PERMANENT RULES
SOCIAL AND HEALTH SERVICES
(Health and Recovery Services Administration)
Effective Date of Rule: July 1, 2007.
Purpose: The department is adopting into rule that the department is ending the hospital selective contracting program on June 30, 2007. The program is being replaced with a new inpatient payment system. The hospital selective contracting program was based on negotiating a rate below the conversion factor based on facility-specific costs (subject to peer group caps in some instances). Conversion factors in the new inpatient payment system were generally based on statewide weighted average cost per discharge amounts, which were then adjusted to reflect the unique characteristic of hospitals in the state for payment purposes. The new inpatient methodology was developed as budget neutral; aggregate payments to hospitals under the proposed methodology do not exceed what projected aggregate payments would be to those same hospitals if the current methodology remained in place.
Citation of Existing Rules Affected by this Order: Amending WAC 388-550-4600 and 388-550-4700.
Statutory Authority for Adoption: RCW 74.08.090, 74.09.500.
Adopted under notice filed as WSR 07-09-080 on April 17, 2007.
A final cost-benefit analysis is available by contacting Larry Linn, P.O. Box 45510, Olympia, WA 98504-5510, phone (360) 725-1856, fax (360) 753-9152, e-mail linnld@dshs.wa.gov.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 2, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 2, Repealed 0.
Date Adopted: May 23, 2007.
Robin Arnold-Williams
Secretary
3844.1(1) The department designates selective contracting areas (SCA) in which hospitals participate in competitive bidding to provide hospital services to Medicaid clients. Selective contracting areas are based on historical patterns of hospital use by Medicaid clients.
(2) The department requires Medicaid clients in a selective contracting area obtain their elective (nonemergent) inpatient hospital services from participating or exempt hospitals in the SCA. Elective (nonemergent) inpatient hospital services provided by nonparticipating hospitals in an SCA shall not be reimbursed by the department, except as provided in WAC 388-550-4700.
(3) The department exempts from the selective contracting program those hospitals that are:
(a) In an SCA but designated by the department as remote. The department designates hospitals as remote when they meet the following criteria:
(i) Located more than ten miles from the nearest hospital in the SCA;
(ii) Having fewer than seventy-five beds; and
(iii) Having fewer than five hundred Medicaid admissions in a two-year period.
(b) Owned by health maintenance organizations (HMOs) and providing inpatient services to HMO enrollees only;
(c) Children's hospitals;
(d) State psychiatric hospitals or separate (freestanding) psychiatric facilities;
(e) Out-of-state hospitals located in nonbordering cities, and out-of-state hospitals in bordering cities not designated as selective contracting areas;
(f) Peer group E hospitals; and
(g) Peer group F hospitals (critical access hospitals).
(4) The department:
(a) Negotiates with selectively contracted hospitals a negotiated conversion factor (NCF) for inpatient hospital services provided to Medicaid clients.
(b) Calculates its maximum financial obligation for a Medicaid client under the hospital selective contract in the same manner as DRG payments using cost-based conversion factors (CBCFs).
(c) Applies NCFs to Medicaid clients only. (The department uses CBCFs in calculating payments for medical care services clients.)
[Statutory Authority: RCW 74.08.090, 74.09.500. 06-08-046, § 388-550-4600, filed 3/30/06, effective 4/30/06. Statutory Authority: RCW 74.04.050, 74.08.090. 05-12-132, § 388-550-4600, filed 6/1/05, effective 7/1/05. 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, § 388-550-4600, filed 12/18/97, effective 1/18/98.]
(1) In a selective contracting area (SCA), MAA pays any qualified hospital for inpatient hospital services provided to an eligible medical care client for treatment of an emergency medical condition.
(2) MAA pays any qualified hospital for medically necessary but nonemergent inpatient hospital services provided to an eligible medical care client deemed by the department to reside an excessive travel distance from a contracting hospital.
(a) The client is deemed to have an excessive travel burden if the travel distance from a client's residence to the nearest contracting hospital exceeds the client's county travel distance standard, as follows:
| County | Community Travel Distance Standard |
| Adams | 25 miles |
| Asotin | 15 miles |
| Benton | 15 miles |
| Chelan | 15 miles |
| Clallam | 20 miles |
| Clark | 15 miles |
| Columbia | 19 miles |
| Cowlitz | 15 miles |
| Douglas | 20 miles |
| Ferry | 27 miles |
| Franklin | 15 miles |
| Garfield | 30 miles |
| Grant | 24 miles |
| Grays Harbor | 23 miles |
| Island | 15 miles |
| Jefferson | 15 miles |
| King | 15 miles |
| Kitsap | 15 miles |
| Kittitas | 18 miles |
| Klickitat | 15 miles |
| Lewis | 15 miles |
| Lincoln | 31 miles |
| Mason | 15 miles |
| Okanogan | 29 miles |
| Pacific | 21 miles |
| Pend Oreille | 25 miles |
| Pierce | 15 miles |
| San Juan | 34 miles |
| Skagit | 15 miles |
| Skamania | 40 miles |
| Snohomish | 15 miles |
| Spokane | 15 miles |
| Stevens | 22 miles |
| Thurston | 15 miles |
| Wahkiakum | 32 miles |
| Walla Walla | 15 miles |
| Whatcom | 15 miles |
| Whitman | 20 miles |
| Yakima | 15 miles |
(3) MAA requires prior authorization for all nonemergent admissions to nonparticipating hospitals in an SCA. See WAC 388-550-1700 (2)(a).
(4) MAA pays a licensed hospital all applicable Medicare deductible and coinsurance amounts for inpatient services provided to Medicaid clients who are also beneficiaries of Medicare Part A subject to the Medicaid maximum allowable as established in WAC 388-550-1200 (8)(a).
(5) The department pays any licensed hospital DRG-exempt services as listed in WAC 388-550-4400.
[Statutory Authority: RCW 74.08.090, 42 USC 1395 x(v), 42 CFR 447.271, 447.11303, and 447.2652. 99-06-046, § 388-550-4700, 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, § 388-550-4700, filed 12/18/97, effective 1/18/98.]