WSR 03-09-118

PROPOSED RULES

DEPARTMENT OF

SOCIAL AND HEALTH SERVICES
(Medical Assistance Administration)

[ Filed April 22, 2003, 4:39 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 02-03-092.

Title of Rule: Amending WAC 388-550-3700 DRG high-cost and low-cost outliers.

Purpose: The proposed amendment: (1) Clarifies that for inpatient hospital claims paid under the diagnosis-related (DRG) payment methodology, only a Medicaid claim that qualifies as a DRG high-cost outlier is paid 75% of the allowed charges above the outlier threshold, multiplied by the specific hospital's RCC rate, plus the applicable DRG payment. (2) Adds language to clarify that DRG high-cost and low-cost outlier claims for state-administered programs are paid according to WAC 388-550-4800.

Statutory Authority for Adoption: RCW 74.08.090, 74.09.500.

Statute Being Implemented: RCW 74.08.090, 74.09.500.

Summary: Clarifies how the department pays hospitals for Medicaid claims that qualify as DRG high-cost outliers. Also clarifies that the department pays hospitals for DRG high-cost and low-cost outlier claims for state-administered programs according to WAC 388-550-4800.

Name of Agency Personnel Responsible for Drafting: Kathy Sayre, P.O. Box 45533, Olympia, WA 98504, (360) 725-1342; Implementation and Enforcement: John Hanson, P.O. Box 45510, Olympia, WA 98504, (360) 725-1856.

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

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: The proposed rule adds language to clarify that only a Medicaid claim that qualifies as a DRG high-cost outlier is paid 75% of the allowed charges above the outlier threshold, multiplied by the hospital's RCC rate, plus the applicable DRG payment. The proposed rule also adds language to clarify that DRG high-cost outlier and low-cost outlier claims for state-administered programs are paid according to WAC 388-550-4800.

The purpose of the rules is to adopt into permanent rule clarifying language to reflect current department policy and business practices.

The anticipated effects are to identify the payment method for Medicaid claims that qualify as DRG high-cost outlier claims and clarify that DRG high-cost outlier and low-cost claims for state-administered programs are paid according to WAC 388-550-4800.

Proposal Changes the Following Existing Rules: The department has added language to clarify and reflect current department policy.

No small business economic impact statement has been prepared under chapter 19.85 RCW. Small businesses are not affected by this rule change.

RCW 34.05.328 does not apply to this rule adoption. MAA has determined the proposed rule clarifies existing department policy and is not "significant" as defined in the statute. The proposed rule does not: Adopt substantive provisions of law pursuant to delegated legislative authority, subjecting a violator of such rule to a penalty or sanction; establish, alter, or revoke any qualification or standard for the issuance, suspension, or revocation of a license or permit; or adopt a new, or make significant amendments to, a policy or regulatory program.

Hearing Location: Blake Office Park (behind Goodyear Courtesy Tire), 4500 10th Avenue S.E., Rose Room, Lacey, WA 98503, on May 27, 2003, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Andy Fernando by May 20, 2003, phone (360) 664-6094, TTY (360) 664-6178, e-mail fernaax@dshs.wa.gov.

Submit Written Comments to: Identify WAC Numbers, DSHS Rules Coordinator, Rules and Policies Assistance Unit, P.O. Box 45850, Olympia, WA 98504-5850, fax (360) 664-6185, e-mail fernaax@dshs.wa.gov, by May 27, 2003.

Date of Intended Adoption: Not sooner than May 28, 2003.

April 18, 2003

Brian H. Lindgren, Manager

Rules and Policies Assistance Unit

3219.3
AMENDATORY SECTION(Amending WSR 01-16-142, filed 7/31/01, effective 8/31/01)

WAC 388-550-3700   DRG high-cost and low-cost outliers.   This section applies to inpatient hospital claims paid under the diagnosis-related group (DRG) payment methodology. (1) A Medicaid or state-administered claim qualifies as a ((diagnosis-related group ())DRG(())) high-cost outlier when:

(a) The client's admission date ((for)) on the claim is before January 1, 2001, the stay did not meet the definition of "administrative day," and the allowed charges exceed:

(i) A threshold of twenty-eight thousand dollars; and

(ii) A threshold of three times the applicable DRG payment amount.

(b) The client's admission date ((for)) on the ((case)) claim is January 1, 2001, or after, the stay did not meet the definition of "administrative day," and the allowed charges exceed:

(i) A threshold of thirty-three thousand dollars; and

(ii) A threshold of three times the applicable DRG payment amount.

(2) If the claim qualifies as a DRG high-cost outlier, the high-cost outlier threshold, for payment purposes, is the amount in subsection (1)(a)(i) or (ii), whichever is greater, for an admission date before January 1, 2001; or subsection (1)(b)(i) or (ii), whichever is greater, for an admission date January 1, 2001 or after.

(3) The department determines payment for Medicaid claims ((qualifying)) that qualify as DRG high-cost outliers as follows:

(a) ((Payment for)) All qualifying claims, except for claims in psychiatric DRGs 424-432 and in-state children's hospitals, are paid seventy-five percent of the allowed charges above the outlier threshold determined in subsection (2) of this section, multiplied by the hospital's RCC rate, plus the applicable DRG payment.

(b) In-state children's hospitals are paid eighty-five percent of the allowed charges above the outlier threshold determined in subsection (2) of this section, multiplied by the hospital's RCC rate, plus the applicable DRG payment.

(c) Psychiatric DRG high-cost outliers for DRGs 424-432 are paid one hundred percent of the allowed charges above the outlier threshold determined in subsection (2) of this section, multiplied by the hospital's RCC rate, plus the applicable DRG payment.


Examples for DRG high-cost outlier claim qualification and payment calculation (admission dates are January 1, 2001, or after).
((DRG)) Allowed Charges Applicable DRG Payment Three times App. DRG Payment ((DRG)) Allowed Charges > $33,000? ((DRG)) Allowed Charges

>

Three times App. DRG Payment?

DRG High-Cost Outlier Payment Hospital's Individual RCC Rate
$17,000 $5,000 $15,000 No Yes N/A 64%
*33,500 5,000 15,000 Yes Yes **$5,240 64%
10,740 35,377 106,131 No No N/A 64%


Medicaid

Payment calculation example for ((DRG)) allowed charges of:

Nonpsych DRGs/Nonin-state children's hospital (RCC is 64%)
*$33,500 ((DRG)) Allowed charges
- $33,000

$ 500

The greater amount of 3 x app. DRG pymt ($15,000) or $33,000
x 48% 75% of allowed charges x hospital RCC rate (nonpsych DRGs/nonin-state children's) (75% x 64% = 48%)
$ 240 Outlier portion
+ $ 5,000 Applicable DRG payment
**$ 5,240 Outlier payment

(4) DRG high-cost outliers for state-administered programs are paid according to WAC 388-550-4800.

(5) A Medicaid or state-administered claim qualifies as a DRG low-cost outlier if:

(a) The client's admission date ((for)) on the claim is before January 1, 2001, and the ((and)) allowed charges are:

(i) Less than ten percent of the applicable DRG payment; or

(ii) Less than four hundred dollars.

(b) The client's admission date ((for)) on the claim is January 1, 2001, or after, and the allowed charges are:

(i) Less than ten percent of the applicable DRG payment; or

(ii) Less than four hundred fifty dollars.

(((5))) (6) If the claim qualifies as a DRG low-cost outlier:

(a) For an admission date before January 1, 2001, the low-cost outlier amount is the amount in subsection (((4))) (5)(a)(i) or (ii), whichever is greater; or

(b) For an admission date on January 1, 2001, or after, the low-cost outlier amount is the amount in subsection (((4))) (5)(b)(i) or (ii), whichever is greater.

(((6))) (7) The department(('s)) determines payment for a Medicaid claim that qualifies as a DRG low-cost outlier ((is)) by multiplying the allowed charges for ((the)) each claim ((multiplied)) by the hospital's RCC rate.

(((7) The department does not pay administrative days until the case exceeds the DRG high-cost outlier threshold for that claim.))

(8) DRG low-cost outliers for state-administered programs are paid according to WAC 388-550-4800.

(9) The department makes day outlier payments to hospitals in accordance with section 1923 (a)(2)(C) of the Social Security Act, for clients who have exceptionally long stays that do not reach DRG high-cost outlier status. A hospital is eligible for the day outlier payment if it meets all of the following criteria:

(a) The hospital is a disproportionate share hospital (DSH) and the client served is under age six, or the hospital may not be a DSH hospital but the client served is a child under age one;

(b) The payment methodology for the admission is DRG;

(c) The allowed charges for the hospitalization are less than the DRG high-cost outlier threshold as defined in subsection (((1))) (2) of this section; and

(d) The client's length of stay exceeds the day outlier threshold for the applicable DRG payment amount. The day outlier threshold is defined as the number of days in an average length of stay for a discharge (for an applicable DRG payment), plus twenty days.

(((9))) (10) The department bases the day outlier payment on the number of days that exceed the day outlier threshold, multiplied by the administrative day rate.

(((10))) (11) The department's total payment for day outlier claims is the applicable DRG payment plus the day outlier or administrative days payment.

(((11) The department pays day outliers only for claims that do not reach a DRG high-cost outlier status.))

(12) A client's outlier claim is either a day outlier or a high-cost outlier, but not both.

[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, 388-550-3700, filed 7/31/01, effective 8/31/01. Statutory Authority: RCW 74.08.090, 42 USC 1395 x(v), 42 CFR 447.271, 447.11303 and 447.2652. 99-06-046, 388-550-3700, 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, 388-550-3700, filed 12/18/97, effective 1/18/98.]

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