Original Notice.

     Preproposal statement of inquiry was filed as WSR 06-22-054.

     Title of Rule and Other Identifying Information: Part 2 of 3; amending WAC 388-550-1500 Covered and noncovered revenue code categories and subcategories for outpatient hospital services, 388-550-1600 Specific items/services not covered, 388-550-1700 Authorization and utilization review (UR) of inpatient and outpatient hospital services, 388-550-1800 Hospital speciality services not requiring prior authorization, and 388-550-1900 Transplant coverage.

     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 department is proposing to amend sections in chapter 388-550 WAC relating to covered and noncovered outpatient revenue code categories and subcategories; specific noncovered services; authorization and utilization review of hospital services; specialty services not requiring prior authorization; and transplant coverage in order to change verbiage from "medical assistance administration (MAA)" to "the department," change verbiage from "facility" to "hospital." The proposed rules amend sections for dates of admission before August 1, 2007, and on and after August 1, 2007.

     Reasons Supporting Proposal: See above.

     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 not required under RCW 34.05.328. The department has determined that the proposed rule does not meet the definition of "significant legislative rule" under RCW 34.05.328, and therefore a cost-benefit analysis is not required.

April 27, 2007

Stephanie E. Schiller

Rules Coordinator

     (a) "Pharmacy," only subcategories "general classification," "generic drugs," "nongeneric drugs," "drugs incident to other diagnostic services," "drugs incident to radiology," "nonprescription," and "IV solutions";

     (b) "IV therapy," only subcategories "general classification," "infusion pump," "IV therapy/pharmacy services," "IV therapy/drug/supply delivery," and "IV therapy/supplies";

     (c) "Medical/surgical supplies and devices," only subcategories "general classification," "nonsterile supply," "sterile supply," "pacemaker," "intraocular lens," and "other implant," and "other supplies/devices";

     (d) "Oncology," only subcategory "general classification";

     (e) "Durable medical equipment (other than renal)," only subcategory "general classification";

     (f) "Laboratory," only subcategories "general classification," "chemistry," "immunology," "renal patient (home)," "nonroutine dialysis," "hematology," "bacteriology and microbiology," and "urology";

     (((f))) (g) "Laboratory ((pathological)) pathology," only subcategories "general classification," "cytology," "histology," and "biopsy";

     (((g))) (h) "Radiology - diagnostic," only subcategories "general classification," "angiocardiography," "arthrography," "arteriography," and "chest X ray";

     (((h))) (i) "Radiology - therapeutic and/or chemotherapy administration," only subcategories "general classification," "chemotherapy - injected," "chemotherapy - oral," "radiation therapy," and "chemotherapy - IV";

     (((i))) (j) "Nuclear medicine," only subcategories "general classification," "diagnostic," and "therapeutic," "diagnostic radiopharmaceuticals," and "therapeutic radiopharmaceuticals";

     (((j))) (k) "CT scan," only subcategories "general classification," "head scan," and "body scan";

     (((k))) (l) "Operating room services," only subcategories "general classification" and "minor surgery";

     (((l))) (m) "Anesthesia," only subcategories "general classification," "anesthesia incident to radiology," and "anesthesia incident to other diagnostic services";

     (((m))) (n) "((Blood and blood component)) Administration, processing and storage for blood and blood components," only subcategories "general classification" and "administration (((e.g., transfusions)))";

     (((n))) (o) "Other imaging," only subcategories "general classification," "diagnostic mammography," "ultrasound," "screening mammography," and "positron emission tomography";

     (((o))) (p) "Respiratory services," only subcategories "general classification," "inhalation services," and "hyper baric oxygen therapy";

     (((p))) (q) "Physical therapy," only subcategories "general classification," "visit charge," "hourly charge," "group rate," and "evaluation or reevaluation";

     (((q))) (r) "Occupational therapy," only subcategories "general classification," "visit charge," "hourly charge," "group rate," and "evaluation or reevaluation";

     (((r))) (s) "Speech therapy-language pathology," only subcategories "general classification," "visit charge," "hourly charge," "group rate," and "evaluation or reevaluation";

     (((s))) (t) "Emergency room," only subcategories "general classification" and "urgent care";

     (((t))) (u) "Pulmonary function," only subcategory "general classification";

     (((u))) (v) "Audiology," only subcategories "general classification," "diagnostic," and "treatment";

     (((v))) (w) "Cardiology," only subcategories "general classification," "cardiac cath lab," "stress test," and "echocardiology";

     (((w))) (x) "Ambulatory surgical care," only subcategory "general classification";

     (((x) "Outpatient services," only subcategory "general classification";))

     (y) "Magnetic resonance technology (MRT)," only subcategories "general classification," "MRI - brain (including brainstem)," "MRI - spinal cord (including spine)," "MRI - other," "MRA - head and neck," ((and)) "MRA - lower extremities" and "MRA-other";

     (z) "Medical/surgical supplies - extension," only subcategories "supplies incident to radiology," "supplies incident to other diagnostic services," and "surgical dressings";

     (aa) "Pharmacy - extension," only subcategories "single source drug," "multiple source drug," "restrictive prescription," "erythropoietin (EPO) less than ten thousand units," "erythropoietin (EPO) ten thousand or more units," "drugs requiring detailed coding," and "self-administrable drugs";

     (bb) "Cast room," only subcategory "general classification";

     (cc) "Recovery room," only subcategory "general classification";

     (dd) "Labor room/delivery," only subcategories "general classification," "labor," "delivery," and "birthing center";

     (ee) "EKG/ECG (Electrocardiogram)," only subcategories "general classification," "holter monitor," and "telemetry";

     (ff) "EEG (Electroencephalogram)," only subcategory "general classification";

     (gg) "Gastro-intestinal services," only subcategory "general classification";

     (hh) "Specialty room - treatment/observation room," only subcategories (("general classification,")) "treatment room," and "observation room";

     (ii) "((Lithotripsy," only subcategory "general classification")) Telemedicine," only subcategory "other telemedicine";

     (jj) "Extra-corporeal shock wave therapy (formerly lithotripsy)," subcategory "general classification";

     (((jj))) (kk) "Acquisition of body components," only subcategories "general classification," "living donor," and "cadaver donor";

     (((kk))) (ll) "Hemodialysis - outpatient or home," only subcategory "general classification";

     (((ll))) (mm) "Peritoneal dialysis - outpatient or home," only subcategory "general classification";

     (((mm))) (nn) "Continuous ambulatory peritoneal dialysis (CAPD - outpatient or home," only subcategory "general classification";

     (((nn))) (oo) "Continuous cycling peritoneal dialysis (CCPD) - outpatient or home," only subcategory "general classification";

     (((oo))) (pp) "Miscellaneous dialysis," only subcategories "general classification," and "ultra filtration";

     (((pp) "Psychiatric/psychological treatments)) (qq) "Behavioral health treatments/services," only subcategory "electroshock treatment"; and

     (((qq))) (rr) "Other diagnostic services," only subcategories "general classification," "peripheral vascular lab," "electromyelogram," "pap smear," (("allergy test,")) and "pregnancy test."

     (2) The department ((covers)) pays for an outpatient hospital covered service in the following revenue code subcategories only when the outpatient hospital provider is approved by the department to provide the specific service(s):

     (a) "Clinic," subcategories "general classification," "dental clinic," and "other clinic"; and

     (b) "Other therapeutic services(( - extension))," subcategories, "general classification," "education/training," "cardiac rehabilitation," and "other therapeutic service."

     (3) The department does not ((cover)) pay for outpatient hospital services in the following revenue code categories and subcategories ((for outpatient hospital services)):

     (a) "All inclusive rate";

     (b) "Room & board - private (one bed)";

     (c) "Room & board - semi-private (two beds)";

     (d) "Room & board - semi-private (three and four beds)";

     (e) "Room & board - deluxe private (((deluxe)))";

     (f) "Room & board - ward";

     (g) "Room & board - other";

     (h) "Nursery";

     (i) "Leave of absence";

     (j) "Subacute care";

     (k) "Intensive care unit";

     (l) "Coronary care unit";

     (m) "Special charges";

     (n) "Incremental nursing charge rate";

     (o) "All inclusive ancillary";

     (p) "Pharmacy," subcategories "take home drugs," "experimental drugs," and "other pharmacy";

     (q) "IV therapy," subcategory "other IV therapy";

     (r) "Medical/surgical supplies and devices," subcategories "take home supplies," "prosthetic/orthotic devices," and "oxygen - take home((,))" ((and "other supplies/devices"));

     (s) "Oncology," subcategory "other oncology";

     (t) "Durable medical equipment (other than renal)," subcategories "rental," "purchase of new DME," "purchase of used DME," "supplies/drugs for DME effectiveness (home health agency only)," and "other equipment";

     (u) "Laboratory," subcategory "other laboratory";

     (v) "Laboratory ((pathological)) pathology," subcategory "other laboratory pathological";

     (w) "Radiology - diagnostic," subcategory "other radiology - diagnostic";

     (x) "Radiology - therapeutic and/or chemotherapy administration," subcategory "other radiology - therapeutic";

     (y) "Nuclear medicine," subcategory "other nuclear medicine";

     (z) "CT scan," subcategory "other CT scan";

     (aa) "Operating room services," subcategories "organ transplant - other than kidney," "kidney transplant," and "other operating room services";

     (bb) "Anesthesia," subcategories "acupuncture" and "other anesthesia";

     (cc) "Blood and blood components";

     (dd) "((Blood and blood component)) Administration, processing and storage for blood and blood component," subcategory "other processing and storage";

     (ee) "Other imaging," subcategory "other imaging service";

     (ff) "Respiratory services," subcategory "other respiratory services";

     (gg) "Physical therapy services," subcategory "other physical therapy";

     (hh) "Occupational therapy services," subcategory "other occupational therapy";

     (ii) "Speech therapy-language pathology," subcategory "other speech-language pathology";

     (jj) "Emergency room," subcategories "EMTALA emergency medical screening services," "ER beyond EMTALA screening" and "other emergency room";

     (kk) "Pulmonary function," subcategory "other pulmonary function";

     (ll) "Audiology," subcategory "other audiology";

     (mm) "Cardiology," subcategory "other cardiology";

     (nn) "Ambulatory surgical care," subcategory "other ambulatory surgical care";

     (oo) "Outpatient Services((,))" ((subcategory "other outpatient service"));

     (pp) "Clinic," subcategories "chronic pain center," "psychiatric clinic," "OB-GYN clinic," "pediatric clinic," "urgent care clinic," and "family practice clinic";

     (qq) "Free-standing clinic";

     (rr) "Osteopathic services";

     (ss) "Ambulance";

     (tt) "Home health (HH) - skilled nursing";

     (uu) "Home health (HH) - medical social services";

     (vv) "Home health (HH) - ((home health)) aide";

     (ww) "Home health (HH) - other visits";

     (xx) "Home health (HH) - units of service";

     (yy) "Home health (HH) - oxygen";

     (zz) "Magnetic resonance technology(MRT)," ((subcategories "MRA - other" and)) subcategory "other MRT";

     (aaa) "Medical/surgical supplies - extension," only subcategory "FDA investigational devices";

     (bbb) "Home IV therapy services";

     (ccc) "Hospice services";

     (ddd) "Respite care";

     (eee) "Outpatient special residence charges";

     (fff) "Trauma response";

     (ggg) "Cast room," subcategory "other cast room";

     (hhh) "Recovery room," subcategory "other recovery room";

     (iii) "Labor room/delivery," subcategories "circumcision" and "other labor room/delivery";

     (jjj) "EKG/ECG (Electrocardiogram)," subcategory "other EKG/ECG";

     (kkk) "EEG (Electroencephalogram)," subcategory "other EEG";

     (lll) "Gastro-intestinal services," subcategory "other gastro-intestinal";

     (mmm) "Speciality room - treatment/observation room," ((subcategory)) subcategories "general classification" and "other ((treatment/observation room)) speciality rooms";

     (nnn) "Preventive care services";

     (ooo) "Telemedicine," subcategory "general classification;

     (ppp) "((Lithotripsy," subcategory "other lithotripsy")) Extra-corporal shock wave therapy (formerly lithotripsy)," subcategory "other ESWT";

     (qqq) "Inpatient renal dialysis";

     (rrr) "Acquisition of body components," subcategories "unknown donor," "unsuccessful organ search - donor bank charges," and "other donor";

     (sss) "Hemodialysis - outpatient or home," subcategories "hemodialysis/composite or other rate," "home supplies," "home equipment," "maintenance one hundred percent (home)," "support services (home)," and "other outpatient hemodialysis (home)";

     (ttt) "Peritoneal dialysis - outpatient or home," subcategories "peritoneal/composite or other rate," "home supplies," "home equipment," "maintenance one hundred percent (home)" "support services (home)," and "other outpatient peritoneal dialysis (home)";

     (uuu) "Continuous ambulatory peritoneal dialysis (CAPD) - outpatient or home," subcategories "CAPD/composite or other rate," "home supplies," "home equipment," "maintenance one hundred percent (home)" "support services (home)," and "other outpatient CAPD (home)";

     (vvv) "Continuous cycling peritoneal dialysis (CCPD) - outpatient or home," subcategories "CCPD/composite or other rate," "home supplies," "home equipment," "maintenance one hundred percent (home), "support services (home)," and "other outpatient CCPD (home)";

     (www) "Miscellaneous dialysis," subcategories "home dialysis aid visit" and "other miscellaneous dialysis";

     (xxx) "((Psychiatric/psychological)) Behavioral health treatments/services," subcategories "general classification," "milieu therapy," "play therapy," "activity therapy," ((and "other psychiatric/psychological treatment")) "intensive outpatient services - psychiatric," "intensive outpatient services - chemical dependency," and "community behavioral health program (day treatment)";

     (yyy) "((Psychiatric/psychological services)) Behavioral health treatment/services (extension)";

     (zzz) "Other diagnostic services," subcategories "((general classification)) allergy test" and "other diagnostic services";

     (aaaa) "Medical rehabilitation day program";

     (bbbb) "Other therapeutic services - extension," subcategories (("general classification,")) "recreational therapy," (("cardiac rehabilitation,")) "drug rehabilitation," "alcohol rehabilitation," "complex medical equipment - routine," "complex medical equipment - ancillary," "athletic training," and "kinesiotherapy";

     (cccc) "Professional fees";

     (dddd) "Patient convenience items"; and

     (eeee) Revenue code categories and subcategories that are not identified in this section.

[Statutory Authority: RCW 74.04.050, 74.04.057, 74.08.090, and Public Law 104-191. 03-19-046, § 388-550-1500, filed 9/10/03, effective 10/11/03. 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, § 388-550-1500, filed 12/18/97, effective 1/18/98.]

     (1) Personal care items such as, but not limited to, slippers, toothbrush, comb, hair dryer, and make-up;

     (2) Telephone/telegraph services or television/radio rentals;

     (3) Medical photographic or audio/videotape records;

     (4) Crisis counseling;

     (5) Psychiatric day care;

     (6) Ancillary services, such as respiratory and physical therapy, performed by regular nursing staff assigned to the floor or unit;

     (7) Standby personnel and travel time;

     (8) Routine hospital medical supplies and equipment such as bed scales;

     (9) Handling fees and portable X-ray charges;

     (10) Room and equipment charges ("rental charges") for use periods concurrent with another room or similar equipment for the same client;

     (11) Cafeteria charges; and

     (12) Services and supplies provided to nonpatients, such as meals and "father packs"((; and

     (13) Standing orders. The department shall cover routine tests and procedures only if the department determines such services are medically necessary, according to the following criteria. The procedure or test:

     (a) Is specifically ordered by the admitting physician or, in the absence of the admitting physician, the hospital staff having responsibility for the client (e.g., physician, advanced registered nurse practitioner, or physician assistant);

     (b) Is for the diagnosis or treatment of the individual's condition; and

     (c) Does not unnecessarily duplicate a test available or made known to the hospital which is performed on an outpatient basis prior to admission; or

     (d) Is performed in connection with a recent admission)).

[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, § 388-550-1600, filed 12/18/97, effective 1/18/98.]

     (2) ((The medical assistance administration (MAA) may perform one or more types of utilization reviews described in subsection (3)(b) of this section.

     (3) MAA's utilization review)) All hospital services paid for by the department are subject to UR for medical necessity, appropriate level of care, and program compliance.

     (3) Authorization for inpatient and outpatient hospital services is valid only if a client is eligible for covered services on the date of service. Authorization does not guarantee payment.

     (4) The department will deny, recover, or adjust hospital payments if the department or its designee determines, as a result of UR, that a hospital service does not meet the requirements in federal regulations and WAC.

     (5) The department may perform one or more types of UR described in subsection (6) of this section.

     (6) The department's UR:

     (a) Is a concurrent, prospective, and/or retrospective (including postpay and prepay) formal evaluation of a client's documented medical care to assure that the services provided are proper and necessary and of good quality. The review considers the appropriateness of the place of care, level of care, and the duration, frequency or quantity of services provided in relation to the conditions(s) being treated; and

     (b) Includes one or more of the following:

     (i) "Concurrent utilization review" -- an evaluation performed by ((MAA)) the department or its designee during a client's course of care. A continued stay review performed during the client's hospitalization is a form of concurrent UR;

     (ii) "Prospective utilization review" -- an evaluation performed by ((MAA)) the department or its designee prior to the provision of healthcare services. Preadmission authorization is a form of prospective UR; and

     (iii) "Retrospective utilization review" -- an evaluation performed by ((MAA)) the department or its designee following the provision of healthcare services that includes both a post-payment retrospective ((utilization review)) UR (performed ((by MAA)) after healthcare services are provided and ((reimbursed)) paid), and a prepayment retrospective ((utilization review)) UR (performed ((by MAA)) after healthcare services are provided but prior to ((reimbursement)) payment). Retrospective UR is routinely performed as an audit function.

     (7) During the UR process, the department or its designee notifies the appropriate oversight entity if either of the following is identified:

     (a) A quality of care concern; or

     (b) Fraudulent conduct.

     (((4) Covered inpatient and outpatient hospital services must:

     (a) Be medically necessary as defined in WAC 388-500-0005;

     (b) Be provided at the appropriate level of care as defined in WAC 388-550-1050; and

     (c) Meet all authorization and program requirements in WAC and MAA published issuances.

     (5) Authorization for inpatient and outpatient hospital services is valid only if the client is eligible for covered services on the date of service. Authorization does not guarantee payment.))

[Statutory Authority: RCW 74.08.090 and 74.09.500. 04-20-058, § 388-550-1700, filed 10/1/04, effective 11/1/04. Statutory Authority: RCW 74.08.090. 01-02-075, § 388-550-1700, filed 12/29/00, effective 1/29/01. 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, § 388-550-1700, filed 12/18/97, effective 1/18/98.]

     (1) All transplant procedures specified in WAC 388-550-1900(2) under the conditions established in WAC 388-550-1900;

     (2) Chronic pain management services, including outpatient evaluation and inpatient treatment, as described under WAC 388-550-2400;

     (3) Polysomnograms and multiple sleep latency tests for clients one year of age and older (allowed only in outpatient hospital settings), as described under WAC 388-550-6350;

     (4) Diabetes education (allowed only in outpatient hospital setting), as described under WAC 388-550-6400; and

     (5) Weight loss program (allowed only in outpatient hospital setting), as described under WAC 388-550-6450.

[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, § 388-550-1800, filed 12/18/97, effective 1/18/98.]

     (b))) are not otherwise subject to a managed care organization (MCO) plan. Clients eligible under the alien emergency medical (AEM) program are not eligible for transplant coverage.

     (2) The department ((shall)) covers the following transplant procedures when the transplant procedures are performed in a hospital designated by the department as a "center of excellence" for transplant procedures and meet that hospital's criteria for establishing appropriateness and the medical necessity of the procedures:

     (a) Solid organs involving the heart, kidney, liver, lung, heart-lung, pancreas, kidney-pancreas and small bowel;

     (b) Bone marrow and peripheral stem cell (PSC);

     (c) Skin grafts; and

     (d) Corneal transplants.

     (3) For procedures covered under subsections (2)(a) and (b) of this section, the department ((shall)) pays facility charges only to those ((medical centers)) hospitals that meet the standards and conditions:

     (a) Established by the department; and

     (b) Specified in WAC 388-550-2100 and 388-550-2200.

     (4) The department ((shall)) pays ((facility charges)) for skin grafts and corneal transplants to any qualified ((medical facility)) hospital, subject to the limitations in this chapter.

     (5) The department ((shall)) deems organ procurement fees as being included in the ((reimbursement)) payment to the transplant ((facility)) hospital. The department may make an exception to this policy and ((reimburse)) pay these fees separately to a transplant ((facility)) hospital when an eligible medical ((care)) medical client is covered by a third-party payer which will pay for the organ transplant procedure itself but not for the organ procurement.

     (6) The department ((shall)), without requiring prior authorization, pays for up to fifteen matched donor searches per client approved for a bone marrow transplant. The department ((shall)) requires prior authorization for matched donor searches in excess of fifteen per bone marrow transplant client.

     (7) The department ((shall)) does not pay for experimental transplant procedures. In addition, the department ((shall)) considers as experimental those services including, but not limited to, the following:

     (a) Transplants of three or more different organs during the same hospital stay;

     (b) Solid organ and bone marrow transplants from animals to humans; and

     (c) Transplant procedures used in treating certain medical conditions for which use of the procedure has not been generally accepted by the medical community or for which its efficacy has not been documented in peer-reviewed medical publications.

     (8) The department ((shall)) pays for a solid organ transplant procedure only once per client's lifetime, except in cases of organ rejection by the client's immune system during the original hospital stay.

     (9) The department ((shall cover)) pays for bone marrow, PSC, skin grafts and corneal transplants ((whenever)) when medically necessary.

     (((9) In reviewing coverage for transplant services, the department shall consider cost benefit analyses on a case-by-case basis)) (10) The department may conduct a post-payment retrospective utilization review as described in WAC 388-550-1700, and may adjust the payment if the department determines the criteria in this section are not met.

[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, § 388-550-1900, filed 12/18/97, effective 1/18/98.]

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