HB 155: "An Act relating to audits of health facilities."
00HOUSE BILL NO. 155 01 "An Act relating to audits of health facilities." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 47.07.070 is amended by adding a new subsection to read: 04 (g) Unless a facility agrees to the use of other adjustments or rate revisions, 05 the department, in setting a prospective rate of payment under this section, may use 06 only final audit adjustments under AS 47.07.084 - 47.07.088 for which there is no 07 formal administrative hearing or other administrative or judicial review pending. 08 * Sec. 2. 47.07.074 is amended by adding a new subsection to read: 09 (b) Under procedures set out in AS 47.07.082 - 47.07.096, the department may 10 audit the financial records of a health facility and other documents relating to the 11 calculation of medical assistance payment rates to 12 (1) determine the accuracy of information used to set a prospective rate 13 of payment to the facility; and 14 (2) ensure compliance by the facility and by the department with this
01 chapter and with regulations adopted under this chapter. 02 * Sec. 3. AS 47.07 is amended by adding new sections to read: 03 Sec. 47.07.082. PRELIMINARY AUDIT PROCEDURES. (a) Within 120 04 days after the end of the health facility's fiscal year or within whatever additional time 05 is granted by the department at the request of the facility, a health facility shall submit 06 to the department its year-end report, consisting of its Medicare cost report, an audited 07 financial statement, and other reasonable information specified by the department. 08 (b) Within 30 days after the department receives a year-end report under (a) 09 of this section, the department shall conduct a preliminary review of the facility's 10 report and determine whether a field audit or a desk audit will be conducted of the 11 facility. 12 Sec. 47.07.084. DESK AUDIT PROCEDURES. (a) If the department 13 determines under AS 47.07.082(b) that a desk audit will be conducted, it shall use the 14 following procedures: 15 (1) within 30 days after the department's receipt of the facility's year-end report, the department shall notify th 16 facility in writing that it intends to conduct 17 a desk audit and shall submit to the facility in writing any questions the department 18 has regarding the year-end report; 19 (2) within 30 days after receiving the department's questions under (1) 20 of this subsection, the facility may submit its response to the department in writing; 21 (3) within 30 days after the deadline for submission of the written 22 response from the facility under (2) of this subsection, the department shall issue its 23 preliminary desk audit report; 24 (4) within 30 days after it receives the preliminary desk audit report 25 under (3) of this subsection, a facility may submit a written response to the 26 department; 27 (5) within 30 days after the deadline for submission of the facility's 28 response to the preliminary desk audit report, the department shall issue a final desk 29 audit report; 30 (6) within 30 days after it receives a final desk audit report under (5) 31 of this subsection, a facility that is dissatisfied with the report may request a formal
01 administrative hearing. 02 (b) If, in the course of conducting a desk audit under this section, the 03 department concludes that it would be advisable to conduct a field audit, the 04 department may initiate a field audit under AS 47.07.086. 05 Sec. 47.07.086. FIELD AUDIT PROCEDURES. If the department determines 06 under AS 47.07.082(b) or 47.07.084(b) that a field audit will be conducted, it shall use 07 the following procedures: 08 (1) within 30 days after the department's receipt of the facility's year-end report under AS 47.07.082, the 09 department shall notify the facility in writing that 10 it intends to conduct a field audit and shall submit to the facility in writing any 11 questions the department has regarding the year-end report; 12 (2) within 30 days after receiving the department's questions under (1) 13 of this section, the facility may submit its response to the department in writing; 14 (3) the department shall give the facility written notice of the date the 15 field audit will begin; the department may not begin a field audit until at least 10 days 16 after the facility received the notice, except with the consent of the facility; 17 (4) the department shall complete the field audit within 60 days after 18 the department received the facility's year-end report under AS 47.07.082; 19 (5) before beginning a field audit, the lead auditor shall conduct an 20 entrance conference with a representative of the facility and shall fully inform the 21 facility of the audit process and the areas of focus; 22 (6) promptly upon completion of the field audit, the lead auditor shall 23 conduct an exit conference; at the exit conference, the department shall provide the 24 facility with a list in writing of all proposed audit adjustments and a list in writing of 25 any outstanding issues; upon request by the facility, the department shall provide to 26 the facility copies of the audit work papers; 27 (7) within 20 days after the exit conference under (6) of this section, 28 the facility may submit additional information to the department to be considered in 29 connection with the audit; 30 (8) within 30 days after completion of the field audit, the department 31 shall issue its preliminary field audit report;
01 (9) within 30 days after it receives the preliminary field audit report 02 under (8) of this section, a facility may submit a written response to the department; 03 (10) within 30 days after the deadline for submission of the facility's 04 response to the preliminary field audit report under (9) of this section, the department 05 shall issue a final field audit report; 06 (11) within 30 days after it receives a final field audit report under (10) 07 of this section, a facility that is dissatisfied with the report may request a formal 08 administrative hearing. 09 Sec. 47.07.087. TIME DEADLINE FOR FINAL AUDIT REPORTS. The 10 department shall complete a final field audit report and serve it on the facility so that 11 it is received by the facility within 165 days after the date the facility's year-end report 12 was due under AS 47.07.082 or the date the department received the year-end report, 13 whichever was later. This time limit applies to any final field audit report, regardless 14 of whether the audit is a desk audit under AS 47.07.084, a field audit under 15 AS 47.07.086, or a field audit that began as a desk audit under AS 47.07.084. 16 Sec. 47.07.088. CONTENTS OF AUDIT REPORTS. Preliminary and final 17 audit reports for desk audits and field audits must each include 18 (1) criteria that form the basis of the audit, including the statutory, 19 regulatory, and contractual bases of the criteria; 20 (2) findings describing noncompliance by the facility or the department 21 with applicable statutes, regulations, or contractual requirements and calculation or 22 reporting errors; 23 (3) a statement of causation describing the reasons for any 24 noncompliance or errors cited in the findings; 25 (4) specific audit adjustments based on the findings, except that the 26 department may waive adjustments that are not material; 27 (5) a revised cost report if the audit report identifies changes that 28 should be made in the cost report; and 29 (6) attachments, including all written responses and comments 30 submitted by the facility. 31 Sec. 47.07.090. PERFORMANCE OF AUDITS. The audit unit within the
01 department shall perform the audit functions described in AS 47.07.082 - 47.07.088. 02 At the request of and under the direction of the audit unit, audit work under 03 AS 47.07.082 - 47.07.088 may also be performed by a contractor or by the 04 commission, but all audit work shall be performed in compliance with AS 47.07.082 - 05 47.07.088. 06 Sec. 47.07.092. FACILITY'S REQUEST FOR AUDIT ADJUSTMENTS. (a) 07 A facility may submit to the department a written request that the department include 08 specified audit adjustments in the audit results under AS 47.07.084 - 47.07.088. The 09 facility may submit a request under this section with its year-end report under 10 AS 47.07.082 or at any time up to 120 days after either the date the year-end report 11 is due or the date the department received the year-end report, whichever was later. 12 (b) The department shall 13 (1) include the adjustments requested under (a) of this section in the 14 final audit report under AS 47.07.084 - 47.07.088; or 15 (2) state in the final audit report the basis for not including the 16 requested adjustments. 17 (c) If the department fails to comply with the 165-day time limit in 18 AS 47.07.087, the facility's request for specified adjustments under this section is 19 considered denied on the 165th day, and within 30 days after the 165th day, the 20 facility may request a formal administrative hearing on the denial of the request. 21 (d) If the department includes the requested adjustments in the final audit 22 report under AS 47.07.084 - 47.07.088 or if it is determined by a final unappealed 23 decision in an administrative or judicial proceeding that the requested adjustments 24 should have been included in the final audit report, then any resulting rate revision 25 shall be applied to that rate year and to any affected subsequent fiscal period of the 26 facility. 27 Sec. 47.07.094. AUTHORIZED USE OF AUDIT RESULTS. (a) The 28 department may not use results of audits conducted under this chapter to recalculate 29 or revise medical assistance payment rates for fiscal periods before the rate year. 30 Except as otherwise provided in this chapter, the department shall use the results of 31 audits conducted under this chapter in the calculation of medical assistance payment
01 rates for the rate year. 02 (b) Except as otherwise provided in this chapter, if the department has failed 03 to comply with the 165-day time limit in AS 47.07.087, the department may not use 04 the audit results in the calculation of medical assistance payment rates for 05 (1) the rate year; or 06 (2) for any fiscal period that commences fewer than 80 days after the 07 facility receives the final audit report. 08 Sec. 47.07.096. IMPLEMENTATION OF AUDIT AND RATE DECISIONS. 09 (a) Unless otherwise ordered by a court, the department shall promptly implement the 10 results of a final, unappealed decision issued in an administrative or judicial 11 proceeding in which a facility has sought review of an audit result or a rate. 12 (b) Within 60 days after a decision described in (a) of this section is issued, 13 the department shall revise the challenged audit result or rate in accordance with the 14 decision and shall also revise affected rates for subsequent periods. 15 (c) Within the same 60-day period described in (b) of this section, the 16 department shall calculate the lump-sum adjustment necessary to implement the revised 17 audit result or revised rates and shall give the facility written notice of the revised 18 audit result, the revised rates, and the related lump-sum adjustment. 19 (d) Amounts owed to the department by a facility as the result of an 20 adjustment under (c) of this section shall be repaid, at the option of the facility, either 21 by a reduction in the next prospective rate of payment or by 12 equal monthly 22 payments starting with the first month of the facility's next fiscal year. Amounts owed 23 to a facility by the department as the result of an adjustment under (c) of this section 24 shall be repaid, at the option of the facility, by an increase in the next prospective rate 25 of payment or by 12 equal monthly payments starting with the first month of the 26 facility's next fiscal year. 27 (e) A facility that is dissatisfied with the rate revision or lump-sum adjustment 28 calculated by the department under (c) of this section may request a formal 29 administrative hearing within 30 days after the health facility receives written notice 30 of the rate revision or lump-sum adjustment. A rate revision or adjustment challenged 31 under this subsection may not be implemented until a final, unappealed administrative
01 or judicial decision has been issued. 02 * Sec. 4. AS 47.07.180 is amended by adding a new subsection to read: 03 (e) The commission shall calculate two proposed rates under this subsection. 04 One rate must incorporate all final audit adjustments under AS 47.07.084 - 05 AS 47.07.088 and other adjustments and rate revisions, consistent with this chapter, 06 that have been agreed to by the department and the facility. The other rate, which the 07 commission shall propose to the department for use under AS 47.07.070, shall be the 08 basis for the rate adopted by the department. This rate must incorporate the final audit 09 adjustments under AS 47.07.084 - 47.07.088 for which a formal administrative hearing 10 or other administrative or judicial review is not pending and other adjustments and rate 11 revisions, consistent with this chapter, that have been agreed to by the department and 12 the facility. 13 * Sec. 5. AS 47.07.900 is amended by adding new paragraphs to read: 14 (18) "desk audit" means an audit conducted without being at the facility 15 being audited; 16 (19) "facility" means a health facility; 17 (20) "field audit" means an audit conducted at the facility being 18 audited; 19 (21) "rate year" means the second fiscal year of a health facility that 20 begins after the end of the fiscal year that is the subject of an audit under 21 AS 47.07.082 - 47.07.096.