WSR 06-11-100

PERMANENT RULES

DEPARTMENT OF

SOCIAL AND HEALTH SERVICES
(Health and Recovery Services Administration)

[ Filed May 17, 2006, 4:30 p.m. , effective June 17, 2006 ]


Effective Date of Rule: Thirty-one days after filing.

Purpose: The department is adding new WAC 388-550-4670 and 388-550-4690 to add a "hold harmless" provision to meet requirements in ESSB 6090 and to describe the authorization requirements and utilization review process for hospitals eligible for certified public expenditure (CPE) payments.

Statutory Authority for Adoption: RCW 74.08.090, 74.09.500.

Other Authority: Section 209(9), chapter 518, Laws of 2005 (ESSB 6090).

Adopted under notice filed as WSR 06-08-095 on April 4, 2006.

A final cost-benefit analysis is available by contacting Ayuni Wimpee, Cherry Street Plaza, 626 8th Avenue, Olympia, WA 98504-5510, phone (360) 725-1835, fax (360) 753-9152, e-mail wimpeah@dshs.wa.gov. No changes were made. The preliminary cost-benefit analysis will be final.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 2, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 2, Amended 0, Repealed 0.

Date Adopted: May 10, 2006.

Andy Fernando, Manager

Rules and Policies Assistance Unit

3653.2
NEW SECTION
WAC 388-550-4670   CPE payment program -- "Hold harmless" provision.   (1) To meet legislative requirements, the department includes a "hold harmless" provision for hospital providers eligible for the certified public expenditure (CPE) payment program. Under the "hold harmless" provision, hospitals eligible for payments under the CPE payment program will receive no less in combined state and federal payments than they would have received under the methodologies in effect during state fiscal year (SFY) 2005.

(2) As part of the "hold harmless" payment calculation, the department reprices inpatient hospital claims paid during the service year, beginning with service year SFY 2006, to determine how these claims would have been paid under the payment methodologies in effect during SFY 2005.

(3) The department makes the final "hold harmless" calculation after the department receives the hospital's final audited Medicare cost report and audited financial statements for the service year. The department calculates the federally required prospective cost settlement at the same time. Any adjustments to state grants payments due to the cost settlement calculations will be made as payment adjustments to the next year's state grants.

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NEW SECTION
WAC 388-550-4690   Authorization requirements and utilization review for hospitals eligible for CPE payments.   (1) Certified public expenditure (CPE) inpatient hospital claims submitted to the department must meet all authorization and program requirements in WAC and current department-published issuances.

(2) The department performs utilization reviews of inpatient hospital:

(a) Admissions in accordance with the requirements of 42 CFR 456, subparts A through C; and

(b) Claims for compliance with medical necessity and length of stay (LOS) standards.

(3) CPE inpatient hospital claims that would have been paid by the diagnosis related group (DRG) payment method prior to July 1, 2005:

(a) Are not targeted for retrospective utilization review based on the department's Professional Activity Study (PAS) Length of Stay (LOS) criteria;

(b) Are subject to the department's medical necessity retrospective utilization review process (see WAC 388-550-1700); and

(c) That involve a client's seven-day readmission (see WAC 388-550-1050) are subject to a department retrospective utilization review described in WAC 388-550-3000(5)(e).

(4) CPE inpatient hospital claims that would have been paid by the ratio of costs-to-charges (RCC) payment method prior to July 1, 2005 and exceed the Professional Activity Study (PAS) average LOS, will continue to be targeted for retrospective utilization review based on the department's PAS LOS criteria. See WAC 388-550-4300(3).

(5) For claims identified in subsection (4) of this section, the department may request a copy of the client's hospital medical records and itemized billing statements. The department sends written notification to the hospital detailing the department's findings. Any day of a client's hospital stay that exceeds the PAS LOS:

(a) Is paid under the RCC payment method if the department determines it to be medically necessary for the client at the acute level of care;

(b) Is paid as an administrative day (see WAC 388-550-1050 and 388-550-4500(8)) if the department determines it to be medically necessary for the client at the subacute level of care; and

(c) Is not eligible for payment if the department determines it was not medically necessary.

(6) Inpatient hospital claims that would not have been paid under a prior payment methodology are not eligible for payment under the CPE payment program.

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Washington State Code Reviser's Office