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PDFWAC 388-96-205

Purposes of department audits—Examination—Incomplete or incorrect reports—Contractor's duties—Access to facility—Fines—Adverse rate actions.

(1) The purposes of department audits and examinations under this chapter and chapter 74.46 RCW are to ascertain that:
(a) Allowable costs for each year for each medicaid nursing facility are accurately reported;
(b) Cost reports accurately reflect the true financial condition, revenues, expenditures, equity, beneficial ownership, related party status, and records of the contractor;
(c) The contractor's revenues, expenditures, building, building square footage, building improvements, leasehold improvements, fixed equipment, and age are recorded in compliance with department requirements, instructions, and generally accepted accounting principles;
(d) The contractor is in compliance with the direct care staffing requirements found in this chapter and chapter 74.42 RCW;
(e) The responsibility of the contractor has been met in the maintenance and disbursement of patient trust funds; and
(f) The contractor has reported and maintained accounts receivable in compliance with this chapter and chapter 74.46 RCW.
(2) The department must examine the submitted cost report, or a portion thereof, of each contractor for each nursing facility for each report period to determine whether the information is correct, complete, and reported in conformance with department instructions and generally accepted accounting principles, the requirements of this chapter, and chapter 74.46 RCW. The department must determine the scope of the examination.
(3) When the department finds that the cost report is incorrect or incomplete, the department may make adjustments to the reported information for purposes of establishing component rate allocations or in determining amounts to be recovered in direct care under WAC 388-96-218 or in any component rate resulting from undocumented or misreported costs. A schedule of the adjustments must be provided to the contractor, including dollar amount and explanations for the adjustments. Adjustments are subject to review under WAC 388-96-901 and 388-96-904.
(4) Audits of resident trust funds and receivables must be reported separately and in accordance with the provisions of this chapter and chapter 74.46 RCW.
(5) The contractor must:
(a) Provide access to the nursing facility, all financial and statistical records, and all working papers that are in support of the cost report, receivables, and resident trust funds. To ensure accuracy, the department may require the contractor to submit for departmental review any underlying financial statements or other records, including income tax returns, relating to the cost report directly or indirectly;
(b) Make available to the department staff an individual or individuals to respond to questions and requests for information from department staff. The designated individual or individuals must have sufficient knowledge of the issues, operations, or functions to provide accurate and reliable information; and
(c) Prepare a reconciliation of the cost report with:
(i) Applicable federal income and federal and state payroll tax returns; and
(ii) The records for the period covered by the cost report.
(6) If an examination discloses material discrepancies, undocumented costs, or mishandling of resident trust funds, the department may open or reopen one or both of the two preceding cost reports or resident trust fund periods, whether examined or unexamined, for indication of similar discrepancies, undocumented costs, or mishandling of resident trust funds.
(7) Any assets, liabilities, revenues, or expenses reported as allowable that are not supported by adequate documentation in the contractor's records must be disallowed. Documentation must show both that costs reported were incurred during the period covered by the report and were related to resident care, and that assets reported were used in the provision of resident care.
(8) When access is required at the facility or at another location in the state, the department must notify the contractor of its intent to examine all financial and statistical records, and all working papers that are in support of the cost report, receivables, and resident trust funds.
(9) The department is authorized to assess civil fines and take adverse rate action if a contractor, or any of its employees, do not allow access to the contractor's nursing facility records.
[Statutory Authority: RCW 74.46.800, 74.46.561(1). WSR 17-22-037, § 388-96-205, filed 10/24/17, effective 11/24/17. Statutory Authority: Chapter 74.46 RCW, 2010 1st sp.s. c 34, and 2010 1st sp.s. c 37 § 958. WSR 11-05-068, § 388-96-205, filed 2/14/11, effective 2/26/11.]
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