Title 7 . Health and Social Services

Chapter 43 . Hearings

Section 693. Facility audits and desk reviews

7 AAC 43.693. Facility audits and desk reviews

(a) In administering the Medicaid program, the department may perform facility audits, desk reviews, and field audits of various types and scope and take the results of those facility audits, desk reviews, and field audits into account in establishing a facility's payment rate. The department will perform facility audits, desk reviews, and field audits with respect to a facility's year-end report submitted under 7 AAC 43.679(c) . The scope and frequency of facility audits, field audits, and desk reviews are determined at the department's discretion. This section does not apply to the department's conduct of investigations or audits regarding patient abuse or neglect, fraud, or other program noncompliance. This section does not limit the department's authority under 7 AAC 43.670 - 7 AAC 43.709 to review and adjust items directly included in a facility's payment rate based on a budget submitted under 7 AAC 43.679(b) .

(b) If the department performs a field audit or desk review, the process in this subsection applies. The department will commence its field audit or desk review with respect to a facility's year-end report after the facility has filed its year-end report under 7 AAC 43.679(c) and the department has determined the report to be complete under 7 AAC 43.680(e) . The department will review the facility's year-end report and provide written notice in accordance with 7 AAC 43.680(a) - (d). The department will complete its field audit or desk review of a facility's year-end report and provide to the facility a completed field audit or desk review report. The department will provide to the facility, as attachments to the department's completed report, a revised Medicare cost report, and a revised Medicare cost report on electronic diskette if the facility provided an HCFA-approved electronic filing of its Medicare cost report with its annual year-end report. The department will provide the department's completed report and all attachments to the facility promptly upon completion, in accordance with (1), (2), or (3) of this subsection, or (f) of this section. The following provisions apply to year-end field audit and desk review reports:

(1) if a facility's year-end report required by 7 AAC 43.679(c) is filed with the department within 150 days after the close of the facility's fiscal year and is determined by the department to be complete, the department will provide to the facility a completed report and the department's proposed adjustments to the year-end report for purposes of setting rates under 7 AAC 43.670 - 7 AAC 43.709 no later than 40 days before the beginning of the facility's applicable rate year;

(2) repealed 1/01/2004.

(3) if the facility's year-end report required by 7 AAC 43.679(c) is filed with the department more than 150 days after the close of the facility's fiscal year, the department may establish a temporary rate for the facility pending establishment of the facility's permanent rate;

(4) a facility may file with the department a response to the department's field audit or desk review report within 40 days after the date the department issues the report; the department may make additional related adjustments if the facility makes objections to the department's adjustments; the department will provide to the facility a description of any additional adjustments;

(5) adjustments proposed during the course of a desk review or a field audit are not limited to adjustments the department has made in prior desk reviews or audits; the department may make adjustments to reflect reporting in accordance with AS 47.07 and this chapter.

(c) The department may conduct desk reviews or field audits of a facility. The department may conduct a field audit with respect to a facility's year-end report submitted under 7 AAC 43.679(c) or expand the desk review to a field audit. During a department desk review or field audit, the department may review a sample of medical and billing records for both Medicaid and non-Medicaid patients in order to determine that the Medicaid program is being charged no more than any other payer types for the same services.

(d) The department will, in its discretion, limit its review of a facility to a desk review. The department is not required to conduct a desk review in accordance with the auditing standards applicable to field audits. As part of a desk review, the department will, in its discretion, submit requests for documents or production of other items, as well as requests for information or responses to specific questions. A facility will be allowed at least 15 days, but not more than 45 days, including extensions, to provide the department with its response to the requests, as measured from the date that the department mailed or otherwise forwarded the requests to the facility. A facility's failure to timely respond to the department's requests as provided for in this subsection may result in permanent disallowance of the items in question. This section does not limit the right of a facility to appeal adjustments under 7 AAC 43.703.

(e) The department will, in its discretion, conduct a field audit of a facility. The department's field audits will be conducted in accordance with the Government Auditing Standards established by the comptroller general of the United States (1994 Revision). In conducting a field audit, the following procedures govern:

(1) the department will notify the facility at least 20 days in advance of any field work scheduled at the facility; the notification will state the planned areas of emphasis and describe documents, items, or other information that the facility is required to produce at the entrance conference; this requirement does not limit the department's authority to modify the audit or to require additional information that the department considers necessary; the notification will include a proposed agenda for the entrance conference;

(2) the department will schedule an entrance conference with the facility at the earliest practicable time during the audit; at the entrance conference, the department will, in its discretion, discuss all proposed adjustments identified to date, will designate the auditor in charge of conducting the audit on behalf of the department, and will address necessary administrative issues relating to the audit; at the entrance conference, the facility shall have all materials requested in the notification of the field audit available for the auditor, designate the person who will act as liaison on behalf of the facility for all purposes with respect to the audit, address the availability of third parties involved in preparation of the information being audited, and address other issues relating to the conduct of the audit;

(3) the timelines established for a facility's response to the department's requests for documents and other information relating to desk reviews also apply to field audits, except for requests made by the auditor while at the facility in the conduct of a field audit; while the department is at a facility conducting a field audit, the facility shall promptly respond to the auditor's requests to produce documents or other items, and to requests for information during normal working hours;

(4) the department will work with the facility to schedule the auditor/facility liaison consultations that are necessary to discuss proposed audit adjustments, open issues, and general progress of the audit;

(5) an exit conference shall be conducted as audit work at the facility nears completion unless the facility requests the department in writing not to conduct an exit conference; the department's auditor and the facility's representatives authorized to respond to audit questions shall attend the exit conference; third-party preparers of reports or statements subject to audit and other facility consultants may also attend an exit conference; at an exit conference, the department will provide the facility with all audit adjustments that have been made final by that time, discuss unresolved issues, and indicate what type of information is required from the facility to resolve those issues; the department will, in its discretion, make additional findings and adjustments during preparation of the audit report;

(6) a facility shall, within 30 days after the date of the exit conference, provide documents or other items not available at the exit conference and its comments relating to the department's proposed audit adjustments; the auditor may, for good cause, extend the time for the facility to provide the documents or other items;

(7) the department will review and consider the information provided by the facility and issue the audit report and adjustments that are proposed to be made for purposes of setting rates under 7 AAC 43.670 - 7 AAC 43.709;

(8) a facility's failure to timely respond to the department's requests as provided in this subsection may result in permanent disallowance of the items in question; this paragraph does not limit the right of a facility to appeal adjustments under 7 AAC 43.703;

(f) The department may conduct desk reviews or field audits of a facility at times later than otherwise provided for in this section. To the greatest extent practicable, the procedures described in this section apply to out-of-time desk reviews and field audits. The department may prospectively adjust a facility's rates or other payments, taking into account the out-of-time desk review or field audit at the time of the facility's next rate-setting for the rate year that begins at least 90 days after the department provides the completed report to the facility. In establishing a rate, the department is not required to consider or include adjustments made by Medicare intermediaries to Medicare cost reports after the department has completed its audit. The department will provide the facility with all adjustments proposed to be made for purposes of setting rates under 7 AAC 43.670 - 7 AAC 43.709 and attachments specified in (b) of this section.

(g) The report presented to the facility will include

(1) criteria that form the basis of the adjustments, including the statutory, regulatory, or contractual bases of the criteria;

(2) findings that state the facility's noncompliance with applicable statutes, regulations, or contractual requirements, and that state calculation or reporting errors;

(3) a revised year-end report if the report identifies changes that should be made in the year-end report; and

(4) other findings as determined by the department.

(h) A facility shall produce items to be desk-reviewed or audited by the department at a location within the state or at another place agreed upon by the department and the facility.

(i) For purposes of this section,

(1) "auditor" means the department's officials, employees, contractors, agents, and any other person acting on the department's behalf in conducting an audit of a facility;

(2) "desk review" means the department's review that is conducted without the auditor visiting the facility being desk-reviewed for the purpose of conducting tests or the initial phase of a field audit;

(3) "facility" means the same entities listed in the definition in 7 AAC 43.709 and includes all of a facility's affiliated or otherwise related persons that possess documents or other information related to the entity that is subject to audits under this section;

(4) "field audit" means the department's audit that includes at least one facility visit by the auditor for the purpose of conducting audit tests;

(5) "rate year" means the prospective payment year of a facility, based upon that facility's fiscal year;

(6) "facility audit" means a systematic inspection of accounting and statistical records of a facility, including analyses, tests, and confirmations.

History: Eff. 8/9/86, Register 99; am 8/6/92, Register 123; am 8/11/95, Register 135; readopt 8/7/96, Register 139; am 12/27/96, Register 140; readopt 5/31/98, Register 146; am 12/30/2000, Register 156; am 1/1/2004, Register 168

Authority: AS 47.05.010

AS 47.07.070

AS 47.07.071

AS 47.07.074

Editor's note: The commissioner readopted 7 AAC 43.693 in its entirety without change to affirm the validity of the provisions following statutory amendments made in ch. 95, SLA 1997.