PROPOSED RULES
SOCIAL AND HEALTH SERVICES
(Health and Recovery Services Administration)
Original Notice.
Preproposal statement of inquiry was filed as WSR 06-22-054.
Title of Rule and Other Identifying Information: Part 3 of 6; amending WAC 388-550-3600 Diagnosis-related group (DRG) payment -- Hospital transfers, 388-550-3800 Rebasing and recalibration, 388-550-3900 Payment method -- Border area hospitals, 388-550-4000 Out-of-state hospitals, 388-550-4100 Payment method--New hospitals, 388-550-4200 Change in hospital ownership, and 388-550-4300 Hospitals and units exempt from the DRG payment method.
Hearing Location(s): Blake Office Park East, Rose Room, 4500 10th Avenue S.E., Lacey, WA 98503 (one block north of the intersection of Pacific Avenue S.E. and Alhadeff Lane. A map or directions are available at http://www1.dshs.wa.gov/msa/rpau/docket.html or by calling (360) 664-6097), on June 5, 2007, at 10:00 a.m.
Date of Intended Adoption: Not earlier than June 6, 2007.
Submit Written Comments to: DSHS Rules Coordinator, P.O. Box 45850, Olympia, WA 98504, delivery 4500 10th Avenue S.E., Lacey, WA 98503, e-mail schilse@dshs.wa.gov, fax (360) 664-6185, by 5:00 p.m. on June 5, 2007.
Assistance for Persons with Disabilities: Contact Stephanie Schiller by June 1, 2007, TTY (360) 664-6178 or (360) 664-6097 or by e-mail at schilse@dshs.wa.gov.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed rules describe policy regarding the department's hospital services coverage, rate-setting methods, and payment methods, based on recommendations made in the navigant study and supported by the state legislature. In addition, the proposed rules replace "medical assistance administration (MAA)" with "the department," and update and clarify other language.
Reasons Supporting Proposal: In 2005, ESSB 6090 recommended that a study be done by navigant to look at the department's inpatient payment system and include recommendations on the design. These rules are written to incorporate into rule the results of the navigant study, and to update information on the department's hospital coverage, rate-setting, and payment processes. At the same time and for the same reasons, the department is proposing rule making to reflect changes and new sections in chapter 388-550 WAC.
Statutory Authority for Adoption: RCW 74.08.090 and 74.09.500.
Statute Being Implemented: RCW 74.08.090 and 74.09.500.
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 45504, Olympia, WA 98504-5504, (360) 725-1342; Implementation and Enforcement: Larry Linn, P.O. Box 45502, Olympia, WA 98504-5502, (360) 725-1856.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The department has determined that the proposed rule will not create more than minor costs for affected small businesses.
A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Larry Linn, P.O. Box 45502, Olympia, WA 98504-5502, phone (360) 725-1856, fax (360) 753-9152, e-mail linnld@dshs.wa.gov.
April 26, 2007
Stephanie E. Schiller
Rules Coordinator
3865.1 (1) The department does not ((reimburse)) pay a hospital
for a ((nonemergent)) nonemergency case when the hospital
transfers the client to another hospital.
(2) The department pays a hospital that transfers
((emergent)) emergency cases to another hospital, the lesser
of:
(a) The appropriate diagnosis-related group (DRG) payment; or
(b) For dates of admission:
(i) Before August 1, 2007, a per diem rate multiplied by the number of medically necessary days the client stays at the transferring hospital. The department determines the per diem rate by dividing the hospital's DRG payment amount for the appropriate DRG by that DRG's average length of stay.
(ii) On or after August 1, 2007, a per diem rate multiplied by the number of medically necessary days the client stays at the transferring hospital plus one, not to exceed the total calculated DRG-based payment amount including any outlier payment amount. The department determines the per diem rate by dividing the hospital's DRG allowed amount for payment for the appropriate DRG by that DRG's statewide average length of stay for the AP-DRG classification as determined by the department.
(3) The department uses:
(a) The hospital's midnight census to determine the number of days a client stayed in the transferring hospital prior to the transfer; and
(b) ((MAA's)) The department's length of stay data to
determine the number of medically necessary days for a
client's hospital stay.
(4) The department:
(a) Pays the hospital that ultimately discharges the client to any residence other than a hospital (e.g., home, nursing facility, etc.) the full DRG payment; and
(b) Applies the outlier payment methodology if a transfer case qualifies:
(i) For dates of admission before August 1, 2007, as a high-cost or low-cost outlier; and
(ii) For dates of admission on or after August 1, 2007, as a high outlier.
(5) The department does not pay a discharging hospital any additional amounts as a transferring hospital if it transfers a client to another hospital (intervening hospital) which subsequently sends the client back.
(a) The department's maximum payment to the discharging hospital is the full DRG payment.
(b) The department pays the intervening hospital(s) a per diem payment based on the method described in subsection (2) of this section.
(6) The department makes all applicable claim payment adjustments to claims for client responsibility, third party liability, medicare, etc.
[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, § 388-550-3600, filed 7/31/01, effective 8/31/01. 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, § 388-550-3600, filed 12/18/97, effective 1/18/98.]
(a) To determine costs for that rebasing process, the department uses:
(i) Each instate hospital's medicare cost report for the hospital fiscal year that ends during the calendar year that the rebasing base year designated by the department begins; and
(ii) Inpatient medicaid and SCHIP claims data for the twelve-month period designated by the department as the rebasing base year.
(b) The rebasing process updates rates for the diagnosis related group (DRG), per diem, and per case rate payment methods.
(c) Other inpatient payment system rates (e.g., the ratio of costs-to-charges (RCC) rates, departmental weighted costs-to-charges (DWCC) rates, administrative day rate, and swing bed rate) are rebased on an annual basis.
(d) The department increases inpatient hospital rates only when mandated by the state legislature. These increases are implemented according to the base methodology in effect, unless otherwise directed by the legislature.
(2) ((MAA)) The department periodically recalibrates
diagnosis-related group (DRG) relative weights
((periodically)), as described in WAC 388-550-3100, but no
less frequently than each time the rate rebasing ((is
conducted)) process described in subsection (1) takes place. The department makes recalibrated relative weights effective
on the ((rate)) rebasing implementation date, which can change
with each rebasing process.
(3) When recalibrating DRG relative weights without
rebasing, ((MAA)) the department may apply a budget neutrality
factor (BNF) to hospitals' ((cost based)) conversion factors
to ensure that total DRG payments to hospitals do not exceed
total DRG payments that would have been made to hospitals if
the relative weights had not been recalibrated. For the
purposes of this section, BNF equals the percentage change
from total ((reimbursement)) aggregate payments calculated
under a new payment system to total ((reimbursement))
aggregate payments calculated under the prior payment system.
[Statutory Authority: RCW 74.08.090, 74.09.500. 05-06-044, § 388-550-3800, filed 2/25/05, effective 7/1/05. 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, § 388-550-3800, filed 7/31/01, effective 8/31/01. 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, § 388-550-3800, filed 12/18/97, effective 1/18/98.]
(a) ((MAA)) The department calculates the cost-based
conversion factor (CBCF) of a bordering city ((area)) hospital
as defined in WAC 388-550-1050, in accordance with WAC 388-550-3450.
(b) For a bordering city ((area)) hospital with no
((HCFA)) medicare cost report (Form 2552-96) for the rebasing
year, ((MAA)) the department assigns the ((MAA)) department
peer group average conversion factor. This is the average of
all final conversion factors of hospitals in that group.
(2) ((MAA)) For dates of admission before August 1, 2007,
the department calculates:
(a) The ratio of costs-to-charges (RCC) in accordance with WAC 388-550-4500.
(b) For a bordering city ((area)) hospital with no ((HCFA
2552)) medicare cost report submitted to the department, its
RCC is based on the Washington in-state average RCC
((ratios)).
(3) For dates of admission before August 1, 2007, the department pays a bordering city hospital using the same payment methods as for an instate hospital for allowed covered charges related to medically necessary services identified on an outpatient hospital claim.
(4) For dates of admission on and after August 1, 2007, with the exception of hospitals previously paid under the outpatient prospective payment system (OPPS) methodology and critical border hospitals located in bordering cities, the department pays bordering city hospitals for allowed covered charges related to medically necessary services based on the inpatient and outpatient hospital rates and payment methods used to pay out-of-state hospitals. See WAC 388-550-4000.
(5) For dates of admission on and after August 1, 2007, the department pays a critical border hospital for allowed covered charges related to medically necessary services identified on an inpatient hospital claim:
(a) Under one of the inpatient DRG, RCC, per diem, or per case rate payment methods that are similar to the methods used to pay instate hospitals, whether the hospital does, or does not have a medicare cost report (Form 2552-96) for the rebasing year;
(b) Using a DRG conversion factor, per diem, or per case rate based on the statewide standardized average that will result in payment that does not exceed the payment that would be made to any instate hospital for the same service, including medical education components of payments; and
(c) Using a hospital's specific RCC rate based on the hospital's annual medicare cost report information for the applicable period. For a critical border hospital that does not submit a medicare cost report to the department, the department determines which instate hospital has the lowest RCC rate and uses that rate as the critical border hospital's RCC rate.
(6) The inpatient payment rates used to calculate payments to critical border hospitals are prospective payment rates. Those rates are not used to pay for claims with dates of admission before the hospital qualified as a critical border hospital. Bordering city hospitals' base period claims data is analyzed during the rebasing process, and annually thereafter, to determine if a bordering city hospital qualifies as a critical border hospital.
(7) For dates of admission on and after August 1, 2007, the department pays a critical border hospital for allowed covered charges related to medically necessary services identified on an outpatient hospital claim using the outpatient hospital payment methods and payment criteria identified in WAC 388-550-6000 and 388-550-7200.
(8) The department makes applicable claim payment adjustments for client responsibility, third party liability, medicare, etc., to claim payments.
[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, § 388-550-3900, 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, § 388-550-3900, filed 12/18/97, effective 1/18/98.]
(1) For dates of admission before August 1, 2007, the
department ((shall)) pays:
(a) Inpatient hospital claims for emergency services provided in out-of-state hospitals, the lesser of:
(i) Billed charges; or
(ii) ((the amount calculated using)) The weighted average
of ratio of cost-to-charge (RCC) ratios for in-state
((Washington)) hospitals multiplied by the allowed covered
charges for medically necessary services.
(b) Outpatient hospital claims for emergency services provided in out-of-state hospitals, the lesser of:
(i) Billed charges; or
(ii) The weighted average of outpatient hospital rates for instate hospitals multiplied by the allowed covered charges for medically necessary services.
(2) For dates of admission on and after August 1, 2007, the department pays:
(a) Inpatient hospital claims for emergency services provided in out-of-state hospitals under the inpatient diagnostic related group (DRG), ration of costs-to-charges (RCC), per diem, and per case rate payment methods, whether or not the hospital has submitted a medicare cost report (Form 2552-96) to the department for the rebasing year. The department:
(i) Pays an out-of-state hospital and bordering city hospital that is not a critical border hospital, using the lowest of the instate inpatient hospital rates, and excludes payment for medical education (out-of-state hospitals are not eligible to receive payment for medical education.). This rate is the same rate calculated for all rural hospitals in Washington for the same service (excluding DWCC rates that are paid to instate critical access hospitals).
(ii) Pays a department designated critical border hospital according to WAC 388-550-3900.
(b) Pays outpatient hospital claims for emergency services provided in out-of-state hospitals that are:
(i) Bordering city hospitals, including critical border hospitals previously paid under the outpatient prospective payment system (OPPS) methodology for dates of admission before August 1, 2007, in accordance with WAC 388-550-7200; and
(ii) Out-of-state hospitals, including bordering city hospitals not previously paid under the OPPS methodology, the lesser of:
(A) Billed charges; or
(B) The weighted average of outpatient hospital rates for instate hospitals times the allowed covered charges for medically necessary services.
(3) The department does not pay for nonemergency hospital services provided to medical assistance clients in out-of-state hospitals unless the facility is contracted and/or prior authorized by the department or the department's designee, for the specific service provided.
(i) Contracted services are paid according to the contract terms whether or not the hospital has signed a core provider agreement.
(ii) Authorized services are paid according to subsections (1) and (2) of this section.
(4) The department makes all applicable claim payment adjustments for clients responsibility, third party liability, medicare, etc., to claim payments.
[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, § 388-550-4000, filed 12/18/97, effective 1/18/98.]
Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
AMENDATORY SECTION(Amending WSR 99-14-027, filed 6/28/99,
effective 7/1/99)
WAC 388-550-4100
Payment method -- New hospitals.
(1) For
rate-setting purposes, ((MAA)) the department considers as
new:
(a) A hospital which began services after the most recent
rebased cost-based conversion factors (CBCFs) conversion
factors, RCC rates, per diem rates, per case rates, etc.((,))
; or
(b) A hospital that has not been in operation for a complete fiscal year.
(2) ((MAA)) The department determines a new hospital's:
(a) CBCF as the average of the CBCF of all hospitals
within the same ((MAA)) department peer group for dates of
admission before August 1, 2007.
(b) Conversion factor, per diem rate, or per case rate, to be the statewide average rate for the conversion factor, category of per diem rate, or per case rate, for dates of admission on and after August 1, 2007, adjusted by the geographically appropriate hospital specific medicare wage index.
(3) ((MAA)) The department determines a new hospital's
ratio of costs-to-charges (RCC) by calculating and using the
average RCC rate for all current Washington in-state
hospitals.
(4) ((MAA)) The department considers that a change in
hospital ownership does not constitute a new hospital.
[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, § 388-550-4100, 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, § 388-550-4100, filed 12/18/97, effective 1/18/98.]
(a) A change in the composition of the partnership;
(b) A sale of an unincorporated sole proprietorship;
(c) The statutory merger or consolidation of two or more corporations;
(d) The leasing of all or part of a provider's facility if the leasing affects utilization, licensure, or certification of the provider entity;
(e) The transfer of a government-owned institution to a governmental entity or to a governmental corporation;
(f) Donation of all or part of a provider's facility to another entity if the donation affects licensure or certification of the provider entity;
(g) Disposition of all or some portion of a provider's facility or assets through sale, scrapping, involuntary conversion, demolition or abandonment if the disposition affects licensure or certification of the provider entity; or
(h) A change in the provider's federal identification tax number.
(2) A hospital ((shall)) must notify the department in
writing ninety days prior to the date of an expected change in
the hospital's ownership, but in no case later than thirty
days after the change in ownership takes place.
(3) When a change in a hospital's ownership occurs, the
department ((shall)) sets the new provider's cost-based
conversion factor (CBCF), conversion factor, per diem rates,
per case rate, at the same level as the prior owner's, except
as provided in subsection (4) below.
(4) The department ((shall)) sets for a hospital formed
as a result of a merger:
(a) A blended CBCF, conversion factor, per diem rate, per case rate, based on the old hospitals' rates, proportionately weighted by admissions for the old hospitals; and
(b) An RCC rate determined by combining the old hospitals' cost reports and following the process described in WAC 388-550-4500. Partial year cost reports will not be used for this purpose.
(5) The department ((shall)) recaptures depreciation and
acquisition costs as required by section 1861 (V)(1)(0) of the
Social Security Act.
[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, § 388-550-4200, filed 12/18/97, effective 1/18/98.]
(2) For dates of admission before August 1, 2007, subject to the restrictions and limitations listed in this section, the department exempts the following hospitals and units from the DRG payment method for inpatient services provided to medicaid-eligible clients:
(a) Peer group A hospitals, as described in WAC 388-550-3300(2). Exception: Inpatient services provided to
clients eligible under the following programs are
((reimbursed)) paid through the DRG payment method (see WAC 388-550-4400):
(i) General assistance programs; and
(ii) Other state((-only)) administered programs.
(b) Peer group E hospitals, as described in WAC 388-550-3300(2). See WAC 388-550-4650 for how the department calculates payment to Peer group E hospitals.
(c) Peer group F hospitals (critical access hospitals).
(d) Rehabilitation units when the services are provided in department-approved acute physical medicine and rehabilitation (acute PM&R) hospitals and designated distinct rehabilitation units in acute care hospitals.
The department uses the same criteria as the medicare
program to identify exempt rehabilitation hospitals and
designated distinct rehabilitation units. ((Exception:))
Inpatient rehabilitation services provided to clients eligible
under the following programs are covered and ((reimbursed))
paid through the DRG payment method (see WAC 388-550-4400 for
exceptions):
(i) General assistance programs; and
(ii) Other state-only administered programs.
(e) Out-of-state hospitals excluding hospitals located in
designated bordering cities as described in WAC 388-501-0175. Inpatient services provided in out-of-state hospitals to
clients eligible under the following programs are not covered
or ((reimbursed)) paid by the department:
(i) General assistance programs; and
(ii) Other state((-only)) administered programs.
(f) Military hospitals when no other specific arrangements have been made with the department. Military hospitals may individually elect or arrange for one of the following payment methods in lieu of the RCC payment method:
(i) A negotiated per diem rate; or
(ii) DRG.
(g) Nonstate-owned specifically identified psychiatric hospitals and designated hospitals with medicare certified distinct psychiatric units. The department uses the same criteria as the medicare program to identify exempt psychiatric hospitals and distinct psychiatric units of hospitals.
(i) Inpatient psychiatric services provided to clients
eligible under the following programs are ((reimbursed)) paid
through the DRG payment method:
(A) General assistance programs; and
(B) Other state((-only)) administered programs.
(ii) ((Regional support networks (RSNs))) Mental health
division (MHD) designees that arrange to reimburse
nonstate-owned psychiatric hospitals and designated distinct
psychiatric units of hospitals directly, may use the
department's payment methods or contract with the hospitals to
reimburse using different methods. Claims not paid directly
through ((an RSN)) a MHD are paid through the department's
payment system.
(3) The department limits inpatient hospital stays for dates of admission before August 1, 2007 that are exempt from the DRG payment method and identified in subsection (2) of this section to the number of days established at the seventy-fifth percentile in the current edition of the publication, "Length of Stay by Diagnosis and Operation, Western Region," unless the stay is:
(a) Approved for a specific number of days by the department, or for psychiatric inpatient stays, by the regional support network (RSN);
(b) For chemical dependency treatment which is subject to WAC 388-550-1100; or
(c) For detoxification of acute alcohol or other drug intoxication.
(4) If subsection (3)(c) of this section applies to an eligible client, the department will:
(a) Pay for three-day detoxification services for an acute alcoholic condition; or
(b) Pay for five-day detoxification services for acute drug addiction when the services are directly related to detoxification; and
(c) Extend the three- and five-day limitations for up to six additional days if either of the following is invoked on a client under care in a hospital:
(i) Petition for commitment to chemical dependency treatment; or
(ii) Temporary order for chemical dependency treatment.
(5) For dates of admission on and after August 1, 2007, the department exempts the following hospitals, units, and services from the DRG payment method for inpatient services provided to medicaid-eligible clients:
(a) Peer group E hospitals as described in WAC 388-550-3300(2), i.e., hospitals participating in the department's certified public expenditure (CPE) payment program. See WAC 388-550-4650.
(b) Peer group F hospitals, i.e., critical access hospitals. See WAC 388-550-2598.
(c) Rehabilitation services. All rehabilitation services are paid through the per diem payment method except as indicated in (b), (c), and (f) of this subsection. See WAC 388-550-3010. Inpatient psychiatric services, involuntary treatment act services, and detoxification services provided in out-of-state hospitals are not covered or paid by the department or a MHD designee. The department does not cover or pay for other hospital services provided to clients eligible for those services in the following programs, when the services are provided in out-of-state hospitals that are not in designated bordering cities:
(i) General assistance programs; and
(ii) Other state-administered programs.
(f) Military hospitals when no other specific arrangements have been made with the department. The department, or the military hospital, may elect or arrange for one of the following payment methods in lieu of the RCC payment method:
(i) Per diem payment method; or
(ii) DRG payment method.
(g) Psychiatric services. All psychiatric services are paid through the per diem payment method except as indicated in (b), (c), and (f) of this subsection. See WAC 388-550-3010. A MHD designee that arranges to pay a hospital and/or a designated distinct psychiatric unit of a hospital directly, may use the department's payment methods or contract with the hospitals to pay using different methods. Claims not paid directly through a MHD designee are paid through the department's payment system.
(6) The department limits all inpatient hospital stays exempt from the DRG payment method, for dates of admission on and after August 1, 2007, that have not received a length of stay extension from the department, to the average length of stay calculated for the specific DRG classification in the inpatient payment system effective August 1, 2007. Exceptions to this standard exist as follows. The inpatient stay is:
(a) Approved for a specific number of days by the department, or for psychiatric inpatient stays, by a MHD designee;
(b) For chemical dependency treatment, which is subject to WAC 388-550-1100; or
(c) For detoxification of acute alcohol or other drug intoxication.
(7) If subsection (6)(c) of this section applies to an eligible client, the department will:
(a) Pay for three-day detoxification services for an acute alcoholic condition; or
(b) Pay for five-day detoxification services for acute drug addiction when the services are directly related to detoxification; and
(c) Extend the three- and five-day limitations for up to six additional days if either of the following is invoked on a client under care in a hospital:
(i) Petition for commitment to chemical dependency treatment; or
(ii) Temporary order for chemical dependency treatment.
[Statutory Authority: RCW 74.08.090, 74.09.500. 06-08-046, § 388-550-4300, filed 3/30/06, effective 4/30/06. Statutory Authority: RCW 74.04.050, 74.08.090. 05-12-132, § 388-550-4300, filed 6/1/05, effective 7/1/05. 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, § 388-550-4300, filed 7/31/01, effective 8/31/01. 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, § 388-550-4300, filed 12/18/97, effective 1/18/98.]
Reviser's note: The typographical errors in the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.