Washington’s New Medicaid Audit Regulations: No More Mr. Nice Guy

The Washington Health and Recovery Services Administration (HRSA) has completely overhauled the Medicaid audit and appeals process. HRSA issued the new rules governing audits which went into effect June 1, 2007. (See http://apps.leg.wa.gov/WAC/default.aspx?cite=388-502A.) In general, the new rules significantly restrict providers’ rights. For example, the new rules:

• Reduce advance notification for on-site audits from 20 working days to 10 working days (with the exception of a 30-calendar-days notice for hospitals).
• Allow HRSA to bypass the dispute conference and issue a final audit report when certain conditions are met. For instance, HRSA reserves the right to bypass the dispute conference if a provider “fails to participate or comply with the department’s audit process or unduly delays the department’s audit process.”
• Reference existing documentation requirements and “clarify” that a provider’s bill for services, appointment books, accounting records, or other similar documents alone may not constitute appropriate documentation of services.
• Provide that billing adjustments to paid claims do not affect the original audit universe, even if the provider properly rebills claims for an adjustment.
• Require the interest on overpayments to be extrapolated, despite the fact that the statutory basis for imposing interest does not contemplate extrapolation of interest on overpayments and the statistical validity of extrapolating interest is questionable.
• Assert HRSA’s authority to initiate unlimited reaudits of the same audit period.
• Eliminate revised draft reports. HRSA previously issued such reports to reflect any areas of agreement with providers prior to the dispute conference.
• Authorize HRSA to issue subpoenas for records pursuant to RCW 43.20A.605, including depositions or testimony taken under oath.
• Remove protective language requiring HRSA to destroy records at the end of the audit and to not remove original records from the provider’s office. HRSA claims it will continue to follow these practices but is unwilling to be bound by regulations.
• Confirm that HRSA does not reimburse administrative fees associated with an audit, even if the provider prevails.
• Expand the scope of audits to include the clinical determinations of whether the services were “medically necessary” and “provided at the appropriate level of care.”
• Reduce the time period for the provider to dispute draft audit findings from 45 days to 30.
• Require the provider to personally attend the dispute conference in Olympia, regardless of the inconvenience, and regardless of whether the provider has engaged counsel to handle the appeal.
• Require the provider to schedule the dispute conference within 60 days of the date the provider receives written acceptance of the dispute, regardless of the complexity of the appeal or the time required to prepare.
• Eliminate the ability to request an extension of the deadline for requesting a dispute conference. Historically extensions were freely granted.

The new regulations governing Medicaid audits contain a host of traps for the unwary. Providers should exercise caution in responding to audits and initiating the appeal process under these new rules. Should you have any questions about the new rules or the audit process, please feel free to contact Roger Jansson, Bob Homchick or your usual Davis Wright Tremaine attorney.