Effective Date of Rule: August 1, 2007.

     Purpose: Medical assistance of the health and recovery services administration (HRSA) is clarifying and updating existing sections in chapter 388-550 WAC relating to the outpatient prospective payment system (OPPS), the outpatient sleep apnea/sleep study programs, blood and blood components, and conditions of payment, payment methods, and payment calculations for outpatient hospital services. These amendments change verbiage from "medical assistance administration (MAA)" to "the department," replace "ambulatory payment classification (APC) conversion factor" with "OPPS conversion factor," add the definition for "national payment rate," and ensure the department policies are applied correctly and equitably. Outpatient hospitals providing services to medical assistance clients will be able to use the rule to understand the policy, services provided, and payment limitations.

     Citation of Existing Rules Affected by this Order: Amending WAC 388-550-6000, 388-550-6350, 388-550-6500, 388-550-7000, 388-550-7050, 388-550-7100, 388-550-7200, 388-550-7300, 388-550-7400, 388-550-7500, and 388-550-7600.

     Statutory Authority for Adoption: RCW 74.08.090, 74.09.500.

      Adopted under notice filed as WSR 07-10-092 on May 1, 2007.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 11, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 11, Repealed 0.

     Date Adopted: June 16, 2007.

Stephanie E. Schiller

Rules Coordinator

     (2) To be paid for covered outpatient hospital services, a hospital provider must:

     (a) Have a current core provider agreement with ((MAA)) the department;

     (b) Bill ((MAA)) the department according to the conditions of payment under WAC 388-502-0100;

     (c) Bill ((MAA)) the department according to the time limits under WAC 388-502-0150; and

     (d) Meet program requirements in other applicable WAC and ((MAA)) the department's published issuances.

     (3) ((MAA)) The department does not pay separately for any services:

     (a) Included in a hospital's room charges;

     (b) Included as covered under ((MAA's)) the department's definition of room and board (e.g., nursing services). See WAC 388-550-1050; or

     (c) Related to an inpatient hospital admission and provided within one calendar day of a client's inpatient admission.

     (4) ((MAA)) The department does not pay:

     (a) A hospital for outpatient hospital services when a managed care plan is contracted with ((MAA)) the department to cover these services;

     (b) More than the "acquisition cost" ("A.C.") for HCPCS (Healthcare Common Procedure Coding System) codes noted in the outpatient fee schedule ((as paid "A.C.")); or

     (c) For cast room, emergency room, labor room, observation room, treatment room, and other room charges in combination when billing periods for these charges overlap.

     (5) ((MAA)) The department uses the outpatient departmental weighted costs-to-charges (ODWCC) rate to pay for covered outpatient services provided in a critical access hospital (CAH). See WAC 388-550-2598.

     (6) ((MAA)) The department uses the maximum allowable fee schedule to pay non-OPPS hospitals and non-CAH hospitals for the following types of covered outpatient hospital services listed in ((MAA's)) the department's current published outpatient hospital fee schedule and billing instructions:

     (a) ((Laboratory services)) EKG/ECG/EEG and other diagnostics;

     (b) Imaging services;

     (c) ((EKG/ECG/EEG and other diagnostics)) Immunizations;

     (d) ((Physical therapy)) Laboratory services;

     (e) ((Speech/language)) Occupational therapy;

     (f) ((Synagis)) Physical therapy;

     (g) Sleep studies; ((and))

     (h) Speech/language therapy;

     (i) Synagis; and

     (j) Other hospital services identified and published by the department.

     (7) ((MAA)) The department uses the hospital outpatient rate as described in WAC 388-550-4500 to pay for covered outpatient hospital services when:

     (a) A hospital provider is a non-OPPS or a non-CAH provider; and

     (b) The services are not included in subsection (6) of this section.

     (8) Hospitals must provide documentation as required and/or requested by ((MAA)) the department.

     (9) All hospital providers must present final charges to the department within three hundred sixty-five days of the "statement covers period from date" shown on the claim. The state of Washington is not liable for payment based on billed charges received beyond three hundred sixty-five days from the "statement covers period from date" shown on the claim.

[Statutory Authority: RCW 74.08.090 and 74.09.500. 04-20-060, § 388-550-6000, filed 10/1/04, effective 11/1/04. Statutory Authority: RCW 74.04.050, 74.04.057, 74.08.090, and Public Law 104-191. 03-19-044, § 388-550-6000, filed 9/10/03, effective 10/11/03. Statutory Authority: RCW 74.08.090, 74.09.500, 74.09.035(1), and 43.88.290. 02-21-019, § 388-550-6000, filed 10/8/02, effective 11/8/02. Statutory Authority: RCW 74.09.090, 42 U.S.C. 1395x(v), 42 C.F.R. 447.271 and 42 C.F.R. 11303. 99-14-028, § 388-550-6000, 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, § 388-550-6000, 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, § 388-550-6000, filed 12/18/97, effective 1/18/98.]

     (2) The department ((shall)) pays for polysomnograms or multiple sleep latency tests only when performed in outpatient hospitals approved by the ((medical assistance administration (MAA))) the department as centers of excellence for sleep apnea/sleep study programs.

     (3) The department ((shall)) does not require prior authorization for sleep studies as outlined in WAC 388-550-1800.

     (4) Hospitals ((shall)) must bill the department for sleep studies using current procedural terminology codes. The department ((shall)) does not ((reimburse)) pay hospitals for these services when billed under revenue codes alone.

[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, § 388-550-6350, filed 12/18/97, effective 1/18/98.]

     (a) Blood bank service charges for processing ((the)) and storage of blood and blood ((products)) components; and

     (b) Blood administration charges.

     (2) ((Other than payment of blood bank service charges,)) The department ((shall)) does not pay for blood and blood ((derivatives)) components.

     (3) The department ((shall)) does not pay a hospital separately ((reimburse blood bank service charges for handling and processing blood and blood derivatives provided to an individual who is hospitalized when the hospital is reimbursed under)) for the services identified in subsection (1) when these services are included and paid using the diagnosis-related group (DRG) ((system)), per diem, or per case rate payment rates. ((The department shall bundle these service charges into the total DRG payment.))

     (4) The department ((shall reimburse a hospital, which is)) pays a hospital no more than the hospital's cost, as determined by the department, for the services identified in subsection (1) when the hospital is paid ((under)) using the ratio of costs-to-charges (RCC) or departmental weighted costs-to-charges (DWCC) payment method((, separately for processing blood and blood products)).

[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, § 388-550-6500, filed 12/18/97, effective 1/18/98.]

     (2) For a complete description of the CMS outpatient hospital prospective payment system, including the assignment of status indicators (SIs), see 42 CFR, Chapter IV, Part 419. The Code of Federal Regulations (CFR) is available from the CFR web site and the Government Printing Office, Seattle office. The document is also available for public inspection at the Washington state library (a copy of the document may be obtained upon request, subject to any pertinent charge).

[Statutory Authority: RCW 74.08.090 and 74.09.500. 04-20-061, § 388-550-7000, filed 10/1/04, effective 11/1/04.]

     (("Alternative outpatient payment" means a payment calculated using a method other than the ambulatory payment classification (APC) method, such as the outpatient hospital rate or the fee schedule.))

     "Ambulatory payment classification (APC)" means a grouping that categorizes outpatient visits according to the clinical characteristics, the typical resource use, and the costs associated with the diagnoses and the procedures performed.

     (("Ambulatory payment classification (APC) weight" means the relative value assigned to each APC.

     "Ambulatory payment classification (APC) conversion factor" means a dollar amount that is one of the components of the APC payment calculation.))

     "Budget target" means the amount of money appropriated by the legislature or through ((MAA's)) the department's budget process to pay for a specific group of services, including anticipated caseload changes or vendor rate increases.

     "Budget target adjustor" means the ((MAA)) department specific multiplier applied to all payable ambulatory payment classifications (APCs) to allow ((MAA)) the department to reach and not exceed the established budget target.

     "Discount factor" means the percentage applied to additional significant procedures when a claim has multiple significant procedures or when the same procedure is performed multiple times on the same day. Not all significant procedures are subject to a discount factor.

     "Medical visit" means diagnostic, therapeutic, or consultative services provided to a client by a healthcare professional in an outpatient setting.

     "Modifier" means a two-digit alphabetic and/or numeric identifier that is added to the procedure code to indicate the type of service performed. The modifier provides the means by which the reporting hospital can describe or indicate that a performed service or procedure has been altered by some specific circumstance but not changed in its definition or code. The modifier can affect payment or be used for information only. Modifiers are listed in fee schedules.

     "National payment rate" means a rate for a given procedure code, published by the centers for medicare and medicaid (CMS), that does not include a state or location specific adjustment.

     "Observation services" means services furnished by a hospital on the hospital's premises, including use of a bed and periodic monitoring by hospital staff, which are reasonable and necessary to evaluate an outpatient's condition or determine the need for possible admission to the hospital as an inpatient.

     "Outpatient code editor (OCE)" means a software program published by 3M Health Information Systems that ((MAA)) the department uses for classifying and editing claims in ambulatory payment classification (APC) based OPPS.

     "Outpatient prospective payment system (OPPS)" means the payment system used by ((MAA)) the department to calculate reimbursement to hospitals for the facility component of outpatient services. This system uses ambulatory payment classifications (APCs) as the primary basis of payment.

     "Outpatient prospective payment system conversion factor" means a hospital-specific multiplier assigned by the department that is one of the components of the APC payment calculation.

     "Pass-throughs" means certain drugs, devices, and biologicals, as identified by centers for medicare and medicaid services (CMS), for which providers are entitled to additional separate payment until the drugs, devices, or biologicals are assigned their own ambulatory payment classification (APC).

     "Significant procedure" means a procedure, therapy, or service provided to a client that constitutes the primary reason for the visit to the healthcare professional.

     "Status indicator (SI)" means a one-digit identifier assigned to each service by the outpatient code editor (OCE) software.

     "SI" see "status indicator."

[Statutory Authority: RCW 74.08.090 and 74.09.500. 04-20-061, § 388-550-7050, filed 10/1/04, effective 11/1/04.]

     (1) Cancer hospitals;

     (2) Critical access hospitals;

     (3) Free-standing psychiatric hospitals;

     (4) ((Out-of-state hospitals (Bordering-city hospitals are considered in-state hospitals. See WAC 388-550-1050.);

     (5))) Pediatric hospitals;

     (((6))) (5) Peer group A hospitals;

     (((7))) (6) Rehabilitation hospitals; and

     (((8))) (7) Veterans' and military hospitals.

[Statutory Authority: RCW 74.08.090 and 74.09.500. 04-20-061, § 388-550-7100, filed 10/1/04, effective 11/1/04.]

AMBULATORY PAYMENT CLASSIFICATION (APC) METHOD

     (2) ((MAA)) The department uses the APC method when the centers for medicare and medicaid services (CMS) has established ((either an APC weight or)) a national payment rate to pay for covered services. The APC method is the primary payment methodology for OPPS. Examples of services paid by the APC methodology include, but are not limited to:

     (a) Ancillary services;

     (b) Medical visits;

     (((b))) (c) Nonpass-through drugs or devices;

     (d) Observation services;

     (e) Packaged services subject to separate payment when criteria are met;

     (f) Pass-through drugs;

     (g) Significant procedures that are not subject to multiple procedure discounting (except for dental-related services);    

     (((c))) (h) Significant procedures that are subject to multiple procedure discounting; and    

     (((d) Nonpass-through drugs or devices;

     (e) Observation services; and

     (f) Ancillary services)) (i) Other services as identified by the department.

OPPS MAXIMUM ALLOWABLE FEE SCHEDULE

     (3) ((MAA)) The department uses the ((OPPS)) outpatient fee schedule published in the ((OPPS section of MAA's)) the department's billing instructions to pay for covered:

     (a) Services that are exempted from the APC payment methodology or services for which there are no established weight(s);

     (b) Procedures that are on the CMS inpatient only list;

     (c) Items, codes, and services that are not covered by medicare;    

     (d) Corneal tissue acquisition;

     (e) ((Drugs or biologicals that are pass-throughs; and

     (f))) Devices that are pass-throughs (see WAC 388-550-7050 for definition of pass-throughs); and

     (f) Dental clinic services.

HOSPITAL OUTPATIENT RATE

     (4) ((MAA)) The department uses the hospital outpatient rate described in WAC 388-550-3900 and 388-550-4500 to pay for the services listed in subsection (3) of this section for which ((MAA)) the department has not established a maximum allowable fee.

[Statutory Authority: RCW 74.08.090 and 74.09.500. 04-20-061, § 388-550-7200, filed 10/1/04, effective 11/1/04.]

     (a) When a unit limit for services is not stated in the ((OPPS)) outpatient fee schedule, ((MAA)) department pays for services according to the program's unit limits stated in applicable WAC and published issuances.

     (b) Because multiple units for services may be factored into the ambulatory payment classification (APC) weight, ((MAA)) department pays for services according to the unit limit stated in the ((OPPS)) outpatient fee schedule when the limit is not the same as the program's unit limit stated in applicable WAC and published issuances.

     (2) ((MAA)) The department does not pay separately for covered services that are packaged into the APC rates. These services are paid through the APC rates.

     (3) The department:

     (a) Limits surgical dental services payment to the ambulatory surgical services fee schedule and pays:

     (i) The first surgical procedure at the applicable ambulatory surgery center group rate; and

     (ii) The second surgical procedure at fifty percent of the ambulatory surgery center group rate.

     (b) Considers all surgical procedures not identified in subsection (a) to be bundled.

     (4) The department limits outpatient services billing to one claim per episode of care. If there are late charges, or if any line of the claim is denied, the department requires the entire claim to be adjusted.

[Statutory Authority: RCW 74.08.090 and 74.09.500. 04-20-061, § 388-550-7300, filed 10/1/04, effective 11/1/04.]

[Statutory Authority: RCW 74.08.090 and 74.09.500. 04-20-061, § 388-550-7400, filed 10/1/04, effective 11/1/04.]

[Statutory Authority: RCW 74.08.090 and 74.09.500. 04-20-061, § 388-550-7500, filed 10/1/04, effective 11/1/04.]

APC payment =

((APC relative weight x APC conversion factor x)) National payment rate x Hospital OPPS conversion factor x

Discount factor (if applicable) x Units of service (if applicable) x

Budget target adjustor
     (2) The total OPPS claim payment is the sum of the APC payments plus the sum of the lesser of the billed charge or allowed charge for each non-APC service.

     (3) The department pays hospitals for claims that involve clients who have third-party liability (TPL) insurance, the lesser of either the:

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

     (b) Allowed amount minus the third-party payment amount.

[Statutory Authority: RCW 74.08.090 and 74.09.500. 04-20-061, § 388-550-7600, filed 10/1/04, effective 11/1/04.]

© Washington State Code Reviser's Office