Analysis of Legislative Changes to HHSC-OIG in SB 207

sunset commissionSenate Bill 207 which details legislative reforms to be made to the structure and function of the Health and Human Services Commission Office of Inspector General as recommended by the Sunset Advisory Commission has cleared the Texas Senate and is set to be reviewed by the House.

A report on the bill and its implications has been published by the Senate Research Center to aid legislators on the intent and changes made by the bill.

The detailed changes can be found in the section by section analysis contained in the full report.

Here are the broad strokes.


The Health and Human Services Commission (HHSC) Office of Inspector General (OIG) prevents, detects, and investigates fraud, waste, and abuse and other allegations of wrongdoing in the health and human services system. In fiscal year 2014, OIG had 774 staff and operated on a budget of $48.9 million, a growth of nearly 30 percent since 2011.

In its first review of OIG, conducted as part of the HHSC review, the Sunset Advisory Commission (Sunset) found deep management and due process concerns, particularly in OIG’s efforts to detect and deter Medicaid fraud, waste, and abuse.  OIG’s investigative processes lack structure, guidelines, and performance measures to ensure consistent and fair results.  Poor communication and a lack of transparency give a perception that OIG makes up rules as it goes.  These significant concerns and vague accountability between the governor and the executive commissioner of HHSC (executive commissioner) demand serious attention to set this office right so it can appropriately ensure the integrity of programs in the health and human services system.

Major Provisions in Sunset Legislation:

Strengthens the accountability of OIG.

  • Provides that the executive commissioner, not the governor, appoint the inspector general.
  • Requires a special-purpose Sunset review in six years (in 2021).

Improves the effectiveness of OIG through a series of process improvements to measure and achieve better results.

  • Provides timeframes for OIG to complete preliminary and full investigations.
  • Allows OIG to share confidential drafts concerning child fatalities with DFPS.
  • Requires OIG to improve basic management practices, including establishing prioritization criteria and performance measures for its investigative processes.
  • Requires OIG to conduct quality assurance reviews for its sampling methodology used in the investigative process.
  • Strengthens oversight of special investigative units in managed care organizations and better defines OIG’s role in managed care.

Streamlines the credible allegation of fraud (CAF) payment hold appeal process.

  • Limits OIG’s ability to place payment holds in cases not involving fraud.
  • Shortens timeframes and limits the scope of appeal hearings to more quickly mitigate state financial risks.
  • Removes requirements for providers to pay for half of their CAF hold and overpayment hearing costs, consistent with other state hearing procedures.
  • Clarifies that “fraud” does not include unintentional technical, clerical, or administrative errors.
  •  Strengthens the audit appeal process for pharmacies to promote greater independence in decision making.