THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY DAVIS, DeLUCA, BARRAR, CARROLL, D. COSTA, FABRIZIO, HORNAMAN, JOSEPHS, W. KELLER, KOTIK, MANN, MATZIE, MUNDY, M. O'BRIEN, PASHINSKI, SANTARSIERO, M. SMITH AND STURLA, FEBRUARY 14, 2011

REFERRED TO COMMITTEE ON HUMAN SERVICES, FEBRUARY 14, 2011  

AN ACT

Amending Title 35 (Health and Safety) of the Pennsylvania

Consolidated Statutes, providing for oversight of the

integrity of health care programs; and imposing penalties.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Title 35 of the Pennsylvania Consolidated

Statutes is amended by adding a part to read:

PART IV

HEALTH CARE PROGRAMS

Chapter

61.  Preliminary Provisions (Reserved)

63.  Oversight of the Integrity of Health Care Programs

CHAPTER 61

PRELIMINARY PROVISIONS

(RESERVED)

CHAPTER 63

OVERSIGHT OF THE INTEGRITY OF HEALTH CARE PROGRAMS

Sec.

6301.  Scope of chapter.

6302.  Definitions.

6303.  Duties of executive agency and department.

6304.  Termination and sanctions.

6305.  Recipient and prescription refill fraud.

6306.  Duties of Office of Attorney General.

6307.  Initial service provision to a Medicaid or health care

program recipient.

6308.  Home health care agencies.

6309.  Medicaid fraud, disqualification for license, certificate

or registration.

6310.  Executive agencies regulation of health care providers

activities.

6311.  Temporary suspension.

6312.  Antifraud plans.

§ 6301.  Scope of chapter.

This chapter relates to oversight of the integrity of health

care programs.

§ 6302.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Abuse."  All of the following:

(1)  Provider practices that are inconsistent with

generally accepted business or medical practices and that

result in an unnecessary cost to the Medicaid program or in

reimbursement for goods or services that are not medically

necessary or that fail to meet professionally recognized

standards for health care.

(2)  Recipient practices that result in an unnecessary

cost to the health care program.

"AdultBasic program."  The program established pursuant to

chapter 13 of the act of June 26, 2001 (P.L.755, No.77), known

as the Tobacco Settlement Act.

"Children's Health Insurance Program."  The Children's Health

Care Program established under Article XXIII of the act of May

17, 1921 (P.L.682, No.284), known as The Insurance Company Law

of 1921.

"Complaint."  An allegation that fraud, abuse or an

overpayment has occurred.

"Department."  All of the following:

(1)  For health care programs under the administration of

the Insurance Department of the Commonwealth, the Insurance

Department of the Commonwealth.

(2)  For health care programs not under the

administration of the Insurance Department of the

Commonwealth, the executive agency of the Commonwealth

charged with administering, managing or financing the health

care program.

"Fraud."  An intentional deception or misrepresentation made

by a person with the knowledge that the deception results in

unauthorized benefit to the person or another person. The term

includes any act that constitutes fraud under applicable Federal

or State law.

"Health care program."  A health care program administered,

managed or financed through an executive agency of the

Commonwealth, such as the Children's Health Insurance Program

and the adultBasic program. The term does not include the

Medicaid program.

"Health care provider" or "provider."  All of the following:

(1)  A primary health care center or a person, including

a corporation, university or other educational institution,

licensed or approved by the Commonwealth to provide health

care or professional medical services as a physician, a

certified nurse midwife, a dentist, a pharmacist, a

podiatrist, hospital, nursing home or birth center.

(2)  A person receiving compensation or reimbursements

from a health care program.

"Home health care agency."  An organization or part thereof

staffed and equipped to provide nursing and at least one

therapeutic service to persons who are disabled, aged, injured

or sick in their place of residence or other independent living

environment.

"Insurance Company Law of 1921."  The act of May 17, 1921

(P.L.682, No.284), known as The Insurance Company Law of 1921.

"Managed care plans."  A company or health insurance entity

licensed under the act of May 17, 1921 (P.L.682, No.284), known

as The Insurance Company Law of 1921, to issue any individual or

group health, sickness or accident policy or subscriber contract

or certificate or plan that provides medical or health care

coverage by a health care facility or licensed health care

provider that is offered or governed under this chapter or any

of the following:

(1)  Article XXIV of The Insurance Company Law of 1921.

(2)  The act of December 29, 1972 (P.L.1701, No.364),

known as the Health Maintenance Organization Act.

(3)  The act of May 18, 1976 (P.L.123, No.54), known as

the Individual Accident and Sickness Insurance Minimum

Standards Act.

(4)  40 Pa.C.S. Ch. 61 (relating to hospital plan

corporations) or 63 (relating to professional health services

plan corporations).

"Medical assistance" or "Medicaid."  The State program of

medical assistance established under the act of June 13, 1967

(P.L.31, No.21), known as the Public Welfare Code.

"Medical necessity" or "medically necessary."  Any goods or

services necessary to palliate the effects of a terminal

condition or to prevent, diagnose, correct, cure, alleviate or

preclude deterioration of a condition that threatens life,

causes pain or suffering or results in illness or infirmity,

which goods or services are provided in accordance with

generally accepted standards of medical practice.

"Overpayment."  Any amount that is not authorized to be paid

by Medicaid or a health care program whether paid as a result of

inaccurate or improper cost reporting, improper claiming,

unacceptable practices, fraud, abuse or mistakes.

"Person."  Any natural person, corporation, partnership,

association, clinic, group or other entity, whether or not the

person is enrolled in the Medicaid or health care program or is

a provider of health care.

§ 6303. Duties of executive agency and department.

(a)  Reports.--

(1)  The Department of Public Welfare and the department

shall operate their respective programs to oversee the

activities of the Commonwealth's health care programs for the

benefit of the programs' recipients, providers and their

representatives to ensure that fraudulent and abusive

behavior and neglect of recipients occur to the minimum

extent possible and to recover overpayments and impose

sanctions as appropriate. Beginning January 1, 2012, and each

year thereafter, the Department of Public Welfare shall

submit a report to the General Assembly documenting the

effectiveness of the Commonwealth's efforts to control

Medicaid and health care program costs and abuse and to

recover Medicaid and health care program overpayments during

the previous year.

(2)  The report shall describe all of the following:

(i)  The number of cases opened and investigated each

year.

(ii)  The sources of the cases opened.

(iii)  The disposition of the cases closed each year.

(iv)  The amount of overpayments alleged in

preliminary and final audit letters.

(v)  The number and amount of fines or penalties

imposed.

(vi)  Any reductions in overpayment amounts

negotiated in settlement agreements or by other means.

(vii)  The amount of final Department of Public

Welfare determinations of overpayments.

(viii)  The amount deducted from Federal claiming as

a result of overpayments.

(ix)  The amount of overpayments recovered each year.

(x)  The amount of cost of investigation recovered

each year.

(xi)  The average length of time to collect from the

time the case was opened until the overpayment is paid in

full.

(xii)  The amount determined as uncollectible and the

portion of the uncollectible amount subsequently

reclaimed from the Federal Government.

(xiii)  The number of providers, by type, that are

terminated from participation in the Medicaid and health

care programs as a result of fraud and abuse.

(xiv)  All costs associated with discovering and

prosecuting cases of health care program overpayments and

making recoveries in the cases.

(3)  The report shall document actions taken to prevent

overpayments and the number of providers prevented from

enrolling in or reenrolling in each health care program and

Medicaid as a result of documented fraud and abuse and shall

include policy recommendations necessary to prevent or

recover overpayments and changes necessary to prevent and

detect fraud.

(4)  All policy recommendations in the report shall

include a detailed fiscal analysis, including implementation

costs, estimated savings to Medicaid and each health care

program and the return on investment.

(5)  The Department of Public Welfare and the department

shall submit the policy recommendations and fiscal analyses

in the report to the President pro tempore of the Senate, the

Speaker of the House of Representatives, the Banking and

Insurance Committee of the Senate and the Insurance Committee

of the House of Representatives by February 15 of each year.

(6)  The Department of Public Welfare and the department

shall each include detailed unit-specific performance

standards, benchmarks and metrics in the report, including

projected cost savings to each health care program during the

following fiscal year.

(b)  Reviews.--

(1)  The Department of Public Welfare shall conduct

reviews, investigations, analyses, audits or any combination

thereof, to determine possible fraud, abuse, overpayment or

recipient neglect in the Medicaid program and shall report

the findings of any overpayments in audit reports. At least

5% of all audits shall be conducted on a random basis. As

part of its ongoing fraud detection activities, the

Department of Public Welfare shall identify and monitor

patterns of overutilization of health care services based on

State averages. The Department of Public Welfare shall track

health care provider prescription and billing patterns and

evaluate them against Medicaid medical necessity criteria and

coverage and limitation guidelines adopted by rule. The

Department of Public Welfare shall conduct reviews of

provider exceptions to peer group norms and shall, using

statistical methodologies, provider profiling and analysis of

billing patterns, detect and investigate abnormal or unusual

increases in billing or payment of claims for Medicaid

services and medically unnecessary provision of services. For

purposes of determining Medicaid reimbursement, the

Department of Public Welfare is the final arbiter of medical

necessity. Determinations of medical necessity must be made

by a licensed physician employed by or under contract with

the Department of Public Welfare and must be based upon

information available at the time the goods or services are

provided.

(2)  The department shall conduct reviews,

investigations, analyses, audits or any combination thereof

to determine possible fraud, abuse or waste in health care

programs and shall report the findings in the report required

under this section.

(c)  Prepayment review.--

(1)  The Department of Public Welfare may conduct

prepayment review of provider claims to:

(i)  Ensure cost-effective purchasing.

(ii)  Ensure that billing by a provider to the

Department of Public Welfare is in accordance with

applicable provisions of rules, regulations, handbooks

and policies and in accordance with Federal and State

law.

(iii)  Ensure that appropriate care is rendered to

Medicaid recipients.

(2)  Prepayment reviews may be conducted as determined

appropriate by the Department of Public Welfare, without any

suspicion or allegation of fraud, abuse or neglect and may

last for up to one year. Unless the Department of Public

Welfare has reliable evidence of fraud, misrepresentation,

abuse or neglect, claims shall be adjudicated for denial or

payment within 90 days after receipt of complete

documentation by the Department of Public Welfare for review.

If there is reliable evidence of fraud, misrepresentation,

abuse or neglect, claims shall be adjudicated for denial of

payment within 180 days after receipt of complete

documentation by the Department of Public Welfare for review.

(d)  Referrals to the Office of Attorney General.--Any

suspected criminal violation identified by the Department of

Public Welfare or by the department shall be referred to the

Office of Attorney General for investigation. The Department of

Public Welfare and the department shall periodically conduct

joint training and other joint activities with the Office of

Attorney General designed to increase communication and

coordination in recovering overpayments.

(e)  Peer review.--A health care provider is subject to

having goods and services that are paid for by Medicaid or a

health care program reviewed by an appropriate peer-review

organization designated by the Department of Public Welfare or

the department. The written findings of the peer-review

organization shall be admissible in any court or administrative

proceeding as evidence of medical necessity or the lack of

medical necessity.

(f)  Notice of peer review.--Any notice required to be given

to a provider under this section shall be presumed to be

sufficient notice if sent to the address last shown on the

provider enrollment file. It is the responsibility of the

provider to furnish and keep the Department of Public Welfare 

informed of the provider's current address. United States Postal

Service proof of mailing or certified or registered mailing of

the notice to the provider at the address shown on the provider

enrollment file shall constitute sufficient proof of notice. Any

notice required to be given to the Department of Public Welfare 

under this section must be sent to the Department of Public

Welfare at an address designated by rule.

(g)  Payments.--When presenting a claim for payment under

Medicaid or a health care program, a provider shall have an

affirmative duty to supervise the provision of, and be

responsible for, goods and services claimed to have been

provided, to supervise and be responsible for preparation and

submission of the claim, and to present a claim that is true and

accurate and that is for goods and services that:

(1)  Have actually been furnished to the recipient by the

provider prior to submitting the claim.

(2)  Are covered goods or services under the health care

program and that are medically necessary.

(3)  Are of a quality comparable to those furnished to

the general public by the provider's peers.

(4)  Have not been billed in whole or in part to a

recipient or a recipient's responsible party, except for the

copayments, coinsurance or deductibles as are authorized by

the Department of Public Welfare.

(5)  Are provided in accord with applicable provisions of

all health care program rules, regulations, handbooks and

policies and in accordance with Federal and State law.

(6)  Are documented by records made at the time the goods

or services were provided, demonstrating the medical

necessity for the goods or services rendered. Medicaid and

health care program goods or services shall be considered

excessive or not medically necessary unless both the medical

basis and the specific need for them are fully and properly

documented in the recipient's medical record.

(7)  Medicaid and the Department of Public Welfare shall

deny payment or require repayment for goods or services that

are not presented as required under this section.

(h)  Denial of payments.--The Department of Public Welfare 

shall not reimburse any person or entity for any prescription

for medications, medical supplies or medical services if the

prescription was written by a physician or other prescribing

practitioner who is not enrolled in the health care program.

This section shall not apply:

(1)  In instances involving bona fide emergency medical

conditions as determined by the Department of Public Welfare.

(2)  To a provider of medical services to a patient in a

hospital emergency department, hospital inpatient or

outpatient setting or nursing home.

(3)  To bona fide pro bono services by preapproved non-

Medicaid providers as determined by the Department of Public

Welfare.

(4)  To prescribing physicians who are board-certified

specialists treating Medicaid recipients referred for

treatment by a treating physician who is enrolled in the

health care program.

(5)  To prescriptions written for duly eligible Medicare

beneficiaries by an authorized Medicare provider who is not

enrolled in the Medicaid program.

(6)  To other physicians who are not enrolled in the

Medicaid program but who provide a medically necessary

service or prescription not otherwise reasonably available

from a Medicaid-enrolled physician.

(i)  Retention.--

(1)  A health care program provider shall retain medical,

professional, financial and business records pertaining to

services and goods furnished to Medicaid or a health care

program recipient and billed to Medicaid or the health care

program for a period of five years after the date of

furnishing the services or goods.

(2)  The Department of Public Welfare or department may

investigate, review or analyze the records, which must be

made available during normal business hours, except that 24-

hour notice must be provided if patient treatment would be

disrupted. The provider shall be responsible for furnishing

to the Department of Public Welfare or the department, and

keeping the Department of Public Welfare or the department

informed of the location of, the provider's Medicaid and

health care program-related records.

(3)  The authority of the Department of Public Welfare to

obtain Medicaid or health care program-related records from a

provider shall not be curtailed nor limited during a period

of litigation between the Department of Public Welfare and

the provider or the department and the provider.

(j)  Billing payments.--Payments for the services of billing

agents or persons participating in the preparation of a Medicaid

or health care program claim shall not be based on amounts for

which they bill nor based on the amount a provider receives from

Medicaid or the health care program.

(k)  Denial of payments.--The Department of Public Welfare or

the department shall deny payment or require repayment for

inappropriate, medically unnecessary or excessive goods or

services from the person furnishing them, the person under whose

supervision they were furnished or the person causing them to be

furnished.

(l)  Confidentiality.--The complaint and all information

obtained pursuant to an investigation of a health care provider,

or the authorized representative or agent of a provider,

relating to an allegation of fraud, abuse or neglect are

confidential and shall be exempt from the act of February 14,

2008 (P.L.6, No.3), known as the Right-to-Know Law, under the

following circumstances:

(1)  Until the Department of Public Welfare or the

department takes final Department of Public Welfare action

with respect to the provider and requires repayment of any

overpayment or imposes an administrative sanction.

(2)  Until the Attorney General refers the case for

criminal prosecution.

(3)  Until ten days after the complaint is determined

without merit.

(4)  At any time if the complaint or information is

otherwise protected by law.

§ 6304.  Termination and sanctions.

(a)  Termination of participation.--The Department of Public

Welfare or the department shall immediately terminate

participation of a health care program provider in the Medicaid

or health care program and may seek civil remedies or impose

other administrative sanctions against a provider if the

provider or any principal, officer, director, agent, managing

employee or affiliated person of the provider, or any partner or

shareholder having an ownership interest in the provider equal

to at least 5%, has been:

(1)  Convicted of a criminal offense related to the

delivery of any health care goods or services, including the

performance of management or administrative functions

relating to the delivery of health care goods or services.

(2)  Convicted of a criminal offense under Federal law or

the law of any state relating to the practice of the

provider's profession.

(3)  Found by a court of competent jurisdiction to have

neglected or physically abused a patient in connection with

the delivery of health care goods or services.

(b)  Termination for foreign suspension.--If the provider has

been suspended or terminated from participation in the Medicaid

program or the Medicare program by the Federal Government or any

state, the Department of Public Welfare shall immediately

suspend or terminate the provider's participation in the

Commonwealth's Medicaid program for a period no less than that

imposed by the Federal Government or any other state, and may

not enroll the provider in the Commonwealth's Medicaid program

while the foreign suspension or termination remains in effect.

The Department of Public Welfare shall immediately suspend or

terminate, as appropriate, a provider's participation in the

Commonwealth's Medicaid program if the provider participated or

acquiesced in any action for which any principal, officer,

director, agent, managing employee or affiliated person of the

provider, or any partner or shareholder having an ownership

interest in the provider equal to at least 5%, was suspended or

terminated from participating in the Medicaid program or the

Medicare program by the Federal Government or any state. The

sanction under this subsection shall be in addition to any other

remedies provided by law.

(c)  Remedies.--The Department of Public Welfare shall seek

any remedy provided by law, including any remedy provided under

this chapter if any of the following apply:

(1)  The provider's license has not been renewed or has

been revoked, suspended or terminated, for cause, by the

licensing agency of any state.

(2)  The provider has failed to make available or has

refused access to Medicaid or health care program-related

records to an auditor, investigator or other authorized

employee or agent of the Department of Public Welfare, the

Attorney General or the Federal Government.

(3)  The provider has not furnished or has failed to make

available Medicaid or health care program-related records as

the Department of Public Welfare or the department has found

necessary to determine whether Medicaid or health care

program payments are or were due and the amounts of the

payments.

(4)  The provider has failed to maintain medical records

made at the time of service, or prior to service if prior

authorization is required, demonstrating the necessity and

appropriateness of the goods or services rendered.

(5)  The provider is not in compliance with the

provisions applicable to the health care program of any of

the following:

(i)  Provisions of Medicaid provider publications.

(ii)  Federal or State laws, rules or regulations.

(iii)  Provisions of the provider agreement between

the Department of Public Welfare and the provider.

(iv)  Certifications found on claim forms or on

transmittal forms for electronically submitted claims

that are submitted by the provider or authorized

representative.

(6)  The provider or person who ordered or prescribed the

care, services or supplies has furnished, or ordered the

furnishing of, goods or services to a recipient which are

inappropriate, unnecessary, excessive or harmful to the

recipient or are of inferior quality.

(7)  The provider has demonstrated a pattern of failure

to provide goods or services that are medically necessary.

(8)  The provider, an authorized representative of the

provider or a person who ordered or prescribed the goods or

services has submitted or caused to be submitted false or a

pattern of erroneous Medicaid or health care program claims.

(9)  The provider, an authorized representative of the

provider or a person who has ordered or prescribed the goods

or services has submitted or caused to be submitted a health

care provider enrollment application, a request for prior

authorization for Medicaid services, a drug exception request

or a health care program or Medicaid cost report that

contains materially false or incorrect information.

(10)  The provider or an authorized representative of the

provider has collected from or billed a recipient or a

recipient's responsible party improperly for amounts that

should not have been collected or billed by reason of the

provider's billing of the Medicaid or health care program for

the same service.

(11)  The provider is charged by information or

indictment with fraudulent billing practices. The sanction

under this paragraph shall be limited to suspension of the

provider's participation in the Medicaid or health care

program for the duration of the indictment unless the

provider is found guilty pursuant to the information or

indictment.

(12)  The provider or a person who has ordered or

prescribed the goods or services is found liable for

negligent practice resulting in death or injury to the

provider's patient.

(13)  The provider fails to demonstrate that the provider

had available during a specific audit or review period

sufficient quantities of goods, or sufficient time in the

case of services, to support the provider's billings to the

Medicaid or health care program.

(14)  The Department of Public Welfare has received

reliable information of patient abuse or neglect or of any

act prohibited by 18 Pa.C.S. (relating to crimes and

offenses).

(15)  The provider has failed to comply with an agreed-

upon repayment schedule.

(d)  Sanctions.--A provider is subject to sanctions for

violations of subsections (a) and (b) as the result of actions

or inactions of the provider, or actions or inactions of any

principal, officer, director, agent, managing employee,

affiliated person of the provider or any partner or shareholder

having an ownership interest in the provider equal to at least

5% or greater, in which the provider participated or acquiesced.

(e)  Imposition of sanctions.--The Department of Public

Welfare or the department shall impose any of the following

sanctions or disincentives on a provider or a person for any of

the acts described under subsection (a) or (b):

(1)  Suspension for a specific period of time of not more

than one year. Suspension shall preclude participation in the

Medicaid or health care program, which shall include any

action that results in a claim for payment to the health care

program as a result of furnishing, supervising a person who

is furnishing or causing a person to furnish goods or

services.

(2)  Termination for a specific period of time of from

more than one year to 20 years. Termination shall preclude

participation in the Medicaid and health care program, which

shall include any action that results in a claim for payment

to the Medicaid or health care program as a result of

furnishing, supervising a person who is furnishing or causing

a person to furnish goods or services.

(3)  (i)  Imposition of a fine of up to $5,000 for each

violation. Each day that an ongoing violation continues,

such as refusing to furnish Medicaid related or health

care program-related records or refusing access to

records, is considered, for the purposes of this section,

to be a separate violation.

(ii)  Each instance of improper billing of a Medicaid

or health care program recipient, each instance of

furnishing a Medicaid or health care program recipient

goods or professional services that are inappropriate or

of inferior quality as determined by competent peer

judgment, each instance of knowingly submitting a

materially false or erroneous Medicaid or health care

program provider enrollment application, request for

prior authorization for health care program services,

drug exception request or cost report, each instance of

the inappropriate prescribing of drugs for a Medicaid or

health care program recipient as determined by competent

peer judgment and each false or erroneous health care

provider claim leading to an overpayment to a provider is

considered, for the purposes of this section, to be a

separate violation.

(4)  Immediate suspension, if the Department of Public

Welfare or the department has received information of patient

abuse or neglect or of any act prohibited by companion

criminal law. Upon suspension, the Department of Public

Welfare must issue an immediate final order appealable to a

court of competent jurisdiction.

(5)  A fine, not to exceed $10,000, for a violation of

paragraph (15)(i).

(6)  Imposition of liens against provider assets,

including financial assets and real property, not to exceed

the amount of fines or recoveries sought, upon entry of an

order determining that the moneys are due or recoverable.

(7)  Prepayment reviews of claims for a specified period

of time.

(8)  Comprehensive follow-up reviews of providers every

six months to ensure that they are billing the Medicaid and

health care programs correctly.

(9)  Corrective-action plans that would remain in effect

for providers for up to three years and that would be

monitored by the Department of Public Welfare or the

department every six months while in effect.

(10)  Other remedies as permitted by law to effect the

recovery of a fine or overpayment.

(f)  Discretion.--The Department of Public Welfare or

department head charged with responsibility for administering

Medicaid or each health care program may make a determination

that imposition of a sanction or disincentive is not in the best

interest of the Medicaid or health care program, in which case a

sanction or disincentive shall not be imposed.

(g)  Factors affecting sanctions.--In determining the

appropriate administrative sanction to be applied, or the

duration of any suspension or termination, the Department of

Public Welfare or department head shall consider:

(1)  The seriousness and extent of the violation or

violations.

(2)  Any prior history of violations by the provider

relating to the delivery of health care programs which

resulted in either a criminal conviction or in administrative

sanction or penalty.

(3)  Evidence of continued violation within the

provider's management control of the health care program's

statutes, rules, regulations or policies after written

notification to the provider of improper practice or instance

of violation.

(4)  The effect, if any, on the quality of medical care

provided to Medicaid or health care program recipients as a

result of the acts of the provider.

(5)  Any action by a licensing agency respecting the

provider in any state in which the provider operates or has

operated.

(6)  The apparent impact on access by recipients to

health care program services if the provider is suspended or

terminated, in the best judgment of the Department of Public

Welfare or the department.

(h)  Documentation.--The Department of Public Welfare and the

department shall document the basis for all sanctioning actions

and recommendations.

(i)  Limiting participation.--The Department of Public

Welfare or the department may take action to sanction, suspend

or terminate a particular provider working for a group provider

and may suspend or terminate participation in the health care

program at a specific location, rather than or in addition to

taking action against an entire group.

(j)  Follow-up review process.--The Department of Public

Welfare or the department shall establish a process for

conducting follow-up reviews of a sampling of providers who have

a history of overpayment under the Medicaid or health care

program. This process shall consider the magnitude of previous

fraud or abuse and the potential effect of continued fraud or

abuse on Medicaid or health care program costs.

(k)  Overpayment determinations.--In making a determination

of overpayment to a provider, the Department of Public Welfare 

or the department shall use accepted and valid auditing,

accounting, analytical, statistical or peer-review methods or

combinations thereof. Appropriate statistical methods may

include sampling and extension to the population, parametric and

nonparametric statistics, tests of hypotheses and other

generally accepted statistical methods. Appropriate analytical

methods may include reviews to determine variances between the

quantities of products that a provider had on hand and available

to be purveyed to health care program recipients during the

review period and the quantities of the same products paid for

by Medicaid or the health care program for the same period,

taking into appropriate consideration sales of the same products

to non-Medicaid or nonhealth care program customers during the

same period. In meeting its burden of proof in any

administrative or court proceeding, the Department of Public

Welfare or the department may introduce the results of the

statistical methods as evidence of overpayment.

(l)  Audit reports.--When making a determination that an

overpayment has occurred, the Department of Public Welfare or

the department shall prepare and issue an audit report to the

provider showing the calculation of overpayments.

(m)  Audit reports on overpayments.--The audit report,

supported by Department of Public Welfare or department work

papers, showing an overpayment to a provider constitutes

evidence of the overpayment. A provider may not present or

elicit testimony, either on direct examination or cross-

examination in any court or administrative proceeding, regarding

the purchase or acquisition by any means of drugs, goods or

supplies, sales or divestment by any means of drugs, goods or

supplies or inventory of drugs, goods or supplies, unless the

acquisition, sales, divestment or inventory is documented by

written invoices, written inventory records or other competent

written documentary evidence maintained in the normal course of

the provider's business. Notwithstanding the applicable rules of

discovery, all documentation that will be offered as evidence at

an administrative hearing on a Medicaid or health care program

overpayment must be exchanged by all parties at least 14 days

before the administrative hearing or must be excluded from

consideration.

(n)  Audit expenses.--In an audit or investigation of a

violation committed by a provider which is conducted under this

section, the Department of Public Welfare or the department is

entitled to recover all investigative, legal and expert witness

costs if the Department of Public Welfare's or department's

findings were not contested by the provider or, if contested,

the Department of Public Welfare or the department ultimately

prevailed.

(o)  Burden of proof for audit expenses.--The Department of

Public Welfare or the department shall have the burden of

documenting the costs, which include salaries and employee

benefits and out-of-pocket expenses. The amount of costs that

may be recovered must be reasonable in relation to the

seriousness of the violation and must be set taking into

consideration the financial resources, earning ability and needs

of the provider, who has the burden of demonstrating the

factors.

(p)  Periodic payment of audit expenses.--The provider may

pay the costs over a period to be determined by the Department

of Public Welfare or the department if the Department of Public

Welfare or the department determines that an extreme hardship

would result to the provider from immediate full payment. Any

default in payment of costs may be collected by any means

authorized by law.

(q)  Notification.--If the Department of Public Welfare or

the department imposes an administrative sanction under

subsection (c), except paragraphs (5) and (15) or subsection

(m), upon any provider or any principal, officer, director,

agent, managing employee or affiliated person of the provider

who is regulated by another state entity, the Department of

Public Welfare or the department shall notify the other entity

of the imposition of the sanction within five business days. The

notification shall include the provider's or person's name and

license number and the specific reasons for sanction.

(r)  Withholding payment.--

(1)  The Department of Public Welfare or the department

shall withhold Medicaid or health care program payments, in

whole or in part, to a provider upon receipt of reliable

evidence that the circumstances giving rise to the need for a

withholding of payments involve fraud, willful

misrepresentation or abuse under the Medicaid or health care

program, or a crime committed while rendering goods or

services to Medicaid or the health care program recipients.

(2)  The Department of Public Welfare or the department

shall deny payment or require repayment, if the goods or

services were furnished, supervised or caused to be

furnished, by a person who has been suspended or terminated

from the health care program or the Medicare program by the

Federal Government or any state.

(3)  Overpayments owed to the Department of Public

Welfare shall bear interest at the rate calculated under

section 806 of act of April 9, 1929 (P.L.343, No.176), known

as The Fiscal Code, from the date of determination of the

overpayment by the Department of Public Welfare. Payment

arrangements shall be made at the conclusion of legal

proceedings. A provider who does not enter into or adhere to

an agreed-upon repayment schedule may be terminated by the

Department of Public Welfare for nonpayment or partial

payment.

(s)  Collection on judgments.--The Department of Public

Welfare, upon entry of a final Department of Public Welfare 

order, a judgment or order of a court of competent jurisdiction,

or a stipulation or settlement, may collect the money owed by

all means allowable by law, including notifying any fiscal

intermediary of health care program benefits that the State has

a superior right of payment. Upon receipt of the written

notification, the Medicare fiscal intermediary shall remit to

the State the sum claimed.

(t)  Administrative sanctions.--The Department of Public

Welfare may impose administrative sanctions against a Medicaid

recipient or may seek any other remedy provided by law if the

Department of Public Welfare finds that a recipient has abused

the Medicaid program.

(u)  Overpayments.--If the Department of Public Welfare has

made a probable cause determination and alleged that an

overpayment to a health care provider has occurred, the

Department of Public Welfare, after notice to the provider,

shall:

(1)  Withhold, during the pendency of an administrative

hearing under 2 Pa.C.S. (relating to administrative law and

procedure), any medical assistance reimbursement payments

until the time as the overpayment is recovered, unless within

30 days after receiving notice of the overpayment, the

provider:

(i)  makes repayment in full; or

(ii)  establishes a repayment plan that is

satisfactory to the Department of Public Welfare.

(2)  Withhold, during the pendency of an administrative

hearing under 2 Pa.C.S., medical assistance reimbursement

payments if the terms of a repayment plan are not adhered to

by the provider.

(v)  Records review.--Notwithstanding any other provision of

law, the Department of Public Welfare may review a provider's

Medicaid, health care program-related and nonhealth care

program-related records in order to determine the total output

of a provider's practice to reconcile quantities of goods or

services billed to Medicaid with quantities of goods or services

used in the provider's total practice.

(w)  Termination of participation in health care program.--

The Department of Public Welfare or the department shall

terminate a provider's participation in the Medicaid or health

care program if the provider fails to reimburse an overpayment

that has been determined by final order, not subject to further

appeal, within 35 days after the date of the final order, unless

the provider and the Department of Public Welfare have entered

into a repayment agreement.

(x)  Administrative hearing.--If a provider requests an

administrative hearing, the hearing must be conducted within 90

days following assignment of an administrative law judge, absent

exceptionally good cause, shown as determined by the hearing

officer. Upon issuance of a final order, the outstanding balance

of the amount determined to constitute the overpayment shall

become due. If a provider fails to make payments in full, fails

to enter into a satisfactory repayment plan or fails to comply

with the terms of a repayment plan or settlement agreement, the

Department of Public Welfare shall withhold medical assistance

reimbursement payments until the amount due is paid in full.

(y)  Inspections.--Duly authorized agents and employees of

the Department of Public Welfare shall have the power to

inspect, during normal business hours, the records of any

pharmacy, wholesale establishment or manufacturer, or any other

place in which drugs and medical supplies are manufactured,

packed, packaged, made, stored, sold or kept for sale, for the

purpose of verifying the amount of drugs and medical supplies

ordered, delivered or purchased by a provider. The Department of

Public Welfare shall provide at least two business days' prior

notice of any inspection. The notice shall identify the provider

whose records will be inspected and the inspection shall include

only records specifically related to that provider.

(z)  Internet website posting.--The Department of Public

Welfare shall post on its Internet website a current list of

each health care provider, including any principal, officer,

director, agent, managing employee or affiliated person of the

provider, or any partner or shareholder having an ownership

interest in the provider equal to at least 5%, who has been

terminated for cause from the Medicaid or health care program or

sanctioned under this section. The list shall be searchable by a

variety of search parameters and provide for the creation of

formatted lists that may be printed or imported into other

applications, including spreadsheets. The Department of Public

Welfare shall update the list at least monthly.

(aa)  Use of technology.--In order to improve the detection

of health care fraud, use technology to prevent and detect fraud

and maximize the electronic exchange of health care fraud

information, the Department of Public Welfare shall:

(1)  Compile, maintain and publish on its Internet

website a detailed list of all Federal and state databases

that contain health care fraud information and update the

list at least biannually.

(2)  Develop a strategic plan to connect all databases

that contain health care fraud information to facilitate the

electronic exchange of health information between the

Department of Public Welfare, the department, the Department

of Health and the Office of Attorney General. The plan must

include recommended standard data formats, fraud

identification strategies and specifications for the

technical interface between Federal and State health care

fraud databases.

(3)  Monitor innovations in health information

technology, specifically as it pertains to Medicaid and

health care program fraud prevention and detection.

(4)  Periodically publish policy briefs that highlight

available new technology to prevent or detect health care

fraud and projects implemented by other states, the private

sector or the Federal Government, which use technology to

prevent or detect health care fraud.

§ 6305.  Recipient and prescription refill fraud.

(a)  Recipient fraud.--In accordance with Federal law,

Medicaid recipients convicted of a crime under section 1128B of

the Social Security Act (49 Stat. 620, 42 U.S.C. § 1320a-7b) may

be limited, restricted or suspended from other health care

program eligibility for a period not to exceed one year, as

determined by the Department of Public Welfare head or designee.

(b)  Prescription refill fraud.--To deter fraud and abuse in

a health care program, the Department of Public Welfare may

limit the number of Schedule II and Schedule III refill

prescription claims submitted from a pharmacy provider. The

Department of Public Welfare shall limit the allowable amount of

reimbursement of prescription refill claims for Schedule II and

Schedule III pharmaceuticals if the Department of Public Welfare 

determines that the specific prescription refill was not

requested by the Medicaid recipient or authorized representative

for whom the refill claim is submitted or was not prescribed by

the recipient's medical provider or physician. Any refill

request must be consistent with the original prescription.

(c)  Recipient explanation of benefits.--At least three times

a year, the Department of Public Welfare shall provide to each

Medicaid recipient or the recipient's representative an

explanation of benefits in the form of a letter that is mailed

to the most recent address of the recipient on the record with

the Department of Public Welfare. The explanation of benefits

shall include the patient's name, the name of the health care

provider and the address of the location where the service was

provided, a description of all services billed to Medicaid in

terminology that should be understood by a reasonable person and

information on how to report inappropriate or incorrect billing

to the Department of Public Welfare or other law enforcement

entities for review or investigation. At least once a year, the

Department of Public Welfare and the department shall by letter

notify Medicaid and health care program recipients of

information on how to report criminal health care provider fraud

and the Department of Public Welfare's toll-free hotline

telephone number.

§ 6306.  Duties of the Office of Attorney General.

(a)  Statewide Medicaid fraud prevention program.--The Office

of Attorney General shall conduct a Statewide program of

Medicaid and health care program fraud control. To accomplish

this purpose, the Attorney General shall:

(1)  Investigate the possible criminal violation of any

State law pertaining to fraud in the administration of a

health care program or the Medicaid program, in the provision

of medical assistance or in the activities of providers of

health care under the Medicaid or health care program.

(2)  Investigate the alleged abuse or neglect of patients

in health care facilities receiving payments under the

Medicaid program, in coordination with the Department of

Public Welfare.

(3)  Investigate the alleged misappropriation of

patients' private funds in health care facilities receiving

payments under the Medicaid program.

(4)  Refer to the Department of Public Welfare or the

department all suspected abusive activities not of a criminal

or fraudulent nature.

(5)  Safeguard the privacy rights of all individuals and

provide safeguards to prevent the use of patient medical

records for any reason beyond the scope of a specific

investigation for fraud or abuse, or both, without the

patient's written consent.

(6)  Publicize to State employees and the public the

ability of persons to bring suit under 18 Pa.C.S. (relating

to crimes and offenses) and the potential for the persons

bringing a civil action under 18 Pa.C.S. to obtain a monetary

award.

(b)  Discretionary actions.--In carrying out the duties and

responsibilities under this section, the Office of Attorney

General may:

(1)  Enter upon the premises of any health care provider,

excluding a physician, participating in the Medicaid program

or health care program to examine all accounts and records

that may be relevant in determining the existence of fraud in

the Medicaid or health care program, to investigate alleged

abuse or neglect of patients or to investigate alleged

misappropriation of patients' private funds. A participating

physician shall make available any accounts or records that

may be relevant in determining the existence of fraud in the

Medicaid or health care program, alleged abuse or neglect of

patients or alleged misappropriation of patients' private

funds. The accounts or records of a non-Medicaid or nonhealth

care program patient may not be reviewed by, or turned over

to, the Attorney General without the patient's written

consent.

(2)  Subpoena witnesses or materials, including medical

records relating to Medicaid and health care program

recipients, within or outside of this Commonwealth and,

through any duly designated employee, administer oaths and

affirmations and collect evidence for possible use in either

civil or criminal judicial proceedings.

(3)  Request and receive the assistance of any district

attorney or law enforcement agency in the investigation and

prosecution of any violation of this section.

(4)  Take all actions necessary for the collection of

overpayments to a provider of health care under the Medicaid

program.

(5)  Seek any other civil remedies permitted by law.

§ 6307.  Initial service provision to a Medicaid or health care

program recipient.

(a)  Initial notice.--

(1)  On or before the first day services are provided to

a client, a health care provider shall inform the client and

his immediate family or representative, if appropriate, of

the right to report:

(i)  Complaints. The Statewide toll-free telephone

number for reporting complaints to the licensing agency

shall be provided to clients in a manner that is clearly

legible and shall include the following language:

To report a complaint regarding the services you

receive, please call toll-free (telephone number).

(ii)  Abusive, neglectful or exploitative practices.

The Statewide toll-free telephone number for the central

abuse hotline shall be provided to clients in a manner

that is clearly legible and shall include the following

language:

To report abuse, neglect or exploitation, please call

toll-free (telephone number).

(iii)  Medicaid or health care program fraud. Any

licensing agency description of Medicaid or health care

program fraud and the Statewide toll-free telephone

number for the central Medicaid fraud hotline shall be

provided to clients in a manner that is clearly legible

and shall include the following language:

To report suspected Medicaid or health care program

fraud, please call toll-free (telephone number).

(2)  The licensing agency shall publish a minimum of a

90-day advance notice of a change in the toll-free telephone

numbers.

(b)  Procedures and policies.--Each licensee shall establish

appropriate policies and procedures for providing notice to

clients.

(c)  Proof of right to occupancy.--An applicant must provide

the Department of Public Welfare with proof of the applicant's

legal right to occupy the property before a license may be

issued. Proof may include copies of warranty deeds, lease or

rental agreements, contracts for deeds, quitclaim deeds or other

similar documentation.

(d)  Initial application.--Upon application for initial

licensure or change of ownership licensure, the applicant shall

furnish satisfactory proof of the applicant's financial ability

to operate in accordance with the requirements of this chapter,

statute and applicable rules. The licensing agency shall

establish standards for this purpose, including information

concerning the applicant's controlling interests. The licensing

agency shall also establish documentation requirements, to be

completed by each applicant, that show anticipated provider

revenues and expenditures, the basis for financing the

anticipated cash-flow requirements of the provider and an

applicant's access to contingency financing. A current

certificate of authority, issued by a licensing agency, may be

provided as proof of financial ability to operate. The licensing

agency may require a licensee to provide proof of financial

ability to operate at any time if there is evidence of financial

instability, including unpaid expenses necessary for the basic

operations of the provider.

(e)  Evidence of financial stability.--A controlling interest

may not withhold from the Department of Public Welfare any

evidence of financial instability, including checks returned due

to insufficient funds, delinquent accounts, nonpayment of

withholding taxes, unpaid utility expenses, nonpayment for

essential services or adverse court action concerning the

financial viability of the provider that is under the control of

the controlling interest. Any person who violates this