Date of Adoption: June 6, 2003.

     Purpose: (1) Clarifies that for inpatient hospital claims paid under the diagnosis-related (DGR) 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 that clarifies that DRG high-cost and low-cost claims for state-administered programs are paid according to WAC 388-550-4800.

     Citation of Existing Rules Affected by this Order: Amending WAC 388-550-3700.

     Statutory Authority for Adoption: RCW 74.08.090, 74.09.500.

      Adopted under notice filed as WSR 03-09-118 on April 22, 2003.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 1, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 1, Repealed 0.
     Effective Date of Rule: Thirty-one days after filing.

June 6, 2003

Brian H. Lindgren, Manager

Rules and Policies Assistance Unit

     (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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