WSR 05-01-170

PROPOSED RULES

DEPARTMENT OF

LABOR AND INDUSTRIES

[ Filed December 21, 2004, 9:37 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 04-12-067.

Title of Rule and Other Identifying Information: This rule proposal will amend WAC 296-30-090 What are the maximum allowable fees, reducing Crime Victims' Compensation (CVC) provider reimbursement rates to the Department of Social and Health Services (DSHS) reimbursement rates (the lowest rates allowed by law).

Hearing Location(s): Department of Labor and Industries, 7273 Linderson Way S.W., Tumwater, WA 98501, on February 24, 2005, at 9:00 a.m. to 1:00 p.m.

Date of Intended Adoption: April 26, 2005.

Submit Written Comments to: Janice M. Deal, P.O. Box 44520, Olympia, WA 98504-4520, e-mail deal235@lni.wa.gov, fax (360) 902-5333, by March 23, 2005.

Assistance for Persons with Disabilities: Contact Jill Short by March 9, 2005, TTY (360) 905-4974.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Due to an increase in medical costs paid by the CVC program it has been determined that the current appropriation will not be sufficient to carry the program through this biennium. RCW 7.68.015 requires the program to operate within the appropriations and the conditions and limitations on the appropriations provided for the program. RCW 7.68.080 (2)(b) gives the department the authority to set the service levels and fees no lower than those established by the Department of Social and Health Services under Title 74 RCW.

The CVC program filed an emergency rule to immediately reduce its provider reimbursement rates to the DSHS reimbursement rates, effective September 1, 2004. Labor and industries will also file a second emergency rule, effective December 30, 2004. This will continue the reimbursement rate at the DSHS rate while the agency works to put this permanent rule in place. We chose this option because it had the least onerous impact on crime victims.

Statutory Authority for Adoption: RCW 7.68.030.

Statute Being Implemented: RCW 7.68.030.

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

Name of Proponent: Department of Labor and Industries, governmental.

Name of Agency Personnel Responsible for Drafting: Janice M. Deal, 7273 Linderson Way, Tumwater, WA 98501, (360) 902-5369; Implementation: Cletus Nnanabu, 7273 Linderson Way, Tumwater, WA 98501, (360) 902-5340; and Enforcement: Bob Malooly, 7273 Linderson Way, Tumwater, WA 98501, (360) 902-4209.

A small business economic impact statement has been prepared under chapter 19.85 RCW.

Small Business Economic Impact Statement

Background: Since 1973, the Washington State Department of Labor and Industries (L&I) has provided relief from the costs of medical care and lost wages to crime victims in Washington state. The crime victims' compensation (CVC) program exists to ensure that victims of crime do not suffer financial devastation as a result of, and, in addition to, the trauma caused by the crime itself.

Washington state law requires victims to exhaust all other insurance, both private and public, before tapping into CVC program benefits. However, once a CVC claim has been accepted, the provider must not bill the patient for the treatment of any injury caused by the crime. If the victim has paid for any services up to that point, the provider must reimburse the victim. Once all other insurance sources have been exhausted, the CVC program is then billed for all costs, including copays. It is the intention of the CVC program that crime victims pay no out-of-pocket expenses for treatment of crime-related injuries.

It is important to note that there is one specific service for which providers must bill the CVC program and are specifically disallowed, under any circumstances, to bill a victim. That service is the sexual assault forensic exam, also known as SAFE. This exam provides critical evidence to prosecutors in cases of sexual assault, and providing funding for this exam is the express responsibility of the CVC program.

Since mid-2003, the Washington state program has experienced a dramatic increase in claim expenditures. Though the precise reason for this has not been identified, it is likely a result of a reduction in the number of low-income individuals eligible for Medicaid, as well as inflation in medical costs. As a result of this increase in claim costs, the current biennial budget for the Washington state CVC program, appropriated during the 2003 legislative session, is inadequate to meet the projected financial needs of the program. In response, the CVC program has decided to make reductions in their reimbursement rates for medical treatment.

At present, CVC reimbursement rates are the same as the rates used by L&I's workers' compensation program. If the CVC program were to continue to reimburse providers at these rates, the program would exhaust its current appropriation by mid-March 2005. At that point, the program will be required by state statute to cease paying benefits.

In light of its critical financial situation, the CVC program filed an emergency rule to immediately reduce its reimbursement rates to DSHS reimbursement rates (the lowest rates allowed by law), effective September 1, 2004. Because emergency rules are only effective for one hundred twenty days, L&I must file a second emergency rule, effective December 30, 2004. This second emergency rule will continue the reimbursement rate at the DSHS rate while the agency works to put a permanent rule in place.

With the proposed fee schedule in place, the agency has projected that the proposed reduction in reimbursement rates will prolong the financial viability of the program until some point between mid April 2005 to mid May 2005.


Economic Analysis Requirements of the Regulatory Fairness Act: Proposed rules and rule amendments must meet the requirements of the Regulatory Fairness Act (RFA), chapter 19.85 RCW before adoption. The RFA is intended to ensure, if legal and feasible, that rules do not impose disproportionate economic burdens on small business1. The RFA requires that a small business economic impact statement (SBEIS) be prepared for proposed rules that impose more than minor economic impact on businesses in an industry. In an SBEIS, an agency must assess the compliance cost of proposed regulations on small businesses and then compare those costs to the compliance cost estimates for the largest 10% of the businesses in an industry.

Proposed Amendments: Presently WAC 296-30-090 states the following:

What are the maximum allowable fees?

1) Maximum allowable fees for medical services are those fees published in the medical aid rules and fee schedules less any available benefits of public or private insurance.

2) Maximum allowable fees for mental health services are those fees published in the CVC program mental health treatment rules and fees less any available benefits of public or private insurance.

3) The percent of allowed charges authorized for hospital inpatient and outpatient services billed by revenue codes are those rates established by DSHS under Title 74 RCW and WAC 388-550-4500 (1)(a) and 388-550-6000 (1)(a) less any available benefits of public or private insurance.

EXCEPTION: If any of the maximum allowable fees in the publications entitled medical aid rules and fee schedules and CVC program mental health treatment rules and fees are lower than the maximum allowable fees for those procedures established by the DSHS under Title 74 RCW, the Title 74 RCW fees are the maximum allowable fees for those procedures.

The proposed change to WAC 296-30-090 reads as follows:

What are the maximum allowable fees?

1) The maximum allowable fees for medical and mental health services will be those rates established by the Department of Social and Health Services less any available benefits of public or private insurance.

2) The percent of allowed charges authorized for hospital inpatient and outpatient services billed by revenue codes are those rates established by DSHS under Title 74 RCW and WAC 388-550-4500 (1)(a) and 388-550-6000 (1)(a) less any available benefits of public or private insurance.

Assessing Costs: The population of affected businesses includes all current and potential CVC medical providers. Presently, there are 19,641 providers registered with the program. They supply a variety of services including trauma care, surgery, general medical care, physical therapy, psychological counseling and nursing care. Under the proposed reimbursement rates, almost all of these providers will see a significant decline in their CVC reimbursement rates.

This change is not a simple, across-the-board reduction in reimbursement rates. The vast majority of hospital inpatient services are reimbursed at the GA-U (general assistance-unemployable) rates, which are usually lower than those for outpatient services. Also, every hospital is reimbursed at its own unique rate. Outpatient services are reimbursed at Medicaid outpatient rates that are usually higher than GA-U rates. However, since all hospitals are considered large businesses the GA-U rate schedule and its impact on providers were not considered for this analysis.

For purposes of assessing the economic impact of the proposed changes, it is important to note that in most cases, the decisions to become a CVC provider, to treat CVC recipients and to bill the CVC program for services rendered are entirely voluntary. As such, providers have the choice to participate or not to participate in the program. In this light, it is assumed that over time those providers who are unwilling or unable to provide services at the reduced reimbursement rates will reduce the number of CVC claimants that they are willing to treat or will simply cease treating CVC program beneficiaries entirely. In the short-run, however, there will be an economic impact on all providers currently treating CVC claimants.

The change from the current fee schedule to the DSHS fee schedule represents a decline in provider reimbursement rates on a per-service basis. In practice this means that when a provider bills the CVC program for a service, (e.g. an office visit) the CVC program will simply pay them at the rate assigned to that service. As such, a provider working for a large firm and a provider working for a small firm will experience identical declines in their CVC reimbursement rates. In this light, the impact of the proposed rule on CVC providers will be exactly proportionate for large and small firms.

Conclusion: The reduction in maximum allowable fees is based entirely on service provided. As a result, providers of similar services can expect to see exactly the same reductions in reimbursement rates as their industry counterparts. In this light it is clear that the impact of this rule change is equivalent for all CVC providers, and no disproportionate impact on small business will result from adoption of the proposed rule.

A copy of the statement may be obtained by contacting Janice M. Deal, P.O. Box 44520, Olympia, WA 98504-4520, phone (360) 902-5369, fax (360) 902-5333, e-mail deal235@lni.wa.gov.

A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Janice M. Deal, P.O. Box 44520, Olympia, WA 98504-4520, phone (360) 902-5369, fax (360) 902-5333, e-mail deal235@lni.wa.gov.

December 21, 2004

Paul Trause

Director

OTS-7333.4


AMENDATORY SECTION(Amending WSR 00-03-056, filed 1/14/00, effective 2/14/00)

WAC 296-30-090   What are the maximum allowable fees?   (1) ((Maximum allowable fees for medical services are those fees published in the Medical Aid Rules and Fee Schedules less any available benefits of public or private insurance.

(2) Maximum allowable fees for mental health services are those fees published in the Crime Victims Compensation Program Mental Health Treatment Rules and Fees less any available benefits of public or private insurance.


EXCEPTION: If any of the maximum allowable fees in the publications entitled Medical Aid Rules and Fee Schedules and Crime Victims Compensation Program Mental Health Treatment Rules and Fees are lower than the maximum allowable fees for those procedures established by the department of social and health services under Title 74 RCW, the Title 74 RCW fees are the maximum allowable fees for those procedures.

(3))) The maximum allowable fees for medical and mental health services will be those rates established by the department of social and health services less any available benefits of public or private insurance.

(2) The percent of allowed charges authorized for hospital inpatient and outpatient services billed by revenue codes are those rates established by the department of social and health services under Title 74 RCW and WAC 388-550-4500 (1)(a) and 388-550-6000 (1)(a) less any available benefits of public or private insurance.

[Statutory Authority: RCW 7.68.030, 7.68.080, 7.68.130. 00-03-056, 296-30-090, filed 1/14/00, effective 2/14/00.]

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