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 GARREY PESKA , ASHNHA, added that SB 149 would repeal a state filing deadline that has been superseded by federal deadlines.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.