WEST virginia Legislature

2016 regular session

Introduced

Senate Bill 312

By Senators Gaunch, Ashley, Blair, Carmichael, Ferns, Stollings, Trump, Walters, Boso and Plymale

[Introduced January 18, 2016;
Referred to the Committee on Health and Human Resources; and then to the Committee on Finance.]

A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §9-10-1, §9-10-2, §9-10-3, §9-10-4, §9-10-5, §9-10-6, §9-10-7, §9-10-8, §9-10-9, §9-10-10, §9-10-11, §9-10-12 and §9-10-13, all relating to welfare fraud prevention.

Be it enacted by the Legislature of West Virginia:

That the Code of West Virginia, 1961, as amended, be amended and reenacted, by adding there to a new article, designated §9-10-1, §9-10-2, §9-10-3, §9-10-4, §9-10-5, §9-10-6, §9-10-7, §9-10-8, §9-10-9, §9-10-10, §9-10-11, §9-10-12 and §9-10-13, all to read as follows:

ARTICLE 10.  WELFARE FRAUD PREVENTION ACT.

§ 9-10-1.  Definitions.

This article may be known as the Welfare Fraud Prevention Act.  For purposes of this article, the following definitions apply:

(1) “Department” means the State Division of Human Services.

(2) “Identity information” means an applicant or recipient’s full name, aliases, date of birth, address, Social Security number and other related information.

§9-10-2.  Establishment of enhanced eligibility verification system.

(a) The department shall establish a computerized income, asset, and identity eligibility verification system in order to verify eligibility, eliminate the duplication of assistance, and deter waste, fraud and abuse within each respective assistance program administered by the department.

(b) The department shall enter into a competitively bid contract with a third-party vendor for the purposes of developing a system by which to verify the income, asset and identity eligibility of applicants to prevent fraud, misrepresentation and inadequate documentation when determining an applicant’s eligibility for assistance prior to the distribution of benefits, periodically between eligibility redeterminations, and during eligibility redeterminations and reviews, as prescribed in this section. The department may also contract with a vendor to provide information to facilitate reviews of recipient eligibility conducted by the department.

(c) When the department enters into a contract with a third-party vendor for the purposes of carrying out provisions of this article, the vendor, in partnership with the department, shall be required by contract to establish annualized savings realized from implementation of the verification system and savings shall exceed the total yearly cost to the state for implementing the verification system.

(d) When the department enters into a contract with a third-party vendor, the payment structure shall be based on a per-applicant rate and a performance bonus for achieving above a predetermined rate of success of identifying waste, fraud and abuse.

(e) To avoid any conflict of interest, when the department enters into a contract with a third-party vendor, that primary vendor may not currently or will not be allowed in the future to bid on or be awarded a state contract to run enrollment services.

(f) Nothing in this article shall preclude the department from continuing to conduct additional eligibility verification processes, not detailed in this article, that are currently in practice.

§9-10-3.  Enhanced eligibility verification process.

(a)  All applications for benefits must be processed within a ten-day period or the minimum required by federal law. Prior to awarding assistance, and on a quarterly basis thereafter, the department shall match identity information of each respective applicant and recipient of assistance from the department against the following:

(1) Earned and unearned income information maintained by the Internal Revenue Service;

(2) Employer weekly, monthly, and/or quarterly reports of income and unemployment insurance payment information maintained by the State Division of Labor;

(3). Earned income information maintained by the U.S. Social Security Administration;

(4) Immigration status information maintained by U.S. Citizenship and Immigration Services;

(5) Death register information maintained by the U.S. Social Security Administration;

(6) Prisoner information maintained by the U.S. Social Security Administration;

(7) Public Housing and Section 8 Housing Assistance payment information maintained by the U.S. Department of Housing and Urban Development;

(8) National fleeing felon information maintained by the U.S. Federal Bureau of Investigation;

(9) Wage reporting and similar information maintained by states contiguous to this state;

(10) Beneficiary records and earnings information maintained by the U.S. Social Security Administration in its Beneficiary and Earnings Data Exchange (BENDEX) database;

(11) Earnings and pension information maintained by the U.S. Social Security Administration in its Beneficiary Earnings Exchange Record System (BEERS) database;

(12) Employment information maintained by the State Division of Labor;

(13) Employment information maintained by the U.S. Department of Health and Human Services in its National Directory of New Hires (NDNH) database;

(14) Supplemental security income information maintained by the U.S. Social Security Administration in its SSI State Data Exchange (SDX) database;

(15) Veterans’ benefits information maintained by the U.S. Department of Health and Human Services, in coordination with the department and State Division of Veterans’ Affairs, in the federal Public Assistance Reporting Information System (PARIS) database;

(16) Child care services information maintained by the State Division of Human Services;

(17) Utility payments information maintained by the state under the Low Income Home Energy Assistance Program;

(18) Emergency utility payment information maintained by state or local entities;

(19) A database of all persons who currently hold a license, permit, or certificate from any state agency the cost of which exceeds $500;

(20) Income and employment information maintained by the Child Support Enforcement Division of the department and the U.S. Department of Health and Human Services’ Office of Child Support Enforcement;

(21) Earnings and pension information maintained by the West Virginia Consolidated Public Retirement Board;

(22) Any existing real-time database of persons currently receiving benefits in other states, such as the National Accuracy Clearinghouse; and

(23) A database which is substantially similar to or a successor of a database established in this act.

(b) Prior to awarding assistance, and on a quarterly basis, the department shall match identity information of each respective applicant and recipient of assistance from the department against, at minimum, the following public records:

(1) A nationwide public records data source of physical asset ownership such as real property, automobiles, watercraft, aircraft, and luxury vehicles, or any other vehicle owned by the applicant and recipient of assistance;

(2) A nationwide public records data source of incarcerated individuals;

(3) A nationwide best-address and driver's license data source to verify individuals are residents of the state;

(4) A comprehensive public records database that identifies potential identity fraud or identity theft that can closely associate name, social security number, date of birth, phone and address information;

(5) National and local financial institutions, in order to locate undisclosed depository accounts or verify account balances of disclosed accounts;

(6) Outstanding default or arrest warrant information maintained by the criminal history systems board, the criminal justice information system, and the warrant management system; and

(7) A database which is substantially similar to or a successor of a database established in this article.

§9-10-4.  Enhanced identity authentication process.

Prior to awarding assistance, applicants for benefits must complete a computerized identity authentication process that shall confirm the applicant owns the identity presented in the application. The department shall review the respective applicant’s or recipient’s identity ownership using the following procedures:

(1) Provide a knowledge-based quiz consisting of financial or personal questions. The quiz must provide support for nonbanked or under-banked applicants who do not have an established credit history.

(2) Require the quiz for applications submitted through all channels, including online, in-person, and via phone.

§9-10-5.  Discrepancies and case review.

(a) If a discrepancy results from an applicant or recipient’s identity information and one or more of the databases or information tools listed under section three or section four of this article, the department shall review the respective applicant or recipient’s case using the following procedures:

(1) If the information discovered does not result in the department finding a discrepancy or change in an applicant’s or recipient’s circumstances that may affect eligibility, the department shall take no further action.

(2) If the information discovered under section three or section four of this article results in the department finding a discrepancy or change in a recipient’s circumstances that may affect eligibility, the department shall promptly redetermine eligibility after receiving the information.

(3)(A) If the information discovered under section three or section four of this article results in the department finding a discrepancy or change in an applicant’s or recipient’s circumstances that may affect eligibility, the applicant or recipient shall be given an opportunity to explain the discrepancy; provided, however, that self-declarations by applicants or recipients shall not be accepted as verification of categorical and financial eligibility during eligibility evaluations, reviews, and redeterminations.

(B) The department shall provide written notice to the applicant or recipient, which shall describe in sufficient detail the circumstances of the discrepancy or change, the manner in which the applicant or recipient may respond, and the consequences of failing to take action. The applicant or recipient shall have ten business days, or the minimum required by state or federal law, to respond in an attempt to resolve the discrepancy or change. The explanation provided by the recipient or applicant shall be given in writing. After receiving the explanation, the department may request additional documentation if it determines that there is risk of fraud, misrepresentation, or inadequate documentation.

(4) If the applicant or recipient does not respond to the notice, the department shall deny or discontinue assistance for failure to cooperate, in which case the department shall provide notice of intent to deny or discontinue assistance. Eligibility for assistance shall not be established or reestablished until the discrepancy or change has been resolved.

(5) If an applicant or recipient responds to the notice and disagrees with the findings of the match between his or her identity information and one or more databases or information tools listed under this article, the department shall reinvestigate the matter. If the department finds that there has been an error, the department shall take immediate action to correct it and no further action shall be taken. If, after an investigation, the department determines that there is no error, the department shall determine the effect on the applicant’s or recipient’s case and take appropriate action. Written notice of the department’s action shall be given to the applicant or recipient.

(6) If the applicant or recipient agrees with the findings of the match between the applicant’s or recipient’s identity information and one or more databases or information tools listed under this act, the department shall determine the effect on the applicant or recipient’s case and take appropriate action. Written notice of the department’s action shall be given to the applicant or recipient. In no case shall the department discontinue assistance as a result of a match between the applicant’s or recipient’s identity information and one or more databases or information tools listed under this article until the applicant or recipient has been given notice of the discrepancy and the opportunity to respond as required under this act.

(b) The department shall promulgate rules and regulations necessary for the purposes of carrying out provisions of this article.

§9-10-6.  Referrals for fraud, misrepresentation, or inadequate documentation.

(a) After reviewing changes or discrepancies that may affect program eligibility, the department shall refer suspected cases of fraud to the State Medicaid Fraud Control Unit or the Investigations and Fraud Management Division of the department, for criminal prosecution, recovery of improper payments, and collection of civil penalties.

(b) After reviewing changes or discrepancies that may affect program eligibility, the department shall refer suspected cases of identity fraud to an appropriate prosecuting attorney for criminal prosecution.

(c) In cases of fraud substantiated by the department, upon conviction the state should review all legal options to remove enrollees from other public programs and garnish wages or state income tax refunds until the state recovers an equal amount of benefits fraudulently claimed.

(d) After reviewing changes or discrepancies that may affect program eligibility, the department shall refer suspected cases of fraud, misrepresentation, or inadequate documentation to appropriate agencies, divisions, or departments for review of eligibility discrepancies in other public programs. This should also include cases in which an individual is determined to be no longer eligible for the original program.

§9-10-7.  Implementation date and reporting.

(a) This act shall be implemented six months following legislative enactment.

(b) Six months following the act’s implementation, and quarterly thereafter, the department shall provide a written report to the Governor, Legislature, State Auditor and State Treasurer detailing the effectiveness and general findings of the eligibility verification system, including the number of cases reviewed, the number of case closures, the number of referrals for criminal prosecution, recovery of improper payment, collection of civil penalties, the outcomes of cases referred to the Medicaid Fraud Control Unit or the Investigations and Fraud Management Division under this Act, and the savings that have resulted from the system.

§9-10-8.  Transparency in Medicaid.

Following the precedent set by Medicare, the department shall release data that includes but is not limited to the following: The physician’s name and office locations; a provider’s National Provider Identifier (NPI); the type of service provided by Healthcare Common Procedure Coding System (HCPCS) code; and whether the service was performed in a facility or office setting. This public data shall also include the number of services, average submitted charges, average allowed amount, average Medicaid payment, and a count of unique beneficiaries treated.

§9-10-9.  Eliminate federal work waivers for SNAP beneficiaries.

The department shall not seek, apply for, accept or renew any waiver of requirements established under 7 U.S.C. § 2015(o).

§9-10-10.  Photo identification on electronic benefits transfer cards.

(a) The department shall place a photograph of the recipient on any electronic benefits transfer card issued by the department, unless the recipient declines to have the photograph included. When a recipient is a minor or otherwise incapacitated individual, a parent or legal guardian of such recipient may have a photograph of the parent or legal guardian placed on the card.

(b) The department shall explore opportunities with other state agencies, departments, or divisions, including the Division of Motor Vehicles, to share photographs when available. The department may sign one or more memorandum of understanding with such agencies, departments, or divisions as necessary to implement this section.

§9-10-11.  Prohibition of electronic benefits transfer spending at locations of vice and luxury.

(a) Funds available on electronic benefit transfer cards may not be used to purchase alcohol, liquor or imitation liquor, cigarettes, tobacco products, bail, gambling activities, lottery tickets, tattoos, travel services provided by a travel agent, money transmission to locations abroad, sexually oriented adult materials, concert tickets, professional or collegiate sporting event tickets, or tickets for other entertainment events intended for the general public.

(b) Electronic benefit transfer card transactions are prohibited at all retail liquor stores, casinos, gaming establishments, jewelry stores, tattoo parlors, massage parlors, body piercing parlors, spas, nail salons, lingerie shops, tobacco paraphernalia stores, vapor cigarette stores, psychic or fortune telling businesses, bail bond companies, video arcades, movie theaters, swimming pools, cruise ships, theme parks, dog or horse racing facilities, pari-mutuel facilities, sexually oriented businesses, retail establishments which provide adult-oriented entertainment in which performers disrobe or perform in an unclothed state for entertainment, and businesses or retail establishments where minors under age eighteen are not permitted.

(c) Upon enrollment, the department shall offer new applicants an itemized list of prohibited purchases, including those specified in subsection (a), and make such a list available on the department’s website.

(d) The department shall prohibit establishments identified under subsection (b) of this section B from operating ATMs that accept electronic benefit transfer cards. Businesses found in violation of this subsection shall be subject to appropriate licensing sanctions.

(e) If a recipient is found to have violated subsection (a), of this section, the department shall issue a warning in writing to the recipient. The recipient shall be subject to disqualification of benefits for up to three months following the first offense and a permanent termination of benefits following the second offense, unless expressly prohibited by federal law.

§9-10-12.  Track out-of-state spending.

(a) The department shall post on its websites and make available on an annual basis to the Legislature’s Joint Committee on Government and Finance, the Speaker and Minority Leader of the House of Delegates, the Senate President, and the Senate Minority Leader, a report of Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) benefit spending.

(b) The report required under subsection (a), of this section shall include:

(1) The dollar amount and number of transactions of SNAP benefits that are accessed or spent out-of-state, disaggregated by state;

(2) The dollar amount and number of transactions of TANF benefits that are accessed or spent out-of-state, disaggregated by state;

(3) The dollar amount, number of transactions, and times of transactions of SNAP benefits that are accessed or spent in-state, disaggregated by retailer, institution, or location; and

(4) The dollar amount, number of transactions, and time of transactions of TANF benefits that are accessed or spent in-state, disaggregated by retailer, institution, or location.

(c) The report required under subsection (a), of this section shall be de-identified to prevent identification of individual recipients.

NOTE: The purpose of this bill, creating the Welfare Fraud Prevention Act, is to establish or improve and maintain procedures for welfare fraud prevention.

Strike-throughs indicate language that would be stricken from a heading or the present law and underscoring indicates new language that would be added.