WSR 04-20-058



(Medical Assistance Administration)

[ Filed October 1, 2004, 12:49 p.m. , effective November 1, 2004 ]

Purpose: (Part 2 of 3) The rule updates the department's policy to no longer use the twenty-four-hours-or-less criteria in the definition for "outpatient short stay," and clarifies standards for utilization review. Hospital admissions are based on medical criteria rather than on time in order to bring the department's policies in line with industry standards, promote administrative simplicity for providers, and provide a utilization review that is more consistent with industry standards. This order repeals WAC 388-550-1750 and 388-550-5900 to remove outdated language and place applicable language in other sections.

Citation of Existing Rules Affected by this Order: Repealing WAC 388-550-1750 and 388-550-5900; and amending WAC 388-550-1700 and 388-550-2900.

Statutory Authority for Adoption: RCW 74.08.090 and 74.09.500.

Adopted under notice filed as WSR 04-17-112 on August 17, 2004.

A final cost-benefit analysis is available by contacting Linda Ayers, P.O. Box 45506, Olympia, WA 98504, phone (360) 725-1680, fax (360) 586-1471, e-mail The cost-benefit analysis (CBA) is unchanged from the preliminary version.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 2, Repealed 2.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 2, Repealed 2.

Date Adopted: September 27, 2004.

Brian H. Lindgren, Manager

Rules and Policies Assistance Unit

AMENDATORY SECTION(Amending WSR 01-02-075, filed 12/29/00, effective 1/29/01)

WAC 388-550-1700   Authorization and utilization review of inpatient and outpatient hhospital services((--Prior approval)).   (1) ((Providers of hospital-related services to clients not enrolled with the department's managed care carriers shall obtain prior approval from the medical assistance administration (MAA) for hospital services requiring prior approval. For inpatient psychiatric admissions and inpatient treatment for alcohol and other substance abuse, see chapter 246-318 and 246-326 WAC respectively.

(2) The department shall require that for medical care clients not enrolled with the department's managed care carriers, providers receive prior approval from the department for the following hospital-related services:

(a) All nonemergent admissions to or planned inpatient hospital surgeries in nonparticipating hospitals in selective contracting areas;

(b) Inpatient detoxification, medical stabilization, and drug treatment for a pregnant Medicaid client as described under WAC 388-550-1100(3);

(c) Cataract surgery that does not meet requirements in WAC 388-544-0550;

(d) The following surgical procedures, regardless of the diagnosis or place of service:

(i) Hysterectomies for clients forty-four years and younger;

(ii) Reduction mammoplasty; and

(iii) Surgical bladder repair.

(e) All physical medicine and rehabilitation (PM&R) inpatient hospital stays, even when provided by MAA-approved PM&R contract facilities (see WAC 388-550-2300);

(f) All outpatient magnetic resonance imaging and magnetic resonance angiography procedures;

(g) All nonemergent inpatient hospital transfers (see WAC 388-550-3600);

(h) All out-of-state non-emergent hospital stays;

(i) Hospital-related services as described in WAC 388-550-1800 when not provided in an MAA-approved facility; and

(j) Services in excess of the department's established limits.

(3) The department shall inform providers which diagnosis codes from the International Classification of Diseases, 9th Revision, Clinical Modification and procedure codes from physicians' current procedural terminology require prior authorization for nonemergent hospital admissions.

(4) When a client's hospitalization exceeds the number of days allowed by WAC 388-550-4300(2):

(a) The hospital shall, within sixty days after discharge, submit to MAA a request for authorization of the extra days with adequate medical justification, to include at a minimum the following:

(i) History and physical examination;

(ii) Social history;

(iii) Progress notes and doctor's orders for the entire length of stay;

(iv) Treatment plan/critical pathway; and

(v) Discharge summary.

(b) The department shall approve or deny a length of stay extension request within fifteen working days of receiving the request.

(5) The department shall require prior approval for out-of-state hospital admissions of clients not enrolled with department's managed care carriers, except for emergent hospitalizations. The department shall inform providers which codes from the current revision of ICD-9CM are designated as emergent diagnosis codes. The nature of the client's emergent medical condition must be fully documented in the client's hospital's records.

(6) The department shall not reimburse ambulance providers for ambulance transports in cases involving hospital transfers without prior authorization by the department.

(7) The department shall require that providers receive prior approval from the department for medical transportation to out-of-state treatment programs or services authorized by the department for clients not enrolled with the department's managed care carriers)) This section applies to inpatient and outpatient hospital services provided to medical assistance clients receiving services through the fee-for-service program. For clients receiving services through other programs, see chapter 388-538 WAC (Managed care program), chapters 388-800 and 388-810 WAC (Alcohol and Drug Addiction Treatment and Support Act (ADATSA), and chapter 388-865 WAC (Mental health treatment programs coordinated through the mental health division or its designee). See chapter 388-546 WAC for transportation services.

(2) The medical assistance administration (MAA) may perform one or more types of utilization reviews described in subsection (3)(b) of this section.

(3) MAA's utilization review:

(a) Is a concurrent, prospective and/or retrospective (including post-pay and prepay) formal evaluation of a client's documented medical care to assure that the services provided are proper and necessary and of good quality. The review considers the appropriateness of the place of care, level of care, and the duration, frequency or quantity of services provided in relation to the conditions(s) being treated; and

(b) Includes one or more of the following:

(i) "Concurrent utilization review" -- an evaluation performed by MAA during a client's course of care;

(ii) "Prospective utilization review" -- an evaluation performed by MAA prior to the provision of healthcare services; and

(iii) "Retrospective utilization review" -- an evaluation performed by MAA following the provision of healthcare services that includes both a post-payment retrospective utilization review (performed by MAA after healthcare services are provided and reimbursed), and a prepayment retrospective utilization review (performed by MAA after healthcare services are provided but prior to reimbursement).

(4) Covered inpatient and outpatient hospital services must:

(a) Be medically necessary as defined in WAC 388-500-0005;

(b) Be provided at the appropriate level of care as defined in WAC 388-550-1050; and

(c) Meet all authorization and program requirements in WAC and MAA published issuances.

(5) Authorization for inpatient and outpatient hospital services is valid only if the client is eligible for covered services on the date of service. Authorization does not guarantee payment.

[Statutory Authority: RCW 74.08.090. 01-02-075, 388-550-1700, filed 12/29/00, effective 1/29/01. Statutory Authority: RCW 74.08.090, 74.09.730, 74.04.050, 70.01.010, 74.09.200, [74.09.]500, [74.09.]530 and 43.20B.020. 98-01-124, 388-550-1700, filed 12/18/97, effective 1/18/98.]

Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
AMENDATORY SECTION(Amending WSR 01-16-142, filed 7/31/01, effective 8/31/01)

WAC 388-550-2900   Payment limits--Inpatient hospital services.   (1) To receive reimbursement for covered inpatient hospital services, a hospital must:

(a) Have a core-provider agreement with the department; and

(b) Be an in-state ((or)) border ((area)) city hospital that meets the definition in RCW 70.41.020 and is certified under Title XVIII of the federal Social Security Act; or

(c) Be an out-of-state hospital that meets the conditions in WAC 388-550-6700.

(2) The department does not pay:

(a) A hospital for inpatient care and/or services when ((the)) a managed care plan is contracted to cover those services.

(((3) The department does not pay))

(b) A hospital for care or services provided to a client enrolled in the hospice program, unless the care or services are completely unrelated to the terminal illness that qualifies the client for the hospice benefit.

(((4) The department does not pay))

(c) Hospitals for ancillary services in addition to the diagnosis-related group (DRG) payment.

(((5) When the hospital is paid by the RCC method, the department and the client are not financially responsible for payment of the))

(d) For additional days of hospitalization on a non-DRG claim when:

(((a) The additional))

(i) Those days exceed the number of days established at the seventy-fifth percentile ((of the professional activities study (PAS) length of stay (LOS) limitations)) as published in the "Length of Stay by Diagnosis and Operations, Western Region"; and

(((b))) (ii) The hospital has not requested and/or received approval for an extended length of stay (LOS) from the department as specified in WAC ((388-550-1700; or for psychiatric inpatient stays, the appropriate regional support network (RSN).

(6) LOS extensions are not required for claims reimbursed by the DRG method.

(7) The department is not financially responsible for payment of)) 388-550-4300(3).

(e) For elective or nonemergent inpatient services ((that are included in the department's selective contracting program and for those that a client receives in a nonparticipating hospital in a selective contracting area (SCA) unless the provider meets the department's authorization requirement in WAC 388-550-1700(12). The client may only be held responsible for payment of such services in accordance with WAC 388-502-0160. See WAC 388-550-4600 for selective contracting program requirements.

(8) The department considers hospital stays of twenty-four hours or less outpatient short stays, and does not pay such stays under the DRG or ratio of costs-to-charges (RCC) methods unless one of the following situations apply:

(a) Death of a client;

(b) Obstetrical delivery;

(c) Initial care of a newborn; or

(d) Transfer of a client to another acute care hospital.

(9) When the department determines that the need for inpatient care is not evidenced in the medical record, even in stays longer than twenty-four hours, the department considers and reimburses the stay as an outpatient short stay.

(10) When the stay does not meet the definition of an inpatient hospital admission, the department limits reimbursement to the first twenty-four hours of allowed services, and uses the outpatient payment method.

(11) The department considers all services provided by the hospital within twenty-four hours of admission for a scheduled or elective surgery to be included in the hospital's inpatient payment. These services must not be charged to the client. Clients may only be held financially responsible for services in accordance with WAC 388-502-0160.

(12) The department does not count toward the threshold for hospital outlier status:

(a) Any charges for extra days of inpatient stay prior to a scheduled or elective surgery; and

(b) The associated services provided during those extra days.

(13) Accommodation charges: The department reimburses charges related to accommodation costs by multiplying the hospital's appropriate room rate charge by the hospital's RCC rate.

(a) Effective January 1, 2001, the department no longer requires a hospital to provide a room rate change form to indicate its usual and customary accommodation charge. Charges must not exceed the hospital's usual and customary charges to the general public as required by 42 C.F.R. 447.271.

(b) The department does not pay hospitals for private room accommodations. The department pays a semi-private room rate and requires the hospital to bill using a semi-private room revenue code when the hospital has:

(i) Only private rooms; or

(ii) Both private and semi-private rooms and provides an MAA client accommodations in a private room.

(14) The department determines its actual payment for a hospital admission by deducting from the basic hospital reimbursement the client responsibility amount (referred to as spend-down) and any third party liability amount.

(15) The department reduces reimbursement rates to hospitals for services provided to clients eligible under the state-only medically indigent (MI) and medical care services (MCS) programs according to the hospital specific equivalency factor and/or ratable, as provided in WAC 388-550-4800.

(16) The department pays for the hospitalization of a client who is eligible for Medicare and Medicaid only when the client has exhausted the Medicare Part A benefits)) provided in a nonparticipating hospital. A nonparticipating hospital is defined in WAC 388-550-1050. See also WAC 388-550-4600.

(f) For inpatient hospital services when the department determines that the medical record fails to support the medical necessity and inpatient level of care for the inpatient admission.

(3) The department limits payment for private room accommodations to the semi-private room rate. Room charges must not exceed the hospital's usual and customary charges to the general public as required by C.F.R. 447.271.

[Statutory Authority: RCW 74.08.090 and 42 U.S.C. 1395x(v), 42 C.F.R. 447.271, .11303, and .2652. 01-16-142, 388-550-2900, filed 7/31/01, effective 8/31/01. Statutory Authority: RCW 74.09.090, 42 U.S.C. 1395x(v) and 1396r-4, 42 C.F.R. 447.271, 11303 and 2652. 99-14-027, 388-550-2900, filed 6/28/99, effective 7/1/99. Statutory Authority: RCW 74.08.090, 42 USC 1395 x(v), 42 CFR 447.271, 447.11303, and 447.2652. 99-06-046, 388-550-2900, filed 2/26/99, effective 3/29/99. Statutory Authority: RCW 74.08.090, 74.09.730, 74.04.050, 70.01.010, 74.09.200, [74.09.]500, [74.09.]530 and 43.20B.020. 98-01-124, 388-550-2900, filed 12/18/97, effective 1/18/98.]

Reviser's note: RCW 34.05.395 requires the use of underlining and deletion marks to indicate amendments to existing rules. The rule published above varies from its predecessor in certain respects not indicated by the use of these markings.3426.1

     The following sections of the Washington Administrative Code are repealed:
WAC 388-550-1750 Services requiring approval.
WAC 388-550-5900 Prior authorization--Outpatient services.

Legislature Code Reviser 


Washington State Code Reviser's Office