(1) In conjunction with the group ofrepresentatives convened by the state department pursuant to section 26-5-104 (6)(e) to review the rate-setting process for child welfare services, the state department shall develop a rate-setting process consistent with medicaid requirements for providers of residential treatment services in Colorado. The department of health care policy and financing shall approve the rate-setting process for rates funded by medicaid. The rate-setting process developed pursuant to this section may include:

(a) A range that represents a base-treatment rate for serving a child who is subject to out-of-home placement due to dependency and neglect, a child placed in a residential child care facility pursuant to the "Children and Youth Mental Health Treatment Act", article 67 of title 27, or a child who has been adjudicated a delinquent, which includes a defined service package to meet the needs of the child;

(b) A request for proposal to contract for specialized service needs of a child, including but not limited to: Substance use disorder treatment services, sex offender services, and services for the intellectually and developmentally disabled; and

(c) Negotiated incentives for achieving outcomes for the child as defined by the state department, counties, and providers.

(2) In auditing residential treatment providers, the state department shall apply compliance requirements and monitoring functions consistently across all division and monitoring teams.

(3) The rate-setting process developed by the state department, counties, and providers and approved by the department of health care policy and financing pursuant to subsection (1) of this section shall include a two- or three-year implementation timeline with implementation beginning in state fiscal year 2008-09.

(4) (a) (I) The state department, in conjunction with the counties and providers, shall submit an initial report to the joint budget committee of the general assembly on or before January 1, 2017, and every January 1 thereafter. The report must include the rate-setting process and the implementation timeline developed pursuant to this section.

(II) Pursuant to section 24-1-136 (11)(a)(I), this subsection (4)(a) is repealed, effective January 2, 2020.

(b) The department of health care policy and financing and the state department, in consultation with the group of representatives convened by the state department pursuant to section 26-5-104 (6)(e) to review the rate-setting process for child welfare services, shall review the rate-setting process every two years and shall submit any changes to the joint budget committee of the general assembly.