The bill, S.B. No. 1616, amends the Government Code to enhance payment recovery and recoupment efforts under Medicaid and the child health plan program. It introduces new requirements for managed care organizations (MCOs) regarding payment recovery processes. Specifically, MCOs must provide written notice to providers of their intent to recoup overpayments and allow a minimum of 60 days for providers to address any claim defects after exhausting their appeal rights. Additionally, the bill prohibits MCOs from reviewing medical necessity determinations or claim documentation errors for previously approved services if the error was not made by the provider.

Furthermore, the bill establishes a program for recovery audit contractors to identify and recover overpayments under Medicaid, including those related to the Medicaid managed care program. It also includes a provision that allows state agencies to delay implementation of any part of the act until necessary federal waivers or authorizations are obtained. The act is set to take effect on September 1, 2025.