WSR 09-08-118



(Health and Recovery Services Administration)

[ Filed March 31, 2009, 5:27 p.m. ]

     Original Notice.

     Preproposal statement of inquiry was filed as WSR 09-04-072.

     Title of Rule and Other Identifying Information: Amending WAC 388-550-3600 Diagnosis-related group (DRG) payment -- Hospital transfers, 388-550-3700 DRG high-cost and low-cost outliers, and new system DRG and per diem high outliers, 388-550-4500 Payment method -- Inpatient RCC rate, administrative day rate, hospital outpatient rate, and swing bed rate, 388-550-7050 OPPS definitions, 388-550-7100 OPPS -- Exempt hospitals, 388-550-7500 OPPS conversion factor, and 388-550-7600 OPPS payment calculation; and new sections WAC 388-550-4550 Administrative day rate and swing bed day rate and 388-550-7450 OPPS budget target adjustor.

     Hearing Location(s): Office Building 2, Auditorium, DSHS Headquarters, 1115 Washington, Olympia, WA 98504 (public parking at 11th and Jefferson. A map is available at or by calling (360) 664-6094), on May 26, 2009, at 10:00 a.m.

     Date of Intended Adoption: Not sooner than May 27, 2009.

     Submit Written Comments to: DSHS Rules Coordinator, P.O. Box 45850, Olympia, WA 98504-5850, delivery 4500 10th Avenue S.E., Lacey, WA 98503, e-mail, fax (360) 664-6185, by 5 p.m. on May 26, 2009.

     Assistance for Persons with Disabilities: Contact Jennisha Johnson, DSHS rules consultant, by May 12, 2009, TTY (360) 664-6178 or (360) 664-6094 or by e-mail at

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed changes update and clarify hospital-related sections and are intended to address the anticipated levels of funding from the legislature, inform providers of program changes, and clarify and update current language. These rules:

Update and clarify how the department pays a hospital when an acute care hospital or distinct unit transfers a client to another acute care hospital or distinct unit, or when a client transfers from an acute care hospital or distinct unit to another acute care hospital or distinct unit or other places as identified in the rule;
Remove "neonatal" from the list of DRG service categories for claims that group to a medical, surgical, or burn diagnosis related services (DRG) category; remove "prepay" from "retrospective prepay utilization review" and clarify that the department may perform these reviews;
Define "outpatient adjustment factor" and add that the inpatient adjustment factor does not apply to hospitals paid under the certified public expenditure (CPE) payment method, except to payments for repriced claims adjusted according to WAC 388-550-4670 (2)(a)(ii); update and clarify how the department calculates and uses the ratio of costs-to-charges (RCC) payment method to pay inpatient hospital claims;
Remove language for "administrative day rate and swing bed rate" from WAC 388-550-4500 and place it into a new section;
Add language that the department may change the method for calculating OPPS rates to achieve the legislature's targeted expenditure levels for outpatient hospital services;
Add language that the legislative direction may take the form of express language in the Biennial Appropriations Act or may be reflected in the level of funding appropriated to the department in the Biennial Appropriations Act;
Update the definitions for "budget target adjustor," outpatient code editor (OCE), and "outpatient prospective payment system (OPPS) conversion factor";
Add definitions for "nationwide rate," and "outpatient prospective payment system (OPPS) rate";
Add language that incorporates into rule which hospitals are no longer exempted from the outpatient prospective payment system (OPPS) method and that the department pays all covered outpatient hospital services, except for those provided in critical access hospitals (CAHs), under the OPPS methodology;
Add a new section "OPPS budget target adjustor" that describes the budget target adjustor and how the department calculates the OPPS budget target adjustor;
Clarify how the department calculates the hospital-specific OPPS rates;
Add language that the department may change the method for calculating OPPS payments to achieve the legislature's targeted expenditure levels; and
Update and clarify current language for improved readability.

     Reasons Supporting Proposal: The department must meet the legislature's targeted budget expenditure levels for payment of hospital and hospital-related services provided to medical assistance clients.

     Statutory Authority for Adoption: RCW 74.04.050, 74.04.057, 74.08.090, 74.09.500, and 74.09.530.

     Statute Being Implemented: RCW 74.04.050, 74.04.057, 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 45505, Olympia, WA 98504-5504, (360) 725-1342; Implementation and Enforcement: Carolyn Adams, P.O. Box 45510, Olympia, WA 98504-5510, (360) 725-1854.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. These rules do not impact small businesses.

     A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Carolyn Adams, Health and Recovery Services Administration, P.O. Box 45510, Olympia, WA 98504-5510, phone (360) 725-1854, fax (360) 753-9152, e-mail

March 30, 2009

Stephanie E. Schiller

Rules Coordinator

     Reviser's note: The material contained in this filing exceeded the page-count limitations of WAC 1-21-040 for appearance in this issue of the Register. It will appear in the 09-09 issue of the Register.

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