2791 AMS HHS S5658.1

HB 2791 - S COMM AMD

By Committee on Health & Human Services

    Strike everything after the enacting clause and insert the following:

    "Sec. 1.  RCW 74.46.060 and 1985 c 361 s 6 are each amended to read as follows:

    (1) Cost reports shall be prepared in a standard manner and form, as determined by the department, which shall provide for an itemized list of allowable costs and a preliminary settlement report.  Costs reported shall be determined in accordance with generally accepted accounting principles, the provisions of this chapter, and such additional rules and regulations as are established by the secretary.

    (2) The records shall be maintained on the accrual method of accounting and agree with or be reconcilable to the cost report.  All revenue and expense accruals shall be reversed against the appropriate accounts if not received or paid within one hundred eighty-one days after the end of the contractor's medicaid cost report period in which the accrual was made, unless the contractor has documentation of a good faith billing dispute with the supplier or vendor, in which case this period may be extended, but only for those portions of the billings subject to the good faith dispute.  Accruals for vacation, holiday, sick pay, and taxes may be carried for longer periods, provided the contractor's usual policy and generally accepted accounting principles are followed.

    Sec. 2.  RCW 74.46.105 and 1985 c 361 s 10 are each amended to read as follows:

    Cost reports and patient trust accounts of contractors shall be field audited by the department, either by department staff or by auditors under contract to the department, in accordance with the provisions of this chapter.  The department when it deems necessary to assure the accuracy of cost reports may review any underlying financial statements or other records upon which the cost reports are based.  The department shall have the authority to accept or reject audits which fail to satisfy the requirements of this section or which are performed by auditors who violate any of the rules of this section.  Department audits of the cost reports and patient trust accounts shall be conducted as follows:

    (1) Each year the department will provide for field audit of the cost report, statistical reports, and patient trust funds, as established by RCW 74.46.700, of all or a sample of reporting facilities selected by profiles of costs, exceptions, contract terminations, upon special requests or other factors determined by the department.

    (2) Beginning with audits for calendar year 1983, up to one hundred percent of contractors cost reports and patient care trust fund accounts shall be audited:  PROVIDED, That each contractor shall be audited at least once in every ((three-year)) five-year period.

    (3) Facilities shall be selected for sample audits within one hundred twenty days of submission of a correct and complete cost report, and shall be so informed of the department's intent to audit.  Audits so scheduled shall be completed within one year of selection.

    (4) Where an audit for a recent reporting or trust fund period discloses material discrepancies, undocumented costs or mishandling of patient trust funds, auditors may examine prior unaudited periods, for indication of similar material discrepancies, undocumented costs or mishandling of patient trust funds for not more than ((two)) four reporting periods preceding the facility reporting period selected in the sample.

    (5) The audit will result in a schedule summarizing appropriate adjustments to the contractor's cost report.  These adjustments will include an explanation for the adjustment, the general ledger account or account group, and the dollar amount.  Patient trust fund audits shall be reported separately and in accordance with RCW 74.46.700.

    (6) Audits shall meet generally accepted auditing standards as promulgated by the American institute of certified public accountants and the standards for audit of governmental organizations, programs, activities and functions as published by the comptroller general of the United States.  Audits shall be supervised or reviewed by a certified public accountant.

    (7) No auditor under contract with or employed by the department to perform audits in accordance with the provisions of this chapter shall:

    (a) Have had direct or indirect financial interest in the ownership, financing or operation of a nursing home in this state during the period covered by the audits;

    (b) Acquire or commit to acquire any direct or indirect financial interest in the ownership, financing or operation of a nursing home in this state during said auditor's employment or contract with the department;

    (c) Accept as a client any nursing home in this state during or within two years of termination of said auditor's contract or employment with the department.

    (8) Audits shall be conducted by auditors who are otherwise independent as determined by the standards of independence established by the American institute of certified public accountants.

    (9) All audit rules adopted after March 31, 1984, shall be published before the beginning of the cost report year to which they apply.

    Sec. 3.  RCW 74.46.820 and 1985 c 361 s 14 are each amended to read as follows:

    (1) Cost reports and their final audit reports shall be subject to public disclosure pursuant to the requirements of chapter 42.17 RCW.  Notwithstanding any other provision of law, cost report schedules showing information on rental or lease of assets, the facility or corporate balance sheet, schedule of changes in financial position, statement of changes in equity-fund balances, notes to financial statements, and any accompanying schedules summarizing the adjustments to a contractor's financial records, reports on review of internal control and accounting procedures, and letters of comments or recommendations relating to suggested improvements in internal control or accounting procedures which are prepared pursuant to the requirements of this chapter shall be exempt from public disclosure.

    This subsection does not prevent a contractor from having access to its own records or from authorizing an agent or designee to have access to the contractor's records.

    (2) Regardless of whether any document or report submitted to the secretary pursuant to this chapter is subject to public disclosure, copies of such documents or reports shall be provided by the secretary, upon written request, to the legislature ((and)), to state agencies or state or local law enforcement officials who have an official interest in the contents thereof, and to nursing facility trade associations representing at least fifty providers licensed under chapter 18.51 RCW, provided:

(a) The nursing facility has filed with its most recent medicaid cost report a release of information form developed by the department granting permission to the department to disclose all cost report data without reference to the prohibitions of subsection (1) of this section; and

(b) Such nursing facility trade associations shall not further disclosure information barred from public disclosure under subsection (1) of this section in a form that identifies individual providers."

HB 2791 - S COMM AMD

By Committee on Health & Human Services

    On page 1, line 1 of the title, after "audits;" strike the remainder of the title and insert "and amending RCW 74.46.060, 74.46.105, and 74.46.820."

                            --- END ---