04/04/1997 10:04 AM Senate HES

                                                                               
          SB 149 HEALTH CARE FACILITY AUDITS & REPORTS                        
                                                                              
 Number 001                                                                    
                                                                               
  CHAIRMAN WILKEN  called the Senate Health, Education & Social                
 Services Committee (HES) to order at 10:04 a.m. and introduced                
  SB 149  as the first order of business before the committee.                 
  JAY LIVEY , Deputy Commissioner for the Department of Health &               
 Social Services, noted that the committee packet contained a                  
 position paper from the Alaska State Hospital & Nursing Home                  
 Association (ASHNHA) which describes the four sections of SB 149.             
 SB 149 clarifies that the department has the ability to do audits             
 and other financial inspections of hospitals and nursing homes in             
 order to establish reimbursement rates for Medicaid.  In the past,            
 there has been some ambiguity whether the department's statute                
 specifies that ability.                                                       
                                                                               
  GARREY PESKA , ASHNHA, added that SB 149 would repeal a state filing         
 deadline that has been superseded by federal deadlines.  Under                
 state law, facilities must file a year end report with the                    
 department within 120 days of the end of the facility's fiscal                
 year.  Due to changes in federal deadlines, facilities no longer              
 receive the documents necessary from federal payment intermediaries           
 until five months after the year end.  SB 149 would allow the                 
 department to set that deadline so as to coincide with the federal            
 deadlines.  SB 149 includes language that acknowledges that the               
 department is not required to audit every hospital and nursing home           
 every year for Medicaid.  Those facilities are all audited by                 
 independent CPAs every year and therefore it would be appropriate             
 for Medicaid audits to be done less frequently.                               
                                                                               
  CHAIRMAN WILKEN  noted that Douglas Jones and Randal Schlapia from           
 DHSS were present to answer questions.  Chairman Wilken said that             
 he intended to report SB 149 out of committee.                                
                                                                               
  SENATOR ELLIS  asked if there would be a review of the independent           
 CPAs' audit during the years the department does not perform an               
 audit.  How many years could a small facility participate in                  
 Medicaid without a state audit of the program?   JAY LIVEY  said that         
 a criteria had not yet been developed by which the department would           
 choose to do a facility audit every year.  The department and                 
 ASHNHA are contemplating changes to the rate setting system which             
 would eliminate the need for yearly audits.  Therefore, the                   
 department wanted to ensure that statute allowed the department the           
 discretion not to perform yearly audits.                                      
                                                                               
 Number 120                                                                    
                                                                               
  SENATOR ELLIS  inquired as to the length of time SB 149 allows for           
 the department not to audit.   JAY LIVEY  said that SB 149 does not           
 specify a schedule.   SENATOR ELLIS  believed that under SB 149 the           
 department could choose not to perform an audit on a facility with            
 a Medicaid program.   JAY LIVEY  acknowledged that possibility under          
 SB 149, but said that the department had no intention of doing                
 such.  Unless a change occurred in the current rate setting system,           
 the department would intend to audit every year.   GARREY PESKA               
 noted that federal law requires that the department have an audit             
 program.  Mr. Peska suggested that for a small facility an audit              
 every other year would be appropriate.  Such a facility could have            
 a contract based on the number of encounters rather than actual               
 cost or a contract based on a quarterly lump sum of the previous              
 year's reimbursement could be utilized.                                       
                                                                               
  SENATOR ELLIS  asked how small an operation would be before the              
 program would be considered as a program not materially                       
 participating in Medicaid.   JAY LIVEY  pointed out that the problem          
 with Medicaid is that it is a $350 million program.  Even a                   
 facility with a relatively small share of that budget could be                
 receiving $2 or $3 million in state expenditures which would be a             
 large portion in another context.  Mr. Livey said that the                    
 materiality would need review and the department has not begun                
 regulations describing that materiality.                                      
                                                                               
 Hearing no further discussion,  CHAIRMAN WILKEN  said that he would           
 entertain a motion.                                                           
                                                                               
  SENATOR GREEN  moved to report SB 149 out of committee with                  
 individual recommendations and accompanying fiscal notes.  Without            
 objection, it was so ordered.