Texas Governor Rick Perry signed a series of bills into law last week modifying some of the state’s Medicaid statutes and programs.  The laws will take effect on September 1, 2013.

While the legislation was purportedly aimed at enhancing the state’s ability to detect and prevent Medicaid fraud, waste, and abuse, in fact many of the statutory provisions were added to comply with federal mandates necessary to secure ongoing federal funding for the Texas Medicaid program to ensure  continued eligibility for incentive recoveries under its civil false claims act. 

The highlights of the new laws are as follows:

• S.B. 746 brings the state’s civil false claims act, the Texas Medicaid Fraud Prevention Act (TMFPA), into compliance with the federal requirement that the state statute be “at least as effective” in rewarding and facilitating qui tam actions as the federal false claims act.  The U.S. Department of Health and Human Services Office of Inspector General gave Texas until September 1, 2013 to amend the TMFPA so that the state may continue to qualify for a 10-percentage-point increase in its share of recovery of civil Medicaid false claims judgments and settlements.

The bill extends false claims liability to any person who or entity that commits an “unlawful act” by conspiring to otherwise violate the TMFPA, or who conceals, avoids or decreases their obligations to repay funds to Medicaid.   The bill also makes procedural changes to the state civil false claims statute of limitations and public disclosure provisions, resulting in provisions that parallel those in the federal false claims act.

• Another bill, S.B. 1803, amends the Texas Government Code to meet federal requirements allowing the state to continue receiving matching funds from the federal government for the state’s Medicaid program. Among other provisions, the bill requires the Texas Medicaid program’s Office of Inspector General to conduct preliminary investigations of any complaint of Medicaid fraud or abuse, mandates referrals of fraud to the Texas Medicaid Fraud Control Unit or other law enforcement entities, and requires the Medicaid program to impose a payment hold on claims for reimbursement when credible allegations of fraud exist.

• S.B. 8 amends the Texas Government Code to require the Medicaid program to establish a data analysis unit intended to detect data trends and identify anomalies relating to compliance with Medicaid and Children’s Health Insurance Program (CHIP) requirements.  The bill also limits the marketing activities of CHIP and Medicaid providers and changes the licensure of non-emergency medical transportation companies and emergency medical services providers, with a two-year moratorium on new licenses for emergency medical services providers beginning September 1, 2013.

• H.B. 658 amends the Civil Practice and Remedies Code so that plaintiffs cannot collect post-judgment interest on any portion of a damages award that includes money subject to Medicare subrogation.  The bill responds to concerns that post judgment interest accrues in Medicare subrogation lien cases, causing defendants to pay additional costs due to the delay of a third party’s issuance of a demand letter.

While at first blush the bills appear technical in nature, the result may be increased Medicaid program oversight and enhanced opportunities for whistleblowers and state enforcement authorities to bring Medicaid-based civil false claims actions in Texas.  These new laws, combined with the swelling ranks of Medicaid Recovery Audit Contractors and similar entities, mean that Texas health care providers will likely see more scrutiny of their Medicaid billing activities.