SENATE BILL 33

51st legislature - STATE OF NEW MEXICO - second session, 2014

INTRODUCED BY

Mary Kay Papen and James Roger Madalena

FOR THE LEGISLATIVE HEALTH AND HUMAN SERVICES COMMITTEE

AN ACT

RELATING TO PUBLIC HEALTH; AMENDING THE MEDICAID PROVIDER ACT; DEFINING "CREDIBLE ALLEGATION OF FRAUD"; PROVIDING FOR JUDICIAL REVIEW OF A DETERMINATION OF CREDIBLE ALLEGATION OF FRAUD; AMENDING SECTION 30-44-7 NMSA 1978 (BEING LAWS 1989, CHAPTER 286, SECTION 7, AS AMENDED) TO CLARIFY THAT, IN THE ABSENCE OF CLEAR AND CONVINCING EVIDENCE TO THE CONTRARY, MERE ERRORS FOUND DURING THE COURSE OF AN AUDIT, BILLING ERRORS THAT ARE ATTRIBUTABLE TO HUMAN ERROR AND INADVERTENT BILLING AND PROCESSING ERRORS DO NOT CONSTITUTE MEDICAID FRAUD.

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

     SECTION 1. Section 27-11-1 NMSA 1978 (being Laws 1998, Chapter 30, Section 1) is amended to read:

     "27-11-1. SHORT TITLE.--[This act] Chapter 27, Article 11 NMSA 1978 may be cited as the "Medicaid Provider Act"."

     SECTION 2. 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. "credible allegation of fraud" means an allegation of medicaid fraud, as defined in Subsection A of Section 30-44-7 NMSA 1978, that has been verified as credible by the department:

                (1) considering the totality of the facts and circumstances surrounding any particular allegation or set of allegations;

                (2) based upon a careful review of all allegations, facts and evidence; and

                (3) accompanied by sufficient indicia of reliability to justify a decision by the department to refer a medicaid provider or other person to the attorney general for further investigation;

          [A.] B. "department" means the human services department;

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

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

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

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

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

     SECTION 3. A new section of the Medicaid Provider Act is enacted to read:

     "[NEW MATERIAL] CREDIBLE ALLEGATION OF FRAUD--JUDICIAL REVIEW.--

          A. A credible allegation of fraud determination by the department shall be deemed a final decision as defined in Section 39-3-1.1 NMSA 1978.

          B. A medicaid provider or other person who is the subject of a referral to the attorney general for further investigation based upon a credible allegation of fraud may seek judicial review of the department's credible allegation of fraud determination pursuant to Section 39-3-1.1 NMSA 1978."

     SECTION 4. Section 30-44-7 NMSA 1978 (being Laws 1989, Chapter 286, Section 7, as amended) is amended to read:

     "30-44-7. MEDICAID FRAUD--DEFINED--INVESTIGATION--PENALTIES.--

          A. Medicaid fraud consists of:

                (1) paying, soliciting, offering or receiving:                    (a) a kickback or bribe in connection with the furnishing of treatment, services or goods for which payment is or may be made in whole or in part under the program, including an offer or promise to, or a solicitation or acceptance by, a health care official of anything of value with intent to influence a decision or commit a fraud affecting a state or federally funded or mandated managed health care plan;                      (b)  a rebate of a fee or charge made to a provider for referring a recipient to a provider;

                     (c) anything of value, intending to retain it and knowing it to be in excess of amounts authorized under the program, as a precondition of providing treatment, care, services or goods or as a requirement for continued provision of treatment, care, services or goods; or

                     (d)  anything of value, intending to retain it and knowing it to be in excess of the rates established under the program for the provision of treatment, services or goods;

                (2)  providing with intent that a claim be relied upon for the expenditure of public money:

                     (a) treatment, services or goods that have not been ordered by a treating physician;

                     (b) treatment that is substantially inadequate when compared to generally recognized standards within the discipline or industry; or

                     (c) merchandise that has been adulterated, debased or mislabeled or is outdated;

                (3) presenting or causing to be presented for allowance or payment with intent that a claim be relied upon for the expenditure of public money any false, fraudulent, excessive, multiple or incomplete claim for furnishing treatment, services or goods; or

                (4) executing or conspiring to execute a plan or action to:

                     (a) defraud a state or federally funded or mandated managed health care plan in connection with the delivery of or payment for health care benefits, including engaging in any intentionally deceptive marketing practice in connection with proposing, offering, selling, soliciting or providing any health care service in a state or federally funded or mandated managed health care plan; or

                     (b) obtain by means of false or fraudulent representation or promise anything of value in connection with the delivery of or payment for health care benefits that are in whole or in part paid for or reimbursed or subsidized by a state or federally funded or mandated managed health care plan. This includes representations or statements of financial information, enrollment claims, demographic statistics, encounter data, health services available or rendered and the qualifications of persons rendering health care or ancillary services.

          B. In the absence of clear and convincing evidence to the contrary, the following do not constitute medicaid fraud:

                (1) mere errors found during the course of an audit;

                (2) billing errors that are attributable to human error; and

                (3) inadvertent billing and processing errors.

          [B.] C. Except as otherwise provided for in this section regarding the payment of fines by an entity, whoever commits medicaid fraud as described in Paragraph (1) or (3) of Subsection A of this section is guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.

          [C.] D. Except as otherwise provided for in this section regarding the payment of fines by an entity, whoever commits medicaid fraud as described in Paragraph (2) or (4) of Subsection A of this section when the value of the benefit, treatment, services or goods improperly provided is:

                (1) not more than one hundred dollars ($100) is guilty of a petty misdemeanor and shall be sentenced pursuant to the provisions of Section 31-19-1 NMSA 1978;

                (2) more than one hundred dollars ($100) but not more than two hundred fifty dollars ($250) is guilty of a misdemeanor and shall be sentenced pursuant to the provisions of Section 31-19-1 NMSA 1978;

                (3) 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 and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978;

                (4) more than two thousand five hundred dollars ($2,500) but not more than twenty thousand dollars ($20,000) [shall be] is guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978; and

                (5) more than twenty thousand dollars ($20,000) [shall be] is guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.

          [D.] E. Except as otherwise provided for in this section regarding the payment of fines by an entity, whoever commits medicaid fraud when the fraud results in physical harm or psychological harm to a recipient is guilty of a fourth degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.

          [E.] F. Except as otherwise provided for in this section regarding the payment of fines by an entity, whoever commits medicaid fraud when the fraud results in great physical harm or great psychological harm to a recipient is guilty of a third degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.

          [F.] G. Except as otherwise provided for in this section regarding the payment of fines by an entity, whoever commits medicaid fraud when the fraud results in death to a recipient is guilty of a second degree felony and shall be sentenced pursuant to the provisions of Section 31-18-15 NMSA 1978.

          [G.] H. If the person who commits medicaid fraud is an entity rather than an individual, the entity shall be subject to a fine of not more than fifty thousand dollars ($50,000) for each misdemeanor and not more than two hundred fifty thousand dollars ($250,000) for each felony.

          [H.] I. The unit shall coordinate with the human services department, department of health and children, youth and families department to develop a joint protocol establishing responsibilities and procedures, including prompt and appropriate referrals and necessary action regarding allegations of program fraud, to ensure prompt investigation of suspected fraud upon the medicaid program by any provider. These departments shall participate in the joint protocol and enter into a memorandum of understanding defining procedures for coordination of investigations of fraud by medicaid providers to eliminate duplication and fragmentation of resources. The memorandum of understanding shall further provide procedures for reporting to the legislative finance committee the results of all investigations every calendar quarter. The unit shall report to the legislative finance committee a detailed disposition of recoveries and distribution of proceeds every calendar quarter."

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