Purpose: To comply with the requirements of the 2005 legislature, the department is adopting a separate base community psychiatric hospital payment rate for Medicaid and non-Medicaid clients.

     Citation of Existing Rules Affected by this Order: Amending WAC 388-550-2800.

     Statutory Authority for Adoption: RCW 74.08.090, 74.09.500.

     Other Authority: Chapter 518, Laws of 2005 (ESSB 6090 Part II, Section 204).

     Under RCW 34.05.350 the agency for good cause finds that state or federal law or federal rule or a federal deadline for state receipt of federal funds requires immediate adoption of a rule.

     Reasons for this Finding: The legislature appropriated funds from the general fund for fiscal year 2006 and 2007 to establish a separate base community psychiatric hospitalization payment rate for Medicaid and non-Medicaid clients at hospitals that accept commitments under the Involuntary Treatment Act (ITA) and free-standing psychiatric hospitals that accept commitments under ITA. This filing continues the emergency rule that is currently in effect under WSR 05-14-080 to carry out the legislature's directive while the department completes the permanent rule-making process begun under WSR 05-14-145 and filed on July 5, 2005.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 1, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 1, Repealed 0.

     Date Adopted: October 11, 2005.

Andy Fernando, Manager

Rules and Policies Assistance Unit

Method	Used for
Diagnoses related group (DRG) negotiated conversion factor	Hospitals participating in the Medicaid hospital selective contracting program under waiver from the federal government
DRG cost-based conversion factor	Hospitals not participating in or exempt from the Medicaid hospital selective contracting program
Ratio of costs-to-charges (RCC)	Hospitals or services exempt from DRG payment methods; Hospitals eligible to be paid through the certified public expenditure (CPE) payment program
Single case rate	Bariatric surgery
Fixed per diem rate	Acute physical medicine and rehabilitation (Acute PM&R) Level B facilities and long-term acute care (LTAC) hospitals
Cost settlement	MAA-approved critical access hospitals (CAHS)

     (2) The department's annual aggregate Medicaid payments to each hospital for inpatient hospital services provided to Medicaid clients will not exceed the hospital's usual and customary charges to the general public for the services (42 CFR § 447.271). The department recoups annual aggregate Medicaid payments that are in excess of the usual and customary charges.

     (3) The department's annual aggregate payments for inpatient hospital services, including state-operated hospitals, will not exceed the estimated amounts that the department would have paid using Medicare payment principles.

     (4) When hospital ownership changes, the department's payment to the hospital will not exceed the amount allowed under 42 U.S.C. Section 1395x (v)(1)(O).

     (5) Hospitals participating in the medical assistance program must annually submit to the medical assistance administration:

     (a) A copy of the hospital's HCFA 2552 Medicare Cost Report; and

     (b) A disproportionate share hospital application.

     (6) Reports referred to in subsection (5) of this section must be completed according to:

     (a) Medicare's cost reporting requirements;

     (b) The provisions of this chapter; and

     (c) Instructions issued by MAA.

     (7) The department requires hospitals to follow generally accepted accounting principles unless federally or state regulated.

     (8) Participating hospitals must permit the department to conduct periodic audits of their financial and statistical records.

     (9) The department reimburses hospitals for claims involving clients with third-party liability insurance:

     (a) At the lesser of either the DRG:

     (i) Billed amount minus the third-party payment amount; or

     (ii) Allowed amount minus the third-party payment amount; or

     (b) The RCC allowed payment minus the third-party payment amount.

     (10) Beginning in state fiscal year 2006 and in accordance with legislative directive, the department implemented separate base community psychiatric hospitalization payment rates for Medicaid clients and non-Medicaid clients.

     (a) An eligible client's length of stay (LOS) is determined by counting the number of days from the date of inpatient psychiatric admission through date of discharge, and subtracting one day.

     (b) A hospital described in this section that submits an initial and/or interim billing for inpatient psychiatric services provided to an eligible client is reimbursed only for a single LOS, subject to other applicable rules.

     (c) The Medicaid base community psychiatric hospitalization payment rate applies only to a Medicaid client:

     (i) Admitted to a free-standing psychiatric hospital located in Washington state; and

     (ii) Assigned to a department of health (DOH)-certified psychiatric hospital bed.

     (d) The non-Medicaid base community psychiatric hospitalization payment rate applies only to a non-Medicaid client:

     (i) Admitted to a hospital that is certified by the department to accept patients under the Involuntary Treatment Act (ITA); and

     (ii) Assigned to a DOH-certified psychiatric hospital bed.

     (e) A client's hospital admission must have a root cause that is psychiatric in nature. The department:

     (i) Defines "root cause" as the reason the client was admitted based on the principle diagnosis and the department's review of the client's medical record; and

     (ii) Does not consider detoxification to be psychiatric in nature.

     (f) For inpatient psychiatric services provided on and after August 1, 2005, the department reimburses:

     (i) An Involuntary Treatment Act (ITA)-certified acute care hospital's DOH-certified distinct psychiatric unit as follows:

     (A) For Medicaid clients, inpatient psychiatric services are paid using the ratio of costs-to-charges (RCC) payment method.

     (B) For non-Medicaid clients, inpatient psychiatric services are paid using for the allowable, the greater of:

     (I) The state-only diagnostic-related group (DRG) allowable (including the high cost outlier allowable, if applicable); or

     (II) The non-Medicaid base community psychiatric hospitalization payment rate multiplied by the LOS.

     (ii) An ITA-certified acute care hospital without a DOH-certified distinct psychiatric unit as follows:

     (A) For Medicaid clients, inpatient psychiatric services are paid using:

     (I) The DRG payment method; or

     (II) The RCC payment method if no relative weight exists for the DRG in the department's payment system.

     (B) For non-Medicaid clients, inpatient psychiatric services are paid using for the allowable, the greater of:

     (I) The state-only DRG allowable (including the high cost outlier allowable, if applicable); or

     (II) The non-Medicaid base community psychiatric hospitalization payment rate multiplied by the LOS.

     (iii) A free-standing psychiatric hospital as follows:

     (A) For Medicaid clients, inpatient psychiatric services are paid using for the allowable, the greater of:

     (I) The RCC allowable; or

     (II) The Medicaid base community psychiatric hospitalization payment rate multiplied by the LOS.

     (B) For non-Medicaid clients, inpatient psychiatric services are paid the same as for Medicaid clients, except the base community psychiatric hospitalization payment rate is the non-Medicaid rate.

     (iv) An ITA-certified hospital that is participating in the certified public expenditure (CPE) payment program as follows:

     (A) For Medicaid clients, inpatient psychiatric services are paid using the methods identified in WAC 388-550-4650.

     (B) For non-Medicaid clients, inpatient psychiatric services are paid using the methods identified in WAC 388-550-4650, except that the allowable to which the federal funds participation percentage is applied is the greater of:

     (I) The RCC allowable; or

     (II) The non-Medicaid base community psychiatric hospitalization payment rate multiplied by the LOS.

[Statutory Authority: RCW 74.08.090, 74.09.520. 05-12-022, § 388-550-2800, filed 5/20/05, effective 6/20/05. Statutory Authority: RCW 74.08.090 and 74.09.500. 04-19-113, § 388-550-2800, filed 9/21/04, effective 10/22/04. Statutory Authority: RCW 74.08.090, 74.09.500, 74.09.035(1), and 43.88.290. 02-21-019, § 388-550-2800, filed 10/8/02, effective 11/8/02. 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, § 388-550-2800, filed 7/31/01, effective 8/31/01. Statutory Authority: RCW 74.09.090, 42 U.S.C. 1395x(v) and 1396r-4, 42 C.F.R. 447.271, 11303 and 2652. 99-14-027, § 388-550-2800, filed 6/28/99, effective 7/1/99. Statutory Authority: RCW 74.08.090, 42 USC 1395 x(v), 42 CFR 447.271, 447.11303, and 447.2652. 99-06-046, § 388-550-2800, 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, § 388-550-2800, filed 12/18/97, effective 1/18/98.]