A BILL TO BE ENTITLED
AN ACT TO improve the APPEALs process for medicaid applicants and recipients appealing Department of Health and Human Services DEterminations PERTAINING TO SERVICES UNDER THE MEDICAID PROGRAM.
Whereas, the State and federal Medicaid costs for Community Support Services were about $500 million higher than expected in fiscal year 2006‑2007, and have remained higher than anticipated despite efforts by the Department of Health and Human Services to control the program's growth and expenses; and
Whereas, the service authorization process used by the Department resulted in a number of Medicaid applicants and recipients receiving inappropriate services; and
Whereas, efforts to control costs and to provide appropriate services have resulted in the denial, termination, suspension, or reduction of Medicaid services to large numbers of applicants and recipients; and
Whereas, federal law requires that applicants and recipients be given a fair hearing before services are denied, terminated, suspended, or reduced and that hearings ordinarily be held within 90 days of the request for appeal made by the applicant or recipient; and
Whereas, the Department's current informal hearing process has no time limits and formal contested cases before the Office of Administrative Hearings can take considerably longer than 90 days; and
Whereas, there is a backlog of approximately 6,956 cases awaiting informal hearing within the Department of Health and Human Services, and the Department is on track to receive over 10,000 cases this year; and
Whereas, the General Assembly finds that the appeals process must be streamlined to address the substantial backlog in appeals pending, and the process should be simplified to address issues of fairness; Now, therefore,
The General Assembly of North Carolina enacts:
SECTION 1.(a)  Effective October 1, 2008, the catch line 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 of Department determinations.
(a)	General Rule. – Notwithstanding any provision of State law or rules to the contrary, this section shall govern the process used by a Medicaid applicant or recipient to appeal a determination made by the Department to deny, terminate, suspend, or reduce Medicaid covered services. For purposes of this section, the phrase "adverse determination" means a determination by the Department to deny, terminate, suspend, or reduce Medicaid covered services. For purposes of this section, all references to an applicant or recipient include the applicant or recipient's parent, guardian, or legal representative, however, notice need only be given to a parent, guardian, or legal representative who has requested in writing to receive the notice. (b)	Notice. – Except as otherwise provided by federal law or regulation, at least 30 days before the effective date of an adverse determination, the Department shall notify the applicant or recipient, and the provider, if applicable, in writing of the determination and of the applicant's or recipient's right to appeal the determination. The notice shall be mailed on the date indicated on the notice as the date of the determination. The notice shall include:
(1)	An identification of the applicant or recipient whose services are being affected by the adverse determination, including full name and Medicaid identification number.
(2)	An explanation of what service is being denied, terminated, suspended, or reduced, and the reason for the determination.
(3)	The specific regulation, statute, or medical policy that supports or requires the adverse determination.
(4)	The effective date of the adverse determination.
(5)	An explanation of the applicant's or recipient's right to appeal the Department's adverse determination in an evidentiary hearing before an administrative law judge.
(6)	An explanation of how the applicant or recipient can request a hearing, and a statement that the applicant or recipient may represent himself, or use legal counsel, a relative, or other spokesperson.
(7)	A statement that the applicant or recipient will continue to receive Medicaid services at the level provided on the day immediately preceding the Department's adverse determination or the amount requested by the applicant or recipient, whichever is less, if the applicant or recipient requests a hearing before the effective date of the adverse determination. The services shall continue until the hearing is completed and a final decision is rendered. 
(8)	The name and telephone number of a contact person at the Department to respond in a timely fashion to the applicant's or recipient's questions.
(9)	The telephone number by which the applicant or recipient may contact a Legal Aid/Legal Services office.
(10)	The appeal request form described in subsection (e) of this section that the applicant or recipient may use to request a hearing.
(c)	Appeals. – Except as provided by this section, a request for a hearing to appeal an adverse determination of the Department under this section is a contested case subject to the provisions of Article 3 of Chapter 150B of the General Statutes, and a fair hearing as required by 42 U.S.C. § 1396(a)(3). The applicant or recipient must request a hearing within 30 days of the mailing of the notice required by subsection (c) of this section by sending an appeal request form to the Office of Administrative Hearings and the Department. The Department shall immediately forward a copy of the notice to the Office of Administrative Hearings electronically. The information contained in the notice is confidential unless the recipient appeals. The Office of Administrative Hearings may dispose of the records after one year. The Department may not influence, limit, or interfere with the applicant's or recipient's decision to request a hearing. 
(d)	Appeal Request Form. – Along with the notice required by subsection (c) of this section, the Department shall also provide the applicant or recipient with an appeal request form which shall be no more than one side of one page. The form shall include the following:
(1)	A statement that in order to request an appeal, the applicant or recipient must send the form by mail or fax to the address or fax number listed on the form within 30 days of mailing of the notice.
(2)	The applicant's or recipient's name, address, telephone number, and Medicaid identification number.
(3)	A preprinted statement that indicates that the applicant or recipient would like to appeal the specific adverse determination of which the applicant or recipient was notified in the notice.
(4)	A statement informing the applicant or recipient that he or she may choose to be represented by a lawyer, a relative, a friend, or other spokesperson.
(5)	A space for the applicant's or recipient's signature and date.
(e)	Final Decision. – After a hearing before an administrative law judge, the Judge shall return the decision and record to the Department in accordance with G.S. 150B‑31.2 of the General Statutes. The Department shall make a final decision in the case within 20 days of receipt of the decision and record from the administrative law judge and promptly notify the applicant or recipient of the final decision and of the right to judicial review of the decision pursuant to Article 4 of Chapter 150B of the General Statutes."
SECTION 2.  Article 3 of Chapter 150B of the General Statutes is amended by adding a new section to read:
"§ 150B‑31.2. Contested Medicaid cases.
(a)	Application. – This section applies only to contested Medicaid cases commenced by Medicaid applicants or recipients under G.S. 108A‑79.1. Notwithstanding any other provision of this Chapter, the provisions of G.S. 108A‑79.1 shall govern time lines and procedural steps in a contested Medicaid case commenced in accordance with G.S. 108A‑79.1. To the extent any provision in this section conflicts with another provision in this Article, this section controls.
(b)	Simple Procedures. – Notwithstanding any other provision of this Article, the chief administrative law judge may limit and simplify the procedures that apply to a contested Medicaid case involving a Medicaid applicant or recipient in order to complete the case as quickly as possible. To the extent possible, the Hearings Division shall schedule and hear contested Medicaid cases within 45 days of submission of a request for appeal. The simplified procedure may include requiring that all prehearing motions be considered and ruled on by the administrative law judge in the course of the hearing of the case on the merits. An administrative law judge assigned to a contested Medicaid case shall make reasonable efforts in a case involving a Medicaid applicant or recipient who is not represented by an attorney to assure a fair hearing and to maintain a complete record of the hearing. The administrative law judge may allow brief extensions of the time limits contained in this section for good cause and to ensure that the record is complete. Good cause includes delays resulting from untimely receipt of documentation needed to render a decision and other unavoidable and unforeseen circumstances.
(c)	Mediation. – Upon receipt of an appeal request form as provided by G.S. 108A‑79.1(e) or other clear request for a hearing by a Medicaid applicant or recipient, The chief administrative law judge shall immediately notify the Mediation Network of North Carolina which shall within five days contact the petitioner to offer mediation in an attempt to resolve the dispute. If mediation is accepted, the mediation must be completed within 25 days of submission of the request for appeal. If mediation is successful, the mediator shall inform the Hearings Division, which shall confirm with the agency that a settlement has been achieved, and the case shall be dismissed. If the petitioner rejects the offer of mediation or the mediation is unsuccessful, the mediator shall notify the Hearings Division that the case will proceed to hearing. Nothing in this subsection shall restrict the right to a contested case hearing.
(d)	Burden of Proof. – The party proposing that the agency take action or grant a benefit has the burden to show the propriety of the agency action or entitlement to the benefit sought. The party seeking to impose a penalty or reduce, terminate, or suspend a benefit previously granted has the burden of showing the propriety of such action. The party with the burden of proof on any issue has the burden of going forward, and the administrative law judge shall not make any ruling on the preponderance of evidence until the close of all evidence. (e)	Decision. – The administrative law judge assigned to a contested Medicaid case shall hear and decide the case without unnecessary delay. The Hearings Division shall send a copy of the audiotape or diskette of the hearing to the agency within five days of completion of the hearing. The judge shall prepare a written decision and send it to the parties. The decision must be sent together with the record to the agency within 20 days of the conclusion of the hearing."
SECTION 3.  There is appropriated from the General Fund to the Office of Administrative Hearings the sum of three million dollars ($3,000,000) for the 2008‑2009 fiscal year.  These funds shall be used as follows: one million five hundred thousand dollars ($1,500,000) for mediation services; four hundred thousand dollars ($400,000) for legal services organizations to encourage those organizations to assist Medicaid recipients in connection with appeals of adverse determinations; and one million one hundred thousand dollars ($1,100,000) to increase the number of administrative law judges and other staff necessary to implement Section 2 of this act.
SECTION 4.  There is appropriated from the General Fund to the Department of Health and Human Services, Division of Medical Assistance, the sum of seven hundred eighty‑seven thousand dollars ($787,000) for the 2008‑2009 fiscal year.  These funds shall be used by the Department for staffing and other services which will be required to administer the new process under this act.
SECTION 5.  Effective October 1, 2008, the Department of Health and Human Services shall discontinue its current informal appeals process for Medicaid applicants and recipients appealing a determination made by the Department to deny, terminate, suspend, or reduce Medicaid covered services.  All such informal appeals by Medicaid applicants or recipients under the current system which are pending on that date and for which a hearing has not been held shall be discontinued and the applicant or recipient offered an opportunity to appeal to the Office of Administrative Hearings in accordance with the provisions of Section 1(b) of this act. The Department shall comply with the provisions of Section 1(b) of this act regarding informal reconsideration review for all adverse determinations made on or after October 1, 2008.
SECTION 6.  Sections 3 and 4 of this act become effective July 1, 2008. The remainder of this act becomes effective October 1, 2008, and applies to determinations to deny, terminate, suspend, or reduce Medicaid services made on or after that date.