Original Notice.

     Preproposal statement of inquiry was filed as WSR 08-14-125.

     Title of Rule and Other Identifying Information: The department is amending chapter 388-548 WAC, Federally qualified health centers (FQHC).

     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://www.dshs.wa.gov/msa/rpau/docket.html or by calling (360) 664-6094), on January 26, 2010, at 10:00 a.m.

     Date of Intended Adoption: Not sooner than January 27, 2010.

     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 DSHSRPAURulesCoordinator@dshs.wa.gov, fax (360) 664-6185, by 5 p.m. on January 26, 2010.

     Assistance for Persons with Disabilities: Contact Jennisha Johnson, DSHS rules consultant, by January 5, 2010, TTY (360) 664-6178 or (360) 664-6094 or by e-mail at johnsjl4@dshs.wa.gov.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose of this chapter is to implement the federal payment methodology for FQHC under section 702 of the Benefit Improvement and Protection Act (BIPA) of 2000. The act replaced cost-based reimbursement methodology with medicaid FQHC prospective payment system (PPS). This rule will replace the emergency rule that is currently in effect under WSR 09-22-029. It describes the reimbursement methodology the department will use, as authorized under 42 U.S.C. 1396a(bb), to meet the legislature's intent that the department continue to meet federal payment standards for FQHCs with a lower overall level of appropriation as required under sections 201 and 209 of the 2009-2011 final legislative budget.

     Reasons Supporting Proposal: The rule is needed to serve as the foundation for the program and its operations. The Administrative Procedure Act requires agency policy to be codified. These rules incorporate policies into rule, incorporate federal payment methodology into rule, and provide a point of access for the public to read rules for the program.

     Statutory Authority for Adoption: RCW 74.08.090.

     Statute Being Implemented: RCW 74.08.090, sections 201 and 209 of 2009-2011 budget bill.

     Rule is necessary because of federal law, BIPA of 2000 section 702.

     Name of Proponent: Department of social and health services, governmental.

     Name of Agency Personnel Responsible for Drafting: Wendy L. Boedigheimer, P.O. Box 45504, Olympia, WA 98504-5504, (360) 725-1306; Implementation and Enforcement: Kevin Collins, P.O. Box 5510 [45510], Olympia, WA 98504-5510, (360) 725-2104.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed rules do not impose any new costs on small businesses.

     A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Kevin Collins, P.O. Box 45510, Olympia, WA 98504-5510, phone (360) 725-2104, fax (360) 586-9727, e-mail collikm@dshs.wa.gov.

December 16, 2009

Stephanie E. Vaughn

Rules Coordinator

     (1) Requirements for enrollment as a federally qualified health center (FQHC) provider; and

     (2) Reimbursement methodology for services provided by FQHCs to clients of medical assistance.

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     APM index - The alternative payment methodology (APM) is used to update APM encounter payment rates on an annual basis. The APM index is a measure of input price changes experienced by Washington's federally-qualified health center (FQHC) and rural health clinic (RHC) providers. The index is derived from the federal medicare economic index (MEI) and Washington-specific variable measures.

     Base year - The year that is used as the benchmark in measuring a center's total reasonable costs for establishing base encounter rates.

     Cost report - A statement of costs and provider utilization that occurred during the time period covered by the cost report. FQHCs must complete a cost report when there is a change in scope, rebasing of the encounter rate, or when the department sets a base rate.

     Encounter - A face-to-face visit between a client and a FQHC provider (e.g., a physician, physician's assistant, or advanced registered nurse practitioner) who exercises independent judgment when providing services that qualify for an encounter rate.

     Encounter rate - A cost-based, facility-specific rate for covered FQHC services, paid to an FQHC for each valid encounter it bills.

     Enhancements (also called managed care enhancements) - A monthly amount paid by the department to FQHCs for each client enrolled with a managed care organization (MCO). Plans may contract with FQHCs to provide services under managed care programs. FQHCs receive enhancements from the department in addition to the negotiated payments they receive from the MCOs for services provided to enrollees.

     Federally qualified health center (FQHC) - An entity that has entered into an agreement with the centers for medicare and medicaid services (CMS) to meet medicare program requirements under 42 CFR 405.2434 and:

     (1) Is receiving a grant under section 329, 330, or 340 of the public health service (PHS) act, or is receiving funding from such a grant under a contract with the recipient of such a grant and meets the requirements to receive a grant under section 330 of the public health service act;

     (2) Based on the recommendation of the PHS, is determined by CMS to meet the requirements for receiving such as grant;

     (3) Was treated by CMS, for purposes of part B, as a comprehensive federally funded health center (FFHC) as of January 1, 1990; or

     (4) Is an outpatient health program or facility operated by a tribe or tribal organizations under the Indian Self-Determination Act or by an Urban Indian organization receiving funding under Title V of the Indian Health Care Improvement Act.

     Fee-for-service - A payment method the department uses to pay providers for covered medical services provided to medical assistance clients, except those services provided under the department's prepaid managed care organizations or those services that qualify for an encounter rate.

     Interim rate - The rate established by the department to pay an FQHC for covered FQHC services prior to the establishment of a permanent rate for that facility.

     Rebasing - The process of recalculating the conversion factors, per diems, per case rates, or RCC rates using historical data..

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     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.
NEW SECTION
WAC 388-548-1200   Federally qualified health centers -- Enrollment.   (1) To enroll as a medical assistance provider and receive payment for services, a federally qualified health center (FQHC) must:

     (a) Receive FQHC certification for participation in the Title XVIII (medicare) program according to 42 CFR 491;

     (b) Sign a core provider agreement; and

     (c) Operate in accordance with applicable federal, state, and local laws.

     (2) The department uses one of two timeliness standards for determining the effective date of a medicaid-certified FQHC.

     (a) The department uses medicare's effective date if the FQHC returns a properly completed core provider agreement and FQHC enrollment packet within sixty calendar days from the date of medicare's letter notifying the center of the medicare certification.

     (b) The department uses the date the signed core provider agreement is received if the FQHC returns the properly completed core provider agreement and FQHC enrollment packet sixty-one or more calendar days after the date of medicare's letter notifying the clinic of the medicare certification.

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     (a) Physician services specified in 42 CFR 405.2412.

     (b) Nurse practitioner or physician assistant services specified in 42 CFR 405.2414.

     (c) Clinical psychologist and clinical social worker services specified in 42 CFR 405.2450.

     (d) Visiting nurse services specified in 42 CFR 405.2416.

     (e) Nurse-midwife services specified in 42 CFR 405.2401.

     (f) Preventive primary services specified in 42 CFR 405.2448.

     (2) The department pays for FQHC services when they are:

     (a) Within the scope of an eligible client's medical assistance program. Refer to WAC 388-501-0060 scope of services; and

     (b) Medically necessary as defined WAC 388-500-0005.

     (3) FQHC services may be provided by any of the following individuals in accordance with 42 CFR 405.2446:

     (a) Physicians;

     (b) Physician assistants (PA);

     (c) Nurse practitioners (NP);

     (d) Nurse midwives or other specialized nurse practitioners;

     (e) Certified nurse midwives;

     (f) Registered nurses or licensed practical nurses; and

     (g) Psychologists or clinical social workers.

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     (2) Effective January 1, 2009, FQHCs have the choice to continue being reimbursed under the PPS or to be reimbursed under an alternative payment methodology (APM), as authorized by 42 U.S.C. 1396a (bb)(6). As required by 42 U.S.C. 1396a(bb), payments made under the APM must be at least as much as PPS.

     (3) The department calculates the FQHC's PPS encounter rate as follows:

     (a) Until the FQHC's first audited department cost report is available, the department pays an average encounter rate of other similar FQHCs within the state, otherwise known as an interim rate;

     (b) Upon availability of the FQHC's audited cost report, the department sets the clinic's encounter rate at one hundred percent of its total reasonable costs as defined in the cost report. The FQHC receives this rate for the remainder of the calendar year during which the audited cost report became available. Thereafter, the encounter rate is then inflated each January 1 by the medicare economic index (MEI) for primary care services.

     (4) For FQHCs in existence during calendar years 1999 and 2000, the department sets the payment prospectively using a weighted average of one hundred percent of the center's total reasonable costs for calendar years 1999 and 2000 and adjusted for any increase or decrease in the scope of services furnished during the calendar year 2001 to establish a base encounter rate.

     (a) The department adjusts a PPS base encounter rate to account for an increase or decrease in the scope of services provided during calendar year 2001 in accordance with WAC 388-548-1500.

     (b) The PPS base encounter rates are determined using audited cost reports and each year's rate is weighted by the total reported encounters. The department does not apply a capped amount to these base encounter rates. The formula used to calculate the base encounter rate is as follows:

Specific FQHC Base Encounter Rate=	(1999 Rate x 1999 Encounters) + (2000 Rate x 2000 Encounters)
	(1999 Encounters + 2000 Encounters) for each FQHC

     (c) Beginning in calendar year 2002 and any year thereafter, the encounter rate is increased by the MEI for primary care services, and adjusted for any increase or decrease within the center's scope of services.

     (5) The department calculates the FQHC's APM encounter rate as follows:

     (a) For the period beginning January 1, 2009, the APM utilizes the FQHC base encounter rates, as described in WAC 388-548-1400 (4)(b).

     (i) The base rates are adjusted to reflect any valid changes in scope of service between years 2002 and 2009.

     (ii) The adjusted base rates are then inflated by each annual percentage, from years 2002 through 2009, of the APM index. The result is the year 2009 APM rate for each FQHC that chooses to be reimbursed under the APM.

     (b) The department will ensure that the APM pays an amount that is at least equal to the PPS, the annual inflator used to increase the APM rates is the greater of the APM index or the MEI.

     (c) The department will periodically rebase the APM rates. The department will not rebase rates determined under the PPS.

     (6) The department limits encounters to one per client, per day except in the following circumstances:

     (a) The visits occur with different doctors with different specialties; or

     (b) There are separate visits with unrelated diagnoses.

     (7) FQHC services and supplies incidental to the provider's services are included in the encounter rate payment.

     (8) Payments for nonFQHC services provided in an FQHC are made on a fee-for-service basis using the department's published fee schedules. NonFQHC services are subject to the coverage guidelines and limitations listed in chapters 388-500 through 557 WAC.

     (9) For clients enrolled with a managed care organization, covered FQHC services are paid for by that plan.

     (10) Only clients enrolled in Title XIX (medicaid) or Title XXI (CHIP) are eligible for encounter or enhancement payments. The department does not pay the encounter rate or the enhancement rate for clients in state-only medical programs. Services provided to clients in state-only medical programs are considered fee-for-service regardless of the type of service performed.

     (11) For clients enrolled with a managed care organization (MCO), the department pays each FQHC a supplemental payment in addition to the amounts paid by the MCO. The supplemental payments, called enhancements, are paid in amounts necessary to ensure compliance with 42 U.S.C. 1396a (bb)(5)(A).

     (a) The FQHCs receive an enhancement payment each month for each managed care client assigned to them by an MCO.

     (b) To ensure that the appropriate amounts are paid to each FQHC, the department performs an annual reconciliation of the enhancement payments. For each FQHC, the department will compare the amount actually paid to the amount determined by the following formula: (managed care encounters times encounter rate) less FFS equivalent of MCO services. If the center has been overpaid, the department will recoup the appropriate amount. If the center has been underpaid, the department will pay the difference.

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     (2) When the department determines that a change in scope of service has occurred after the base year, the department adjusts the FQHC's encounter rate to reflect the change.

     (3) FQHCs must:

     (a) Notify the department's FQHC program manager in writing, at the address published in the department's federally qualified health centers billing instructions, of any changes in scope of service no later than sixty calendar days after the effective date of the change; and

     (b) Provide the department with all relevant and requested documentation pertaining to the change in scope of service.

     (4) The department adjusts the encounter rate to reflect the change in scope of service using one or more of the following:

     (a) A medicaid comprehensive desk review of the FQHC's cost report;

     (b) Review of a medicare audit of the FQHC's cost report; or

     (c) Other documentation relevant to the change in scope of service.

     (5) The adjusted encounter rate will be effective on the date the change of scope of service is effective.

     (6) For centers reimbursed under the alternative payment methodology (APM), the department considers an FQHC change in scope of service to be a change in the type of services provided by the FQHC. Changes in intensity, duration, and/or amount of services will be addressed in the next scheduled encounter rate rebase. Changes in scope of service apply only to covered medicaid services.

     (7) When the department determines that a change in scope of service has occurred after the base year, the department adjusts the FQHC's encounter rate to reflect the change.

     (8) FQHCs must:

     (a) Notify the department's FQHC program manager in writing, at the address published in the department's FQHC billing instructions, of any changes in scope of service no later than sixty calendar days after the effective date of the change; and

     (b) Provide the department with all relevant and requested documentation pertaining to the change in scope of service.

     (9) The department adjusts the encounter rate to reflect the change in scope of service using one or more of the following:

     (a) A medicaid comprehensive desk review of the FQHC's cost report;

     (b) Other documentation relevant to the change in scope of service.

     (10) The adjusted encounter rate will be effective on the date the change of scope of service is effective.

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