1908-S

AN ACT Relating to long-term care; amending RCW 74.39.005, 74.39.040, 74.39A.010, 70.128.005, 70.128.007, 70.128.010, 70.128.057, 70.128.060, 70.128.070, 70.128.120, 70.128.080, 70.128.090, 70.128.130, 70.128.140, 70.128.150, 70.128.160, 70.128.175, 43.190.020, 43.190.060, 74.08.545, 74.08.550, 74.08.570, 18.51.091, 18.51.140, 18.51.300, 11.40.010, 11.42.020, 11.62.010, 11.28.120, 18.39.250, 18.39.255, 68.46.050, 70.129.040, 43.20B.080, 74.46.105, 74.46.115, 74.46.640, and 74.46.690; reenacting and amending RCW 18.130.040; adding new sections to chapter 74.39A RCW; adding new sections to chapter 70.41 RCW; adding new sections to chapter 70.128 RCW; adding new sections to chapter 74.46 RCW; adding a new section to chapter 43.20A RCW; adding a new chapter to Title 18 RCW; creating a new section; recodifying RCW 74.08.530, 74.08.560, 74.08.570, 74.08.545, and 74.08.550; repealing RCW 70.128.180 and 74.08.541; prescribing penalties; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1. A new section is added to chapter 74.39A RCW to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Adult family home" means a facility licensed under chapter 70.128 RCW.

(2) "Adult residential care" means services provided by a boarding home that has a contract with the department under section 11 of this act.

(3) "Aging and adult services administration" means the aging and adult services administration of the department.

(4) "Assisted living services" means services provided by a boarding home that has a contract with the department under RCW 74.39A.010 and the resident is housed in a private apartment-like unit.

(5) "Boarding home" means a facility licensed under chapter 18.20 RCW.

(6) "Cost-effective care" means care provided in a setting of an individual's choice that is necessary to enable an individual to achieve his or her highest practicable level of physical, mental, and psychosocial well-being, in an environment that is appropriate to the care and safety needs of the individual, and such care cannot be provided at a lower cost in any other setting. But this in no way precludes an individual from choosing a different residential setting to achieve his or her desired quality of life.

(7) "Department" means the department of social and health services.

(8) "Home and community services" means assisted living services, modified assisted living services, adult residential care, adult family homes, in-home services, and other services administered by the aging and adult services administration of the department directly or through contract with area agencies on aging.

(9) "Long-term care services" means the services administered directly or through contract by the aging and adult services administration of the department, including but not limited to nursing facility care and home and community services.

(10) "Modified assisted living services" means services provided by a boarding home that has a contract with the department under RCW 74.39A.010.

(11) "Nursing facility" means a nursing facility as defined in section 1919(a) of the federal social security act and regulations adopted thereunder.

(12) "Nursing home" means a facility licensed under chapter 18.51 RCW.

NEW SECTION. Sec. 2. A new section is added to chapter 74.39A RCW to read as follows:

(1) To the extent of available funding, the department shall expand cost-effective options for home and community services for consumers for whom the state participates in the cost of their care.

(2) In expanding home and community services, the department shall: (a) Take full advantage of federal funding available under Title XVIII and Title XIX of the federal social security act, including home health, adult day care, waiver options, and state plan services; and (b) be authorized to use funds available under its community options program entry system waiver granted under section 1915(c) of the federal social security act to expand the availability of in-home, adult residential care, adult family homes, modified assisted living services, and assisted living services; and (c) undertake to assist, by June 30, 1997, one thousand individuals who would otherwise require nursing facility services to obtain services of their choice, including assisted living services, modified assisted living services, and other home and community services. In contracting with nursing homes and boarding homes for modified assisted living service placements, the department shall not require, by contract or through other means, structural modifications to existing building construction.

(3)(a) The department shall by rule establish payment rates for home and community services that support the provision of cost-effective care.

(b) The department may authorize a modified assisted living rate for nursing homes that temporarily or permanently convert their bed use for the purpose of providing modified assisted living services under chapter 70.38 RCW, when the department determines that payment of a modified rate is cost-effective and necessary to foster expansion of contracted modified assisted living services. As an incentive for nursing homes to permanently delicense a portion of its nursing home bed capacity for the purpose of providing modified assisted living services, the department may authorize a supplemental add-on to the modified assisted living services rate.

(c) The department may authorize a supplemental assisted living rate for up to four years for facilities that convert from nursing home use and do not retain rights to the converted nursing home beds under chapter 70.38 RCW, if the department determines that payment of a supplemental rate is cost-effective and necessary to foster expansion of contracted assisted living services.

NEW SECTION. Sec. 3. A new section is added to chapter 70.41 RCW to read as follows:

(1)(a) The department of social and health services, in consultation with hospitals and acute care facilities, shall promote the most appropriate and cost-effective use of long-term care services by developing and distributing to hospitals and other appropriate health care settings information on the various chronic long-term care programs that it administers directly or through contract. The information developed by the department of social and health services shall, at a minimum, include the following:

(i) An identification and detailed description of each long-term care service available in the state;

(ii) Functional, cognitive, and medicaid eligibility criteria that may be required for placement or admission to each long-term care service; and

(iii) A long-term care services resource manual for each hospital, that identifies the long-term care services operating within each hospital's patient service area. The long-term care services resource manual shall, at a minimum, identify the name, address, and telephone number of each entity known to be providing long-term care services; a brief description of the programs or services provided by each of the identified entities; and the name or names of a person or persons who may be contacted for further information or assistance in accessing the programs or services at each of the identified entities.

(b) The information required in (a) of this subsection shall be periodically updated and distributed to hospitals by the department of social and health services so that the information reflects current long-term care service options available within each hospital's patient service area.

(2) To the extent that a patient will have continuing care needs, once discharged from the hospital setting, hospitals shall, during the course of the patient's hospital stay, promote each patient's family member's and/or legal representative's understanding of available long-term care service discharge options by, at a minimum:

(a) Discussing the various and relevant long-term care services available, including eligibility criteria;

(b) Making available, to patients, their family members, and/or legal representative, a copy of the most current long-term care services resource manual; and

(d) Assisting the patient, their family members, and/or legal representative in contacting appropriate persons or entities to respond to the question or questions posed.

NEW SECTION. Sec. 4. A new section is added to chapter 70.41 RCW to read as follows:

"Cost-effective care" and "long-term care services," where used in section 3 of this act, shall have the same meaning as that given in section 1 of this act.

NEW SECTION. Sec. 5. A new section is added to chapter 70.41 RCW to read as follows:

Hospitals and acute care facilities shall:

(1) Establish and maintain a system for discharge planning and designate a person responsible for system management and implementation;

(2) Establish written policies and procedures to:

(a) Identify patients needing further nursing, therapy, or supportive care following discharge from the hospital;

(b) Develop a documented discharge plan for each identified patient including:

(i) Coordinate with patient and family or caregiver, as appropriate;

(ii) Coordinate with appropriate members of the health care team;

(iii) Coordinate with the receiving agency or agencies, when necessary; and

(iv) Work cooperatively with the department of social and health services and local long-term care information and assistance organizations in the planning and implementation of long-term care patient discharge services;

(i) Relevant patient history;

(ii) Specific care requirements including equipment, supplies, and medications needed; and

(iii) Date care is to be initiated;

(d) For those patients identified under (a) of this subsection, assess and document needs and implement discharge plans to the extent possible by the hospital; and

(e) Provide any patient needing long-term care services both written and verbal information on the array of long-term care options, the most appropriate and cost-effective long-term care services available, and the eligibility criteria, locations, directions, contact persons, and other information that will promote an informed choice of care for the patient, family members, or legal representative.

Sec. 6. RCW 74.39.005 and 1989 c 427 s 2 are each amended to read as follows:

The purpose of this chapter is to:

(1) Establish a balanced range of ((~~community-based~~)) health, social, and supportive services that deliver long-term care services to chronically, functionally disabled persons of all ages;

(2) Ensure that functional ((~~disability~~)) ability shall be the determining factor in defining long-term care service needs and that these needs will be determined by a uniform system for comprehensively assessing functional disability;

(3) Ensure that services are provided in the most independent living situation consistent with individual needs;

(4) Ensure that long-term care service options shall be developed and made available that enable functionally disabled persons to continue to live in their homes or other community residential facilities while in the care of their families or other volunteer support persons;

(5) Ensure that long-term care services are coordinated in a way that minimizes administrative cost, eliminates unnecessarily complex organization, minimizes program and service duplication, and maximizes the use of financial resources in directly meeting the needs of persons with functional limitations;

(6) Develop a systematic plan for the coordination, planning, budgeting, and administration of long-term care services now fragmented between the division of developmental disabilities, division of mental health, aging and adult services administration, division of children and family services, division of vocational rehabilitation, office on AIDS, division of health, and bureau of alcohol and substance abuse;

(7) Encourage the development of a state-wide long-term care case management system that effectively coordinates the plan of care and services provided to eligible clients;

(8) Ensure that individuals and organizations affected by or interested in long-term care programs have an opportunity to participate in identification of needs and priorities, policy development, planning, and development, implementation, and monitoring of state supported long-term care programs;

(9) Support educational institutions in Washington state to assist in the procurement of federal support for expanded research and training in long-term care; and

(10) Facilitate the development of a coordinated system of long-term care education that is clearly articulated between all levels of higher education and reflective of both in-home care needs and institutional care needs of functionally disabled persons.

Sec. 7. RCW 74.39.040 and 1989 c 427 s 13 are each amended to read as follows:

((~~(1) A long-term care commission is created. It shall consist of:~~

(a) Four legislators who shall serve on the executive committee, one from each of the two largest caucuses in the house of representatives and the senate who shall be selected by the president of the senate and the speaker of the house of representatives;

(b) Six members, to be selected by the executive committee, who shall be authorities in gerontology, developmental disabilities, neurological impairments, physical disabilities, mental illness, nursing, long-term care service delivery, long-term care service financing, systems development, or systems analysis;

~~(c) Three members, to be selected by the executive committee, who represent long-term care consumers, services providers, or advocates;~~

~~(d) Two members, to be selected by the executive committee, who represent county government;~~

(e) One member, to be selected by the secretary of social and health services, to represent the department of social and health services long-term care programs, including at least developmental disabilities, mental health, aging and adult services, AIDS, children's services, alcohol and substance abuse, and vocational rehabilitation; and

~~(f) Two members, to represent the governor, who shall serve on the executive committee.~~

~~The legislative members shall select a chair from the membership of the commission.~~

~~The commission shall be staffed, to the extent possible, by staff from the appropriate senate and house of representatives committees.~~

~~The commission may form technical advisory committees to assist it with any particular matters deemed necessary by the commission.~~

The commission and technical advisory committee members shall receive no compensation, but except for publicly funded agency staff, shall, to the extent funds are available, be reimbursed for their expenses while attending any meetings in the same manner as legislators engaged in interim committee business as specified in RCW 44.04.120.

The commission may receive appropriations, grants, gifts, and other payments from any governmental or other public or private entity or person which it may use to defray the cost of its operations or to contract for technical assistance, with the approval of the senate committee on facilities and operations and the house of representatives executive rules committee.

~~(2) The long-term care commission shall develop legislation and recommend administrative actions necessary to achieve the following long-term care reforms:~~

(a) The systematic coordination, planning, budgeting, and administration of long-term care services currently administered by the department of social and health services, division of developmental disabilities, aging and adult services administration, division of vocational rehabilitation, office on AIDS, division of health, and the bureau of alcohol and substance abuse;

~~(b)~~)) The legislature finds the intent of the 1989 legislature to reform statutory provisions of long-term care for persons of all ages with chronic functional disability, although not enacted, continues to be applicable. The need to streamline the current bureaucratic fragmentation of chronic health services for the person with functional disabilities and facilitate the development of client centered, accessible, high quality, cost-effective, and appropriate long-term care services options for persons with functional disabilities is even more pressing today. The legislature further finds that if we are going to meet the significant and growing chronic care needs in the next two decades, rapid fundamental changes will need to take place in the way we finance, organize, and provide long-term care services to the functionally disabled. The public demands, and it is the intent of the legislature to reduce the cost and size of government and provide efficient and effective public service to the persons most impaired by chronic functional disability.

To realize the need for a cost-effective, uniform, and fully integrated long-term care system while simultaneously reducing the size and cost of government, the joint committee on health systems oversight if enacted pursuant to House Bill No. 1262 or the legislative budget committee if House Bill No. 1262 is not enacted, shall develop a working plan for long-term care reform, including recommendations and statutory changes, by December 12, 1995, to accomplish the following:

(1) Reorganize and consolidate, on a noncategorical basis, all disease or age-specific (categorical) organizational entities of state administration and their regional elements pertaining to chronic care services to persons with functional mental and physical disabilities, including but not limited to: In the department of social and health services: Health and rehabilitative services and aging and adult services; in the department of health: Aids chronic care and boarding homes; the department of services to the blind; in the department of veterans affairs: Nursing facilities; and in all other state agencies that provide chronic long-term health care services;

(2) Implement a streamlined client centered administrative and delivery system for long-term care services state-wide that incorporates all long-term care services for the person with functional disabilities to include the functionally disabled, developmentally disabled, mentally ill, traumatically brain injured, and others with chronic functional disabilities. The system shall be a single point entry system administered at the local level that allows the person with functional disabilities to obtain needs determination, eligibility screening, priority setting, and services information and assistance. The system shall be designed so that acute health care services are effectively coordinated with long-term care services. The system shall recognize and respect the individuality and dignity of all functionally disabled individuals and promote self-reliance and the preference for the assistance and comfort provided by families, friends, and community volunteers. It shall also recognize the importance of community organizations and the public and private infrastructure in the delivery of care and support. All major points of access into the long-term care system shall be identified and integrated into the system to insure that clients are fully informed of the most appropriate least expensive care options;

(3) Provision of long-term care services to persons based on their functional disabilities noncategorically and in the most independent living situation consistent with the person's needs and preferences;

((~~(c)~~)) (4) A consistent definition of appropriate roles and responsibilities for state and local government, regional organizations, and private organizations in the planning, administration, financing, and delivery of long-term care services;

((~~(d)~~)) (5) Technical assistance to enable local communities to have greater participation and control in the planning, administration, and provision of long-term care services;

((~~(e)~~)) (6) A case management system that coordinates an appropriate and cost-effective plan of care and services for eligible functionally disabled persons based on their individual needs and preferences;

((~~(f)~~)) (7) A sufficient supply of quality institutional and noninstitutional residential alternatives for functionally disabled persons, and supports for the providers of such services;

((~~(g)~~)) (8) Public and private alternative funding for long-term care services, ((~~such as federal Title XIX funding of personal care services through the limited casualty program for the medically needy and other optional services~~)) that includes the promotion of affordable stand alone long-term care insurance options or as part of overall health care insurance benefits, a uniform fee copayment scale for client participation in state-funded, long-term care programs, and private, long-term care insurance;

((~~(h)~~)) (9) A systematic and balanced long-term care services payment and reimbursement system, including a case mix nursing home reimbursement, that will provide access to needed services while controlling the rate of cost increases for such services;

((~~(i)~~)) (10) Active involvement of volunteers and advocacy groups;

((~~(j)~~)) (11) An integrated data base that provides long-term care client tracking;

((~~(k)~~)) (12) A coordinated education system for long-term care to insure client safety and quality of services; ((~~and~~

~~(l)~~)) (13) Administratively separate the nonmeans tested economic and social welfare and advocacy programs of the older Americans act, 42 U.S.C. Chap 35 and 45 C.F.R. 1321 et seq. from the need and means tested programs for persons with functional disabilities;

(14) Review all activities mandated and expenditures authorized by the senior citizens services act, chapter 74.38 RCW; and identify which funds are being used for functionally disabled seniors and identify how these senior citizens services act funds can be directed to programs serving the most disabled elderly; and

(15) Other issues deemed appropriate by the ((~~implementation team~~)) joint committee on health systems oversight.

The ((~~commission~~)) joint committee on health systems oversight, if created in House Bill No. 1262, or the legislative budget committee if House Bill No. 1262 is not enacted, shall report to the legislature with its findings, recommendations, and proposed legislation by December ((~~1, 1990~~)) 12, 1995.

NEW SECTION. Sec. 8. A new section is added to chapter 74.39A RCW to read as follows:

The department's system of quality improvement for long-term care services shall be guided by the following principles, consistent with applicable federal laws and regulations:

(1) The system shall be consumer centered and promote privacy, independence, dignity, choice, and a home or home-like environment for consumers.

(2) The goal of the system is continuous quality improvement with the focus on consumer satisfaction and outcomes for consumers.

(3) Providers should be supported in their efforts to improve quality through training, technical assistance, and case management.

(4) The emphasis should be on problem prevention both in monitoring and in screening potential providers of service.

(5) Monitoring should be outcome based and responsive to consumer complaints.

(6) Providers generally should be assisted in addressing identified problems initially through consultation and technical assistance. Enforcement remedies shall be available for problems that are serious, recurring, or that have been uncorrected.

NEW SECTION. Sec. 9. A new section is added to chapter 74.39A RCW to read as follows:

(1) The aging and adult services administration of the department shall establish and maintain a toll-free telephone number for receiving complaints regarding a facility that the administration licenses or with which it contracts for long-term care services.

(2) All facilities that are licensed by, or that contract with the aging and adult services administration to provide long-term care services shall post in a place and manner clearly visible to residents and visitors the department's toll-free complaint telephone number.

(3) The aging and adult services administration shall investigate complaints if the subject of the complaint is within its authority unless the department determines that: (a) The complaint is intended to willfully harass a licensee or employee of the licensee; (b) there is no reasonable basis for investigation; or (c) corrective action has been taken.

(4) The aging and adult services administration shall refer complaints to appropriate state agencies, law enforcement agencies, the attorney general, the long-term care ombudsman, or other entities if the department lacks authority to investigate.

(5) The department may not provide the substance of the complaint to the licensee or contractor before the completion of the investigation by the department. Neither the substance of the complaint provided to the licensee or contractor nor any copy of the complaint or related report published, released, or made otherwise available shall disclose the name, title, or identity of any complainant, or other person mentioned in the complaint, except that the department may disclose the identity of the complainant if such disclosure is requested in writing by the complainant.

(6) The office of the long-term care ombudsman shall receive funds to increase its staff by one full-time equivalent to accomplish the increased activities consistent with the implementation of this act.

Sec. 10. RCW 74.39A.010 and 1993 c 508 s 3 are each amended to read as follows:

(1) To the extent of available funding, the department of social and health services may contract with licensed boarding homes under chapter 18.20 RCW and tribally licensed boarding homes for assisted living services and modified assisted living services. The department shall develop ((~~rules~~)) terms and conditions for facilities that contract with the department for assisted living services or modified assisted living services to establish:

(a) Facility service standards consistent with the principles in section 8 of this act and consistent with chapter 70.129 RCW;

(b) Standards for resident living areas consistent with section 2 of this act;

(2) The department's terms and conditions shall provide that ((~~ensure that the contracted~~)) services in assisted living and modified assisted living facilities:

((~~(1)~~)) (a) Recognize individual needs, privacy, and autonomy;

((~~(2)~~)) (b) Include, but not be limited to, personal care, nursing services, medication administration, and supportive services that promote independence and self-sufficiency;

((~~(3)~~)) (c) Are of sufficient scope to assure that each resident who chooses to remain in the assisted living or modified assisted living settings may do so, ((~~unless nursing care needs exceed the level of care defined by the department~~)) to the extent that the care provided continues to be cost-effective and safe. However, the resident may waive the provision of any service that would otherwise promote their ability to function at their highest practicable level, but only if the resident has been fully informed as to his or her need for and potential to benefit from the services that are to be waived;

((~~(4)~~)) (d) Are directed first to those persons most likely, in the absence of modified assisted living services or assisted living services, to need hospital, nursing facility, or other out-of-home placement; and

((~~(5)~~)) (e) Are provided in compliance with applicable ((~~department of health~~)) facility and professional licensing laws and rules.

(3) When a facility contracts with the department for assisted living services or modified assisted living services, only services and facility standards that are provided to or in behalf of the assisted living services or modified assisted living services client shall be subject to the department's contract standards.

NEW SECTION. Sec. 11. A new section is added to chapter 74.39A RCW to read as follows:

(1) To the extent of available funding, the department of social and health services may contract for adult residential care.

(2) The department shall, by contract, develop terms and conditions for facilities that contract with the department for adult residential care to establish:

(a) Facility service standards consistent with the principles in section 8 of this act and consistent with chapter 70.129 RCW; and

(b) Training requirements for providers and their staff.

(3) The department shall, by contract, provide that services in adult residential care facilities:

(a) Recognize individual needs, privacy, and autonomy;

(b) Include personal care services and other services that promote independence and self-sufficiency and aging in place;

(c) Are directed first to those persons most likely, in the absence of adult residential care services, to need hospital, nursing facility, or other out-of-home placement; and

(d) Are provided in compliance with applicable facility and professional licensing laws and rules.

(4) When a facility contracts with the department for adult residential care, only services and facility standards that are provided to or in behalf of the adult residential care client shall be subject to the adult residential care contract standards.

NEW SECTION. Sec. 12. A new section is added to chapter 74.39A RCW to read as follows:

(1) The department shall, by contract, establish reasonable minimum qualifications and training requirements to assure that assisted living service, modified assisted living service, and adult residential care providers with whom the department contracts are capable of providing services consistent with this chapter.

(2) The department shall not contract for assisted living, modified assisted living, or adult residential care services with a provider if the department finds that the provider or any partner, officer, director, managerial employee, or owner of five percent or more of the provider has a history of significant noncompliance with federal or state regulations, rules, or laws in providing care or services to vulnerable adults or to children.

Sec. 13. RCW 70.128.005 and 1989 c 427 s 14 are each amended to read as follows:

The legislature finds that:

(1) Adult family homes are an important part of the state's long-term care system. Adult family homes provide an alternative to institutional care and promote a high degree of independent living for residents;

(2) Persons with functional limitations have broadly varying service needs. Adult family homes that can meet those needs are an essential component of a long-term system;

(3) The development and operation of adult family homes that can provide quality personal care and special care services should be encouraged.

Sec. 14. RCW 70.128.007 and 1989 c 427 s 15 are each amended to read as follows:

The purposes of this chapter are to:

(1) Encourage the establishment and maintenance of adult family homes that provide a humane, safe, and homelike environment for persons with functional limitations who need personal and special care;

(2) Establish standards for regulating adult family homes that adequately protect residents((~~, but are consistent with the abilities and resources of an adult family home so as not to discourage individuals from serving as adult family home providers; and~~));

(3) Encourage consumers, families, providers, and the public to become active in assuring their full participation in development of adult family homes that provide high quality and cost-effective care;

(4) Provide for appropriate care of residents in adult family homes by requiring that each resident have a care plan that promotes his or her ability to achieve their highest practicable level of physical, mental, and psychosocial functioning, unless the resident chooses not to receive any such services after being fully informed as to the need for and potential to benefit from services that are to be waived; and

(5) Accord each resident the right to participate in the development of the care plan and in other major decisions involving the resident and their care.

Sec. 15. RCW 70.128.010 and 1989 c 427 s 16 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Adult family home" means a regular family abode ((of)) in which a person or persons ((~~who are providing~~)) provides personal care, special care, room, and board to more than one but not more than ((~~four~~)) six adults who are not related by blood or marriage to the person or persons providing the services((; except that a maximum of six adults may be permitted if the department determines that the home is of adequate size and that the home and the provider are capable of meeting standards and qualifications as provided for in this act)).

(2) "Provider" means any person who is licensed under this chapter to operate an adult family home. The provider shall reside at the adult family home((~~, except that~~)). Exceptions may be authorized by the department ((~~for good cause,~~)) through standards as defined in rule.

(3) "Department" means the department of social and health services.

(4) "Resident" means an adult in need of personal or special care in an adult family home who is not related to the provider.

(5) "Adults" means persons who have attained the age of eighteen years.

(6) "Home" means an adult family home.

(7) "Imminent danger" means serious physical harm to or death of a resident has occurred, or there is a serious threat to resident life, health, or safety.

(8) "Special care" means care beyond personal care as defined by the department, in rule.

(9) "Capacity" means the maximum number of persons in need of personal or special care permitted in an adult family home at a given time. This number shall include related children or adults living in the home and who receive full-time care.

Sec. 16. RCW 70.128.057 and 1991 c 40 s 2 are each amended to read as follows:

Notwithstanding the existence or use of any other remedy, the department may, in the manner provided by law, upon the advice of the attorney general who shall represent the department in the proceedings, maintain an action in the name of the state for an injunction, civil penalty, or other process against a person to restrain or prevent the operation or maintenance of an adult family home without a license under this chapter.

NEW SECTION. Sec. 17. A new section is added to chapter 70.128 RCW to read as follows:

The legislature finds that the operation of an adult family home without a license in violation of this chapter is a matter vitally affecting the public interest for the purpose of applying the consumer protection act, chapter 19.86 RCW. Operation of an adult family home without a license in violation of this chapter is not reasonable in relation to the development and preservation of business. Such a violation is an unfair or deceptive act in trade or commerce and an unfair method of competition for the purpose of applying the consumer protection act, chapter 19.86 RCW.

Sec. 18. RCW 70.128.060 and 1989 c 427 s 20 are each amended to read as follows:

(1) An application for license shall be made to the department upon forms provided by it and shall contain such information as the department reasonably requires.

(2) The department shall issue a license to an adult family home if the department finds that the applicant and the home are in compliance with this chapter and the rules adopted under this chapter; and that the applicant has no prior violations of this chapter relating to the adult family home subject to the application or any other adult family home, or of any other law regulating residential care facilities within the past five years that resulted in revocation or nonrenewal of a license.

(3) The department shall not issue a license to a provider if the department finds that the provider or any partner, officer, director, managerial employee, or owner of five percent or more of the provider has a history of significant noncompliance with federal or state regulations, rules, or laws in providing care or services to vulnerable adults or to children.

(4) The license fee shall be submitted with the application.

((~~(4)~~)) (5) The department shall license an adult family home for the maximum level of care that the adult family home may provide. The department shall define, in rule, license levels based upon the education, training, and caregiving experience of the licensed provider or staff.

(6) The department shall serve upon the applicant a copy of the decision granting or denying an application for a license. An applicant shall have the right to contest denial of his or her application for a license as provided in chapter 34.05 RCW by requesting a hearing in writing within ((~~ten~~)) twenty-eight days after receipt of the notice of denial.

(((5) A provider shall not be licensed for more than one adult family home. Exceptions may be authorized by the department for good cause, as defined in rule. The department shall submit to appropriate committees of the legislature, by December 1, 1991, a report on the number and type of good cause exceptions granted.

~~(6)~~)) (7) The department shall establish, by rule, standards used to license nonresident providers and multiple facility operators.

(8) The department by rule shall establish for multiple facility operators educational standards substantially equivalent to recognized national certification standards for residential care administrators.

(9) The license fee shall be set at fifty dollars per year for each home. A fifty dollar processing fee shall also be charged each home when the home is initially licensed.

Sec. 19. RCW 70.128.070 and 1989 c 427 s 22 are each amended to read as follows:

(1) A license shall be valid for one year.

(2) At least ((~~ninety~~)) sixty days prior to expiration of the license, the provider shall submit an application for renewal of a license. The department shall send the provider an application for renewal prior to this time. The department shall have the authority to investigate any information included in the application for renewal of a license.

(3)(a) Homes applying for a license shall be inspected at the time of licensure.

(b) Homes licensed by the department shall be inspected at least every eighteen months, subject to available funds.

(c) ((~~Licensed homes where a complaint has been received by the department may be inspected at any time.~~)) The department may make an unannounced inspection of a licensed home at any time to assure that the home and provider are in compliance with this chapter and the rules adopted under this chapter.

(4) If the department finds that the home is not in compliance with this chapter, it shall require the home to correct any violations as provided in this chapter. If the department finds that the home is in compliance with this chapter and the rules adopted under this chapter, the department shall renew the license of the home.

Sec. 20. RCW 70.128.120 and 1989 c 427 s 24 are each amended to read as follows:

An adult family home provider shall have the following minimum qualifications:

(1) Twenty-one years of age or older;

(2) Good moral and responsible character and reputation;

(3) Literacy; ((~~and~~))

(4) Management and administrative ability to carry out the requirements of this chapter;

(5) Satisfactory completion of department-approved initial training and continuing education training as specified by the department in rule;

(6) Satisfactory completion of department-approved, or equivalent, special care training before a provider may provide special care services to a resident;

(7) Not been convicted of any crime listed in RCW 43.43.830 and 43.43.842; and

(8) Registered with the department of health.

Sec. 21. RCW 70.128.080 and 1989 c 427 s 21 are each amended to read as follows:

An adult family home shall have readily available for review by the department, residents, and the public:

(1) Its license to operate; and

(2) A copy of each inspection report received by the home from the department for the past three years.

Sec. 22. RCW 70.128.090 and 1989 c 427 s 30 are each amended to read as follows:

(1) During inspections of an adult family home, the department shall have access and authority to examine areas and articles in the home used to provide care or support to residents, including residents' records, accounts, and the physical premises, including the buildings, grounds, and equipment. The department also shall have the authority to interview the provider and residents of an adult family home.

(2) Whenever an inspection is conducted, the department shall prepare a written report that summarizes all information obtained during the inspection, and if the home is in violation of this chapter, serve a copy of the inspection report upon the provider at the same time as a notice of violation. If the home is not in violation of this chapter, a copy of the inspection report shall be mailed to the provider within ten days of the inspection of the home. All inspection reports shall be made available to the public at the department during business hours.

(3) ((The inspection report shall describe any corrective measures on the part of the provider necessary to pass a reinspection. If the department finds upon reinspection of the home that the corrective measures have been satisfactorily implemented, the department shall cease any actions taken against the home. Nothing in this section shall require the department to license or renew the license of a home where serious physical harm or death has occurred to a resident)) The provider shall develop corrective measures for any violations found by the department's inspection. The department may provide consultation and technical assistance to assist the provider in developing effective corrective measures. The department shall include a statement of the provider's corrective measures in the department's inspection report.

NEW SECTION. Sec. 23. A new section is added to chapter 70.128 RCW to read as follows:

The legislature recognizes that adult care homes located within the boundaries of a federally recognized Indian reservation may be licensed by the Indian tribe. The department may pay for care for persons residing in such homes, if there has been a tribal or state criminal background check of the provider and any staff, and the client is otherwise eligible for services administered by the department.

Sec. 24. RCW 70.128.130 and 1989 c 427 s 26 are each amended to read as follows:

(1) Providers must own, rent, or lease the home to be licensed. Exceptions may be granted by the department to churches, hospitals, nonprofit associations, or similar organizations.

(2) Adult ((~~family~~)) care homes shall be maintained internally and externally in good repair and condition. Such homes shall have safe and functioning systems for heating, cooling, hot and cold water, electricity, plumbing, garbage disposal, sewage, cooking, laundry, artificial and natural light, ventilation, and any other feature of the home.

((~~(2)~~)) (3) Adult ((~~family~~)) care homes shall be maintained in a clean and sanitary manner, including proper sewage disposal, food handling, and hygiene practices.

((~~(3)~~)) (4) Adult ((~~family~~)) care homes shall develop a fire drill plan for emergency evacuation of residents, shall have smoke detectors in each bedroom where a resident is located, shall have fire extinguishers on each floor of the home, and shall not keep nonambulatory patients above the first floor of the home.

((~~(4)~~)) (5) Adult ((~~family~~)) care homes shall have clean, functioning, and safe household items and furnishings.

((~~(5)~~)) (6) Adult ((~~family~~)) care homes shall provide a nutritious and balanced diet and shall recognize residents' needs for special diets.

((~~(6)~~)) (7) Adult care home providers shall ensure that all residents receive care consistent with the resident's plan of care.

(8) Adult ((~~family~~)) care homes shall establish health care procedures for the care of residents including medication administration and emergency medical care.

(a) Adult family home residents shall be permitted to self-administer medications.

(b) Adult family home providers may administer medications and deliver special care only to the extent ((~~that the provider is a licensed health care professional for whom the administration of medications is within the scope of practice under Washington~~)) authorized by law.

(9) A provider will ensure that any volunteer, student, employee, or person residing within the adult family home who will have unsupervised access to any resident shall not have been convicted of a crime listed under RCW 43.43.830 or 43.43.842. Except that a person may be conditionally employed pending the completion of a criminal conviction background inquiry.

(10) A provider shall offer activities to residents under care as defined by the department in rule.

(11) An adult family home provider shall ensure that staff are competent and receive necessary training to perform assigned tasks.

Sec. 25. RCW 70.128.140 and 1989 c 427 s 27 are each amended to read as follows:

Each adult family home shall meet applicable local licensing, zoning, building, and housing codes, and state and local fire safety regulations as they pertain to a single-family residence. It is the responsibility of the home to check with local authorities to ensure all local codes are met.

Sec. 26. RCW 70.128.150 and 1989 c 427 s 28 are each amended to read as follows:

Whenever possible adult family homes are encouraged to contact and work with local quality assurance projects such as the volunteer ombudsman with the goal of assuring high quality care is provided in the home.

An adult family home may not willfully interfere with a representative of the long-term care ombudsman program in the performance of official duties. The department shall impose a penalty of not more than one thousand dollars for any such willful interference.

Sec. 27. RCW 70.128.160 and 1989 c 427 s 31 are each amended to read as follows:

(1) The department is authorized to take one or more of the actions listed in subsection (2) of this section in any case in which the department finds that an adult family home provider has:

(a) Failed or refused to comply with the requirements of this chapter or the rules adopted under this chapter;

(b) Operated an adult family home without a license or under a revoked license;

(c) Knowingly or with reason to know made a false statement of material fact on his or her application for license or any data attached thereto, or in any matter under investigation by the department; or

(d) Willfully prevented or interfered with any inspection or investigation by the department.

(2) When authorized by subsection (1) of this section, the department may take one or more of the following actions:

(a) Refuse to issue a license;

(b) Impose reasonable conditions on a license, such as correction within a specified time, training, and limits on the type of clients the provider may admit or serve;

(d) Suspend, revoke, or refuse to renew a license; or

((~~(c)~~)) (e) Suspend admissions to the adult family home by imposing stop placement.

(3) When the department orders stop placement, the facility shall not admit any person until the stop placement order is terminated. The department may approve readmission of a resident to the facility from a hospital or nursing home during the stop placement. The department shall terminate the stop placement when: (a) The violations necessitating the stop placement have been corrected; and (b) the provider exhibits the capacity to maintain adequate care and service.

(4) Chapter 34.05 RCW applies to department actions under this section, except that orders of the department imposing license suspension, stop placement, or conditions for continuation of a license are effective immediately upon notice and pending any hearing.

Sec. 28. RCW 70.128.175 and 1989 1st ex.s. c 9 s 815 are each amended to read as follows:

(1) Unless the context clearly requires otherwise, these definitions shall apply throughout this section and RCW 35.63.140, 35A.63.149, 36.70.755, 35.22.680, 36.32.560, and 70.128.180:

(a) "Adult family home" means a ((~~facility licensed pursuant to chapter 70.128 RCW or the~~)) regular family abode of a person or persons ((~~who are~~)) providing personal care, special care, room, and board to more than one but not more than six adults who are not related by blood or marriage to the person or persons providing the services.

(b) "Residential care facility" means a facility that cares for at least five, but not more than fifteen functionally disabled persons, that is not licensed pursuant to chapter 70.128 RCW.

(2) An adult family home shall be considered a residential use of property for zoning purposes. Adult family homes shall be a permitted use in all areas zoned for residential or commercial purposes, including areas zoned for single family dwellings.

NEW SECTION. Sec. 29. A new section is added to chapter 70.128 RCW to read as follows:

(1) The department shall maintain a toll-free telephone number for receiving complaints regarding adult family homes.

(2) An adult family home shall post in a place and manner clearly visible to residents and visitors the department's toll-free complaint telephone number.

(3) No adult family home shall discriminate or retaliate in any manner against a resident on the basis or for the reason that such resident or any other person made a complaint to the department or the long-term care ombudsman or cooperated with the investigation of such a complaint.

NEW SECTION. Sec. 30. RCW 70.128.180 and 1989 c 427 s 41 are each repealed.

NEW SECTION. Sec. 31. The legislature intends to protect the public's right to high quality long-term care by assuring that adult family homes are operated by competent and qualified persons.

NEW SECTION. Sec. 32. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Secretary" means the secretary of the department of health.

(2) "Adult family home" means a regular family abode of a person or persons who are providing personal care, room, and board to more than one but not more than four adults who are not related by blood or marriage to the person or persons providing the services. A maximum of six adults may be permitted by the department of social and health services under chapter 70.128 RCW.

(3) "Operator" means a provider who is licensed under chapter 70.128 RCW to operate an adult family home.

(4) "Person" includes an individual, firm, corporation, partnership, or association.

NEW SECTION. Sec. 33. A person who operates an adult family home shall register the home with the secretary. Each separate location of the business of an adult family home shall have a separate registration.

The secretary, by rule, shall establish forms and procedures for the processing of operator registration applications, including the payment of registration fees pursuant to RCW 43.70.250. An application for an adult family home operator registration shall include at least the following information:

(1) The names and addresses of the operator of the adult family home; and

(2) If the operator is a corporation, copies of its articles of incorporation and current bylaws, together with the names and addresses of its officers and directors.

A registration issued by the secretary in accordance with this section shall remain effective for a period of one year from the date of its issuance unless the registration is revoked or suspended pursuant to section 34 of this act, or unless the adult family home is sold or ownership or management is transferred, in which case the registration of the home shall be voided and the operator shall apply for a new registration.

NEW SECTION. Sec. 34. The uniform disciplinary act, chapter 18.130 RCW, shall govern the issuance and denial of registration and the discipline of persons registered under this chapter. The secretary shall be the disciplinary authority under this chapter.

NEW SECTION. Sec. 35. Sections 31 through 34 of this act shall constitute a new chapter in Title 18 RCW.

Sec. 36. RCW 18.130.040 and 1994 sp.s. c 9 s 603 and 1994 c 17 s 19 are each reenacted and amended to read as follows:

(1) This chapter applies only to the secretary and the boards and commissions having jurisdiction in relation to the professions licensed under the chapters specified in this section. This chapter does not apply to any business or profession not licensed under the chapters specified in this section.

(2)(a) The secretary has authority under this chapter in relation to the following professions:

(i) Dispensing opticians licensed under chapter 18.34 RCW;

(ii) Naturopaths licensed under chapter 18.36A RCW;

(iii) Midwives licensed under chapter 18.50 RCW;

(iv) Ocularists licensed under chapter 18.55 RCW;

(v) Massage operators and businesses licensed under chapter 18.108 RCW;

(vi) Dental hygienists licensed under chapter 18.29 RCW;

(vii) Acupuncturists certified under chapter 18.06 RCW;

(viii) Radiologic technologists certified and x-ray technicians registered under chapter 18.84 RCW;

(ix) Respiratory care practitioners certified under chapter 18.89 RCW;

(x) Persons registered or certified under chapter 18.19 RCW;

(xi) Persons registered as nursing pool operators under chapter 18.52C RCW;

(xii) Nursing assistants registered or certified under chapter 18.79 RCW;

(xiii) Health care assistants certified under chapter 18.135 RCW;

(xiv) Dietitians and nutritionists certified under chapter 18.138 RCW;

(xv) Sex offender treatment providers certified under chapter 18.155 RCW; ((~~and~~))

(xvi) Persons licensed and certified under chapter 18.73 RCW or RCW 18.71.205; and

(xvii) Persons registered as adult family home operators under section 33 of this act.

(b) The boards and commissions having authority under this chapter are as follows:

(i) The podiatric medical board as established in chapter 18.22 RCW;

(ii) The chiropractic quality assurance commission as established in chapter 18.25 RCW;

(iii) The dental quality assurance commission as established in chapter 18.32 RCW;

(iv) The board on fitting and dispensing of hearing aids as established in chapter 18.35 RCW;

(v) The board of examiners for nursing home administrators as established in chapter 18.52 RCW;

(vi) The optometry board as established in chapter 18.54 RCW governing licenses issued under chapter 18.53 RCW;

(vii) The board of osteopathic medicine and surgery as established in chapter 18.57 RCW governing licenses issued under chapters 18.57 and 18.57A RCW;

(viii) The board of pharmacy as established in chapter 18.64 RCW governing licenses issued under chapters 18.64 and 18.64A RCW;

(ix) The medical quality assurance commission as established in chapter 18.71 RCW governing licenses and registrations issued under chapters 18.71 and 18.71A RCW;

(x) The board of physical therapy as established in chapter 18.74 RCW;

(xi) The board of occupational therapy practice as established in chapter 18.59 RCW;

(xii) The nursing care quality assurance commission as established in chapter 18.79 RCW governing licenses issued under that chapter;

(xiii) The examining board of psychology and its disciplinary committee as established in chapter 18.83 RCW;

(xiv) The veterinary board of governors as established in chapter 18.92 RCW.

(3) In addition to the authority to discipline license holders, the disciplining authority has the authority to grant or deny licenses based on the conditions and criteria established in this chapter and the chapters specified in subsection (2) of this section. This chapter also governs any investigation, hearing, or proceeding relating to denial of licensure or issuance of a license conditioned on the applicant's compliance with an order entered pursuant to RCW 18.130.160 by the disciplining authority.

Sec. 37. RCW 43.190.020 and 1991 sp.s. c 8 s 3 are each amended to read as follows:

As used in this chapter, "long-term care facility" means any of the following ((~~which provide services to persons sixty years of age and older and is~~)):

(1) A facility which:

(a) Maintains and operates twenty-four hour skilled nursing services for the care and treatment of chronically ill or convalescent patients, including mental, emotional, or behavioral problems, mental retardation, or alcoholism;

(b) Provides supportive, restorative, and preventive health services in conjunction with a socially oriented program to its residents, and which maintains and operates twenty-four hour services including board, room, personal care, and intermittent nursing care. "Long-term health care facility" includes nursing homes and nursing facilities, but does not include acute care hospital or other licensed facilities except for that distinct part of the hospital or facility which provides nursing facility services.

(2) Any family home, group care facility, or similar facility determined by the secretary, for twenty-four hour nonmedical care of persons in need of personal services, supervision, or assistance essential for sustaining the activities of daily living or for the protection of the individual.

(3) Any swing bed in an acute care facility.

Sec. 38. RCW 43.190.060 and 1987 c 158 s 3 are each amended to read as follows:

A long-term care ombudsman shall:

(1) Investigate and resolve complaints made by or on behalf of ((~~older individuals who are~~)) residents of long-term care facilities relating to administrative action which may adversely affect the health, safety, welfare, and rights of these individuals;

(2) Monitor the development and implementation of federal, state, and local laws, rules, regulations, and policies with respect to long-term care facilities in this state;

(3) Provide information as appropriate to public agencies regarding the problems of individuals residing in long-term care facilities; and

(4) Provide for training volunteers and promoting the development of citizen organizations to participate in the ombudsman program. A volunteer long-term care ombudsman shall be able to identify and resolve problems regarding the care of residents in long-term care facilities and to assist such residents in the assertion of their civil and human rights. However, volunteers shall not be used for complaint investigations but may engage in fact-finding activities to determine whether a formal complaint should be submitted to the department.

NEW SECTION. Sec. 39. RCW 74.08.530, 74.08.560, 74.08.570, 74.08.545, and 74.08.550 are each recodified in chapter 74.39A RCW.

NEW SECTION. Sec. 40. RCW 74.08.541 and 1989 c 427 s 4, 1986 c 222 s 1, 1983 1st ex.s. c 41 s 39, & 1981 1st ex.s. c 6 s 17 are each repealed.

Sec. 41. RCW 74.08.545 and 1989 c 427 s 5 are each amended to read as follows:

It is the intent of the legislature that chore services be provided to eligible persons within the limits of funds appropriated for that purpose. Therefore, the department shall provide services only to those persons identified as at risk of being placed in a long-term care facility in the absence of such services. The department shall not provide chore services to any individual who is eligible for, and whose needs can be met by another community service administered by the department. Chore services shall be provided to the extent necessary to maintain a safe and healthful living environment. It is the policy of the state to encourage the development of volunteer chore services in local communities as a means of meeting chore care service needs and directing financial resources. In determining eligibility for chore services, the department shall consider the following:

(1) The kind of services needed;

(2) The degree of service need, and the extent to which an individual is dependent upon such services to remain in his or her home or return to his or her home;

(3) The availability of personal or community resources which may be utilized to meet the individual's need; and

(4) Such other factors as the department considers necessary to insure service is provided only to those persons whose chore service needs cannot be met by relatives, friends, nonprofit organizations, ((or)) other persons, or by other programs or resources.

In determining the level of services to be provided under this chapter, ((~~[the]~~)) the client shall be assessed using an instrument designed by the department to determine the level of functional disability, the need for service and the person's risk of long-term care facility placement.

NEW SECTION. Sec. 42. A new section is added to chapter 74.39A RCW to read as follows:

(1) The department shall establish a monthly dollar lid for each region on chore services expenditures within the legislative appropriation. Priority for services shall be given to the following situations:

(a) People who were receiving chore personal care services as of June 30, 1995;

(b) People for whom chore personal care services are necessary to return to the community from a nursing home;

(d) People for whom chore personal care services are necessary as a protective measure based on referrals resulting from an adult protective services investigation.

(2) The department shall require a client to participate in the cost of chore services as a necessary precondition to receiving chore services paid for by the state. The client shall retain an amount equal to one hundred percent of the federal poverty level, adjusted for household size, for maintenance needs. The department shall consider the remaining income as the client participation amount for chore services except for those persons whose participation is established under RCW 74.08.570.

(3) The department shall establish, by rule, the maximum amount of resources a person may retain and be eligible for chore services.

Sec. 43. RCW 74.08.550 and 1989 c 427 s 6 are each amended to read as follows:

(1) The department is authorized to develop a program to provide for ((~~those~~)) chore services ((~~enumerated in RCW 74.08.541~~)) under this chapter.

(2) The department may provide assistance in the recruiting of providers of the services enumerated in ((~~RCW 74.08.541~~)) section 42 of this act and seek to assure the timely provision of services in emergency situations.

(3) The department shall assure that all providers of the chore services ((~~enumerated in RCW 74.08.541~~)) under this chapter are compensated for the delivery of the services on a prompt and regular basis.

Sec. 44. RCW 74.08.570 and 1989 c 427 s 7 are each amended to read as follows:

(1) An otherwise eligible disabled person shall not be deemed ineligible for chore services under this chapter if the person's gross income from employment, adjusted downward by the cost of the chore services to be provided and the disabled person's work expenses, does not exceed the maximum eligibility standard established by the department for such chore services. The department shall establish a ((~~sliding scale fee schedule for~~)) methodology for client participation that allows such disabled persons((~~, taking into consideration the person's ability to pay and work expenses~~)) to be employed.

(2) If a disabled person arranges for chore services through an individual provider arrangement, the client's contribution shall be counted as first dollar toward the total amount owed to the provider for chore services rendered.

(3) As used in this section:

(a) "Gross income" means total earned wages, commissions, salary, and any bonus;

(b) "Work expenses" includes:

(i) Payroll deductions required by law or as a condition of employment, in amounts actually withheld;

(ii) The necessary cost of transportation to and from the place of employment by the most economical means, except rental cars; and

(iii) Expenses of employment necessary for continued employment, such as tools, materials, union dues, transportation to service customers if not furnished by the employer, and uniforms and clothing needed on the job and not suitable for wear away from the job;

(d) "Disabled" means:

(i) Permanently and totally disabled as defined by the department and as such definition is approved by the federal social security administration for federal matching funds;

(ii) Eighteen years of age or older;

(iii) A resident of the state of Washington; and

(iv) Willing to submit to such examinations as are deemed necessary by the department to establish the extent and nature of the disability.

Sec. 45. RCW 18.51.091 and 1987 c 476 s 24 are each amended to read as follows:

The department shall make or cause to be made at least one inspection of each nursing home ((~~prior to license renewal and shall inspect community-based services as part of the licensing renewal survey~~)) at least every eighteen months and any citation-free facility every sixteen to eighteen months. The inspection shall be made without providing advance notice of it. Every inspection may include an inspection of every part of the premises and an examination of all records, methods of administration, the general and special dietary and the stores and methods of supply. Those nursing homes that provide community-based care shall establish and maintain separate and distinct accounting and other essential records for the purpose of appropriately allocating costs of the providing of such care: PROVIDED, That such costs shall not be considered allowable costs for reimbursement purposes under chapter 74.46 RCW. Following such inspection or inspections, written notice of any violation of this law or the rules and regulations promulgated hereunder, shall be given the applicant or licensee and the department. The notice shall describe the reasons for the facility's noncompliance. The department may prescribe by regulations that any licensee or applicant desiring to make specified types of alterations or additions to its facilities or to construct new facilities shall, before commencing such alteration, addition or new construction, submit its plans and specifications therefor to the department for preliminary inspection and approval or recommendations with respect to compliance with the regulations and standards herein authorized.

Sec. 46. RCW 18.51.140 and 1986 c 266 s 83 are each amended to read as follows:

Standards for fire protection and the enforcement thereof, with respect to all nursing homes to be licensed hereunder, shall be the responsibility of the director of community, trade, and economic development, through the director of fire protection, who shall adopt such recognized standards as may be applicable to nursing homes for the protection of life against the cause and spread of fire and fire hazards. The department upon receipt of an application for a license, shall submit to the director of community, trade, and economic development, through the director of fire protection, in writing, a request for an inspection, giving the applicant's name and the location of the premises to be licensed. Upon receipt of such a request, the director of community, trade, and economic development, through the director of fire protection, or his or her deputy, shall make an inspection of the nursing home to be licensed, and if it is found that the premises do not comply with the required safety standards and fire regulations as promulgated by the director of community, trade, and economic development, through the director of fire protection, he or she shall promptly make a written report to the nursing home and the department as to the manner and time allowed in which the premises must qualify for a license and set forth the conditions to be remedied with respect to fire regulations. The department, applicant or licensee shall notify the director of community, trade, and economic development, through the director of fire protection, upon completion of any requirements made by him or her, and the director of community, trade, and economic development, through the director of fire protection, or his or her deputy, shall make a reinspection of such premises. Whenever the nursing home to be licensed meets with the approval of the director of community, trade, and economic development, through the director of fire protection, he or she shall submit to the department, a written report approving same with respect to fire protection before a full license can be issued. The director of community, trade, and economic development, through the director of fire protection, shall make or cause to be made inspections of such nursing homes at least ((~~annually~~)) every eighteen months.

In cities which have in force a comprehensive building code, the provisions of which are determined by the director of community, trade, and economic development, through the director of fire protection, to be equal to the minimum standards of the code for nursing homes adopted by the director of community, trade, and economic development, through the director of fire protection, the chief of the fire department, provided the latter is a paid chief of a paid fire department, shall make the inspection with the director of community, trade, and economic development, through the director of fire protection, or his or her deputy and they shall jointly approve the premises before a full license can be issued.

Sec. 47. RCW 18.51.300 and 1981 1st ex.s. c 2 s 24 are each amended to read as follows:

Unless specified otherwise by the department, a nursing home shall retain and preserve all records which relate directly to the care and treatment of a patient for a period of no less than ((~~ten~~)) eight years following the most recent discharge of the patient; except the records of minors, which shall be retained and preserved for a period of no less than three years following attainment of the age of eighteen years, or ten years following such discharge, whichever is longer.

If a nursing home ceases operations, it shall make immediate arrangements, as approved by the department, for preservation of its records.

The department shall by regulation define the type of records and the information required to be included in the records to be retained and preserved under this section; which records may be retained in photographic form pursuant to chapter 5.46 RCW.

NEW SECTION. Sec. 48. A new section is added to chapter 74.39A RCW to read as follows:

(1) A person who receives an asset from an applicant for or recipient of long-term care services for less than fair market value shall be subject to a civil fine payable to the department if:

(a) The applicant for or recipient of long-term care services transferred the asset for the purpose of qualifying for state or federal coverage for long-term care services and the person who received the asset was aware, or should have been aware, of this purpose;

(b) Such transfer establishes a period of ineligibility for such service under state or federal laws or regulations; and

(c) The department provides coverage for such services during the period of ineligibility because the failure to provide such coverage would result in an undue hardship for the applicant or recipient.

(2) The civil fine imposed under this section shall be imposed in a judicial proceeding initiated by the department and shall equal the amount the department expends for the care of the applicant or recipient during the period of ineligibility attributable to the amount transferred to the person subject to the civil fine.

(3) Transfers subject to a civil fine under this section shall be considered null and void and a fraudulent conveyance as to the department. The department shall have the right to petition a court to set aside such transfers and require all assets transferred returned to the applicant or recipient.

NEW SECTION. Sec. 49. A new section is added to chapter 74.39A RCW to read as follows:

(1) All payments made in state-funded long-term care shall be recoverable as if they were medical assistance payments subject to recovery under 42 U.S.C. Sec. 1396p and chapter 43.20B RCW, but without regard to the recipient's age.

(2) In determining eligibility for state-funded long-term care services programs, the department shall impose the same rules with respect to the transfer of assets for less than fair market value as are imposed under 42 U.S.C. 1396p with respect to nursing home and home and community services.

NEW SECTION. Sec. 50. A new section is added to chapter 74.39A RCW to read as follows:

Notwithstanding any other provision of law:

(1) In order to facilitate and ensure compliance with the federal social security act, Title XIX, as now existing or hereafter amended, later enactment to be adopted by reference by the director by rule, and other state laws mandating recovery of assets from estates of persons receiving long-term care services, the secretary of the department, with the approval of the office of the attorney general, may pay the reasonable and proper fees of attorneys admitted to practice before courts of this state, and associated professionals such as guardians, who are engaged in probate practice for the purpose of maintaining actions under Title 11 RCW, to the end that assets are not wasted, but are rather collected and preserved, and used for the care of the client or the reimbursement of the department pursuant to this chapter or chapter 43.20B RCW.

(2) The department may hire such other agencies and professionals on a contingency basis or otherwise as are necessary and cost-effective to collect bad debts owed to the department for long-term care services.

Sec. 51. RCW 11.40.010 and 1994 c 221 s 25 are each amended to read as follows:

Every personal representative shall, after appointment and qualification, give a notice to the creditors of the deceased, stating such appointment and qualification as personal representative and requiring all persons having claims against the deceased to serve the same on the personal representative or the estate's attorney of record, and file an executed copy thereof with the clerk of the court, within four months after the date of the first publication of such notice described in this section or within four months after the date of the filing of the copy of such notice with the clerk of the court, whichever is the later, or within the time otherwise provided in RCW 11.40.013. The four-month time period after the later of the date of the first publication of the notice to creditors or the date of the filing of such notice with the clerk of the court is referred to in this chapter as the "four-month time limitation." Such notice shall be given as follows:

(1) The personal representative shall give actual notice, as provided in RCW 11.40.013, to such creditors who become known to the personal representative within such four-month time limitation;

(2) The personal representative shall cause such notice to be published once in each week for three successive weeks in the county in which the estate is being administered; ((~~and~~))

(3) The personal representative shall file a copy of such notice with the clerk of the court; and

(4) The personal representative shall mail a copy of the notice, including the decedent's social security number, to the state of Washington, department of social and health services, office of financial recovery.

Except as otherwise provided in RCW 11.40.011 or 11.40.013, any claim not filed within the four-month time limitation shall be forever barred, if not already barred by any otherwise applicable statute of limitations. This bar is effective as to claims against both the decedent's probate assets and nonprobate assets as described in RCW 11.18.200. Proof by affidavit of the giving and publication of such notice shall be filed with the court by the personal representative.

Acts of a notice agent in complying with chapter 221, Laws of 1994 may be adopted and ratified by the personal representative as if done by the personal representative in complying with this chapter, except that if at the time of the appointment and qualification of the personal representative a notice agent had commenced nonprobate notice to creditors under chapter 11.42 RCW, the personal representative shall give published notice as provided in RCW 11.42.180.

Sec. 52. RCW 11.42.020 and 1994 c 221 s 32 are each amended to read as follows:

(1) The notice agent may give nonprobate notice to the creditors of the decedent if:

(a) As of the date of the filing of a copy of the notice with the clerk of the superior court for the notice county, the notice agent has no knowledge of the appointment and qualification of a personal representative in the decedent's estate in the state of Washington or of another person becoming a notice agent; and

(b) According to the records of the clerk of the superior court for the notice county as of 8:00 a.m. on the date of the filing, no personal representative of the decedent's estate had been appointed and qualified and no cause number regarding the decedent had been issued to any other notice agent by the clerk under RCW 11.42.010.

(2) The notice must state that all persons having claims against the decedent shall: (a) Serve the same on the notice agent if the notice agent is a resident of the state of Washington upon whom service of all papers may be made, or on the nonprobate resident agent for the notice agent, if any, or on the attorneys of record of the notice agent at their respective address in the state of Washington; and (b) file an executed copy of the notice with the clerk of the superior court for the notice county, within: (i)(A) Four months after the date of the first publication of the notice described in this section; or (B) four months after the date of the filing of the copy of the notice with the clerk of the superior court for the notice county, whichever is later; or (ii) the time otherwise provided in RCW 11.42.050. The four-month time period after the later of the date of the first publication of the notice to creditors or the date of the filing of the notice with the clerk of the court is referred to in this chapter as the "four-month time limitation."

(3) The notice agent shall declare in the notice in affidavit form or under the penalty of perjury under the laws of the state of Washington as provided in RCW 9A.72.085 that: (a) The notice agent is entitled to give the nonprobate notice under subsection (1) of this section; and (b) the notice is being given by the notice agent as permitted by this section.

(4) The notice agent shall sign the notice and file it with the clerk of the superior court for the notice county. The notice must be given as follows:

(a) The notice agent shall give actual notice as to creditors of the decedent who become known to the notice agent within the four-month time limitation as required in RCW 11.42.050;

(b) The notice agent shall cause the notice to be published once in each week for three successive weeks in the notice county; ((~~and~~))

(d) The notice agent shall mail a copy of the notice, including the decedent's social security number, to the state of Washington, department of social and health services, office of financial recovery.

(5) A claim not filed within the four-month time limitation is forever barred, if not already barred by an otherwise applicable statute of limitations, except as provided in RCW 11.42.030 or 11.42.050. The bar is effective to bar claims against both the probate estate of the decedent and nonprobate assets that were subject to satisfaction of the decedent's general liabilities immediately before the decedent's death. If a notice to the creditors of a decedent is published by more than one notice agent and the notice agents are not acting jointly, the four-month time limitation means the four-month time limitation that applies to the notice agent who first publishes the notice. Proof by affidavit or perjury declaration made under RCW 9A.72.085 of the giving and publication of the notice must be filed with the clerk of the superior court for the notice county by the notice agent.

Sec. 53. RCW 11.62.010 and 1993 c 291 s 1 are each amended to read as follows:

(1) At any time after forty days from the date of a decedent's death, any person who is indebted to or who has possession of any personal property belonging to the decedent or to the decedent and his or her surviving spouse as a community, which debt or personal property is an asset which is subject to probate, shall pay such indebtedness or deliver such personal property, or so much of either as is claimed, to a person claiming to be a successor of the decedent upon receipt of proof of death and of an affidavit made by said person which meets the requirements of subsection (2) of this section.

(2) An affidavit which is to be made pursuant to this section shall state:

(a) The claiming successor's name and address, and that the claiming successor is a "successor" as defined in RCW 11.62.005;

(b) That the decedent was a resident of the state of Washington on the date of his or her death;

(c) That the value of the decedent's entire estate subject to probate, not including the surviving spouse's community property interest in any assets which are subject to probate in the decedent's estate, wherever located, less liens and encumbrances, does not exceed sixty thousand dollars;

(d) That forty days have elapsed since the death of the decedent;

(e) That no application or petition for the appointment of a personal representative is pending or has been granted in any jurisdiction;

(f) That all debts of the decedent including funeral and burial expenses have been paid or provided for;

(g) A description of the personal property and the portion thereof claimed, together with a statement that such personal property is subject to probate;

(h) That the claiming successor has given written notice, either by personal service or by mail, identifying his or her claim, and describing the property claimed, to all other successors of the decedent, and that at least ten days have elapsed since the service or mailing of such notice; and

(i) That the claiming successor is either personally entitled to full payment or delivery of the property claimed or is entitled to full payment or delivery thereof on the behalf and with the written authority of all other successors who have an interest therein.

(3) A transfer agent of any security shall change the registered ownership of the security claimed from the decedent to the person claiming to be the successor with respect to such security upon the presentation of proof of death and of an affidavit made by such person which meets the requirements of subsection (2) of this section. Any governmental agency required to issue certificates of ownership or of license registration to personal property shall issue a new certificate of ownership or of license registration to a person claiming to be a successor of the decedent upon receipt of proof of death and of an affidavit made by such person which meets the requirements of subsection (2) of this section.

(4) No release from any Washington state or local taxing authority may be required before any assets or debts are paid or delivered to a successor of a decedent as required under this section.

(5) A copy of the affidavit, including the decedent's social security number, shall be mailed to the state of Washington, department of social and health services, office of financial recovery.

Sec. 54. RCW 11.28.120 and 1994 c 221 s 23 are each amended to read as follows:

Administration of an estate if the decedent died intestate or if the personal representative or representatives named in the will declined or were unable to serve shall be granted to some one or more of the persons hereinafter mentioned, and they shall be respectively entitled in the following order:

(1) The surviving spouse, or such person as he or she may request to have appointed.

(2) The next of kin in the following order: (a) Child or children; (b) father or mother; (c) brothers or sisters; (d) grandchildren; (e) nephews or nieces.

(3) The trustee named by the decedent in an inter vivos trust instrument, testamentary trustee named in the will, guardian of the person or estate of the decedent, or attorney in fact appointed by the decedent, if any such a fiduciary controlled or potentially controlled substantially all of the decedent's probate and nonprobate assets.

(4) One or more of the beneficiaries or transferees of the decedent's probate or nonprobate assets.

(5)(a) The director of revenue, or the director's designee, for those estates having property subject to the provisions of chapter 11.08 RCW; however, the director may waive this right.

(b) The secretary of the department of social and health services for those estates owing debts for long-term care services as defined in section 1 of this act; however the secretary may waive this right.

(6) One or more of the principal creditors.

(7) If the persons so entitled shall fail for more than forty days after the death of the decedent to present a petition for letters of administration, or if it appears to the satisfaction of the court that there is no next of kin, as above specified eligible to appointment, or they waive their right, and there are no principal creditor or creditors, or such creditor or creditors waive their right, then the court may appoint any suitable person to administer such estate.

Sec. 55. RCW 18.39.250 and 1989 c 390 s 3 are each amended to read as follows:

(1) Any funeral establishment selling funeral merchandise or services by prearrangement funeral service contract and accepting moneys therefore shall establish and maintain one or more prearrangement funeral service trusts under Washington state law with two or more designated trustees, for the benefit of the beneficiary of the prearrangement funeral service contract or may join with one or more other Washington state licensed funeral establishments in a "master trust" provided that each member of the "master trust" shall comply individually with the requirements of this chapter.

(2) Up to ten percent of the cash purchase price of each prearrangement funeral service contract, excluding sales tax, may be retained by the funeral establishment unless otherwise provided in this chapter. If the prearrangement funeral service contract is canceled within thirty calendar days of its signing, then the purchaser shall receive a full refund of all moneys paid under the contract.

(3) At least ninety percent of the cash purchase price of each prearrangement funeral service contract, paid in advance, excluding sales tax, shall be placed in the trust established or utilized by the funeral establishment. Deposits to the prearrangement funeral service trust shall be made not later than the twentieth day of the month following receipt of each payment made on the last ninety percent of each prearrangement funeral service contract, excluding sales tax.

(4) All prearrangement funeral service trust moneys shall be deposited in an insured account in a qualified public depositary or shall be invested in instruments issued or insured by any agency of the federal government if these securities are held in a public depositary. The account shall be designated as the prearrangement funeral service trust of the funeral establishment for the benefit of the beneficiaries named in the prearrangement funeral service contracts. The prearrangement funeral service trust shall not be considered as, nor shall it be used as, an asset of the funeral establishment.

(5) After deduction of reasonable fees for the administration of the trust, taxes paid or withheld, or other expenses of the trust, all interest, dividends, increases, or accretions of whatever nature earned by a trust shall be kept unimpaired and shall become a part of the trust. Adequate records shall be maintained to allocate the share of principal and interest to each contract. Fees deducted for the administration of the trust shall not exceed one percent of the face amount of the prearrangement funeral service contract per annum. In no instance shall the administrative charges deducted from the prearrangement funeral service trust reduce, diminish, or in any other way lessen the value of the trust so that the services or merchandise provided for under the contract are reduced, diminished, or in any other way lessened.

(6) Except as otherwise provided in this chapter, the trustees of a prearrangement funeral service trust shall permit withdrawal of all funds deposited under a prearrangement funeral service contract, plus accruals thereon, under the following circumstances and conditions:

(a) If the funeral establishment files a verified statement with the trustees that the prearrangement funeral merchandise and services covered by the contract have been furnished and delivered in accordance therewith; or

(b) If the funeral establishment files a verified statement with the trustees that the prearrangement funeral merchandise and services covered by the contract have been canceled in accordance with its terms.

(7) Subsequent to the thirty calendar day cancellation period provided for in this chapter, any purchaser or beneficiary who has a revocable prearrangement funeral service contract has the right to demand a refund of the amount in trust.

(8) Prearrangement funeral service contracts which have or should have an account in a prearrangement funeral service trust may be terminated by the board if the funeral establishment goes out of business, becomes insolvent or bankrupt, makes an assignment for the benefit of creditors, has its prearrangement funeral service certificate of registration revoked, or for any other reason is unable to fulfill the obligations under the contract. In such event, or upon demand by the purchaser or beneficiary of the prearrangement funeral service contract, the funeral establishment shall refund to the purchaser or beneficiary all moneys deposited in the trust and allocated to the contract unless otherwise ordered by a court of competent jurisdiction. The purchaser or beneficiary may, in lieu of a refund, elect to transfer the prearrangement funeral service contract and all amounts in trust to another funeral establishment licensed under this chapter which will agree, by endorsement to the contract, to be bound by the contract and to provide the funeral merchandise or services. Election of this option shall not relieve the defaulting funeral establishment of its obligation to the purchaser or beneficiary for any amounts required to be, but not placed, in trust.

(9) Prior to the sale or transfer of ownership or control of any funeral establishment which has contracted for prearrangement funeral service contracts, any person, corporation, or other legal entity desiring to acquire such ownership or control shall apply to the director in accordance with RCW 18.39.145. Persons and business entities selling or relinquishing, and persons and business entities purchasing or acquiring ownership or control of such funeral establishments shall each verify and attest to a report showing the status of the prearrangement funeral service trust or trusts on the date of the sale. This report shall be on a form prescribed by the board and shall be considered part of the application for a funeral establishment license. In the event of failure to comply with this subsection, the funeral establishment shall be deemed to have gone out of business and the provisions of subsection (8) of this section shall apply.

(10) Prearrangement funeral service trust moneys shall not be used, directly or indirectly, for the benefit of the funeral establishment or any director, officer, agent, or employee of the funeral establishment including, but not limited to, any encumbrance, pledge, or other use of prearrangement funeral service trust moneys as collateral or other security.

(11)(a) If, at the time of the signing of the prearrangement funeral service contract, the beneficiary of the trust is a recipient of public assistance as defined in RCW 74.04.005, or reasonably anticipates being so defined, the contract may provide that the trust will be irrevocable. If after the contract is entered into, the beneficiary becomes eligible or seeks to become eligible for public assistance under Title 74 RCW, the contract may provide for an election by the beneficiary, or by the purchaser on behalf of the beneficiary, to make the trust irrevocable thereafter in order to become or remain eligible for such assistance.

(b) The department of social and health services shall notify the trustee of any prearrangement service trust that the department has a claim on the estate of a beneficiary for long-term care services. Such notice shall be renewed at least every three years. The trustees upon becoming aware of the death of a beneficiary shall give notice to the department of social and health services, office of financial recovery, who shall file any claim there may be within thirty days of the notice.

(12) Every prearrangement funeral service contract financed through a prearrangement funeral service trust shall contain language which:

(a) Informs the purchaser of the prearrangement funeral service trust and the amount to be deposited in the trust;

(b) Indicates if the contract is revocable or not in accordance with subsection (11) of this section;

(c) Specifies that a full refund of all moneys paid on the contract will be made if the contract is canceled within thirty calendar days of its signing;

(d) Specifies that, in the case of cancellation by a purchaser or beneficiary eligible to cancel under the contract or under this chapter, up to ten percent of the contract amount may be retained by the seller to cover the necessary expenses of selling and setting up the contract;

(e) Identifies the trust to be used and contains information as to how the trustees may be contacted.

Sec. 56. RCW 18.39.255 and 1989 c 390 s 4 are each amended to read as follows:

Prearranged funeral service contracts funded through insurance shall contain language which:

(1) States the amount of insurance;

(2) Informs the purchaser of the name and address of the insurance company through which the insurance will be provided, the policy number, and the name of the beneficiary; ((~~and~~))

(3) Informs the purchaser that amounts paid for insurance may not be refundable;

(4) Informs that any funds from the policy not used for services may be subject to a claim for reimbursement for long-term care services paid for by the state; and

(5) States that for purposes of the contract, the procedures in RCW 18.39.250(11)(b) shall control such recoupment.

Sec. 57. RCW 68.46.050 and 1973 1st ex.s. c 68 s 5 are each amended to read as follows:

(1) A bank, trust company, or savings and loan association designated as the depository of prearrangement funds shall permit withdrawal by a cemetery authority of all funds deposited under any specific prearrangement contract plus interest accrued thereon, under the following circumstances and conditions:

((~~(1)~~)) (a) If the cemetery authority files a verified statement with the depository that the prearrangement merchandise and services covered by a contract have been furnished and delivered in accordance therewith; or

((~~(2)~~)) (b) If the cemetery authority files a verified statement that a specific prearrangement contract has been canceled in accordance with its terms.

(2) The department of social and health services shall notify the cemetery authority maintaining a prearrangement trust fund regulated by this chapter that the department has a claim on the estate of a beneficiary for long-term care services. Such notice shall be renewed at least every three years. The cemetery authority upon becoming aware of the death of a beneficiary shall give notice to the department of social and health services, office of financial recovery, who shall file any claim there may be within thirty days of the notice.

Sec. 58. RCW 70.129.040 and 1994 c 214 s 5 are each amended to read as follows:

(1) The resident has the right to manage his or her financial affairs, and the facility may not require residents to deposit their personal funds with the facility.

(2) Upon written authorization of a resident, if the facility agrees to manage the resident's personal funds, the facility must hold, safeguard, manage, and account for the personal funds of the resident deposited with the facility as specified in this section.

((~~(3)~~))(a) The facility must deposit a resident's personal funds in excess of one hundred dollars in an interest-bearing account or accounts that is separate from any of the facility's operating accounts, and that credits all interest earned on residents' funds to that account. In pooled accounts, there must be a separate accounting for each resident's share.

(b) The facility must maintain a resident's personal funds that do not exceed one hundred dollars in a noninterest-bearing account, interest-bearing account, or petty cash fund.

((~~(4)~~)) (3) The facility must establish and maintain a system that assures a full and complete and separate accounting of each resident's personal funds entrusted to the facility on the resident's behalf.

(a) The system must preclude any commingling of resident funds with facility funds or with the funds of any person other than another resident.

(b) The individual financial record must be available on request to the resident or his or her legal representative.

((~~(5)~~)) (4) Upon the death of a resident with a personal fund deposited with the facility the facility must convey within forty-five days the resident's funds, and a final accounting of those funds, to the individual or probate jurisdiction administering the resident's estate; but in the case of a resident who received long-term care services paid for by the state, the funds and accounting shall be sent to the state of Washington, department of social and health services, office of financial recovery. The department shall establish a release procedure for use for burial expenses.

Sec. 59. RCW 43.20B.080 and 1994 c 21 s 3 are each amended to read as follows:

(1) The department shall file liens, seek adjustment, or otherwise effect recovery for medical assistance correctly paid on behalf of an individual as required by this chapter and 42 U.S.C. Sec. 1396p.

(2) Liens may be adjusted by foreclosure in accordance with chapter 61.12 RCW.

(3) In the case of an individual who was fifty-five years ((~~or [of]~~)) of age or older when the individual received medical assistance, the department shall seek adjustment or recovery from the individual's estate, and from nonprobate assets of the individual as defined by RCW 11.02.005 except property passing through a community property agreement, but only for medical assistance consisting of nursing facility services, home and community-based services, other services that the department determines to be appropriate, and related hospital and prescription drug services. Recovery from the individual's estate, including foreclosure of liens imposed under this section, shall be undertaken as soon as practicable, consistent with the requirements of 42 U.S.C. Sec. 1396p.

((~~(3)~~)) (4)(a) The department shall establish procedures consistent with standards established by the federal department of health and human services and pursuant to 42 U.S.C. Sec. 1396p to waive recovery when such recovery would work an undue hardship.

((~~(4)~~)) (b) Recovery of medical assistance from a recipient's estate shall not include property made exempt from claims by federal law or treaty, including exemption for tribal artifacts that may be held by individual Native Americans.

(5) The department is authorized to adopt rules to effect recovery under this section. The department may adopt by rule later enactments of the federal laws referenced in this section.

NEW SECTION. Sec. 60. A new section is added to chapter 74.46 RCW to read as follows:

Upon the death of a resident with a personal fund deposited with the facility, the facility must convey within forty-five days the resident's funds, and a final accounting of those funds, to the individual or probate jurisdiction administering the resident's estate; but in the case of a resident who received long-term care services, the funds and accounting shall be sent to the state of Washington, department of social and health services, office of financial recovery. The department shall establish a release procedure for use for burial expenses.

Sec. 61. 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 period)) 1993, contractors' cost reports and resident care trust fund accounts shall be audited periodically as determined necessary by the department.

(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 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. 62. RCW 74.46.115 and 1983 1st ex.s. c 67 s 6 are each amended to read as follows:

The office of the state auditor shall ((~~annually~~)) at least once in every three state fiscal years commencing July 1, 1995, review the performance of the department to ensure that departmental audits are conducted in accordance with generally accepted ((~~accounting principles and~~)) auditing standards.

Sec. 63. 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 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 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 settlement, 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 a 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. 64. 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 and shall become a lien against the real and personal property of the contractor from the time of filing by the department with the county auditor of the county where the contractor resides 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)) 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 a total of fifty thousand dollars, as determined by preliminary settlement or final settlement, or both, whether subject to a 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 facility's current contract payments or impose liens, or both, as authorized in subsection (6) of this section if security acceptable to the department is not forthcoming. The department shall release a facility's withheld payments or lift liens, or both, if the facility subsequently provides security acceptable to the department. This subsection shall apply to all overpayments determined by preliminary or final settlements issued on or after July 1, 1995, regardless of what reimbursement periods the settlements may cover.

NEW SECTION. Sec. 65. A new section is added to chapter 74.46 RCW under the subchapter heading "Part D Allowable Costs" to read as follows:

The July 1, 1995, rates shall be determined using allowable costs reported for the period from January 1st through December 31st of the preceding year, less a reduction of one and four-tenths percent to take into account lower operating costs to nursing facilities resulting from implementation of the regulatory reform initiatives, described in the February 14, 1995, report, prepared by the legislative budget committee and as occurring through the implementation of other regulatory reforms.

NEW SECTION. Sec. 66. A new section is added to chapter 43.20A RCW to read as follows:

(1) The secretary shall select appropriate persons from within the department's divisions to serve on a workgroup for the purpose of developing a case management program that targets acute care hospital patients with physical medicine and rehabilitative needs and transition such patients to skilled nursing facility settings. Other patients having care needs that may be transitioned to skilled nursing facility settings shall also be identified and targeted for the department's case management program.

(2) In implementing the transitional care case management program, the secretary shall endeavor to reduce the medicaid physical medicine and rehabilitative program budget by at least twenty-five percent during the 1995-97 biennium.

NEW SECTION. Sec. 67. If any part of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state, the conflicting part of this act is inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding does not affect the operation of the remainder of this act in its application to the agencies concerned. The rules under this act shall meet federal requirements that are a necessary condition to the receipt of federal funds by the state.

NEW SECTION. Sec. 68. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 69. 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 July 1, 1995.