LRB-3892/1
PJK:sac&amn
2015 - 2016 LEGISLATURE
December 18, 2015 - Introduced by Senators Cowles, Gudex, Hansen, Lasee and
Stroebel, cosponsored by Representatives Jacque, Brandtjen, R. Brooks,
Gannon, Genrich, Horlacher, Kremer, Krug, T. Larson, Petersen,
Skowronski and Tittl. Referred to Committee on Public Benefit and
Regulatory Reform.
SB472,1,6 1An Act to amend 20.435 (4) (b), 20.435 (4) (b), 20.435 (4) (bm), 20.435 (4) (L),
220.435 (4) (nn), 20.435 (4) (pa), 49.49 (5), 49.497 (2) (a), 49.793 (2) (a) and 49.847
3(3) (a); and to create 49.844 of the statutes; relating to: an optional incentive
4program for counties and tribes that identify fraudulent activity in certain
5public assistance programs, granting rule-making authority, and making
6appropriations.
Analysis by the Legislative Reference Bureau
This bill establishes an optional program that provides incentives in the form
of reward payments to counties and tribes for identifying fraud in certain public
assistance programs.
Under current law, a county or an elected governing body of a federally
recognized American Indian tribe or band (tribe) may retain a portion of incorrect
overpayments in public assistance programs administered by the Department of
Health Services (DHS), including Medical Assistance (MA) and the supplemental
nutrition assistance program (known as FoodShare in Wisconsin), that are recovered
as the result of the efforts of an employee or officer of the county or tribe.
Under one provision in current law, a tribe or county other than Milwaukee
County may retain the portion of a recovered amount that is specified by rule by
DHS. This provision applies to any public assistance program administered by DHS.
Under another provision that applies only to MA, a county or tribe may retain 15

percent of recovered MA funds that were incorrectly provided as a result of
fraudulent activity by a recipient or provider. Under another provision that applies
only to MA, a tribe or county other than Milwaukee County may retain 15 percent
of recovered MA funds that were incorrectly provided as a result of misstatements
or omissions of fact or failures to provide information by an applicant or recipient or
another person providing information on behalf of an applicant or recipient. Under
a provision that applies only to FoodShare, DHS establishes by rule the portion of
overpayment recoveries that a tribe or a county other than Milwaukee County may
retain. In this latter provision, the bill changes the amount of a FoodShare
overpayment recovery that a county or tribe may retain to the full amount of the
overpayment recovery that the state is permitted to retain under federal law.
Under the bill, DHS is required to establish an optional incentive program, by
rule, under which a county with a population of less than 750,000, which excludes
Milwaukee County, or a tribe receives a reward payment if an employee or officer of
the county or tribe identifies suspected fraudulent activity in MA or FoodShare and
the county or tribe determines the fraudulent activity occurred, establishes a claim
for any overpaid benefits related to the fraudulent activity, and, if directed by DHS,
criminally prosecutes the fraudulent activity. Under the bill, the amount of the
reward payment under the program is 20 percent of the amount that DHS
determines will be saved in the program over a 12-month period as the result of
eliminating the identified fraudulent activity. The bill also provides that, if a county
or tribe chooses to receive a reward payment under the optional incentive program,
the county or tribe may not also retain 15 percent or any other portion of recovered
MA or FoodShare overpayments that were made as a result of the identified
fraudulent activity. The bill does not, however, affect a county or tribe's eligibility
to retain a recovered overpayment that was made as the result of a recipient's
nonfraudulent error.
For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB472,1 1Section 1. 20.435 (4) (b) of the statutes, as affected by 2015 Wisconsin Act 55,
2section 676, is amended to read:
SB472,3,173 20.435 (4) (b) Medical Assistance program ; benefits and reward payments for
4identifying fraud
. Biennially, the amounts in the schedule to provide a portion of the
5state share of Medical Assistance program benefits administered under subch. IV of
6ch. 49, for a portion of the Badger Care health care program under s. 49.665, to

1provide a portion of the Medical Assistance program benefits administered under
2subch. IV of ch. 49 that are not also provided under par. (o), to fund the pilot project
3under s. 46.27 (9) and (10), to provide a portion of the facility payments under 1999
4Wisconsin Act 9
, section 9123 (9m), to fund services provided by resource centers
5under s. 46.283, for services under the family care benefit under s. 46.284 (5), for
6assisting victims of diseases, as provided in ss. 49.68, 49.683, and 49.685, for
7distributing grants under s. 146.64, for reward payments under s. 49.844 (2), and for
8reduction of any operating deficits as specified in 2005 Wisconsin Act 15, section 3.
9Notwithstanding s. 20.002 (1), the department may transfer from this appropriation
10account to the appropriation account under sub. (5) (kc) funds in the amount of and
11for the purposes specified in s. 46.485. Notwithstanding ss. 20.001 (3) (b) and 20.002
12(1), the department may credit or deposit into this appropriation account and may
13transfer between fiscal years funds that it transfers from the appropriation account
14under sub. (5) (kc) for the purposes specified in s. 46.485 (3r). Notwithstanding s.
1520.002 (1), the department may transfer from this appropriation account to the
16appropriation account under par. (bd) funds in the amount and for the purposes
17specified in s. 49.45 (6v).
SB472,2 18Section 2 . 20.435 (4) (b) of the statutes, as affected by 2015 Wisconsin Act 55,
19section 677, is amended to read:
SB472,4,1220 20.435 (4) (b) Medical Assistance program ; benefits and reward payments for
21identifying fraud
. Biennially, the amounts in the schedule to provide a portion of the
22state share of Medical Assistance program benefits administered under subch. IV of
23ch. 49, for a portion of the Badger Care health care program under s. 49.665, to
24provide a portion of the Medical Assistance program benefits administered under
25subch. IV of ch. 49 that are not also provided under par. (o), to fund the pilot project

1under s. 46.27 (9) and (10), to provide a portion of the facility payments under 1999
2Wisconsin Act 9
, section 9123 (9m), to fund services provided by resource centers
3under s. 46.283, for services under the family care benefit under s. 46.284 (5), for
4assisting victims of diseases, as provided in ss. 49.68, 49.683, and 49.685, for
5distributing grants under s. 146.64, for reward payments under s. 49.844 (2), and for
6reduction of any operating deficits as specified in 2005 Wisconsin Act 15, section 3.
7Notwithstanding s. 20.002 (1), the department may transfer from this appropriation
8account to the appropriation account under sub. (5) (kc) funds in the amount of and
9for the purposes specified in s. 46.485. Notwithstanding ss. 20.001 (3) (b) and 20.002
10(1), the department may credit or deposit into this appropriation account and may
11transfer between fiscal years funds that it transfers from the appropriation account
12under sub. (5) (kc) for the purposes specified in s. 46.485 (3r).
SB472,3 13Section 3. 20.435 (4) (bm) of the statutes is amended to read:
SB472,5,614 20.435 (4) (bm) Medical Assistance, food stamps, and Badger Care
15administration; contract costs, insurer reports, and resource centers.
Biennially, the
16amounts in the schedule to provide a portion of the state share of administrative
17contract costs for the Medical Assistance program under subch. IV of ch. 49 and the
18Badger Care health care program under s. 49.665 and to provide the state share of
19administrative costs for the food stamp program under s. 49.79, other than payments
20under s. 49.78 (8), for reward payments under s. 49.844 (2) and (3), to develop and
21implement a registry of recipient immunizations, to reimburse 3rd parties for their
22costs under s. 49.475, for costs associated with outreach activities, for state
23administration of state supplemental grants to supplemental security income
24recipients under s. 49.77, and for services of resource centers under s. 46.283. No
25state positions may be funded in the department of health services from this

1appropriation, except positions for the performance of duties under a contract in
2effect before January 1, 1987, related to the administration of the Medical Assistance
3program between the subunit of the department primarily responsible for
4administering the Medical Assistance program and another subunit of the
5department. Total administrative funding authorized for the program under s.
649.665 may not exceed 10% of the amounts budgeted under pars. (p) and (x).
SB472,4 7Section 4. 20.435 (4) (L) of the statutes is amended to read:
SB472,5,178 20.435 (4) (L) Fraud and error reduction. All moneys received as the state's
9share of the recovery of overpayments and incorrect payments under ss. 49.497 (1)
10and (1m), 49.793 (2) (a), and 49.847, all moneys received from counties and tribal
11governing bodies as a result of any error reduction activities under ss. 49.197 and
1249.845, and all moneys credited to this appropriation account under ss. 49.497 (2) (b),
1349.793 (2) (b), and 49.847 (3) (b), for any contracts under s. 49.197 (5), for any
14activities to reduce error and fraud under s. 49.845, to pay federal sanctions under
15the food stamp program, for reward payments under s. 49.844 (2) and (3), and for food
16stamp reinvestment activities under reinvestment agreements with the federal
17department of agriculture that are designed to improve the food stamp program.
SB472,5 18Section 5. 20.435 (4) (nn) of the statutes is amended to read:
SB472,5,2419 20.435 (4) (nn) Federal aid; income maintenance. All moneys received from the
20federal government for the costs of contracting for the administration of the Medical
21Assistance program under subch. IV of ch. 49 and the Badger Care health care
22program under s. 49.665 and the food stamp program, other than moneys received
23under par. (pa), for costs to administer income maintenance programs, as defined in
24s. 49.78 (1) (b), and for reward payments under s. 49.844 (2) and (3).
SB472,6 25Section 6. 20.435 (4) (pa) of the statutes is amended to read:
SB472,6,7
120.435 (4) (pa) Federal aid; Medical Assistance and food stamp contracts
2administration.
All federal moneys received for the federal share of the cost of
3contracting for payment and services administration and reporting, other than
4moneys received under pars. (nn) and (np), to reimburse 3rd parties for their costs
5under s. 49.475, for administrative contract costs for the food stamp program under
6s. 49.79, for reward payments under s. 49.844 (2) and (3), and for services of resource
7centers under s. 46.283.
SB472,7 8Section 7. 49.49 (5) of the statutes is amended to read:
SB472,6,149 49.49 (5) County collection. Any Except as provided in s. 49.844 (2) (b) and
10(c), any
county may retain 15 percent of state Medical Assistance funds that are
11recovered due to the efforts of a county employee or officer or, if the county initiates
12action by the department of justice, due to the efforts of the department of justice
13under s. 49.846. This subsection applies only to recovery of medical assistance that
14was provided as a result of fraudulent activity by a recipient or by a provider.
SB472,8 15Section 8. 49.497 (2) (a) of the statutes is amended to read:
SB472,6,1916 49.497 (2) (a) Except as provided in par. (b) and s. 49.844 (2) (b) and (c), a county
17or governing body of a federally recognized American Indian tribe may retain 15%
18of benefits provided under this subchapter or s. 49.665 that are recovered under this
19section due to the efforts of an employee or officer of the county or tribe.
SB472,9 20Section 9. 49.793 (2) (a) of the statutes is amended to read:
SB472,7,521 49.793 (2) (a) Except as provided in par. (b) and s. 49.844 (3) (b) and (c), a county,
22multicounty consortium, as defined in s. 49.78 (1) (br), or governing body of a
23federally recognized American Indian tribe may retain a portion of the full amount
24of an overpayment the state is authorized to retain under 7 USC 2025 that is
25recovered under sub. (1) due to the efforts of an employee or officer of the county,

1multicounty consortium, or tribe. The department shall promulgate a rule
2establishing the portion of the amount of the overpayment that the county,
3multicounty consortium, or governing body may retain.
This paragraph does not
4apply to recovery of an overpayment that was made as a result of state, county,
5multicounty consortium, or tribal governing body error.
SB472,10 6Section 10. 49.844 of the statutes is created to read:
SB472,7,9 749.844 Optional incentive program for counties and tribes that
8identify fraud in certain public assistance programs.
(1) Definitions. In this
9section:
SB472,7,1110 (a) "County or tribe" means a county having a population of less than 750,000
11or a federally recognized American Indian tribe or band in this state.
SB472,7,1212 (b) "Department" means the department of health services.
SB472,7,1413 (c) "Food stamp program" means the federal food stamp program under 7 USC
142011
to 2036a.
SB472,7,1515 (d) "Medical Assistance program" means the program under subch. IV.
SB472,7,20 16(2) Medical Assistance program. (a) The department shall establish by rule
17an optional incentive program under which the department will provide a reward
18payment to a county or tribe if an employee or officer of the county or tribe identifies
19suspected fraudulent activity in the Medical Assistance program and the county or
20tribe does all of the following:
SB472,7,2221 1. Investigates the identified suspected fraudulent activity and determines
22that fraud occurred.
SB472,7,2423 2. Establishes a claim for any overpaid benefits resulting from the identified
24fraudulent activity.
SB472,8,2
13. Pursues criminal prosecution for the identified fraudulent activity if directed
2to do so by the department.
SB472,8,43 (b) The department shall establish the optional incentive program to include
4all of the following:
SB472,8,85 1. That, for identifying fraudulent activity, a county or tribe shall choose to
6receive a reward payment under this subsection in the amount determined under
7subd. 2. or, alternatively, to retain funds under s. 49.49 (5), 49.497 (2) (a), or 49.847
8(3) (a).
SB472,8,139 2. That the amount of a reward payment to a county or tribe under the program
10established under this subsection is equal to 20 percent of the amount that the
11department determines will be saved in the Medical Assistance program, during the
1212-month period after the fraudulent activity is eliminated, as a result of
13eliminating the identified fraudulent activity.
SB472,8,1714 (c) 1. A county or tribe that chooses to receive a reward payment under this
15subsection may not retain any funds that were incorrectly paid as a result of the
16identified fraudulent activity and that are recovered due to the efforts of an employee
17or officer of the county or tribe.
SB472,8,2018 2. Nothing in subd. 1. or par. (b) prohibits a county or tribe from retaining
19recovered funds under s. 49.497 (2) (a) or 49.847 (3) (a) that were incorrectly paid as
20the result of a recipient's error rather than fraud.
SB472,8,2321 (d) The department may make reward payments under the optional incentive
22program established under this subsection from the appropriations under s. 20.435
23(4) (b), (bm), (L), (nn), and (pa).
SB472,9,3 24(3) Food stamp program. (a) The department shall establish by rule an
25optional incentive program under which the department will provide a reward

1payment to a county or tribe if an employee or officer of the county or tribe identifies
2suspected fraudulent activity in the food stamp program and the county or tribe does
3all of the following:
SB472,9,54 1. Investigates the identified suspected fraudulent activity and determines
5that fraud occurred.
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