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SB 5497

Concerning medicaid expenditures.

2023-2024 Regular Session Introduced by Christine Rolfes and 1 co-sponsor

HCA becomes single Medicaid agency, standardizing program integrity with data analytics, agency oversight, and mandatory overpayment recovery across all Medicaid partners.

Effective date 7/23/2023.
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Bill Summary · SB 5497

Summary — SB 5497 (2023): Concerning Medicaid expenditures

Status: Chapter 439, 2023 Laws; Governor signed 5/11/2023; Effective date 7/23/2023.
Primary subject: Medicaid program integrity and oversight (amends RCW 74.04.050; adds new sections to chapter 74.09 RCW).

Purpose and legislative intent

The bill centralizes and strengthens oversight of Washington’s Medicaid program integrity activities to ensure Medicaid funds are spent lawfully and efficiently. The Legislature states the goal is “sound fiscal stewardship” — paying the right amount to the right provider for the right reason — and directs stronger, statewide controls and use of best practices to identify and recover improper payments.

Key provisions

  • Designates the Health Care Authority (HCA) as the single state Medicaid agency with explicit responsibility to provide administrative oversight and effective internal control over any state agency that expends Medicaid (Title XIX/XXI and other federal Medicaid funds). (Amends RCW 74.04.050.)
  • Requires HCA to provide administrative oversight to ensure:
    • Funds are spent consistent with federal/state law;
    • Services are delivered consistent with federal requirements;
    • Corrective action plans are put in place where necessary; and
    • Sound fiscal stewardship across all agencies receiving Medicaid funding.
  • Requires HCA to develop:
    • A strategic plan and performance measures for Medicaid program integrity (goals, objectives, metrics, monitoring/reporting systems); and
    • A single statewide Medicaid fraud and abuse prevention plan consistent with federal best practices (CMS / national initiatives).
  • Direct oversight responsibilities over other state agencies that expend Medicaid funds, including regular review of delegated work, joint review of provider sanctions/termination reports and compliance data, review of sister-agency audits, and assistance with risk assessments, policies, and procedures.
  • Establishes required program integrity practices for HCA (examples):
    • Use of data analytics and risk assessments to generate and triage leads;
    • Preliminary lead reviews and credibility determinations before referral to the Medicaid Fraud Control Unit;
    • Analysis of leads from managed care organizations (MCOs);
    • Collaboration with federal/recognized experts (e.g., unified program integrity contractors); and
    • Maintenance of current fraud/abuse detection systems.
  • Contract standards for managed care organizations (effective Jan 1, 2024): HCA contracts must explicitly set out program integrity duties and adequate penalties; HCA is to follow CMS-recommended practices such as monthly reporting, quarterly meetings, financial penalties (including liquidated damages), direct audits of providers, recovery of overpayments, and accounting of recoveries into managed-care encounter data for accurate rate setting.

Who is affected

  • Health Care Authority (primary responsibility and implementer of new duties)
  • Other state agencies receiving Medicaid funds (e.g., DSHS, DCYF) — subject to HCA oversight and audit review
  • Managed care organizations and their provider networks — required contract, reporting, audit, and recovery practices
  • Medicaid providers — subject to increased audits, overpayment recovery, and possible sanctions
  • Medicaid Fraud Control Unit and law enforcement partners — receive vetted referrals
  • Potential indirect impacts on budgets and future rate-setting from recoveries and improved encounter accounting

Timing and procedural notes

  • Bill enacted and effective 7/23/2023.
  • Contract requirement for MCOs begins January 1, 2024.
  • The bill reflects legislative response to prior State Auditor recommendations (2021 audit) to strengthen statewide program integrity.

Other notes

  • Earlier drafts included codifying a Medicaid expenditure forecast work group; later amendment removed that codification.
  • Statutory changes: amendment to RCW 74.04.050 and new sections added to chapter 74.09 RCW establishing HCA’s expanded oversight and program integrity obligations.

Overall, SB 5497 centralizes Medicaid program-integrity authority in HCA, mandates best-practice detection and recovery processes, tightens oversight of sister state agencies using Medicaid funds, and increases accountability requirements for managed care contracts.

Compiled from official sources — confirm details with the bill’s official record.

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