This section contains definitions of words or phrases that apply to this chapter. Unless defined in this chapter ((or)), the definitions found in chapter 182-500 WAC((, the definitions found in the Webster's New World Dictionary)) apply.

"APM index" - The agency uses the alternative payment methodology (APM) ((is used)) to update APM encounter payment rates on an annual basis. The APM index is a measure of input price changes experienced by Washington's federally qualified health center (FQHC) and rural health clinic (RHC) providers. The index is derived from the federal medicare economic index (MEI) and Washington-specific variable measures.

"Base year" - The year that is used as the benchmark in measuring ((a center's))an FQHC's total reasonable costs for establishing base encounter rates.

"Cost report" - A statement of costs and provider utilization that occurred during the time period covered by the cost report. FQHCs ((must)) complete a cost report when there is a request for a change in scope rate adjustment, there is a rebasing of the encounter rate, or ((when)) the ((medicaid)) agency sets a base rate.

"Encounter" - A face-to-face or telemedicine (including audio-only telemedicine) visit between ((a))an encounter-eligible client and ((a))an FQHC provider (((e.g., a physician, physician's assistant, or advanced registered nurse practitioner))) who exercises independent judgment when providing services that qualify for ((an)) encounter rate reimbursement.

"Encounter rate" - A cost-based, facility-specific rate for covered FQHC services((, paid to an FQHC for each valid encounter it bills)).

"Enhancements (also called managed care enhancements)" - A monthly amount ((paid by)) the agency pays to FQHCs for each client enrolled with a managed care organization (MCO). ((MCOs))FQHCs may contract with ((FQHCs))MCOs to provide services under managed care programs. FQHCs receive enhancements from the agency in addition to the negotiated payments they receive from the MCOs for services provided to enrollees.

"Federally qualified health center (FQHC)" - An entity that has entered into an agreement with the Centers for Medicare and Medicaid Services (CMS) to meet medicare program requirements under 42 C.F.R. 405.2434 and:

(((1)))(a) Is receiving a grant under section 329, 330, or 340 of the federal Public Health Service (PHS) Act, or is receiving funding from such a grant under a contract with the recipient of such a grant and meets the requirements to receive a grant under section 330 of the ((Public Health Service))PHS Act;

(((2)))(b) Based on the recommendation of the PHS, is determined by CMS to meet the requirements for receiving such a grant;

(((3)))(c) Was treated by CMS, for purposes of medicare part B, as a comprehensive federally funded health center (FFHC) as of January 1, 1990; or

(((4)))(d) Is an outpatient health program or facility operated by a tribe or tribal organization under the federal Indian Self-Determination and Education Assistance Act of 1975 or ((by)) an Urban Indian organization receiving funding under Title V of the federal Indian Health Care Improvement Act of 1976.

"Fee-for-service" - A payment method the agency uses to pay providers for covered medical services provided to Washington apple health clients, ((except those))which excludes services provided ((under))by the agency's ((prepaid))contracted managed care organizations ((or those))and services that qualify for an encounter rate.

"Interim rate" - The rate ((established by)) the agency establishes to pay an FQHC for covered FQHC services prior to the establishment of a permanent rate for that ((facility))FQHC.

"Rebasing" - The process of recalculating encounter rates using actual cost report data.

(1) To enroll as a Washington apple health provider and receive payment for services, a federally qualified health center (FQHC) must:

(a) Receive FQHC certification for participation in the Title XVIII (medicare) program according to 42 C.F.R. 491;

(b) Sign a core provider agreement with the medicaid agency; and

(c) Operate in accordance with applicable federal, state, and local laws.

(2) The medicaid agency uses one of two timeliness standards for determining the effective date of a medicaid-certified FQHC.

(a) The agency uses medicare's effective date if the FQHC returns a properly completed core provider agreement and a properly completed FQHC enrollment packet within ((sixty))60 calendar days from the date of ((medicare's letter notifying the center))CMS's written notification to the FQHC of the medicare certification.

(b) The agency uses the date when both the ((signed core provider agreement is))properly completed FQHC enrollment packet and properly completed core provider agreement have been received if ((the FQHC returns the properly completed core provider agreement and FQHC enrollment packet sixty-one))either of the required documentation is submitted 61 or more calendar days after the date of medicare's letter notifying the clinic of the medicare certification.

(1) The following outpatient services qualify for FQHC encounter rate reimbursement:

(a) Physician services specified in 42 C.F.R. 405.2412.

(b) Nurse practitioner or physician assistant services specified in 42 C.F.R. 405.2414.

(c) Clinical psychologist and clinical social worker services specified in 42 C.F.R. 405.2450.

(d) Visiting nurse services specified in 42 C.F.R. 405.2416.

(e) Nurse-midwife services specified in 42 C.F.R. 405.2401.

(f) Preventive primary services specified in 42 C.F.R. 405.2448.

(2) The medicaid agency pays for FQHC services when they are:

(a) Within the scope of an encounter-eligible client's Washington apple health program. Refer to WAC 182-501-0060 scope of services; and

(b) Medically necessary as defined in WAC 182-500-0070.

(3) FQHC services may be provided by any of the following individuals in accordance with 42 C.F.R. 405.2446:

(a) Physicians;

(b) Physician assistants (PA);

(c) Nurse practitioners (NP);

(d) Nurse midwives or other specialized nurse practitioners;

(e) Certified nurse midwives;

(f) Registered nurses or licensed practical nurses; and

(g) Psychologists or clinical social workers.

(1) For services provided during the period beginning January 1, 2001, and ending December 31, 2008, the medicaid agency's payment methodology for federally qualified health centers (FQHC) was a prospective payment system (PPS) as authorized by 42 U.S.C. 1396a (bb)(2) and (3).

(2) For services provided beginning January 1, 2009, FQHCs have the choice to be reimbursed under the PPS or to be reimbursed under an alternative payment methodology (APM), as authorized by 42 U.S.C. 1396a (bb)(6). As required by 42 U.S.C. 1396a (bb)(6), payments made under the APM ((will be))are at least as much as payments that would have been made under the PPS.

(3) The agency calculates FQHC PPS encounter rates as follows:

(a) Until an FQHC's first audited medicaid cost report is available, the agency pays an average encounter rate of other similar FQHCs within the state, otherwise known as an interim rate.

(b) Upon availability of the FQHC's first audited medicaid cost report, the agency sets FQHC encounter rates at ((one hundred))100 percent of its total reasonable costs as defined in the cost report. FQHCs receive this rate for the remainder of the calendar year during which the audited cost report became available. The encounter rate is then ((increased))adjusted each January 1st by the percent change in the medicare economic index (MEI).

(4) For FQHCs in existence during calendar years 1999 and 2000, the agency sets encounter rates prospectively using a weighted average of ((one hundred))100 percent of the FQHC's total reasonable costs for calendar years 1999 and 2000 and adjusted for any increase or decrease in the scope of services furnished during the calendar year 2001 to establish a base encounter rate.

(a) The agency adjusts PPS base encounter rates to account for an increase or decrease in the scope of services provided during calendar year 2001 in accordance with WAC 182-548-1500.

(b) The agency determines PPS base encounter rates ((are determined)) using audited cost reports, and each year's rate is weighted by the total reported encounters. The agency does not apply a capped amount to these base encounter rates. The formula used to calculate base encounter rates is as follows:

(c) Beginning in calendar year 2002 and any year thereafter, encounter rates are ((increased))adjusted by the MEI for primary care services, and adjusted for any increase or decrease in the FQHC's scope of services.

(5) The agency calculates the FQHC's APM encounter rate for services provided during the period beginning January 1, 2009, and ending April 6, 2011, as follows:

(a) The APM utilizes the FQHC base encounter rates, as described in subsection (4)(b) of this section.

(b) Base rates are adjusted to reflect any approved changes in scope of service in calendar years 2002 through 2009.

(c) The adjusted base rates are then increased by each annual percentage, from calendar years 2002 through 2009, of the IHS Global Insight index, also called the APM index. The result is the year 2009 APM rate for each FQHC that chooses to be reimbursed under the APM.

(6) This subsection describes the encounter rates that the agency pays FQHCs for services provided during the period beginning April 7, 2011, and ending June 30, 2011. On January 12, 2012, the federal Centers for Medicare and Medicaid Services (CMS) approved a state plan amendment (SPA) containing the methodology outlined in this section.

(a) During the period that CMS approval of the SPA was pending, the agency continued to pay FQHCs at the encounter rates described in subsection (5) of this section.

(b) Each FQHC has the choice of receiving either its PPS rate, as determined under the method described in subsection (3) of this section, or a rate determined under a revised APM, as described in (c) of this subsection.

(c) The revised APM uses each FQHC's PPS rate for the current calendar year, increased by five percent.

(d) For all payments made for services provided during the period beginning April 7, 2011, and ending June 30, 2011, the agency ((will)) recoups from FQHCs any amount in excess of the encounter rate established in this section. This process is specified in emergency rules that took effect on October 29, 2011, (WSR 11-22-047) and February 25, 2012 (WSR 12-06-002).

(7) This subsection describes the encounter rates that the agency pays FQHCs for services provided on and after July 1, 2011. On January 12, 2012, CMS approved a SPA containing the methodology outlined in this section.

(a) Each FQHC has the choice of receiving either its PPS rate as determined under the method described in subsection (3) of this section, or a rate determined under a revised APM, as described in (b) of this subsection.

(b) The revised APM, known as APM-3, is as follows:

(i) For FQHCs that rebased their rate effective January 1, 2010, the revised APM is their allowed cost per visit during the cost report year increased by the cumulative percentage increase in the MEI between the cost report year and January 1, 2011.

(ii) For FQHCs that did not rebase their rate effective January 1, 2010, the revised APM is based on their PPS base rate from 2001 (or subsequent year for FQHCs receiving their initial FQHC designation after 2002) increased by the cumulative percentage increase in the IHS Global Insight index from the base year through calendar year 2008 and by the cumulative percentage increase in the MEI from calendar years 2009 through 2011. The rates were increased by the MEI effective January 1, 2012, and ((will be))are increased by the MEI each January 1st thereafter.

(c) For all payments made for services provided during the period beginning July 1, 2011, and ending January 11, 2012, the agency ((will)) recoups from FQHCs any amount paid in excess of the encounter rate established in this section. This process is specified in emergency rules that took effect on October 29, 2011, (WSR 11-22-047) and February 25, 2012 (WSR 12-06-022).

(d) For FQHCs that choose to be paid under the revised APM, the agency ((will)) periodically rebases the encounter rates using the FQHC cost reports and other relevant data. Rebasing ((will be))is done only for FQHCs that are reimbursed under the APM.

(e) The agency ((will)) ensures that the payments made under the APM are at least equal to the payments that would be made under the PPS.

(8) This subsection describes the payment methodology that the agency uses to pay participating FQHCs for services provided beginning July 1, 2017, and ending December 31, 2022.

(a) Each FQHC may receive payments under the APM described in subsection (7) of this section, or receive payments under the revised APM described in this subsection.

(b) The revised APM, known as APM-4, is as follows:

(i) The revised APM establishes a budget-neutral, baseline per member per month (PMPM) rate for each FQHC. The PMPM rate accounts for enhancement payments in accordance with the definition of enhancements in WAC 182-548-1100. For the purposes of this section, "budget-neutral" means the cost of the revised APM to the agency will not exceed what would have otherwise been spent not including the revised APM on a per member per year basis.

(ii) The agency pays the FQHC a PMPM payment each month for each managed care client assigned to them by an MCO.

(iii) The agency pays the FQHC a PMPM rate in addition to the amounts the MCO pays the FQHC. The agency may prospectively adjust the FQHC's PMPM rate for any of the following reasons:

(A) Quality and access metrics performance.

(B) FQHC encounter rate changes.

(iv) In accordance with 42 U.S.C. 1396a (bb)(5)(A), the agency performs an annual reconciliation.

(A) If the FQHC was underpaid, the agency pays the difference, and the PMPM rate may be subject to prospective adjustment under (b)(iii) of this subsection.

(B) If the FQHC was overpaid, the PMPM rate may be subject to prospective adjustment under (b)(iii) of this subsection.

(1) The agency limits FQHC encounter((s))rate reimbursement to one per client, per day except in the following circumstances:

(a) ((The visits occur with different health care professionals with different specialties))There is a subsequent visit in the same cost center that requires separate evaluation and treatment on the same day for unrelated diagnoses; or

(b) There are separate visits ((with unrelated diagnoses.))in different types of cost centers that occur with different health care professionals. (For example, a client with a separate medical and dental visit on the same day.)

(2) ((FQHC services and supplies incidental to the provider's services are included in the encounter rate payment.

(4) Payments for non-FQHC))All services provided within the same cost center performed on the same day must be included in the same encounter, except for in the circumstance outlined in subsection (1)(a) of this section.

(5) Services provided in an FQHC that are not encounter-eligible are ((made))paid on a fee-for-service basis ((using the agency's published))according to agency rules, billing guides and fee schedules. ((Non-FQHC services are subject to the coverage guidelines and limitations listed in chapters 182-500 through 182-557 WAC.

(5) For clients enrolled with a managed care organization (MCO), covered FQHC services are paid for by that plan.))

(6) Managed care organization (MCO) contracted services provided in an FQHC for clients enrolled in an MCO are paid for by the MCO.

(7) For clients enrolled with an MCO, the agency pays each FQHC a supplemental payment in addition to the amounts paid by the MCO. The supplemental payments, called enhancements, are paid in amounts necessary to ensure compliance with 42 U.S.C. 1396a (bb)(5)(A).

(a) The FQHCs receive an enhancement payment each month for each managed care client assigned to them by an MCO.

(b) To ensure that the appropriate amounts are paid to each FQHC, the agency performs an annual reconciliation of the enhancement payments.

(i) For each FQHC, the agency compares the amount paid in enhancement payments to the amount determined by the following formula: (((Managed care encounters times encounter rate) less actual MCO payments for FQHC services.))

(ii) If the agency determines that the FQHC ((has been))was overpaid, the agency recoups the appropriate amount. If the agency determines that the FQHC ((has been))was underpaid, the agency pays the difference.

(((7) Only clients enrolled in Title XIX (medicaid) or Title XXI (CHIP) are eligible for encounter or enhancement payments. The agency does not pay the encounter rate or the enhancement rate for clients in state-only medical programs.))(iii) The agency may prospectively adjust the FQHC's monthly enhancement payments if the agency determines the FQHC has been overpaid or underpaid in the annual reconciliation.

(8) The agency pays the encounter rate and the enhancement payments with respect to services provided to encounter-eligible clients. Services provided to clients who are enrolled in ((state-only)) medical programs that are ((considered))paid only in state funds are not encounter-eligible; these claims are paid on a fee-for-service basis regardless of the type of service performed.

In accordance with 42 U.S.C. 1396a (bb)(3)(B), the agency ((will)) adjusts its payment rate to a federally qualified health center (FQHC) to take into account any increase or decrease in the scope of the FQHC's services. The procedures and requirements for any such rate adjustment are described below.

(1) Triggering events.

(a) An FQHC may file a change in scope of services rate adjustment application with the agency on its own initiative only when((:))the FQHC satisfies the criteria described in (a)(i), (ii), and (iii) of this subsection.

(i) When the cost to the FQHC of providing covered health care services to eligible clients has increased or decreased due to one or more of the following triggering events:

(A) A change in the type of health care services the FQHC provides;

(B) A change in the intensity of health care services the FQHC provides. Intensity means the total quantity of labor and materials consumed by an individual client during an average encounter has increased;

(C) A change in the duration of health care services the FQHC provides. Duration means the length of an average encounter has increased;

(D) A change in the amount of health care services the FQHC provides in an average encounter;

(E) Any change comparable to (a)(i)(A) through (D) of this subsection in which the type, intensity, duration or amount of services has decreased and the cost of an average encounter has decreased((; and)).

(ii) The cost change equals or exceeds:

(A) An increase of one and three-quarters percent in the prospective payment system (PPS) rate per encounter over one year as measured by comparing the cost per encounter to the then current PPS rate;

(B) A decrease of two and one-half percent in the PPS rate per encounter over one year as measured by comparing the cost per encounter to the then current PPS rate; or

(C) A cumulative increase or decrease of five percent in the PPS rate per encounter as compared to the current year's cost per encounter((; and)).

(iii) The costs reported to the agency to support the proposed change in scope rate adjustment are reasonable under OMB Circular A-122 or successor (the Uniform Grants Guidance) and other applicable state and federal law.

(b) At any time, the agency may instruct the FQHC to file a medicaid cost report with a position statement ((of))indicating whether the FQHC asserts that its PPS rate should be increased or decreased due to a change in the scope of services (((the FQHC "position statement"))).

(i) The FQHC ((must)) files a completed cost report and position statement no later than ((ninety))90 calendar days after receiving the instruction from the agency ((to file same; provided, however,)). If the FQHC has ((recently completed its fiscal year))not received the annual audit report at the time of the agency's request ((but has not received its annual audit by the time of the request)), the FQHC ((may at its option wait and respond to the agency's request ninety days after the FQHC receives its annual audit or it may submit a cost report))informs the agency, in writing, that it will submit one of the following alternatives:

(B) The cost report and position statement based on the prior year's audit.

(ii) The agency reviews the FQHC's cost report and position statement ((will be reviewed)) under the same criteria listed above for an application for a change in scope adjustment.

(iii) The agency will not request more than one change in scope in a calendar year.

(2) Filing requirements.

(a) The FQHC may apply for a prospective change in scope of service rate adjustment, a retrospective change in scope of service rate adjustment, or both, in a single application.

(((i)))(b) Unless instructed to file an application by the agency, the FQHC may file no more than one change in scope of service application per calendar year; however, more than one type of change in scope may be included in a single application.

(((ii)))(c) The FQHC ((must)) files for a change in scope of service rate adjustment ((no later than))based on the following deadlines, whichever is later:

(i) Ninety calendar days after the end of the ((calendar))FQHC's fiscal year ((in which)), demonstrating that the change in scope occurred as documented in the medicaid cost report.

(ii) Ninety calendar days after the FQHC ((believes the change in scope occurred or in which the FQHC)) learned, based on its annual audit, that the cost threshold in subsection (1)(a)(ii) of this section was met((, whichever is later))during the fiscal year.

(((b)))(d) Prospective change in scope.

(i) ((To file))A prospective change in scope of service rate adjustment application must state each triggering event listed in subsection (1)(a)(i) of this section that supports the FQHC's application.

(ii) A prospective change in scope of service rate adjustment application((, the FQHC must submit projected costs sufficient to establish an interim rate. A prospective change is))must be based on one of the following:

(A) A change the FQHC plans to implement in the future. The FQHC submits 12 months of projected data and costs sufficient to establish an interim rate; or

(iii) The interim rate adjustment ((will go))goes into effect after the change takes effect.

(((ii)))(iv) The interim rate is subject to the post change in scope review and rate adjustment process defined in subsection (5) of this section.

(((iii)))(v) If the change in scope occurs ((fewer))less than ((ninety))90 calendar days after the FQHC submitted a complete application to the agency, the interim rate ((must)) takes effect no later than ((ninety))90 calendar days after the complete application was submitted to the agency.

(((iv)))(vi) If the change in scope occurs more than ((ninety))90 calendar days but ((fewer))less than ((one hundred eighty))180 calendar days after the FQHC submitted a complete application to the agency, the interim rate takes effect when the change in scope occurs.

(((v)))(vii) If the FQHC fails to implement a change in service identified in its prospective change in scope of service rate adjustment application within ((one hundred eighty))180 calendar days, the application is void and the FQHC may resubmit the application to the agency, in ((which case))such a circumstance, (((a)(i)))(b) of this subsection does not apply.

(((c)))(viii) If the change in scope is based on a triggering event that already occurred but is supported by less than 12 months of data in the filed cost report, the interim rate takes effect on the date the FQHC submitted the completed application to the agency.

(e) Retrospective change in scope.

(i) A retrospective change in scope of service rate adjustment application must state each ((qualifying))triggering event listed in subsection (1)(a)(i) of this section that supports its application and include ((twelve))12 months of data documenting the cost change caused by the ((qualifying))triggering event. A retrospective change in scope is a change that took place in the past and the FQHC is seeking to adjust its rate based on that change.

(ii) If approved, a retrospective rate adjustment takes effect on the date the FQHC ((filed the))submitted a complete application ((with))to the agency, as determined by the agency.

(3) Supporting documentation.

(a) To apply for a change in scope of service rate adjustment, the FQHC ((must include))submits the following supporting documentation ((in the application))to the agency in electronic format by email to fqhcrhc@hca.wa.gov:

(i) A narrative description of the proposed change in scope;

(ii) A description of each cost center on the cost report that was or will be affected by the change in scope;

(iii) The FQHC's most recent audited financial statements, if audit is required by federal law;

(iv) The implementation date for the proposed change in scope; and

(v) Any additional documentation requested by the agency.

(b) A prospective change in scope of service rate adjustment application must also include the projected medicaid cost report ((or))and the projected medicare cost report with supplemental schedules necessary to identify the medicaid cost per visit for the ((twelve-month))12-month period following implementation of the change in scope.

(c) A retrospective change in scope of service rate adjustment application must also include the medicaid cost report ((or))and the medicare cost report with supplemental schedules necessary to identify the medicaid cost per visit and encounter data for ((twelve months or the fiscal year))one of the following:

(i) The 12-month period following the implementation of the triggering event; or

(ii) The fiscal year following implementation of the proposed change in scope.

(4) Review of the application.

(a) Application processing.

(i) The agency ((must)) reviews the application for completeness, accuracy, and compliance with program rules.

(ii) Within ((sixty))60 calendar days of receiving the application, the agency ((must notify))notifies the FQHC of any deficient documentation or request any additional information that is necessary to process the application. If the FQHC does not provide the agency with the documentation or information within 30 calendar days of the request, the agency may deny the application.

(iii) Within ((ninety))90 calendar days of receiving a complete application, including any additional documentation or information that the agency might request, the agency ((must)) sends the FQHC:

(A) A decision stating whether it will implement a PPS rate change; and

(B) A rate-setting statement if the rate change is implemented.

(iv) ((Failure to act within ninety days will mean that the change is considered denied by the agency and))The FQHC may appeal the decision on the application as provided for in ((subsection (6) of this section))WAC 182-548-1650.

(b) Determining rate for change in scope.

(i) The agency ((must)) sets an interim rate for prospective changes in scope by adjusting the FQHC's existing rate by the projected average cost per encounter of any approved change. The agency ((will)) reviews the costs to determine if they are reasonable, and set a new interim rate based on the determined cost per encounter.

(ii) The agency ((must)) sets an adjusted encounter rate for retrospective changes in scope by adjusting the FQHC's existing rate by the documented average cost per encounter of the approved change. ((Projected costs per encounter may be used if there are insufficient historical data to establish the rate.)) The agency ((will)) reviews the costs to determine whether they are reasonable, and set a new rate based on the determined cost per encounter.

(c) If the FQHC is paid under an alternative payment methodology (APM), any change in scope of service rate adjustment ((requested by the FQHC will modify))approved by the agency modifies the PPS rate in addition to the APM.

(d) The agency may delegate the duties related to application processing and rate setting to a third party. The agency retains final responsibility and authority for making decisions related to changes in scope.

(5) Post change in scope of services rate adjustment review.

(a) If the approved change in scope ((application))rate adjustment was based on a retrospective change in scope application (i.e., based on a year or more of actual encounter data), the agency may conduct a post change in scope rate adjustment review.

(b) If the approved change in scope ((application was))rate adjustment was based on a prospective change in scope application (i.e., based on less than a full year of actual encounter data), the FQHC ((must)) submits the following information to the agency within ((eighteen))18 months of the effective date of the rate adjustment:

(i) Medicaid cost report ((or))and medicare cost report with supplemental schedules necessary to identify the medicaid cost per visit and encounter data for ((twelve))12 consecutive months of experience following implementation of the change in scope; ((and))

(ii) A narrative description of the request;

(v) Any additional documentation requested by the agency.

(c) The agency ((will)) conducts the post change in scope review within ((ninety))90 calendar days of receiving the cost report and encounter data from the FQHC.

(d) If necessary, the agency ((will)) adjusts the encounter rate within ((ninety))90 calendar days to ensure that the rate reflects the reasonable cost of the change in scope of services.

(e) A rate adjustment based on a post change in scope review ((will)) takes effect on the date the agency issues its adjustment. The new rate ((will be))is prospective.

(f) If the FQHC fails to submit the post change in scope cost report or related encounter data, the agency ((must)) provides written notice to the center or clinic ((of the deficiency)) within ((thirty))30 calendar days.

(g) If the FQHC fails to submit required documentation within five months of ((this deficiency notice))the notice identified in (f) of this subsection, the agency may reinstate the prechange in scope encounter rate going forward from the date the interim rate was established. The agency may recoup any overpayment to the FQHC ((may be recouped by the agency)).

(((6) Appeals. Appeals of agency action under this section are governed by WAC 182-502-0220, except that any rate change begins on the date the agency received the change in scope of services rate adjustment application.))

An overpayment assessment by the agency against an FQHC identified in the annual managed care reconciliation (see WAC 182-548-1450) may be appealed based on WAC 182-502-0230 and RCW 41.05A.170. Administrative hearing appeals are governed by chapter 34.05 RCW (Administrative Procedure Act) and chapter 182-526 WAC (HCA administrative hearing rules).

(1) An FQHC provider has a right to an administrative appeal of agency action related to rate setting under this chapter based on the rules in this section.

(a) The rules in WAC 182-502-0220 do not apply to appeals of agency action related to rate setting under this chapter.

(b) Appeals related to rate setting under this section are not governed by the Administrative Procedure Act, chapter 34.05 RCW.

(c) Any rate change that the agency grants that is the result of fraudulent practices on the part of the FQHC, including as described under RCW 74.09.210, is exempt from the appeal provisions in this chapter.

(d) An FQHC who fails to submit requested information as outlined in this chapter will be determined to have abandoned their appeal.

(2) The first level of appeal.

(a) An FQHC provider who wants to contest an agency action concerning the reimbursement rate must file a written appeal with the agency. Written appeals must be sent to the address provided in the rate notification letter.

(b) The FQHC must file the appeal within 60 calendar days of the date of the rate notification letter from the agency, unless an extension has been granted.

(i) The agency may grant a time extension for the appeal period if the FQHC makes such a request before the expiration of the 60-day period.

(ii) The agency does not consider an appeal filed after the 60-day period unless an extension is granted by the agency.

(c) The appeal must include the following:

(i) A statement of the specific issue being appealed;

(ii) Supporting documentation; and

(iii) A request for the agency to recalculate the rate.

(d) When an FQHC appeals a portion of a rate, the agency may review all components of the reimbursement rate.

(e) To complete a review of the appeal, the agency may do one or both of the following:

(i) Request additional information;

(ii) Conduct an audit of the documentation provided.

(f) The agency issues a decision or requests additional information within 60 calendar days of receiving the rate appeal request. When the agency requests additional information:

(i) The FQHC has 45 calendar days from the date of the request to submit the additional information to the agency; and

(ii) The agency issues a decision within 30 calendar days of receipt of the additional information.

(g) Any rate increase or decrease resulting from an appeal is effective retroactively to the rate effective date in the notification letter. The exception is identified in (h) of this subsection.

(h) If an appeal is related to the denial of a change in scope rate adjustment application, any rate adjustment effective date is established by the following rules:

(i) For prospective change in scope, the effective date of the rate adjustment is established by WAC 182-548-1500 (2)(d);

(ii) For retrospective change in scope, the effective date of the rate adjustment is established by WAC 182-548-1500 (2)(e);

(iii) For a post change in scope of services, the effective date of the rate adjustment is established by WAC 182-548-1500 (5)(e).

(3) The second level of appeal.

(a) When an FQHC disagrees with a rate review decision from the first level of appeal, it may file a request along with supporting documentation for a dispute conference with the agency. For this section, "dispute conference" means an informal administrative appeal to resolve FQHC disagreements with an agency action not resolved at the first level of appeal.

(b) If an FQHC files a request for a dispute conference, it must submit the request to the agency within 30 calendar days after the date of the rate review decision.

(i) Any request for a dispute conference must be sent to the address indicated in the rate review decision.

(ii) The agency does not consider dispute conference requests submitted after the 30-day period for the first level decision.

(c) The agency conducts the dispute conference within 90 calendar days of receiving the request.

(d) The agency-director designee issues the final decision within 30 calendar days of the conference. Extensions of time for extenuating circumstances may be granted by the agency-director designee.

(e) Any rate increase or decrease resulting from a dispute conference decision is effective on the date specified in the dispute conference decision.

(f) The dispute conference is the final level of administrative appeal within the agency and precedes judicial action.

(4) The agency considers an FQHC who fails to attempt to resolve disputed rates as provided in this section has abandoned the dispute.

This section contains definitions of words and phrases that apply to this chapter. Unless defined in this chapter ((or)), the definitions found in chapter 182-500 WAC((, the definitions found in the Webster's New World Dictionary)) apply.

"APM index" - The agency uses the alternative payment methodology (APM) ((is used)) to update APM encounter payment rates on an annual basis. The APM index is a measure of input price changes experienced by Washington's federally qualified health center (FQHC) and rural health clinic (RHC) providers. The index is derived from the federal medicare economic index (MEI).

"Base year" - The year that is used as the benchmark in measuring ((a clinic's))an RHC's total reasonable costs for establishing base encounter rates.

"Encounter" - A face-to-face or telemedicine (including audio-only telemedicine) visit between ((a client and a qualified RHC provider (e.g., a physician, dentist, physician's assistant, or advanced registered nurse practitioner)))an encounter-eligible client and an RHC provider who exercises independent judgment when providing services that qualify for ((an)) encounter rate reimbursement.

"Encounter rate" - A cost-based, facility-specific rate for covered RHC services((, paid to a rural health clinic for each valid encounter it bills)).

"Enhancements (also called managed care enhancements or supplemental payments)" - A monthly amount ((paid by)) the agency pays to RHCs through a managed care organization (MCO) that has contracted with the RHC to provide services to clients enrolled with the MCO. The enhancement is in addition to the negotiated payment that RHCs receive from the MCO. RHCs participating in the payment method described in WAC 182-549-1450 (((5)))(7)(b) do not receive enhancements.

"Fee-for-service" - A payment method the agency uses to pay providers for covered medical services provided to ((clients enrolled in the Title XIX (medicaid) program or the Title XXI (CHIP) program, except those))Washington apple health clients, which excludes services provided ((under))by the agency's ((prepaid))contracted managed care organizations ((or those))and services that qualify for an encounter payment.

"Interim rate" - The rate ((established by)) the agency establishes to pay ((a rural health clinic))an RHC for covered RHC services prior to the establishment of a permanent rate for that ((facility))RHC.

"Medicare cost report" - The cost report is a statement of costs and provider utilization that occurred during the time period covered by the cost report. RHCs must complete and submit a report annually to medicare.

"Mobile unit" - The objects, equipment, and supplies necessary for provision of the services furnished directly by the RHC are housed in a mobile structure.

"Permanent unit" - The objects, equipment, and supplies necessary for the provision of the services furnished directly by the RHC are housed in a permanent structure.

"Rebasing" - The process of recalculating encounter rates using actual cost report data.

"Rural area" - An area that is not delineated as an urbanized area by the U.S. Census Bureau.

"Rural health clinic (RHC)" - A clinic, as defined in 42 C.F.R. 405.2401(b), that is primarily engaged in providing RHC services and is:

• Located in a rural area designated as a shortage area as defined under 42 C.F.R. 491.2;

• Certified by medicare as an RHC in accordance with applicable federal requirements; and

• Not a rehabilitation agency or a facility primarily for the care and treatment of mental diseases.

"Rural health clinic (RHC) services" - Outpatient or ambulatory care of the nature typically provided in a physician's office or outpatient clinic or similar setting, including specified types of diagnostic examination, laboratory services, and emergency treatments. The specific list of services which must be made available by the clinic can be found under 42 C.F.R. Part 491.9.

(1) To participate in the Title XIX (medicaid) program or the Title XXI (CHIP) program and receive payment for services, a rural health clinic (RHC) must:

(a) Receive RHC certification for participation in the Title XVIII (medicare) program according to 42 C.F.R. 491;

(b) Sign a core provider agreement with the medicaid agency;

(c) Comply with the clinical laboratory improvement amendments (CLIA) of 1988 testing for all laboratory sites per 42 C.F.R. Part 493; and

(d) Operate in accordance with applicable federal, state, and local laws.

(2) An RHC may be a permanent or mobile unit. If an entity owns clinics in multiple locations, each individual site must be certified by the agency in order to receive reimbursement from the agency as an RHC.

(3) The agency uses one of two timeliness standards for determining the effective date of a medicaid-certified RHC.

(a) The agency uses medicare's effective date if the RHC returns a properly completed core provider agreement and a properly completed RHC enrollment packet within ((sixty))60 calendar days from the date of ((medicare's letter notifying the clinic))CMS's written notification to the RHC of the medicare certification.

(b) The agency uses the date the medicare certification letter is received by the agency if the RHC returns either the properly completed core provider agreement ((and))or properly completed RHC enrollment packet after ((sixty))60 calendar days of the date of medicare's letter notifying the clinic of the medicare certification.

(1) Rural health clinic (RHC) services are defined under 42 C.F.R. 440.20(b).

(2) The medicaid agency pays for RHC services when they are:

(a) Within the scope of ((a))an encounter-eligible client's benefit package. See WAC 182-501-0060; and

(b) Medically necessary as defined in WAC 182-500-0070.

(3) RHC services may be provided by any of the following individuals in accordance with 42 C.F.R. 405.2401, 491.7, and 491.8:

(a) Physicians;

(b) Physician assistants (PA);

(c) Nurse practitioners (NP);

(d) Nurse midwives or other specialized nurse practitioners;

(e) Certified nurse midwives;

(f) Registered nurses (RN) or licensed practical nurses (LPN);

(g) Psychologists or clinical social workers; and

(h) Dental services specified in 42 C.F.R. Sec. 440.100.

(1) For services provided during the period beginning January 1, 2001, and ending December 31, 2008, the medicaid agency's payment methodology for rural health clinics (RHC) was a prospective payment system (PPS) as authorized by 42 U.S.C. 1396a (bb)(2) and (3).

(2) For services provided beginning January 1, 2009, RHCs have the choice to be reimbursed under the PPS or be reimbursed under an alternative payment methodology (APM), as authorized by 42 U.S.C. 1396a (bb)(6). As required by 42 U.S.C. 1396a (bb)(6), payments made under the APM are at least as much as payments that would have been made under the PPS.

(3) The agency calculates RHC PPS encounter rates for RHC core services as follows:

(a) Until an RHC submits its first audited or as filed medicare cost report to the agency, the agency pays the RHC an average encounter rate of other similar RHCs within the state, otherwise known as an interim rate. Similar RHCs are defined as either all hospital based or all free-standing RHCs((;)).

(b) Upon ((submission of the RHC's first audited medicare cost report,))the RHC's request to the agency, which must include the submission of the RHC's first as filed or audited medicare cost report, the agency calculates the RHC's PPS rates for RHC core services. The agency sets each RHC's encounter rates ((at one hundred))by dividing 100 percent of ((its))the RHC's costs ((as defined in the cost report)) divided by the total number of RHC encounters ((the RHC has provided during the time period covered in the audited))reported in the submitted cost report. The encounter rate is effective on the date the agency receives the submitted medicare cost report from the RHC.

(c) RHCs receive this rate for the remainder of the calendar year during which the ((audited))submitted medicare cost report became available to the agency. The agency then ((increases))adjusts the encounter rate each January 1st by the percent change in the medicare economic index (MEI).

(4) For RHCs in existence during calendar years 1999 and 2000, the agency sets the encounter rates prospectively using a weighted average of ((one hundred))100 percent of the RHC's total reasonable costs for calendar years 1999 and 2000 and adjusted for any increase or decrease in the scope of services furnished during the calendar year 2001 to establish a base encounter rate.

(a) The agency adjusts PPS base encounter rates to account for an increase or decrease in the scope of services provided during calendar year 2001 in accordance with WAC 182-549-1500.

(b) The agency determines PPS base encounter rates ((are determined)) using medicare's audited cost reports, and each year's rate is weighted by the total reported encounters. The agency does not apply a capped amount to these base encounter rates. The formula used to calculate base encounter rates is as follows:

(c) Beginning in calendar year 2002 and any year thereafter, encounter rates are ((increased))adjusted by the MEI and adjusted for any increase or decrease in the RHC's scope of services.

(5) The agency calculated RHC's APM encounter rates for services provided during the period beginning January 1, 2009, and ending April 6, 2011, as follows:

(a) The APM used the RHC base encounter rates as described in subsection (4)(b) of this section.

(b) Base rates were increased by each annual percentage, from calendar years 2002 through 2009, of the IHS Global Insight index, also called the APM index.

(c) The result was the year 2009 APM rates for each RHC that chose to be reimbursed under the APM.

(6) This subsection describes the encounter rates that the agency paid RHCs for services provided during the period beginning April 7, 2011, and ending June 30, 2011. On January 12, 2012, the federal Centers for Medicare and Medicaid Services (CMS) approved a state plan amendment (SPA) containing the methodology outlined in this section.

(a) During the period that CMS approval of the SPA was pending, the agency continued to pay RHCs at the encounter rate described in subsection (5) of this section.

(b) Each RHC had the choice of receiving either its PPS rate, as determined under the method described in subsection (3) of this section, or a rate determined under a revised APM, as described in (c) of this subsection.

(c) The revised APM used each RHC's PPS rate for the current calendar year, increased by five percent.

(d) For all payments made for services provided during the period beginning April 7, 2011, and ending June 30, 2011, the agency recouped from RHCs any amount paid in excess of the encounter rate established in this section. This process was specified in emergency rules that took effect on October 29, 2011, (WSR 11-22-047) and February 25, 2012 (WSR 12-06-002).

(7) This subsection describes the encounter rate that the agency pays RHCs for services provided on and after July 1, 2011. On January 12, 2012, CMS approved a SPA containing the methodology outlined in this section.

(a) Each RHC has the choice of receiving either its PPS rate, as determined under the method described in subsection (3) of this section, or a rate determined under a revised APM, as described in (b) of this subsection.

(b) The revised APM, known as APM-3, is as follows:

(i) For RHCs that rebased their rate effective January 1, 2010, the revised APM is their allowed cost per visit during the cost report year increased by the cumulative percentage increase in the MEI between the cost report year and January 1, 2011.

(ii) For RHCs that did not rebase their rate effective January 1, 2010, the revised APM is based on their PPS base rate from 2001 (or subsequent year for RHCs receiving their initial RHC designation after 2002) increased by the cumulative percentage increase in the IHS Global Insight index from the base year through calendar year 2008 and the cumulative increase in the MEI from calendar years 2009 through 2011. The rates are increased by the MEI effective January 1, 2012, and each January 1st thereafter.

(c) For all payments made for services provided during the period beginning July 1, 2011, and ending January 11, 2012, the agency recouped from RHCs any amount paid in excess of the encounter rate established in this section. This process was specified in emergency rules that took effect on October 29, 2011, (WSR 11-22-047) and February 25, 2012 (WSR 12-06-002).

(d) For RHCs that choose to be paid under the revised APM, the agency periodically rebases the encounter rates using the RHC cost reports and other relevant data. Rebasing is done only for RHCs that are reimbursed under the APM.

(e) The agency makes sure that the payments made under the APM are at least equal to the payments that would be made under the PPS.

(8) This subsection describes the payment methodology that the agency uses to pay participating RHCs for services provided beginning July 1, 2017, and ending December 31, 2022.

(a) Each RHC may receive payments under the APM described in subsection (7) of this section, or receive payments under the revised APM described in this subsection.

(b) The revised APM, known as APM-4, is as follows:

(i) The revised APM establishes a budget-neutral, baseline per member per month (PMPM) rate for each RHC. The PMPM rate ((will)) accounts for enhancement payments in accordance with the definition of enhancements in WAC 182-548-1100. For the purposes of this section, "budget-neutral" means the cost of the revised APM to the agency will not exceed what would have otherwise been spent not including the revised APM on a per member per year basis.

(ii) The agency pays the RHC a PMPM payment each month for each managed care client assigned to them by an MCO.

(iii) The agency pays the RHC a PMPM payment each month in addition to the amounts the MCO pays the RHC.

(iv) The agency may prospectively adjust the RHC's PMPM rate for any of the following reasons:

(A) Quality and access metrics performance.

(B) RHC encounter rate changes.

(v) In accordance with 42 U.S.C. 1396a (bb)(5)(A), the agency performs an annual reconciliation.

(A) If the RHC was underpaid, the agency pays the difference, and the PMPM rate may be subject to prospective adjustment under (b)(iv) of this subsection.

(B) If the RHC was overpaid, the PMPM rate may be subject to prospective adjustment under (b)(iv) of this subsection.

(1) The medicaid agency ((pays for one encounter,))limits RHC encounter rate reimbursement to one per client, per day except in the following circumstances:

(a) ((The visits occur with different health care professionals with different specialties))There is a subsequent visit in the same cost center that requires separate evaluation and treatment on the same day for unrelated diagnoses; or

(b) There are separate visits ((with unrelated diagnoses.

(5)))in different types of cost centers that occur with different health care professionals. (For example, a client with a separate medical and dental visit on the same day.)

(7) For clients enrolled with MCOs, the RHC receives ((an)) encounter rate reimbursement using either the method described in (a) or (b) of this subsection.

(a) RHCs receive an enhancement payment in addition to the MCO's negotiated payment. The agency makes enhancement payments in amounts necessary to ((make sure))ensure that the RHC receives the full encounter rate to comply with 42 U.S.C. 1396a (bb)(5)(A).

(i) The RHCs receive a monthly enhancement payment for each managed care client assigned to them by an MCO.

(ii) To ((make sure))ensure that the appropriate amounts are paid to each RHC ((receives the appropriate amounts)), the agency performs an annual reconciliation of the enhancement payments.

(A) For each RHC, the agency compares the amount paid in enhancement payments to the amount determined by the following formula: (((Managed care encounters times encounter rate) less actual MCO payments for RHC services.))

(B) If the agency determines that the RHC ((has been))was overpaid, the agency recoups the appropriate amount. If the agency determines that the RHC ((has been))was underpaid, the agency pays the difference.

(F) For dates of service on and after January 1, 2018, reconciliations are conducted in the calendar year following the calendar year for which the enhancements were paid. Reconciliations are conducted by the agency or the clinic with final review and approval by the agency. The process of settling over or under payments may extend beyond the calendar year in which the reconciliations were conducted.

(b) Effective January 1, 2018, instead of distributing monthly enhancement payments to the RHCs, MCOs pay the full encounter rate directly to participating clinics for encounter-eligible services.

(i) RHC participation ((in this option)) is voluntary. The RHC ((must notify))notifies the agency in writing whether it will participate or not by no later than November 1st prior to the year of participation.

(ii) The agency performs a reconciliation or claim review with the MCO as outlined in the MCO contract. Reconciliations or claim reviews make sure appropriate amounts are paid to each RHC and that MCOs are not put at risk for, or have any right to, the enhancement portion of the claim. If an MCO has been overpaid, the agency recoups the appropriate amount. If an MCO has been underpaid, the agency pays the difference.

(iii) RHCs participating in the revised alternative payment method (APM) as described in WAC 182-549-1400(8) are not eligible to receive encounter payments directly from MCOs under this section.

(((6) Only those services provided to clients enrolled in the Title XIX (medicaid) program or the Title XXI (CHIP) program are eligible for encounter or enhancement payments. The agency does not pay the encounter rate or the enhancement rate for services provided to clients in state-only medical programs.))(8) The agency pays the encounter rate and the enhancement payments with respect to services provided to encounter-eligible clients. Services provided to clients ((in state-only))who are enrolled in medical programs that are paid only in state funds are not encounter-eligible; these claims are ((considered))paid on a fee-for-service basis, regardless of the type of service performed.

In accordance with 42 U.S.C. 1396a (bb)(3)(B), the agency adjusts its payment rate to a rural health clinic (RHC) to take into account any increase or decrease in the scope of the RHC's services. The procedures and requirements for any such rate adjustment are described below.

(1) Triggering events.

(a) An RHC may file a change in scope of services rate adjustment application with the agency on its own initiative only when((:))the RHC satisfies the criteria described in (a)(i), (ii), and (iii) of this subsection.

(i) When the cost to the RHC of providing covered health care services to eligible clients has increased or decreased due to one or more of the following triggering events:

(A) A change in the type of health care services the RHC provides;

(B) A change in the intensity of health care services the RHC provides. Intensity means the total quantity of labor and materials consumed by an individual client during an average encounter has increased;

(C) A change in the duration of health care services the RHC provides. Duration means the length of an average encounter has increased;

(D) A change in the amount of health care services the RHC provides in an average encounter;

(E) Any change comparable to (a)(i)(A) through (D) of this subsection in which the type, intensity, duration or amount of services has decreased and the cost of an average encounter has decreased((; and)).

(ii) The cost change equals or exceeds:

(A) An increase of one and three-quarters percent in the prospective payment system (PPS) rate per encounter over one year as measured by comparing the cost per encounter to the then current PPS rate;

(B) A decrease of two and one-half percent in the PPS rate per encounter over one year as measured by comparing the cost per encounter to the then current PPS rate; or

(C) A cumulative increase or decrease of five percent in the PPS rate per encounter as compared to the current year's cost per encounter((; and)).

(iii) The costs reported to the agency to support the proposed change in scope rate adjustment are reasonable under state and federal law.

(b) At any time, the agency may instruct the RHC to file a medicare cost report with a position statement ((of))indicating whether the RHC asserts that its PPS rate should be increased or decreased due to a change in the scope of services (((the RHC "position statement"))).

(i) The RHC ((must)) files a completed cost report and position statement no later than ((ninety))90 calendar days after receiving the instruction from the agency to file an application;

(ii) The agency reviews the RHC's cost report and position statement under the same criteria listed above for an application for a change in scope adjustment;

(iii) The agency ((does))will not request more than one change in scope in a calendar year.

(2) Filing requirements.

(a) The RHC may apply for a prospective change in scope of service rate adjustment, a retrospective change in scope of service rate adjustment, or both, in a single application.

(((i)))(b) Unless instructed to file an application by the agency, the RHC may file no more than one change in scope of service application per calendar year; however, more than one type of change in scope may be included in a single application.

(((ii)))(c) The RHC ((must)) files for a change in scope of service rate adjustment ((no later than))based on the following deadlines, whichever is later:

(i) Ninety calendar days after the end of the ((calendar year in which the RHC believes the change in scope occurred or in which))RHC's fiscal year, demonstrating that the change in scope occurred.

(ii) Ninety calendar days after the RHC learned ((that)) the cost threshold in subsection (1)(a)(ii) of this section was met((, whichever is later)).

(((b)))(d) Prospective change in scope.

(i) ((To file))A prospective change in scope of service rate adjustment application((, the RHC must submit projected costs sufficient to establish an interim rate. A prospective change is))states each triggering event listed in subsection (1)(a)(i) of this section that supports the RHC's application.

(A) A change the RHC plans to implement in the future. The RHC submits 12 months of projected data and costs sufficient to establish an interim rate; or

(iii) The interim rate adjustment goes into effect after the change takes effect.

(((ii)))(iv) The interim rate is subject to the post change in scope review and rate adjustment process defined in subsection (5) of this section.

(((iii)))(v) If the change in scope occurs ((fewer))less than ((ninety))90 calendar days after the RHC submitted a complete application to the agency, the interim rate ((must)) takes effect no later than ((ninety))90 calendar days after the complete application was submitted to the agency.

(((iv)))(vi) If the change in scope occurs more than ((ninety))90 calendar days but ((fewer))less than ((one hundred eighty))180 calendar days after the RHC submitted a complete application to the agency, the interim rate takes effect when the change in scope occurs.

(((v)))(vii) If the RHC fails to implement a change in service identified in its prospective change in scope of service rate adjustment application within ((one hundred eighty))180 calendar days, the application is void and the RHC may resubmit the application to the agency, in ((which case))such a circumstance, (((a)(i)))(b) of this subsection does not apply.

(((c)))(viii) If the change in scope is based on a triggering event that already occurred but is supported by less than 12 months of data in the filed cost report, the interim rate takes effect on the date the RHC submitted the completed application to the agency.

(e) Retrospective change in scope.

(i) A retrospective change in scope of service rate adjustment application ((must)) states each ((qualifying))triggering event listed in subsection (1)(a)(i) of this section that supports its application and include ((twelve))12 months of data documenting the cost change caused by the ((qualifying))triggering event. A retrospective change in scope is a change that took place in the past and the RHC is seeking to adjust its rate based on that change.

(ii) If approved, a retrospective rate adjustment takes effect on the date the RHC ((filed the))submitted a complete application ((with))to the agency, as determined by the agency.

(3) Supporting documentation.

(a) To apply for a change in scope of service rate adjustment, the RHC ((must include))submits the following supporting documentation ((in the application))to the agency in electronic format by email to fqhcrhc@hca.wa.gov:

(i) A narrative description of the proposed change in scope;

(ii) A description of each cost center on the cost report that was or will be affected by the change in scope;

(iii) The RHC's most recent audited financial statements, if audit is required by federal law;

(iv) The implementation date for the proposed change in scope; and

(v) Any additional documentation requested by the agency.

(b) A prospective change in scope of service rate adjustment application must also include ((a))the projected medicare cost report with supplemental schedules necessary to identify the medicaid cost per visit for the ((twelve-month))12-month period following implementation of the change in scope.

(c) A retrospective change in scope of service rate adjustment application must also include the medicare cost report with supplemental schedules necessary to identify the medicaid cost per visit and encounter data for ((twelve months or))one of the following:

(ii) The fiscal year following implementation of the proposed change in scope.

(4) Review of the application.

(a) Application processing.

(i) The agency reviews the application for completeness, accuracy, and compliance with program rules.

(ii) Within ((sixty))60 days of receiving the application, the agency notifies the RHC of any deficient documentation or requests any additional information that is necessary to process the application. If the RHC does not provide the agency with the documentation or information requested within 30 calendar days of the request, the agency may deny the application.

(iii) Within ((ninety))90 calendar days of receiving a complete application, including any additional documentation or information that the agency might request, the agency sends the RHC:

(A) A decision stating whether it will implement a PPS rate change; and

(B) A rate-setting statement if the rate change is implemented.

(iv) ((Failure to act within ninety days means that the change is considered denied by the agency and))The RHC may appeal the decision on the application as provided for in ((subsection (6) of this section))WAC 182-549-1650.

(b) Determining rate for change in scope.

(i) The agency sets an interim rate for prospective changes in scope by adjusting the RHC's existing rate by the projected average cost per encounter of any approved change. The agency reviews the costs to determine if they are reasonable, and sets a new interim rate based on the determined cost per encounter.

(ii) The agency sets an adjusted encounter rate for retrospective changes in scope by adjusting the RHC's existing rate by the documented average cost per encounter of the approved change. ((Projected costs per encounter may be used if there are insufficient historical data to establish the rate.)) The agency reviews the costs to determine whether they are reasonable, and sets a new rate based on the determined cost per encounter.

(c) If the RHC is paid under an alternative payment methodology (APM), any change in scope of service rate adjustment approved by the agency modifies the PPS rate in addition to the APM.

(d) The agency may delegate the duties related to application processing and rate setting to a third party. The agency retains final responsibility and authority for making decisions related to changes in scope.

(5) Post change in scope of services rate adjustment review.

(a) If the approved change in scope ((application))rate adjustment was based on a retrospective change in scope application (i.e., based on a year or more of actual encounter data), the agency may conduct a post change in scope rate adjustment review.

(b) If the approved change in scope ((application))rate adjustment was based on a prospective change in scope application (i.e., less than a full year of actual encounter data), the RHC ((must)) submits the following information to the agency within ((eighteen))18 months of the effective date of the rate adjustment:

(i) Medicare cost report with supplemental schedules necessary to identify the medicaid cost per visit and encounter data for ((twelve))12 consecutive months of experience following implementation of the change in scope; ((and))

(ii) A narrative description of the request;

(v) Any additional documentation requested by the agency.

(c) The agency conducts the post change in scope review within ((ninety))90 calendar days of receiving the cost report and encounter data from the RHC.

(d) If necessary, the agency adjusts the encounter rate within ((ninety))90 calendar days to make sure that the rate reflects the reasonable cost of the change in scope of services.

(e) A rate adjustment based on a post change in scope review takes effect on the date the agency issues its adjustment. The new rate is prospective.

(f) If the RHC fails to submit the post change in scope cost report or related encounter data, the agency provides written notice to the clinic ((of the deficiency)) within ((thirty))30 calendar days.

(g) If the RHC fails to submit required documentation within five months of ((this deficiency))the notice identified in (f) of this subsection, the agency may reinstate the prechange in scope encounter rate going forward from the date the interim rate was established. The agency may recoup any overpayment to the RHC.

(((6) Appeals. Appeals of agency action under this section are governed by WAC 182-502-0220, except that any rate change begins on the date the agency received the change in scope of services rate adjustment application.))

An overpayment assessment by the agency against an RHC that was identified in the annual managed care reconciliation (see WAC 182-549-1450) may be appealed based on WAC 182-502-0230 and RCW 41.05A.170. Administrative hearing appeals are governed by chapter 34.05 RCW (Administrative Procedure Act) and chapter 182-526 WAC (HCA administrative hearing rules).

(1) An RHC provider has a right to an administrative appeal of agency action related to rate setting under this chapter based on the rules in this section.

(a) The rules in WAC 182-502-0220 do not apply to appeals of agency action related to rate setting under this chapter.

(b) Appeals related to rate setting under this section are not governed by the Administrative Procedure Act, chapter 34.05 RCW.

(c) Any rate change that the agency grants that is the result of fraudulent practices on the part of the RHC, including as described under RCW 74.09.210, is exempt from the appeal provisions in this chapter.

(d) An RHC who fails to submit requested information as outlined in this chapter will be determined to have abandoned their appeal.

(2) The first level of appeal.

(a) An RHC provider who wants to contest an agency action concerning the reimbursement rate must file a written appeal with the agency. Written appeals must be sent to the address provided in the rate notification letter.

(b) The RHC must file the appeal within 60 calendar days of the date of the rate notification letter from the agency, unless an extension has been granted.

(i) The agency may grant a time extension for the appeal period if the RHC makes such a request before the expiration of the 60-day period.

(ii) The agency does not consider an appeal filed after the 60-day period unless an extension is granted by the agency.

(c) The appeal must include the following:

(i) A statement of the specific issue being appealed;

(ii) Supporting documentation; and

(iii) A request for the agency to recalculate the rate.

(d) When an RHC appeals a portion of a rate, the agency may review all components of the reimbursement rate.

(e) To complete a review of the appeal, the agency may do one or both of the following:

(i) Request additional information;

(ii) Conduct an audit of the documentation provided.

(f) The agency issues a decision or requests additional information within 60 calendar days of receiving the rate appeal request. When the agency requests additional information:

(i) The RHC has 45 calendar days from the date of the request to submit the additional information to the agency; and

(ii) The agency issues a decision within 30 calendar days of receipt of the additional information.

(g) Any rate increase or decrease resulting from an appeal is effective retroactively to the rate effective date in the notification letter. The exception is identified in (h) of this subsection.

(h) If an appeal is related to the denial of a change in scope rate adjustment application, any rate adjustment effective date is established by the following rules:

(i) For prospective change in scope, the effective date of the rate adjustment is established by WAC 182-549-1500 (2)(d);

(ii) For retrospective change in scope, the effective date of the rate adjustment is established by WAC 182-549-1500 (2)(e);

(iii) For a post change in scope of services, the effective date of the rate adjustment is established by 182-549-1500 (5)(e).

(3) The second level of appeal.

(a) When an RHC disagrees with a rate review decision from the first level of appeal, it may file a request along with supporting documentation for a dispute conference with the agency. For this section "dispute conference" means an informal administrative appeal to resolve RHC disagreements with an agency action not resolved at the first level of appeal.

(b) If an RHC files a request for a dispute conference, it must submit the request to the agency within 30 calendar days after the date of the rate review decision.

(i) Any request for a dispute conference must be sent to the address indicated in the rate review decision.

(ii) The agency does not consider dispute conference requests submitted after the 30-day period for the first level decision.

(c) The agency conducts the dispute conference within 90 calendar days of receiving the request.

(d) The agency-director designee issues the final decision within 30 calendar days of the conference. Extensions of time for extenuating circumstances may be granted by the agency-director designee.

(e) Any rate increase or decrease resulting from a dispute conference decision is effective on the date specified in the dispute conference decision.

(f) The dispute conference is the final level of administrative appeal within the agency and precedes judicial action.

(4) The agency considers an RHC who fails to attempt to resolve disputed rates as provided in this section has abandoned the dispute.