SENATE BILL 50

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

INTRODUCED BY

Timothy M. Keller and Eliseo Lee Alcon

FOR THE LEGISLATIVE HEALTH AND HUMAN SERVICES COMMITTEE

AN ACT

RELATING TO PROCUREMENT; ELIMINATING THE HEALTH CARE EXEMPTION TO THE PROCUREMENT CODE; CLARIFYING THAT INVESTIGATION OF ALLEGED HEALTH CARE OVERPAYMENTS OR FRAUD IS NOT AN EMERGENCY CONDITION JUSTIFYING AN EMERGENCY PROCUREMENT; CLARIFYING THAT SUSPENSION OF PAYMENTS TO HOSPITALS OR OTHER HEALTH CARE PROVIDERS UPON A DETERMINATION OF CREDIBLE ALLEGATION OF FRAUD IS NOT AN EMERGENCY CONDITION JUSTIFYING AN EMERGENCY PROCUREMENT; REQUIRING A STATE AGENCY, AS AUTHORIZED BY LAW, TO ANNUALLY CONTRACT THROUGH NORMAL PROCUREMENT FOR AUDIT SERVICES TO INVESTIGATE ALLEGED HEALTH CARE OVERPAYMENTS OR FRAUD AND FOR TEMPORARY ON-CALL HEALTH CARE OR OTHER SERVICES NECESSITATED BY A SUSPENSION OF PAYMENTS PURSUANT TO DETERMINATION OF CREDIBLE ALLEGATION OF FRAUD; GIVING THE ATTORNEY GENERAL, STATE AUDITOR AND LEGISLATIVE FINANCE COMMITTEE STANDING TO SEEK JUDICIAL REVIEW OF CERTAIN PURCHASING PRACTICES; REQUIRING THE STATE AUDITOR TO COMPILE AND MAINTAIN A LIST OF AUDIT FIRMS APPROVED FOR STATE AND FEDERAL HEALTH CARE PROGRAM AUDITS; MAKING AN APPROPRIATION; DECLARING AN EMERGENCY.

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

     SECTION 1. Section 12-6-1 NMSA 1978 (being Laws 1969, Chapter 68, Section 1) is amended to read:

     "12-6-1. SHORT TITLE.--[Sections 4-31-1 through 4-31-17 NMSA 1953] Chapter 12, Article 6 NMSA 1978 may be cited as the "Audit Act"."

     SECTION 2. A new section of the Audit Act is enacted to read:

     "[NEW MATERIAL] AUDITS OF STATE AND FEDERAL HEALTH CARE PROGRAMS.--The state auditor shall compile and maintain a list of audit firms approved by the state auditor to conduct audits of state and federal health care programs."

     SECTION 3. Section 13-1-98.1 NMSA 1978 (being Laws 1998, Chapter 69, Section 1) is amended to read:

     "13-1-98.1. HOSPITAL [AND HEALTH CARE] EXEMPTION.--The provisions of the Procurement Code shall not apply to procurement of items of tangible personal property or services by a state agency or a local public body through [A.] an agreement with any other state agency, local public body or external procurement unit or any other person [corporation, organization or association] that provides that the parties to the agreement shall join together for the purpose of making some or all purchases necessary for the operation of public hospitals or public and private hospitals, if the state purchasing agent, [or] a central purchasing office or a chief procurement officer of a state agency makes a determination that the arrangement will or is likely to reduce health care costs [or

          B. an agreement with any other state agency, local public body or external procurement unit or any other person, corporation, organization or association for the purpose of creating a network of health care providers or jointly operating a common health care service, if the state purchasing agent or a central purchasing office makes a determination that the arrangement will or is likely to reduce health care costs, improve quality of care or improve access to care]."

     SECTION 4. Section 13-1-126 NMSA 1978 (being Laws 1984, Chapter 65, Section 99, as amended) is amended to read:

     "13-1-126. SOLE SOURCE PROCUREMENT--STANDING TO SEEK JUDICIAL REVIEW.--

          A. A contract may be awarded without competitive sealed bids or competitive sealed proposals regardless of the estimated cost when the state purchasing agent, [or] a central purchasing office or a chief procurement officer of a state agency determines, in writing, that:

                (1) there is only one source for the required service, construction or item of tangible personal property;

                (2) the service, construction or item of tangible personal property is unique and this uniqueness is substantially related to the intended purpose of the contract; and

                (3) other similar services, construction or items of tangible personal property cannot meet the intended purpose of the contract.

          B. The state purchasing agent, [or] a central purchasing office or a chief procurement officer of a state agency shall use due diligence in determining the basis for the sole source procurement, including reviewing available sources and consulting the using agency, and shall include [its] a written determination in the procurement file.

          C. The state purchasing agent, [or] a central purchasing office or a chief procurement officer of a state agency shall conduct negotiations, as appropriate, as to price, delivery and quantity in order to obtain the price most advantageous to the state agency or a local public body.

          D. A contract for the purchase of research consultant services by institutions of higher learning constitutes a sole source procurement.

          E. The state purchasing agent, [or] a central purchasing office or a chief procurement officer of a state agency shall not circumvent this section by narrowly drafting specifications so that only one predetermined source would satisfy those specifications.

          F. The attorney general, state auditor or legislative finance committee may, pursuant to Sections 13-1-183 and 39-3-1.1 NMSA 1978, seek judicial review of actions of the state purchasing agent, a central purchasing office or a chief procurement officer of a state agency contrary to the requirements of Subsections B, C and E of this section."

     SECTION 5. Section 13-1-127 NMSA 1978 (being Laws 1984, Chapter 65, Section 100, as amended) is amended to read:

     "13-1-127. EMERGENCY PROCUREMENTS--STANDING TO SEEK JUDICIAL REVIEW.--

          A. The state purchasing agent, [or] a central purchasing office or a chief procurement officer of a state agency may make emergency procurements when there exists a threat to public health, welfare, safety or property requiring procurement under emergency conditions; provided that emergency procurements shall be made with competition as is practicable under the circumstances.

          B. An emergency condition is a situation that creates a threat to public health, welfare or safety such as may arise by reason of floods, fires, epidemics, riots, acts of terrorism, equipment failures or similar events and includes the planning and preparing for an emergency response. The existence of the emergency condition creates an immediate and serious need for services, construction or items of tangible personal property that cannot be met through normal procurement methods and the lack of which would seriously threaten:

                (1) the functioning of government;

                (2) the preservation or protection of property; or

                (3) the health or safety of any person.

          C. Emergency procurements shall not include:

                (1) the purchase or lease purchase of heavy road equipment;

                (2) the purchase of professional services to audit public or private hospitals or any health care provider for alleged health care overpayments or fraud;

                (3) the purchase or lease of goods or equipment necessitated by a suspension of payments pursuant to a determination made by the human services department of credible allegation of fraud; or

                (4) the purchase of health care services or other professional services necessitated by a suspension of payments pursuant to a determination made by the human services department of credible allegation of fraud.

          D. The state purchasing agent, [or] a central purchasing office or a chief procurement officer of a state agency shall use due diligence in determining the basis for the emergency procurement and for the selection of the particular contractor. The determination shall be in writing and included in the procurement file.

          E. Money expended for planning and preparing for an emergency response shall be accounted for and reported to the legislative finance committee and the department of finance and administration within sixty days after the end of each fiscal year.

          F. The attorney general, state auditor or legislative finance committee may, pursuant to Sections 13-1-183 and 39-3-1.1 NMSA 1978, seek judicial review of actions of the state purchasing agent, a central purchasing office or a chief procurement officer of a state agency contrary to the requirements of this section."

     SECTION 6. A new section of the Procurement Code is enacted to read:

     "[NEW MATERIAL] PROCUREMENT TO INVESTIGATE ALLEGED HEALTH CARE OVERPAYMENTS OR FRAUD OR NECESSITATED BY SUSPENSION OF PAYMENTS PURSUANT TO A DETERMINATION OF CREDIBLE ALLEGATION OF FRAUD--STANDING TO SEEK JUDICIAL REVIEW.--

          A. As used in this section, "state agency" includes the human services department, the department of health, the interagency behavioral health purchasing collaborative and any members of the interagency behavioral health purchasing collaborative.

          B. As authorized by law, a state agency shall:

                (1) contract annually, and in advance of the need, for:

                     (a) audit or other professional services to investigate alleged health care overpayments or fraud; and

                     (b) on-call temporary health care or other professional services necessitated by a suspension of payments pursuant to a determination of credible allegation of fraud;

                (2) contract through a competitive sealed proposal process for such audit, on-call temporary health care or other professional services pursuant to the Procurement Code, and give a preference to a resident business as provided by Section 13-1-21 NMSA 1978;

                (3) not accept a proposal from any party for health care or other professional services unless the offeror and all persons providing services covered under the proposal are registered, licensed or certified as required by law to provide such services in New Mexico; and

                (4) not accept a proposal for audit services unless the offeror is approved by the state auditor to conduct audits of state and federal health care programs.

          C. Contracts for on-call temporary health care or other professional services necessitated by a suspension of payments pursuant to a determination of credible allegation of fraud shall be limited to three months or less and may not be renewed or extended.

          D. Each proposal to provide audit, on-call temporary health care or other professional services shall, within five business days of the award, be made public and posted on the web site of the state agency awarding such contract and on the sunshine portal.

          E. The provisions of this section do not apply to any procurement by the office of the attorney general or by the state auditor to investigate alleged health care overpayments or health care fraud.

          F. The attorney general, state auditor or legislative finance committee may, pursuant to Sections 13-1-183 and 39-3-1.1 NMSA 1978, seek judicial review of actions of the state purchasing agent, a central purchasing office or a chief procurement officer of a state agency contrary to the requirements of this section."

     SECTION 7. APPROPRIATION.--One hundred thousand dollars ($100,000) is appropriated from the general fund to the office of the state auditor for expenditure in fiscal year 2015 to compile and maintain a list of firms approved by the state auditor to conduct audits of state and federal health care programs. Any unexpended or unencumbered balance remaining at the end of fiscal year 2015 shall revert to the general fund.

     SECTION 8. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.

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