17-1739.1

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1739.1-1
HAWAII ADMINISTRATIVE RULES
TITLE 17
DEPARTMENT OF HUMAN SERVICES
SUBTITLE 12
MED-QUEST DIVISION
CHAPTER 1739.1
AUTHORIZATION, PAYMENT, AND CLAIMS IN THE
FEE-FOR-SERVICE MEDICAL ASSISTANCE PROGRAM
FOR NON-INSTITUTIONAL SERVICES
§17-1739.1-1 	Purpose
§17-1739.1-2 	Definitions
§17-1739.1-3 	Controlling factors for payment
§17-1739.1-4 	Authorization of services
§17-1739.1-5 	Methods of payment
§17-1739.1-6 	Medicaid payments to individual
practitioners
§17-1739.1-7 	Payments to individual practitioners
providing therapy services in
long-term care facilities
§17-1739.1-8 	Medicaid payments for other
noninstitutional items and services
§17-1739.1-9 	Payments for intra-state transportation
and related services
§17-1739.1-10 	Payments for out-of-state
transportation
and related services
§17-1739.1-11 	Payment for drugs and related supplies
§17-1739.1-12 	Repealed
§17-1739.1-13 	Drug use review (DUR) board
§17-1739.1-14 	Medical payment involving third party
liability
§17-1739.1-15 	Timely claims payment
§17-1739.1-16 	Time limit for claims submittal and
one year claim filing deadline waiver
request
Historical Note: 	This chapter is based substantially
upon chapter 17-1739, subchapter 1. 	[Eff 11/13/95,

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1739.1-2
am 01/29/96, am 11/25/96, am 12/27/97; am 09/14/98;
am 07/06/99; am 06/19/00; R 10/26/01 	]
§17-1739.1-1 	Purpose. 	This chapter shall
implement the state plan requirements for payments
made by the state Medicaid agency for the fee-for-
service component for services received under the
medical assistance program. 	[Eff 10/26/01 	]
(Auth: 	HRS §346-59) (Imp: 	HRS §346-59)
§17-1739.1-2 	REPEALED. 	[R 09/30/13]
§17-1739.1-3 	Controlling factors for payment.
(a) 	The department shall pay for the cost of medical
care when the department's medical consultants
determine medical care to be necessary to the eligible
patient's well-being and medical care is provided,
under standards generally acceptable to the medical
community, by a practitioner approved by the
department to participate in Medicaid.
(b) 	The department shall not increase the
payment made to any provider to offset uncollected
amounts for deductibles, coinsurance, copayments, or
similar charges.
(c) 	No payment shall be made where program rules
are violated, or when services furnished are
inappropriate to the patient's health care management
as determined by the department's medical consultant.
(d) 	Rates of payment to providers of medical
care who are individual practitioners shall be based
upon the Hawaii Medicaid fee schedule. 	The amount
paid shall not exceed the maximum permitted to be paid
to individual practitioners or other individuals under
federal Medicaid laws and regulations, the Medicare
fee schedule applicable in the year the service was
rendered, the state limits as provided in the
appropriation act, the provider’s billed amount, or
the rate set by the department.
(e) 	Rates of payment to out-of-state providers
of medical care who are individual practitioners shall
be the Medicaid rate paid in the practitioner's state,
subject to the conditions of section 17-1736-13. 	In
the absence of a Medicaid payment rate, payment will
be according to the Hawaii Medicaid fee schedule.

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(f) 	Payments may be prepaid to health
maintenance organizations which the department
contracts to provide medical care to eligible public
assistance recipients.
(g) 	The department may withhold payment of
claims to recoup overpayments, or may withhold payment
pending completion of an audit or investigation.
(1) 	Payment of pending or future claims may be
withheld in an amount reasonably calculated
to approximate the amounts of past
overpayments.
(2) 	Payment of pending claims may be withheld
until completion of a pending audit or
investigation, at which time the department
may initiate actions to recoup the amounts
of any overpayments discovered.
(3) 	The department shall notify the provider in
writing of its intent to withhold payments
and shall include reasons for the proposed
action, the effective date of the action,
and a statement of the provider's right to
request administrative review of the
proposed action.
(4) 	The effective date of withholding shall be
sixteen calendar days following the issuance
of the notice.
(h) 	For a Medicaid recipient with Medicare
coverage, payment on a Medicare covered service shall
be the applicable Medicare deductible and coinsurance
amounts.
(i) 	For a Medicaid recipient with Medicare
coverage, payment on a service that is not covered by
Medicare, but is covered by Medicaid, shall be up to
the Medicaid rate.
(j) 	Payment on a QMB claim shall be the
applicable Medicare deductible and coinsurance
amounts. 	[Eff 10/26/01; am 05/10/03; am 02/07/05]
(Auth: 	HRS §346-59) (Imp: 	42 C.F.R. §§447.10,
447.15, 447.57, 447.200)
§17-1739.1-4 	Authorization of services. 	(a) The
department shall provide:
(1) 	Methods of administration necessary for the
proper operation of the Medicaid program;
and

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(2) 	Procedures relating to the utilization of
and the payment for care and services
available under the program. 	Among the
procedures the department may employ shall
be a system of
authorization of selected types of costly
health care.
(b) 	Authorizations shall insure that:
(1) 	Requested services and materials are
medically necessary;
(2) 	Any adequate and less expensive alternatives
are considered; and
(3) 	Any services and materials provided conform
to currently accepted community standards of
the profession involved.
(c) 	Authorization may be required when the
department considers or has found a service to be
associated with, but not necessarily limited to:
(1) 	High or excessive costs provided over
extended periods of time without evidence of
benefit;
(2) 	Questionable or limited value, or both; or
(3) 	Subject to abuse;
(d) 	The authorization function may be contracted
to certain individuals or organizations, including the
State’s fiscal agent.
(e) 	The department, through its medical
consultants, may place appropriate limits on a
Medicaid service based on such criteria as medical
necessity or utilization control procedures. 	The
department shall pay for health care services when the
department’s medical consultants determine that the
services are necessary to the patient’s well-being and
the services are provided under standards accepted by
the medical profession. 	However, no payment shall be
made in a situation where the program rules were
violated or when services furnished did not involve
economical or effective health care management of the
patient.
(f) 	A request for medical authorization, which
does not require prior authorization, must be
submitted for approval within sixty calendar days
before or thirty calendar days after the initial date
the service is rendered. 	Authorization may be
obtained by submission of an authorization request
adequately justifying the service and signed and dated
by the requesting physician. 	Requests not received
within thirty calendar days after the initial date of

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service shall be denied. 	The following services
require medical authorization:
(1) 	Short-term inpatient psychiatric admission;
(2) 	Outpatient electroconvulsive therapy; and
(3) 	Purchase or rental of durable medical
equipment, or the purchase of medical
supplies totaling more than a $50 billed
charge per line item per month.
(g) 	The following services require medical
authorization prior to the service being rendered.
A request for authorization may be submitted up to
sixty days prior to the services being rendered.
(1) 	Obtaining special medical services from
other United States jurisdictions;
(2) 	Termination of regulatory controls,
for example, release from physicians'
management (reference is to recipients
assigned to a primary physician);
(3) 	Rental or purchase of hearing aids;
(4) 	Replacement glasses, special
glasses, or other visual aids;
(5) 	Physical therapy and occupational therapy
for outpatients other than ultrasound
therapy for musculoskeletal problems;
(6) 	Outpatient speech therapy;
(7) 	Lodging, meals, and transportation for
recipients and medical attendants to
accompany a recipient for medical purposes,
including out-of state and inter-island
transportation by scheduled carrier, air
ambulance, ground ambulance, handicab, or
taxi;
(8) 	Detoxification;
(9) 	Psychiatric outpatient visits (individual or
group) and psychological tests on an
outpatient basis;
(10) 	Certain dental services;
(11) 	Admission and Medicaid coverage of persons
in long-term care facilities and subacute
level of care;
(12) 	All surgical procedures that are performed
in the outpatient and inpatient hospital
settings by podiatrists and for all surgical
procedures costing more than $100 that are
performed in the office by podiatrists;
(13) 	Home pharmacy services;
(14) 	Sleep laboratory and sleep disorder center
services;

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(15) 	Augmentative communicative devices; and
(16) 	Other medical services as may be
identified by the department.
(h) 	Services provided without the necessary
prior authorizations are subject to denial of payment.
(i) 	A request for authorization shall be acted
upon within thirty calendar days for a non-urgent
request and two working days for an urgent request.
An exception to this provision is a request for
authorization for augmentative communicative devices
(ACD’s) as indicated in subsection (o). 	If the
request is deferred or denied, a notice to include a
reason for the deferral or denial, shall be sent to
the provider(s) and the recipient.
(j) 	An authorization request that requires
urgent medical action, shall be acted upon within two
working days. For the purpose of this section, an
“urgent” medical service or item is a service or item
for the diagnosis or treatment of a medical condition
which is serious but not an immediate threat to life.
The service or item is medically needed by the patient
within two working days of request to preserve an
essential bodily function or prevent a serious
complication.
(k) 	Services which necessitate immediate
professional medical action shall not be subject to
prior authorization if obtaining prior authorization
may delay service and place a patient in jeopardy.
The request for authorization must be submitted within
thirty calendar days after the initial date of
service. 	The request shall then be processed in
accordance with the procedures stated in this section.
Requests not received within thirty calendar days
after the initial date of service shall be denied.
(l) 	When a request for authorization is
submitted for services which require prior
authorization but have already been rendered, an
explanation for the delay in submittal must be
provided for consultant review. 	If the explanation
adequately justifies the untimely submittal, the
request shall be processed in accordance with the
procedures stated in this section. 	If the explanation
does not justify the untimely submittal, the request
shall be denied. 	Requests not received within thirty
calendar days after the initial date of service shall
be denied.
(m) 	An incomplete authorization form shall

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be returned to the sender. 	The form shall be deemed
incomplete if the following is incomplete, illegible,
or missing:
(1) 	The name and the identification number of
the recipient;
(2) 	The requesting physician’s signature, date,
and provider number;
(3) 	The supplier’s name, provider number, dates
of service or period requested as determined
by begin and end dates, and signature, if
the service or item is not being provided by
the requesting physician;
(4) 	The diagnostic code or description;
(5) 	The procedure code; and
(6) 	For non-urgent requests, all attached copies
of the form must be submitted together
intact.
When the newly completed form is received, the form
shall be processed in accordance with the procedures
stated in this section from the date the completed
form is received.
(n) 	When a request for authorization is deferred
due to lack of supportive documentation to justify a
service:
(1) 	The provider(s) shall be notified of the
deferral. 	The notice shall include a reason
for the deferral giving twenty-one calendar
days from the date of the deferral notice to
submit the requested information; and
(2) 	If the requested information is not received
within twenty-one calendar days from the
date of the deferral notice, the request
shall be denied; or
(3) 	If all necessary information is received
within twenty-one calendar days from the
date of the deferral notice, the request for
authorization shall be acted upon within
twenty-one calendar days by a DHS consultant
or an authorized representative. 	If the
request is denied, a notice to include a
reason for the denial, shall be sent to the
provider(s) and the recipient.
(o) 	A request for authorization relating to the
purchase, repair, or rental of augmentative
communicative devices shall be acted upon within two
working days of receipt for an urgent request and
within twenty-one calendar days of receipt for a non-
urgent request. 	If the request is approved, the

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vendor shall be notified. 	If the request is denied, a
notice of denial to include a reason for the denial
and appeal rights shall be sent to the recipient and
the requesting provider(s). 	When a request for
authorization is deferred due to lack of supportive
documentation to justify a service:
(1) 	The provider(s) and the recipient shall be
notified of the deferral. 	The notice shall
include:
(A) 	A reason for the deferral, identifying
the additional information needed to
process the request; and
(B) 	Where to send the additional
information;
giving twenty-one calendar days to submit
the requested information; and
(2) 	If the requested information is not received
within twenty-one calendar days from the
date the request was sent, the request shall
be denied; or
(3) 	If all necessary information is received
within twenty-one days from the date the
request was sent, the request for
authorization shall be acted upon within two
working days for an urgent request and
twenty-one days for a non-urgent request by
a DHS consultant or an authorized
representative. 	If the request is denied, a
notice to include a reason for the denial,
shall be sent to the provider(s) and the
recipient.
(p) 	An approved authorization request and
treatment plan shall be initiated within sixty
calendar days of the signed approval by the
department.
(1) 	If an approved service is not rendered
within sixty calendar days of the signed
approval, a new request for authorization
shall be submitted.
(2) 	If an extension is needed for partially
completed service or if the approved service
is not completed within sixty calendar days
of the signed approval, a new request for
authorization shall be submitted for the new
period.
(q) 	The department, through its medical
consultants, may permit exceptions and determine level
of care, medical appropriateness, and medical

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necessity. 	In disagreements between the provider and
DHS’s authorized agent(s) regarding authorization of
services and level of care determinations, the
department’s medical consultant’s decision shall be
final. 	Further appeal shall be pursued through the
appeal administrator’s office or the courts.
[Eff 10/26/01; am 05/10/03; am 03/11/04 	]
(Auth: 	HRS §346-59) (Imp: 	42 C.F.R. §§456.1, 456.2,
456.3; 42 U.S.C. §1396r(8)(d)(5))
§17-1739.1-4.1 	Prior authorization of drugs.
(a) 	Selected drugs designated by the medical
assistance program through the processes set forth in
section 17-1737-71 pursuant to 42 U.S.C.
1396r(8)(d)(5) require prior medical authorization.
(b) 	Preferred drug list:
(1) 	The department may maintain a preferred drug
list containing the names of drugs for which
prior authorization will not be required
under the medical assistance program. 	All
other drugs not on the preferred drug list,
but are in the same drug class as drug(s)
placed on the preferred drug list, shall be
placed on an enhanced prior authorization
list. 	The department may seek the
recommendations of an advisory committee to
be comprised of licensed medical and
pharmacy professionals regarding the
products that may be placed on a preferred
drug list.
(2) 	The members of the advisory committee
referred to in subsection (b)(1) shall be as
determined by the department. 	The
composition and number of members may change
from time to time.
(3) 	The advisory committee shall meet at times
and locations as may be requested by the
department.
(4) 	The advisory committee’s recommendations may
take into consideration all, or some, of the
following:
(A) 	Therapeutic value for the disease or
condition under treatment;

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(B) 	Clinical efficacy;
(C) 	Safety;
(D) 	Cost; and
(E) 	Other considerations as determined by
the committee.
(5) 	The advisory committee’s recommendation(s)
to the department shall be advisory only.
The department may accept or reject all, or
a portion, of the recommendation(s) of the
advisory committee.
(6) 	Pharmaceutical products which have been
placed on a preferred drug list pursuant to
the provisions of this subsection may also
be temporarily deleted from the list by the
department pending further review and
recommendation of the advisory committee
described in section 17-1737-71(b) or the
decision of the department. 	The
circumstances under which the department may
temporarily delete a drug from the preferred
drug list are for clinical and safety
reasons and administrative cost.
(7) 	Providers will be notified of changes made
to the preferred drug list.
(c) 	A request for outpatient drugs, including
prescriptions for nursing facilities, that require
prior authorization:
(1) 	Shall be acted upon within twenty-four
hours of receipt when the request is
received within the business week; or
(2) 	In an emergency situation, pharmacies
can dispense a seventy-two hour supply of an
outpatient drug which otherwise
requires prior authorization under the
following conditions:
(A) 	The consequence of delaying the
dispensing of the drug is a high
probability of serious adverse effects
on the person’s health. 	Serious
adverse effects are hospitalization,
medically necessary emergency room
care, and loss of bodily function or
life;
(B) 	There is no similar medication
available without prior authorization

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or the patient has a documented
intolerance for the similar agent; or
(C) 	The patient’s physician documents that
the patient is unable to use a generic
form of a drug because of an allergy or
history of a serious adverse reaction
to the generic drug.
(d) 	The department may require certain
medications to be prior authorized or may place usage
restrictions on certain drugs.
(e) 	Services provided without the required prior
authorizations are subject to denial of payment.
(f) 	When a request for authorization is
submitted for services which require prior
authorization but have already been rendered, an
explanation for the delay in submittal must be
provided for consultant review. 	If the explanation
adequately justifies the untimely submittal, the
request shall be processed in accordance with the
procedures stated in this section. 	If the explanation
does not justify the untimely submittal, the request
shall be denied.
(g) 	An incomplete prior authorization form shall
be returned to the sender. 	The form shall be deemed
incomplete if the following is incomplete, illegible
or missing. 	The following are examples and do not
represent an exhaustive list:
(1) 	The name and the identification number of
the recipient;
(2) 	The requesting physician’s signature, date,
and provider number;
(3) 	The supplier’s name, provider number, dates
of service or period requested as determined
by begin and end dates, and signature, if
the service or item is not being provided by
the requesting physician;
(4) 	The diagnostic code or description;
(5) 	The procedure code; and
(6) 	For non-urgent requests, all attached copies
of the form must be submitted together
intact.
When the newly completed form is received, the form
shall be processed in accordance with the procedures
stated in this section from the date the completed
form is received.
(h) 	When a request for authorization is deferred
due to lack of supportive documentation to justify a
service:

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(1) 	The provider(s) shall be notified of the
deferral. 	The notice shall include a reason
for the deferral giving thirty calendar days
from the date of the deferral notice to
submit the requested information; and
(2) 	If the requested information is not received
within thirty calendar days from the date of
the deferral notice, the request shall be
denied; or
(3) 	If all necessary information is received
within thirty calendar days from the date of
the deferral notice, the request for
authorization shall be acted upon within
twenty four hours by a DHS consultant or an
authorized representative. 	If the request
is denied, a notice to include a reason for
the denial, shall be sent to the provider(s)
and the recipient.
(j) 	The department, through its medical
consultants, may permit exceptions and determine level
of care, medical appropriateness, and medical
necessity. 	In disagreements between the provider and
DHS’s authorized agent(s) regarding authorization of
services and level of care determinations, the
department’s medical consultant’s decision shall be
final. 	Further appeal shall be pursued through the
administrative appeals office or the courts.
[Eff 03/11/04 	] 	(Imp: 	42 C.F.R. §§456.1,
456.2, 456.3; 42 U.S.C. 1396r-8(d)(4) and (5))
§17-1739.1-5 	Methods of payment. 	(a) 	State
payments for medical services shall not be provided to
anyone except the:
(1) 	Provider; or
(2) 	Recipient for settlement of a legal suit or
fair hearing.
(b) 	Payment to an individual shall be
prohibited, except in specified circumstances where
payment is reassigned to another person, facility, or
organization by the provider. 	The circumstances
include payment made:
(1) 	In accordance with a reassignment from the
provider to a government agency or
reassignment by a court order;
(2) 	To a business agent, such as a billing
service or an accounting firm, that
furnishes statements and receives payments

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in the name of the provider. 	The agent's
compensation for the service shall be
related to the cost of processing the
billing, and not on a percentage or other
basis of the amount that is billed or
collected, and the compensation
shall not be dependent upon the collection
of the payment; and
(3) 	To the following:
(A) 	The employer of the practitioner, if
the practitioner is required as a
condition of employment to turn over
the fees to the employer;
(B) 	The facility in which the service is
provided, if the practitioner has a
contract under which the facility
submits the claim; or
(C) 	A foundation, plan, or similar
organization operating an organized
health care delivery system, if the
practitioner has a contract under which
the organization submits the claim.
(c) 	Payment for any service furnished to a
recipient by a provider shall not be made to or
through a factor, either directly or by power of
attorney.
(d) 	Participation in the State's Medicaid
program shall be limited to providers who accept, as
payment in full, the amounts paid by Medicaid with the
exception of amounts specifically identified as the
recipient's spend-down or cost-share.
[Eff 10/26/01 	] 	(Auth: HRS §346-59) (Imp: 	42
C.F.R. §§447.10, 447.15)
§17-1739.1-6 	REPEALED. 	[Eff 10/26/01;
R 05/10/03 	]
§17-1739.1-6.1 	Hawaii Medicaid fee schedule.
(a) 	Payment to providers of medical care who are
individual practitioners, including doctors of
medicine, dentists, podiatrists, psychologist,
osteopaths, optometrists, and other individuals
providing services, shall be based upon the Hawaii
Medicaid fee schedule.
(b) 	Payment for noninstitutional items and
services, with the exception of prescribed drugs and

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EPSDT services, shall be based on the Hawaii Medicaid
fee schedule. 	These items and services include, but
are not limited to:
(1) 	Laboratory services;
(2) 	X-ray services;
(3) 	Physician services;
(4) 	Podiatric services;
(5) 	Optometric services;
(6) 	Other practitioner services including nurse
midwife, pediatric nurse practitioner,
advanced practice registered nurse in
behavioral health, and licensed social
worker in behavioral health;
(7) 	Dental Services (including dentures);
(8) 	Physical therapy;
(9) 	Occupational therapy;
(10) Services for persons with speech, language,
and hearing disorders (exception: 	There
shall be a flat rate for hearing
evaluations.);
(11) Durable medical equipment, except eye glass
frames and hearing aides;
(12) Medical supplies;
(13) Sleep services;
(14) Other services specified by the department.
(c) 	Providers who are visiting consultants to
the neighbor islands may be reimbursed travel charges
on the condition that an addendum to their provider
agreement is submitted with the following information
for approval by the department:
(1) 	The neighbor island to be visited;
(2) 	Frequency of visits; and
(3) 	Location where individuals are to be seen.
(d) 	Reimbursements may be made to providers who
are visiting consultants as follows:
(1) 	$8 per patient visit; and
(2) 	An additional $7 per patient visit if
hospital charges for supplies and equipment
are assessed to the visiting consultant.
Justification shall be required on the
individual claim form when requesting this
additional fee. 	[Eff 05/10/03 	]
(Auth: 	HRS §346-59) (Imp: 42 C.F.R.
§§405.502, 405.503, 447.10)
§17-1739.1-7 	Payments to individual
practitioners providing therapy services in long-term

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care facilities. 	(a) 	Payment for physical and
occupational therapy, and speech, language, and
hearing disorder services provided to a Medicaid
recipient in a long-term care facility shall be based
on a fee schedule established by the department for
services provided at fifteen minute time increments.
(b) 	Payment shall be made for only those covered
therapy services specified in sections 17-1737-79,
which are determined to be medically necessary,
prescribed by a physician, and provided by a licensed
or certified therapist approved by the Medicaid
program.
(c) 	Payment shall be made only upon submission
of a Hawaii claim form (UB-82 or DHS-1500), by a
provider eligible to bill for the services under the
Medicare and Medicaid programs. 	Facilities with
Medicare numbers shall use the form UB-82. 	Individual
therapists shall use the form DHS-1500.
(d) 	In the case of speech evaluation and
training, and hearing evaluation and hearing aids, an
authorization form (DHS 1144), shall be attached to
the claim form.
(e) 	In the case of persons eligible for both
Medicare and Medicaid who reside in an intermediate
care facility, payment shall be made only if Medicare
payment has been sought and denied. [Eff 10/26/01;
am 05/10/03 	] 	(Auth: 	HRS §346-59) (Imp: 	42
C.F.R. §§447.252, 447.253)
§17-1739.1-8 	Medicaid payments for other
noninstitutional items and services not included in
the Medicaid fee schedule. The following services
shall be limited to billed charges not to exceed
Medicare's upper limit of payment or the rate
established by the department:
(1) 	Hearing aids;
(2) 	Home health agency services;
(3) 	Outpatient hospital services;
(4) 	Emergency room services;
(5) 	Frames for eyeglasses;
(6) 	Hearing devices shall be the actual claim
charge or $300, whichever is lower.
Exceptions may be made for special models or
modifications.
(7) 	Clinic services (other than physician-based
clinics); 	The types of clinics include

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government sponsored non-profit, and
hospital-based clinics.
(8) 	Teaching physicians shall be paid to the
teaching fund, not to the physician;
(9) 	Prescribed drugs shall be made as described
in section 17-1739.1-11.
(10) The Hawaii Medicaid program shall not pay
more than the billed amount for any
noninstitutional item or service or more
than the amount permitted by federal law or
regulation; and
(11) Payments to a facility for non-emergency
care rendered in an emergency room and to an
emergency room physician for the screening
and assessment of a patient who receives
non-emergency care. 	[Eff 10/26/01;
am 05/10/03 	] 	(Auth: 	HRS §346-59)
(Imp: 	42 C.F.R. §§447.201, 447.304)
§17-1739.1-9 	Payments for intra-state
transportation and related services. 	(a) 	Payments
for the following intra-state transportation and
related services are based upon the Hawaii Medicaid
fee schedule:
(1) 	Payments for emergency air ambulance.
services;
(2) 	Payments for emergency ground ambulance
services;
(3) 	Payments for non-emergency air and ground
ambulance services. 	Air and ground
ambulances must be authorized by the
department; and
(4) 	Payments for non-emergency transportation
(e.g. handicabs, but not taxis).
(b) 	Except for a recipient who is a stretcher
patient, payment for air transportation shall not
exceed the inter-island air fare charged the other
persons on the recipient's flight, or a contracted
amount previously agreed upon between the airlines and
the department for emergency chartered flights,
whichever is lower. 	For transportation of a stretcher
patient by the scheduled inter-island carrier, payment
shall not exceed the air fare charged for four seats
on the recipient's flight.
(c) 	A round trip air fare shall be paid for an
attendant whose services are recommended by the

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1739.1-17
attending physician or are required by the airline.
Prior approval of the department's medical consultant
is necessary, except in emergency situations, when the
attending physician's authorization is sufficient,
subject to the department's medical consultant's
review.
(d) 	Payments for medical taxi services shall be
by purchase order issued by the department and only on
trips to or from a physician's office, clinic,
hospital, or airport (for covered medical
transportation) and the patient's home. 	Reimbursement
for those services shall be further limited as
follows:
(1) 	No detours or side trips shall be permitted;
(2) 	The amount of payment shall be made on the
basis of metered rates charged the public;
and
(3) 	Payments shall not include compensation for
the driver's waiting time at the clinic,
hospital, physician's office, or at the
location of other providers of medical
services.
(e) 	Lodging and meals for Medicaid patients or
attendants authorized by the attending physician, in
an emergency situation, or the department's medical
consultant shall be paid through purchase orders to
the providers issued by the department.
[Eff 10/26/01; am 05/10/03 	] 	(Auth: 	HRS §346-
59) (Imp: 	42 C.F.R. §§447.201, 447.304)
§17-1739.1-10 	Payments for out-of-state
transportation and related services. 	(a) 	Payments
shall be made for out-of-state transportation, meals
and lodging when these services are authorized in
accordance with section 17-1739.1-9.
(b) 	Out-of-state air transportation shall be
paid by a purchase order made out to the airlines or
travel agency.
(c) 	Ground transportation expenses, subject to
subsection 17-1739.1-9(f), shall be allowed when these
expenses are incurred by the recipient. 	Verification
of ground transportation expenses shall be documented
completely on the proper departmental form when
reimbursement is requested.
(d) 	Payment for meals and lodging shall be the
lesser of the per diem rate of $100 a day or the

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1739.1-18
actual charge for lodging plus a daily per diem of $30
for meals.
(e) 	The $30 per diem shall be prorated equally
for three meals and shall begin with the first meal
upon arrival at the specified destination and ending
with the last meal prior to flight departure home.
[Eff 10/26/01 	] 	(Auth: 	HRS §346-59; 42 C.F.R.
§431.10) (Imp: 	42 C.F.R. §§447.201, 447.304)
§17-1739.1-11 	Payment for drugs and related
supplies. 	(a) 	The state medical assistance program
shall determine reimbursement for the ingredient cost
of prescription drugs using the following criteria:
(1) 	Single source drugs shall not exceed the
lower of:
(A) 	The provider’s invoice price;
(B) 	The provider's usual and customary
charge to the general public; or
(C) 	The estimated acquisition cost (EAC).
(2) 	Multiple source drugs shall not exceed the
lower of:
(A) 	The provider’s invoice price;
(B) 	The provider's usual and customary
charge to the general public;
(C) 	The EAC;
(D) 	The federal upper limit (FUL) price; or
(E) 	The state maximum allowable cost
(SMAC).
(3) 	The FUL price shall not apply if the
practitioner:
(A) 	Certifies in his or her own handwriting
or by an electronic method compliant
with national standard approved by the
Centers for Medicare and Medicaid
Services that a specific brand
medication is medically necessary for a
particular recipient. 	A check-off box
is not acceptable but a notation of
“brand medically necessary” or “do not
substitute” is allowable; and
(B) 	Obtains prior authorization for medical
necessity from the state medical
assistance program. 	In such cases, the
payment shall be according to the
methodology in this section.

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1739.1-19
(4) 	The State medical assistance program
requires that the lower cost equivalent drug
product be dispensed if available in the
marketplace and substitution is not
prohibited by part VI of chapter 328, Hawaii
Revised Statues, relating to drug product
selection. 	The recipient may refuse lower
cost drug products but must pay the entire
cost of the higher price equivalent.
(5) 	If a published WAC is unavailable for the
medication and the provider does not submit
documentation of the invoice price, then the
medication and dispensing fee shall not be
reimbursed.
(b) 	The dispensing fee for prescription
medications dispensed by a licensed pharmacy shall be:
(1) 	$5.00 (five and no/100 dollars) per
prescription.
(2) 	The dispensing fee for any maintenance or
chronic medication shall be extended only
once per thirty (30) days without medical
authorization from the medical assistance
program. 	Other appropriate limits regarding
the number of dispensing fees paid per
interval of time shall be determined as
necessary by the medical assistance program.
(c) 	The Department may cover selected over-the-
counter medications.
(1) 	Reimbursement for over-the-counter
medications shall be according to the
methodology in subsection (a).
(2) 	Reimbursement for over-the-counter drugs
shall be limited to the over-the-counter
drugs prescribed by a licensed practitioner
and specifically designated by the medical
assistance program. Over-the-counter drugs
not specifically designated shall require
prior authorization for medical necessity by
the medical assistance program.
(3) 	Under no circumstances shall the program pay
more than the general public for the same
prescription or item.
(d) 	The following conditions shall apply to
payment for drugs dispensed by physicians and dentists
from the physicians’ and dentists’ offices:
(1) 	Physicians and dentists dispensing
medications from the physicians’ and

UNOFFICIAL
1739.1-20
dentists’ offices shall be reimbursed at the
EAC plus $0.50 (fifty cents); and
(2) 	If there is no pharmacy within five miles of
the provider’s office, special consideration
for payment at the pharmacy rate may be made
upon written request to the department’s
med-QUEST division administrator for
approval.
(e) 	Payment for prescribed drugs dispensed to
outpatients and patients of long-term care facilities
shall be made only upon the submission of an itemized
claim by the dispensing provider (Form 204), hardcopy
or electronic media claim or via point-of-sale.
(f) 	Emergency calls by the pharmacist to the
long-term care facility:
(1) 	Shall be paid up to a maximum of four calls
for each one hundred beds in the facility at
the time services are rendered, at $25
(twenty-five and no/100 dollars) per
emergency call. 	Any fraction of one hundred
shall be prorated accordingly; and
(2) 	Facilities with less than twenty-five beds
at the time services are rendered may charge
up to one full emergency call per month.
(A) 	An emergency call shall be one that
cannot be delayed, i.e. non-routine
call to the patient of a facility by
the pharmacist in a life-threatening
situation.
(B) 	All other services shall be handled
during the pharmacist’s routine visits
whenever possible.
(g) 	Payments for medical supplies shall be the
lower of:
(1) 	The rate set by the department;
(2) 	Medicare’s upper limit of payment; or
(3) 	The EAC for a medical supply.
[Eff 10/26/01; am 05/10/03; am 05/05/05; am
04/12/13 	] 	(Auth: 	HRS §346-59) (Imp:
42 C.F.R. §§447.331, 447.332,447.333)
§17-1739.1-12 	REPEALED. 	[R 	04/12/13]
§17-1739.1-13 	Drug use review (DUR) board. 	(a)
An advisory drug use review board shall be appointed

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1739.1-21
by the director of the department, and shall consist
of: (1) 	The department's pharmacy consultant or
medical consultant or both, shall serve as
the drug use review coordinator(s);
(2) 	Four persons licensed and actively engaged
in the practice of medicine in the state;
(3) 	Four persons licensed and actively
practicing pharmacy in the state; and
(4) 	One person actively practicing as a medical
service representative in the state.
(b) 	The term of each drug use review board
member shall be three years and overlapped in such a
way that expiration of terms shall not cause a total
membership change.
(c) 	A quorum shall consist of five board
members; at least one of the five must be a physician
or pharmacist.
(d) 	The duties of the advisory drug use review
board shall be to:
(1) 	Meet when called by the chairperson;
(2) 	Develop, review, and adapt criteria and
standards for prospective and retrospective
drug use review;
(3) 	Make policy recommendations to the Hawaii
medical assistance program in respect to
confidentiality of patient related data, and
all aspects of the drug use review program;
(4) 	Decide on and monitor educational programs
and interventions deemed appropriate based on
potential therapeutic problems identified
through the program; and
(5) 	Determine the content and mix of educational
programs and interventions for practitioners,
designed to enhance the clinical
appropriateness and cost effective use of
prescription drugs with primary emphasis on
therapeutic outcomes and quality of care.
(e) 	The actions of the drug use review board
shall be:
(1) 	Subject to the approval of the department;
(2) 	Remain confidential within the department;
and
(3) 	Be communicated to the specific providers
affected. 	[Eff 10/26/01 	] 	(Auth: 	HRS
§346-14; P.L. 101-508) 	(Imp: 42 C.F.R.
§§456.1, 456.3)

UNOFFICIAL
1739.1-22
§17-1739.1-14 Medical payment involving third
party liability. 	(a) 	The liability of a third party
for the cost of the medical services shall be treated
as a resource applicable to the cost of needed medical
services when:
(1) 	It has been verified that a legal obligation
actually exists; and
(2) 	The amount of the obligation may be
determined within thirty days from the time
of the recipient's need for medical care.
(b) 	No Medicaid payment may be made under a
refund plan for that portion of cost for which a third
party has been determined to be liable and
reimbursement is forthcoming. 	An exception is
Medicaid’s agreement with Medicare on durable medical
equipment processing.
(c) 	If a liability by an identified third party
exists, the recipient shall be required to satisfy all
conditions set forth by that third party to receive
third party coverage, to the extent coverage is
available, before Medicaid payment is allowed.
(d) 	When the existence or extent of third party
liability is in question, medical assistance payments
may be made:
(1) 	In part, if the recipient has excess income
and other assets; or
(2) 	For the entire cost of the medical services,
if the recipient assigns to the department
in writing, the third party payment;
provided that where third party policy
prohibits assignment of payment, the
recipient shall, in writing, agree to refund
the department upon being paid by the third
party. 	[Eff 10/26/01; am 	02/07/05] 	(Auth:
HRS §346-59) (Imp: 	42 C.F.R. §§433.135
through 433.154, 447.20)
§17-1739.1-15 	Timely claims payment. 	(a) 	The
department shall pay ninety per cent of all clean
claims from practitioners, who are in individual or
group practice or who practice in shared health
facilities, within thirty days, and ninety-nine per
cent of the clean claims within ninety days of the date
of receipt.
(b) 	The department shall pay all other claims
within twelve months of the date of receipt, except
where:

UNOFFICIAL
1739.1-23
(1) 	Retroactive adjustments are paid to providers
who are reimbursed under a retrospective
payment system;
(2) 	Claims are from providers under
investigation for fraud or abuse; or
(3) 	Payments are made in accordance with a court
order, hearing decision, corrective action,
or to extend benefits of these actions to
others in the same situation as those
directly affected.
(c) 	Prepayment and post-payment claims review
shall be conducted for all claims to verify:
(1) 	Eligibility and proper authorization of
service;
(2) 	The number of visits and services for
consistency with age, sex, and illness;
(3) 	That payment does not exceed reimbursement
rates or limits; and
(4) 	Third party liability, if any.
(d) 	Post-payment claims review shall meet the
requirements dealing with fraud and utilization
control.
(e) 	The department shall provide any reports and
documentation in compliance with this chapter and any
conditions that the federal Centers for Medicare and
Medicaid Services may require. 	[Eff 10/26/01;
am 05/05/05] 	(Auth: 	HRS §346-59) (Imp: 	42 C.F.R.
§447.45)
§17-1739.1-16 	Time limit for claims submittal
and one year claim filing deadline waiver request.
(a) 	The provider shall submit all claims for payment
within twelve months from providing care or services.
No Medicaid payment shall be made for any claim
submitted after this period except as allowed by
subsections (c) and (d). 	For retroactive cases
involving retroactive assistance, the twelve-month
period for claim submittal shall start from the date
of service or the date retroactive eligibility was
determined, whichever is later. 	This subsection shall
not apply to payment of deductibles and coinsurance
for cases that are eligible for both Medicare and
Medicaid in which the circumstances leading to a

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1739.1-24
submittal of claim after twelve months are acceptable
to Medicare’s fiscal agent or carrier.
(b) 	In cases where the provider disputes the
department’s allowance or claim adjudication, a
request for reconsideration of the payment amount or
claim adjudication must be made within sixty days of
the Medicaid payment or claim adjudication date. 	The
Medicaid payment or claim adjudication date is the
date on the remittance advice or the date on the
explanation of benefit (EOB).
(c) 	A claim received after the twelve-month
period shall only be accepted for consideration of
payment if all of the following conditions are met:
(1) 	The department finds that the delay was
caused by the provider’s efforts to obtain
coverage from Medicare or any other source
or third party liability;
(2) 	The provider filed a claim with Medicare or
another source of third party liability on a
timely basis, as determined by Medicare or the
source of third party liability involved; and
(3) 	The claim is received by the department or
its Medicaid fiscal agent within six months
of a final disposition of coverage by
Medicare or the source of third party
liability involved.
(d) 	In addition to the conditions stated in
subsection (c), a claim for medical assistance payment
that is received more than twelve months after the date
of service by the department or its Medicaid fiscal
agent, may, with the approval of the department, be
accepted and processed in accordance with:
(1) 	A court order;
(2) 	An administrative hearing decision; or
(3) 	As a corrective action to resolve a dispute.
The request shall be made in writing to the department
and include a clear statement and documentation of the
reason for the delayed filing of the claim.
(e) 	A request for payment of a claim that has
been filed after the twelve-month deadline for claim
submittal shall be made in writing to the department.
The request shall include a clear statement and

UNOFFICIAL
1739.1-25
documentation of the reason(s) for the delayed filing
of the claim.
(f) 	Providers may appeal the denial of a claim.
[Eff 05/05/05] 	(Auth: 	HRS §346-59) (Imp: 	42 C.F.R.
§447.45)