BILL REQ. #:  S-3655.1 

Read first time 01/24/12.   Referred to Committee on Health & Long-Term Care.

     AN ACT Relating to improving program integrity for medicaid and the children's health insurance program by implementing waste, fraud, and abuse prevention, detection, and recovery; and adding a new chapter to Title 74 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   It is the intent of the legislature to implement waste, fraud, and abuse detection, and prevention and recovery solutions to improve program integrity for medicaid and the children's health insurance program in the state and create efficiency and cost savings through a shift from a retrospective "pay and chase" model to a prospective prepayment prevention and detection model.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Children's health insurance program" means the children's health insurance program established under Title XXI of the social security act, 42 U.S.C. Sec. 1397aa et seq.
     (2) "Enrollee" means an individual who is eligible to receive benefits and is enrolled in either the medicaid or children's health insurance programs.
     (3) "Medicaid" means the program to provide grants to states for medical assistance programs established under Title XIX of the social security act, 42 U.S.C. Sec. 1396 et seq.
     (4) "Secretary" means the United States secretary of health and human services, acting through the administrator of the centers for medicare and medicaid services.

NEW SECTION.  Sec. 3   This chapter specifically applies to:
     (1) State medicaid programs; and
     (2) The state children's health insurance program.

NEW SECTION.  Sec. 4   The state shall implement state-of-the-art clinical code editing technology solutions to further automate claims resolution and enhance cost containment through improved claim accuracy and appropriate code correction. The technology must identify and prevent errors or potential overbilling based on widely accepted and transparent protocols such as the American medical association and the centers for medicare and medicaid services. The edits must be applied automatically before claims are adjudicated to speed processing and reduce the number of pended or rejected claims and help ensure a smoother, more consistent and more transparent adjudication process and fewer delays in provider reimbursement.

NEW SECTION.  Sec. 5   The state shall implement state-of-the-art predictive modeling and analytics technologies to provide a more comprehensive and accurate view across all providers, beneficiaries, and geographies within the medicaid and children's health insurance programs in order to:
     (1) Identify and analyze those billing or utilization patterns that represent a high risk of fraudulent activity;
     (2) Be integrated into the existing medicaid and children's health insurance program claims workflow;
     (3) Undertake and automate such analysis before payment is made to minimize disruptions to the workflow and speed claim resolution;
     (4) Prioritize such identified transactions for additional review before payment is made based on likelihood of potential waste, fraud, or abuse;
     (5) Capture outcome information from adjudicated claims to allow for refinement and enhancement of the predictive analytics technologies based on historical data and algorithms within the system; and
     (6) Prevent the payment of claims for reimbursement that have been identified as potentially wasteful, fraudulent, or abusive until the claims have been automatically verified as valid.

NEW SECTION.  Sec. 6   The state shall implement fraud investigative services that combine retrospective claims analysis and prospective waste, fraud, or abuse detection techniques. These services must include analysis of historical claims data, medical records, suspect provider databases, and high-risk identification lists, as well as direct patient and provider interviews. Emphasis must be placed on providing education to providers and ensuring that they have the opportunity to review and correct any problems identified prior to adjudication.

NEW SECTION.  Sec. 7   The state shall implement medicaid and children's health insurance program claims audit and recovery services to identify improper payments due to nonfraudulent issues, audit claims, obtain provider sign-off on the audit results, and recover validated overpayments. Postpayment reviews must ensure that the diagnoses and procedure codes are accurate and valid based on the supporting physician documentation within the medical records. Core categories of reviews may include: Coding compliance diagnosis related group reviews, transfers, readmissions, cost outlier reviews, outpatient seventy-two hour rule reviews, payment errors, billing errors, and others.

NEW SECTION.  Sec. 8   To implement this chapter, the state shall either contract with the cooperative purchasing network to issue a request for proposals to select a contractor or use the following contractor selection process:
     (1) No later than November 1, 2012, the state shall issue a request for information to seek input from potential contractors on capabilities and cost structures associated with the scope of work of this chapter. The results of the request for information must be used by the state to create a formal request for proposals to be issued within ninety days of the closing date of the request for information.
     (2) No later than ninety days after the close of the request for information, the state shall issue a formal request for proposals to carry out this chapter during the first year of implementation. To the extent appropriate, the state may include subsequent implementation years and may issue additional request for proposals with respect to subsequent implementation years.
     (3) The state shall select contractors to carry out this chapter using competitive procedures as provided for in the state procurement statute.
     (4) The state shall enter into a contract under this chapter with an entity only if the entity:
     (a) Can demonstrate appropriate technical, analytical, and clinical knowledge and experience to carry out the functions included in this chapter; or
     (b) Has a contract, or will enter into a contract, with another entity that meets the above criteria.
     (5) The state shall only enter into a contract under this chapter with an entity to the extent the entity complies with conflict of interest standards in the state procurement statute.

NEW SECTION.  Sec. 9   The state shall provide entities with a contract under this chapter with appropriate access to claims and other data necessary for the entity to carry out the functions included in this chapter. This includes, but is not limited to, providing current and historical medicaid and children's health insurance program claims and provider database information, and taking necessary regulatory action to facilitate appropriate public-private data sharing, including across multiple medicaid managed care entities.

NEW SECTION.  Sec. 10   The following reports must be completed by the department:
     (1) No later than three months after the completion of the first implementation year under this chapter, the state shall submit to the appropriate committees of the legislature and make available to the public a report that includes the following:
     (a) A description of the implementation and use of technologies included in this chapter during the year;
     (b) A certification by the department that specifies the actual and projected savings to the medicaid and children's health insurance programs as a result of the use of these technologies, including estimates of the amounts of such savings with respect to both improper payments recovered and improper payments avoided;
     (c) The actual and projected savings to the medicaid and children's health insurance programs as a result of such use of technologies relative to the return on investment for the use of such technologies and in comparison to other strategies or technologies used to prevent and detect fraud, waste, and abuse;
     (d) Any modifications or refinements that should be made to increase the amount of actual or projected savings or mitigate any adverse impact on medicare beneficiaries or providers;
     (e) An analysis of the extent to which the use of these technologies successfully prevented and detected waste, fraud, or abuse in the medicaid and children's health insurance programs;
     (f) A review of whether the technologies affected access to, or the quality of, items and services furnished to medicaid and children's health insurance program beneficiaries; and
     (g) A review of what effect, if any, the use of these technologies had on medicaid and children's health insurance program providers, including assessment of provider education efforts and documentation of processes for providers to review and correct problems that are identified.
     (2) No later than three months after the completion of the second implementation year under this chapter, the state shall submit to the appropriate committees of the legislature and make available to the public a report that includes, with respect to such year, the items required under subsection (1) of this section as well as any other additional items determined appropriate with respect to the report for such year.
     (3) No later than three months after the completion of the third implementation year under this chapter, the state shall submit to the appropriate committees of the legislature, and make available to the public, a report that includes with respect to such year, the items required under subsection (1) of this section, as well as any other additional items determined appropriate with respect to the report for such year.

NEW SECTION.  Sec. 11   It is the intent of the legislature that the savings achieved through this chapter shall more than cover the costs of implementation. Therefore, to the extent possible, technology services used in carrying out this chapter must be secured using a shared savings model, whereby the state's only direct cost will be a percentage of actual savings achieved. Further, to enable this model, a percentage of achieved savings may be used to fund expenditures under this chapter.

NEW SECTION.  Sec. 12   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 13   Sections 1 through 11 of this act constitute a new chapter in Title 74 RCW.