(a) Except where specifically stated otherwise, the requirements of this section shall apply to both eligible inpatient providers under section 841.10 of this Part and eligible residential rehabilitation services for youth providers under section 841.12 of this Part, hereafter collectively referred to as the provider for purposes of this section.

1. (1) Each provider shall keep and maintain the statistical and financial records which formed the basis of the reports submitted to the commissioner, as required in section 841.5 of this Part, for the later of:

   1. (i) six years from the date on which the reports were due to the commissioner;
   2. (ii) six years from the date on which the reports were submitted to the commissioner;
   3. (iii) two years from the last day of any rate or fee period during which any part of a rate or fee was based on the required reports; or
   4. (iv) for such longer period as may be required under Federal, State or local law.

2. (2) All such records shall be subject to audit during the time period of their keeping and maintenance, as described in paragraph (1) of this subdivision.

   1. (i) Field audits or desk audits shall be conducted by the commissioner at a time and place and in a manner to be determined by the commissioner.
   2. (ii) The commissioner may enter into agreements with other organizations or agencies having audit responsibilities to audit the financial and statistical records of providers. At the conclusion of such audit, the commissioner may either accept the audit findings as the audit findings of the commissioner or reject the audit findings and conduct an independent audit.
   3. (iii) The audits may be performed on any financial or statistical records required to be maintained.
   4. (iv) Any finding of an above described audit shall constitute grounds for a rate, fee, or fee add-on adjustment at the discretion of the commissioner and to the extent that the audit finding has been upheld in a decision after a hearing or a hearing has not been requested on such finding. The rate, fee, or fee add-on adjustment may be implemented prospectively or retroactively, at the discretion of the commissioner.
   5. (v) All rates or fees shall be considered provisional and subject to revision under the provisions of subdivision (c) of this section until an audit has been performed and completed or the period described in paragraph (1) of this subdivision has expired.

3. (3) All administrative review of audits conducted to determine allowable Medicaid expenses and offsetting revenues shall be in accordance with this subdivision as follows:

   1. (i) At the conclusion of the audit, a proposed audit report may be issued identifying the items which are being disallowed and advising the provider of the basis for the proposed action and the legal authority therefore. When feasible, the proposed report will also specify the amount of the overpayment or underpayment.

      1. (a) The proposed report shall contain a statement of action to be taken, shall afford the provider the opportunity to object to the proposed action within 30 days and shall advise the provider that failure to object within the time provided may result in the adoption of the proposed action as the final action. The proposed report shall be accompanied by a document identifying the person to whom objections to the report should be mailed.
      2. (b) The provider's objections to the proposed audit report must be mailed to the office within 30 days of receipt of the report by certified mail, return receipt requested. Such provider shall include a statement detailing the specific items of the proposed audit report to which the provider objects and shall provide any additional material or documentation which the provider wishes to be considered in support of the objections.

   2. (ii) After the office's receipt and review of the provider's objections and additional documentation, or at any time after the expiration of 40 days after mailing of the proposed audit report without objections having been received, a final audit report may be issued by the commissioner regarding those items in the proposed audit report to which the provider objected and a statement of the reasons therefor.

      1. (a) A copy of the final audit report and notice of any proposed rate adjustment to be made based on such report shall be sent to the provider, within 120 days of issuance, by certified mail, return receipt requested. Such notice of proposed rate adjustment shall provide the provider with 30 days from receipt thereof to make a written request to the commissioner for a hearing on factual and legal issues.
      2. (b) Requests for a hearing made pursuant to this section shall contain a statement of the legal authority and jurisdiction under which the hearing is requested to be held, a reference to relevant sections of statutes and rules, and a short and plain statement of relevant factual issues.
   3. (iii) Upon receipt of a request for a hearing, the commissioner shall order that a hearing be held as soon as practicable and to the extent possible, at a time acceptable to all parties. Unless otherwise agreed by all parties, the hearing shall be scheduled no later than 60 days after receipt by the office of the request for a hearing.
   4. (iv) Conduct of hearings requested pursuant to this section shall be in accordance with the provisions of Part 831 of this Title.
4. (4) At the commissioner's discretion, adjustments to rates, fees, or fee add-ons determined in accordance with the provisions of this section may be implemented prospectively, or retroactively to the beginning of the rate year or fee period covered by the audit.

(b) Audits.

(c) Revisions to rates for inpatient rehabilitation programs, revisions to capital and admission review team add-ons for residential rehabilitation services for youth programs, revisions to service operating fees for residential rehabilitation services for youth programs based on changes in certified capacity.

1. (1) The commissioner may revise or update rates, fees (based on changes in certified capacity), or fee add-ons at his or her own discretion or in response to requests from providers. Such revisions or updates shall be based on:

   1. (i) errors made by the office in the calculation of the rate, determination of the volume fee or calculation of the fee add-ons;
   2. (ii) errors in the financial or statistical data submitted to the commissioner by the provider;
   3. (iii) significant changes in the overall operating costs and/or certified capacity of an eligible inpatient provider resulting from the implementation of substantial changes in programs or services approved for implementation under applicable operating requirements of the office pursuant to this Title, as such may be amended from time to time;
   4. (iv) significant changes in the overall operating costs of an eligible inpatient provider or the eligible residential rehabilitation for service for youth provider resulting from substantial capital projects approved in accordance with the operating requirements of the office pursuant to this Title, as such may be amended from time to time;
   5. (v) Federal- or State-mandated requirements resulting in approved cost increases;
   6. (vi) additional staffing and non-personal service expenses approved by the commissioner for an eligible inpatient rehabilitation provider; or
   7. (vii) significant changes in a service's certified operating capacity.

2. (2) Rate revision applications shall be made in writing to the commissioner and shall be sent by registered or certified mail.

   1. (i) The applications shall set forth the basis for the revision and the issues of fact, and must comply with the following requirements:

      1. (a) an application for revision based upon the grounds set forth in subparagraph (1)(i) of this subdivision must be accompanied by a detailed statement of the correct financial or statistical data certified in accordance with the requirements of section 841.5 of this Part;
      2. (b) an application for revision based upon the grounds set forth in subparagraph (1)(i) or (ii) of this subdivision must be submitted within 120 days of receipt of the notice of the rate by provider; and
      3. (c) an application for revision based upon the grounds set forth in subparagraphs (1)(iii), (vi) of this subdivision must be submitted within 60 days of the close of the rate year or fee period in question.
3. (3) Actions on appeal applications will be processed without unjustifiable delay.
4. (4) The burden of proof on appeal shall be on the provider to demonstrate that the rate, fee, or fee add-on requested in the revision application is necessary.
5. (5) There shall be a formal notification of the final determination of provider's revision request after administrative review. However, at no point in the revision process shall the provider have a right to an interim report of any determination made by any of the parties to the revision request.
6. (6) Formal notification shall be sent to the provider by certified mail, return receipt requested, and shall include a statement of the reasons for the final determination. The determination after administrative review shall be final.
7. (7) A rate, fee, or fee add-on revised pursuant to a revision request shall not be considered final unless and until such request is granted by the office and approved by the State Division of the Budget.
8. (8) If the office grants the revision to the rate, fee, or fee add-on and the State Division of the Budget does not approve the revision, the provider shall have no further right to administrative review pursuant to this section.
9. (9) A revision to the rate, fee, or fee add-on determined pursuant to paragraph (1) of this subdivision shall be effective on the date for which the original certified rate, fee, or fee add-on of payment was effective.