2012 -- H 7709

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LC01206

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO HUMAN SERVICES -- MEDICAID

     Introduced By: Representatives Reilly, Morgan, Chippendale, Costa, and Newberry

     Date Introduced: February 16, 2012

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 40 of the General Laws entitled "HUMAN SERVICES" is hereby

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amended by adding thereto the following chapter:

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     CHAPTER 8.11

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THE MEDICAID INTEGRITY ACT OF 2012

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     40-8.11-1. Citation. – This chapter shall be known and may be cited as the “Medicaid

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Integrity Act of 2012.”

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     40-8.11-2. Legislative intent. – (a) It is the intent of the general assembly to implement

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waste and fraud and abuse detection, prevention, and recovery solutions to:

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     (1) Improve program integrity for Medicaid and the children's health insurance program

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or “CHIP” in the state, and to create efficiency and cost savings through a shift from a

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retrospective "pay and chase" model to a prospective pre-payment model; and

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     (2) Comply with program integrity provisions of the federal patient protection and

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affordable care act and the health care and education reconciliation act of 2010, as promulgated in

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the centers for Medicare and Medicaid services final rule 6028.

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     40-8.11-3. Definitions. – As used in this chapter, the following words and phrases shall

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have the following meanings, unless the context clearly indicates otherwise:

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     (1) “CHIP” means the children's health insurance program established under title XXI of

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the Social Security Act (42 U.S.C. 1397aa et seq.) and implemented in Rhode Island, including

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but not limited to, any plans and/or programs implemented pursuant to the provisions of chapter

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40-8.4 (“Health Care for Families”).

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     (2) “Department” means the Rhode Island department of human services.

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     (3) “Enrollee” means an individual who is eligible to receive benefits and is enrolled in

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either the Medicaid or CHIP programs.

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     (4) “Medicaid” means the program to provide grants to states for medical assistance

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programs established under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.).

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     (5) “Secretary” means the U.S. secretary of health and human services, acting through the

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administrator of the centers for Medicare and Medicaid Services.

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     40-8.11-4. Application of chapter. – The provisions of this chapter shall specifically

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apply to:

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     (1) State Medicaid managed care programs, including programs operated under and/or

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pursuant to the provisions of this title 40 (Human Services);

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     (2) State Medicaid programs operated under and/or pursuant to the provisions of this title

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40 (Human Services); and

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     (3) The state CHIP program operated under this title and implemented in Rhode Island,

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including but not limited to, any plans and/or programs implemented pursuant to the provisions of

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chapter 40-8.4 (“Health Care for Families”).

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     40-8.11-5. State to provide data verification. – The department shall implement

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provider data verification and provider screening technology solutions to check healthcare billing

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and provider rendering data against a continually maintained provider information database for

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the purposes of automating reviews and identifying and preventing inappropriate payments to:

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     (1) Deceased providers;

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     (2) Sanctioned providers;

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     (3) License expiration/retired providers; and

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     (4) Confirmed wrong addresses.

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     40-8.11-6. Clinical code editing. – The department shall implement state-of-the-art

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clinical code editing technology solutions to further automate claims resolution and enhance cost

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containment through improved claim accuracy and appropriate code correction. The technology

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shall identify and prevent errors or potential overbilling based on widely accepted and transparent

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protocols such as the American Medical Association and the Centers for Medicare and Medicaid

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Services. The edits shall be applied automatically before claims are adjudicated to speed

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processing and reduce the number of pended or rejected claims and help ensure a smoother, more

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consistent and more transparent adjudication process and fewer delays in provider

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reimbursement.

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     40-8.11-7. Predictive modeling technologies. – The department shall implement state-

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of-the-art predictive modeling and analytics technologies to provide a more comprehensive and

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accurate view across all providers, beneficiaries and geographies within the Medicaid and CHIP

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programs in order to:

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     (1) Identify and analyze those billing or utilization patterns that represent a high risk of

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fraudulent activity;

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     (2) Be integrated into the existing Medicaid and CHIP claims workflow;

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     (3) Undertake and automate such analysis before payment is made to minimize

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disruptions to the workflow and speed claim resolution;

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     (4) Prioritize such identified transactions for additional review before payment is made

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based on likelihood of potential waste, fraud or abuse;

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     (5) Capture outcome information from adjudicated claims to allow for refinement and

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enhancement of the predictive analytics technologies based on historical data and algorithms

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within the system; and

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     (6) Prevent the payment of claims for reimbursement that have been identified as

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potentially wasteful, fraudulent or abusive until the claims have been automatically verified as

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valid.

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     40-8.11-8. Fraud investigation services. – The department shall implement fraud

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investigative services that combine retrospective claims analysis and prospective waste, fraud or

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abuse detection techniques. These services shall include analysis of historical claims data,

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medical records, suspect provider databases and high-risk identification lists, as well as direct

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patient and provider interviews. Emphasis shall be placed on providing education to providers

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and ensuring that they have the opportunity to review and correct any problems identified prior to

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adjudication.

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     40-8.11-9. Claims audit and recovery services. – (a) The department shall implement

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Medicaid and CHIP claims audit and recovery services to identify improper payments due to non-

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fraudulent issues, audit claims, obtain provider sign-off on the audit results and recover validated

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overpayments. Post payment reviews shall ensure that the diagnoses and procedure codes are

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accurate and valid based on the supporting physician documentation within the medical records. 

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     (b) Core categories of reviews shall include:

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     (1) Coding compliance diagnosis related group (“DRG”) reviews;

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     (2) Transfers;

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     (3) Readmissions;

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     (4) Cost outlier reviews;

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     (5) Outpatient seventy-two (72) hour rule reviews;

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     (6) Payment errors;

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     (7) Billing errors; and

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     (8) Such others as may be designated by the department.

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     40-8.11-10. Selection of contractor. – (a) To implement the provisions of this chapter,

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the department shall either contract with the cooperative purchasing network (“CPN”) to issue a

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request for proposals (“RFP”) to select a contractor or use the following contractor selection

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process:

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     (1) On or before January 1, 2013, the department shall issue a request for information

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(“RFI”)  to seek input from potential contractors on capabilities and cost structures associated

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with the scope of work of this chapter. The results of the RFI shall be used by the department to

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create a formal RFP to be issued within ninety (90) days of the closing date of the RFI.

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     (2) No later than ninety (90) days after the close of the RFI, the department shall issue a

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formal RFP to carry out the provisions of this chapter during the first year of implementation. To

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the extent appropriate, the department may include subsequent implementation years and may

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issue additional RFPs with respect to subsequent implementation years.

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     (3) The department shall select contractors to carry out this chapter using competitive

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procedures as provided for in chapter 37-2 (“State Purchases”).

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     (4) The department shall enter into a contract under this chapter with an entity only if the

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entity:

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     (i) Can demonstrate appropriate technical, analytical and clinical knowledge and

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experience to carry out the functions included in this chapter; or

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     (ii) Has a contract, or will enter into a contract, with another entity that meets the above

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criteria.

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     (5) The department shall only enter into a contract under this chapter with an entity to the

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extent the entity complies with conflict of interest standards under state law, including but not

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limited to the provisions of chapter 37-2 (“State Purchases).

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     40-8.11-11. Department contract. – The state department of human services shall

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provide entities with a contract pursuant to the provisions of this chapter with appropriate access

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to claims and other data necessary for the entity to carry out the functions included in this chapter.

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This shall include, but shall not be limited to, providing current and historical Medicaid and CHIP

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claims and provider database information, and taking necessary regulatory action to facilitate

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appropriate public-private data sharing, including across multiple Medicaid managed care

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entities.

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     40-8.11-12. Reports. – The following reports shall be completed by the state department

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of human services:

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     (1) Not later than three (3) months after the completion of the first implementation year

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under this chapter, the department shall submit to the clerk of the house of representatives and the

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clerk of the senate, and also make available to the public, a report that includes the following:

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     (i) A description of the implementation and use of technologies set forth in this chapter

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during the year;

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     (ii) A certification by the department that specifies the actual and projected savings to the

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Medicaid and CHIP programs as a result of the use of these technologies, including estimates of

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the amounts of such savings with respect to both improper payments recovered and improper

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payments avoided;

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     (iii) The actual and projected savings to the Medicaid and CHIP programs as a result of

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such use of technologies relative to the return on investment for the use of such technologies and

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in comparison to other strategies or technologies used to prevent and detect fraud, waste, and

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abuse;

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     (iv) Suggestions for any modifications or refinements that should be made to increase the

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amount of actual or projected savings or mitigate any adverse impact on Medicare beneficiaries

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or providers;

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     (v) An analysis of the extent to which the use of these technologies successfully

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prevented and detected waste, fraud, or abuse in the Medicaid and CHIP programs;

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     (vi) A review of whether the technologies affected access to, or the quality of, items and

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services furnished to Medicaid and CHIP beneficiaries; and

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     (vii) A review of what effect, if any, the use of these technologies has had on Medicaid

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and CHIP providers, including assessment of provider education efforts and documentation of

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processes for providers to review and correct problems that are identified.

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     (2) Not later than three (3) months after the completion of the second implementation

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year under this chapter, the department shall submit to the clerk of the house of representatives

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and the clerk of the senate, and also make available to the public, a report that shall include, with

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respect to such year, the items required under subdivision (1) herein for said second (2nd) year, as

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well as any other additional items determined appropriate with respect to the report for such year.

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     (3) Not later than three (3) months after the completion of the third (3rd) implementation

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year under this chapter, the department shall submit to the clerk of the house of representatives

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and the clerk of the senate, and make available to the public, a report that shall include with

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respect to such year, the items required under subdivision (1) herein for said third (3rd) year, as

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well as any other additional items determined appropriate with respect to the report for such year.

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     40-8.11-13. Cost savings intent of chapter. – It is the intent of the general assembly that

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the savings achieved through this chapter shall be sufficient to cover the costs of implementation.

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Therefore, to the extent possible, technology services used in carrying out this chapter shall be

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secured using a shared savings model, whereby the state's only direct cost will be a percentage of

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actual savings achieved. Further, to enable this model, a percentage of achieved savings may be

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used to fund expenditures under this chapter.

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     40-8.11-14. Severability. – If any provision of this chapter is held by a court to be

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invalid, that invalidity shall not affect the remaining provisions of the chapter, and to this end the

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provisions of this chapter are declared to be severable.

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     SECTION 2. This act shall take effect upon passage.

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LC01206

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO HUMAN SERVICES -- MEDICAID

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     This act would implement procedures to detect fraud and abuse in regard to the payment

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of Medicaid claims. Most of these procedures would be implemented by the department of human

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services.

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     This act would take effect upon passage.

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LC01206

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