Date of Adoption: November 3, 2000.

Purpose: To comply with the Governor's Executive Order 97-02 on regulatory reform. To consolidate all department rules that apply to providers into chapter 388-502 WAC, establishing WAC 388-502-0240 Audits and the audit appeal process for contractors/providers.

Citation of Existing Rules Affected by this Order: Repealing WAC 388-41-001, 388-41-003, 388-41-010, 388-41-020, 388-81-175, and 388-501-0130.

Statutory Authority for Adoption: RCW 74.08.090, 43.20B.675.

Adopted under notice filed as WSR 00-17-161 on August 22, 2000, and 00-18-031 (supplemental) on August 29, 2000.

Changes Other than Editing from Proposed to Adopted Version: (Additions indicated by underlining and deletions indicated by strikethrough.)

     Subsection (6)(e) The right to an administrative appeal, if the contractor/provider requests it. See subsections (15) and (16) (17) of this section.

     Subsection (8)(b) MAA gives a provider twenty days advance notice that it is going to audit paid claims or patient medical records for compliance with program rules, standards, or the community standard of practice. See subsection (16) of this section to request an extension of this notification period. This notice does not:...

     Subsection (13)(b)(i) The contractor/provider may review, comment, and provide any additional information related to the draft audit report, that the contractor/provider wants considered. This information must be submitted within forty-five days of the date the contractor/provider received the draft audit report. See subsection (16) of this section to request an extension of this time period.

     Subsection (15)(a)(ii) Be submitted within twenty-eight calendar days of the date of delivery of the final audit report, by certified mail. to: (Contact the Office of Financial Recovery to request an extension of this time period.) Send the request to:

     Subsection (16) A contractor/provider may request an extension of the time periods in this section by sending a request to MAA that contains all of the following. The request must:

     (a) Be in writing;

     (b) Be received by MAA before the applicable time period has elapsed;

     (c) Include the reason(s) for the request; and

     (d) Include the date the contractor/provider expects to submit or respond to requested information.

     (Subsequent subsections (16) through (21) renumbered as (17) through (22).)

     Subsection (18)(19)(c) The repayment includes interest on the amount of excess benefits or payments, per RCW 43.20B.695.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 1, Amended 0, Repealed 6.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 1, Amended 0, Repealed 6.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 1, Amended 0, Repealed 6. Effective Date of Rule: Thirty-one days after filing.

November 3, 2000

Marie Myerchin-Redifer, Manager

Rules and Policies Assistance Unit

(1) This section applies to all contractor/providers except the following:

     (a) Nursing homes as described in chapters 388-96, 388-97, and 388-98 WAC; and

     (b) Managed care contractors as described in chapter 388-538 WAC.

     (2) Subject to the limitations in subsection (1) of this section, the following definitions apply to this section:

     (a) "Contractor/provider" means any person or organization that has a signed core provider agreement with the medical assistance administration (MAA) to provide services to eligible clients.

     (b) "Extrapolation" means the methodology of estimating an unknown value by projecting, with a calculated precision (i.e., margin of error), the results of a probability sample to the universe from which the sample was drawn.

     (c) "Probability sample" means the standard statistical methodology in which a sample is selected based on the theory of probability (a mathematical theory used to study the occurrence of random events).

     (3) MAA may audit an MAA contractor/provider who furnishes medical or other covered services to eligible clients. See WAC 388-502-0220 for rate appeals. See WAC 388-502-0230 for dispute appeals involving provider review, termination and appeal. See WAC 388-502-0260 for contract appeals, other than those contained in core provider.

     (4) MAA conducts audits as necessary to identify benefits or payments to which contractor/providers are not entitled.

     (5) The Washington state health professions quality assurance commissions serve in an advisory capacity to MAA in conducting audits.

     (6) An MAA audit includes the following:

     (a) An examination of provider records, by either an on-site or desk audit. See subsections (7) and (8) of this section;

     (b) A draft audit report, which contains preliminary findings and recommendations. See subsection (13) of this section;

     (c) A dispute conference, if the contractor/provider requests it. See subsection (14) of this section;

     (d) A final audit report. See subsection (15) of this section; and

     (e) The right to an administrative appeal, if the contractor/provider requests it. See subsections (15) and (16) of this section.

     (7) MAA audits providers who furnish medical and other services as authorized by chapter 74.09 RCW. An audit:

     (a) Determines whether providers are:

     (i) Complying with the rules and regulations of the program;

     (ii) Meeting the community standard of practice; and

     (iii) Billing allowable costs; or

     (b) Investigates any of the following:

     (i) Complaints/allegations;

     (ii) Actions taken regarding Medicare or medical assistance; or

     (iii) Actions taken by the health profession's quality assurance commissions.

     (8) As part of the audit:

     (a) MAA examines provider records.

     (i) MAA examines those records, or portion thereof, that were reimbursed by MAA.

     (ii) MAA examines records as necessary to verify usual and customary charges and payable and receivable accounts to verify third party liability.

     (iii) MAA may remove copies of, but not original, records from the provider's premises.

     (b) MAA gives a provider twenty days advance notice that it is going to audit paid claims or patient medical records for compliance with program rules, standards, or the community standard of practice. See subsection (16) of this section to request an extension of this notification period. This notice does not:

     (i) Apply to providers who are suspected of fraudulent or abusive practices;

     (ii) Apply to providers whose practices MAA considers may present a risk of imminent danger to medical assistance clients;

     (iii) Include names of patient files that MAA will review; and

     (iv) Apply to medical assistance provider business and financial records and patient financial records when they are reviewed as part of a third-party liability compliance audit.

     (c) Whenever possible, MAA works with the provider to minimize inconvenience and disruption of health care delivery during the audit.

     (d) MAA destroys all copies of identified client medical records made during an audit, after all appeal rights are exhausted.

     (9) MAA may audit on a claim-by-claim basis, or using a probability sample.

     (10) When MAA conducts a probability sample audit, all of the following apply:

     (a) The sample claims are selected on the basis of recognized and generally accepted sampling methods;

     (b) The sample claims are examined for compliance with relevant federal and state laws and regulations, department billing instructions, and numbered memoranda; and

     (c) When projecting the overpayment, MAA uses a sample that is sufficient to ensure a minimum ninety-five percent confidence level.

     (11) MAA uses probability sampling as described in subsection (10) of this section.

     (a) If the audit findings demonstrate that MAA has made an overpayment to a Washington state Title XIX or other medical program provider(s), MAA recovers those statistically calculated overpayments.

     (b) When calculating the amount to be recovered, MAA ensures that all overpayments and underpayments reflected in the probability sample are totaled and extrapolated to the universe from which the sample was drawn.

     (c) MAA does not consider nonbilled services or supplies when calculating underpayments or overpayments.

     (12) When MAA uses the results of a probability sample to extrapolate the amount to be recovered as described in subsection (11) of this section, the provider may request a description of all of the following:

     (a) The universe from which MAA drew the sample;

     (b) The sample size and method that MAA used to select the sample; and

     (c) The formulas and calculation procedures MAA used to determine the amount to be recovered.

     (13) Upon completion of the audit, MAA identifies for the contractor/provider those files or records that are necessary for the audit, but were not located at the time of the audit.

     (a) MAA allows the contractor/provider thirty calendar days from the date of completion of the on-site audit to locate and provide the missing files or records. Undocumented services will be considered as program overpayments; and

     (b) At the end of this thirty day period, MAA issues the draft audit report. At this time:

     (i) The contractor/provider may review, comment, and provide any additional information related to the draft audit report, that the contractor/provider wants considered. This information must be submitted within forty-five days of the date the contractor/provider received the draft audit report. See subsection (16) of this section to request an extension of this time period;

     (ii) MAA works with the contractor/provider to resolve areas of disagreement; and

     (iii) If necessary, MAA issues a revised draft audit report.

     (14) A contractor/provider who wants to dispute draft audit findings must request a dispute conference.

     (a) The contractor/provider must submit a written request for a dispute conference within forty-five calendar days of the date the draft audit report was received by the contractor/provider. MAA may grant an additional thirty day extension of the forty-five day limit as long as the contractor/provider requests the time extension in writing within the forty-five day limit and states the reason for the request.

     (b) The dispute request must:

     (i) Specify which finding(s) the contractor/provider is disputing; and

     (ii) Supply documentation to support the contractor/provider's position.

     (c) MAA acknowledges each request for a dispute conference.

     (d) MAA responds to each disputed item in writing.

     (e) If MAA and the contractor/provider reach an agreement during the dispute conference process, MAA issues the final audit report and the recommendations are binding.

     (f) If MAA and the contractor/provider cannot reach an agreement during the dispute conference process, and the contractor/provider has had the opportunity to raise all concerns related to the audit findings, MAA may close the dispute conference process and issue a final audit report. After MAA issues the final audit report, the contractor/provider may request an audit appeal hearing per subsection (15) of this section.

     (15) After MAA issues the final audit report, the contractor/provider may appeal findings in the report and request an audit appeal hearing. When the contractor/provider requests an audit appeal hearing, and when any part of the audited time period falls on or before June 30, 1998, the following process applies. This hearing is not governed by the Administrative Procedure Act (chapter 34.05 RCW).

     (a) The request for an audit appeal hearing must meet all of the following:

     (i) Be in writing;

     (ii) Be submitted within twenty-eight calendar days of the date of delivery of the final audit report, by certified mail. (Contact the office of financial recovery to request an extension of this time period.) Send the request to:

     Office of Financial Recovery/DSHS

     POB 45862

     Olympia, WA 98504-5862

     (iii) Include a copy of the final audit report cover letter;

     (iv) State the contractor/provider's name, address, and contract number (DSHS contract number or core provider agreement number);

     (v) State the audit time period's beginning and ending dates; and

     (vi) Provide additional documentation, limited to the issues identified in the audit, that the contractor/provider requests to be considered within the hearing.

     (b) The audit appeal hearing consists of an administrative review of all documents submitted for consideration by the contractor/provider and MAA. DSHS appoints a hearing officer to conduct such a review. At the hearing officer's discretion, the review may be conducted as a telephone conference, as an in-person meeting in Olympia, Washington, or as a combination thereof.

     (c) The decision made by the hearing officer serves as the final agency action and is binding.

     (d) The office of financial recovery collects any amount the provider is ordered to repay.

     (16) A contractor/provider may request an extension of the time periods in this section by sending a request to MAA that contains all of the following. The request must:

     (a) Be in writing;

     (b) Be received by MAA before the applicable time period has elapsed;

     (c) Include the reason(s) for the request; and

     (d) Include the date the contractor/provider expects to submit or respond to requested information.

     (17) When a contractor/provider requests an audit appeal hearing, and the entire audit period falls on or after July 1, 1998, the audit hearing is governed by the process in RCW 43.20B.675.

     (18) MAA considers that a contractor/provider has abandoned the dispute, if the provider fails to identify and attempt to resolve disputed audit findings as provided in this section, has abandoned the dispute. MAA proceeds with issuing and/or implementing the final audit report.

     (19) Based on the findings of an audit, MAA may order the provider to repay excess benefits or payments received, as follows:

     (a) MAA may assess civil penalties as provided for in chapter 74.09 RCW;

     (b) The amount of civil penalties may not exceed three times the amount of excess benefits or payments the provider received; and

     (c) The repayment includes interest on the amount of excess benefits or payments, per RCW 43.20B.695.

     (20) When MAA imposes a civil penalty or suspends or terminates a provider from the program, written notice of the action taken is given to the appropriate licensing agency, disciplinary commission, and/or other entity requiring a report.

     (21) When an audit shows that a provider has demonstrated a significant noncompliance with the provisions of the medical care program, MAA may refer that provider to the appropriate disciplinary commission.

     (22) Where MAA finds evidence of or has reason to suspect fraud, those contractors/providers are referred to the appropriate prosecuting authority for possible criminal action.

[]

     The following sections of the Washington Administrative Code are repealed:

WAC 388-41-020	Audit dispute conference.
WAC 388-81-175	Audit dispute resolution.
WAC 388-501-0130	Administrative controls.

2832.1
REPEALER

     The following sections of the Washington Administrative Code are repealed:

WAC 388-41-001	Authority.
WAC 388-41-003	Purpose.
WAC 388-41-010	Definitions.

© Washington State Code Reviser's Office