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

     Purpose: To comply with the requirements of the 2005 legislature, the department is adding new WAC 388-550-2650, to adopt two separate base community psychiatric hospital payments. One is for Medicaid clients and the other is for non-Medicaid clients. The new rule also clarifies that both Involuntary Treatment Act (ITA)-certified hospitals and hospitals that have ITA-certified beds that have been used to treat ITA patients are included in the base community psychiatric hospitalization payment method for Medicaid and non-Medicaid clients.

     This permanent rule replaces the emergency rule filed under WSR 07-05-049. The amendment incorporates into rule that the department is adding certain newborn screening tests to the newborn metabolic screening panel and clarified that the department pays hospitals an additional flat fee to cover the cost of the tests; the amendment also clarifies language regarding inpatient payment methods and limits concerning inpatient hospital services for Medicaid clients.

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

     Statutory Authority for Adoption: RCW 74.08.090 and 74.09.500.

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

      Adopted under notice filed as WSR 07-02-087 on January 3, 2007.

     A final cost-benefit analysis is available by contacting Larry Linn, P.O. Box 45510, Olympia, WA 98504-5510, phone (360) 725-1856, fax (360) 753-9152, e-mail linnld@dshs.wa.gov.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 1, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 1, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 1, Amended 1, Repealed 0.

     Date Adopted: February 27, 2007.

Robin Arnold-Williams

Secretary

     (a) The Medicaid base community psychiatric hospital payment rate is a minimum per diem for claims for psychiatric services provided to Medicaid covered patients, paid to hospitals that accept commitments under the involuntary treatment act (ITA).

     (b) The non-Medicaid base community psychiatric hospital payment rate is a minimum allowable per diem for claims for psychiatric services provided to indigent patients paid to hospitals that accept commitments under the ITA.

     (2) For the purposes of this section, "allowable" means the calculated amount for payment based on the payment method before adjustments, deductions, or add-ons.

     (3) To be eligible for payment under the base community psychiatric hospitalization payment method:

     (a) A client's inpatient psychiatric voluntary hospitalization must:

     (i) Be medically necessary as defined in WAC 388-500-0005. In addition, the department considers medical necessity to be met when:

     (A) Ambulatory care resources available in the community do not meet the treatment needs of the client;

     (B) Proper treatment of the client's psychiatric condition requires services on an inpatient basis under the direction of a physician;

     (C) The inpatient services can be reasonably expected to improve the client's condition or prevent further regression so that the services will no longer be needed; and

     (D) The client, at the time of admission, is diagnosed as having an emotional/behavioral disturbance as a result of a mental disorder as defined in the current published Diagnostic and Statistical Manual of the American Psychiatric Association. The department does not consider detoxification to be psychiatric in nature.

     (ii) Be approved by the professional in charge of the hospital or hospital unit.

     (iii) Be authorized by the appropriate mental health division (MHD) designee prior to admission for covered diagnoses.

     (iv) Meet the criteria in WAC 388-550-2600.

     (b) A client's inpatient psychiatric involuntary hospitalization must:

     (i) Be in accordance with the admission criteria in chapters 71.05 and 71.34 RCW.

     (ii) Be certified by a MHD designee.

     (iii) Be approved by the professional in charge of the hospital or hospital unit.

     (iv) Be prior authorized by the regional support network (RSN) or its designee.

     (v) Meet the criteria in WAC 388-550-2600.

     (4) The provider requesting payment must complete the appropriate sections of the Involuntary Treatment Act Patient Claim Information (form DSHS 13-628) in triplicate and route both the form and each claim form submitted for payment, to the County Involuntary Treatment Office.

     (5) Payment for all claims is based on covered days within a client's approved length of stay (LOS), subject to client eligibility and department-covered services.

     (6) The Medicaid base community psychiatric hospitalization payment rate applies only to a Medicaid client admitted to a non-state-owned free-standing psychiatric hospital located in Washington state.

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

     (a) Designated by the department as an ITA-certified hospital; or

     (b) That has a department-certified ITA bed that was used to provide ITA services at the time of the non-Medicaid admission.

     (8) For inpatient hospital psychiatric services provided to eligible clients on and after July 1, 2005, the department pays:

     (a) A hospital's department of health (DOH)-certified distinct psychiatric unit as follows:

     (i) For Medicaid clients, inpatient hospital psychiatric services are paid using the department-specific non-diagnosis related group (DRG) payment method.

     (ii) For non-Medicaid clients, the allowable for inpatient hospital psychiatric services is the greater of:

     (A) The state-only DRG allowable (including the high cost outlier allowable, if applicable), or the department-specified non-DRG payment method if no relative weight exists for the DRG in the department's payment system; or

     (B) The non-Medicaid base community psychiatric hospitalization payment rate multiplied by the covered days.

     (b) A hospital without a DOH-certified distinct psychiatric unit as follows:

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

     (A) The DRG payment method; or

     (B) The department-specified non-DRG payment method if no relative weight exists for the DRG in the department's payment system.

     (ii) For non-Medicaid clients, the allowable for inpatient hospital psychiatric services is the greater of:

     (A) The state-only DRG allowable (including the high cost outlier allowable, if applicable), or the department-specified non-DRG payment method if no relative weight exists for the DRG in the department's payment system; or

     (B) The non-Medicaid base community psychiatric hospitalization payment rate multiplied by the covered days.

     (c) A non-state-owned free-standing psychiatric hospital as follows:

     (i) For Medicaid clients, inpatient hospital psychiatric services are paid using as the allowable, the greater of:

     (A) The ratio of costs-to-charges (RCC) allowable; or

     (B) The Medicaid base community psychiatric hospitalization payment rate multiplied by covered days.

     (ii) For non-Medicaid clients, inpatient hospital psychiatric services are paid the same as for Medicaid clients, except the base community inpatient psychiatric hospital payment rate is the non-Medicaid rate, and the RCC allowable is the state-only RCC allowable.

     (d) A hospital, or a distinct psychiatric unit of a hospital, that is participating in the certified public expenditure (CPE) payment program, as follows:

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

     (ii) For non-Medicaid clients, inpatient hospital psychiatric services are paid using the methods identified in WAC 388-550-4650 in conjunction with the non-Medicaid base community psychiatric hospitalization payment rate multiplied by covered days.

     (e) A hospital, or a distinct psychiatric unit of a hospital, that is participating in the critical access hospital (CAH) program, as follows:

     (i) For Medicaid clients, inpatient hospital psychiatric services are paid using the department-specified non-DRG payment method.

     (ii) For non-Medicaid clients, inpatient hospital psychiatric services are paid using the department-specified non-DRG payment method.

[]

     (1) The department ((reimburses)) pays hospitals for Medicaid inpatient hospital services using the rate setting methods identified in the department's approved state plan ((that includes)) as follows:

((Method)) Payment method used for Medicaid inpatient hospital claims	((Used for)) Applicable providers/services	Process to adjust for third-party liability insurance and any other client responsibility
((Diagnoses)) Diagnosis related group (DRG) negotiated conversion factor	Hospitals participating in the Medicaid hospital selective contracting program under waiver from the federal government	Lesser of either the DRG billed amount minus the third-party payment and any client responsibility amount, or the allowable, minus the third-party payment amount and any client responsibility amount.
DRG cost-based conversion factor	Hospitals not participating in or exempt from the Medicaid hospital selective contracting program	Lesser of either the DRG billed amount minus the third-party payment amount and any client responsibility amount, or the allowable, minus the third-party payment amount and any client responsibility amount.
Ratio of costs-to-charges (RCC)	Hospitals or services exempt from DRG payment methods	The allowable minus the third-party payment amount and any client responsibility amount.
Costs-to-charges rate with a "hold harmless" settlement provision	Hospitals eligible to be paid through the certified public expenditure (CPE) payment program	The allowable minus the third-party payment amount and any client responsibility amount. The payment made is the federal share only.
Single case rate	((Bariatric surgery)) Hospitals eligible to provide bariatric surgery to medical assistance clients	Single case rate minus the third-party payment amount and any client responsibility amount.
Fixed per diem rate	((Acute physical medicine and rehabilitation (Acute PM&R) Level B facilities and)) Long-term acute care (LTAC) hospitals	Per diem amount minus the third-party payment amount and any client responsibility amount.
Cost settlement	((MAA)) DOH-approved critical access hospitals (CAHS)	The allowable times the approved CAH rate, subject to retrospective cost settlement, minus the third-party payment amount and any client responsibility amount.
Medicaid base community psychiatric hospitalization rate	Non-state-owned free-standing psychiatric hospitals located in Washington state	Paid according to applicable payment method in WAC 388-550-2650 for Medicaid clients, minus the third-party payment amount and any client responsibility amount.

     See WAC 388-550-4800 for payment methods used by the department for inpatient hospital services provided to clients eligible under state-administered programs.

     (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 ((§)) Sec. 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 department's medical assistance program must annually submit to the ((medical assistance administration)) department:

     (a) A copy of the hospital's ((HCFA 2552)) CMS Medicare Cost Report (form 2552-96) that is the official "as submitted" cost report submitted to the Medicare fiscal intermediary; and

     (b) A disproportionate share hospital (DSH) application if the hospital wants to be considered for DSH payments. See WAC 388-550-4900 for the requirement for a hospital to qualify for a DSH payment.

     (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)) the department.

     (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)) records, statistical records, and any other records as determined by the department.

     (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)) The department limits payment for private room accommodations to the semiprivate room rate. Room charges must not exceed the hospital's usual and customary charges to the general public as required by 42 C.F.R. Sec. 447.271.

     (10) For a client's hospital stay that involves both Regional Support Network (RSN)-approved voluntary inpatient and involuntary inpatient hospitalizations, the hospital must bill the department for payment, unless the hospital contracts directly with the RSN. In that case, the hospital must bill the RSN for payment.

     (11) The department pays hospitals to cover the cost of certain newborn screening tests that are required under chapter 70.83 RCW (see also chapter 246-650 WAC). The flat fees that are not included in the DRG rate but are related to performing the newborn screening tests are added to the DRG payment. Hospitals are responsible to bill for all newborn screening fees when submitting any claims for newborn services to the department.

     (12) Refer to subsection (1) of this section for how the department adjusts inpatient hospital claims for third party payment amounts and any client responsibility amounts.

[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.]

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