Original Notice.

     Preproposal statement of inquiry was filed as WSR 04-08-133, 03-07-031, and 01-16-136.

     Title of Rule and Other Identifying Information: Chapter 388-96 WAC, Medicaid nursing facility payment system.

     Hearing Location(s): Blake Office Park East (behind Goodyear Courtesy Tire), 4500 10th Avenue S.E., Rose Room, Lacey, WA, on October 5, 2004, at 10:00 a.m.

     Date of Intended Adoption: Not earlier than October 6, 2004.

     Submit Written Comments to: DSHS Rules Coordinator, P.O. Box 45850, Olympia, WA 98504, delivery 4500 10th Avenue S.E., Lacey, WA, e-mail fernaax@dshs.wa.gov, fax (360) 664-6185, by 5:00 p.m., October 5, 2004.

     Assistance for Persons with Disabilities: Contact Fred Swenson, DSHS Rules Consultant, by October 1, 2004, TTY (360) 664-6178 or (360) 664-6097.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The ADSA Management Services Division (MSD)/Office of Rates Management is implementing 2004 legislative changes (section 913, chapter 276, Laws of 2004) that affect chapter 388-96 WAC, Medicaid nursing facility payment system. This CR-102 is also filed to cover the following CR-101s: WSR 01-16-136 filed July 31, 2001, to implement SHB 2242 (chapter 8, Laws of 2001 1st sp.s.); WSR 03-07-031 filed on March 31, 2003; and WSR 04-08-133 filed on April 7, 2004.

WAC 388-96-117	Requiring a perjury statement signed by the contractor and no other signatures.
WAC 388-96-217	Adding a new fine to address nonreporting of Medicaid resident income and resource changes.
WAC 388-96-218	Editing and to comply with RCW 74.46.165 on shifting and overpayment retention.
WAC 388-96-369	Requiring signature of two witnesses resident unable to sign for funds.
WAC 388-96-372	Increasing petty cash to $1000.
WAC 388-96-708 and 388-96-709	Unbanking and banking beds to comply with changes in chapter 74.46 RCW.
WAC 388-96-713	Identifying adjusted cost report data from calendar year 1999 will be used for July 1, 2004 rates.
WAC 388-96-714	Repealing - Nursing facility Medicaid rate allocations -- Economic trends and conditions adjustment factors.
WAC 388-96-723, 388-96-724, 388-96-725, 388-96-726, 388-96-730 and 388-96-731	Removing rate designation as capital/noncapital.
WAC 388-96-728	Repealing - How will the nursing facility's "hold harmless" direct care rate be determined?
WAC 388-96-729	Repealing - When will the department use the "hold harmless rate" to pay for direct care services?
WAC 388-96-730 and 388-96-731	Removing the capital/noncapital designation for payment rates.
WAC 388-96-732	Repealing - How will the department determine whether its notice pursuant to WAC 388-96-724 was timely?
WAC 388-96-749	Adding that the VR rate, quartiles and percentages will not be adjusted following a July 1, rebasing.
WAC 388-96-776	Amending to account for certificates of capital authorizations (CCA).
WAC 388-96-779	Repealing - Exceptional therapy care -- Designated nursing facilities.
WAC 388-96-780	Repealing - Exceptional therapy care -- Covered Medicaid residents.
WAC 388-96-783	Implementing CCA.
WAC 388-96-740	Adding that newly Medicaid not meeting 90% will use industry average Medicaid case mix index.
WAC 388-96-742	Adding that a significant discrepancy exists when census is 50% or less of licensed beds.
WAC 388-96-766	Adding that a contractor is deemed to receive notification five days from date of department notice.
WAC 388-96-901	Revising actions not subject to administrative review.

     Reasons Supporting Proposal: Implementing changes in state law, and editing the rules for clarity, substance and form where appropriate.

     Statutory Authority for Adoption: RCW 74.46.431 (11) and (12) and 74.46.800 are statutory authority for all WAC sections in this proposal, except the following: RCW 74.46.431 is the authority for WAC 388-96-713; RCW 74.46.807 and 74.46.431 are the authority for WAC 388-96-783; RCW 74.46.155, 74.46.165, and 74.46.431 are the authority for WAC 388-96-218; and RCW 74.46.050 and 74.46.431 are the authority for WAC 388-96-217.

     Statute Being Implemented: Chapter 74.46 RCW; section 913, chapter 276, Laws of 2004; chapter 8, Laws of 2001 1st sp.s.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Department of Social and Health Services, governmental.

     Name of Agency Personnel Responsible for Drafting: Patricia Hague, Mailstop 45600, (360) 725-2447; Implementation: Edward Southon, Mailstop 45600, (360) 725-2472; and Enforcement: Kenneth Callaghan, Mailstop 45600, (360) 725-2469.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. Under RCW 19.85.025(3) a small business economic impact statement does not apply to rules that set or adjust fees or rates pursuant to legislative standards. RCW 34.05.310 (4)(f). Chapter 74.46 RCW provides standards to which the rules adopted in chapter 388-96 WAC comply.

     A cost-benefit analysis is not required under RCW 34.05.328. Under RCW 34.05.328 (5)(b)(vi), rules that set or adjust fees or rates pursuant to legislative standards are exempt from RCW 34.05.328. Chapter 74.46 RCW provides standards to which the rules adopted in chapter 388-96 WAC comply.

August 17, 2004

Brian H. Lindgren, Manager

Rules and Policies Assistance Unit

[Statutory Authority: RCW 74.09.120, 74.46.840 and 74.46.800. 85-17-052 (Order 2270), § 388-96-117, filed 8/19/85; Order 1262, § 388-96-117, filed 12/30/77.]

     (2) The department may fine a contractor or former contractor or any partner, officer, director, owner of five percent or more of the stock of a current or former corporate contractor, or managing agent for the following but is not limited to the following in its fine assessments:

     (a) Failure to file a mathematically accurate and complete cost report, including a final cost report, on or prior to the applicable due date established by this chapter or authorized by extension granted in writing by the department; or

     (b) Failure to permit an audit authorized by this chapter or to grant access to all records and documents deemed necessary by the department to complete such an audit.

     (3) The department shall send notice of a fine assessed under subsection (2) of this section by certified mail return receipt requested to the current contractor, administrator, or former contractor informing the addressee of the following:

     (a) The fine shall become effective the date of receipt of the notice by the addressee; and

     (b) If within two weeks of the date of receipt of the notice by the addressee, an acceptable cost report is received by the department; an audit is allowed; or access to documentation is allowed, as applicable, the department may waive the fine.

     (4)(a) The department may fine a current or former contractor, or any partner, officer, director, owner of a current or former corporate contractor, or managing agent for failure to comply with RCW 76.46.630.

     (b) The department shall send notice of a fine assessed under (a) of this subsection by certified mail, to the current contractor, administrator, or former contractor informing the addressee that the fine shall become effective upon receipt of notice by the addressee.

[Statutory Authority: RCW 74.46.800. 94-12-043 (Order 3737), § 388-96-217, filed 5/26/94, effective 6/26/94; 87-09-058 (Order 2485), § 388-96-217, filed 4/20/87.]

     (2) As part of the cost report, the proposed settlement report is due in accordance with RCW 74.46.040. In the proposed preliminary settlement report, a contractor shall compare the contractor's payment rates during a cost report period, weighted by the number of resident days reported for the same cost report period ((when each rate was in effect,)) to the contractor's allowable costs for the ((reporting)) cost report period. In accordance with RCW 74.46.100, 74.46.155 and 74.46.165 the contractor shall take into account all authorized shifting, retained savings, and upper limits to rates on a cost center basis.

     (a) The department will:

     (i) Review the proposed preliminary settlement report for accuracy; and

     (ii) Accept or reject the proposal of the contractor. If accepted, the proposed preliminary settlement report shall become the preliminary settlement report. If rejected, the department shall issue, by ((cost center)) component payment rate allocation, a preliminary settlement report fully substantiating disallowed costs, refunds, or underpayments due and adjustments to the proposed preliminary settlement.

     (b) When the department receives the proposed preliminary settlement report:

     (i) By the cost report due date specified in RCW 74.46.040, it will issue the preliminary settlement report within one hundred twenty days of the cost report due date; or

     (ii) After the cost report due date specified in RCW 74.46.040, it will issue the preliminary settlement report within one hundred twenty days of the date the cost report was received.

     (c) In its discretion, the department may designate a date later than the dates specified in subsection (2)(b)(i) and (ii) of this section to issue preliminary settlements.

     (d) A contractor shall have twenty-eight days after receipt of a preliminary settlement report to contest such report under WAC 388-96-901 and 388-96-904. Upon expiration of the twenty-eight((-)) day period, the department shall not review or adjust a preliminary settlement report. Any administrative review of a preliminary settlement shall be limited to calculation of the settlement, to the application of settlement principles and rules, or both, and shall not encompass rate or audit issues.

     (3) The department shall issue a final settlement report to the contractor after the completion of the department audit process, including exhaustion or termination of any administrative review and appeal of audit findings or determinations requested by the contractor, but not including judicial review as may be available to and commenced by the contractor.

     (a) The department shall prepare a final settlement by ((cost center)) component payment rate allocation and shall fully substantiate disallowed costs, refunds, underpayments, or adjustments to the cost report and financial statements, reports, and schedules submitted by the contractor. The department shall take into account all authorized shifting, savings, and upper limits to rates on a ((cost center)) component payment rate allocation basis. For the final settlement report, the department shall compare:

     (i) The payment ((rate)) rates it paid the contractor ((was paid)) for the facility in question during the report period, weighted by the number of allowable resident days reported for the period each rate was in effect to the contractor's;

     (ii) Audited allowable costs for the reporting period; or

     (iii) Reported costs for the nonaudited reporting period.

     (b) A contractor shall have twenty-eight days after the receipt of a final settlement report to contest such report pursuant to WAC 388-96-901 and 388-96-904. Upon expiration of the twenty-eight((-)) day period, the department shall not review a final settlement report. Any administrative review of a final settlement shall be limited to calculation of the settlement, the application of settlement principles and rules, or both, and shall not encompass rate or audit issues.

     (c) The department shall reopen a final settlement if it is necessary to make adjustments based upon findings resulting from a department audit performed pursuant to RCW 74.46.100. The department may also reopen a final settlement to recover an industrial insurance dividend or premium discount under RCW 51.16.035 in proportion to a contractor's Medicaid ((recipients)) recipient days.

     (4)(a) In computing a preliminary or final settlement, a contractor ((may shift savings and/or overpayment in the support services cost center to cover a deficit and/or underpayment in the direct care or therapy cost centers up to the amount of the savings as provided in RCW 74.46.165(4). The provider's payment rate is subject to the provisions of RCW 74.46.421.

     (5) If an administrative or judicial remedy sought by the facility is not granted or is granted only in part after exhaustion or mutual termination of all appeals,)) must comply with the requirements of RCW 74.46.165 (2), (3), and (4) for retaining or refunding to the department payments made in excess of the adjusted costs of providing services corresponding to each component rate allocation.

     (b) The facility shall refund all amounts due the department within sixty days after the date of decision or termination plus interest ((as payment on judgments from the date the review was requested pursuant to WAC 388-96-901 and 388-96-904 to the date the repayment is made.

     (6))) on any unpaid balance after sixty days will accrue at one percent per month. Repayment will be without prejudice to obtain review of the settlement determination pursuant to WAC 388-96-901 and 388-96-904. After an administrative hearing and/or judicial review, if the payment obligation is reduced, then the department will rescind the difference between the accrued interest on the payment obligation and the interest that would have accrued on the reduced payment obligation from the date interest began to accrue on the original payment obligation.

     (5) In determining whether a facility has forfeited unused rate funds in its direct care, therapy care and support services component rates under authority of RCW 74.46.165(((3))), the following rules shall apply:

     (a) Federal or state survey officials shall determine when a facility is not in substantial compliance or is providing substandard care, according to federal and state nursing facility survey regulations;

     (b) Correspondence from state or federal survey officials notifying a facility of its compliance status shall be used to determine the beginning and ending dates of any period(s) of noncompliance; and

     (c) Forfeiture shall occur if the facility was out of substantial compliance more than ninety days during the settlement period. The ninety-day period need not be continuous if the number of days of noncompliance exceed ninety days during the settlement period regardless of the length of the settlement period. Also, forfeiture shall occur if the nursing facility was determined to have provided substandard quality of care at any time during the settlement period.

     (((7))) (6)(a) For calendar year 1998, the department will calculate two settlements covering the following periods:

     (i) January 1, 1998 through September 30, 1998; and

     (ii) October 1, 1998 through December 31, 1998.

     (b) The department will use Medicaid rates weighted by total patient days (i.e., Medicaid and non-Medicaid days) to divide 1998 costs between the two settlement periods identified in subsection (((7)))(6)(a) of this section.

     (c) The department will net the two settlements for 1998 to determine a nursing facility's 1998 settlement.

[Statutory Authority: RCW 74.46.800. 01-12-037, § 388-96-218, filed 5/29/01, effective 6/29/01. Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-218, filed 11/30/99, effective 12/31/99. Statutory Authority: Chapter 74.46 RCW as amended by 1998 c 322 §§ 9 and 10 and RCW 74.46.800. 98-20-023, § 388-96-218, filed 9/25/98, effective 10/1/98.]

     Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.
AMENDATORY SECTION(Amending WSR 01-12-037, filed 5/29/01, effective 6/29/01)

WAC 388-96-369   The nursing facility shall maintain a subsidiary ledger with an account for each resident for whom the facility holds money.   (1) The facility shall assure a full and complete separate accounting of each resident's personal funds. Each account record and related supporting information and documentation shall:

     (a) Be maintained at the facility;

     (b) Be kept current;

     (c) Be balanced each month; and

     (d) Show in writing and in detail, with supporting verification, all moneys received on behalf of the individual resident and the disposition of all moneys so received. When the resident is unable to sign the supporting verification for disbursements from the his or her trust account, then the nursing facility provider must obtain the resident's mark ("X") followed by the printed name of the resident and the signature of two witnesses.

     (2) Each account shall be reasonably accessible to the resident or the resident's guardian or legal representative and shall be available for audit and inspection by a department representative. Each account shall be maintained for a minimum of four years. A Medicaid provider shall notify each Title XIX Medicaid recipient or guardian and the home and community services office of the department that serves the area when the amount in the account of any Title XIX Medicaid recipient reaches two hundred dollars less than the applicable dollar resource limit for supplemental security income (SSI) eligibility set forth in Title XVI of the Social Security Act.

     (3) When notice is given under subsection (2) of this section, the facility shall notify the recipient or guardian that if the amount in the account, in addition to the value of the recipient's other nonexempt resources, reaches the dollar resource limit determined under Title XVI, the recipient may lose eligibility for SSI medical assistance or benefits under Title XVI.

     (4) ((Accumulation toward the Title XVI limit,)) After the recipient's admission to the facility, accumulation toward the Title XVI limit is permitted only from ((savings from)) the clothing and personal incidentals allowance and other income ((which)) that the department specifically designates as exempt income.

     (5) No resident funds may be overdrawn (show a debit balance). If a resident wants to spend an amount greater than the facility is holding for the resident, the home may provide money from its own funds and collect the debt by installments from that portion of the resident's allowance remaining at the end of each month. No interest may be charged to residents for such loans.

     (6) The facility may not impose a charge against the personal funds of a Medicare or Medicaid recipient for any item or service for which payment is made under the Title XVIII Medicare program or the Title XIX Medicaid program. In order to ensure that Medicaid recipients are not charged for services provided under the Title XIX program, any charge for medical services otherwise properly made to a recipient's personal funds shall be supported by a written denial from the department.

     (a) Mobility aids including walkers, wheelchairs, or crutches requested for the exclusive use by a Medicaid recipient shall have a written denial from the department of social and health services before a recipient's personal funds may be charged.

     (b) Requests for medically necessary services and supplies not funded under the provisions of chapter 388-96 WAC or chapter 388-86 WAC (reimbursement rate or coupon system) shall have a written denial from the department before a Medicaid recipient's personal funds may be charged.

     (c) A written denial from the department is not required when the pharmacist verifies that a drug is not covered by the program, e.g., items on the FDA list of ineffective or possible effective drugs, nonformulary over-the-counter (OTC) medications. The pharmacist's notation to this effect is sufficient.

[Statutory Authority: RCW 74.46.800. 01-12-037, § 388-96-369, filed 5/29/01, effective 6/29/01. Statutory Authority: RCW 74.46.800, 74.42.620 and 74.09.120. 90-20-075 (Order 3070), § 388-96-369, filed 9/28/90, effective 10/1/90. Statutory Authority: RCW 74.42.620 and 74.46.800. 85-17-070 (Order 2275), § 388-96-369, filed 8/21/85. Statutory Authority: RCW 74.09.120. 83-19-047 (Order 2025), § 388-96-369, filed 9/16/83; 82-21-025 (Order 1892), § 388-96-369, filed 10/13/82; Order 1168, § 388-96-369, filed 11/3/76; Order 1114, § 388-96-369, filed 4/21/76.]

     (2) Cash deposits of recipient allowances must be made intact to the resident personal fund account within one week from the time that payment is received from the department, Social Security Administration, or other ((payor)) payer.

     (3) Any related bankbooks, bank statements, checkbook, check register, and all voided and cancelled checks, shall be made available for audit and inspection by a department representative, and shall be maintained by the home for not less than four years.

     (4) No service charges for such checking account shall be paid by residents or deducted from resident personal funds.

     (5) The resident personal fund account or accounts per bank shall be reconciled monthly to the resident personal funds per resident ledgers.

[Statutory Authority: RCW 74.46.800, 74.42.620 and 74.09.120. 90-20-075 (Order 3070), § 388-96-372, filed 9/28/90, effective 10/1/90. Statutory Authority: RCW 74.09.120. 83-19-047 (Order 2025), § 388-96-372, filed 9/16/83; Order 1114, § 388-96-372, filed 4/21/76.]

     (2) When the contractor returns to service beds banked under the provisions of chapter 70.38 RCW, the department will recalculate the contractor's prospective Medicaid payment rate allocations using the greater of actual days from the cost report period on which the rate is based or days calculated by multiplying the new number of licensed beds times ((eighty-five percent)) the appropriate minimum occupancy pursuant to chapter 74.46 RCW times the number of calendar days in the cost report period on which the rate being recalculated is based.

     (3) The effective date of the recalculated prospective rate for beds returned to service shall be the first of the month:

     (a) ((Before the sixteenth of a month, shall be the first of the month)) In which the banked beds returned to service when the beds are returned to service on the first of the month; or

     (b) ((After the fifteenth of a month, shall be the first of the month)) Following the month in which the banked beds returned to service when the beds are returned to service after the first of the month.

     (4) The recalculated prospective payment rate shall comply with all the provisions of rate setting contained in chapter 74.46 RCW or in this chapter, including all lids and maximums unless otherwise specified in this section.

     (5) The recalculated prospective Medicaid payment rate shall be subject to adjustment if required by RCW 74.46.421.

     (6) After the department recalculates the contractor's prospective Medicaid component rate allocations using the increased number of licensed beds, the department will use the increased number of licensed beds in all post unbanking rate settings, until under chapter 74.46 RCW and/or this chapter, the post unbanking number of licensed beds changes.

[Statutory Authority: RCW 74.46.800. 01-12-037, § 388-96-708, filed 5/29/01, effective 6/29/01. Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-708, filed 11/30/99, effective 12/31/99. Statutory Authority: 1998 c 322 § 19(11). 98-20-023, § 388-96-708, filed 9/25/98, effective 10/1/98. Statutory Authority: RCW 74.46.800. 96-15-056, § 388-96-708, filed 7/16/96, effective 8/16/96.]

     (a) Provides a copy of the new bed license and documentation of the number of beds sold, exchanged or otherwise placed out of service, along with the name of the contractor that received the beds, if any; and

     (b) Requests a rate revision.

     (2) ((The revised prospective Medicaid payment rate will comply with all the provisions of rate setting contained in chapter 74.46 RCW and in this chapter, including all lids and maximums, unless otherwise specified in this section)) For facilities other then essential community providers which bank beds under chapter 70.38 RCW, after May 25, 2001, Medicaid rates shall be revised upward, in accordance with department rules, in direct care, therapy care, support services, and variable return components only, by using the facility's decreased licensed bed capacity to recalculate minimum occupancy for rate setting. No rate upward revision shall be made to operations, property, or financing allowance.

     (3) The requested revised prospective Medicaid payment rate will be effective the first of ((a)) the month(( when the contractor complies with subsection (1)(a) and (b) of this section and the effective date of the licensed bed reduction falls)):

     (a) ((Between the first and the fifteenth of the month, then the revised prospective Medicaid payment rate)) The new license is effective when the new license is effective the first day of the month ((in which the licensed bed reduction occurs)); or

     (b) ((Between the sixteenth and the end of the month, then the revised prospective Medicaid payment rate is effective the first of the month following the month in which the licensed bed reduction occurs)) Following the month the new license is effective when the new license is effective after the first day of the month it is issued.

     (4) The department will recalculate a nursing facility's prospective Medicaid payment rate allocations using the greater of actual days from the cost report period on which the rate is based or days calculated by multiplying the new number of licensed beds times ((eighty-five percent)) the appropriate minimum occupancy pursuant to chapter 74.46 RCW times the number of calendar days in the cost report period on which the rate being recalculated is based.

     (5) The revised prospective Medicaid payment rate will comply with all the provisions of rate setting contained in chapter 74.46 RCW and in this chapter, including all lids and maximums, unless otherwise specified in this section.

     (6) After the department recalculates the contractor's prospective Medicaid component rate allocations using the decreased number of licensed beds, the department will use the decreased number of licensed beds in all post banking rate settings, until under chapter 74.46 RCW and/or this chapter, the post banking number of licensed beds changes.

[Statutory Authority: RCW 74.46.800. 01-12-037, § 388-96-709, filed 5/29/01, effective 6/29/01. Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-709, filed 11/30/99, effective 12/31/99. Statutory Authority: Chapter 74.46 RCW as amended by 1998 c 322 § 19(11) and RCW 74.46.800. 98-20-023, § 388-96-709, filed 9/25/98, effective 10/1/98. Statutory Authority: RCW 74.46.510. 97-17-040, § 388-96-709, filed 8/14/97, effective 9/14/97. Statutory Authority: RCW 74.46.800 and 1995 1st sp.s. c 18. 95-19-037 (Order 3896), § 388-96-709, filed 9/12/95, effective 10/13/95. Statutory Authority: RCW 74.46.800. 94-12-043 (Order 3737), § 388-96-709, filed 5/26/94, effective 6/26/94. Statutory Authority: RCW 74.46.800, 74.46.450 and 74.09.120. 93-12-051 (Order 3555), § 388-96-709, filed 5/26/93, effective 6/26/93.]

     (2) If the contractor participated in the program for less than six months of the prior calendar year, its rates will be determined by procedures set forth in WAC 388-96-710.

     (3) Contractors submitting correct and complete cost reports by March 31st, shall be notified of their rates by July 1st, unless circumstances beyond the control of the department interfere.

     (4) In setting rates, the department will use the greater of actual days from the cost report period on which the rate is based or days calculated at ((eighty-five percent)) minimum occupancy pursuant to chapter 74.46 RCW.

     (5) Adjusted cost report data from 1999 shall be used for July 1, 2001 through June 30, 2005 direct care, therapy care, support services, and operations component rate allocations.

[Statutory Authority: RCW 74.46.800. 01-12-037, § 388-96-713, filed 5/29/01, effective 6/29/01; 98-20-023, § 388-96-713, filed 9/25/98, effective 10/1/98. Statutory Authority: RCW 74.46.800 and 1995 1st sp.s. c 18. 95-19-037 (Order 3896), § 388-96-713, filed 9/12/95, effective 10/13/95. Statutory Authority: RCW 74.46.800 and 74.09.120. 93-19-074 (Order 3634), § 388-96-713, filed 9/14/93, effective 10/15/93; 90-09-061 (Order 2970), § 388-96-713, filed 4/17/90, effective 5/18/90. Statutory Authority: RCW 74.09.120. 83-19-047 (Order 2025), § 388-96-713, filed 9/16/83; 81-15-049 (Order 1669), § 388-96-713, filed 7/15/81; 80-06-122 (Order 1510), § 388-96-713, filed 5/30/80, effective 7/1/80; 78-02-013 (Order 1264), § 388-96-713, filed 1/9/78.]

     (2) To determine the statewide weighted average payment rate ((for the capital and/or noncapital portion of the rate)), the department will use total billed Medicaid days incurred in the calendar year immediately preceding the current fiscal year for the purpose of weighting the July 1 ((capital and/or noncapital)) nursing facilities' rates that have been adjusted, or updated pursuant to chapter 74.46 RCW and this chapter.

[Statutory Authority: RCW 74.46.800. 01-12-037, § 388-96-723, filed 5/29/01, effective 6/29/01. Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-723, filed 11/30/99, effective 12/31/99. Statutory Authority: RCW 74.46.421 and 74.46.800. 98-20-023, § 388-96-723, filed 9/25/98, effective 10/1/98.]

     (2) A rate reduction taken under RCW 74.46.421 will be effective the first day of the month following the twenty-eight calendar day advance notice.

[Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-724, filed 11/30/99, effective 12/31/99. Statutory Authority: RCW 74.46.421 and 74.46.800. 98-20-023, § 388-96-724, filed 9/25/98, effective 10/1/98.]

     (2) If after a reduction a nursing facility is eligible to receive an increase in a ((capital and/or noncapital)) component rate for some unrelated change (e.g., a change in the Medicaid case mix index causes the direct care rate to increase), the department will apply the increase to the rate reduced by application of RCW 74.46.421.

     (3) Reductions made under RCW 74.46.421 are cumulative. The department will reduce the ((capital and/or noncapital)) component rates for all nursing facilities without reversing any previous reductions.

[Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-725, filed 11/30/99, effective 12/31/99. Statutory Authority: RCW 74.46.421 and 74.46.800. 98-20-023, § 388-96-725, filed 9/25/98, effective 10/1/98.]

     (2) The department will not exempt any nursing facility from a component rates reduction required by RCW 74.46.421 for any circumstance, e.g., billed Medicaid days, under-spending of the biennial appropriation for nursing facility rates, etc.

[Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-726, filed 11/30/99, effective 12/31/99. Statutory Authority: RCW 74.46.421 and 74.46.800. 98-20-023, § 388-96-726, filed 9/25/98, effective 10/1/98.]

     (2) By applying various percentages to ((the capital and/or noncapital portion(s) of)) the rates for all nursing facilities, the department will identify ((the percentage(s) that reduce(s))) a percentage that reduces the statewide weighted average payment rate ((for the capital and/or noncapital portion(s) of the rate to be)) equal to or less than the ((statewide)) weighted average payment rate ((for the capital and/or noncapital portion(s) of the rate)) identified in the biennial appropriations act.

     (3) The percentage(((s))) identified in subsection (2) of this section will be the PRF(((s))). To reduce the statewide average payment rate to less than or equal to the weighted average payment rate identified in the Biennial Appropriations Act, the department will apply the ((PFR(s))) PRF equally to all rate component allocations of each nursing facility's ((capital and/or noncapital portions of the)) rate.

[Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-730, filed 11/30/99, effective 12/31/99.]

     (((2) Under RCW 74.46.421, the department will reduce the noncapital portion of the rate for each nursing facility when the statewide weighted average payment rate for the noncapital portion of the rate exceeds or is likely to exceed the statewide weighted average payment rate for the noncapital portion of the rate identified in the biennial appropriations act.))

[Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-731, filed 11/30/99, effective 12/31/99.]

     (2) If the nursing facility does not meet the ninety percent MDS threshold for any other reason, then the department will use one as the Medicaid case mix index.

[Statutory Authority: RCW 74.46.800. 01-12-037, § 388-96-740, filed 5/29/01, effective 6/29/01. Statutory Authority: Chapter 74.46 RCW as amended by 1998 c 322 §§ 22, 24 and 25 and RCW 74.46.800. 98-20-023, § 388-96-740, filed 9/25/98, effective 10/1/98.]

     (1) The reported census as a result of ((data entry)) errors exceeds the number of current licensed beds; or

     (2) There is a significant discrepancy between the reported census and the number of current licensed beds. ((If)) A significant discrepancy exists when the census is fifty percent or less of the number of licensed beds((, a significant discrepancy exists)).

[Statutory Authority: Chapter 74.46 RCW as amended by 1998 c 322 §§ 22, 24 and 25 and RCW 74.46.800. 98-20-023, § 388-96-742, filed 9/25/98, effective 10/1/98.]

     (2) Following a July 1 rebasing of all component rates, the department will not adjust the quartiles or the percentages assigned to them for any reason, including but not limited to reversal of cost report adjustments by administrative review conferences, fair hearings, and/or judicial reviews until the next July 1 rebasing of all component rates.

[]

     (2) If a total Medicaid ((payment)) component payment rate allocation and/or rate allocation(s) is (are) adjusted, updated or amended after the calendar year in which the adjustment or update was effective, then the department will account for any amounts owed through the settlement process.

     (3)(a) The department shall deem the contractor to have received the department's notice five calendar days after the date of the notification letter, unless proof of the date of receipt of the department's notification letter exists, in which case the actual date of receipt shall be used. Proof of date of receipt of department's notification must be from an independent source that has no stake in the outcome.

     (b) When the department has sent notice by certified letter, the department shall deem the contractor to have received the department's notice five calendar days after the date the U.S. Post Office first attempts to deliver the certified letter containing the notice of the department's action(s).

[Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-766, filed 11/30/99, effective 12/31/99. Statutory Authority: RCW 74.09.120. 78-02-013 (Order 1264), § 388-96-766, filed 1/9/78.]

     Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.
AMENDATORY SECTION(Amending WSR 01-12-037, filed 5/29/01, effective 6/29/01)

WAC 388-96-776   Add-ons to the property and financing allowance payment rate--Capital improvements.   (1) ((The department shall grant an add-on to a payment rate for any capitalized additions or replacements made as a condition for licensure or certification; provided, the net rate effect is ten cents per patient day or greater.)) For new or replacement building construction or major renovation projects begun after July 1, 2001, the contractor must have a certificate of capital authorization (CCA) issued pursuant to WAC 388-96-783 and chapter 74.46 RCW.

     (2)(a) Beginning July 1, 2001, the department shall grant an add-on to a prospective payment rate for capitalized improvements done under RCW 74.46.431(12) for all new or replacement building construction or major renovation projects; provided, the ((legislature specifically appropriates funds for capital improvements for the biennium in which the request is made)) department granted the contractor a certificate of capital authorization (CCA) pursuant to WAC 388-96-783 for the fiscal year in which the contractor will complete the project and the net rate effect is ten cents per patient day or greater((. Physical plant capital improvements include, but are not limited to, capitalized additions, replacements or renovations made as a result of an approved certificate of need or exemption from the requirements for certificate of need for the replacement of existing nursing facility beds pursuant to RCW 70.38.115 (13)(a) or capitalized additions or renovations for the removal of physical plant waivers))

     (b) Rate add-on requests filed with the department or approved by the certificate of need unit of the department of health for projects commencing before July 1, 2001 and finishing after July 1, 2001, are not subject to CCA requirements set forth in this chapter and chapter 74.46 RCW.

     (3) The department may grant a rate add-on to a payment rate for capital improvements not requiring a CON and a CCA per subsections (1) and (2) of this section. However, the capital improvement must have a net rate effect of ten cents per patient day or greater.

     (4) Rate add-ons for all construction and renovation projects granted pursuant to subsection (1) or (2) of this section shall be limited ((in total amount each fiscal year to the total current legislative appropriation, if any, specifically made to fund the Medicaid share of such rate add-ons for the fiscal year)) to the total legislative authorization for capital construction and renovation projects for the fiscal year (FY) of the biennium in which the construction or renovation project will be completed. Rate add-ons are subject to the provisions of RCW 74.46.421.

     (((4))) (5) When physical plant improvements made under subsection (1) or (2) of this section are completed in phases, the department shall ((not)):

     (a) Grant a rate add-on in accordance with subsection (6) of this section for any addition, replacement or improvement ((until)) when each phase is completed and ((fully utilized)) certified for occupancy for the purpose for which it was intended((. The department shall));

     (b) Limit the rate add-on to ((only)) the actual cost of the depreciable tangible assets meeting the criteria of RCW 74.46.330 ((and as applicable to that specific completed and fully utilized phase.

     (5)));

     (c) Add-on construction fees as defined in WAC 388-96-747 and other capitalized allowable fees and costs for the completed phase of the project; and

     (d) Make the effective date for the rate add-on for the completed phase the quarterly rate change immediately following the completion and certification for occupancy of the phase. When the date of the written request for a phase add-on rate falls after the first quarter immediately following the completion and certification for occupancy of the phase, the department will issue the rate add-on retroactive to the first of the quarter in which the department received a complete written request.

     (6) When the construction class of any portion of a newly constructed building will improve as the result of any addition, replacement or improvement occurring in a later, but not yet completed and fully utilized phase of the project, the most appropriate construction class, as applicable to that completed and fully utilized phase, will be assigned for purposes of calculating the rate add-on. The department shall not revise the rate add-on retroactively after completion of the portion of the project that provides the improved construction class. Rather, the department shall calculate a new rate add-on when the improved construction class phase is completed and fully utilized and the rate add-on will be effective in accordance with subsection (((9))) (7) of this section using the date the class was improved.

     (((6) The department shall not add on construction fees as defined in WAC 388-96-747 and other capitalized allowable fees and costs as related to the completion of all phases of the project to the rate until all phases of the entire project are completed and fully utilized for the purpose it was made. At that time, the department shall add on these fees and costs to the rate, effective no earlier than the earliest date a rate add-on was established specifically for any phase of this project. If the fees and costs are incurred in a later phase of the project, the add-on to the rate will be effective on the same date as the rate add-on for the actual cost of the tangible assets for that phase.))

     (7) The contractor requesting ((an adjustment)) a rate add-on under subsection (1) ((or (2))), (2) or (3) of this section shall submit a written request to the ((office of rates management)) department separate from all other requests and inquiries of the department, e.g., WAC 388-96-904 (1) and (5). A complete written request shall include the following:

     (a) A copy of documentation requiring completion of the addition or replacements to maintain licensure or certification for adjustments requested under subsection (1) of this section;

     (b) A copy of the new bed license, whether the number of licensed beds increases or decreases, if applicable;

     (c) All documentation, e.g., copies of paid invoices showing actual final cost of assets and/or service, e.g., labor purchased as part of the capitalized addition or replacements;

     (d) Certification showing the completion date of the capitalized additions or replacements and the date the assets were placed in service per RCW 74.46.360;

     (e) A properly completed depreciation schedule for the capitalized additions or replacement as provided in this chapter; and

     (f) When the rate increase is requested pursuant to subsection (3) of this section, a written justification for granting the rate increase((; and

     (g) For capitalized additions or replacements requiring certificate of need approval, a copy of the approval and description of the project.

     (8) The department's criteria used to evaluate the request may include, but is not limited to:

     (a) The remaining functional life of the facility and the length of time since the facility's last significant improvement;

     (b) The amount and scope of the renovation or remodel to the facility and whether the facility will be better able to serve the needs of its residents;

     (c) Whether the improvement improves the quality of living conditions of the residents;

     (d) Whether the improvement might eliminate life safety, building code, or construction standard waivers;

     (e) Prior survey results; and

     (f) A review of the copy of the approval and description of the project.

     (9)(a) No rate add-on shall take effect more than sixty days before the office of rates management receives the initial written request and no earlier than the first of the month in which the physical plant improvements are completed and fully utilized.

     (b) The following table indicates the effective date of an approved rate add-on in relation to the month in which the sixtieth day falls and the month that the project is completed and fully utilized:

The sixtieth day before the initial written request falls in:	The project is completed and fully utilized:	The effective date of the approved rate add-on:
(i) Any month before the month in which the project is completed and fully utilized.	In any month following the month in which the sixtieth day falls.	(A) When the project is completed and fully utilized before the sixteenth of the month, the effective date is the first of that month; or (B) When the project is completed and fully utilized after the fifteenth of the month, the effective date is the first of the month following the month in which the project is completed and fully utilized.
(ii) Any month after the month in which the project is completed and fully utilized.	In any month before the month in which the sixtieth day falls.	The first of the month following the month in which the sixtieth day falls unless the sixtieth day falls on the first of the month, then apply subsection (9)(b(i)(A) and (B).
(iii) The same month in which the project is completed and fully utilized.	In the same month in which the sixtieth day falls.	The first of the month following the month in which the sixtieth day and the project completion and utilization falls, unless the sixtieth day falls on the first of the month, then apply subsection (9)(b)(i)(A) and (B).

     (10))) .

     (8) For rate add-on requests for projects not completed in phases that are approved pursuant to subsection (7) of this section and the written request is received:

     (a) Within sixty calendar days following the completion and certification of occupancy of the new or replacement construction, major renovation, or the acquisition and installation (if applicable) of a capital improvement made under subsection (3) of this section, the effective date of the rate add-on will be the first of the month following the month in which the project was completed and certified for occupancy or acquired and installed; or

     (b) More than sixty days following the completion and certification for occupancy of the new or replacement construction, major renovation project, or the acquisition and installation (if applicable) of a capital improvement made under subsection (3) of this section, the effective date of the rate add-on will be the first of the month following the month in which the written request was received.

     (9) If the initial written request is incomplete, the department will notify the contractor of the documentation and information required. The contractor shall submit the requested information within fifteen calendar days from the date the contractor receives the notice to provide the information. If the contractor fails to complete the add-on request by providing all the requested documentation and information within the fifteen calendar days from the date of receipt of notification, the department shall deny the request for failure to complete.

     (((11))) (10) If, after the denial for failure to complete, the contractor submits ((a)) another written request for a rate add-on for the same project the date of receipt for the purpose of applying subsection (((9))) (8) of this section will depend upon whether the subsequent request for the same project is complete, i.e., the department does not have to request additional documentation and information in order to make a determination. If a subsequent request for funding of the same project is:

     (a) Complete, then the date of the first request may be used when applying subsection (((9))) (8) of this section; or

     (b) Incomplete, then the date of the subsequent request must be used when applying subsection (((9))) (8) of this section even though the physical plant improvements may be completed and fully utilized prior to that date.

     (((12))) (11) The department shall respond, in writing, not later than sixty calendar days after receipt of a complete request.

     (((13))) (12) If the contractor does not use the funds for the purpose for which they were granted, the department ((shall)) immediately shall have the right to recoup the misspent or unused funds.

     (((14))) (13) When any physical plant improvements made under subsection (1) or (2) of this section ((results)) result in a change in licensed beds, any rate add-on granted will be subject to the provisions regarding the number of licensed beds, patient days, occupancy, etc., included in this chapter and chapter 74.46 RCW.

     (((15) All rate components to fund))

     (14) Effective July 1, 2002, except for essential community providers, the Medicaid share of nursing facility new construction or refurbishing projects ((costing in excess of one million two hundred thousand dollars, or projects requiring state or federal certificate of need approval,)) shall be based upon a minimum facility occupancy of ((eighty-five)) ninety percent for the ((direct care, therapy care, support services,)) operations, property, and financing allowance((, and variable return)) component rate allocations((, during the initial rate period in which the adjustment is granted. These same component rate allocations shall)). For essential community providers, the Medicaid share of nursing facility new construction or refurbishing project will be based upon a minimum facility occupancy of eighty-five percent ((for all rate periods after the initial rate period)) for operations, property, and financing allowance component rate allocations.

     (((16))) (15) When a capitalized addition or replacement results in an increased licensed bed capacity during the calendar year following the capitalized addition or replacement:

     (a) The department shall ((for)) determine a nursing facility's prospective Medicaid:

     (i) Property((, use the facility's anticipated resident occupancy level subsequent to the increase in licensed bed capacity)) payment rate allocation by dividing the property costs using the greater of actual days from the cost report period on which the rate being recalculated is based or days calculated by multiplying the new number of licensed beds times ninety percent times the number of calendar days in the cost report period on which the rate being recalculated is based. For essential community providers, the department shall use eighty-five percent to calculate days to compare with actual days; and

     (ii) ((The)) Financing allowance((, multiply)) payment rate allocation by multiplying the net invested funds by the applicable factor in ((accordance with)) WAC 388-96-748(3) and ((divide)) dividing by the greater of the facility's ((anticipated resident occupancy level subsequent to the increase in licensed bed capacity; and

     (b) The anticipated resident occupancy for the increased number of beds must be at or above eighty-five percent. In all cases the department shall use at least eighty-five percent occupancy of the facility's increased licensed bed capacity)) actual days from the cost report period on which the rate being recalculated is based or on days calculated by multiplying the new number of licensed beds times ninety percent occupancy times the calendar days in the cost report period on which the rate being recalculated is based. For essential community providers, the department shall use eighty-five percent occupancy to calculate days to compare to actual days.

[Statutory Authority: RCW 74.46.800. 01-12-037, § 388-96-776, filed 5/29/01, effective 6/29/01. Statutory Authority: Chapter 74.46 RCW, 1999 c 376 § 3 amending c 309 § 207. 99-24-084, § 388-96-776, filed 11/30/99, effective 12/31/99. Statutory Authority: Chapter 74.46 RCW as amended by 1998 c 322 § 19(12) and RCW 74.46.800. 98-20-023, § 388-96-776, filed 9/25/98, effective 10/1/98. Statutory Authority: RCW 74.46.465. 97-17-040, § 388-96-776, filed 8/14/97, effective 9/14/97. Statutory Authority: RCW 74.46.800. 96-15-056, § 388-96-776, filed 7/16/96, effective 8/16/96. Statutory Authority: RCW 74.46.800 and 1995 1st sp.s. c 18. 95-19-037 (Order 3896), § 388-96-776, filed 9/12/95, effective 10/13/95. Statutory Authority: RCW 74.46.800. 94-12-043 (Order 3737), § 388-96-776, filed 5/26/94, effective 6/26/94.]

     Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.
AMENDATORY SECTION(Amending WSR 00-12-098, filed 6/7/00, effective 7/8/00)

WAC 388-96-782   Exceptional therapy care and exceptional direct care -- Payment.   (((1)(a) The department will pay for exceptional therapy care authorized under WAC 388-96-780 according to the current therapy fee for service schedule maintained by the department.

     (b) All payments for therapy care from third-party payers and/or other department programs, e.g., physical medicine and rehabilitation (PM&R) will be deducted before billing the department under the exceptional therapy program. The nursing facility (NF) will bill the department for the authorized exceptional therapy care according to the department's billing instructions, including but not limited to WAC 388-545-0300, 388-545-0500, and 388-545-0700.

     (2))) For WAC 388-96-781 residents, the department will pay the resident's total rate in effect on December 31, 1999, inflated by the industry weighted average economic trends and conditions adjustment factor.

[Statutory Authority: RCW 74.46.800, 74.46.508. 00-12-098, § 388-96-782, filed 6/7/00, effective 7/8/00.]

     (b) Issuance of a CCA as required by this regulation and by chapter 74.46 RCW is necessary before:

     (i) Any depreciation resulting from the capitalized addition is included in a facility's property component rate allocation, including both determinations under RCW 74.46.435 and property rate add-ons done pursuant to WAC 388-96-776; and/or

     (ii) Any net invested funds associated with the capitalized addition are included in the calculation of the facility's financing allowance rate allocation, including both determinations under RCW 74.46.437 and financing allowance rate add-ons done pursuant to WAC 388-96-776.

     (2) To apply for a CCA, a contractor must submit a written application to the nursing home rates section of the office of rates management (ORM) within the department. The application must be entirely separate from, and not included with, any other request or communication. The application must include:

     (a) A description of the proposed new or replacement construction or major renovation;

     (b) A copy of the CON approval, or the determination of CON exception issued by the department of health for the construction or renovation;

     (c) The amount of money for which the CCA is being requested; this will presumably be the same amount as included in the CON approval or exception, but may be different where good cause is shown;

     (d) The name of the general contractor who will build the construction or renovation; and

     (e) The anticipated starting and completion dates of the construction or renovation.

     (3) Completed applications for CCAs will be reviewed in the order received. An application will be deemed completed as of the date when all required information has been received by ORM. Within ninety days of the receipt of an application, ORM will either reject it as incomplete, or act upon it. If more than one CCA application is received on the same date, priority will first be given to an application from an essential community provider and then to an application in relation to the facility which has gone the longest from its last major renovation or building project.

     (4) ORM will accept applications and issue CCAs for each state fiscal year for which the legislature has enacted authorization in the biennial appropriations act as provided by RCW 74.46.807, subject to the limits of such authorization. CCAs for a fiscal year will be issued until the remaining capital authorization for that year is insufficient to cover any more applications made for that year. An application denied because that year's authorization has been depleted may be resubmitted for a later year, and will be given priority for the remaining amounts of capital authorization in the later year, after CCAs already issued for that year. The state fiscal year runs from July 1 of one calendar year to June 30 of the following calendar year, and is designated by the second calendar year. For example, state fiscal year 2004 (SFY04) runs from July 1, 2003 through June 30, 2004.

     (5)(a) When a CCA has been issued, the contractor must act to complete the construction or renovation in a timely manner, consistent with the estimates included in the application. The construction or renovation must be completed and ready for occupancy no later than the last day of the state fiscal year for which the CCA is issued. "Ready for occupancy" means that all federal, state, and local permits for occupancy of the buildings by residents have been issued.

     (b) The contractor must send the department ORM a copy of each progress report submitted to the certificate of need section of the department of health under WAC 246-310-590, or a regulation adopted as a successor thereto, at the same time the progress report is filed with the department of health.

     (c) Based upon the application for the CCA and the progress reports filed with the department of health by the contractor, ORM will set deadlines for progress of the project toward completion. ORM may withdraw a CCA if its holder does not comply with those deadlines in a good faith manner. A contractor that fails to meet a progress deadline due to its own action or inaction shall be considered not to have acted in a good faith manner.

     (d) If a CCA is withdrawn by ORM, or if the construction or renovation is not ready for occupancy by the last day of the fiscal year for which the CCA was issued, the value of the construction or renovation will not be included in the facility's property component or financing allowance rate allocations, as provided in subsection (1)(b) of this section. To include the value of the construction or renovation in the facility's property component or financing allowance rate allocations, the contractor must seek and obtain another CCA.

     (6)(a) Although they are related, the CON and CCA processes are separate. When a CON requires amendment under department of health requirements, the contractor must notify ORM. The previously issued CCA will stay in effect. When the amended CON is issued in an amount greater than the original CON, the contractor must submit a new CCA application to ORM covering only the difference between the original and amended CONs. This supplemental CCA application may reference the original CCA application to the greatest extent possible, to expedite its filing and review.

     (b) The department of health allows the dollar amount of a CON to be exceeded by the greater of twelve percent or fifty thousand dollars without requiring an amendment to the CON. This excess is not automatically reflected in the corresponding CCA. Any increase in the amount requires an application for a new CCA.

     (c) ORM will review the new CCA application based on the estimated date of occupancy and the authorization remaining for the relevant state fiscal year. If there is insufficient authorization remaining in that fiscal year to fund the project, ORM will deny the application in whole or in part.

     (d) If a contractor's application for a CCA is denied pursuant to subsection (c) above, the contractor may resubmit it for a later state fiscal year and the application will be given priority as described in subsection (4) of this section.

     (7) If ORM withdraws a CCA previously issued, the amount of that authorization shall be restored to the total capital authorization available for the state fiscal year against which the CCA was issued.

     (8) An application for a CCA may be considered on an emergency basis. If the application is approved and a sufficient amount of authorization remains for the relevant fiscal year, the CCA may be issued without regard to the priority of the application. Only an application made in relation to a major renovation project may be considered on an emergency basis, and then only if it must be completed as soon as possible to:

     (a) Retain a facility's license or certification provided the net rate effect is ten cents per patient day or greater;

     (b) Protect the health or safety of the facility's residents; or

     (c) Avoid closure if the facility is an essential community provider.

[]

     (a) Adverse actions taken under the authority of this chapter or chapter 74.46 RCW subject to administrative review under WAC 388-96-904 include but are not limited to:

     (i) Determining a nursing facility payment rate;

     (ii) Calculating a nursing facility settlement;

     (iii) Imposing a civil fine on the nursing facility;

     (iv) Suspending payment to a nursing facility; or

     (v) Refusing to contract with a nursing facility.

     (b) Adverse actions taken under the authority of this chapter or chapter 74.46 RCW not subject to administrative review under WAC 388-96-904 include but are not limited to ((those taken)):

     (i) Actions taken under the authority of RCW 74.46.421 and sections of this chapter implementing RCW 74.46.421;

     (ii) Case mix accuracy review of minimum data set (MDS) nursing facility resident assessments, which shall be limited to separate administrative review under the provisions of WAC 388-96-905;

     (iii) Quarterly rate updates to reflect changes in a facility's resident case mix including contractor errors made in the MDSs used to update the facility's resident case mix;

     (iv) Exceptional direct care program codified at WAC 388-96-781; and

     (v) Actions taken under WAC 388-96-218 (2)(c).

     (2) The administrative review process prescribed in WAC 388-96-904 shall not be used to contest or review unrelated or ancillary department actions, whether review is sought to obtain a ruling on the merits of a claim or to make a record for subsequent judicial review or other purpose. If an issue is raised that is not subject to review under WAC 388-96-904, the presiding officer shall dismiss such issue with prejudice to further review under the provisions of WAC 388-96-904, but without prejudice to other administrative or judicial review as may be provided by law. Unrelated or ancillary actions not eligible for administrative review under WAC 388-96-904 include but are not limited to:

     (a) Challenges to the adequacy or validity of the public process followed by department in proposing or making a change to the nursing facility Medicaid payment rate methodology, as required by 42 U.S.C. 1396a (a)(13)(A) and WAC 388-96-718;

     (b) Challenges to the nursing facility Medicaid payment system that are based in whole or in part on federal laws, regulations, or policies;

     (c) Challenges to a contractor's rate that are based in whole or in part ((of)) on federal laws, regulations, or policies;

     (d) Challenges to the legal validity of a statute or regulation; and

     (e) ((Issues relating to case mix accuracy review of minimum data set (MDS) nursing facility resident assessments, which shall be limited to separate administrative review under the provisions of WAC 388-96-905;

     (f) Quarterly rate updates to reflect changes in a facility's resident case mix;

     (g) Issues relating to any action)) Actions of the department affecting a Medicaid beneficiary or provider that were not commenced by the office of rates management, aging and ((adult)) disability services administration, for example, entitlement to or payment for durable medical equipment or other services((;

     (h) Issues relating to exceptional therapy care and exceptional direct care programs codified at WAC 388-96-779 through 388-96-782; and

     (i) Department actions taken under WAC 388-96-218 (2)(c))).

     (3) If a contractor wishes to challenge the legal validity of a statute or regulation relating to the nursing facility Medicaid payment system, or wishes to bring a challenge based in whole or in part on federal law, it must bring such action de novo in a court of proper jurisdiction as may be provided by law.

[Statutory Authority: RCW 74.46.800. 01-12-037, § 388-96-901, filed 5/29/01, effective 6/29/01. Statutory Authority: RCW 74.46.800, 74.46.508. 00-12-098, § 388-96-901, filed 6/7/00, effective 7/8/00. Statutory Authority: RCW 74.46.780 as amended by 1998 c 322 § 41. 98-20-023, § 388-96-901, filed 9/25/98, effective 10/1/98. Statutory Authority: RCW 74.46.800 and 1995 1st sp.s. c 18. 95-19-037 (Order 3896), § 388-96-901, filed 9/12/95, effective 10/13/95. Statutory Authority: RCW 74.46.800 and 74.09.120. 91-12-026 (Order 3185), § 388-96-901, filed 5/31/91, effective 7/1/91. Statutory Authority: RCW 74.09.120. 82-21-025 (Order 1892), § 388-96-901, filed 10/13/82; Order 1262, § 388-96-901, filed 12/30/77.]

     (a) Be signed by the contractor or by a partner, officer, or authorized employee of the contractor;

     (b) State the particular issues raised; and

     (c) Include all necessary supporting documentation or other information.

     (2) After receiving a request for administrative review conference that meets the criteria in subsection (1) of this section, the department shall schedule an administrative review conference. The conference may be conducted by telephone.

     (3) At least fourteen calendar days prior to the scheduled date of the administrative review conference, the contractor must supply any additional or supporting documentation or information upon which the contractor intends to rely in presenting its case. In addition, the department may request at any time prior to issuing a determination any documentation or information needed to decide the issues raised, and the contractor must comply with such a request within fourteen calendar days after it is received. The department may extend this period up to fourteen additional calendar days for good cause shown if the contractor requests an extension in writing received by the department before expiration of the initial fourteen-day period. The department shall dismiss issues that cannot be decided or resolved due to a contractor's failure to provide requested documentation or information within the required period.

     (4) The department shall, within sixty calendar days after conclusion of the conference, render a determination in writing addressing the issues raised. If the department is waiting for additional documentation or information promised by or requested from the contractor pursuant to subsection (3) of this section, the sixty-day period shall not commence until the department's receipt of such documentation or information or until expiration of the time allowed to provide it. The determination letter shall include a notice of dismissal of all issues which cannot be decided due to a contractor's failure to provide documentation or information promised or requested.

     (5) A contractor seeking further review of a determination issued pursuant to subsection (4) of this section shall apply for an adjudicative proceeding, in writing, signed by one of the individuals authorized by subsection (1) of this section, within twenty-eight calendar days after receiving the department's administrative review conference determination letter. A review judge or other presiding officer employed by the department's board of appeals shall conduct the adjudicative proceeding.

     The department shall deem the contractor to have received the department's determination five calendar days after the date of the administrative review determination letter, unless proof of the date of receipt of the letter exists, in which case the actual date of receipt shall be used to determine timeliness of the contractor's application for an adjudicative proceeding. The contractor shall attach to its application for an adjudicative proceeding the department's administrative review conference determination letter. A contractor's application for an adjudicative proceeding shall be addressed to the department's board of appeals.

     (6) Except as authorized by subsection (7) of this section, the scope of an adjudicative proceeding shall be limited to the issues specifically raised by the contractor at the administrative review conference and addressed on the merits in the department's administrative review conference determination letter. The contractor shall be deemed to have waived all issues or claims that could have been raised by the contractor relating to the challenged determination or action, but which were not pursued at the conference and not addressed in the department's administrative review conference determination letter. In its request for an adjudicative proceeding or as soon as practicable, the contractor must specify its issues.

     (7) If the contractor wishes to have further review of any issue not addressed on its merits, but instead dismissed in the department's administrative review conference determination letter, for failure to supply needed, promised, or requested additional information or documentation, or because the department has concluded the request was untimely or otherwise procedurally defective, the issue shall be considered by the presiding officer for the purpose of upholding the department's dismissal, reinstating the issue and remanding for further agency staff action, or reinstating the issue and rendering a decision on the merits.

     (8) An adjudicative proceeding shall be conducted in accordance with this chapter, chapter ((388-08)) 388-02 WAC and chapter 34.05 RCW. In the event of a conflict between hearing requirements in chapter 74.46 RCW and chapter 388-96 WAC specific to the nursing facility Medicaid payment system ((on the one hand)) and general hearing requirements in chapter 34.05 RCW and chapter ((388-08)) 388-02 WAC ((on the other hand)), the specific requirements of chapter 74.46 RCW and chapter 388-96 WAC shall prevail. The presiding officer assigned by the department's board of appeals to conduct an adjudicative proceeding and who conducts the proceeding shall render the final agency decision.

     (9) At the time an adjudicative proceeding is being scheduled for a future time and date certain, or at any appropriate stage of the prehearing process, the presiding officer shall have authority, upon the motion of either party or the presiding officer's own motion, to compel either party to identify specific issues remaining to be litigated.

     (10) If the presiding officer determines there is no material issue(s) of fact to be resolved in a case, the presiding officer shall have authority, upon the motion of either party or the presiding officer's own motion, to decide the issue(s) presented without convening or conducting an in-person evidentiary hearing. In such a case, the decision may be reached on documentation admitted to the record, party admissions, written or oral stipulation(s) of facts, and written or oral argument.

     (11) The board of appeals shall issue an order dismissing an adjudicative proceeding requested under subsection (5) of this section, unless within two hundred seventy calendar days after the board of appeals receives the application for an adjudicative proceeding:

     (a) All issues have been resolved by a written settlement agreement between the contractor and the department signed by both and filed with the board of appeals; or

     (b) An adjudicative proceeding has been held for all issues not resolved and the evidentiary record, including all rebuttal evidence and post-hearing or other briefing, is closed.

     This time limit may be extended one time thirty additional calendar days for good cause shown upon the motion of either party made prior to the expiration of the initial two hundred seventy day period. It shall be the responsibility of the contractor to request that hearings be scheduled and ensure that settlement agreements are signed and filed with the board of appeals in order to comply with the time limit set forth in this subsection.

     (12) Any party dissatisfied with a decision or an order of dismissal of the board of appeals may file a petition for reconsideration within ten calendar days after the decision or order of dismissal is served on such party. The petition shall state the specific grounds upon which relief is sought. The time for seeking reconsideration may be extended by the presiding officer for good cause upon motion of either party. The presiding officer shall rule on a petition for reconsideration and may seek additional argument, briefing, testimony, or other evidence if deemed necessary. Filing a petition for reconsideration shall not be a requisite for seeking judicial review; however, if a petition is filed by either party, the agency decision shall not be deemed final until a ruling is made by the presiding officer.

     (13) A contractor dissatisfied with a decision or an order of dismissal of the board of appeals may file a petition for judicial review pursuant to RCW 34.05.570(3) or other applicable authority.

[Statutory Authority: RCW 74.46.780 as amended by 1998 c 322 § 41. 98-20-023, § 388-96-904, filed 9/25/98, effective 10/1/98. Statutory Authority: RCW 74.46.800. 96-15-056, § 388-96-904, filed 7/16/96, effective 8/16/96. Statutory Authority: RCW 74.46.800 and 1995 1st sp.s. c 18. 95-19-037 (Order 3896), § 388-96-904, filed 9/12/95, effective 10/13/95. Statutory Authority: RCW 74.46.800. 94-12-043 (Order 3737), § 388-96-904, filed 5/26/94, effective 6/26/94. Statutory Authority: RCW 74.46.800 and 74.09.120. 91-12-026 (Order 3185), § 388-96-904, filed 5/31/91, effective 7/1/91. Statutory Authority: RCW 34.05.220 (1)(a) and 74.09.120. 90-04-071 (Order 3003), § 388-96-904, filed 2/5/90, effective 3/1/90. Statutory Authority: RCW 74.09.180 and 74.46.800. 89-01-095 (Order 2742), § 388-96-904, filed 12/21/88. Statutory Authority: 1987 c 476. 88-01-126 (Order 2573), § 388-96-904, filed 12/23/87. Statutory Authority: RCW 34.04.020. 84-05-040 (Order 2076), § 388-96-904, filed 2/17/84. Statutory Authority: RCW 74.09.120. 82-21-025 (Order 1892), § 388-96-904, filed 10/13/82; Order 1262, § 388-96-904, filed 12/30/77.]

     The following sections of the Washington Administrative Code are repealed:

WAC 388-96-714	Nursing facility Medicaid rate allocations--Economic trends and conditions adjustment factors.
WAC 388-96-728	How will the nursing facility's "hold harmless" direct care rate be determined?
WAC 388-96-729	When will the department use the "hold harmless rate" to pay for direct care services?
WAC 388-96-732	How will the department determine whether its notice pursuant to WAC 388-96-724 was timely?
WAC 388-96-779	Exceptional therapy care -- Designated nursing facilities.
WAC 388-96-780	Exceptional therapy care -- Covered Medicaid residents.

© Washington State Code Reviser's Office