A BILL TO BE ENTITLED
AN ACT TO improve the APPEALs process for medicaid recipients and providers appealing Department of Health and Human Services DECISIONS PERTAINING TO ELIGIBILITY AND SERVICES UNDER THE MEDICAID PROGRAM.
The General Assembly of North Carolina enacts:
SECTION 1.(a)  Effective October 1, 2008, the Title of G.S. 108A‑79 reads as rewritten:
"§ 108A‑79.  Appeals of county level decisions."
SECTION 1.(b)  Effective October 1, 2008, Article 4 of Chapter 108A of the General Statutes is amended by adding the following new section to read:
"§108A‑79.1.  Appeals by Medicaid applicants and recipients.
(a)	An action by the Department to deny, terminate, suspend, or reduce Medicaid eligibility or to deny, terminate, suspend, or reduce Medicaid services is a "contested case" subject to the provisions of Chapter 150B of the General Statutes, except as provided by this section. At the time of providing the notice required under subsection (b) of this section, the Department shall file a petition with the Office of Administrative Hearings to determine the Medicaid applicant's or recipient's rights, duties, or privileges.(b)	In addition to the notice requirements of G.S. 150B‑23, the Department shall provide within 30 days of its decision written notice to the aggrieved applicant or recipient, or the applicant's or recipient's legal guardian, which notice shall include:
(1)	An explanation of the Department's decision.
(2)	A clear and concise statement of what service is being reduced, terminated, or denied and the basis upon which the decision was made.
(3)	A statement that the Department has filed a petition for administrative review of its decision on behalf of the applicant or recipient and that the applicant or recipient has 30 days from the date of the Department's decision to decide whether or not to proceed with the hearing.
(4)	A clear explanation of how the hearing will proceed, what is required of the applicant in order to proceed or to decline to proceed, and that the applicant or recipient may be represented by an attorney at the hearing.
(5)	A statement that the recipient will continue to receive Medicaid services at the level provided on the day immediately preceding the Department's decision pending a final decision.
(6)	The telephone number of a contact person at the Department to respond in a timely fashion to applicant or recipient questions.
(7)	A brochure supplied by the North Carolina Protection and Advocacy System that explains the rights of applicants and recipients under the State Medical Assistance program, including the rights to appeal decisions of the Department.
(c)	The agency has the burden of proof to establish by a preponderance of the evidence the facts necessary to support the agency's action.
(d)	The Medicaid recipient may appeal the final agency decision to superior court as provided in Article 4 of Chapter 150B of the General Statutes."
SECTION 2.(a)  G.S. 150B‑1(e) is amended by adding the following new subdivision to read:
"(e)	Exemptions From Contested Case Provisions. – The contested case provisions of this Chapter apply to all agencies and all proceedings not expressly exempted from the Chapter. The contested case provisions of this Chapter do not apply to the following:
…
(16)	Hearings arising under the Medical Assistance program established under Part 6 of Chapter 108A of the General Statutes and pursuant to Title XIX of the Social Security Act, conducted in accordance with G.S. 108A‑79.1."
SECTION 2.(b)  Article 4 of Chapter 108A of the General Statutes is amended by adding the following new section to read:
"§ 108A‑79.2.  Medicaid provider appeals of Department level decision.
(a)	A provider of Medicaid services aggrieved by a decision of the Department to reduce, deny, recoup, or recover reimbursement or to deny, suspend, or revoke a provider agreement shall be entitled to a hearing. A hearing shall be commenced by filing a petition with the chief hearings clerk of the Department within 30 days of the mailing of the notice by the Department of the action giving rise to the contested case. The petition shall identify the petitioner, be signed by the party or representative of the party, and shall describe the agency action giving rise to the contested case. As used in this section, "file or filing" means to place the paper or item to be filed into the care and custody of the chief hearings clerk of the Department and acceptance thereof by the chief hearings clerk, except that the hearing officer may permit the papers to be filed with the hearing officer, in which event the hearing officer shall note thereon the filing date. The Department shall supply forms for use in these contested cases.
(b)	If there is a timely request for an appeal, the Department shall promptly designate a hearing officer who shall hold an evidentiary hearing. The hearing officer shall conduct the hearing according to applicable federal law and regulations and shall ensure that:
(1)	Notice of the hearing is given not less than 15 days before the hearing. The notice shall state the date, hour, and place of the hearing and shall be deemed to have been given on the date that a copy of the notice is mailed, via certified mail, to the address provided by the petitioner in the petition for hearing.
(2)	The hearing shall be held in Wake County, except that the hearing officer may, after consideration of the numbers, locations, and convenience of witnesses and in order to promote the ends of justice, hold the hearing by telephone or other electronic means or hold the hearing in a county in which the petitioner resides.
(3)	Discovery shall be no more extensive or formal than that required by federal law and regulations applicable to the hearings. Prior to and during the hearing, a provider representative shall have adequate opportunity to examine the provider's own case file. No later than five days before the date of the hearing, each party to a contested case shall provide to each other party a copy of any documentary evidence that the party intends to introduce at the hearing and shall identify each witness that the party intends to call.
(4)	The hearing officer shall have the power to administer oaths and affirmations, subpoena the attendance of witnesses, rule on prehearing motions, and regulate the conduct of the hearing.
(5)	At the hearing, the parties may present such sworn evidence, law, and regulations as are relevant to the issues in the case.
(6)	The petitioner and the respondent agency each have a right to be represented by a person of his choice, including an attorney obtained at the party's own expense.
(7)	The petitioner and the respondent agency shall each have the right to cross‑examine witnesses as well as make a closing argument summarizing his view of the case and the law.
(8)	The appeal hearing shall be recorded; however, no transcript will be prepared unless a petition for judicial review is filed pursuant to subsection (f) of this section, in which case the transcript shall be made a part of the official record. In the absence of the filing of a petition for a judicial review, the recording of the appeal hearing may be erased or otherwise destroyed 180 days after the final decision is mailed as provided in G.S. 108A‑79(i)(5).
(c)	The hearing officer shall decide the case based upon a preponderance of the evidence, giving deference to the demonstrated knowledge and expertise of the agency as provided in G.S. 150B‑34(a). The hearing officer shall prepare a proposal for the decision, citing relevant law, regulations, and evidence, which shall be served upon the petitioner or the petitioner's representative by certified mail, with a copy furnished to the respondent agency.
(d)	The petitioner and the respondent agency shall have 15 days from the date of the mailing of the proposal for decision to represent written arguments in opposition to or in support of the proposal for decision to the designated official of the Department who will make the final decision. If neither written arguments are presented, nor extension of time granted by the final agency decision‑maker for good cause, within 15 days of the date of the mailing of the proposal for decision, the proposal for decision becomes final. If written arguments are presented, such arguments shall be considered and the final decision shall be rendered. The final decision shall be rendered not more than 90 days from the date of the filing of the petition. This time limit may be extended by agreement of the parties or by final agency decision‑maker, for good cause shown, for an additional period of up to 30 days. The final decision shall be served upon the petitioner or the petitioner's representative by certified mail, with a copy furnished to the respondent agency. In the absence of a petition for judicial review filed pursuant to subsection (f) of this section, the final decision shall be binding upon the petitioner and the Department.
(e)	A petitioner who is dissatisfied with the final decision of the Department may file, within 30 days of the service of the decision, a petition for judicial review in the Superior Court of Wake County or of the county from which the case arose. The judicial review shall be conducted according to Article 4 of Chapter 150B of the General Statutes.
(f)	In the event of a conflict between federal law or regulations and State law or regulations, federal law or regulations shall control."
SECTION 3.  There is appropriated from the General Fund to the Department of Health and Human Services, Division of Medical Assistance, the sum of five million dollars ($5,000,000) for the 2008‑2009 fiscal year.  These funds shall be used to increase the number of hearing officers in the Department to hear provider appeals under G.S. 108A‑79.2, as enacted by this act, and may also be used to pay for services provided by mediation centers and legal services organizations that assist Medicaid recipients that have filed a petition with the Office of Administrative Hearings pursuant to G.S. 108A‑79.1, as enacted by this act.
SECTION 4.  Effective October 1, 2008, the Department of Health and Human Services shall discontinue its informal settlement process with respect to appeals by Medicaid recipients.  All informal appeals by Medicaid recipients pending on that date that have not been held on the merits or for which notices have not been sent to the Medicaid applicant or recipient shall be deemed a contested case under Chapter 150B of the General Statutes pursuant to G.S. 108A‑79.1 and Article 3 of Chapter 150B of the General Statutes and shall be filed with the Office of Administrative Hearings pursuant to G.S. 108A‑79.1, as enacted by this act.
SECTION 5.  This act becomes effective October 1, 2008, and applies to all petitions that are filed by a Medicaid provider on or after that date and for all Medicaid provider petitions that have been filed at the Office of Administrative Hearings previous to this date but for which a hearing on the merits has not been commenced prior to the effective date of this act.  The requirement that the agency decision must be rendered not more than 90 days from the date of the filing of the petition for hearing shall not apply to petitions that were filed at the Office of Administrative Hearings prior to the effective date of this act.  The Office of Administrative Hearings shall transfer all cases affected by Section 2 of this act to the Department of Health and Human Services within 30 days of the effective date of this act.  This act preempts the existing informal appeal process and reconsideration review process at the Department of Health and Human Services and the existing appeal process at the Office of Administrative Hearings with regard to all appeals filed by Medicaid providers under the Medical Assistance program.