BP BHEAD INT S

AN ACT Relating to nursing home reimbursement overpayments; amending RCW 74.46.640 and 74.46.690; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 74.46.640 and 1983 1st ex.s. c 67 s 34 are each amended to read as follows:

(1) Payments to a contractor may be withheld by the department in each of the following circumstances:

(a) A required report is not properly completed and filed by the contractor within the appropriate time period, including any approved extension. Payments will be released as soon as a properly completed report is received;

(b) State auditors, department auditors, or authorized personnel in the course of their duties are refused access to a nursing ((~~home~~)) facility or are not provided with existing appropriate records. Payments will be released as soon as such access or records are provided;

(c) A refund in connection with a settlement or rate adjustment is not paid by the contractor when due. The amount withheld will be limited to the unpaid amount of the refund; ((~~and~~))

(d) Payment for the final ((~~thirty~~)) sixty days of service under a contract will be held in the absence of adequate alternate security acceptable to the department pending final settlement when the contract is to be terminated; and

(e) Payment for services at any time during the contract period in the absence of adequate alternate security acceptable to the department, if a nursing facility's medicaid overpayment liability, as determined by preliminary or final settlement or both, reaches or exceeds fifty thousand dollars, whether subject to a good faith dispute or not, and for each subsequent increase in liability reaching or exceeding twenty-five thousand dollars. Payments will be released as soon as acceptable security is provided or refund to the department is made.

(2) No payment will be withheld until written notification of the suspension is provided to the contractor, stating the reason ((~~therefor~~)) for the withholding, except that a request for administrative review or appeal of any suspension of payment, if available to the contractor and not already exhausted, shall not delay suspension of payment pending the outcome of the review or appeal.

Sec. 2. RCW 74.46.690 and 1985 c 361 s 3 are each amended to read as follows:

(1) When a facility contract is terminated for any reason, the old contractor shall submit final reports as required by RCW 74.46.040.

(2) Upon notification of a contract termination, the department shall determine by preliminary or final settlement calculations the amount of any overpayments made to the contractor, including overpayments disputed by the contractor. If preliminary or final settlements are unavailable for any period up to the date of contract termination, the department shall make a reasonable estimate of any overpayment or underpayments for such periods. The reasonable estimate shall be based upon prior period settlements, available audit findings, the projected impact of prospective rates, and other information available to the department.

(3) The old contractor shall provide security, in a form deemed adequate by the department, in the amount of determined and estimated overpayments, whether or not the overpayments are the subject of good faith dispute. Security shall consist of:

(a) Withheld payments due the contractor; or

(b) A surety bond issued by a bonding company acceptable to the department; or

(d) Collateral acceptable to the department; or

(e) A purchaser's assumption of liability for the prior contractor's overpayment; or

(f) A promissory note secured by a deed of trust; or

(g) Any combination of (a), (b), (c), (d), ((or)) (e), or (f) of this subsection.

(4) A surety bond or assignment of funds shall:

(a) Be at least equal in amount to determined or estimated overpayments, whether or not the subject of good faith dispute, minus withheld payments;

(b) Be issued or accepted by a bonding company or financial institution licensed to transact business in Washington state;

(c) Be for a term sufficient to ensure effectiveness after final settlement and the exhaustion of administrative and judicial remedies: PROVIDED, That the bond or assignment shall initially be for a term of five years, and shall be forfeited if not renewed thereafter in an amount equal to any remaining overpayment in dispute;

(d) Provide that the full amount of the bond or assignment, or both, shall be paid to the department if a properly completed final cost report is not filed in accordance with this chapter, or if financial records supporting this report are not preserved and made available to the auditor; and

(e) Provide that an amount equal to any recovery the department determines is due from the contractor at settlement, but not exceeding the amount of the bond and assignment, shall be paid to the department if the contractor does not pay the refund within sixty days following receipt of written demand or the conclusion of administrative or judicial proceedings to contest settlement issues.

(5) The department shall release any payment withheld as security if alternate security is provided under subsection (3) of this section in an amount equivalent to determined and estimated overpayments.

(6) If the total of withheld payments, bonds, and assignments is less than the total of determined and estimated overpayments, the unsecured amount of such overpayments shall be a debt due the state, jointly and severally, on the part of the contractor or any person, corporation, partnership, organization, or other entity related to the contractor by some ownership or control as defined in this chapter and shall become a lien against the real and personal property of the contractor or against the real and personal property of any person, corporation, partnership, organization, or other entity related to the contractor by some ownership or control as defined in this chapter from the time of filing by the department with the county auditor of the county where the contractor or related person, corporation, partnership, organization, or other entity resides, does business, or owns property, and the lien claim has preference over the claims of all unsecured creditors.

(7) The contractor shall file a properly completed final cost report in accordance with the requirements of this chapter, which shall be audited by the department. A final settlement shall be determined within ninety days following completion of the audit process, including any administrative review of the audit requested by the contractor.

(8) Following determination of settlement for all periods, security held pursuant to this section shall be released to the contractor after overpayments determined in connection with final settlement have been paid by the contractor. If the contractor contests the settlement determination in accordance with RCW 74.46.170, the department shall hold the security, not to exceed the amount of estimated unrecovered overpayments being contested, pending completion of the administrative appeal process.

(9) If, after calculation of settlements for any periods, it is determined that overpayments exist in excess of the value of security held by the state, the department may seek recovery of these additional overpayments as provided by law.

(10) If a contract is terminated solely in order for the same owner to contract with the department to deliver services to another classification of medical care recipients at the same facility, the contractor is not required to submit final cost reports, and security shall not be required.

(11) Regardless of whether a contractor intends to terminate its medicaid contract, if a facility's medicaid overpayment liability for one or more settlement periods reaches or exceeds fifty thousand dollars as determined by preliminary or final settlement, or both, whether subject to good faith dispute or not, the department shall demand and obtain security equivalent to such overpayment and for each subsequent increase in liability reaching or exceeding twenty-five thousand dollars. Such security shall meet the criteria in subsections (3) and (4) of this section, except that the department shall not accept an assumption of liability. The department shall withhold all or portions of a contractor's current contract payments and/or impose liens as authorized by subsection (6) of this section if security acceptable to the department is not forthcoming. The department shall release a contractor's withheld payments and/or lift liens if the contractor subsequently provides security acceptable to the department. This subsection shall apply to all overpayments determined by preliminary or final settlements issued after the effective date of this act, regardless of what reimbursement periods the settlements may cover.

NEW SECTION. Sec. 3. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.