8000, Sanctions, Fraud and Abuse

Revision 14-2, Effective November 7, 2014

8100 Provider Fraud and Abuse

Revision 14-2; Effective November 7, 2014

The Texas Department of Aging and Disability Services (DADS) is responsible for identifying, investigating and referring cases of suspected fraud or abuse of Medicare, Medicaid or social services programs.

To carry out this responsibility, DADS must:

  • be prepared to exclude from program reimbursement any provider that defrauds or abuses the Medicare or Medicaid program; and
  • suspend, in the event that the United States Department of Health and Human Services directs the suspension, any recipient of Medicaid reimbursement who has been convicted of a crime related to the delivery of medical care or services under Medicare, Medicaid or social services programs.

A fraud referral or abuse referral or both are initiated when a provider has defrauded or abused the Medicaid (Title XIX) program.

8110 Provider Agency Fraud

Revision 14-2; Effective November 7, 2014

DADS endorses the concept that people who provide services are essentially honest and are entitled to the same protection under the law as all other individuals. However, when there is an indication of potential fraud, the allegations must be investigated.

To determine the existence of fraud, the following must be established:

  • Intentional misstatement or concealment by the provider created a false impression.
  • DADS paid the provider based on the false impression, when the payment would not have been made if the truth had been known.

Examples of provider fraud include (list not all-inclusive):

  • billing for services which were not provided;
  • filing false claims;
  • continuing inappropriate billing after provider education visits; and
  • using improper billing practices.

8120 Abuse

Revision 14-2; Effective November 7, 2014

To determine the existence of abuse, the following must be established:

  • Provider practices are inconsistent with sound fiscal, business, or medical practices.
  • These inconsistent practices result in unnecessary cost to the Medicaid program, or reimbursement for services that are not medically necessary or that fail to meet professionally recognized standards of health care or standards required by contract, statute, regulation, or interpretations of a statue or regulation sent to the provider.

Examples of provider abuse include (list not all-inclusive):

  • services provided which are not medically necessary;
  • billing for services provided by inappropriate persons;
  • practicing without a proper license or obtaining a license under false pretenses; and
  • violating the contract or provider agreement.

8130 Civil Penalty

Revision 14-2; Effective November 7, 2014

Cases of fraud or abuse may also be referred to the Texas Health and Human Services Commission (HHSC) for civil penalties under the federal Civil Monetary Law of the Social Security Act. Under this provision, a provider agency (individual and corporate) may be assessed a fine of up to $2,000 and double damages for each line item identified as fraudulent or abusive billing. HHSC may also require a provider agency that has been assessed civil monetary penalties to be barred from participation in the Medicare or Medicaid program or both.

8140 Reporting Fraud and Abuse

Revision 14-2; Effective November 7, 2014

The Medical Provider Sanctions section, Texas Department of State Health Services (DSHS), has established a toll-free hotline for reporting suspected cases of Medicaid fraud and abuse. The number is 1-800-252-8263 and is available every day. Individuals who know of suspected fraud or abuse of assistance benefits, including eligibility and provider services, are urged to use this toll-free service.

8150 Development of the Fraud Referral Packet

Revision 14-2; Effective November 7, 2014

DADS staff must consult with the unit supervisor for guidance in determining the referral, and of the information being provided. If it is decided that a referral is to be submitted, DADS staff complete Form H4834, Individual or Recipient Provider Fraud Referral/Status Report, TIERS, GWS or call toll-free 1-800-436-6184. The following information should be included in the referral packet, if available and appropriate to the allegation:

  • Form H4834;
  • provider identification, including the name, provider type and specialty, business address, residence address and provider number(s);
  • identification of the alleged illegal act. DADS staff include specific data regarding potential witnesses, their addresses, and work/home telephone numbers. Also include names, mail codes and telephone numbers of all staff who can provide information;
  • identification of policy, regulation or procedural violation. DADS staff cite the appropriate numerical reference and manual title, the DADS rule or policy clearance letter. The reference should include the specific chapter, subchapter, page number and effective date of the manual or publication;
  • source. DADS staff indicate who or what initiated the allegation; and
  • other pertinent documentation. DADS staff include any other pertinent documentation relating to the case.

8151 Expedited Referrals

Revision 14-2; Effective November 7, 2014

If DADS staff have reason to believe that the conduct of the suspected provider is serious enough to require immediate action, it may be appropriate to expedite the referral. As with routine referrals, the DADS unit supervisor must first be consulted.

An expedited referral should be made when a delay would:

  • probably result in the loss, destruction or altering of valuable evidence;
  • probably result in harm to an individual;
  • probably result in significant monetary loss to DADS that would probably not be recoverable; or
  • hinder an investigation or criminal prosecution of the alleged offense.

In these situations, the case is immediately referred to the HHSC Medicaid Program Integrity Unit (512-490-0421) before the referral packet is produced. The HHSC representative will instruct DADS staff as to what portions of the required information should be completed and sent.

In addition, the Medicaid Program Integrity Unit maintains a 24-hour fraud line at 512-424-6519. Callers may use this toll-free hotline, 1-800-436-6184, to report Medicaid fraud and abuse.

8152 Referral of Potential Provider Fraud

Revision 14-2; Effective November 7, 2014

If the DADS unit supervisor determines that the criteria for fraud exists, a fraud referral to the Medicaid Program Integrity Unit at HHSC is initiated (even if the potential fraud does not affect Title XIX funds).

8160 Fraud

Revision 14-2; Effective November 7, 2014

See Section 8230, Development of Fraud Referral Packet, for contact information.

8200 Fraud Detection and Referral

Revision 14-2; Effective November 7, 2014

Individuals receiving long-term care services are perceived as essentially honest and entitled to the same protection under the law as all other individuals. However, when there is an indication of potential fraud, the allegations must be investigated.

8210 Definition of Fraud

Revision 14-2; Effective November 7, 2014

To determine the existence of fraud, the following must be established:

  • Intentional misstatement or concealment by the individual or authorized representative created a false impression.
  • DADS or the provider provided services based on the false impression, which would not have been provided if the truth had been known.

Examples of individual fraud include (list not all-inclusive):

  • knowingly providing false information regarding an applicant's financial, medical or functional status in order to be determined eligible for assistance;
  • withholding or concealing information pertaining to the applicant's financial, medical or functional status which may cause the applicant to be ineligible for services;
  • receiving services which the individual knows to be medically unnecessary; and
  • knowingly receiving services from individuals who do not have a proper license or who obtained a license under false pretenses.

8220 Responding to Allegations of Fraud

Revision 14-2; Effective November 7, 2014

When potential fraud is discovered, provider staff should follow these procedures:

  1. Record on Form 2067, Case Information, all pertinent facts relating to the specific case in as much detail as possible. This includes:
    • who engaged or participated in the alleged fraudulent conduct,
    • what the suspected violation was,
    • when the conduct occurred (dates or time periods),
    • where the conduct occurred,
    • how the fraudulent action was performed, and the names of individuals with knowledge of the situation and how they can be contacted.
  2. If fraud is alleged by a third party, try to obtain the complainant's name, address, home telephone number, and telephone number where the complainant can be reached during the day. Provider staff should advise informants who wish to remain anonymous that DADS needs a way to contact them during the investigation.
  3. Do not make any agreements or commitments to anyone regarding the investigation or any possible adverse action.
  4. Mail Form 2067 to the appropriate DADS case manager by the next workday.

8230 Development of Fraud Referral Packet

Revision 14-2; Effective November 7, 2014

Upon receipt of Form 2067, Case Information, the DADS case manager does not request restitution. Restitution is securing payment from an individual when fraud is not indicated. Once restitution is requested, the DADS case manager cannot refer the case for fraud.

The DADS case manager consults his unit supervisor for guidance in determining the appropriateness of the referral, and of the information being provided. If it is decided that a referral is to be submitted, the DADS case manager completes Form H4834, Individual or Recipient Provider Fraud Referral/Status Report, TIERS, GWS or call toll-free 1-800-436-6184. The following information should be included in the referral packet, if available and appropriate to the complaint or allegation:

  • a completed Form H4834;
  • identification of the individual or authorized representative. Include the name, relationship to the individual (if applicable), business address, residence address, individual number, type of coverage being received, beginning date of coverage, and end date of coverage (if applicable);
  • identification of the alleged illegal act. Include copies of all pertinent documents, as well as specific data regarding potential witnesses or knowledgeable sources, their addresses, and work/home telephone numbers. The DADS case manager also includes names, mail codes and telephone numbers of any staff who can provide information;
  • identification of policy, regulation or procedural violation. The DADS case manager cites the appropriate numerical reference and manual title, the department rule or policy clearance letter. The reference should include the specific chapter, subchapter, page number and effective date of the manual or publication;
  • source of the allegation. The DADS case manager indicates who or what initiated the allegation; and
  • other pertinent documentation. The DADS case manager includes any other pertinent documentation relating to the case.

8240 Expedited Referrals

Revision 14-2; Effective November 7, 2014

If the DADS case manager has reason to believe that the conduct of the suspected individual or authorized representative is serious enough to require immediate action, it may be appropriate to expedite the referral. As with routine referrals, the DADS unit supervisor must first be consulted. An expedited referral should be made when a delay would:

  • probably result in the loss, destruction or altering of valuable evidence;
  • probably result in harm to an individual;
  • probably result in significant monetary loss to DADS that would probably not be recoverable; or
  • hinder an investigation or criminal prosecution of the alleged offense.

In these situations, the case is immediately referred to the HHSC Medicaid Program Integrity Unit (512-490-0421) before the referral packet is produced. The HHSC representative will instruct DADS staff as to what portions of the required information should be completed and sent.

8250 Referral of Potential Fraud

Revision 14-2; Effective November 7, 2014

If the DADS unit supervisor determines that the criteria for fraud exists, a fraud referral to the Medicaid Program Integrity Unit at HHSC is initiated (even if the potential fraud does not affect Title XIX funds).

8260 Referral Response

Revision 14-2; Effective November 7, 2014

HHSC is responsible for ensuring that all pertinent information is obtained and may subsequently request additional information. Providing requested material to HHSC does not constitute a confidentiality violation. Staff in that division conduct an analysis and collect data to create a complete picture of the alleged incident.

After referring the case to HHSC, no other action is necessary. DADS staff and provider staff continue to maintain the case as usual. DADS staff and provider staff should preserve a professional working relationship with the individual or authorized representative while the fraud referral is being investigated. However, for the duration of the investigation, DADS staff and provider staff must not discuss the alleged violation with unauthorized personnel. This prevents the possibility of interference with the investigation.

8300 Sanctions

Revision 14-2; Effective November 7, 2014

8310 Medicaid Sanctions

Revision 14-2; Effective November 7, 2014

Rule: 40 TAC §98.212(a), Sanctions.

8320 Additional Sanctions

Revision 14-2; Effective November 7, 2014

In addition to the reasons specified above, DADS may take other sanctions against a provider, including client holds, vendor holds and renewals/terminations.

8330 Client Holds

Revision 14-2; Effective November 7, 2014

Rule: 40 TAC §49.523, Referral Hold

8340 Vendor Hold

Revision 14-2; Effective November 7, 2014

Rule: 40 TAC §49.532, Vendor Hold

An automatic vendor hold may be placed on a provider for failure to submit a current Home and Community Support Services Agency license before the expiration of the previous one.

Although a provider is not required to submit a Certificate of Good Standing on a yearly basis if a provider is subject to franchise taxes, the provider must ensure that it has a current Certificate of Good Standing issued by the Texas State Comptroller at all times for the duration of the provider's contract.

8350 Renewals/Terminations

Revision 14-2; Effective November 7, 2014

Rule: 40 TAC Chapter 49, Contracting for Community Services

8360 Right to Appeal

Revision 14-2; Effective November 7, 2014

Rule: 40 TAC §49.541, Contractor's Right to Appeal