WSR 14-09-100 PROPOSED RULES HEALTH CARE AUTHORITY (Washington Apple Health) [Filed April 22, 2014, 1:58 p.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 14-07-025.
Title of Rule and Other Identifying Information: Amending WAC 182-550-3400 Case-mix index, 182-550-3600 Diagnosis-related group (DRG) payment—Hospital transfers, 182-550-3700 DRG high outliers and 182-550-4500 Payment method—Ratio of costs-to-charges (RCC); and repealing WAC 182-550-3300, 182-550-3350, 182-550-3500, and 182-550-4600.
Hearing Location(s): Health Care Authority (HCA), Cherry Street Plaza Building, Sue Crystal Conference Room 106A, 626 8th Avenue, Olympia, WA 98504, on May 27, 2014, at 10:00 a.m. Metered public parking is available street side around building. A map is available at http://www.hca.wa.gov/documents/directions_to_csp.pdf or directions can be obtained by calling (360) 725-1000.
Date of Intended Adoption: Not sooner than May 28, 2014.
Submit Written Comments to: HCA Rules Coordinator, P.O. Box 45504, Olympia, WA 98504-5504, delivery 626 8th Avenue, Olympia, WA 98504, e-mail arc@hca.wa.gov, fax (360) 586-9727, by 5:00 p.m. on May 27, 2014.
Assistance for Persons with Disabilities: Contact Kelly Richters by May 22, 2014, TTY (800) 848-5429 or (360) 725-1307 or e-mail kelly.richters@hca.wa.gov.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Revising the outlier rules is an integral part of updating inpatient hospital payment rates to reflect changes in hospital industry practices and state medicaid payment policies as requested by the legislature. The update called "rebasing" is completed by a consultant hired by the state of Washington in coordination with stakeholders including hospitals, the Washington State Hospital Association, office of financial management, legislative staff and others.
Statutory Authority for Adoption: RCW 41.05.021.
Statute Being Implemented: Chapter 74.60 RCW.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: HCA, governmental.
Name of Agency Personnel Responsible for Drafting: Jason R. P. Crabbe, Olympia, Washington 98504-2716, (360) 725-1346; Implementation and Enforcement: Dylan Oxford, Olympia, Washington 98504-5500, (360) 725-2130.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The joint administrative [rules] review committee has not requested the filing of a small business economic impact statement, and these rules do not impose a disproportionate cost impact on small businesses.
A cost-benefit analysis is not required under RCW 34.05.328. RCW 34.05.328 does not apply to HCA rules unless requested by the joint administrative rules review committee or applied voluntarily.
April 22, 2014
Kevin M. Sullivan
Rules Coordinator
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-3400 Case-mix index.
(1) The ((department:
(a) Adjusts hospital costs used to calculate the conversion factor and per diem rates during the rebasing process by the hospital's case-mix index; and
(b))) medicaid agency calculates the case-mix index (CMI) for each individual hospital to measure the relative cost for treating medicaid and ((SCHIP)) CHIP cases in a given hospital. The CMI represents the relative acuity of the claims.
(2) ((The department calculates the CMI for each hospital using medicaid and SCHIP admissions data from the individual hospital and the hospital's base period cost report. See WAC 388-550-3150. The CMI is calculated for each hospital by summing all relative weights for all claims in the dataset, and dividing the sum of the relative weights by the number of claims. That amount represents the relative acuity of the claims. The hospital-specific CMI is calculated as follows:)) Using medicaid and children's health insurance program (CHIP) admissions data from the individual hospital and the hospital's base period cost report, the agency calculates the CMI by:
(a) ((The department multiplies)) Multiplying the number of medicaid and ((SCHIP)) CHIP admissions to the hospital for a specific diagnosis-related group (DRG) classification by the relative weight for that DRG classification. The ((department)) agency repeats this process for each DRG billed by the hospital((.));
(b) ((The department adds)) Adding together the products in (a) of this subsection for all of the medicaid and ((SCHIP)) CHIP admissions to the hospital in the base year((.)); and
(c) ((The department divides)) Dividing the sum obtained in (b) of this subsection by the corresponding number of medicaid and ((SCHIP)) CHIP hospital admissions.
(((d) Example: If the average case mix index for a group of hospitals is 1.0, a CMI of 1.0 or greater for a hospital in that group means that the hospital has treated a mix of patients in the more costly DRG classifications. A CMI of less than 1.0 indicates a mix of patients in the less costly DRG classifications.))
(3) The ((department)) agency recalculates each hospital's ((case-mix index periodically, but no less frequently than each time rebasing is done)) CMI during inpatient hospital rebasing, or as needed.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-3600 Diagnosis-related group (DRG) payment—Hospital transfers.
(1) The rules in this section apply when an eligible client transfers from an acute care hospital or distinct unit to any of the following:
(a) ((Before July 1, 2009, to another acute care hospital or distinct unit; and
(b) On or after July 1, 2009, to one of the following:
(i))) Another acute care hospital or distinct unit;
(((ii))) (b) A skilled nursing facility (SNF);
(((iii))) (c) An intermediate care facility (ICF);
(((iv))) (d) Home care under the ((department's)) medicaid agency's home health program;
(((v))) (e) A long-term acute care facility (LTAC);
(((vi))) (f) Hospice (facility-based or in the client's home);
(((vii))) (g) A hospital-based, medicare-approved swing bed, or another distinct unit such as a rehabilitation or psychiatric unit (see WAC ((388-550-3000)) 182-550-3000); or
(((viii))) (h) A nursing facility certified under medicaid but not medicare.
(2) The ((department)) agency pays a transferring hospital ((that transfers an emergency case to another acute care hospital, including an acute physical medicine and rehabilitation (acute PM&R) facility or distinct unit, an acute psychiatric facility or distinct unit, and a long-term acute care facility,)) the lesser of:
(a) The appropriate diagnosis-related group (DRG) payment ((based on a stable DRG)); or
(b) ((A)) The prorated DRG payment ((when the client's stay at the transferring hospital is less than the average length of stay (LOS) for the AP-DRG classification as determined by the department.
(3) The department pays a transferring hospital as follows:
(a) For dates of admission 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 LOS.
(b) For dates of admission on and 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 day, not to exceed the total calculated DRG-based payment amount including any outlier payment amount. The department determines the per diem by dividing the hospital's allowed payment amount for the appropriate DRG by that DRG's statewide average LOS (see WAC 388-550-4300) for the AP-DRG classification as determined by the department.
(4) 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) The department's LOS data to determine the number of medically necessary days for a client's hospital stay.
(5) When a post-acute care hospital transfer occurs to one of the locations listed in subsection (1)(b)(ii) through (viii) of this section, the department pays the transferring hospital the lesser of:
(a) The appropriate DRG payment; or
(b) For dates of admission on and after July 1, 2009, a per diem rate multiplied by the number of medically necessary days the client stays at the transferring hospital plus one day, not to exceed the total calculated DRG-based payment amount including any outlier payment amount. The department determines the per diem by dividing the hospital's allowed payment amount for the appropriate DRG by that DRG's statewide average length of stay (see WAC 388-550-4300) for the AP-DRG classification as determined by the department.
(6) The department applies the outlier payment methodology if a transfer case qualifies:
(a) For dates of admission before August 1, 2007, as a high-cost or low-cost outlier; and
(b) For dates of admission on or after August 1, 2007, as a high-cost outlier.
(7))), which the agency calculates by:
(i) Using the average length of stay (ALOS) for the assigned DRG:
(A) The agency uses the 3M national average length of stay for paying inpatient claims.
(B) The agency publishes ALOS values on its web site;
(ii) Dividing the hospital's allowed payment amount for the assigned DRG by the ALOS in (b)(i) of this subsection;
(iii) Determining the client length of stay as all medically necessary days at the transferring hospital, plus one day; and
(iv) Multiplying the number in (b)(ii) of this subsection by the length of stay determined in (b)(iii) of this subsection.
(3) The agency applies the outlier payment method if a transfer case qualifies as a high outlier. To qualify for a high outlier, the costs (ratio of cost-to-charges multiplied by covered allowed charges) for the transfer must exceed the outlier threshold. The threshold is the DRG allowed amount (hospital-specific rate multiplied by DRG relative weight) plus forty thousand dollars.
(4) The ((department)) agency does not pay a transferring hospital for a nonemergency case when the transfer is to another acute care hospital.
(((8))) (5) The ((department)) agency pays the full DRG payment to the discharging hospital for a discharge to home or self-care. This is the ((department's)) agency's maximum payment to a discharging hospital.
(((9))) (6) 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.
(10) The department)) agency pays ((the)) an intervening hospital(((s))) a per diem payment based on the method described in subsection (((3))) (2) of this section.
(((11))) (7) The transfer payment policy described in this section does not apply to claims grouped into ((AP-DRG)) DRG classifications ((that are paid)) the agency pays based on the per diem, case rate, or ratio of costs-to-charges (RCC) payment methods.
(((12))) (8) The ((department)) agency applies the following to the payment for each claim((,)):
(a) All applicable adjustments for client responsibility((,));
(b) Any third-party liability((,));
(c) Medicare((,)) payments; and
(d) Any other adjustments as determined by the ((department)) agency.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-3700 DRG ((high-cost and low-cost)) high outliers((, and new system DRG and per diem high outliers)).
((This section applies to inpatient hospital claims paid under the diagnosis-related group (DRG) payment methodology, and for dates of admission on and after August 1, 2007. It also applies to inpatient hospital claims paid under the per diem payment methodology.
(1) For dates of admission before August 1, 2007, a medicaid or state-administered claim qualifies as a DRG high-cost outlier when:
(a) The client's admission date on the claim is before January 1, 2001, the stay did not meet the definition of "administrative day," and the allowed charges exceed:
(i) A threshold of twenty-eight thousand dollars; and
(ii) A threshold of three times the applicable DRG payment amount.
(b) The client's admission date on the claim is January 1, 2001, or after, the stay did not meet the definition of "administrative day," and the allowed charges exceed:
(i) A threshold of thirty-three thousand dollars; and
(ii) A threshold of three times the applicable DRG payment amount.
(2) For dates of admission before August 1, 2007, if the claim qualifies as a DRG high-cost outlier, the high-cost outlier threshold, for payment purposes, is the amount in subsection (1)(a)(i) or (ii), whichever is greater, for an admission date before January 1, 2001; or subsection (1)(b)(i) or (ii), whichever is greater, for an admission date on or after January 1.
(3) For dates of admission before August 1, 2007, the department determines payment for medicaid claims that qualify as DRG high-cost outliers as follows:
(a) All qualifying claims, except for claims in psychiatric DRGs 424-432 and claims from instate children's hospitals, are paid seventy-five percent of the allowed charges above the outlier threshold determined in subsection (2) of this section, multiplied by the hospital's RCC rate, plus the applicable DRG payment.
(b) Instate children's hospitals are paid eighty-five percent of the allowed charges above the outlier threshold determined in subsection (2) of this section, multiplied by the hospital's RCC rate, plus the applicable DRG payment.
(c) Psychiatric DRG high-cost outliers for DRGs 424-432 are paid one hundred percent of the allowed charges above the outlier threshold determined in subsection (2) of this section, multiplied by the hospital's RCC rate, plus the applicable DRG payment.
(4) For dates of admission before August 1, 2007, DRG high-cost outliers for state-administered programs are paid according to WAC 388-550-4800.
(5) For dates of admission before August 1, 2007, a medicaid or state-administered claim qualifies as a DRG low-cost outlier if:
(a) The client's admission date on the claim is before January 1, 2001, and the allowed charges are:
(i) Less than ten percent of the applicable DRG payment; or
(ii) Less than four hundred dollars.
(b) The client's admission date on the claim is January 1, 2001, or after, and the allowed charges are:
(i) Less than ten percent of the applicable DRG payment; or
(ii) Less than four hundred fifty dollars.
(6) If the claim qualifies as a DRG low-cost outlier:
(a) For an admission date before January 1, 2001, the low-cost outlier amount is the amount in subsection (5)(a)(i) or (ii), whichever is greater; or
(b) For an admission date on January 1, 2001, or after, the low-cost outlier amount is the amount in subsection (5)(b)(i) or (ii), whichever is greater.
(7) For dates of admission before August 1, 2007, the department determines payment for a medicaid claim that qualifies as a DRG low-cost outlier by multiplying the allowed charges for each claim by the hospital's RCC rate.
(8) For dates of admission before August 1, 2007, DRG low-cost outliers for state-administered programs are paid according to WAC 388-550-4800.
(9) For dates of admission before August 1, 2007, the department makes day outlier payments to hospitals in accordance with section 1923 (a)(2)(C) of the Social Security Act, for clients who have exceptionally long stays that do not reach DRG high-cost outlier status. A hospital is eligible for the day outlier payment if it meets all of the following criteria:
(a) The hospital is a disproportionate share hospital (DSH) and the client served is under age six, or the hospital may not be a DSH hospital but the client served is a child under age one;
(b) The payment methodology for the admission is DRG;
(c) The allowed charges for the hospitalization are less than the DRG high-cost outlier threshold as defined in subsection (2) of this section; and
(d) The client's length of stay exceeds the day outlier threshold for the applicable DRG payment amount. The day outlier threshold is defined as the number of days in an average length of stay for a discharge (for an applicable DRG payment), plus twenty days.
(10) For dates of admission before August 1, 2007 the department bases the day outlier payment on the number of days that exceed the day outlier threshold, multiplied by the administrative day rate.
(11) For dates of admission before August 1, 2007, the department's total payment for a day outlier claim is the applicable DRG payment plus the day outlier or administrative days payment.
(12) For dates of admission before August 1, 2007, a client's outlier claim is either a day outlier or a high-cost outlier, but not both.
(13) For dates of admission on and after August 1, 2007, the department does not identify a claim as a low cost outlier or day outlier. Instead, these claims are processed using the applicable payment method described in this chapter. The department may review claims with very low costs.
(14) For dates of admission on and after August 1, 2007, the department)) (1) The agency identifies a diagnosis-related group (DRG) high outlier claim based on the claim's estimated costs. The agency allows a high outlier payment for claims paid using the DRG payment method when high outlier ((qualifying)) criteria are met.
(a) To qualify as a DRG high outlier claim, the estimated costs for the claim must be greater than the outlier threshold effective for the date of admission. The outlier threshold amount is depicted in the following table:
(b) The agency calculates the estimated costs of the claim ((are calculated)) by multiplying the total submitted charges, minus the ((noncovered)) nonallowed charges on the claim, by the hospital's ratio of costs-to-charges (RCC) ((rate. The department identifies a DRG high outlier claim based on the claim's estimated costs. To qualify as a DRG high outlier claim, the department's estimated costs for the claim must be greater than both the fixed outlier cost threshold of fifty thousand dollars, and one hundred seventy-five percent of the applicable base DRG allowed amount for payment)).
((These)) (c) When a transferring hospital submits a transfer claim to the agency, the high outlier criteria ((are also)) used to determine ((if a transfer)) whether the claim qualifies for high outlier payment ((when a transfer claim is submitted to the department by a transferring hospital.
For Children's Hospital Regional Medical Center, Mary Bridge Children's Hospital and Health Center, and claims grouped to neonatal and pediatric DRGs under the DRG payment method, the department identifies a high outlier claim based on the claim's estimated costs. To qualify as a high outlier claim, the claim's estimated cost amount must be greater than both the fixed outlier threshold of fifty thousand dollars and one hundred fifty percent of the applicable base DRG allowed amount for payment.
(15) For dates of admission on and after August 1, 2007, the department may allow an adjustment for a high outlier for per diem claims grouped to a DRG classification in one of the acute unstable DRG service categories, i.e., medical, surgical, burn, and neonatal. These service categories are described in subsection (16) of this section.
(a) The department identifies high outlier per diem claims for medical, surgical, burn, and neonatal DRG service categories based on the claim estimated costs. The claim estimated costs are the total submitted charges, minus the noncovered charges for the claim, multiplied by the hospital's ratio of costs-to-charges (RCC) related to the admission. Except as specified in (b) of this subsection, a claim that is grouped to a medical, surgical, or burn DRG service category qualifies as a high outlier when the claim's estimated cost is greater than both the fixed outlier threshold of fifty thousand dollars and one hundred seventy-five percent of the applicable per diem base allowed amount for payment.
(b) For Children's Hospital Regional Medical Center, Mary Bridge Children's Hospital and Health Center, and claims grouped to neonatal and pediatric DRGs under medical, surgical, burn, and neonatal services categories, the department identifies high outlier claims based on the claim's estimated costs. To qualify as a high outlier claim, the claim's estimated cost must be greater than both the fixed outlier threshold of fifty thousand dollars and one hundred fifty percent of the applicable per diem base allowed amount for payment.
(c) The department may perform retrospective utilization reviews on all per diem outlier claims that exceed the department determined DRG average length of stay (LOS). If the department determines the entire LOS or part of the LOS is not medically necessary, the claim will be denied or the payment will be adjusted.
(16) For dates of admission on and after August 1, 2007, the term "unstable" is used generically to describe an AP-DRG classification that has fewer than ten occurrences (low volume), or that is unstable based on the statistical stability test indicated in this subsection, and to describe such claims in the major service categories of per diem paid claims identified in this section. The formula for the statistical stability test calculates the required size of a sample population of values necessary to estimate a mean cost value with ninety percent confidence and within an acceptable error of plus or minus twenty percent given the population's estimated standard deviation.
Specifically, this formula is:
N = (Z2 * S2)/R2, where
• The Z statistic for 90 percent confidence is 1.64
• S = the standard deviation for the AP-DRG classification, and
• R = acceptable error range, per sampling unit
If the actual number of claims within an AP-DRG classification is less than the calculated N size for that classification during relative weight recalibration, the department designates that DRG classification as unstable for purposes of calculating relative weights. And as previously stated, for relative weight recalibration, the department also designates any DRG classification having less than ten claims in total in the claims sample used to recalibrate the relative weights, as low volume and unstable.
The DRG classifications assigned to the per diem payment method, that are in one of the major service categories in subsection (16)(a) through (d) of this section, qualify for examination if a high outlier payment is appropriate. The department specifies those DRG classifications to be paid the per diem payment method because the DRG classification has low volume and/or unstable claims data for determination of an AP-DRG relative weight. A claim in a DRG classification that falls into one of the following major services categories that the department designates for per diem payment, may receive a per diem high outlier payment when the claim meets the high outlier criteria as described in subsection (15) of this section:
(a) Neonatal claims, based on assignment to medical diagnostic category (MDC) 15;
(b) Burn claims based on assignment to MDC 22;
(c) AP-DRG groups that include primarily medical procedures, excluding any neonatal or burn per diem classifications identified in (a) and (b) of this subsection; and
(d) AP-DRG groups that include primarily surgical procedures, excluding any neonatal or burn per diem classifications identified in (a) and (b) of this subsection.
(17) For dates of admission on and after August 1, 2007, the high outlier claim payment processes for the general assistance-unemployable (GA-U) program are the same as those for the medicaid or SCHIP DRG paid and per diem paid claims, except that the DRG rates and per diem rates are reduced, and the percent of outlier adjustment factor applied to the payment may be reduced. The high outlier claim payment process for medicaid or SCHIP DRG paid and per diem paid claims is as follows:
(a) The department determines the claim estimated cost amount that is used in the determination of the high outlier claim qualification and the high outlier threshold for the calculation of outlier adjustment amount. The claim estimated cost is equal to the total submitted charges, minus the noncovered charges reported on the claim, multiplied by the hospital's inpatient ratio of costs-to-charges (RCC) related to the admission.
(b) The high outlier threshold when calculating the high outlier adjustment portion of the total payment allowed amount on the claim is:
(i) For DRG paid claims grouped to nonneonatal or nonpediatric DRG classifications, and for DRG paid claims that are not from Children's Hospital Regional Medical Center or Mary Bridge Children's Hospital and Health Center, the high outlier threshold is one hundred seventy-five percent of the base DRG payment allowed amount;
(ii) For DRG paid claims grouped to neonatal or pediatric DRG classifications, and for DRG paid claims that are from Children's Hospital Regional Medical Center or Mary Bridge Children's Hospital and Health Center, the high outlier threshold is one hundred fifty percent of the base DRG payment allowed amount;
(iii) For nonspecialty service category per diem paid claims grouped to nonneonatal and nonpediatric DRG classifications, and for nonspecialty service category per diem paid claims that are not from Children's Hospital Regional Medical Center or Mary Bridge Children's Hospital and Health Center, the high outlier threshold is one hundred seventy-five percent of the base per diem payment allowed amount; and
(iv) For nonspecialty service category per diem paid claims grouped to neonatal and pediatric DRG classifications, and for all nonspecialty service category per diem paid claims from Children's Hospital Regional Medical Center and Mary Bridge Children's Hospital and Health Center, the high outlier threshold is one hundred fifty percent of the base per diem payment allowed amount;
(c) The high outlier payment allowed amount is equal to the difference between the department's estimated cost of services associated with the claim, and the high outlier threshold for payment indicated in (b)(i) through (iv) of this subsection, respectively, the resulting amount being multiplied by a percent of outlier adjustment factor. The percent of outlier adjustment factor is:
(i) Ninety-five percent for outlier claims that fall into one of the neonatal or pediatric AP-DRG classifications. Hospitals paid with the payment method used for out-of-state hospitals are paid using the percent of outlier adjustment factor identified in (c)(iii) of this subsection. All high outlier claims at Children's Hospital Regional Medical Center and Mary Bridge Children's Hospital and Health Center receive a ninety-five percent of outlier adjustment factor, regardless of AP-DRG classification assignment;
(ii) Ninety percent for outlier claims that fall into burn-related AP-DRG classifications;
(iii) Eighty-five percent for all other AP-DRG classifications; and
(iv) Used as indicated in WAC 388-550-4800 to calculate payment for state-administered programs' claims that are eligible for a high outlier payment.
(d) The high outlier payment allowed amount is added to the calculated allowed amount for the base DRG or base per diem payment, respectively, to determine the total payment allowed amount for the claim.
All examples represent a claim that is a nonpsychiatric claim and a claim that isn't from Children's Hospital Regional Medical Center or Mary Bridge Children's Hospital and Health Center.
Example one: The claim meets high cost outlier criteria. Example dollar amounts are approximated and not based on real claims data:
1DRG conversion factor times DRG relative weight = Base DRG allowed amount
$6,300 x 4.5773 = $28,837 = Base DRG allowed amount
2Total submitted charges minus total noncovered charges times RCC rate = Department determined estimated costs
$95,600 x 65% = $62,140 = Department determined estimated costs
3If department determined estimated costs are greater than the outlier qualifying criteria (in this example $50,000), then (department determined estimated costs minus 175% of base DRG payment allowed amount (high outlier payment threshold)) times claim's percent of outlier adjustment factor (see subsection (17)(c)(i), (ii) and (iii)) = High outlier portion allowed amount, if greater than $0, otherwise $0.
$62,140 - $50,465 = $11,675 x 85% = $9,924 = High outlier portion allowed amount
4Base DRG payment allowed amount plus high outlier portion allowed amount = Total DRG high outlier claim payment amount
$28,837 + $9,924 = $38,761
Example two: The claim does not meet high cost outlier criteria due to department-determined estimated cost being less than $50,000. Example dollar amounts are approximated and not based on real claims data:
1DRG conversion factor times DRG relative weight = Base DRG allowed amount
$6,300 x 4.5773 = $28,837 = Base DRG allowed amount
2Total submitted charges minus total noncovered charges times RCC rate = Department determined estimated costs
$64,500 x 65% = $41,925 = Department determined estimated costs
3If department determined estimated costs are greater than the outlier qualifying criteria, then (department determined estimated costs minus 175% of base DRG payment allowed amount (high outlier payment threshold)) times claim's percent of outlier adjustment factor (see subsection (17)(c)(i), (ii) and (iii)) = High outlier portion allowed amount, if greater than $0, otherwise $0.
($41,925 - $50,465 = ($8,540)) x 85% = ($7,259), which is converted to $0. Also, $41,925 is not greater than $50,000, so the claim does not meet the high outlier qualifying criteria. Therefore, the high outlier portion allowed amount is $0.
4Base DRG payment allowed amount plus high outlier portion allowed amount = Total DRG high outlier claim payment allowed amount
$28,837 + $0 = $28,837
Example three: The claim does not meet high outlier criteria due to high DRG allowed amount. Example dollar amounts are approximated and not based on real claims data:
1DRG conversion factor times DRG relative weight = Base DRG allowed amount
$6,300 x 4.5773 = $28,837 = Base DRG allowed amount
2Total submitted charges minus total noncovered charges times RCC rate = Department determined estimated costs
$77,000 x 65% = $50,050 = Department determined estimated costs
3If department determined estimated costs are greater than the outlier qualifying criteria, then (department determined estimated costs minus 175% of base DRG payment allowed amount (high outlier payment threshold)) times claim's percent of outlier adjustment factor (see subsection (17)(c)(i), (ii) and (iii)) = high outlier portion allowed amount, if greater than $0, otherwise $0.
($50,050 - $50,465 = ($415)) x 85% = ($353), which is converted to $0. Also, $50,050 is greater than $50,000, but not greater than $50,465, so the claim does not meet the high outlier qualifying criteria. Therefore, the high outlier portion allowed amount is $0.
4Base DRG payment allowed amount plus high outlier portion allowed amount = Total DRG high outlier claim payment allowed amount
$28,837 + $0 = $28,837
All examples represent a claim that is a nonpsychiatric claim and a claim that isn't from Children's Hospital Regional Medical Center or Mary Bridge Children's Hospital and Health Center.
Example one: The claim meets high cost outlier criteria. Example dollar amounts are approximated and not based on real claims data:
1Per diem rate times client's department recognized length of stay for eligible days = Base per diem allowed amount
$1,000 (rate) x 25 (days) = $25,000 = Base per diem allowed amount
2Total submitted charges minus total noncovered charges times RCC rate = Department determined estimated costs
$100,000 x 70% = $70,000 = Department determined estimated costs
3If department determined estimated costs are greater than the outlier qualifying criteria, then (department determined estimated costs minus 175% of base per diem payment allowed amount (high outlier payment threshold)) times claim's percent of outlier adjustment factor (see subsection (17)(c)(i), (ii) and (iii)) = High outlier portion allowed amount, if greater than $0, otherwise $0.
($70,000 - $43,750 = $26,250) x 85% = $22,313 = High outlier portion allowed amount
4Base per diem payment allowed amount plus high outlier portion allowed amount = Total per diem high outlier claim payment allowed amount
$25,000 + $22,313 = $47,313
Example two: The claim does not meet high cost outlier criteria due to department-determined estimated cost being less than $50,000. Example dollar amounts are approximated and not based on real claims data:
1Per diem rate times client's department recognized length of stay for eligible days = Base per diem allowed amount
$1,000 x 25 = $25,000 = Base per diem allowed amount
2Total submitted charges minus total noncovered charges times RCC rate = Department determined estimated costs
$64,500 x 70% = $45,150 = Department determined estimated costs
3If department determined estimated costs are greater than the outlier qualifying criteria, then (department determined estimated costs minus 175% of base per diem payment allowed amount (high outlier payment threshold)) times claim's percent of outlier adjustment factor (see subsection (17)(c)(i), (ii) and (iii)) = High outlier portion allowed amount, if greater than $0, otherwise $0.
($45,150 - $43,750 = $1,400), but $45,150 is not greater than $50,000, so the claim does not meet the high outlier qualifying criteria. Therefore, the high outlier portion allowed amount is $0.
4Base per diem payment allowed amount plus high outlier portion allowed amount = Total per diem high outlier claim payment allowed amount
$25,000 + $0 = $25,000
Example three: (The claim does not meet high outlier criteria due to high DRG allowed amount. Example dollar amounts are approximated and not based on real claims data):
1Per diem rate times client's department recognized length of stay for eligible days = Base per diem allowed amount
$1,000 x 35 = $35,000 = Base per diem allowed amount
2Total submitted charges minus total noncovered charges times RCC rate = Department determined estimated costs
$75,000 x 70% = $52,500 = Department determined estimated costs
3If department determined estimated costs are greater than the outlier qualifying criteria, then (department determined estimated costs minus 175% of base DRG payment allowed amount (high outlier payment threshold)) times claim's percent of outlier adjustment factor (see subsection (17)(c)(i), (ii) and (iii)) = High outlier portion allowed amount, if greater than $0, otherwise $0.
($52,500 - $61,250 = (8,750)) x 85% = ($7,438), which is converted to $0. Also, $52,500 is greater than $50,000, but not greater than $61,250, so the claim does not meet the high outlier qualifying criteria. Therefore, the high outlier portion allowed amount is $0.
4Base per diem payment allowed amount plus high outlier portion allowed amount = Total per diem high outlier claim payment allowed amount
$35,000 + $0 = $35,000
(18))) is the DRG allowed amount for the claim before the transfer payment reduction.
(2) The agency calculates the high outlier payment by multiplying the hospital's estimated cost above threshold (CAT) by the outlier adjustment factor. The outlier adjustment factors, which vary by dates of admission and inpatient payment policy, are depicted in the table at the end of this subsection.
(a) For inpatient claims paid under the all-patient-diagnosis-related group (AP-DRG), the agency uses a separate outlier adjustment factor for:
(i) Pediatric services, including all claims submitted by children-specialty hospitals;
(ii) Burn services; and
(iii) Nonpediatric services.
(b) For inpatient claims paid under the all-patient refined-DRG (APR-DRG), the agency uses a separate outlier adjustment factor for a:
(i) Severity of illness (SOI) of one or two; or
(ii) SOI of three or four.
(3) For state-administered programs (SAP), the agency applies the hospital-specific ratable to the outlier adjustment factor.
(4) This subsection contains examples of outlier claim payment calculations.
1 Threshold = $40,000 + base DRG
2 Cost = Billed charges - noncovered charges - denied charges
3 Outlier = (cost - threshold) * outlier percent
4 Claim payment = base DRG + outlier
(5) When directed by the legislature to achieve targeted expenditure levels, as described in WAC ((388-550-2800(2))) 182-550-3000(8), the ((department)) agency may apply an inpatient adjustment factor to any of the high outlier thresholds and to any of the ((percentages of)) outlier adjustment factors described in this section.
(((19))) (6) The ((department)) agency applies the following to the payment for each claim((, all)):
(a) All applicable adjustments for client responsibility((, any));
(b) Any third-party liability((, medicare,));
(c) Medicare payments; and ((any))
(d) Any other adjustments as determined by the ((department)) agency.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-4500 Payment method—Ratio of costs-to-charges (RCC).
(1) The medicaid agency pays hospitals using the ratio of costs-to-charges (RCC) ((is defined in WAC 388-550-1050. The department uses:
(a) The RCC payment method to pay hospitals for hospital services that are exempt from the diagnosis related group (DRG), per diem, ambulatory)) payment method for services exempt from the following payment methods:
(a) Ambulatory payment classification (APC)((, maximum allowable fee schedule, and per case payment methods.
(b) The term "ratio of costs-to-charges" to refer to the factor (rate) applied to a hospital's allowed covered charges to determine estimated costs for medically necessary services));
(b) Diagnosis-related group (DRG);
(c) Enhanced ambulatory patient group (EAPG);
(d) Per case;
(e) Per diem; and
(f) Maximum allowable fee schedule.
(2) The ((department)) agency:
(a) Determines the payment ((due a hospital under the RCC payment method)) for:
(i) Inpatient claims by multiplying the hospital's inpatient RCC ((rate)) by the allowed covered charges for medically necessary services((.)); and
(ii) Outpatient claims by multiplying the hospital's outpatient RCC ((rate)) by the allowed covered charges for medically necessary services.
(b) Deducts from the amount derived in (a) of this subsection ((any)):
(i) All applicable adjustments for client responsibility ((amount));
(ii) Any third-party liability (((TPL) amount));
(iii) Medicare payments; and
(((iii) Other applicable payment program adjustment)) (iv) Any other adjustments as determined by the agency.
(c) Limits the RCC payment to the hospital's ((allowable)) usual and customary charges for services allowed by the agency.
(3) ((For inpatient hospital dates of admission before August 1, 2007, the department uses the RCC payment method to pay for inpatient hospital services that are:
(a) Provided in a hospital located in the state of Washington (see WAC 388-550-4000 for out-of-state hospital payment methods and WAC 388-550-3900 for payment methods to designated bordering city and critical border hospitals);
(b) Provided in a diagnosis related group (DRG)-exempt hospital identified in WAC 388-550-4300; and
(c) Identified in WAC 388-550-4400 as DRG-exempt services (see WAC 388-550-4400 (2)(g), (h), and (k) for exceptions).
(4) For inpatient hospital dates of admission on and after August 1, 2007, the department)) The agency uses the RCC payment method to ((pay for)) calculate the following:
(a) Payment for the following services:
(i) Organ transplant services ((identified in)) (See WAC ((388-550-4400)) 182-550-4400 (4)(h));
(((b) High outlier qualifying claims (see WAC 388-550-3700 (14) and (15));
(c))) (ii) Hospital services provided at a long-term acute care (LTAC) facility not covered under the LTAC per diem rate (see WAC ((388-550-2596)) 182-550-2596); and
(((d))) (iii) Any other hospital service identified by the agency as being paid by the RCC payment method; and
(b) Costs for the following:
(i) High outlier qualifying claims (see WAC 182-550-3700); and
(ii) Hospital services provided in hospitals eligible for certified public expenditure (CPE) payments (((see WAC 388-550-4650(5)); and
(e) Any other hospital service identified and published by the department as being paid by the RCC payment method.
(5))) under WAC 182-550-4650(5).
(4) When directed by the legislature to achieve targeted expenditure levels, as described in WAC ((388-550-2800(2))) 182-550-3000(8), the ((department)) agency may apply an inpatient adjustment factor to the inpatient RCC payments made for the services in subsection (((4))) (3) of this section((, except as provided in subsection (6) of this section)).
(((6) For hospitals paid under the certified public expenditure (CPE) payment method, the inpatient adjustment factor referred to in subsection (5) of this section does not apply, except to payments for repriced claims adjusted according to WAC 388-550-4670 (2)(a)(ii).
(7) The department)) (5) This section explains how the agency calculates each in-state and critical border hospital's RCC ((rate as follows)). For noncritical border city hospitals, see WAC 182-550-3900. The ((department)) agency:
(a) Divides ((each hospital's allowable costs by patient-related revenues associated with these allowable costs)) adjusted costs by adjusted patient charges. The ((department)) agency determines the allowable costs and associated ((revenues)) charges.
(b) Excludes((, prior to calculating the RCC rate, department)) agency nonallowed costs and nonallowed ((revenue)) charges, such as costs and ((revenues)) charges attributable to a change in ownership.
(c) Bases the RCC ((rate)) calculation on data from the hospital's (("as filed")) annual medicare cost report (Form ((2552-96)) 2552) and applicable patient revenue reconciliation data provided by the hospital. The (("as filed")) medicare cost report must cover a period of twelve consecutive months in its medicare cost report year.
(d) Updates a hospital's inpatient RCC ((rate)) annually after the hospital sends its (("as filed")) hospital fiscal year medicare cost report to the centers for medicare and medicaid services (CMS) and the ((department)) agency. ((In the case where)) If medicare grants a delay in submission of the CMS medicare cost report to the medicare fiscal intermediary ((is granted by medicare)), the ((department)) agency may determine an alternate method to adjust the RCC ((rate based on a department-determined method)).
(e) Limits a noncritical access hospital's RCC ((payment)) to one ((hundred percent of its allowed covered charges)) point zero (1.0).
(((f) Determines an RCC rate, when)) (6) For a hospital ((is)) formed as a result of a merger (((refer to)) see WAC ((388-550-4200)) 182-550-4200), ((by combining)) the agency combines the previous hospital's medicare cost reports and ((following)) follows the process in (((a))) subsection (5) of this ((subsection)) section. The ((department)) agency does not use partial year cost reports for this purpose.
(((g) Determines a new instate hospital's RCC rate by calculating and using the average RCC rate for all current noncritical access hospitals located in Washington state. The department)) (7) For newly constructed hospitals and hospitals not otherwise addressed in this chapter, the agency annually calculates a weighted average in-state RCC ((rate)) by ((identifying all instate hospitals with specific RCC rates and)) dividing the ((department-determined total patient-related revenues associated with those)) sum of agency-determined costs for all in-state hospitals with RCCs by the sum of agency-determined charges for all hospitals with RCCs.
(8) The ((department)) agency calculates each hospital's outpatient RCC ((rate)) annually. The agency calculates:
(a) ((The department calculates)) A hospital's outpatient RCC ((rate)) by multiplying the hospital's inpatient RCC ((rate)) by the outpatient adjustment factor (OAF)((.)); and
(b) The ((department determines the)) weighted average in-state hospital outpatient RCC ((rate)) by multiplying the in-state weighted average inpatient RCC ((rate)) by the ((outpatient adjustment factor)) OAF.
(9) The ((outpatient adjustment factor)) OAF:
(a) Is the ratio between the outpatient and inpatient RCC payments((, established in 1998 through negotiation with hospital providers));
(b) Is updated annually to adjust for cost and charge inflation; and
(c) Must not exceed ((1.0; and
(d) Is differentiated from the OPPS outpatient adjustment factor (defined in WAC 388-550-1050), and applies to hospitals exempt from OPPS)) one point zero (1.0).
REPEALER
The following sections of the Washington Administrative Code are repealed:
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