Provides for Medicaid fraud detection and prevention

HB 181 — Medicaid Fraud Detection and Prevention Author: Representative Tony Bacala 2026 Regular Session Legislative Counsel Analysis

STATUTORY CONTEXT:

HB 181 enacts two new statutory provisions, R.S. 24:513(Q) and R.S. 47:1508(B)(44), and must be understood against the existing legal framework governing both the legislative auditor's powers and the confidentiality of state tax records.

R.S. 24:513 is the comprehensive statute setting forth the powers and duties of the Louisiana Legislative Auditor, a constitutionally anchored officer responsible for auditing state agencies, political subdivisions, and recipients of public funds. The statute in its current form addresses audit report publication, subpoena authority, frequency of audits, and the relationship between the legislative auditor and the attorney general. Subsection G(1), already existing in present law, provides that while audit reports prepared by the legislative auditor are public records, confidential materials that were disclosed to the legislative auditor and used to prepare those reports retain their confidential character and are not converted to public records by virtue of the auditor's possession. This existing protection is directly relevant to the present bill because the individual-level tax return data that the new subsection Q authorizes the auditor to receive would fall under this existing confidentiality shield once in the auditor's possession.

R.S. 47:1508(A) is the foundational confidentiality provision governing records and files of the Louisiana Department of Revenue. Under present law, those records are declared confidential and privileged, and no person — including Department employees — may divulge or disclose any information obtained from such records except as specifically authorized by law. This is a robust, affirmative prohibition, not merely a default rule, and it reflects Louisiana's strong policy interest in protecting taxpayer privacy. Subsection B of R.S. 47:1508 contains the existing catalog of exceptions to this general prohibition, each of which authorizes the secretary to disclose specific categories of information to specific recipients for enumerated purposes. HB 181 adds a forty-fourth exception to that catalog.

R.S. 46:437.1 et seq. constitutes the Medical Assistance Programs Integrity Law, which establishes the statutory framework governing fraud prevention, detection, and enforcement within Louisiana's Medicaid program. That law provides the substantive legal backdrop for the purposes to which both new provisions tether the authorized data sharing.

SCOPE AND NATURE OF THE CHANGE:

The bill makes two coordinated enactments that together create a new, limited data-sharing channel between the Department of Revenue and the Legislative Auditor's office.

The enactment of R.S. 47:1508(B)(44) operates on the Department of Revenue side of the channel. By adding it to the list of exceptions in subsection B, the bill removes what was previously an absolute prohibition on the secretary disclosing individual-level state income tax return data to the legislative auditor. The word "exclusively" in paragraph (a) is legally significant: it functions as an affirmative restriction, not merely a statement of purpose. Disclosure to the legislative auditor is authorized only for the three enumerated purposes — Medicaid eligibility accuracy, Medicaid fraud detection and prevention, and fulfillment of the requirements of R.S. 46:437.1 et seq. Any disclosure for any purpose outside that triad would not be authorized by this new exception and would remain prohibited under R.S. 47:1508(A). Paragraph (b) reinforces this restriction on the receiving end by imposing a use limitation on the legislative auditor directly in the authorizing statute. Paragraph (c) authorizes the secretary to execute memoranda of understanding, cooperative endeavors, or other agreements to operationalize the data sharing; this provision is permissive rather than mandatory, meaning the secretary retains discretion over whether and how to formalize the data transfer arrangement, though in practice governing data security and access protocols would almost certainly require a formal interagency instrument.

The enactment of R.S. 24:513(Q) operates on the legislative auditor's side of the channel. It affirmatively grants the auditor the authority to access individual-level state income tax return data, expressly conditioning that access on compliance with R.S. 47:1508(B)(44) — meaning the two provisions are interdependent and must be read together. The phrase "limited purposes" in the new subsection Q is a drafting signal that the legislature intends strict construction of the auditor's authority under this provision. This new subsection expands the statutory powers of the legislative auditor in a specific and cabined way, authorizing a form of access to executive branch records that did not previously exist.

The phrase "individual-level state income tax return data" is the operative data description in both new provisions. The bill does not define this phrase, which raises a practical interpretive question about the precise scope of data transferable under the new authority. At a minimum, the phrase encompasses data drawn from individual Louisiana income tax returns, as distinguished from aggregate or anonymized statistical data. The inclusion of the word "individual-level" suggests the legislature contemplated data that can be associated with identifiable persons, which is precisely the category that makes it useful for cross-referencing Medicaid eligibility records and potentially sensitive from a privacy standpoint.

This bill creates no new enforcement mechanism and does not amend the Medical Assistance Programs Integrity Law directly. The connection to R.S. 46:437.1 et seq. is one of purpose, not structural amendment.

PURPOSE AND LEGISLATIVE INTENT:

The manifest legislative purpose of HB 181 is to equip the legislative auditor with an additional data resource for conducting Medicaid program integrity work. Medicaid eligibility in Louisiana, as in other states, is determined in part based on income thresholds. A persistent challenge in Medicaid program administration is ensuring that beneficiaries who are receiving benefits actually meet the income eligibility criteria and that fraudulent applications or continuing eligibility misrepresentations are detected. State income tax return data represents one of the most reliable official records of individual income available to state government, and cross-referencing that data against Medicaid enrollment records is a logical and potentially highly effective analytical technique.

The bill addresses a structural gap in present law: the legislative auditor, despite having broad audit authority over state programs including Medicaid, lacked legal access to Department of Revenue tax return data. This gap limited the auditor's ability to perform income-based eligibility verification as part of Medicaid program integrity reviews. By creating a narrow, purpose-limited exception to the tax confidentiality statute and a corresponding grant of authority in the auditor's governing statute, the legislature appears to be responding to concerns about Medicaid fraud and improper payments in Louisiana's program — concerns that have been a recurrent subject of legislative and executive attention in the state.

The choice to route this authority through the legislative auditor rather than through the Louisiana Department of Health or the Office of Inspector General reflects the legislature's interest in independent oversight of the Medicaid program from within the legislative branch, rather than expanding executive agency data access.

PRACTICAL IMPACT AND AFFECTED PARTIES:

The primary institutional parties affected are the Louisiana Department of Revenue, the Louisiana Legislative Auditor, and, derivatively, the Louisiana Department of Health as the administering agency for Medicaid.

The Department of Revenue is affected because its secretary now has express statutory authorization — previously absent — to share sensitive tax return data with another state entity. The bill is permissive with respect to disclosure: it authorizes but does not compel the secretary to disclose. The cooperative endeavor or memorandum of understanding contemplated by paragraph (c) would likely define the scope, format, security requirements, and protocols for any actual data transfer. Department of Revenue personnel and their obligations under R.S. 47:1508(A) are directly affected, as staff will need to understand the new exception and operate within its limited boundaries.

The Legislative Auditor's office gains a meaningful new analytical tool. The ability to compare individual-level tax data against Medicaid beneficiary rolls could allow the auditor to identify cases where reported income on tax filings exceeds Medicaid eligibility thresholds, suggesting either eligibility errors or potential fraud. This could substantially enhance the quality and specificity of Medicaid program integrity audit work and likely increase the number of referrals for further investigation or enforcement action under R.S. 46:437.1 et seq.

Medicaid beneficiaries and applicants are the population whose information is most directly at stake, even though they are not named parties in the statutory text. Individual-level tax return data for persons enrolled in or applying for Medicaid could be accessed and analyzed under this new authority. The existing protection under R.S. 24:513(G)(1) means this data would not become a public record in the auditor's hands, which provides some privacy protection. However, the bill does not prescribe data retention limitations, destruction requirements, or specific security standards for data in the auditor's possession beyond what already exists in the auditor's