funeral expense payment it makes. If the medical assistance department has already made payment, the funeral director shall refund to the medical assistance department any excess over the amount [which] that the medical assistance department would have paid had it known of the payment from other sources. If any funeral director [shall fail] fails to notify the medical assistance department of any such payment from other sources, he shall be liable to the medical assistance department in an amount double the amount paid or to be paid by the medical assistance department."

Section 23. Section 27-2-43 NMSA 1978 (being Laws 1990, Chapter 93, Section 3) is amended to read:

"27-2-43. DEFINITIONS.--As used in the Indigent Catastrophic Illness Hospital Funding Act:

A. "department" means the [human services] medical assistance department;

B. "fund" means the indigent catastrophic illness hospital fund;

C. "hospital" means any general or special hospital that is licensed by the [health and environment] department of health and that has annual gross charges for medicare, medicaid and indigent patients greater than ten percent of the hospital's total annual gross charges; and

D. "medically indigent patient" means an individual who is a New Mexico resident who incurs hospital charges, who is not eligible for medicaid or medicare and whose family or household income does not exceed two hundred fifty percent of the federal poverty level."

Section 24. Section 27-2A-3 NMSA 1978 (being Laws 1994, Chapter 87, Section 3) is amended to read:

"27-2A-3. DEFINITIONS.--As used in the Medicaid Estate Recovery Act:

A. "department" means the [human services] medical assistance department;

B. "estate" means real and personal property and other assets of the [individual] person subject to probate or administration pursuant to the provisions of the Uniform Probate Code; and

C. "medical assistance" means amounts paid by the department as medical assistance pursuant to Title [XIX] 19 or Title 21 of the Social Security Act."

Section 25. Section 27-3-2 NMSA 1978 (being Laws 1973, Chapter 256, Section 2, as amended) is amended to read:

"27-3-2. DEFINITIONS.--As used in the Public Assistance Appeals Act:

A. "department" means the income support division [the medical assistance division or the social services division] of the human services department;

B. "board" means the income support division [the medical assistance division or the social services division] of the human services department; and

C. "director" means the director of the income support division [the medical assistance division or the social services division] of the human services department."

Section 26. [NEW MATERIAL] SHORT TITLE.--Sections 26 through 30 of this act may be cited as the "Medical Assistance Appeals Act".

Section 27. [NEW MATERIAL] DEFINITIONS.--As used in the Medical Assistance Appeals Act:

A. "department" means the medical assistance department; and

B. "secretary" means the secretary of medical assistance.

Section 28. [NEW MATERIAL] FAIR HEARING.--

A. An applicant for or a recipient of medical assistance under any provisions of the Social Security Act or rules of the department adopted pursuant to that act may request a hearing in accordance with rules of the department if:

(1) an application is not acted upon within a reasonable time after the filing of the application;

(2) an application is denied in whole or in part; or

(3) the assistance or services are modified, terminated or not provided.

The department shall notify the recipient or applicant of his rights under this section.

B. The department shall by rule establish procedures for the filing of a request for a hearing and the time limits within which a request may be filed; provided, however, that the department may grant reasonable extensions of the time limits. If the request is not filed within the specified time for appeal or within whatever extension the department may grant, the department's actions shall be final. Upon receipt of a timely request, the department shall give the applicant or recipient reasonable notice of an opportunity for a fair hearing in accordance with the rules of the department.

C. The hearing shall be conducted by a hearing officer designated by the secretary. The powers of the hearing officer shall include administering oaths or affirmations to witnesses called to testify, taking testimony, examining witnesses, admitting or excluding evidence and reopening any hearing to receive additional evidence. The technical rules of evidence and the rules of civil procedure shall not apply. The hearing shall be conducted so that the contentions or defenses of each party to the hearing are amply and fairly presented. Either party may be represented by counsel or other representative of his designation, and he or his representative may conduct cross-examination. Any oral or documentary evidence may be received, but the hearing officer may exclude irrelevant, immaterial or unduly repetitious evidence.

D. The secretary shall review the record of the proceedings and shall make a decision thereon. The applicant or recipient or his representative shall be notified in writing of the secretary's decision and the reasons for the decision. The written notice shall inform the applicant or recipient of his right to judicial review. The department shall be responsible for ensuring that the decision is enforced.

Section 29. [NEW MATERIAL] APPEAL.--Within thirty days after receiving written notice of the decision of the secretary pursuant to the Medical Assistance Appeals Act, an applicant or recipient may file a notice of appeal with the district court pursuant to the provisions of Chapter 39, Article 3 NMSA 1978.

Section 30. [NEW MATERIAL] EXPENDITURES.--Nothing in the Medical Assistance Appeals Act shall be construed as authorizing or allowing expenditures for the affected programs in excess of the amounts previously appropriated by the legislature for medical assistance.

Section 31. Section 27-5-3 NMSA 1978 (being Laws 1965, Chapter 234, Section 3, as amended) is amended to read:

"27-5-3. PUBLIC ASSISTANCE PROVISIONS.--

A. A hospital shall not be paid from the [county indigent hospital claims] fund under the Indigent Hospital and County Health Care Act for any costs of an indigent patient for services that have been determined by the [human services] medical assistance department to be eligible for medicaid reimbursement [from that department]. However, nothing in the Indigent Hospital and County Health Care Act shall be construed to prevent the board from transferring money from the [county indigent hospital claims] fund to the sole community provider fund or the county-supported medicaid fund for support of the state medicaid program.

B. No action for collection of claims under the Indigent Hospital and County Health Care Act shall be allowed against an indigent patient who is medicaid eligible for medicaid-covered services, nor shall action be allowed against the person who is legally responsible for the care of the indigent patient during the time that person is medicaid eligible."

Section 32. Section 27-5-6.1 NMSA 1978 (being Laws 1993, Chapter 321, Section 18) is amended to read:

"27-5-6.1. SOLE COMMUNITY PROVIDER FUND CREATED.-- A. The "sole community provider fund" is created in the state treasury. The sole community provider fund, which shall be administered by the [human services] medical assistance department, shall consist of funds provided by counties to match federal funds for medicaid sole community provider hospital payments. Money in the fund shall be invested by the state treasurer as other state funds are invested. Any unexpended or unencumbered balance remaining in the fund at the end of any fiscal year shall not revert.

B. Money in the sole community provider fund is appropriated to the [human services] medical assistance department to make sole community provider hospital payments pursuant to the state medicaid program. No sole community provider hospital payments or money in the sole community provider fund shall be used to supplant any general fund support for the state medicaid program.

C. Money in the sole community provider fund shall be remitted back to the individual counties from which it came if federal medicaid matching funds are not received for medicaid sole community provider hospital payments."

Section 33. Section 27-5-7.1 NMSA 1978 (being Laws 1993, Chapter 321, Section 16) is amended to read:

"27-5-7.1. COUNTY INDIGENT HOSPITAL CLAIMS FUND--AUTHORIZED USES OF THE FUND.--

A. The fund shall be used:

(1) to meet the county's contribution for support of sole community provider payments as calculated by the medical assistance department for that county; and

(2) to pay all claims that have been approved by the board that are not matched with federal funds under the state medicaid program.

B. The fund may be used to meet the county's obligation under Section 27-10-4 NMSA 1978.

C. Until June 30, 1996, the cash reserves from the fund may be used to meet the county's obligation under Section 27-10-4 NMSA 1978."

Section 34. Section 27-5-11 NMSA 1978 (being Laws 1965, Chapter 234, Section 12, as amended) is amended to read:

"27-5-11. HOSPITALS AND AMBULANCE SERVICES--HEALTH CARE PROVIDERS--REQUIRED TO FILE DATA--SOLE COMMUNITY PROVIDER HOSPITAL DUTIES.--

A. Any ambulance service, hospital or health care provider in New Mexico or licensed out-of-state hospital, prior to the filing of a claim with the board, shall have placed on file with the board:

(1) current data, statistics, schedules and information deemed necessary by the board to determine the cost for all patients in that hospital or cared for by that health care provider or tariff rates or charges of an ambulance service;

(2) proof that the hospital, ambulance service or health care provider is licensed, where required, under the laws of this state or the state in which the hospital operates; and

(3) any other information or data deemed necessary by the board.

B. Every sole community provider hospital requesting or receiving medicaid sole community provider hospital payments shall:

(1) accept indigent patients and request reimbursement for those patients through the appropriate county indigent fund. The responsible county shall approve requests meeting its eligibility standards and notify the hospital of such approval;

(2) confirm the amount of payment authorized by each county for indigent patients, to that county for the previous fiscal year, by September 30 of each calendar year;

(3) negotiate with each county the amount of indigent hospital payments anticipated for the following fiscal year by December 31 of each year; and

(4) provide to the medical assistance department prior to January 15 of each year the amount of the authorized indigent hospital payments anticipated for the following fiscal year after an agreement has been reached on the amount with each responsible county and such other related information as the medical assistance department may request."

Section 35. Section 27-5-12.2 NMSA 1978 (being Laws 1993, Chapter 321, Section 15) is amended to read:

"27-5-12.2. DUTIES OF THE COUNTY--SOLE COMMUNITY PROVIDER HOSPITAL PAYMENTS.--Every county in New Mexico that authorizes payment for services to a sole community provider hospital shall:

A. determine eligibility for benefits and determine an amount payable on each claim for services to indigent patients from sole community provider hospitals;

B. notify the sole community provider hospital of its decision on each request for payment while not actually reimbursing the hospital for the services that are reimbursed with federal funds under the state medicaid program;

C. confirm the amount of the sole community provider hospital payments authorized for each hospital for the past fiscal year by September 30 of the current fiscal year;

D. negotiate agreements with each sole community provider hospital providing services for county residents on the anticipated amount of the payments for the following fiscal year; and

E. provide the [human services] medical assistance department by January 15 of each year with the budgeted amount of sole community provider hospital payments, by hospital, for the following fiscal year."

Section 36. Section 27-5-16 NMSA 1978 (being Laws 1965, Chapter 234, Section 16, as amended) is amended to read:

"27-5-16. DEPARTMENT--PAYMENTS--COOPERATION.--

A. The medical assistance department shall not decrease the amount of any medical assistance payments made to the hospitals or health care providers of this state pursuant to law because of any financial reimbursement made to ambulance services, hospitals or health care providers for indigent or [medicaid eligible] medicaid-eligible patients as provided in the Indigent Hospital and County Health Care Act.

B. The medical assistance department shall cooperate with each board in furnishing information or assisting in the investigation of any person to determine whether he meets the qualifications of an indigent patient as defined in the Indigent Hospital and County Health Care Act.

C. The medical assistance department shall ensure that the sole community provider payment and the reimbursement to hospitals made under the state medicaid program do not exceed what would have been paid for under medicare payment principles. In the event the sole community provider payment and medicaid reimbursement to hospitals would exceed medicare payment principles, the medical assistance department shall reduce the sole community provider payment prior to making any reduction in reimbursement to hospitals made under the state medicaid program."

Section 37. Section 27-10-3 NMSA 1978 (being Laws 1991, Chapter 212, Section 3, as amended) is amended to read:

"27-10-3. COUNTY-SUPPORTED MEDICAID FUND CREATED--USE-- APPROPRIATION BY THE LEGISLATURE.--

A. There is created in the state treasury the "county-supported medicaid fund". The fund shall be invested by the state treasurer as other state funds are invested. Income earned from investment of the fund shall be credited to the county-supported medicaid fund. The fund shall not revert in any fiscal year.

B. Money in the county-supported medicaid fund is subject to appropriation by the legislature to support the state medicaid program and to institute or support primary care health care services pursuant to Subsections D and E of Section 24-1A-3.1 NMSA 1978. Of the amount appropriated each year, nine percent shall be appropriated to the department of health to institute or support primary care health care services pursuant to Subsections D and E of Section 24-1A-3.1 NMSA 1978.

C. Up to three percent of the county-supported medicaid fund each year may be expended for administrative costs related to medicaid or developing new primary care health care centers or facilities.

D. In the event federal funds for medicaid are not received by New Mexico for any eighteen-month period, the unencumbered balance remaining in the county-supported medicaid fund and the sole community provider fund at the end of the fiscal year following the end of any eighteen-month period shall be paid within a reasonable time to each county for deposit in the county indigent hospital claims fund in proportion to the payments made by each county through tax revenues or transfers in the previous fiscal year as certified by the local government division of the department of finance and administration. The medical assistance department [will] shall provide for budgeting and accounting of payments to the fund."

Section 38. Section 27-11-2 NMSA 1978 (being Laws 1998, Chapter 30, Section 2) is amended to read:

"27-11-2. DEFINITIONS.--As used in the Medicaid Provider Act:

A. "department" means the [human services] medical assistance department;

B. "managed care organization" means a person eligible to enter into risk-based prepaid capitation agreements with the department to provide health care and related services;

C. "medicaid" means the medical assistance program established pursuant to Title 19 of the federal Social Security Act and regulations issued pursuant to that act;

D. "medicaid provider" means a person, including a managed care organization, operating under contract with the department to provide medicaid-related services to recipients;

E. "person" means an individual or other legal entity;

F. "recipient" means a person whom the department has determined to be eligible to receive medicaid-related services;

G. "secretary" means the secretary of [human services] medical assistance; and

H. "subcontractor" means a person who contracts with a medicaid provider to provide medicaid-related services to recipients."

Section 39. Section 27-11-3 NMSA 1978 (being Laws 1998, Chapter 30, Section 3, as amended) is amended to read:

"27-11-3. REVIEW OF MEDICAID PROVIDERS--CONTRACT REMEDIES--PENALTIES.--

A. Consistent with the terms of any contract between the department and a medicaid provider, the secretary shall have the right to be afforded access to such of the medicaid provider's records and personnel, as well as its subcontracts and that subcontractor's records and personnel, as may be necessary to ensure that the medicaid provider is complying with the terms of its contract with the department.

B. Upon not less than two days' written notice to a medicaid provider the secretary may, consistent with the provisions of the Medicaid Provider Act and rules issued pursuant to that act, carry out an administrative investigation or conduct administrative proceedings to determine whether a medicaid provider has:

(1) materially breached its obligation to furnish medicaid-related services to recipients, or any other duty specified in its contract with the department;

(2) violated any provision of the Public Assistance Act or the Medicaid Provider Act or any rules issued pursuant to those acts;

(3) intentionally or with reckless disregard made any false statement with respect to any report or statement required by the Public Assistance Act or the Medicaid Provider Act, rules issued pursuant to either of those acts or a contract with the department;

(4) intentionally or with reckless disregard advertised or marketed, or attempted to advertise or market, its services to recipients in a manner as to misrepresent its services or capacity for services, or engaged in any deceptive, misleading or unfair practice with respect to advertising or marketing;

(5) hindered or prevented the secretary from performing any duty imposed by the Public Assistance Act, the Human Services Department Act, the Department of Health Act, the Medical Assistance Act or the Medicaid Provider Act or any rules issued pursuant to those acts; or

(6) fraudulently procured or attempted to procure any benefit from medicaid.

C. Subject to the provisions of Subsection D of this section, after affording a medicaid provider written notice of hearing not less than ten days before the hearing date and an opportunity to be heard, and upon making appropriate administrative findings, the secretary may take any or any combination of the following actions against the provider:

(1) impose an administrative penalty of not more than five thousand dollars ($5,000) for engaging in any practice described in Paragraphs (1) through (6) of Subsection B of this section; provided that each separate occurrence of such practice shall constitute a separate offense;

(2) issue an administrative order requiring the provider to:

(a) cease or modify any specified conduct or practices engaged in by it or its employees, subcontractors or agents;

(b) fulfill its contractual obligations in the manner specified in the order;

(c) provide any service that has been denied;

(d) take steps to provide or arrange for any service that it has agreed or is otherwise obligated to make available; or

(e) enter into and abide by the terms of a binding or nonbinding arbitration proceeding, if agreed to by any opposing party, including the secretary; or

(3) suspend or revoke the contract between the provider and the department pursuant to the terms of that contract.

D. If a contract between the department and a medicaid provider explicitly specifies a dispute resolution mechanism for use in resolving disputes over performance of that contract, the dispute resolution mechanism specified in the contract shall be used to resolve such disputes in lieu of the mechanism set forth in Subsection C of this section.

E. If a medicaid provider's contract so specifies, the medicaid provider shall have the right to seek de novo review in district court of any decision by the secretary regarding a contractual dispute."

Section 40. Section 27-12-3 NMSA 1978 (being Laws 1998, Chapter 52, Section 3) is amended to read:

"27-12-3. DEFINITIONS.--As used in the Child Health Act:

A. "child" means a natural person who has not reached his nineteenth birthday;

B. "department" means the [human services] medical assistance department;

C. "low-income children and their families" means a family with a dependent child with income at or below the level specified in Section [6 of the Child Health Act] 27-12-6 NMSA 1978; and

D. "secretary" means the secretary of [human services] medical assistance."

Section 41. Section 27-12-4 NMSA 1978 (being Laws 1998, Chapter 52, Section 4) is amended to read:

"27-12-4. PROGRAM CREATED.--After consultation with the secretary of health, the secretary of human services and the secretary of children, youth and families, the secretary is directed to design and implement a program to provide health services to low-income children and their families in accordance with the provisions of the Child Health Act. The program shall meet the requirements for obtaining allotted federal funds pursuant to the provisions of Title 21 of the federal Social Security Act. In accordance with those requirements and the requirements of the Child Health Act, the secretary shall prepare and submit a child health plan to the federal secretary of health and human services. The department is the designated state agency to administer the program and cooperate with the federal government in its administration."

Section 42. Section 30-40-1 NMSA 1978 (being Laws 1979, Chapter 170, Section 1, as amended) is amended to read:

"30-40-1. FAILING TO DISCLOSE FACTS OR CHANGE OF CIRCUMSTANCES TO OBTAIN PUBLIC ASSISTANCE OR MEDICAL ASSISTANCE.--

A. Failing to disclose facts or change of circumstances to obtain public assistance or medical assistance consists of any person knowingly failing to disclose any material facts known to be necessary to determine eligibility for public assistance or medical assistance or knowingly failing to disclose a change in circumstances for the purpose of obtaining or continuing to receive public assistance or medical assistance to which he is not entitled or in amounts greater than that to which he is entitled.

B. Whoever commits failing to disclose facts or change of circumstances to obtain public assistance or medical assistance when the value of the assistance wrongfully received is one hundred dollars ($100) or less in any twelve consecutive months is guilty of a petty misdemeanor.

C. Whoever commits failing to disclose facts or change of circumstances to obtain public assistance or medical assistance when the value of the assistance wrongfully received is more than one hundred dollars ($100) but not more than two hundred fifty dollars ($250) in any twelve consecutive months is guilty of a misdemeanor.

D. Whoever commits failing to disclose facts or change of circumstances to obtain public assistance or medical assistance when the value of the assistance wrongfully received is more than two hundred fifty dollars ($250) but not more than two thousand five hundred dollars ($2,500) in any twelve consecutive months is guilty of a fourth degree felony.

E. Whoever commits failing to disclose facts or change of circumstances to obtain public assistance or medical assistance when the value of the assistance wrongfully received is more than two thousand five hundred dollars ($2,500) but not more than twenty thousand dollars ($20,000) is guilty of a third degree felony.

F. Whoever commits failing to disclose facts or change of circumstances to obtain public assistance or medical assistance when the value of the assistance wrongfully received exceeds twenty thousand dollars ($20,000) is guilty of a second degree felony."

Section 43. Section 30-40-2 NMSA 1978 (being Laws 1979, Chapter 170, Section 2, as amended) is amended to read:

"30-40-2. UNLAWFUL USE OF FOOD STAMP IDENTIFICATION CARD OR MEDICAL IDENTIFICATION CARD.--

A. Unlawful use of food stamp identification card or medical identification card consists of the use of a food stamp or medical identification card by any person to whom it has not been issued, or who is not an authorized representative of such a person, for a food stamp allotment.

B. Whoever commits unlawful use of food stamp identification card or medical identification card when the value of the food stamps or medical [services] assistance wrongfully received is one hundred dollars ($100) or less is guilty of a petty misdemeanor.

C. Whoever commits unlawful use of food stamp identification card or medical identification card when the value of the food stamps or medical [services] assistance wrongfully received is more than one hundred dollars ($100) but not more than two hundred fifty dollars ($250) is guilty of a misdemeanor.

D. Whoever commits unlawful use of food stamp identification card or medical identification card when the value of the food stamps or medical [services] assistance wrongfully received is more than two hundred fifty dollars ($250) but not more than two thousand five hundred dollars ($2,500) is guilty of a fourth degree felony.

E. Whoever commits unlawful use of food stamp identification card or medical identification card when the value of the food stamps or medical [services] assistance wrongfully received is more than two thousand five hundred dollars ($2,500) but not more than twenty thousand dollars ($20,000) is guilty of a third degree felony.

F. Whoever commits unlawful use of food stamp identification card or medical identification card when the value of the food stamps or medical [services] assistance wrongfully received exceeds twenty thousand dollars ($20,000) is guilty of a second degree felony.

G. For the purpose of this section, the value of the medical assistance received is the amount paid by the [human services] medical assistance department for medical [services] assistance received through use of the card."

Section 44. Section 30-40-3 NMSA 1978 (being Laws 1979, Chapter 170, Section 3, as amended) is amended to read:

"30-40-3. MISAPPROPRIATING PUBLIC ASSISTANCE OR MEDICAL ASSISTANCE.--

A. Misappropriating public assistance or medical assistance consists of any public officer or public employee fraudulently misappropriating, attempting to misappropriate or aiding and abetting in the misappropriation of food stamp coupons, WIC checks pertaining to the special supplemental food program for women, infants and children administered by the department of health [and environment department], food stamp or medical identification cards, public assistance benefits, medical assistance benefits or funds received in exchange for food stamp coupons.

B. Whoever commits misappropriating public assistance or medical assistance when the value of the thing misappropriated is one hundred dollars ($100) or less is guilty of a petty misdemeanor.

C. Whoever commits misappropriating public assistance or medical assistance when the value of the thing misappropriated is more than one hundred dollars ($100) but not more than two hundred fifty dollars ($250) is guilty of a misdemeanor.

D. Whoever commits misappropriating public assistance or medical assistance when the value of the thing misappropriated is more than two hundred fifty dollars ($250) but not more than two thousand five hundred dollars ($2,500) is guilty of a fourth degree felony.

E. Whoever commits misappropriating public assistance or medical assistance when the value of the thing misappropriated is more than two thousand five hundred dollars ($2,500) but not more than twenty thousand dollars ($20,000) is guilty of a third degree felony.

F. Whoever commits misappropriating public assistance or medical assistance when the value of the thing misappropriated exceeds twenty thousand dollars ($20,000) is guilty of a second degree felony.

G. Whoever commits misappropriating public assistance or medical assistance when the item misappropriated is a food stamp or medical identification card is guilty of a fourth degree felony."

Section 45. Section 30-40-4 NMSA 1978 (being Laws 1979, Chapter 170, Section 4) is amended to read:

"30-40-4. MAKING OR PERMITTING A FALSE CLAIM FOR REIMBURSEMENT FOR PUBLIC ASSISTANCE OR MEDICAL ASSISTANCE SERVICES.--

A. Making or permitting a false claim for reimbursement of public assistance or medical assistance services consists of knowingly making, causing to be made or permitting to be made a claim for reimbursement for services provided to a recipient of public assistance or medical assistance for services not rendered or making a false material statement or forged signature upon any claim for services, with intent that the claim shall be relied upon for the expenditure of public money.

B. Whoever commits making or permitting a false claim for reimbursement for public assistance or medical assistance services is guilty of a fourth degree felony."

Section 46. Section 30-40-5 NMSA 1978 (being Laws 1979, Chapter 170, Section 5) is amended to read:

"30-40-5. UNLAWFUL SEEKING OF PAYMENT FROM PUBLIC ASSISTANCE OR MEDICAL ASSISTANCE RECIPIENTS.--

A. Unlawful seeking of payment from public assistance or medical assistance recipients consists of knowingly seeking payment from recipients or their families for any unpaid portion of a bill for which reimbursement has been or will be received from the human services department or the medical assistance department or for claims or services denied by the human services department or the medical assistance department because of [provider] the provider's administrative error.

B. Whoever commits unlawful seeking of payment from a public assistance or medical assistance recipient is guilty of a misdemeanor."

Section 47. Section 30-40-6 NMSA 1978 (being Laws 1979, Chapter 170, Section 6, as amended) is amended to read:

"30-40-6. FAILURE TO REIMBURSE THE DEPARTMENT UPON RECEIPT OF THIRD-PARTY PAYMENT.--

A. Failure to reimburse the [human services] medical assistance department upon receipt of third-party payment consists of [knowingly] knowing failure by a medicaid provider to reimburse the [human services] medical assistance department or the medical assistance department's fiscal agent the amount of payment received from the medical assistance department for services when the provider receives payment for the same services from any third party.

B. A medicaid provider who commits failure to reimburse the medical assistance department upon receipt of third-party payment when the value of the payment made by the medical assistance department is one hundred dollars ($100) or less is guilty of a petty misdemeanor.

C. A medicaid provider who commits failure to reimburse the medical assistance department upon receipt of third-party payment when the value of the payment made by the medical assistance department is more than one hundred dollars ($100) but not more than two hundred fifty dollars ($250) is guilty of a misdemeanor.

D. A medicaid provider who commits failure to reimburse the medical assistance department upon receipt of third-party payment when the value of the payment made by the medical assistance department is more than two hundred fifty dollars ($250) but not more than two thousand five hundred dollars ($2,500) is guilty of a fourth degree felony.

E. A medicaid provider who commits failure to reimburse the medical assistance department upon receipt of third-party payment when the value of the payment made by the medical assistance department is more than two thousand five hundred dollars ($2,500) but not more than twenty thousand dollars ($20,000) is guilty of a third degree felony.

F. A medicaid provider who commits failure to reimburse the medical assistance department upon receipt of third-party payment when the value of the payment made by the medical assistance department exceeds twenty thousand dollars ($20,000) is guilty of a second degree felony."

Section 48. Section 30-40-7 NMSA 1978 (being Laws 1979, Chapter 170, Section 7) is amended to read:

"30-40-7. FAILURE TO NOTIFY THE HUMAN SERVICES DEPARTMENT OR THE MEDICAL ASSISTANCE DEPARTMENT OF RECEIPT OF ANYTHING OF VALUE FROM PUBLIC ASSISTANCE OR MEDICAL ASSISTANCE RECIPIENT.--Any employee of the human services department or the medical assistance department who knowingly receives anything of value, other than as provided by law, from either a recipient of public assistance or medical assistance or from the family of a public assistance or medical assistance recipient shall notify the human services department or the medical assistance department within ten days after such receipt on a form provided by the respective department. Whoever fails to so notify the respective department within ten days is guilty of a petty misdemeanor."

Section 49. Section 30-44-2 NMSA 1978 (being Laws 1989, Chapter 286, Section 2, as amended) is amended to read:

"30-44-2. DEFINITIONS.--As used in the Medicaid Fraud Act:

A. "benefit" means money, treatment, services, goods or anything of value authorized under the program;

B. "claim" means any communication, whether oral, written, electronic or magnetic, that identifies a treatment, good or service as reimbursable under the program;

C. "cost document" means [any] a cost report or similar document that states income or expenses and is used to determine a cost reimbursement-based rate of payment for a provider under the program;

D. "covered person" means an individual who is entitled to receive health care benefits from a managed health care plan;

E. "department" means the [human services] medical assistance department;

F. "entity" means a person other than an individual and includes corporations, partnerships, associations, joint-stock companies, unions, trusts, pension funds, unincorporated organizations, governments and their political subdivisions [thereof] and nonprofit organizations;

G. "great physical harm" means physical harm of a type that causes physical loss of a bodily member or organ or functional loss of a bodily member or organ for a prolonged period of time;

H. "great psychological harm" means psychological harm that causes mental or emotional incapacitation for a prolonged period of time or that causes extreme behavioral change or severe physical symptoms or that requires psychological or psychiatric care;

I. "health care official" means:

(1) an administrator, officer, trustee, fiduciary, custodian, counsel, agent or employee of a managed [care] health care plan;

(2) an officer, counsel, agent or employee of an organization that provides, proposes to or contracts to provide services to a managed health care plan; or

(3) an official, employee or agent of a state or federal agency with regulatory or administrative authority over a managed health care plan;

J. "managed health care plan" means a government-sponsored health benefit plan that requires a covered person to use, or creates incentives, including financial incentives, for a covered person to use, health care providers managed, owned, under contract with or employed by a health care insurer or provider service network. A "managed health care plan" includes the health care services offered by a health maintenance organization, preferred provider organization, health care insurer, provider service network, entity or person that contracts to provide or provides goods or services that are reimbursed by or are a required benefit of a state or federally funded health benefit program, or [any] a person or entity who contracts to provide goods or services to the program;

K. "person" includes individuals, corporations, partnerships and other associations;

L. "physical harm" means an injury to the body that causes pain or incapacitation;

M. "program" means the medical assistance program authorized under Title [XIX] 19 or Title 21 of the federal Social Security Act [42 U.S.C. 1396, et seq. and implemented under Section 27-2-12 NMSA 1978];

N. "provider" means [any] a person who has applied to participate or who participates in the program as a supplier of treatment, services or goods;

O. "psychological harm" means emotional or psychological damage of such a nature as to cause fear, humiliation or distress or to impair a person's ability to enjoy the normal process of his life;

P. "recipient" means [any] an individual who receives or requests benefits under the program;

Q. "records" means [any] medical or business documentation, however recorded, relating to the treatment or care of [any] a recipient, to services or goods provided to [any] a recipient or to reimbursement for treatment, services or goods, including [any] documentation required to be retained by regulations of the program; and

R. "unit" means the medicaid fraud control unit or any other agency with power to investigate or prosecute fraud and abuse of the program."

Section 50. Section 59A-18-31 NMSA 1978 (being Laws 1989, Chapter 183, Section 1, as amended) is amended to read:

"59A-18-31. ACCIDENT AND HEALTH POLICY OR CERTIFICATE PROVISIONS RELATING TO INDIVIDUALS WHO ARE ELIGIBLE FOR MEDICAL BENEFITS UNDER THE MEDICAID PROGRAM.--

A. Each individual or group policy or certificate of accident or health insurance that is delivered, issued for delivery or renewed in this state shall include provisions that require benefits paid on behalf of a child or other insured person under the policy or certificate to be paid to the [human services] medical assistance department when:

(1) the [human services] medical assistance department has paid or is paying benefits on behalf of the child or other insured person under the state's medicaid program pursuant to Title [XIX] 19 or Title 21 of the federal Social Security Act [42 U.S.C. 1396, et seq.];

(2) payment for the services in question has been made by the [human services] medical assistance department to the medicaid provider; and

(3) the insurer is notified that the insured individual receives benefits under the medicaid program and that benefits [must] shall be paid directly to the [human services] medical assistance department.

B. The notice required under Paragraph (3) of Subsection A of this section may be accomplished through an attachment to the claim by the [human services] medical assistance department for insurance benefits when the claim is first submitted by the [human services] medical assistance department to the insurer.

C. Notwithstanding any other provisions of law, checks in payment for claims pursuant to any individual or group policy or certificate of accident or health insurance for health care services provided to insured individuals who are also eligible for benefits under the medicaid program and provided by medical providers qualified to participate under the policy or certificate shall be made payable to the provider. The insurer may be notified that the insured individual is eligible for medicaid benefits through an attachment to the claim by the provider for insurance benefits when the claim is first submitted by the provider to the insurer.

D. No individual or group accident or health policy or certificate delivered, issued for delivery or renewed in this state on or after [the effective date of this section] June 16, 1989 shall contain any provision denying or limiting insurance benefits because services are rendered to an insured who is eligible for or who has received medical assistance under the medicaid program of this state.

E. To the extent that payment for covered expenses has been made pursuant to the state medicaid program for health care items or services furnished to an individual, in any case where an insurer has a legal liability to make payments, the state is considered to have acquired the rights of the individual to payment by the insurer for those health care items or services."

Section 51. Section 59A-22-38 NMSA 1978 (being Laws 1989, Chapter 183, Section 2, as amended) is amended to read:

"59A-22-38. INDIVIDUAL HEALTH INSURANCE--POLICY PROVISIONS RELATING TO INDIVIDUALS WHO ARE ELIGIBLE FOR MEDICAL BENEFITS UNDER THE MEDICAID PROGRAM.--

A. Each individual health insurance policy that is delivered, issued for delivery or renewed in this state shall include provisions that require benefits paid on behalf of a child or other insured person under the policy to be paid to the [human services] medical assistance department when:

(1) the [human services] medical assistance department has paid or is paying benefits on behalf of the child or other insured person under the state's medicaid program pursuant to Title [XIX] 19 or Title 21 of the federal Social Security Act [42 U.S.C. 1396, et seq.];

(2) payment for the services in question has been made by the [human services] medical assistance department to the medicaid provider; and

(3) the insurer is notified that the insured individual receives benefits under the medicaid program and that benefits [must] shall be paid directly to the [human services] medical assistance department.

B. The notice required under Paragraph (3) of Subsection A of this section may be accomplished through an attachment to the claim by the [human services] medical assistance department for insurance benefits when the claim is first submitted by the [human services] medical assistance department to the insurer.

C. Notwithstanding any other provisions of law, checks in payment for claims pursuant to any individual health insurance policy for health care services provided to persons who are also eligible for benefits under the medicaid program and provided by medical providers qualified to participate under the policy shall be made payable to the provider. The insurer may be notified that the insured individual is eligible for medicaid benefits through an attachment to the claim by the provider for insurance benefits when the claim is first submitted by the provider to the insurer.

D. No individual health insurance policy delivered, issued for delivery or renewed in this state on or after [the effective date of this section] June 16, 1989 shall contain any provision denying or limiting insurance benefits because services are rendered to an insured who is eligible for or who has received medical assistance under the medicaid program of this state.

E. To the extent that payment for covered expenses has been made pursuant to the state medicaid program for health care items or services furnished to an individual, in any case where an insurer has a legal liability to make payments, the state is considered to have acquired the rights of the individual to payment by the insurer for those health care items or services."

Section 52. Section 59A-23-7 NMSA 1978 (being Laws 1989, Chapter 183, Section 3, as amended) is amended to read:

"59A-23-7. BLANKET OR GROUP HEALTH POLICY OR CERTIFICATE--PROVISIONS RELATING TO INDIVIDUALS WHO ARE ELIGIBLE FOR MEDICAL BENEFITS UNDER THE MEDICAID PROGRAM.--

A. Each blanket or group health policy or certificate of insurance that is delivered, issued for delivery or renewed in this state shall include provisions that require benefits paid on behalf of a child or other insured person under the policy or certificate to be paid to the [human services] medical assistance department when:

(1) the [human services] medical assistance department has paid or is paying benefits on behalf of the child or other insured person under the state's medicaid program pursuant to Title [XIX] 19 or Title 21 of the federal Social Security Act [42 U.S.C. 1396, et seq.];

(2) payment for the services in question has been made by the [human services] medical assistance department to the medicaid provider; and

(3) the insurer is notified that the insured individual receives benefits under the medicaid program and that benefits [must] shall be paid directly to the [human services] medical assistance department.

B. The notice required under Paragraph (3) of Subsection A of this section may be accomplished through an attachment to the claim by the [human services] medical assistance department for insurance benefits when the claim is first submitted by the [human services] medical assistance department to the insurer.

C. Notwithstanding any other provisions of law, checks in payment for claims pursuant to any blanket or group health insurance policy or certificate for health care services provided to persons who are also eligible for benefits under the medicaid program and provided by medical providers qualified to participate under the policy or certificate shall be made payable to the provider. The insurer may be notified that the insured individual is eligible for medicaid benefits through an attachment to the claim by the provider for insurance benefits when the claim is first submitted by the provider to the insurer.

D. No blanket or group health insurance policy or certificate delivered, issued for delivery or renewed in this state on or after [the effective date of this section] June 16, 1989 shall contain any provision denying or limiting insurance benefits because services are rendered to an insured who is eligible for or who has received medical assistance under the medicaid program of this state.

E. To the extent that payment for covered expenses has been made pursuant to the state medicaid program for health care items or services furnished to an individual, in any case where the insurer has a legal liability to make payments, the state is considered to have acquired the rights of the individual to payment by an insurer for those health care items or services."

Section 53. Section 59A-24A-15 NMSA 1978 (being Laws 1989, Chapter 183, Section 4, as amended) is amended to read:

"59A-24A-15. MEDICARE SUPPLEMENT POLICY--PROVISIONS RELATING TO INDIVIDUALS WHO ARE ELIGIBLE FOR MEDICAL BENEFITS UNDER THE MEDICAID PROGRAM.--

A. Each medicare supplement policy that is delivered, issued for delivery or renewed in this state shall include provisions that require benefits paid on behalf of a child or other insured person under the policy to be paid to the [human services] medical assistance department when:

(1) the [human services] medical assistance department has paid or is paying benefits on behalf of the child or other insured person under the state's medicaid program pursuant to Title [XIX] 19 or Title 21 of the federal Social Security Act [42 U.S.C. 1396, et seq.];

(2) payment for the services in question has been made by the [human services] medical assistance department to the medicaid provider; and

(3) the issuer is notified that the insured individual receives benefits under the medicaid program and that benefits must be paid directly to the [human services] medical assistance department.

B. The notice required under Paragraph (3) of Subsection A of this section may be accomplished through an attachment to the claim by the [human services] medical assistance department for insurance benefits when the claim is first submitted by the [human services] medical assistance department to the issuer.

C. Notwithstanding any other provisions of law, checks in payment for claims pursuant to any medicare supplement policy for health care services provided to persons who are also eligible for benefits under the medicaid program and provided by medical providers qualified to participate under the policy shall be made payable to the provider. The issuer may be notified that the insured individual is eligible for medicaid benefits through an attachment to the claim by the provider for insurance benefits when the claim is first submitted by the provider to the issuer.

D. No medicare supplement policy delivered, issued for delivery or renewed in this state on or after [the effective date of this section] June 16, 1989 shall contain any provision denying or limiting insurance benefits because services are rendered to an insured who is eligible for or who has received medical assistance under the medicaid program of this state, unless:

(1) the medicare supplement policy or certificate has been suspended at the request of a policy or certificate holder for a period not to exceed twenty-four months; and

(2) during the period of suspension, the policy or certificate holder is entitled to medical assistance pursuant to Title [XIX] 19 or Title 21 of the federal Social Security Act [42 U.S.C. 1396, et seq.]."

Section 54. Section 59A-44-46 NMSA 1978 (being Laws 1989, Chapter 183, Section 5) is amended to read:

"59A-44-46. FRATERNAL BENEFIT SOCIETIES--CERTIFICATE PROVISIONS RELATING TO INDIVIDUALS WHO ARE ELIGIBLE FOR MEDICAL BENEFITS UNDER THE MEDICAID PROGRAM.--

A. Each individual or group policy or certificate of accident or health insurance issued by a society that is delivered, issued for delivery or renewed in this state shall include provisions that require benefits paid on behalf of a child or other insured person under the policy or certificate to be paid to the [human services] medical assistance department when:

(1) the [human services] medical assistance department has paid or is paying benefits on behalf of the child or other insured person under the state's medicaid program pursuant to Title [XIX] 19 or Title 21 of the federal Social Security Act [42 U.S.C. 1396, et seq.];

(2) payment for the services in question has been made by the [human services] medical assistance department to the medicaid provider; and

(3) the society is notified that the insured individual receives benefits under the medicaid program and that benefits must be paid directly to the [human services] medical assistance department.

B. The notice required under Paragraph (3) of Subsection A of this section may be accomplished through an attachment to the claim by the [human services] medical assistance department for insurance benefits when the claim is first submitted by the [human services] medical assistance department to the society.

C. Notwithstanding any other provisions of law, checks in payment for claims pursuant to any individual or group policy or certificate of accident or health insurance for health care services provided to persons who are also eligible for benefits under the medicaid program and provided by medical providers qualified to participate under the policy or certificate shall be made payable to the provider. The society may be notified that the insured individual is eligible for medicaid benefits through an attachment to the claim by the provider for insurance benefits when the claim is first submitted by the provider to the society.

D. No individual or group policy or certificate of accident or health insurance issued by a society that is delivered, issued for delivery or renewed in this state on or after the effective date of this section shall contain any provision denying or limiting insurance benefits because services are rendered to an insured who is eligible for or who has received medical assistance under the medicaid program of this state."

Section 55. Section 59A-46-29 NMSA 1978 (being Laws 1989, Chapter 183, Section 6, as amended) is amended to read:

"59A-46-29. HEALTH MAINTENANCE ORGANIZATIONS--CONTRACT OR CERTIFICATE PROVISIONS RELATING TO INDIVIDUALS WHO ARE ELIGIBLE FOR MEDICAL BENEFITS UNDER THE MEDICAID PROGRAM.--

A. Each individual or group contract or certificate that is delivered, issued for delivery or renewed in this state shall include provisions that require any indemnity benefits payable by a health maintenance organization on behalf of an enrollee under the contract or certificate to be paid to the [human services] medical assistance department when:

(1) the [human services] medical assistance department has paid or is paying benefits on behalf of the enrollee under the state's medicaid program pursuant to Title [XIX] 19 or Title 21 of the federal Social Security Act [42 U.S.C. 1396, et seq.];

(2) payment for the services in question has been made by the [human services] medical assistance department to the medicaid provider; and

(3) the health maintenance organization is notified that the enrollee receives benefits under the medicaid program and that any indemnity benefits payable by the health maintenance organization must be paid directly to the [human services] medical assistance department.

B. The notice required under Paragraph (3) of Subsection A of this section may be accomplished through an attachment to the claim by the [human services] medical assistance department for any indemnity benefits payable by the health maintenance organization when the claim is first submitted by the [human services] medical assistance department to the health maintenance organization.

C. Notwithstanding any other provisions of law, checks in payment for claims for any indemnity benefits payable by a health maintenance organization pursuant to any individual or group contract or certificate for health care services provided to persons who are also eligible for benefits under the medicaid program and provided by medical providers not contracting with the health maintenance organization shall be made payable to the provider. The health maintenance organization may be notified that the enrollee is eligible for medicaid benefits through an

attachment to the claim by the provider for health maintenance organization benefits when the claim is first submitted by the provider to the health maintenance organization.

D. No health maintenance organization group or individual contract or certificate delivered, issued for delivery or renewed in this state on or after [the effective date of this section] June 16, 1989 shall contain any provision denying or limiting health maintenance organization benefits because services are rendered to an enrollee who is eligible for or who has received medical assistance under the medicaid program of this state.

E. To the extent that payment for covered expenses has been made pursuant to the state medicaid program for health care items or services furnished to an individual, in any case where a health maintenance organization has a legal liability to make payments, the state is considered to have acquired the rights of the individual to payment by the health maintenance organization for those health care items or services."

Section 56. Section 59A-47-36 NMSA 1978 (being Laws 1989, Chapter 183, Section 7, as amended) is amended to read:

"59A-47-36. NONPROFIT HEALTH CARE PLANS--CONTRACT OR CERTIFICATE PROVISIONS RELATING TO INDIVIDUALS WHO ARE ELIGIBLE FOR MEDICAL BENEFITS UNDER THE MEDICAID PROGRAM.--

A. Each individual or group contract for health care expense payments or certificate therefor that is delivered, issued for delivery or renewed in this state by a health care plan shall include provisions that require benefits paid on behalf of a subscriber under the contract or certificate to be paid to the [human services] medical assistance department when:

(1) the [human services] medical assistance department has paid or is paying health care expenses on behalf of the subscriber under the state's medicaid program pursuant to Title [XIX] 19 or Title 21 of the federal Social Security Act [42 U.S.C. 1396, et seq.];

(2) payment for the expenses in question has been made by the [human services] medical assistance department to the medicaid provider; and

(3) the health care plan is notified that the subscriber receives benefits under the medicaid program and that benefits must be paid directly to the [human services] medical assistance department.

B. The notice required under Paragraph (3) of Subsection A of this section may be accomplished through an attachment to the claim by the [human services] medical assistance department for health care expense payments when the claim is first submitted by the [human services] medical assistance department to the health care plan.

C. Notwithstanding any other provisions of law, checks in payment for claims pursuant to any individual or group contract for health care expense payments or certificate therefor for health care services provided to subscribers who are also eligible for benefits under the medicaid program and provided by medical providers qualified to participate under the contract or certificate shall be made payable to the provider. The health care plan may be notified that the subscriber is eligible for medicaid benefits through an attachment to the claim by the provider for health care expense payments when the claim is first submitted by the provider to the health care plan.

D. No individual or group contract for health care expense payments or certificate therefor delivered, issued for delivery or renewed in this state on or after [the effective date of this section] June 16, 1989 shall contain any provision denying or limiting contract benefits because services are rendered to a subscriber who is eligible for or who has received medical assistance under the medicaid program of this state.

E. To the extent that payment for covered expenses has been made pursuant to the state medicaid program for health care items or services furnished to an individual, in any case where a health care plan has a legal liability to make payments, the state is considered to have acquired the rights of the individual to payment by the health care plan for those health care items or services."

Section 57. Section 59A-57-7 NMSA 1978 (being Laws 1998, Chapter 107, Section 7) is amended to read:

"59A-57-7. POINT-OF-SERVICE OPTION PLAN.--

A. Except as otherwise provided in this section, the department may require a plan that offers a point-of-service plan or open plan to include in any managed health care plan it offers an option for a point-of-service plan or open plan to the extent that the department determines that the open plan option is financially sound.

B. No health care insurer may be required to offer a point-of-service plan or open plan as an option under a medicaid-funded managed health care plan unless the [human services] medical assistance department has established such a requirement as part of a procurement for managed health care under the medicaid program."

Section 58. Section 59A-57-10 NMSA 1978 (being Laws 1998, Chapter 107, Section 10) is amended to read:

"59A-57-10. APPLICATION OF ACT TO MEDICAID PROGRAM.--

A. Except as otherwise provided in this section, the provisions of the Patient Protection Act apply to the medicaid program operation in the state. A managed health care plan offered through the medicaid program shall grant enrollees and providers the same rights and protections as are granted to enrollees and providers in any other managed health care plan subject to the provisions of the Patient Protection Act.

B. Nothing in the Patient Protection Act shall be construed to limit the authority of the [human services] medical assistance department to administer the medicaid program, as required by law. Consistent with applicable state and federal law, the [human services] medical assistance department shall have sole authority to determine, establish and enforce medicaid eligibility criteria, the scope, definitions and limitations of medicaid benefits and the minimum qualifications or standards for medicaid service providers.

C. Medicaid recipients and applicants retain their right to appeal decisions adversely affecting their medicaid benefits to the [human services] medical assistance department, pursuant to the [Public] Medical Assistance Appeals Act. Notwithstanding other provisions of the Patient Protection Act, a medicaid recipient or applicant who files an appeal to the [human services] medical assistance department pursuant to the [Public] Medical Assistance Appeals Act may not file an appeal on the same issue to the superintendent pursuant to the Patient Protection Act, unless the [human services] medical assistance department refuses to hear the appeal. The superintendent may refer to the [human services] medical assistance department any appeal filed with the superintendent pursuant to the Patient Protection Act if the complainant is a medicaid beneficiary and the matter in dispute is subject to the provisions of the [Public] Medical Assistance Appeals Act.

D. Any managed health care plan participating in the medicaid managed care program as of [the effective date of the Patient Protection Act] July 1, 1998 and that is in compliance with contractual and regulatory requirements applicable to that program shall be deemed to comply with any requirements established in accordance with [that] the Patient Protection Act until July 1, 1999; provided that, from [the effective date of that act] July 1, 1998, any rights established under that act beyond those under requirements of the [human services] medical assistance department shall apply to enrollees in medicaid managed health care plans."

Section 59. TEMPORARY PROVISION--TRANSFER OF PERSONNEL, PROPERTY, CONTRACTS AND REFERENCES IN LAW.--On July 1, 2001:

A. all personnel, appropriations, money, records, equipment, supplies and other property of the medical assistance division of the human services department shall be transferred to the medical assistance department;

B. all contracts of the medical assistance division shall be binding and effective on the medical assistance department; and

C. all references in law to the medical assistance division, medicaid or Title 19 or Title 21 of the Social Security Act shall be deemed to be references to the medical assistance department.

Section 60. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2001.