Preproposal statement of inquiry was filed as WSR 98-03-077.

Title of Rule: Public process for determination of rates.

Purpose: To establish a public process for determining nursing facility Medicaid payment rates when there is a change in rate methodology, in compliance with 42 U.S.C. 1396a (a)(13)(A), as amended by the 1997 Balanced Budget Act, Sec. 4711.

Statutory Authority for Adoption: RCW 74.08.090 and 74.46.800.

Statute Being Implemented: 42 U.S.C. 1396a (a)(13)(A) (SSA, Sec. 1902 (a)(13)(A)).

Summary: Describes the process the department has adopted to make changes to its nursing facility payment rate methodology, allowing interested parties to make comments.

Reasons Supporting Proposal: It is required by federal law that states have such a public process. Failure to have or follow such a process may result in the loss of federal funds.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Robert Gray, P.O. Box 45600, Olympia, WA, (360) 493-2588.

Name of Proponent: Department of Social and Health Services, governmental.

Rule is necessary because of federal law, 42 U.S.C. 1396a (a)(13)(A).

Explanation of Rule, its Purpose, and Anticipated Effects: The rule establishes a public process for making changes to the Medicaid nursing facility payment rate methodology. Its purpose is to comply with a new federal law requiring states to have such a process (1997 Balanced Budget Act, Sec. 4711). The effect will be to obligate the department to follow the process described, and failure to follow it could result in the invalidation of changes or loss of some federal funding for the Medicaid program.

Proposal Changes the Following Existing Rules: It adds a rule setting forth the process which must be followed.

No small business economic impact statement has been prepared under chapter 19.85 RCW. Changes are unlikely to have any financial impact on nursing facilities or other businesses.

RCW 34.05.328 does not apply to this rule adoption. This rule does not meet the criteria of a "significant legislative rule" under RCW 34.05.328(5).

Hearing Location: Lacey Government Center, 1009 College Street S.E., Room 104-B, Lacey, WA 98503, on August 25, 1998, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Paige Wall by August 14, 1998, TDD (360) 902-8324, or (360) 902-7540.

Submit Written Comments to: Paige Wall, Rules Coordinator, P.O. Box 45850, Olympia, WA 98504-5850, fax (360) 902-8292, by August 25, 1998.

Date of Intended Adoption: No sooner than August 26, 1998.

July 16, 1998

Edith M. Rice, Chief

Office of Legal Affairs

NEW SECTION

WAC 388-96-718  Public process for determination of rates. (1) The purpose of this section is to describe the manner in which the department will comply with the federal Balanced Budget Act of 1997, Section 4711(a)(1), codified at 42 U.S.C. 1396a(a)(13)(A).

(2) For all material changes to the methodology for determining nursing facility Medicaid payment rates occurring after October 1, 1997, and requiring a Title XIX state plan amendment to be submitted to and approved by the Health Care Financing Administration under applicable federal laws, the department shall follow the following public process:

(a) The proposed estimated initial payment rates, the proposed new methodologies for determining the payment rates, and the underlying justifications shall be published. Publication shall be:

(i) In the Washington State Register; or

(ii) In the Seattle Times and Spokane Spokesman Review newspapers.

(b) The department shall maintain and update as needed a mailing list of all individuals and organizations wishing to receive notice of changes to the nursing facility Medicaid payment rate methodology, and all materials submitted for publication shall be sent postage prepaid by regular mail to such individuals and organizations. Individuals and organizations wishing to receive notice shall notify the department in writing.

(c) Nursing facility providers, their associations, nursing facility Medicaid beneficiaries, representatives of providers or beneficiaries, and other concerned members of the public shall be given a reasonable opportunity to review and comment on the proposed estimated rates, methodologies and justifications. The period allowed for review and comment shall not be less than thirty calendar days after the date of the Washington State Register containing the published material or the date the published material has appeared in both the Seattle Times and the Spokane Spokesman Review.

(d) If, after receiving and considering all comments, the department decides to move ahead with any change to its nursing facility Medicaid payment rate methodology, it shall adopt needed further changes in response to comments, if any, and shall publish the final estimated initial rates, final rate determination methodologies and justifications. Publication shall be:

(i) In the Washington State Register; or

(ii) In the Seattle Times and Spokane Spokesman Review newspapers.

(e) Unless an earlier effective date is required by state or federal law, implementation of final changes in methodologies and commencement of the new rates shall not occur until final publication has occurred in the Register or in both designated newspapers. The department shall not be authorized to delay implementation of, or to alter, ignore or violate requirements of, state or federal laws in response to public process comments.

(f) Publication of proposed estimated initial payment rates and final estimated initial payment rates shall be deemed complete once the department has published:

(i) The statewide average proposed estimated initial payment rate weighted by adjusted Medicaid resident days for all Medicaid facilities from the most recent cost report year, including the change from the existing statewide average payment rate weighted by adjusted Medicaid resident days for all Medicaid facilities from the most recent cost report year; and

(ii) The statewide average final estimated initial payment rate weighted by adjusted Medicaid resident days for all Medicaid facilities from the most recent cost report year, including the change from the existing statewide average payment rate weighted by adjusted Medicaid resident days for all Medicaid facilities from the most recent cost report year.

(3) Nothing in this section shall be construed to prevent the department from commencing or completing the public process authorized by this section even though the proposed changes to the methodology for determining nursing facility Medicaid payment rates are awaiting federal approval, or are the subject of pending legislative, gubernatorial or rule-making action and are yet to be finalized in statute and/or regulation.

(4)(a) Neither a contractor nor any other interested person or organization shall challenge, in any administrative appeals or exception procedure established in rule by the department under the provisions of chapter 74.46 RCW, the adequacy or validity of the public process followed by the department in proposing or implementing a change to the payment rate methodology, regardless of whether the challenge is brought to obtain a ruling on the merits or simply to make a record for subsequent judicial or other review. Such challenges shall be pursued only in courts of proper jurisdiction as may be provided by law.

(b) Any challenge to the public process followed by the department that is brought in the course of an administrative appeals or exception procedure shall be dismissed by the department or presiding officer, with prejudice to further administrative review and record-making, but without prejudice to judicial or other review as may be provided by law.

(5) The public process required and authorized by this section shall not apply to any change in the payment rate methodology that does not require a Title XIX state plan amendment under applicable federal laws, including but not limited to:

(a) Prospective or retrospective changes to nursing facility payment rates or to methodologies for establishing such rates ordered by a court or administrative tribunal, after exhaustion of all appeals by either party as may be authorized by law, or the expiration of time to appeal; or

(b) Changes to nursing facility payment rates for one or more facilities resulting from the application of authorized payment rate methodologies, principles or adjustments, including but not limited to: partial or phased-in termination or implementation of rate methodologies; scheduled cost rebasing; quarterly or other updates to reflect changes in case mix or other private or public source data used to establish rates; adjustments for inflation or economic trends and conditions; rate funding for capital improvements or new requirements imposed by the department; changes to resident-specific or exceptional care rates; and changes to correct errors or omissions by the contractor or the department.

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