1. (a) This subchapter implements the Health and Human Services Commission's (HHSC), Office of Inspector General (OIG) authority to approve annually, each managed care organization (MCO) plan to prevent and reduce waste, abuse, and fraud. This authority is granted by Chapter 531, Subchapter C, Government Code, Section 531.113.

2. (b) An MCO that provides or arranges for the provision of health care services to an individual under the children's health insurance program (CHIP), must arrange for a special investigative unit to investigate fraudulent claims and other types of program abuse by recipients and providers. An MCO may choose to:

   1. (1) Establish and maintain the special investigative unit within the managed care organization; or
   2. (2) Contract with another entity for the investigation.
3. (c) An MCO must develop a plan to prevent and reduce waste, abuse, and fraud. The plan must be submitted annually to the HHSC-OIG for approval each year the MCO is enrolled with the State of Texas. The plan must be submitted 60 days prior to the start of the State fiscal year.
4. (d) If the initial plan to prevent and reduce waste, abuse, and fraud is not approved, the MCO must resubmit the plan to HHSC-OIG within 15 working days of receiving the denial letter, which will explain the deficiencies. If the plan is not resubmitted within the time allotted, the MCO will be in default and sanctions may be imposed.
5. (e) If the MCO elects to contract with another entity for the investigation of fraudulent claims and other types of program abuse as referenced in paragraph (b)(2) of this section, the MCO must adhere to all requirements of Chapter 42, §438.230 of the Code of Federal Regulations.

Source Note:The provisions of this §370.501 adopted to be effective August 8, 2004, 29 TexReg 7302.