Original Notice.

     Preproposal statement of inquiry was filed as WSR 05-06-080.

     Title of Rule and Other Identifying Information: (Part 2 of 2) Amending WAC 388-550-4900 Disproportionate share payments, 388-550-5210 Payment method -- SRHIAAPDSH (rural hospital indigent adult assistance program disproportionate share hospital), 388-550-5220 Payment method -- NRHIAAPDSH (hospital indigent adult assistance program disproportionate share hospital), 388-550-5400 Payment method -- PHDDSH (public hospital district disproportionate share hospital), and 388-550-6800 Proportionate share payments for inpatient hospital services; and repealing WAC 388-550-5100 Payment method -- MIDSH (medically indigent disproportionate share hospital), 388-550-5250 Payment method -- THAPDSH (teaching hospital assistance program disproportionate share hospital), 388-550-5300 Payment method -- STHFPDSH (teaching hospital financing program disproportionate share hospital), 388-550-5350 Payment method -- CTHFPDSH (county teaching hospital financing program disproportionate share hospital); and 388-550-6900 Proportionate share payments for outpatient hospital services.

     Hearing Location(s): Blake Office Park East (behind Goodyear Courtesy Tire), Rose Room, 4500 10th Avenue S.E., Lacey, WA, on May 24, 2005, at 10:00 a.m.

     Date of Intended Adoption: Not sooner than May 25, 2005.

     Submit Written Comments to: DSHS Rules Coordinator, P.O. Box 45850, Olympia, WA 98504, delivery 4500 10th Avenue S.E., Lacey, WA, e-mail fernaax@dshs.wa.gov, fax (360) 664-6185, by 5:00 p.m., May 24, 2005.

     Assistance for Persons with Disabilities: Contact Andy Fernando, DSHS Rules Coordinator, by May 20, 2005, TTY (360) 664-6178 or (360) 664-6097.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The Medical Assistance Administration (MAA) is proposing to amend/repeal the above listed WAC sections applicable to MAA's proposed new WAC 388-550-4650 "Full cost" public hospital certified public expenditure (CPE) payment program (see the separate related rule-making notice, Part 1 of 2). MAA is also replacing the verbiage, "medically indigent (MI)" costs or charges with "charity" costs or charges.

     Reasons Supporting Proposal: See above.

     Statutory Authority for Adoption: RCW 74.04.050, 74.08.090.

     Statute Being Implemented: RCW 74.04.050, 74.08.090.

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

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

     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.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The department has analyzed the proposed rule amendment and concludes that it will impose no new costs on small businesses. The preparation of a comprehensive SBEIS is not required.

     A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting John Hanson, P.O. Box 45510, Olympia, WA 98504, phone (360) 725-1856, fax (360) 753-9152, e-mail hansojr@dshs.wa.gov.

April 14, 2005

Andy Fernando, Manager

Rules and Policies Assistance Unit

     (1) To qualify for a DSH payment for each state fiscal year (SFY), an instate or ((border area)) bordering city hospital provider must submit to MAA, the hospital's completed and final DSH application by the due date specified in that year's application letter. The application due date will not be less than sixty days after MAA makes the application available.

     (2) A hospital is a disproportionate share hospital eligible for the low-income disproportionate share hospital (LIDSH) program for a specific SFY if the hospital submits a DSH application for that specific year in compliance with subsection (1) and if both the following apply:

     (a) The hospital's Medicaid inpatient utilization rate (MIPUR) is at least one standard deviation above the mean Medicaid inpatient utilization rate for hospitals receiving Medicaid payments in the state, or its low-income utilization rate (LIUR) exceeds twenty-five percent; and

     (b) At least two obstetricians who have staff privileges at the hospital ((and)) have agreed to provide obstetric services to eligible individuals at the hospital. For the purpose of establishing DSH eligibility, "obstetric services" is defined as routine nonemergency delivery of babies. This requirement for two obstetricians with staff privileges does not apply to a hospital:

     (i) That provides inpatient services predominantly to individuals under eighteen years of age; or

     (ii) That did not offer nonemergency obstetric services to the general public as of December 22, 1987, when section 1923 of the Social Security Act was enacted.

     (3) For hospitals located in rural areas, "obstetrician" means any physician with staff privileges at the hospital to perform nonemergency obstetric procedures.

     (4) MAA may consider a hospital a disproportionate share hospital for programs other than the LIDSH program if the hospital submits a DSH application for the specific year and meets the following criteria for the year specified in the application:

     (a) The hospital has a MIPUR of not less than one percent; and

     (b) The hospital meets the requirement of subsection (2)(b) of this section.

     (5) MAA administers the low-income disproportionate share (LIDSH) program and may administer any of the following DSH programs:

     (a) ((Medically indigent disproportionate share hospital (MIDSH);

     (b))) General assistance-unemployable disproportionate share hospital (GAUDSH);

     (((c))) (b) Small rural hospital assistance program disproportionate share hospital (SRHAPDSH);

     (((d))) (c) Small rural hospital indigent adult assistance program disproportionate share hospital (SRHIAAPDSH);

     (((e))) (d) Nonrural hospital indigent adult assistance program disproportionate share hospital (NRHIAAPDSH);

     (((f) Teaching hospital assistance program disproportionate share hospital (THAPDSH);

     (g) State teaching hospital financing program disproportionate share hospital (STHFPDSH);

     (h) County teaching hospital financing program disproportionate share hospital (CTHFPDSH); and

     (i))) and

     (e) Public hospital ((district)) disproportionate share hospital (((PHDDSH))) (PHDSH).

     (6) MAA allows a hospital to receive any one or all of the DSH payment adjustments discussed in subsection (5) of this section when the hospital:

     (a) Meets the requirements in subsection (4) of this section; and

     (b) Meets the eligibility requirements for the particular DSH payment program, as discussed in WAC 388-550-5000 through 388-550-5400.

     (7) MAA ensures each hospital's total DSH payments do not exceed the individual hospital's DSH limit, defined as:

     (a) The cost to the hospital of providing services to Medicaid clients, including clients served under Medicaid managed care programs;

     (b) Less the amount paid by the state under the non-DSH payment provision of the state plan;

     (c) Plus the cost to the hospital of providing services to uninsured patients;

     (d) Less any cash payments made by uninsured clients; and

     (e) Plus any adjustments required and/or authorized by federal regulation.

     (8) MAA's total annual DSH payments must not exceed the state's DSH allotment for the federal fiscal year.

     If the MAA statewide allotment is exceeded, MAA may adjust future DSH payments to each hospital to compensate for the amount overpaid. Adjustments will be made in the following program order:

     (a) ((PHDDSH;

     (b) THAPDSH;

     (c) CTHFPDSH;

     (d) STHFPDSH;

     (e))) SRHAPDSH;

     (((f))) (b) NRHIAAPDSH;

     (((g))) (c) SRHIAAPDSH;

     (((h) MIDSH;

     (i))) (d) GAUDSH; ((and

     (j))) (e) LIDSH; and

     (f) PHDSH.

[Statutory Authority: RCW 74.08.090, 74.04.050, and 2003 1st sp.s. c 25. 04-12-044, § 388-550-4900, filed 5/28/04, effective 7/1/04. Statutory Authority: RCW 74.08.090, 74.09.500, 74.09.035(1), and 43.88.290. 03-13-055, § 388-550-4900, filed 6/12/03, effective 7/13/03. Statutory Authority: RCW 74.08.090, 74.09.730 and 42 U.S.C. 1396r-4. 99-14-040, § 388-550-4900, filed 6/30/99, effective 7/1/99. 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, § 388-550-4900, filed 12/18/97, effective 1/18/98.]

     (2) To qualify for an SRHIAAPDSH payment, a hospital must:

     (a) Meet the criteria in WAC 388-550-4900 (2)(b) and (4);

     (b) Be an in-state hospital that provided charity services to clients ((eligible under the medically indigent (MI) program)) during the most recent, completed fiscal year;

     (c) Be a small rural hospital with fewer than seventy-five acute licensed beds; and

     (d) For state fiscal year (SFY) beginning July 1, 2003, be located in a city or town that has a nonstudent population of fifteen thousand eight hundred ten or less. For each subsequent SFY, the nonstudent population requirement is increased cumulatively by two percent.

     (3) MAA pays hospitals qualifying for SRHIAAPDSH payments from a legislatively appropriated pool. MAA determines each hospital's individual SRHIAAPDSH payment from the total dollars in the pool using percentages established through the following prospective payment method:

     (a) At the time the SRHIAAPDSH payment is to be made, MAA calculates each hospital's profitability margin based on the most recent, completed year-end data using audited financial statements from the hospital.

     (b) MAA determines the average profitability margin for the qualifying hospitals.

     (c) Any hospital with a profitability margin of less than one hundred ten percent of the average profitability margin for qualifying hospitals receives a profit factor of 1.1. All other hospitals receive a profit factor of 1.0.

     (d) MAA:

     (i) Identifies from historical data considered to be complete, each individual qualifying hospital's ((inpatient and outpatient)) allowed charity charges ((for MAA's MI clients)); then

     (ii) Multiplies the total allowed charity charges by the hospital's ratio of costs-to-charges (RCC), limiting the RCC to a value of 1, to determine the hospital's ((MI)) charity costs; then

     (iii) Multiplies the hospital's ((MI)) charity costs by the hospital's profit factor assigned in (c) of this subsection to identify a revised cost amount; then

     (iv) Determines the hospital's percentage of revised costs by dividing its revised cost amount by the sum of the revised ((MI)) charity cost amounts for all qualifying hospitals during the same period.

     (4) MAA's SRHIAAPDSH payments to a hospital may not exceed one hundred percent of the projected cost of care for Medicaid clients and uninsured indigent patients for that hospital unless an exception is identified by federal regulation. MAA reallocates dollars as defined in the state plan.

[Statutory Authority: RCW 74.08.090, 74.04.050, and 2003 1st sp.s. c 25. 04-12-044, § 388-550-5210, filed 5/28/04, effective 7/1/04.]

     (2) To qualify for an NRHIAAPDSH payment, a hospital must:

     (a) Meet the criteria in WAC 388-550-4900 (2)(b) and (4);

     (b) Be an in-state or ((border area)) bordering city hospital that provided charity services to clients ((eligible under the medically indigent (MI) program)) during the most recent, completed fiscal year; and

     (c) Be a hospital that does not qualify as a small rural hospital as defined in WAC 388-550-5210.

     (3) MAA pays hospitals qualifying for NRHIAAPDSH payments from a legislatively appropriated pool. MAA determines each hospital's individual NRHIAAPDSH payment from the total dollars in the pool using percentages established through the following prospective payment method:

     (a) At the time the NRHIAAPDSH payment is to be made, MAA calculates each hospital's profitability margin based on the most recent, completed year-end data using audited financial statements from the hospital.

     (b) MAA determines the average profitability margin for the qualifying hospitals.

     (c) Any hospital with a profitability margin of less than one hundred ten percent of the average profitability margin for qualifying hospitals receives a profit factor of 1.1. All other hospitals receive a profit factor of 1.0.

     (d) MAA:

     (i) Identifies from historical data considered to be complete, each individual qualifying hospital's ((inpatient and outpatient)) allowed charity charges ((for MAA's MI clients)); then

     (ii) Multiplies the total allowed charity charges by the hospital's ratio of costs-to-charges (RCC), limiting the RCC to a value of 1, to determine the hospital's ((MI)) charity costs; then

     (iii) Multiplies the hospital's ((MI)) charity costs by the hospital's profit factor assigned in (c) of this subsection to identify a revised cost amount; then

     (iv) Determines the hospital's percentage of the NRHIAAPDSH revised costs by dividing the hospital's revised cost amount by the total ((MI)) charity costs for all qualifying hospitals during the same period.

     (4) MAA's NRHIAAPDSH payments to a hospital may not exceed one hundred percent of the projected cost of care for Medicaid clients and uninsured indigent patients for the hospital unless an exception is identified by federal regulation. MAA reallocates dollars as defined in the state plan.

[Statutory Authority: RCW 74.08.090, 74.04.050, and 2003 1st sp.s. c 25. 04-12-044, § 388-550-5220, filed 5/28/04, effective 7/1/04.]

     (2) Using a prospective payment method, MAA pays hospitals considered eligible under the criteria in subsection (1) of this section a PHDDSH payment amount from the legislatively appropriated PHDDSH pool)) public hospital disproportionate share hospital (PHDSH) program is a public hospital program for:

     (a) Public hospitals located in the state of Washington that are:

     (i) Owned by public hospital districts; and

     (ii) Not certified by the department of health (DOH) as a critical access hospital;

     (b) Harborview Medical Center; and

     (c) University of Washington Medical Center.

     (2) MAA pays hospitals eligible under this program a payment equal to the hospital's individual disproportionate share hospital (DSH) payment limit calculated according to WAC 388-550-4900. The resulting amount is multiplied by the federal matching assistance percentage in effect for Washington State at the time of the payment. This amount is sent to the hospital.

     (3) Hospitals receiving payment in this DSH program must certify that funds have been spent on uncompensated care at the hospital equal to or in excess of the payment amount before applying the federal matching assistance percentage. Certified funds cannot include federal funds or money used to match federal funds.

[Statutory Authority: RCW 74.08.090, 74.09.500, 74.09.035(1), and 43.88.290. 03-13-055, § 388-550-5400, filed 6/12/03, effective 7/13/03. Statutory Authority: RCW 74.08.090, 74.09.730, chapter 74.46 RCW and 42 U.S.C. 1396r-4. 99-14-025, § 388-550-5400, filed 6/28/99, effective 7/1/99. 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, § 388-550-5400, filed 12/18/97, effective 1/18/98.]

     (a) Washington state-owned or state-operated hospital; or

     (b) Nonstate government-owned hospital.

     (2) Prior to payment, proportionate share payments for inpatient hospital services are subject to:

     (a) Federal approval for federal matching funds;

     (b) A department analysis of the Medicare upper limit; and

     (c) The federal Medicare upper payment limit for hospital payment.

     (3) The medical assistance administration (MAA) determines each payment year's total proportionate share payment for inpatient hospital services by:

     (a) Using the charge and payment data from MAA's Medicaid Management Information System (MMIS) for inpatient hospital services for the base years; and

     (b) Calculating the cumulative difference between covered Title XIX inpatient charges, Title XIX payments, and third party liability payments for all eligible hospitals during the most recent federal fiscal year.

     (4) Proportionate share payments for inpatient hospital services:

     (a) Are determined and paid periodically to participating eligible hospitals during each federal fiscal year; and

     (b) Must be used to improve health care services to low income patients.

[Statutory Authority: RCW 74.08.090, 74.09.500, 74.09.035(1), and 43.88.290. 03-13-055, § 388-550-6800, filed 6/12/03, effective 7/13/03.]

     The following sections of the Washington Administrative Code are repealed:

WAC 388-550-5100	Payment method--MIDSH.
WAC 388-550-5250	Payment method -- THAPDSH.
WAC 388-550-5300	Payment method--STHFPDSH.
WAC 388-550-5350	Payment method--CTHFPDSH.
WAC 388-550-6900	Proportionate share payments for outpatient hospital services.

© Washington State Code Reviser's Office