WSR 14-12-047 PERMANENT RULES HEALTH CARE AUTHORITY (Washington Apple Health) [Filed May 29, 2014, 1:50 p.m., effective July 1, 2014] Effective Date of Rule: July 1, 2014.
Purpose: 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. During the rebasing of inpatient and outpatient rates, the agency along with consultants and stakeholders, reviews and revises how the agency pays hospitals for caring for agency clients. During this process, payment methods and rates change. These changes must be reflected in rule.
The agency is also updating WAC 182-550-1050 with new and revised definitions pertaining to chapter 182-550 WAC.
Citation of Existing Rules Affected by this Order: Repealing WAC 182-550-2511, 182-550-2570, 182-550-2800, 182-550-3010, 182-550-3020, 182-550-3100, 182-550-3150, 182-550-3200, 182-550-3250, 182-550-3300, 182-550-3350, 182-550-3450, 182-550-3460, 182-550-3500, 182-550-4600 and 182-550-7050; and amending WAC 182-550-1050, 182-550-2900, 182-550-3000, 182-550-3381, 182-550-3400, 182-550-3600, 182-550-3700, 182-550-3800, 182-550-3900, 182-550-4000, 182-550-4100, 182-550-4300, 182-550-4400, 182-550-4500, and 182-550-4800.
Statutory Authority for Adoption: RCW 41.05.021.
Other Authority: Chapter 74.60 RCW.
Adopted under notice filed as WSR 14-08-059 on March 28, 2014, and WSR 14-09-100 on April 22, 2014.
Changes Other than Editing from Proposed to Adopted Version: As a result of stakeholder comments, the agency added the following sentence to WAC 182-550-3800(4): "The agency ensures that base DRG conversion factors and per diem rates are sufficient to support economy, efficiency, and access to services for medicaid recipients."
In WAC 182-550-3800(4), the agency added the following underlined text:
(4) Calculates base payment factors. The agency calculates the average, or base, DRG conversion factor and per diem rates. The base is calculated as the maximum amount that can be used, along with all other payment factors and adjustments described in this chapter, to maintain aggregate payments across the system. The agency ensures that base DRG conversion factors and per diem rates are sufficient to support economy, efficiency, and access to services for medicaid recipients. The agency will publish base rate factors on its web site.
The changes were made because:
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 15, Repealed 16.
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 0, 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 15, Repealed 16.
Kevin M. Sullivan
Rules Coordinator
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-1050 Hospital services definitions.
The following definitions and abbreviations, those found in ((WAC 388-500-0005)) chapter 182-500 WAC, Medical definitions, and definitions and abbreviations found in other sections of this chapter((,)) apply to this chapter. When a term is not defined in this chapter, other agency or agency's designee WAC, or state or federal law, the medical definitions found in Taber's Cyclopedic Medical Dictionary apply.
"Accommodation costs" ((means)) - The expenses incurred by a hospital to provide its patients services for which a separate charge is not customarily made. These expenses include, but are not limited to, room and board, medical social services, psychiatric social services, and the use of certain hospital equipment and facilities.
(("Acquisition cost (AC)" means the cost of an item excluding shipping, handling, and any applicable taxes as indicated by a manufacturer's invoice.))
"Accredited" or "accreditation" - A term used by nationally recognized health organizations, such as the commission on accreditation of rehabilitation facilities (CARF), to indicate a facility meets both professional and community standards of medical care.
"Acute" ((means)) - A medical condition of severe intensity with sudden onset. ((See WAC 388-550-2511 for the definition of "acute")) For the purposes of the acute physical medicine and rehabilitation (Acute PM&R) program, acute means an intense medical episode, not longer than three months.
"Acute care" ((means)) - Care provided for patients who are not medically stable or have not attained a satisfactory level of rehabilitation. These patients require frequent monitoring by a health care professional in order to maintain their health status (((see WAC 248-27-015))).
"Acute physical medicine and rehabilitation (Acute PM&R)" ((means)) - A comprehensive inpatient rehabilitative program coordinated by an interdisciplinary team at ((a department-approved)) an agency-approved rehabilitation facility. The program provides twenty-four-hour specialized nursing services and an intense level of therapy for specific medical conditions for which the client shows significant potential for functional improvement. Acute PM&R is a twenty-four hour inpatient comprehensive program of integrated medical and rehabilitative services provided during the acute phase of a client's rehabilitation.
(("ADATSA/DASA assessment center" means an agency contracted by the division of alcohol and substance abuse (DASA) to provide chemical dependency assessment for clients and pregnant women in accordance with the Alcoholism and Drug Addiction Treatment and Support Act (ADATSA). Full plans for a continuum of drug and alcohol treatment services for pregnant women are also developed in ADATSA/DASA assessment centers.
"Add-on procedure(s)" means secondary procedure(s) that are performed in addition to another procedure.))
"Administrative day" ((means a day)) or "administrative days" - One or more days of a hospital stay in which an acute inpatient or observation level of care is ((no longer)) not medically necessary, and ((noninpatient hospital placement)) a lower level of care is appropriate.
"Administrative day rate" ((means)) - The agency's statewide medicaid average daily nursing facility rate ((as determined by the department.
"Admitting diagnosis" means the medical condition before study, which is initially responsible for the client's admission to the hospital, as defined by the international classification of diseases, 9th revision, clinical modification (ICD-9-CM) diagnostic code, or with the current published ICD-CM coding guidelines used by the department.
"Advance directive" means a document, recognized under state law, such as a living will, executed by a client, that tells the client's health care providers and others about the client's decisions regarding his or her health care in the event the client should become incapacitated. (See WAC 388-501-0125.)
"Aggregate capital cost" means the total cost or the sum of all capital costs)).
"Aggregate cost" ((means)) - The total cost or the sum of all constituent costs.
"Aggregate operating cost" ((means)) - The total cost or the sum of all operating costs.
(("Alcoholism and Drug Addiction Treatment and Support Act (ADATSA)" means the law and the state-administered program it established which provides medical services for persons who are incapable of gainful employment due to alcoholism or substance addiction.
"Alcoholism and/or alcohol abuse treatment" means the provision of medical social services to an eligible client designed to mitigate or reverse the effects of alcoholism or alcohol abuse and to reduce or eliminate alcoholism or alcohol abuse behaviors and restore normal social, physical, and psychological functioning. Alcoholism or alcohol abuse treatment is characterized by the provision of a combination of alcohol education sessions, individual therapy, group therapy, and related activities to detoxified alcoholics and their families.))
"All-patient DRG grouper (AP-DRG)" ((means)) - A computer software program that determines the medical and surgical diagnosis-related group (DRG) assignments used by the agency for inpatient admissions between August 1, 2007, and June 30, 2014.
"All-patient refined DRG grouper (APR-DRG)" - A computer software program that determines the medical and surgical diagnosis-related group (DRG) assignments used by the agency for inpatient admissions on and after July 1, 2014.
"Allowable" ((means)) - The calculated amount for payment, after exclusion of any "nonallowed service or charge," based on the applicable payment method before final adjustments, deductions, and add-ons.
"Allowed amount" ((means)) - The initial calculated amount for any procedure or service, after exclusion of any "nonallowed service or charge," that the ((department)) agency allows as the basis for payment computation before final adjustments, deductions, and add-ons.
"Allowed charges" ((means the maximum amount for any procedure or service that the department allows as the basis for payment computation)) - The total billed charges for allowable services.
"Allowed covered charges" ((means the maximum amount of charges on a hospital claim recognized by the department as charges for "hospital covered service" and payment computation, after exclusion of any "nonallowed service or charge," and before final adjustments, deductions, and add-ons)) - The total billed charges for services minus the billed charges for noncovered and/or denied services.
"Ambulatory payment classification (APC)" - 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 surgery" ((means)) - A surgical procedure that is not expected to require an inpatient hospital admission.
(("Ancillary hospital costs" means the expenses incurred by a hospital to provide additional or supporting services to its patients during their hospital stay. See "ancillary services."))
"Ancillary services" ((means)) - Additional or supporting services provided by a hospital to a ((patient)) client during the ((patient's)) client's hospital stay. These services include, but are not limited to((,)): Laboratory, radiology, drugs, delivery room, operating room, postoperative recovery rooms, and other special items and services.
"Appropriate level of care" ((means)) - The level of care required to best manage a client's illness or injury based on:
(1) The severity of illness ((presentation)) and the intensity of services ((received)) required to treat the illness or injury; or
(2) A condition-specific episode of care.
(("Approved treatment facility" means a treatment facility, either public or private, profit or nonprofit, approved by DSHS.))
"Audit" ((means)) - An assessment, evaluation, examination, or investigation of a health care provider's accounts, books, and records, including:
(1) Health, financial, and billing records pertaining to billed services paid by the ((department)) agency through ((medicaid, SCHIP, or other state programs)) Washington apple health, by a person not employed or affiliated with the provider, for the purpose of verifying the service was provided as billed and was allowable under program regulations; and
(2) Financial, statistical, and health records, including mathematical computations and special studies conducted supporting the medicare cost report (Form 2552-96 and 2552-10 or successor form), submitted to the ((department)) agency for the purpose of establishing program rates for payment to hospital providers.
(("Audit claims sample" means a selection of claims reviewed under a defined audit process.))
"Authorization" - See "prior authorization" and "expedited prior authorization (EPA)."
(("Average hospital rate" means an average of hospital rates for any particular type of rate that the department uses.))
"Bad debt" ((means)) - An operating expense or loss incurred by a hospital because of uncollectible accounts receivables.
(("Beneficiary" means a recipient of Social Security benefits, or a person designated by an insuring organization as eligible to receive benefits.))
"Bedside nursing services" - Services included under the room and board services paid to the facility and provided by nursing service personnel. These services include, but are not limited to: Medication administration, IV hydration and IV medication administration, vaccine administration, dressing applications, therapies, glucometry testing and other point of care testing, catheterizations, tube feedings and irrigations, and equipment monitoring services.
"Billed charge" ((means)) - The charge submitted to the ((department)) agency by the provider.
(("Blended rate" means a mathematically weighted average rate.))
"Bordering city hospital" ((means)) - A hospital located ((outside Washington state and located)) in one of the ((bordering)) cities listed in WAC ((388-501-0175)) 182-501-0175.
(("BR" - See "by report."))
"Budget ((neutrality)) neutral" ((is a concept that means that hospital payments resulting from payment methodology changes and rate changes should be equal to what payments would have been if the payment methodology changes and rate changes were not implemented)) - A condition in which a claims model produces aggregate payments to hospitals that are the same under two separate payment systems. ((())See also "budget neutrality factor."(()))
"Budget neutrality factor" ((is a factor)) - A multiplier used by the ((department)) agency to ((adjust conversion factors, per diem rates, and per case rates in order)) ensure that modifications to the payment ((methodology)) method and rates are budget neutral. ((())See also "budget ((neutrality)) neutral."(()))
"Budget target" - Funds appropriated by the legislature or through the agency's budget process to pay for a specific group of services, including anticipated caseload changes or vendor rate increases.
"Budget target adjuster" - A multiplier applied to the outpatient prospective payment system (OPPS) payment to ensure aggregate payments do not exceed the established budget target.
"Bundled services" ((means)) - Interventions ((that are)) integral to or related to the major procedure ((and are not paid separately.
"Buy-in premium" means a monthly premium the state pays so a client is enrolled in part A and/or part B medicare.
"By report (BR)" means a method of payment in which the department determines the amount it will pay for a service when the rate for that service is not included in the department's published fee schedules. Upon request the provider must submit a "report" which describes the nature, extent, time, effort and/or equipment necessary to deliver the service.
"Callback" means keeping hospital staff members on duty beyond their regularly scheduled hours, or having them return to the facility after hours to provide unscheduled services which are usually associated with hospital emergency room, surgery, laboratory and radiology services.
"Capital-related costs" or "capital costs" means the component of operating costs related to capital assets, including, but not limited to:
(1) Net adjusted depreciation expenses;
(2) Lease and rentals for the use of depreciable assets;
(3) The costs for betterment and improvements;
(4) The cost of minor equipment;
(5) Insurance expenses on depreciable assets;
(6) Interest expense; and
(7) Capital-related costs of related organizations that provide services to the hospital.
Capital costs due solely to changes in ownership of the provider's capital assets are excluded.
"CARF" is the official name for commission on accreditation of rehabilitation facilities. CARF is an international, independent, nonprofit accreditor of human service providers and networks in the areas of aging services, behavioral health, child and youth services, employment and community services, and medical rehabilitation)). The agency does not pay separately for these services.
"Case mix" ((means, from the clinical perspective, the condition of the treated patients and the difficulty associated with providing care. Administratively, it means the resource intensity demands that patients place on an institution)) - A relative value assigned to a DRG or classification of patients in a medical care environment representing the resource intensity demands placed on an institution.
"Case mix index (CMI)" ((means the arithmetical index that measures)) - The average relative weight of all cases treated in a hospital during a defined period.
"Centers for Medicare and Medicaid Services (CMS)" - See WAC 182-500-0020.
"Chemical dependency" ((means)) - An ((alcohol or drug)) addiction((;)) or dependence on ((alcohol and one or more other psychoactive chemicals)) alcohol or drugs, or both.
"Children's health insurance program (CHIP)" - The federal Title XXI program under which medical care is provided to uninsured children younger than age nineteen. Part of Washington apple health.
"Children's hospital" ((means)) - A hospital primarily serving children.
"Client" ((means)) - A person who receives or is eligible to receive services through ((department of social and health services (DSHS))) agency programs.
(("CMS" means Centers for Medicare and Medicaid Services.))
"Commission on accreditation of rehabilitation facilities (CARF)" - See http://www.carf.org/home/.
"CMS PPS input price index" ((means)) - A measure, expressed as a percentage, of the annual inflationary costs for hospital services((, measured by Global Insight's Data Resources, Inc. (DRI).
"Comorbidity" means of, relating to, or caused by a disease other than the principal disease.
"Complication" means a disease or condition occurring subsequent to or concurrent with another condition and aggravating it)).
"Comprehensive hospital abstract reporting system (CHARS)" ((means)) - The department of health's (DOH's) inpatient hospital data collection, tracking, and reporting system.
(("Contract hospital-selective contracting" means for dates of admission before July 1, 2007, a licensed hospital located in a selective contracting area, which is awarded a contract to participate in the department's hospital selective contracting program. The department's hospital selective contracting program no longer exists for admissions on and after July 1, 2007.))
"Condition-specific episode of care" - Care provided to a client based on the client's primary condition, complications, comorbidities, standard treatments, and response to treatments.
"Contract hospital" ((means)) - A hospital contracted by the ((department)) agency to provide specific services.
(("Contractual adjustment" means the difference between the amount billed at established charges for the services provided and the amount received or due from a third-party payer under a contract agreement. A contractual adjustment is similar to a trade discount.
"Cost proxy" means an average ratio of costs to charges for ancillary charges or per diem for accommodation cost centers used to determine a hospital's cost for the services where the hospital has medicaid claim charges for the services, but does not report costs in corresponding centers in its medicare cost report.))
"Conversion factor" - A hospital-specific dollar amount that is used in calculating inpatient payments.
"Core provider agreement (CPA)" - The basic contract the agency holds with providers serving Washington apple health clients.
"Cost report" - See "medicare cost report."
"Costs" ((mean department-approved)) - Agency-approved operating, medical education, and capital-related costs (capital costs) as reported and identified on the "cost report."
(("Cost-based conversion factor (CBCF)" means for dates of admission before August 1, 2007, a hospital-specific dollar amount that reflects a hospital's average cost of treating medicaid and SCHIP clients. It is calculated from the hospital's cost report by dividing the hospital's costs for treating medicaid and SCHIP clients during a base period by the number of medicaid and SCHIP discharges during that same period and adjusting for the hospital's case mix. See also "hospital conversion factor" and "negotiated conversion factor."
"Covered charges" ((means)) - Billed charges submitted to the ((department)) agency on a claim by the provider, less the noncovered charges indicated on the claim.
"Covered services" - See "hospital covered service" and WAC ((388-501-0060)) 182-501-0050.
"Critical border hospital" ((means, on and after August 1, 2007,)) - An acute care hospital located in a bordering city (see WAC 182-501-0175 for list) that the ((department)) agency has, through analysis of admissions and hospital days, designated as critical to provide ((elective)) health care for ((the department's medical assistance)) Washington apple health clients.
"Current procedural terminology (CPT)" ((means)) - A systematic listing of descriptive terms and identifying codes for reporting medical services, procedures, and interventions performed by physicians. CPT is copyrighted and published annually by the American Medical Association (AMA).
(("Customary charge payment limit" means the limit placed by the department on aggregate DRG payments to a hospital during a given year to assure that DRG payments do not exceed the hospital's charges to the general public for the same services.
"Day outlier" means an inpatient case with a date of admission before August 1, 2007, that requires the department to make additional payment to the hospital provider but which does not qualify as a high-cost outlier. See "day outlier payment" and "day outlier threshold." The department's day outlier policy no longer exists for dates of admission on and after August 1, 2007.
"Day outlier payment" means the additional amount paid to a disproportionate share hospital for inpatient claims with dates of admission before August 1, 2007, for a client five years old or younger who has a prolonged inpatient stay which exceeds the day outlier threshold but whose covered charges for care fall short of the high cost outlier threshold. The amount is determined by multiplying the number of days in excess of the day outlier threshold and the administrative day rate.
"Day outlier threshold" means for inpatient claims with dates of admission before August 1, 2007, the average number of days a client stays in the hospital for an applicable DRG before being discharged, plus twenty days.))
"Deductible" ((means)) - The dollar amount a ((beneficiary)) client is responsible for((,)) before ((medicare)) an insurer, such as medicare, starts paying((;)) or the initial specific dollar amount for which the ((applicant or)) client is responsible.
"Department of social and health services (DSHS)" ((means the state department of social and health services (DSHS). As used in this chapter, department also means MAA, HRSA, or a successor administration that administers the state's medicaid, SCHIP, and other medical assistance programs.
"Detoxification" means treatment provided to persons who are recovering from the effects of acute or chronic intoxication or withdrawal from alcohol or other drugs)) - The Washington state agency that provides food assistance, financial aid, medical and behavioral health care, and other services to eligible children, families, and vulnerable adults and seniors of Washington state.
"Diabetes education program" ((means)) - A comprehensive, multidisciplinary program of instruction offered by a ((department of health (DOH)-approved)) DOH-approved diabetes education provider to diabetic clients ((on dealing with)) for managing diabetes. This includes instruction on nutrition, foot care, medication and insulin administration, skin care, glucose monitoring, and recognition of signs/symptoms of diabetes with appropriate treatment of problems or complications.
"Diagnosis code" ((means)) - A set of numeric or alphanumeric characters assigned by the ((ICD-9-CM, or successor document,)) current published ICD-CM coding guidelines used by the agency as a shorthand symbol to represent the nature of a disease or condition.
"Diagnosis-related group (DRG)" ((means)) - A classification system that categorizes hospital patients into clinically coherent and homogenous groups with respect to resource use((, i.e., similar treatments and statistically similar lengths of stay for patients with related medical conditions)). Classification of patients is based on the ((International Classification of Diseases (ICD-9))) current published ICD-CM coding guidelines used by the agency, the presence of a surgical procedure, patient age, presence or absence of significant comorbidities or complications, and other relevant criteria.
"Direct medical education costs" ((means)) - The direct costs of providing an approved medical residency program as recognized by medicare.
"Discharging hospital" ((means)) - The institution releasing a client from the acute care hospital setting.
"Discount factor" - 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.
"Disproportionate share hospital (DSH) payment" ((means)) - A supplemental ((payment(s))) payment made by the ((department)) agency to a hospital that qualifies for one or more of the disproportionate share hospital programs identified in the state plan. See WAC 182-550-4900.
"Disproportionate share hospital (DSH) program" ((is)) - A program through which the ((department gives consideration to hospitals)) agency makes payment adjustments to eligible hospitals that serve a disproportionate number of low-income ((patients with special needs by making payment adjustment to eligible hospitals)) clients in accordance with legislative direction and established payment methods. See 1902 (a)(13)(A)(iv) of the Social Security Act. See also WAC ((388-550-4900 through 388-550-5400)) 182-550-4900 through 182-550-5400.
"Dispute conference" - See "hospital dispute conference."
"Distinct unit" ((means medicare-certified)) - A distinct area for psychiatric ((or)), rehabilitation, or detox services which has been certified by medicare within an acute care hospital or ((a department-designated unit in)) approved by the agency within a children's hospital.
"Division of ((alcohol and substance abuse (DASA)" is)) behavioral health and recovery services (DBHR)" - The division within DSHS ((responsible for providing alcohol and drug-related services to help clients recover from alcoholism and drug addiction)) that administers mental health, problem gambling, and substance abuse programs authorized by chapters 43.20A, 71.05, 71.24, 71.34, and 70.96A RCW.
"DRG" - See "diagnosis-related group."
"DRG allowed amount" - The DRG relative weight multiplied by the conversion factor.
"DRG average length-of-stay" ((means for dates of admission on and after July 1, 2007, the department's)) - The agency's average length-of-stay for a DRG classification established during ((a department)) an agency DRG rebasing and recalibration project.
"DRG-exempt services" ((means services which are)) - Services paid through ((other methodologies than those using inpatient medicaid conversion factors, inpatient state-administered program conversion factors, cost-based conversion factors (CBCF) or negotiated conversion factors (NCF). Some examples are services paid using a)) methods other than DRG, such as per diem rate, ((a)) per case rate, or ((a)) ratio of costs-to-charges (RCC) ((rate)).
"DRG payment" ((means)) - The total payment made by the ((department)) agency for a client's inpatient hospital stay. ((This)) The DRG payment ((allowed amount is calculated by multiplying the conversion factor by the DRG relative weight assigned by the department to provider's inpatient claim before any outlier payment calculation)) is the DRG allowed amount plus the high outlier minus any third-party liability, client participation, medicare payment, and any other adjustments applied by the agency.
"DRG relative weight" ((means the average cost or charge of a certain DRG classification divided by the average cost or charge, respectively, for all cases in the entire data base for all DRG classifications.
"Drug addiction and/or drug abuse treatment" means the provision of medical and rehabilitative social services to an eligible client designed to mitigate or reverse the effects of drug addiction or drug abuse and to reduce or eliminate drug addiction or drug abuse behaviors and restore normal physical and psychological functioning. Drug addiction or drug abuse treatment is characterized by the provision of a combination of drug and alcohol education sessions, individual therapy, group therapy and related activities to detoxified addicts and their families.
"DSHS" means the department of social and health services.
"Elective procedure or surgery" means a nonemergency procedure or surgery that can be scheduled at the client's and provider's convenience.)) - A factor used in the calculation of DRG payments. As of July 1, 2014, the medicaid agency uses the 3MTM Corporation's national weights developed for the all-patient refined-diagnosis-related group (APR-DRG) software.
"Enhanced ambulatory patient groupings (EAPG)" - The payment system used by the agency to calculate reimbursement to hospitals for the facility component of outpatient services on and after July 1, 2014. This system uses 3M's EAPGs as the primary basis for payment.
"Emergency medical condition" ((see WAC 388-500-0005)) - See WAC 182-500-0030.
(("Emergency medical expense requirement (EMER)" means a specified amount of expenses for ambulance, emergency room or hospital services, including physician services in a hospital, incurred for an emergency medical condition that a client must incur prior to certification for the psychiatric indigent inpatient (PII) program.))
"Emergency room" or "emergency facility" or "emergency department" ((means an organized, distinct hospital-based facility available twenty-four hours a day for the provision of unscheduled episodic services to patients who present for immediate medical attention, and is capable of providing emergency services including trauma care)) - A distinct hospital-based facility which provides unscheduled services to clients who require immediate medical attention. An emergency department must be capable of providing emergency medical, surgical, and trauma care services twenty-four hours a day, seven days a week. A physically separate extension of an existing hospital emergency department may be considered a freestanding emergency department as long as the extension provides comprehensive emergency medical, surgical, and trauma care services twenty-four hours a day, seven days a week.
"Emergency services" ((means)) - Health care services required by and provided to a ((patient)) client after the sudden onset of a medical condition manifesting itself by acute symptoms of sufficient severity that the absence of immediate medical attention could reasonably be expected to result in placing the ((patient's)) client's health in serious jeopardy; serious impairment to bodily functions; or serious dysfunction of any bodily organ or part. ((For department payment to a hospital,)) Inpatient maternity services are ((treated as)) considered emergency services by the agency.
"Equivalency factor (EF)" ((means)) - A factor that may be used by the ((department)) agency in conjunction with other factors to determine the level of a state-administered program payment. See WAC ((388-550-4800)) 182-550-4800.
"Exempt hospital((—)) - DRG payment method" ((means)) - A hospital that for a certain ((patient)) client category is reimbursed for services to ((medical assistance)) Washington apple health clients through methodologies other than those using DRG conversion factors.
(("Exempt hospital—Hospital selective contracting program" means a hospital that is either not located in a selective contracting area or is exempted by the department from the selective contracting program. The department's hospital selective contracting program no longer exists for admissions on and after July 1, 2007.))
"Expedited prior authorization (EPA)" ((means the department-delegated process of creating an authorization number for selected medical/dental procedures and related supplies and services in which providers use a set of numeric codes to indicate which department-acceptable indications, conditions, diagnoses, and/or department-defined criteria are applicable to a particular request for service.
"Expedited prior authorization (EPA) number" means an authorization number created by the provider that certifies that the department-published criteria for the medical/dental procedure or supply or services have been met)) - See WAC 182-500-0030.
"Experimental service" ((means)) - A procedure, course of treatment, drug, or piece of medical equipment, which lacks scientific evidence of safety and effectiveness. See WAC ((388-531-0050)) 182-531-0050. A service is not "experimental" if the service:
(1) Is generally accepted by the medical profession as effective and appropriate; and
(2) Has been approved by the federal Food and Drug Administration (FDA) or other requisite government body if such approval is required.
"Fee-for-service" ((means the general payment process the department uses to pay a hospital provider's claim for covered medical services provided to medical assistance clients when the payment for these services is through direct payment to the hospital provider, and is not the responsibility of one of the department's managed care organization (MCO) plans, or a mental health division designee)) - See WAC 182-500-0035.
"Fiscal intermediary" ((means)) - Medicare's designated fiscal intermediary for a region ((and/or)) or category of service, or both.
"Fixed per diem rate" ((means)) - A daily amount used to determine payment for specific services provided in long-term acute care (LTAC) hospitals.
"Formal release" - When a client:
(1) Discharges from a hospital or distinct unit;
(2) Dies in a hospital or distinct unit;
(3) Transfers from a hospital or distinct unit as an acute care transfer; or
(4) Transfers from the hospital or distinct unit to a designated psychiatric unit or facility, or a designated acute rehabilitation unit or facility.
"Global surgery days" ((means)) - The number of preoperative and follow-up days that are included in the payment to the physician for the major surgical procedure.
"Graduate medical education costs" ((means)) - The direct and indirect costs of providing medical education in teaching hospitals. See "direct medical education costs" and "indirect medical education costs."
"Grouper" - See "all-patient DRG grouper (AP-DRG)" and "all-patient refined DRG grouper (APR-DRG)."
"Health ((and recovery services administration (HRSA)" means the successor administration to the medical assistance administration within the department, authorized by the department secretary to administer the acute care portion of Title XIX medicaid, Title XXI SCHIP, and other medical assistance programs, with the exception of certain nonmedical services for persons with chronic disabilities)) care authority (medicaid agency)" - The Washington state agency that administers Washington apple health.
(("Health care team" means a group of health care providers involved in the care of a client.
"High-cost outlier" means, for dates of admission before August 1, 2007, a claim paid under the DRG payment method that did not meet the definition of "administrative day," and has extraordinarily high costs when compared to other claims in the same DRG. For dates of admission on and after January 1, 2001, to qualify as a high-cost outlier, the billed charges, minus the noncovered charges reported on the claim, must exceed three times the applicable DRG payment and exceed thirty-three thousand dollars. The department's high-cost outliers are not applicable for dates of admission on and after July 1, 2007.
"High outlier claim—Medicaid/SCHIP DRG" means, for dates of admission on and after August 1, 2007, a claim paid under the DRG payment method that does not meet the definition of "administrative day," and has extraordinarily high costs as determined by the department. See WAC 388-550-3700.))
"High outlier ((claim—Medicaid/SCHIP per diem))" ((means, for dates of admission on and after August 1, 2007,)) - A DRG claim ((that is)) classified by the ((department)) agency as being allowed a high outlier payment that is paid under the ((per diem)) DRG payment method, does not meet the definition of "administrative day," and has extraordinarily high costs as determined by the ((department)) agency. See WAC ((388-550-3700)) 182-550-3700.
(("High outlier claim—State-administered program DRG" means, for dates of admission on and after August 1, 2007, claim paid under the DRG payment method that does not meet the definition of "administrative day," and has extraordinarily high costs as determined by the department. See WAC 388-550-3700.
"High outlier claim—State-administered program per diem" means, for dates of admission on or after August 1, 2007, claim that is classified by the department as being allowed as a high outlier payment, that is paid under the per diem payment method, does not meet the definition of "administrative day," and has extraordinarily high costs as determined by the department. See WAC 388-550-3700.))
"Hospice" ((means)) - A medically directed, interdisciplinary program of palliative services for terminally ill clients and the clients' families. Hospice is provided under arrangement with a Washington state-licensed and Title XVIII-certified Washington state hospice.
"Hospital" ((means)) - An entity that is licensed as an acute care hospital in accordance with applicable state laws and regulations, or the applicable state laws and regulations of the state in which the entity is located when the entity is out-of-state, and is certified under Title XVIII of the federal Social Security Act. The term "hospital" includes a medicare or state-certified distinct rehabilitation unit ((or)), a "psychiatric hospital" as defined in this section, or any other distinct unit of the hospital.
(("Hospital base period" means, for purposes of establishing a provider rate, a specific period or timespan used as a reference point or basis for comparison.
"Hospital base period costs" means costs incurred in, or associated with, a specified base period.
"Hospital conversion factor" means a hospital-specific dollar amount that reflects the average cost for a DRG paid case of treating medicaid and SCHIP clients in a given hospital. See cost-based conversion factor (CBCF) and negotiated conversion factor (NCF).))
"Hospital covered service" ((means a)) - Any service ((that is)), treatment, equipment, procedure, or supply provided by a hospital, covered under a ((medical assistance)) Washington apple health program, and ((is)) within the scope of an eligible client's ((medical assistance)) Washington apple health program.
"Hospital cost report" - See "cost report."
(("Hospital dispute resolution conference" means an informal meeting for deliberation during a provider administrative appeal. For provider audit appeals, see chapter 388-502A WAC. For provider rate appeals, see WAC 388-501-0220.
"Hospital market basket index" means a measure, expressed as a percentage, of the annual inflationary costs for hospital services measured by Global Insight's Data Resources, Inc. (DRI) and identified as the CMS PPS input price index.
"Hospital peer group" means the peer group categories established by the department for classification of hospitals:
(1) Peer Group A - Hospitals identified by the department as rural hospitals (excludes all rural hospitals paid by the certified public expenditure (CPE) payment method and critical access hospital (CAH) payment method);
(2) Peer Group B - Hospitals identified by the department as urban hospitals without medical education programs (excludes all hospitals paid by the CPE payment method and CAH payment method);
(3) Peer Group C - Hospitals identified by the department as urban hospitals with medical education programs (excludes all hospitals paid by the CPE payment method and CAH payment method);
(4) Peer Group D - Hospitals identified by the department as specialty hospitals and/or hospitals not easily assignable to the other five peer groups;
(5) Peer Group E - Hospitals identified by the department as public hospitals participating in the "full cost" public hospital certified public expenditure (CPE) payment program; and
(6) Peer Group F - Hospitals identified by the department of health (DOH) as CAHs, and paid by the department using the CAH payment method.
"Hospital selective contracting program" or "selective contracting" means for dates of admission before July 1, 2007, a negotiated bidding program for hospitals within specified geographic areas to provide inpatient hospital services to medical assistance clients. The department's hospital selective contracting program no longer exists for dates of admission on and after July 1, 2007.))
"Hospital readmission" - A situation in which a client who was admitted as an inpatient and discharged from the hospital has returned to inpatient status to the same or a different hospital.
"Indirect medical education costs" ((means)) - The indirect costs of providing an approved medical residency program as recognized by medicare.
"Inflation adjustment" ((means,)) - For cost inflation, this is the hospital inflation adjustment. This adjustment is determined by using the inflation factor method ((supported)) approved by the legislature. For charge inflation, ((it means)) this is the inflation factor determined by comparing average discharge charges for the industry from one year to the next, as found in the comprehensive hospital abstract reporting system (CHARS) ((standard reports three and four)) Hospital Census and Charges by Payer report.
(("Informed consent" means that an individual consents to a procedure after the provider who obtained a properly completed consent form has done all of the following:
(1) Disclosed and discussed the patient's diagnosis;
(2) Offered the patient an opportunity to ask questions about the procedure and to request information in writing;
(3) Given the patient a copy of the consent form;
(4) Communicated effectively using any language interpretation or special communication device necessary per 42 C.F.R. 441.257; and
(5) Given the patient oral information about all of the following:
(a) The patient's right to not obtain the procedure, including potential risks, benefits, and the consequences of not obtaining the procedure;
(b) Alternatives to the procedure including potential risks, benefits, and consequences; and
(c) The procedure itself, including potential risks, benefits, and consequences.
"Inpatient hospital" means a hospital authorized by the department of health to provide inpatient services.))
"Inpatient hospital admission" ((means an)) - A formal admission to a hospital based on an evaluation of the client using objective clinical indicators for the purpose of providing medically necessary, acute inpatient care((, including)). These indicators include assessment, monitoring, and therapeutic services as required to best manage the client's illness or injury((, and that is)). All applicable indicators must be documented in the client's health record. The decision to admit a client to inpatient status should be based on the condition-specific episode of care, severity of illness presented, and the intensity of services rendered. The agency does not deem inpatient hospital admissions as covered or noncovered solely on the basis of the length of time the client actually spends in the hospital. Generally, a client remains overnight and occupies a bed. Inpatient status can apply even if the client is discharged or transferred to another acute hospital and does not actually use a hospital bed overnight. For the agency to recognize a stay as inpatient there must be a physician admission order in the client's medical record indicating the status as inpatient.
"Inpatient medicaid DRG conversion factor" ((means)) A dollar amount that represents selected hospitals' average costs of treating medicaid and ((SCHIP)) CHIP clients. The conversion factor is a rate that is multiplied by a DRG relative weight to pay medicaid and ((SCHIP)) CHIP claims under the DRG payment method. See WAC ((388-550-3450)) 182-550-3800 for how this conversion factor is calculated.
"Inpatient services" ((means)) - Health care services provided ((directly or indirectly)) to a client ((subsequent to the client's inpatient hospital admission and prior to discharge)) during hospitalization whose condition warrants formal admission and treatment in a hospital.
((["]))"Inpatient state-administered program conversion factor" ((means a dollar amount used as a rate)) - A DRG conversion factor reduced from the inpatient medicaid DRG conversion factor to pay a hospital for inpatient services provided to a client eligible under a state-administered program. The conversion factor is multiplied by a DRG relative weight to pay claims under the DRG payment method.
"Intermediary" - See "fiscal intermediary."
"International Classification of Diseases((, 9th Revision, Clinical Modification (ICD-9-CM) Edition" means)) (ICD-9-CM and ICD-10-CM)" - The systematic listing ((that transforms verbal descriptions)) of diseases, injuries, conditions, and procedures ((into)) as numerical or alpha numerical designations (coding).
"Length of stay (LOS)" ((means)) - The number of days of inpatient hospitalization, calculated by adding the total number of days from the admission date to the discharge date, and subtracting one day.
(("Length of stay extension request" means a request from a hospital provider for the department, or in the case of psychiatric admission, the appropriate mental health division designee, to approve a client's hospital stay exceeding the average length of stay for the client's diagnosis and age.
"Lifetime hospitalization reserve" means, under the medicare Part A benefit, the nonrenewable sixty hospital days that a beneficiary is entitled to use during his or her lifetime for hospital stays extending beyond ninety days per benefit period. See also "reserve days."))
"Long-term acute care (LTAC) services" ((means)) - Inpatient intensive long-term care services provided in ((department-approved)) agency-approved LTAC hospitals to eligible ((medical assistance)) Washington apple health clients who meet criteria for level 1 or level 2 services. See WAC ((388-550-2565 through 388-550-2596)) 182-550-2565 through 182-550-2596.
(("Low-cost outlier" means a case having a date of admission before August 1, 2007, with extraordinarily low costs when compared to other cases in the same DRG. For dates of admission on and after January 1, 2001, to qualify as a low-cost outlier, the allowed charges must be less than the greater of ten percent of the applicable DRG payment or four hundred and fifty dollars. The department's low-cost outliers are not applicable for dates of admission on and after August 1, 2007.
"Low income utilization rate (LIUR)" means a rate determined by a formula represented as (A/B)+(C/D) in the same period in which:
(1) The numerator A is the hospital's total patient services revenue under the state plan, plus the amount of cash subsidies for patient services received directly from state and local governments;
(2) The denominator B is the hospital's total patient services revenue (including the amount of such cash subsidies);
(3) The numerator C is the hospital's total inpatient service charge attributable to charity care, less the portion of cash subsidies described in (1) of this definition in the period reasonably attributable to inpatient hospital services. The amount shall not include contractual allowances and discounts (other than for indigent patients not eligible for medical assistance under the state plan); and
(4) The denominator D is the hospital's total charge for inpatient hospital services.))
"LTAC level 1 services" – LTAC services provided to a client who requires eight or more hours of direct skilled nursing care per day and the client's medical needs cannot be met at a lower level of care due to clinical complexity. Level 1 services include one of the following:
(1) Ventilator weaning care; or
(2) Care for a client who has:
(a) Chronic open wounds that require on-site wound care specialty services and daily assessments and/or interventions; and
(b) At least one comorbid condition (such as chronic renal failure requiring hemodialysis).
"LTAC level 2 services" - LTAC services provided to a client who requires four or more hours of direct skilled nursing care per day, and the clients' medical needs cannot be met at a lower level of care due to clinical complexity. Level 2 services include at least one of the following:
(1) Ventilator care for a client who is ventilator-dependent and is not weanable and has complex medical needs; or
(2) Care for a client who:
(a) Has a tracheostomy;
(b) Requires frequent respiratory therapy services for complex airway management and has the potential for decannulation; and
(c) Has at least one comorbid condition (such as quadriplegia).
"Major diagnostic category (MDC)" ((means)) - One of the mutually exclusive groupings of principal diagnosis areas in the AP-DRG and APR-DRG classification systems. ((The diagnoses in each MDC correspond to a single major organ system or etiology and, in general, are associated with a particular medical specialty.
"Market basket index" - See "hospital market basket index."
"MDC" - See "major diagnostic category."
"Medicaid cost proxy" means a figure developed to approximate or represent a missing cost figure.
"Medicaid inpatient utilization rate (MIPUR)" means a ratio expressed by the following formula represented as X/Y in which:
(1) The numerator X is the hospital's number of inpatient days attributable to patients who (for such days) were eligible for medical assistance under the state plan in a period.
(2) The denominator Y is the hospital's total number of inpatient days in the same period as the numerator's. Inpatient day includes each day in which an individual (including a newborn) is an inpatient in the hospital, whether or not the individual is in a specialized ward and whether or not the individual remains in the hospital for lack of suitable placement elsewhere.
"Medical assistance administration (MAA)" means the health and recovery services administration (HRSA), or a successor administration, within the department authorized by the department's secretary to administer the acute care portion of the Title XIX medicaid, Title XXI state children's health insurance program (SCHIP), and other medical assistance programs, with the exception of certain nonmedical services for persons with chronic disabilities.
"Medical assistance program" means any health care program administered through HRSA.))
"Medical care services (MCS)" ((means the state-administered limited scope of care provided to general assistance-unemployable (GAU) recipients, and recipients of alcohol and drug addiction services provided under chapter 74.50 RCW)) - See WAC 182-500-0070.
"Medical education costs" ((means)) - The expenses incurred by a hospital to operate and maintain a formally organized graduate medical education program.
(("Medical screening evaluation" means the service(s) provided by a physician or other practitioner to determine whether an emergent medical condition exists.
"Medical stabilization" means a return to a state of constant and steady function. It is commonly used to mean the patient is adequately supported to prevent further deterioration.))
"Medical visit" – Diagnostic, therapeutic, or consultative services provided to a client by a health care professional in an outpatient setting.
"Medicare cost report" ((means)) - The medicare cost report (Form 2552-96 or Form 2552-10), or successor document, completed and submitted annually by a hospital provider((:
(1) To medicare intermediaries at the end of a provider's selected fiscal accounting period to establish hospital reimbursable costs for per diem and ancillary services; and
(2) To medicaid to establish appropriate DRG and other rates for payment of services rendered)).
"Medicare crossover" ((means)) - A claim involving a client who is eligible for both medicare benefits and medicaid.
"Medicare physician fee schedule (((MFS))) (MPFS)" ((means)) - The official CMS publication of relative value units and medicare ((policies and relative value units)) payment policy indicators for the resource-based relative value scale (RBRVS) payment program.
"Medicare Part A" - See WAC ((388-500-0005)) 182-500-0070.
"Medicare Part B" - See WAC ((388-500-0005)) 182-500-0070.
(("Medicare buy-in premium" - See "buy-in premium."))
"Medicare payment principles" ((means)) - The rules published in the federal register regarding payment for services provided to medicare clients.
"Mental health ((division)) designee" ((or "MHD designee" means)) - A professional contact person authorized by ((MHD)) the division of behavioral health and recovery (DBHR) of DSHS, who operates under the direction of a regional support network (RSN) or a prepaid inpatient health plan (PIHP). See WAC ((388-550-2600)) 182-550-2600.
(("Mentally incompetent" means a person who has been declared mentally incompetent by a federal, state, or local court of competent jurisdiction.
"Multiple occupancy rate" means the rate customarily charged for a hospital room with two to four patient beds.))
"Military hospital" - A hospital reserved for the use of military personnel, their dependents, and other authorized users.
"Modifier" - A two-digit alphabetic and/or numeric identifier 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 correct coding initiative (NCCI)" – A national standard for the accurate and consistent description of medical goods and services using procedural codes. The standard is based on coding conventions defined in the American Medical Associations' Current Procedural Terminology (CPT®) manual, current standards of medical and surgical coding practice, input from specialty societies, and analysis of current coding practices. The Centers for Medicare and Medicaid Services (CMS) maintain NCCI policy. Information can be found at http://www.cms.hhs.gov/NationalCorrectCodInitEd/.
"National drug code (NDC)" ((means)) - The eleven-digit number the manufacturer or labeler assigns to a pharmaceutical product and attaches to the product container at the time of packaging. The eleven-digit NDC is composed of a five-four-two grouping. The first five digits comprise the labeler code assigned to the manufacturer by the ((Federal Drug Administration ())FDA(())). The second grouping of four digits is assigned by the manufacturer to describe the ingredients, dose form, and strength. The last grouping of two digits describes the package size.
(("Negotiated conversion factor (NCF)" means, for dates of admission before July 1, 2007, a negotiated hospital-specific dollar amount which is used in lieu of the cost-based conversion factor as the multiplier for the applicable DRG weight to determine the DRG payment for a selective contracting program hospital. See also "hospital conversion factor" and "cost-based conversion factor." The department's hospital selective contracting program no longer exists for dates of admission on and after July 1, 2007.))
"National payment rate (NPR)" – A rate for a given procedure code, published by CMS, that does not include a state- or location-specific adjustment.
"National Provider Identifier (NPI)" - A standard, unique identifier for health care providers assigned by CMS. The agency's ProviderOne system pays for inpatient and outpatient services using only one NPI per provider. The agency may make an exception for inpatient claims billed with medicare-certified, distinct unit NPIs.
"Nationwide rate" - See "national payment rate (NPR)."
"NCCI edit" - A software step used to determine if a claim is billing for a service that is not in accordance with federal and state statutes, federal and state regulations, agency fee schedules, billing instructions, and other publications. The agency has the final decision whether the NCCI edits allow automated payment for services that were not billed in accordance with governing law, NCCI standards, or agency policy.
"Newborn" or "neonate" or "neonatal" ((means)) - A person younger than twenty-nine days old. ((However, a person who has been admitted to an acute care hospital setting as a newborn and is transferred to another acute care hospital setting is still considered a newborn for payment purposes.))
"Nonallowed service or charge" ((means)) - A service or charge ((that is not recognized for payment)) billed by the provider as noncovered or denied by the ((department, and)) agency. This service or charge cannot be billed to the client except under the conditions identified in WAC ((388-502-0160)) 182-502-0160.
(("Noncontract hospital" means, for dates of admission before July 1, 2007 a licensed hospital located in a selective contracting area (SCA) but which does not have a contract to participate in the hospital selective contracting program. The department's hospital selective contracting program no longer exists for dates of admission on and after July 1, 2007.))
"Noncovered charges" ((means)) - Billed charges ((submitted)) a provider submits to the ((department by a provider)) agency on a claim ((that are indicated by the provider)) and indicates them on the claim as noncovered.
"Noncovered service or charge" ((means)) - A service or charge ((that is not considered or paid by the department)) the agency does not consider or pay for as a "hospital covered service((," and cannot))." This service or charge may not be billed to the client, except under the conditions identified in WAC ((388-502-0160)) 182-502-0160.
(("Nonemergency hospital admission" means any inpatient hospitalization of a patient who does not have an emergent medical condition, as defined in WAC 388-500-0005.
"Nonparticipating hospital" means a noncontract hospital. See "noncontract hospital."))
"Nursing service personnel" – A group of health care professionals that includes, but is not limited to: Registered nurse (RN), licensed practical nurse (LPN), certified nursing assistant/nursing assistant certified (CNA/NAC).
"Observation services" ((means health care 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)) – A well-defined set of clinically appropriate services furnished while determining whether a client will require formal inpatient admission or be discharged from the hospital. Services include ongoing short-term treatment, monitoring, assessment, and reassessment. Rarely do reasonable and necessary observation services exceed forty-eight hours. The agency or its designee may determine through the retrospective utilization review process that an inpatient hospital service should have been billed as an observation service.
"Operating costs" ((means)) - All expenses incurred ((in)) providing accommodation and ancillary services, excluding capital and medical education costs.
(("OPPS" - See "outpatient prospective payment system."
"OPPS adjustment" means the legislative mandated reduction in the outpatient adjustment factor made to account for the delay of OPPS implementation.
"OPPS outpatient adjustment factor" means the outpatient adjustment factor reduced by the OPPS and adjustment factor as a result of legislative mandate.))
"Orthotic device" or "orthotic" ((means)) - A corrective or supportive device that:
(1) Prevents or corrects physical deformity or malfunction; or
(2) Supports a weak or deformed portion of the body.
"Out-of-state hospital" ((means)) - Any hospital located outside the state of Washington and ((outside the designated)) the bordering cities ((in Oregon and Idaho (see WAC 388-501-0175))) designated in WAC 182-501-0175. For ((medical assistance)) Washington apple health clients requiring psychiatric services, an "out-of-state hospital" ((means)) is any hospital located outside the state of Washington.
(("Outlier set-aside factor" means the amount by which a hospital's cost-based conversion factor is reduced for payments of high cost outlier cases. The department's outlier set-aside factor is not applicable for dates of admission on and after August 1, 2007.
"Outlier set-aside pool" means the total amount of payments for high cost outliers which are funded annually based on payments for high cost outliers during the year. The department's outlier set-aside pool is not applicable for dates of admission on and after August 1, 2007.))
"Outliers" ((means)) - Cases with extraordinarily high ((or low)) costs when compared to other cases in the same DRG.
"Outpatient" ((means a patient)) - A client who is receiving health care services ((in)), other than ((an)) inpatient services, in a hospital setting.
"Outpatient care" ((means health care provided other than inpatient services in a hospital setting.)) – See "outpatient hospital services."
"Outpatient code editor (OCE)" – A software program the agency uses for classifying and editing in ambulatory payment classification (APC)-based OPPS.
"Outpatient hospital" ((means)) - A hospital authorized by ((the department of health)) DOH to provide outpatient services.
"Outpatient hospital services" ((means)) - Those health care services that are within a hospital's licensure and provided to a client who is designated as an outpatient.
"Outpatient observation" - See "observation services."
"Outpatient prospective payment system (OPPS)" ((means)) - The payment system used by the ((department)) agency 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 short stay" - See "observation services" and "outpatient hospital services."))
"Outpatient prospective payment system (OPPS) conversion factor" – See "outpatient prospective payment system (OPPS) rate."
"Outpatient prospective payment system (OPPS) rate" – A hospital-specific multiplier assigned by the agency that is one of the components of the APC payment calculation.
"Outpatient surgery" ((means)) - A surgical procedure that is not expected to require an inpatient hospital admission.
(("Pain treatment facility" means a department-approved inpatient facility for pain management, in which a multidisciplinary approach is used to teach clients various techniques to live with chronic pain.
"Participating hospital" means a licensed hospital that accepts department clients.
"PAS length of stay (LOS)" means, for dates of admission before August 1, 2007, the average length of an inpatient hospital stay for patients based on diagnosis and age, as determined by the commission of professional and hospital activities and published in a book entitled Length of Stay by Diagnosis, Western Region. See also "professional activity study (PAS)."
"Patient consent" means the informed consent of the patient and/or the patient's legal guardian, as evidenced by the patient's or guardian's signature on a consent form, for the procedure(s) to be performed upon or for the treatment to be provided to the patient.
"Peer group" - See "hospital peer group."
"Peer group cap" means, for dates of admission before August 1, 2007, the reimbursement limit set for hospital peer groups B and C, established at the seventieth percentile of all hospitals within the same peer group for aggregate operating, capital, and direct medical education costs.))
"Pass-throughs" – Certain drugs, devices, and biologicals, as identified by CMS, for which providers are entitled to additional separate payment until the drugs, devices, or biologicals are assigned their own APC.
"Per diem ((rate" means))" - A method which uses a daily rate ((used)) to calculate payment for services provided as a "hospital covered service."
(("Personal comfort items" means items and services which primarily serve the comfort or convenience of a client and do not contribute meaningfully to the treatment of an illness or injury.))
"PM&R" - See "Acute PM&R."
(("Plan of treatment" or "plan of care" means the written plan of care for a patient which includes, but is not limited to, the physician's order for treatment and visits by the disciplines involved, the certification period, medications, and rationale indicating need for services.
"PPS" see "prospective payment system."))
"Point of care testing (POCT)" - A test designed to be used at or near the site where the patient is located, that does not require permanent dedicated space, and that is performed outside the physical facilities of the clinical laboratory.
"Primary care case management (PCCM)" ((means)) - The coordination of health care services under the ((department's)) agency's Indian health center or tribal clinic managed care program. See WAC ((388-538-068)) 182-538-068.
"Principal diagnosis" ((means)) - The condition ((established after study to be)) chiefly responsible for the admission of the patient to the hospital ((for care)).
(("Principal procedure" means a procedure performed for definitive treatment rather than diagnostic or exploratory purposes, or because it was necessary due to a complication.))
"Prior authorization" ((means a process by which clients or providers must request and receive department or a department designee's approval for certain health care services, equipment, or supplies, based on medical necessity, before the services are provided to clients, as a precondition for payment to the provider. Expedited prior authorization and limitation extension are forms of prior authorization)) – See WAC 182-500-0085.
"Private room rate" ((means)) - The rate customarily charged by a hospital for a one-bed room.
(("Professional activity study (PAS)" means the compilation of inpatient hospital data by diagnosis and age, conducted by the commission of professional and hospital activities, which resulted in the determination of an average length of stay for patients. The data are published in a book entitled Length of Stay by Diagnosis, Western Region.
"Professional component" means the part of a procedure or service that relies on the physician's professional skill or training, or the part of a payment that recognizes the physician's cognitive skill.
"Prognosis" means the probable outcome of a patient's illness, including the likelihood of improvement or deterioration in the severity of the illness, the likelihood for recurrence, and the patient's probable life span as a result of the illness.))
"Prospective payment system (PPS)" ((means a system that sets payment rates for a predetermined period for defined services, before the services are provided. The payment rates are based on economic forecasts and the projected cost of services for the predetermined period)) – A payment system in which what is needed to calculate payments (methods, types of variables, and other factors) is set in advance and is knowable by all parties before care is provided. In a retrospective payment system, what is needed (actual costs or charges) is not available until after care is provided.
"Prosthetic device" or "prosthetic" ((means)) - A replacement, corrective, or supportive device prescribed by a physician or other licensed practitioner, within the scope of his or her practice as defined by state law, to:
(1) Artificially replace a missing portion of the body;
(2) Prevent or correct physical deformity or malfunction; or
(3) Support a weak or deformed portion of the body.
"Psychiatric hospital" ((means)) - A medicare-certified distinct psychiatric unit, a medicare-certified psychiatric hospital, or a state-designated pediatric distinct psychiatric unit in a medicare-certified acute care hospital. Eastern state hospital and western state hospital are excluded from this definition.
(("Psychiatric indigent inpatient (PII) program" means a state-administered program established by the department specifically for mental health clients identified in need of voluntary emergency inpatient psychiatric care by a mental health division designee. See WAC 388-865-0217.
"Psychiatric indigent person" means a person certified by the department as eligible for the psychiatric indigent inpatient (PII) program.))
"Ratable" ((means)) - A factor used to calculate ((a reduction factor used to reduce medicaid level rates to determine)) inpatient payments for state-administered programs ((claim payment to hospitals)).
"Ratio of costs-to-charges (RCC)" ((means)) - A method used to pay hospitals for some services exempt from the DRG payment method. It also refers to the ((factor or rate)) percentage applied to a hospital's allowed covered charges for medically necessary services to determine estimated costs, as determined by the ((department)) agency, and payment to the hospital for some DRG-exempt services.
(("RCC" - See "ratio of costs-to-charges."))
"Rebasing" ((means)) - The process ((of recalculating the conversion factors, per diems, per case rates, or RCC rates using historical data)) used by the agency to update hospital payment policies, related variables (rates, factors, thresholds, multipliers, and caps), and system processes (edits, adjudication, grouping, etc.).
"Recalibration" ((means)) - The process of recalculating DRG relative weights using historical data.
"Regional support network (RSN)" ((means a county authority or a group of county authorities recognized and certified by the department, that contracts with the department per chapters 38.52, 71.05, 71.24, 71.34, and 74.09 RCW and chapters 275-54, 275-55, and 275-57 WAC, to manage the provision of mental health services to medical assistance clients)) – See WAC 182-500-0095.
(("Rehabilitation accreditation commission, The" - See "CARF."))
"Rehabilitation units" ((means)) - Specifically identified rehabilitation hospitals and designated rehabilitation units of hospitals that meet ((department and/or)) agency and medicare criteria for distinct rehabilitation units.
"Relative weights" - See "DRG relative weights."
(("Remote hospitals" means, for claims with dates of admission before July 1, 2007, hospitals that meet the following criteria during the hospital selective contracting (HSC) waiver application period:
(1) Are located within Washington state;
(2) Are more than ten miles from the nearest hospital in the HSC competitive area; and
(3) Have fewer than seventy-five beds; and
(4) Have fewer than five hundred medicaid and SCHIP admissions within the previous waiver period.))
"Reserve days" ((means)) - The days beyond the ninetieth day of hospitalization of a medicare patient for a benefit period or ((spell)) incidence of illness. See also "lifetime hospitalization reserve."
(("Retrospective payment system" means a system that sets payment rates for defined services according to historic costs. The payment rates reflect economic conditions experienced in the past.))
"Revenue code" ((means a nationally-assigned)) - A nationally assigned coding system for billing inpatient and outpatient hospital services, home health services, and hospice services.
"Room and board" ((means the services a hospital facility provides a patient)) - Routine supplies and services provided to a client during the ((patient's)) client's hospital stay. ((These services include)) This includes, but ((are)) is not limited to, a ((routine)) regular or special care hospital room and related furnishings, ((routine)) room supplies, dietary and bedside nursing services, and the use of certain hospital equipment and facilities.
"Rural health clinic" ((means a clinic that is located in areas designed by the bureau of census as rural and by the Secretary of the Department of Health and Human Services (DHHS), as medically underserved)) - See WAC 182-549-1100.
"Rural hospital" ((means)) - An acute care health care facility capable of providing or assuring availability of inpatient and outpatient hospital health services in a rural area.
(("Secondary diagnosis" means a diagnosis other than the principal diagnosis for which an inpatient is admitted to a hospital.
"Selective contracting area (SCA)" means, for dates of admission before July 1, 2007, an area in which hospitals participate in negotiated bidding for hospital contracts. The boundaries of an SCA are based on historical patterns of hospital use by medicaid and SCHIP clients. This definition is not applicable for dates of admission on and after July 1, 2007.))
"Semi-private room rate" ((means)) - A rate customarily charged for a hospital room with two to four beds; this charge is generally lower than a private room rate and higher than a ward room. See also "multiple occupancy rate."
(("Seven-day readmission" means the situation in which a client who was admitted as an inpatient and discharged from the hospital has returned to inpatient status to the same or a different hospital within seven days.
"Special care unit" means a department of health (DOH) or medicare-certified hospital unit where intensive care, coronary care, psychiatric intensive care, burn treatment or other specialized care is provided.))
"Significant procedure" – A procedure, therapy, or service provided to a client that constitutes one of the primary reasons for the visit to the health care professional, and represents a substantial portion of the resources associated with the visit.
"Specialty hospitals" ((means)) - Children's hospitals, psychiatric hospitals, cancer research centers or other hospitals which specialize in treating a particular group of patients or diseases.
"Spenddown" ((means the process by which a person uses incurred medical expenses to offset income and/or resources to meet the financial standards established by the department.)) - See chapter ((388-519)) 182-519 WAC.
(("Stat laboratory charges" means the charges by a laboratory for performing a test or tests immediately. "Stat." is the abbreviation for the Latin word "statim" meaning immediately.
"State children's health insurance program (SCHIP)" means the federal Title XXI program under which medical care is provided to uninsured children younger than age nineteen.))
"State plan" ((means)) - The plan filed by the ((department)) agency with ((the Centers for Medicare and Medicaid Services (CMS))) CMS, Department of Health and Human Services (DHHS), outlining how the state will administer medicaid and ((SCHIP)) CHIP services, including the hospital program.
"Status indicator (SI)" - A code assigned to each medical procedure or service by the agency that contributes to the selection of a payment method.
"Subacute care" ((means)) - Care provided to a ((patient)) client which is less intensive than that given at an acute care hospital. Skilled nursing, nursing care facilities and other facilities provide subacute care services.
(("Surgery" means the medical diagnosis and treatment of injury, deformity or disease by manual and instrumental operations. For reimbursement purposes, surgical procedures are those designated in CPT as procedure codes 10000 to 69999.))
"Survey" - An inspection or review conducted by a federal, state, or private agency to evaluate and monitor a facility's compliance with program requirements.
"Swing bed" - An inpatient hospital bed certified by CMS for either acute inpatient hospital or skilled nursing services.
"Swing-bed day" ((means)) - A day in which a client is receiving skilled nursing services in a hospital-designated swing bed at the hospital's census hour. ((The hospital swing bed must be certified by the Centers for Medicare and Medicaid Services (CMS) for both acute care and skilled nursing services.
"Technical component" means the part of a procedure or service that relates to the equipment set-up and technician's time, or the part of a procedure and service payment that recognizes the equipment cost and technician time.
"Tertiary care hospital" means a specialty care hospital providing highly specialized services to clients with more complex medical needs than acute care services.))
"Total patient days" ((means)) - All patient days in a hospital for a given reporting period, excluding days for skilled nursing, nursing care, and observation days.
"Transfer" ((means)) - To move a client from one acute care ((facility or distinct unit to another)) setting to a higher level acute care setting for emergency care or to a post-acute, lower level care setting for ongoing care.
"Transferring hospital" ((means)) - The hospital or distinct unit that transfers a client to another acute care or subacute facility or distinct unit, or to a nonhospital setting.
(("Trauma care facility" means a facility certified by the department of health as a level I, II, III, IV, or V facility. See chapter 246-976 WAC.
"Trauma care service" - See department of health's WAC 246-976-935.))
"UB-04" ((is)) - The uniform billing document required for use nationally((, beginning on May 23, 2007,)) by hospitals, nursing facilities, hospital-based skilled nursing facilities, home health agencies, and hospice agencies in billing ((third party payers)) for services provided to patients. This document includes the current national uniform billing data element specifications developed by the National Uniform Billing Committee and approved ((and/or)) and modified by the Washington state payer group or the ((department)) agency.
(("UB-92" is the uniform billing document discontinued for billing claims submitted on and after May 23, 2007.
"Unbundled services" means interventions that are not integral to the major procedure and that are paid separately.
"Uncompensated care" - See "charity care."
"Uniform cost reporting requirements" means a standard accounting and reporting format as defined by medicare.
"Uninsured patient" means an individual who is not covered by insurance for provided inpatient and/or outpatient hospital services.
"Usual and customary charge (UCC)" means the charge customarily made to the general public for a health care procedure or service, or the rate charged other contractors for the service if the general public is not served.))
"Vendor rate increase" ((means an inflation)) - An adjustment determined by the legislature, that may be used to periodically increase rates for payment to vendors, including health care providers, that do business with the state.
"Washington apple health program" - Any health care program administered through the medicaid agency.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-2900 Payment limits—Inpatient hospital services.
(1) To be eligible for payment for covered inpatient hospital services, a hospital must:
(a) Have a core-provider agreement with the ((department)) agency; and
(b) Be an in-state hospital, a bordering city hospital, a critical border hospital, or a distinct unit of such a hospital, ((that meets)) and meet the definition in ((RCW 70.41.020 and is certified under Title XVIII of the federal Social Security Act)) WAC 182-550-1050; or
(c) Be an out-of-state hospital that meets the conditions in WAC ((388-550-6700)) 182-550-6700.
(2) The ((department)) agency does not pay for any of the following:
(a) ((A hospital or distinct unit for)) Inpatient care ((and/or)) or services, or both, provided in a hospital or distinct unit to a client when a managed care organization (MCO) plan is contracted to cover those services.
(b) ((A hospital or distinct unit for care and/or)) Care or services, or both, provided in a hospital or distinct unit provided to a client enrolled in the hospice program, unless the care or services are completely unrelated to the terminal illness that qualifies the client for the hospice benefit.
(c) ((A hospital or distinct unit for ancillary services in addition to the:
(i) Diagnosis related group (DRG) payment, or per case rate payment on claims with dates of admission before August 1, 2007; or
(ii) DRG payment, per diem payment, or per case rate payment on claims with dates of admission on and after August 1, 2007.)) Ancillary services provided in a hospital or distinct unit unless explicitly spelled out in this chapter.
(d) ((For)) Additional days of hospitalization on a non-DRG claim when:
(i) Those days exceed the number of days established by the ((department)) agency or mental health ((division (MHD))) designee (see WAC ((388-550-2600)) 182-550-2600), as the approved length of stay (LOS); and
(ii) The hospital or distinct unit has not ((requested and/or)) received approval for an extended ((length of stay ())LOS(())) from the ((department or MHD)) agency or mental health designee as specified in WAC ((388-550-4300)) 182-550-4300(6). The ((department)) agency may perform a prospective, concurrent, or retrospective utilization review as described in WAC ((388-550-1700)) 182-550-1700, to evaluate an extended LOS. A ((MHD)) mental health designee may also perform those utilization reviews to evaluate an extended LOS.
(e) ((For dates of admission before August 1, 2007, for elective or nonemergency inpatient services provided in a nonparticipating hospital. A nonparticipating hospital is defined in WAC 388-550-1050. See also WAC 388-550-4600.
(f) For)) Inpatient hospital services when the ((department)) agency determines that the client's medical record fails to support the medical necessity and inpatient level of care for the inpatient admission. The ((department)) agency may perform a retrospective utilization review as described in WAC ((388-550-1700)) 182-550-1700, to evaluate if the services are medically necessary and are provided at the appropriate level of care.
(((g) For)) (f) Two separate inpatient hospitalizations if a client is readmitted to the same or ((different)) an affiliated hospital or distinct unit within ((seven)) fourteen calendar days of discharge((, unless the readmission is due to conditions unrelated to the previous admission. The department:
(i) May perform a retrospective utilization review as described in WAC 388-550-1700 to determine the appropriate payment for the readmission.
(ii) Determines if the combined hospital stay for the admission qualifies to be paid as an outlier. See WAC 388-550-3700 for DRG high-cost outliers and per diem high outliers for dates of admission on and after August 1, 2007.
(h) For)) and the agency determines one inpatient hospitalization does not qualify for a separate payment. See WAC 182-550-3000.
(g) A client's day(s) of absence from the hospital or distinct unit.
(((i) For)) (h) An inappropriate or nonemergency transfer of a client ((from one acute care hospital or distinct unit to another. The department may perform a prospective, concurrent, or retrospective utilization review as described in WAC 388-550-1700 to determine if the admission to the second hospital or distinct unit qualifies for payment. See also WAC 388-550-3600)). See WAC 182-550-3600 for hospital transfers.
(i) Charges related to a provider preventable condition (PPC), hospital acquired condition (HAC), serious reportable event (SRE), or a condition not present on admission (POA). See WAC 182-502-0022.
(3) ((An interim billed inpatient hospital claim submitted for a client's continuous inpatient hospitalization of at least sixty calendar days, is considered for payment by the department only when the following occurs (this does not apply to interim billed hospital claims for which the department is not the primary payer (see (b) of this subsection), or to inpatient psychiatric admissions:)) This section defines when the agency considers payment for an interim billed inpatient hospital claim.
(a) When the agency is the primary payer, each interim billed ((hospital)) nonpsychiatric claim must:
(i) Be submitted in sixty calendar day intervals, unless the client is discharged prior to the next sixty calendar day interval.
(ii) Document the entire date span between the client's date of admission and the current date of services billed, and include the following for that date span:
(A) All inpatient hospital services provided; and
(B) All applicable diagnosis codes and procedure codes.
(iii) Be submitted as an adjustment to the previous interim billed hospital claim.
(b) When the ((department)) agency is not the primary payer((, the department)):
(i) The agency pays an interim billed ((hospital)) nonpsychiatric claim when the criteria in (a) of this subsection are met; and((:
(i) After sixty))
(ii) Either of the following:
(A) Sixty calendar days have passed from the date the ((department becomes)) agency became the primary payer; or
(((ii) The date a)) (B) A client is eligible for both medicare and medicaid and has exhausted the medicare lifetime reserve days for inpatient hospital care.
(c) For psychiatric claims, (a)(i) and (b)(i) of this subsection do not apply.
(4) The agency considers for payment a hospital claim submitted for a client's continuous inpatient hospital admission of sixty calendar days or less ((is considered for payment by the department)) upon the client's ((discharge)) formal release from the hospital or distinct unit. ((The department considers a client discharged from the hospital or distinct unit if one of the following occurs. The client:
(a) Obtains a formal release issued by the hospital or distinct unit;
(b) Dies in the hospital or distinct unit;
(c) Transfers from the hospital or distinct unit as an acute care transfer; or
(d) Transfers from the hospital or distinct unit to a designated psychiatric unit or facility, or a designated acute rehabilitation unit or facility.))
(5) To be eligible for payment, a hospital or distinct unit must bill the agency using an inpatient hospital claim:
(a) In accordance with the current national uniform billing data element specifications:
(i) Developed by the National Uniform Billing Committee (NUBC);
(ii) Approved ((and/or)) or modified, or both, by the Washington state payer group or the ((department)) agency; and
(iii) In effect on the date of the client's admission.
(b) In accordance with the current published international classification of diseases clinical modification coding guidelines;
(c) Subject to the rules in this section and other applicable rules;
(d) In accordance with the ((department's current)) agency's published ((billing instructions)) provider guides and other documents; and
(e) With the date span that covers the client's entire hospitalization. See subsection (3) of this section for when the ((department)) agency considers and pays an initial interim billed hospital claim ((and/or)) and any subsequent interim billed hospital claims; ((and))
(f) That requires an adjustment due to, but not limited to, charges that were not billed on the original paid claim (((i.e.)) e.g., late charges), through submission of an adjusted hospital claim. Each adjustment to a paid hospital claim must provide complete documentation for the entire date span between the client's admission date and discharge date, and include the following for that date span:
(i) All inpatient hospital services provided; and
(ii) All applicable diagnosis codes and procedure codes; and
(g) With the appropriate National Uniform Billing Committee (NUBC) revenue code(s) specific to the service or treatment provided to the client.
(6) ((The department allows the semiprivate room rate for a client's room charges, even if a hospital bills the private room rate.)) When a hospital charges multiple rates for an accommodation room and board revenue code, the agency pays the hospital's lowest room and board rate for that revenue code. The agency may request the hospital's charge master. Room charges must not exceed the hospital's usual and customary charges to the general public, as required by C.F.R. §447.271.
(7) ((For inpatient hospital claims, the department)) The agency allows hospitals an all-inclusive administrative ((date)) day rate((, beginning on the client's admission date,)) for those days of a hospital stay in which a client ((does not meet)) no longer meets criteria for the acute inpatient level of care((, but is not discharged because)). The agency allows this day rate only when an appropriate placement outside the hospital is not available.
(8) The ((department)) agency pays for observation services according to WAC ((388-550-3000 (2)(b), 388-550-6000 (4)(c) and 388-550-7200 (2)(e))) 182-550-6000, 182-550-7200, and other applicable rules.
(9) The ((department)) agency determines its actual payment for an inpatient hospital admission by making any required adjustments from the calculations of the allowed covered charges. Adjustments include((, but are not limited to, any client)):
(a) Client responsibility((, any)) (e.g., spenddown);
(b) Any third-party liability amount, including medicare part A and part B((,)); and
(c) Any other adjustments as determined by the ((department)) agency.
(10) The ((department reduces payment rates to)) agency pays hospitals ((and distinct units)) less for services provided to clients eligible under state-administered programs ((according to the hospital equivalency factor and/or ratable, or other department policy)), as provided in WAC ((388-550-4800)) 182-550-4800.
(11) 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)) agency according to WAC 182-502-0150.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-3000 Payment method((—DRG)).
(1) The ((department)) medicaid agency uses the diagnosis-related group (DRG) payment method to pay for covered inpatient hospital services, except as specified in WAC ((388-550-4300 and 388-550-4400)) 182-550-4300 and 182-550-4400.
(2) The ((department uses the all-patient grouper (AP-DRG) to)) agency assigns a DRG code to each claim for an inpatient hospital stay((. The department periodically evaluates which version of the AP-DRG to use)) using 3MTM software (AP-DRG or APR-DRG) or other software currently in use by the agency. That DRG code determines the method used to pay claims for prospective payment system (PPS) hospitals. For the purpose of this section, PPS hospitals include all in-state and border area hospitals, except both of the following:
(a) Critical access hospitals (CAH), which the agency pays per WAC 182-550-2598; and
(b) Military hospitals, which the agency pays using the following payment methods depending on the revenue code billed by the hospital:
(i) Ratio of costs-to-charges (RCC); and
(ii) Military subsistence per diem.
(3) For each DRG code, the agency establishes an average length of stay (ALOS). The agency may use the DRG ALOS as part of its authorization process and payment methods as specified in this chapter.
(((3) A DRG)) (4) An inpatient claim payment includes all hospital covered ((hospital)) services provided to a client during days the client is eligible. This includes, but is not limited to:
(a) ((An)) The inpatient hospital stay((.));
(b) Outpatient hospital services, including preadmission, emergency ((room)) department, and observation services related to an inpatient hospital stay and provided within one calendar day of a client's inpatient hospital stay. These outpatient services must be billed on the inpatient hospital claim (((see WAC 388-550-6000 (3)(c)).));
(c) Any ((specific service(s), treatment(s), or procedure(s) (such as renal dialysis services) that the admitting hospital is unable to provide and:
(i) The)) hospital covered service for which the admitting hospital sends the client to another facility or provider ((for the service(s), treatment(s), or procedure(s))) during the client's inpatient hospital stay((; and
(ii) The client returns as an inpatient to the admitting hospital.
(d) All transportation costs for an inpatient client when the client requires transportation to another facility or provider for a specific service(s), treatment(s), or procedure(s) that the admitting hospital is unable to provide and:
(i) The admitting hospital sends the client to another facility or provider for the service(s), treatment(s), or procedure(s); and
(ii) The client returns as an inpatient to the admitting hospital.
(4) The department's allowed amount for the DRG payment is determined by multiplying the assigned DRG's relative weight, as determined in WAC 388-550-3100, by the hospital's specific DRG conversion factor. See WAC 388-550-3450. The total allowed amount also includes any high outlier amount calculated for claims.
(5) When directed by the legislature to achieve targeted expenditure levels, as described in WAC 388-550-2800(2), the department may apply an inpatient adjustment factor to each hospital's specific DRG conversion factor rate used in calculating the DRG payment.)), and the client returns as an inpatient to the admitting hospital.
(5) The agency's claim payment for an inpatient stay is determined by the payment method. The agency pays hospitals for inpatient hospital covered services provided to clients using the following methods:
(6) ((The department's DRG payment to a hospital may be adjusted)) For claims paid using the DRG method, the payment may not exceed the billed amount.
(7) The agency may adjust the initial allowable calculated for a claim when one or more of the following occur:
(a) ((For dates of admission before August 1, 2007, a claim qualifies as a DRG high-cost or low-cost outlier, and for dates of admission on and after August 1, 2007,)) A claim qualifies as a ((DRG)) high outlier (see WAC ((388-550-3700)) 182-550-3700);
(b) A claim is paid by the DRG method and a client transfers((:
(i) Before July 1, 2009, from one acute care hospital or distinct unit to another acute care hospital or distinct unit; or
(ii) On and after July 1, 2009 from one acute care hospital or distinct unit to:
(A) Another acute care hospital or distinct unit;
(B) A skilled nursing facility (SNF);
(C) An intermediate care facility;
(D) Home care under the department's home health program;
(E) A long term acute care facility (LTAC);
(F) Hospice (facility-based or in the client's home);
(G) A hospital-based medicare-approved swing bed, or another distinct unit such as a rehabilitation or psychiatric unit (see WAC 388-550-3600); or
(H) A nursing facility certified under medicaid but not medicare.)) from one acute care hospital or distinct unit per WAC 182-550-3600;
(c) A client is not eligible for a ((medical assistance)) Washington apple health program on one or more days of the hospital stay;
(d) A client has third-party liability coverage at the time of admission to the hospital or distinct unit;
(e) A client is eligible for Part B medicare, the hospital submitted a timely claim to medicare for payment, and medicare has made a payment for the Part B hospital charges; or
(f) A client is discharged from an inpatient hospital stay and, within ((seven)) fourteen calendar days, is readmitted as an inpatient to the same hospital or an affiliated hospital. The ((department)) agency or its designee performs a retrospective utilization review (see WAC ((388-550-1700)) 182-550-1700) on the initial admission and the readmission(s) to determine which inpatient hospital stay(s) qualify for ((DRG)) payment. ((Upon the department's retrospective review, an outlier payment may be made if the department determines the claim for combined hospital stays qualifies as a high-cost outlier or high outlier. See WAC 388-550-3700 for DRG high-cost outliers and high outliers.
(7) For dates of admission on and after July 1, 2009, the department pays inpatient claims assigned by the all-patient DRG grouper (AP-DRG) as cesarean section without complications and comorbidities, at the same rate as the vaginal birth with complicating diagnoses.
(8))) (g) A readmission is due to a complication arising from a previous admission (e.g., provider preventable condition). The agency or its designee performs a retrospective utilization review to determine if both admissions are appropriate and qualify for individual payments;
(h) The agency identifies an enhanced payment due to a provider preventable condition, hospital-acquired condition, serious reportable event, or a condition not present on admission.
(8) In response to direction from the legislature, the agency may change any one or more payment methods outlined in chapter 182-550 WAC for the purpose of achieving the legislature's targeted expenditure levels. 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 agency in the Biennial Appropriations Act. In response to this legislative direction, the agency may calculate an adjustment factor (known as an "inpatient adjustment factor") to apply to inpatient hospital rates.
(a) The inpatient adjustment factor is a specific multiplier calculated by the agency and applied to existing inpatient hospital rates to meet targeted expenditure levels as directed by the legislature.
(b) The agency will apply the inpatient adjustment factor when the agency determines that its expenditures on inpatient hospital rates will exceed the legislature's targeted expenditure levels.
(c) The agency will apply any such inpatient adjustment factor to each affected rate.
(9) The ((department)) agency does not pay for a client's day(s) of absence from the hospital.
(((9))) (10) The ((department)) agency pays an interim billed hospital claim ((or)) for covered inpatient hospital services provided to an eligible client only when the interim billed claim meets the criteria in WAC ((388-550-2900)) 182-550-2900.
(((10))) (11) The ((department)) agency applies to the ((payment)) allowable for each claim all applicable adjustments for client responsibility, any third-party liability, medicare payments, and any other adjustments as determined by the ((department)) agency.
(((11))) (12) The ((department)) agency pays hospitals in designated bordering cities for allowed covered services as described in WAC ((388-550-3900)) 182-550-3900.
(((12))) (13) The ((department)) agency pays out-of-state hospitals for allowed covered services as described in WAC ((388-550-4000)) 182-550-4000.
(14) The agency's annual aggregate payments for inpatient hospital services, including payments to state-operated hospitals, will not exceed the estimated amounts that the agency would have paid using medicare payment principles.
(15) When hospital ownership changes, the agency's payment to the hospital will not exceed the amount allowed under 42 U.S.C. Section 1395x (v)(1)(O).
(16) Hospitals participating in the Washington apple health program must annually submit to the agency:
(a) A copy of the hospital's CMS medicare cost report (Form 2552 version currently in use by the agency) that is the official "as filed" cost report submitted to the medicare fiscal intermediary; and
(b) A disproportionate share hospital (DSH) application if the hospital wants to be considered for DSH payments. See WAC 182-550-4900 for the requirements for a hospital to qualify for a DSH payment.
(17) Reports referred to in subsection (16) of this section must be completed according to:
(a) Medicare's cost reporting requirements;
(b) The provisions of this chapter; and
(c) Instructions issued by the agency.
(18) The agency requires hospitals to follow generally accepted accounting principles.
(19) Participating hospitals must permit the agency to conduct periodic audits of their financial records, statistical records, and any other records as determined by the agency.
(20) The agency limits payment for private room accommodations to the semiprivate room rate. Room charges must not exceed the hospital's usual and customary charges to the general public as required by 42 C.F.R. Sec. 447.271.
(21) For a client's hospital stay that involves regional support network (RSN)-approved voluntary inpatient or involuntary inpatient hospitalizations, the hospital must bill the agency for payment. When the hospital contracts directly with the RSN, the hospital must bill the RSN for payment.
(22) For psychiatric hospitals and psychiatric hospital units, when a claim groups to a DRG code that pays by the DRG method, the agency may manually price the claim at the hospital's psychiatric per diem rate.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-3381 Payment ((methodology)) method for acute PM&R services and administrative day services.
((The department's)) This section describes the agency's payment ((methodology)) method for acute physical medicine and rehabilitation (PM&R) services provided by acute PM&R hospitals ((is described in this section)).
(1) ((For dates of admission before August 1, 2007, the department pays an acute PM&R rehabilitation hospital according to the individual hospital's current ratio of costs-to-charges as described in WAC 388-550-4500. For dates of admission on and after August 1, 2007, the department)) The agency pays an acute PM&R hospital for acute PM&R services based on a rehabilitation per diem rate. See ((WAC 388-550-3010 and 388-550-3460)) chapter 182-550 WAC and WAC 182-550-3000.
(2) Acute PM&R room and board includes, but is not limited to:
(a) Facility use;
(b) ((Medical)) Social services (e.g., discharge planning);
(c) Bed and standard room furnishings; and
(d) Dietary and nursing services.
(3) When the ((department)) agency authorizes administrative day(s) for a client as described in WAC ((388-550-2561(8))) 182-550-2561(8), the ((department)) agency pays the facility:
(a) The administrative day rate; and
(b) For pharmaceuticals prescribed ((in)) for the client's use during the administrative portion of the client's stay.
(4) The ((department)) agency pays for transportation services provided to a client receiving acute PM&R services in an acute PM&R hospital according to chapter ((388-546)) 182-546 WAC.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-3800 Rebasing ((and recalibration)).
(((1) The department rebases most of the rates used in)) The agency redesigns (rebases) the medicaid inpatient payment system ((once every three years. Changes to the inpatient hospital rate calculations and rate-setting methods involved in this rebasing process are implemented pursuant to the rebasing of the rate system.
(a) To determine costs for that rebasing process, the department uses:
(i) Each instate hospital's medicare cost report for the hospital fiscal year that ends during the calendar year that the rebasing base year designated by the department begins; and
(ii) Inpatient medicaid and SCHIP claims data for the twelve-month period designated by the department as the rebasing base year.
(b) The rebasing process updates rates for the diagnosis related group (DRG), per diem, and per case rate payment methods.
(c) Other inpatient payment system rates (e.g., the ratio of costs-to-charges (RCC) rates, departmental weighted costs-to-charges (DWCC) rates, administrative day rate, and swing bed rate) are rebased on an annual basis.
(d) The department increases inpatient hospital rates only when mandated by the state legislature. These increases are implemented according to the base methodology in effect, unless otherwise directed by the legislature.
(2) The department periodically recalibrates diagnosis-related group (DRG) relative weights, as described in WAC 388-550-3100, but no less frequently than each time the rate rebasing process described in subsection (1) takes place. The department makes recalibrated relative weights effective on the rebasing implementation date, which can change with each rebasing process.
(3) When recalibrating DRG relative weights without rebasing, the department may apply a budget neutrality factor (BNF) to hospitals' conversion factors to ensure that total DRG payments to hospitals do not exceed total DRG payments that would have been made to hospitals if the relative weights had not been recalibrated. For the purposes of this section, BNF equals the percentage change from total aggregate payments calculated under a new payment system to total aggregate payments calculated under the prior payment system.)) as needed. The base inpatient conversion factor and per diem rates are only updated during a detailed rebasing process, or as directed by the state legislature. Inpatient payment system factors such as the ratio of costs-to-charges (RCC), weighted costs-to-charges (WCC), and administrative day rate are rebased on an annual basis. As part of the rebasing, the agency does all of the following:
(1) Gathers data. The agency uses the following data resources considered to be the most complete and available at the time:
(a) One year of fee-for-service (FFS) paid claim data from the agency's medicaid management information system (MMIS). The agency excludes:
(i) Claims related to state programs and paid at the Title XIX reduced rates from the claim data; and
(ii) Critical access hospital claims paid per WAC 182-550-2598; and
(b) The hospital's most current medicare cost report data from the health care cost report information system (HCRIS) maintained by the Centers for Medicare and Medicaid Services (CMS). If the hospital's medicare cost report from HCRIS is not available, the agency uses the medicare cost report provided by the hospital.
(2) Estimates costs. The agency uses one of two methods to estimate costs. The agency may perform an aggregate cost determination by multiplying the ratio of costs-to-charges (RCC) by the total billed charges, or the agency may use the following detailed costing method:
(a) The agency identifies routine and ancillary cost for operating capital, and direct medical education cost components using different worksheets from the hospital's medicare cost report;
(b) The agency estimates costs for each claim in the dataset as follows:
(i) Accommodation services. The agency multiplies the average hospital cost per day reported in the medicare cost report data for each type of accommodation service (e.g., adult and pediatric, intensive care unit, psychiatric, nursery) by the number of days reported at the claim line level by type of service; and
(ii) Ancillary services. The agency multiplies the RCC reported for each ancillary type of services (e.g., operating room, recovery room, radiology, laboratory, pharmacy, or clinic) by the allowed charges reported at the claim line level by type of service; and
(c) The agency uses the following standard cost components for accommodation and ancillary services for estimating costs of claims:
(i) Routine cost components:
(A) Routine care;
(B) Intensive care;
(C) Intensive care-psychiatric;
(D) Coronary care;
(E) Nursery;
(F) Neonatal ICU;
(G) Alcohol/substance abuse;
(H) Psychiatric;
(I) Oncology; and
(J) Rehabilitation.
(ii) Ancillary cost components:
(A) Operating room;
(B) Recovery room;
(C) Delivery/labor room;
(D) Anesthesiology;
(E) Radio, diagnostic;
(F) Radio, therapeutic;
(G) Radioisotope;
(H) Laboratory;
(I) Blood administration;
(J) Intravenous therapy;
(K) Respiratory therapy;
(L) Physical therapy;
(M) Occupational therapy;
(N) Speech pathology;
(O) Electrocardiography;
(P) Electroencephalography;
(Q) Medical supplies;
(R) Drugs;
(S) Renal dialysis/home dialysis;
(T) Ancillary oncology;
(U) Cardiology;
(V) Ambulatory surgery;
(W) CT scan/MRI;
(X) Clinic;
(Y) Emergency;
(Z) Ultrasound;
(AA) NICU transportation;
(BB) GI laboratory;
(CC) Miscellaneous; and
(DD) Observation beds.
(3) Specifies resource use with relative weights. The agency uses national relative weights designed by 3MTM Corporation as part of its all-patient refined-diagnostic related group (APR-DRG) payment system.
(4) Calculates base payment factors. The agency calculates the average, or base, DRG conversion factor and per diem rates. The base is calculated as the maximum amount that can be used, along with all other payment factors and adjustments described in this chapter, to maintain aggregate payments across the system. The agency ensures that base DRG conversion factors and per diem rates are sufficient to support economy, efficiency, and access to services for medicaid recipients. The agency will publish base rate factors on its web site.
(5) Determines global adjustments.
(a) Claims paid under the DRG, rehab per diem, and detox per diem payment methods were reduced to support an estimated three million five hundred thousand dollar increase in psychiatric payments to acute hospitals.
(b) Claims for acute hospitals paid under the psychiatric per diem method were increased by a factor to inflate estimated system payments by three million five hundred thousand dollars.
(6) Determines provider specific adjustments. The following adjustments are applied to the base factor or rate established in subsection (4) of this section:
(a) Wage index adjustments reflect labor costs in the cost-based statistical area (CBSA) where a hospital is located.
(i) The agency determines the labor portion by multiplying the base factor or rate by the labor factor established by medicare; then
(ii) The amount in (a)(i) of this subsection is multiplied by the most recent wage index information published by CMS at the time the rates are set; then
(iii) The agency adds the nonlabor portion of the base rate to the amount in (a)(ii) of this subsection to produce a hospital-specific wage adjusted factor.
(b) Indirect medical education factors are applied to the hospital-specific base factor or rate. The agency uses the indirect medical education factor established by medicare on the most currently available medicare cost report that exists at the time the rates are set; and
(c) Direct medical education amounts are applied to the hospital-specific base factor or rate. The agency determines a percentage of direct medical education costs to overall costs using the most currently available medicare cost report that exists at the time the rates are set.
(7) The final, hospital-specific rate is calculated using the base rate established in subsection (4) of this section along with any applicable adjustments in subsections (5) and (6) of this section.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-3900 Payment method—Bordering city hospitals and critical border hospitals.
The ((department)) agency uses the payment methods described in this section to pay bordering city hospitals and critical border hospitals for inpatient and outpatient claims. Bordering city hospitals and critical border hospitals are defined in WAC ((388-550-1050)) 182-550-1050.
(1) ((Bordering city hospitals—)) For inpatient hospital claims ((payment methods.
(a) For dates of admission before August 1, 2007, under the diagnosis related group (DRG) payment method:
(i) The department calculates the cost-based conversion factor (CBCF) of a bordering city hospital as defined in WAC 388-550-1050, in accordance with WAC 388-550-3450.
(ii) For a bordering city hospital with no medicare cost report (Form 2552-96) submitted for the rebasing year, the department assigns the department peer group average conversion factor. This is the average of all final conversion factors of hospitals in that group.
(b) For dates of admission before August 1, 2007, under the ratio of costs-to-charges (RCC) payment method:
(i) The department calculates the RCC in accordance with WAC 388-550-4500.
(ii) For a bordering city hospital with no medicare cost report (Form 2552-96) submitted for the rebasing year, the department bases the RCC on the Washington instate average RCC.
(c) For dates of admission on and after August 1, 2007:
(i))) from bordering city hospitals, the ((department)) agency calculates the payment for allowed covered charges related to medically necessary services, by using the lowest of the in-state inpatient hospital rates ((without graduate medical education (GME) (excluding DWCC rates that are paid to instate critical access hospitals))) for the:
(a) Diagnosis-related group (DRG) conversion factor((, the));
(b) Per diem((,)) payment method;
(c) Per case((,)) payment method; and
(d) Ratio of costs-to-charges (RCC) payment method((s; and
(ii) The department pays the lesser of the:
(A) Billed charges; or
(B) Calculated payment amount)).
(2) ((Bordering city hospitals—)) For outpatient hospital claims ((payment methods for allowed covered charges related to medically necessary services.
(a) For bordering city hospitals paid according to the outpatient prospective payment system (OPPS), refer to WAC 388-550-7000 through 388-550-7600. The department uses the following types of payment methods used in OPPS:
(i) Ambulatory payment classification (APC) method (the primary payment method for OPPS) (WAC 388-55-7200):
(A) Before August 1, 2007, the department determines the OPPS conversion factor using the methods described in WAC 388-550-7500.
(B) On and after August 1, 2007, the department pays using the lowest instate OPPS conversion factor.
(ii) OPPS maximum allowable fee schedule (WAC 388-550-7200).
(iii) Hospital outpatient RCC rate (WAC 388-550-4500).
(A) Before August 1, 2007, the department pays the instate average hospital outpatient RCC rate times the allowed covered charges for medically necessary services.
(B) On and after August 1, 2007, the department pays the lowest instate hospital outpatient RCC rate times the allowed covered charges for medically necessary services.
(b) For bordering city hospitals exempt from OPPS, the department uses the following payment methods:
(i) Outpatient maximum allowable fee schedule (WAC 388-550-6000); and
(ii) Hospital outpatient RCC rate (WAC 388-550-4500).
(c) When the RCC payment method described in WAC 388-550-4500 is used to pay for outpatient services provided:
(i) Before August 1, 2007, the department pays the instate average hospital outpatient RCC rate times the allowed covered charges for medically necessary services.
(ii) On and after August 1, 2007, the department pays the lowest instate hospital outpatient RCC rate times the allowed covered charges for medically necessary services.
(d) When the maximum allowable fee schedule method is used to pay for outpatient services provided, the department pays the lesser of the:
(i) Billed charges; or
(ii) Calculated payment amount)) from bordering city hospitals, the agency calculates the payment for allowed covered charges related to medically necessary services, using the lowest of the in-state outpatient hospital rates for the outpatient prospective payment system (OPPS). Refer to WAC 182-550-7000 through 182-550-7600.
(3) Designated critical border hospitals.
(a) ((Beginning August 1, 2007, the department designated)) The agency designates certain qualifying hospitals located out-of-state as critical border hospitals. A designated critical border hospital must:
(i) Be a bordering city hospital as described in WAC ((388-550-1050)) 182-550-1050; and
(ii) Have submitted at least ten percent of the total nonemergency inpatient hospital claims ((that have been)) paid to bordering city hospitals for the prior state fiscal year (SFY) for clients eligible for Washington ((state medicaid and state-administered programs)) apple health. Nonemergency inpatient hospital claims are defined as those that do not include emergency ((room)) department charges (revenue code 045X series).
(b) The ((department)) agency analyzes bordering city hospitals' base period claims data during the rebasing process, and annually thereafter, to determine if a bordering city hospital qualifies or continues to qualify as a critical border hospital.
(4) Critical border hospitals((—)) - Inpatient hospital claim payment methods. The ((department)) agency pays inpatient critical border hospital claims ((with dates of services on and after August 1, 2007,)) as follows:
(a) The inpatient payment rates used to calculate payments to critical border hospitals are prospective payment rates. The rates are not used to pay for claims with dates of admission before the hospital qualified as a critical border hospital.
(b) The ((department)) agency pays inpatient critical border hospital claims using the same payment methods and rates ((as)) used for in-state hospital claims, including DRG, RCC, per diem, outliers, and per case rate, subject to the following:
(i) Inpatient payment rates used to pay critical border university hospitals for inpatient hospital claims cannot exceed the highest corresponding inpatient payment rate for an in-state university hospital;
(ii) Inpatient payment rates used to pay critical border Level 1 trauma centers for inpatient hospital claims cannot exceed the highest corresponding inpatient payment rate for an in-state Level 1 trauma center; and
(iii) Inpatient payment rates used to pay critical border hospitals ((not listed in (A) and (B) of this subsection for inpatient hospital claims)) that are not university hospitals or Level 1 trauma centers cannot exceed the highest corresponding in-state inpatient payment rate for in-state hospitals ((that are)) not designated as((:
(A) Critical access hospitals (CAHs);
(B) University hospitals; or
(C) Level 1 trauma centers)) university hospitals or Level 1 trauma centers.
(5) Critical border hospitals((—)) - Outpatient hospital claim payment methods. The ((department)) agency pays outpatient critical border hospital claims ((with dates of services on and after August 1, 2007,)) using the same payment methods ((as)) used for in-state outpatient hospital claims((, including the APC method using the hospital's OPPS conversion factor, maximum allowable fee schedule method, and the hospital outpatient RCC rate method (refer to WAC 388-550-7000 through 388-550-7600 and WAC 388-550-4500))) (see WAC 182-550-7000 through 182-550-7600 and 182-550-4500), subject to the following:
(a) Outpatient rates used to pay critical border university hospitals for outpatient claims cannot exceed the highest corresponding rate for an in-state university hospital((.));
(b) Outpatient rates used to pay critical border Level 1 trauma centers for outpatient claims cannot exceed the highest corresponding rate for an in-state Level 1 trauma center((.)); and
(c) Outpatient rates used to pay ((the)) critical border hospitals ((not listed in (i) and (ii) of this subsection for outpatient claims)) that are not university hospitals or Level 1 trauma centers cannot exceed the highest corresponding rate for in-state hospitals ((that are)) not designated as((:
(i) Critical access hospitals (CAH);
(ii) University hospitals; or
(iii) Level 1 trauma centers)) university hospitals or Level 1 trauma centers.
(6) Critical border hospitals are eligible to receive payment for graduate medical education (GME). All other bordering city hospitals are not eligible to receive payment for GME.
(7) The ((department)) agency makes:
(a) Claim payment adjustments, including but not limited to, third-party liability, medicare, and client responsibility; and
(b) Other necessary adjustments, as directed by the legislature (e.g., rate rebasing and other changes).
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-4000 Payment method—Out-of-state hospitals.
This section describes the payment methods the ((department)) agency uses to pay hospitals located out-of-state for providing services to eligible Washington ((state medical assistance)) apple health clients. This section does not apply to hospitals located in any of the designated bordering cities listed in WAC ((388-501-0175)) 182-501-0175. Payment methods that apply to bordering city hospitals, including critical border hospitals, are described in WAC ((388-550-3900.
(1) Emergency hospital services before August 1, 2007.
(a) For inpatient hospital claims for emergency services provided in out-of-state hospitals with dates of admission before August 1, 2007, the department limits the payment to the lesser of the:
(i) Billed charges; or
(ii) Weighted average of ratio of costs-to-charges (RCC) ratios for in-state hospitals multiplied by the allowed covered charges for medically necessary services.
(b) For outpatient hospital claims for emergency services provided in out-of-state hospitals with the first date of service before August 1, 2007, the department limits the payment to the lesser of the:
(i) Billed charges; or
(ii) Weighted average of hospital outpatient RCC rates for instate hospitals multiplied by the allowed covered charges for medically necessary services.
(2))) 182-550-3900. See also WAC 182-501-0180, health care services provided outside the state of Washington - General provisions, and WAC 182-502-0120, payment for health care services provided outside the state of Washington.
(1) Emergency hospital services ((on and after August 1, 2007)).
(a) For inpatient hospital claims for emergency services provided in out-of-state hospitals ((with dates of admission on and after August 1, 2007)), the ((department)) agency:
(i) Pays using the same methods used to pay in-state hospitals((:
(A) Diagnosis related group (DRG) (WAC 388-550-3000);
(B) Per diem (WAC 388-550-3010);
(C) DRG and per diem outliers (WAC 388-550-3700); and
(D) Ratio of costs-to-charges (RCC) (WAC 388-550-4500).)) as specified in this chapter; and
(ii) ((Pays)) Calculates the payment using the lowest in-state inpatient hospital rate corresponding to the payment method ((used in (a)(i) of this subsection.
(iii) Limits payment to out-of-state hospitals to the lesser of the:
(A) Billed charges; or
(B) Calculated payment amount)).
(b) For outpatient hospital claims for emergency services provided in out-of-state hospitals ((with dates of service on or after August 1, 2007)), the ((department)) agency pays an out-of-state hospital using ((one or both of)) the following methods:
(i) The agency's outpatient prospective payment system (OPPS) described in WAC 182-550-7000;
(ii) The maximum allowable fee schedule method described in WAC ((388-550-6000, and limits payment when)) 182-550-6000. When the maximum allowable fee schedule method is used, the agency limits payment to the lesser of the:
(A) Billed charges; or
(B) Calculated payment amount((.
(ii))); and
(iii) The hospital outpatient RCC payment method described in WAC ((388-550-4500)) 182-550-4500. When using the RCC payment method, the ((department)) agency pays the lowest in-state hospital outpatient RCC ((rate)), excluding ((departmental)) weighted costs-to-charges (((DWCC))) (WCC) rates that are paid to in-state critical access hospitals.
(((c) Out-of-state hospitals are not eligible to receive payment for graduate medical education (GME).
(3) The department makes:
(a) Claim payment adjustments, including but not limited to client responsibility, third party liability, and medicare; and
(b) Other necessary adjustments as directed by the legislature (e.g., rate rebasing and other changes).
(4))) (2) Nonemergency hospital services.
(a) The agency pays for:
(i) Contracted and prior authorized nonemergency hospital services according to the contract terms whether or not the hospital has signed a core provider agreement; and
(ii) Nonemergency hospital services authorized by the agency after the fact (subsequent to the date of admission, if the client is still at the out-of-state hospital, or after the services have been provided) according to subsections (1) and (3) of this section.
(b) The ((department)) agency does not pay for:
(i) Nonemergency hospital services provided to a ((medical assistance)) Washington apple health client in a hospital located out-of-state unless the hospital is contracted ((and/or)) and prior authorized by the ((department)) agency or the ((department's)) agency's designee((,)) for the specific service provided((.
(a) Contracted services are paid according to the contract terms whether or not the hospital has signed a core provider agreement.
(b) Authorized services are paid according to subsections (1), (2), and (3) of this section.
(c) Bariatric surgery performed in a designated department-approved hospital is paid a per case rate and must be prior authorized by the department (see WAC 388-550-3020).)) to a specific client; and
(ii) Unauthorized nonemergency hospital services are not paid by the agency. See WAC 182-501-0182.
(3) The agency makes claim payment adjustments including, but not limited to, client responsibility, third-party liability, and medicare. All applicable adjustments are factored into the final hospital payment amount.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-4100 Payment method—New hospitals.
(1) For rate-setting purposes, the ((department)) agency considers as new:
(a) A hospital which began services after the most recent ((rebased cost-based conversion factors (CBCFs) conversion factors, RCC rates, per diem rates, per case rates, etc.)) rebasing; or
(b) A hospital that has not been in operation for a complete fiscal year.
(2) The ((department)) agency determines a new hospital's((:
(a) CBCF as the average of the CBCF of all hospitals within the same department peer group for dates of admission before August 1, 2007.
(b))) Conversion factor, per diem rate, or per case rate, to be the statewide average rate for the conversion factor, category of per diem rate, or per case rate((, for dates of admission on and after August 1, 2007,)) adjusted by the geographically appropriate hospital specific medicare wage index.
(3) The ((department)) agency determines a new hospital's ratio of costs-to-charges (RCC) by calculating and using the average RCC ((rate)) for all current Washington in-state hospitals.
(4) ((The department considers that a change in hospital ownership does not constitute)) When a hospital changes ownership, the agency does not consider it a new hospital.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-4300 Hospitals and units exempt from the DRG payment method.
(1) Except when otherwise specified, inpatient services provided by hospitals and units that are exempt from the diagnosis-related group (DRG) payment method are paid under the ratio of costs-to-charges (RCC) payment method described in WAC ((388-550-4500)) 182-550-4500, the per diem payment method described in WAC ((388-550-3010)) 182-550-3000, the per case rate payment method described in WAC ((388-550-3020)) 182-550-3000, or other payment methods identified in this chapter (e.g., long term acute care (LTAC), certified public expenditure (CPE), critical access hospital (CAH), etc.). ((The department limits inpatient hospital stays based on the department's determinations from medical necessity and quality assurance reviews.
(2) For dates of admission before August 1, 2007, subject to the restrictions and limitations listed in this section, the department exempts the following hospitals and units from the DRG payment method for inpatient services provided to medicaid-eligible clients:
(a) Peer group A hospitals, as described in WAC 388-550-3300(2). Exception: Inpatient services provided to clients eligible under the following programs are paid through the DRG payment method (see WAC 388-550-4400):
(i) General assistance programs; and
(ii) Other state administered programs.
(b) Peer group E hospitals, as described in WAC 388-550-3300(2). See WAC 388-550-4650 for how the department calculates payment to Peer group E hospitals.
(c) Peer group F hospitals (critical access hospitals).
(d) Rehabilitation units when the services are provided in department-approved acute physical medicine and rehabilitation (acute PM&R) hospitals and designated distinct rehabilitation units in acute care hospitals.
The department uses the same criteria as the medicare program to identify exempt rehabilitation hospitals and designated distinct rehabilitation units. Inpatient rehabilitation services provided to clients eligible under the following programs are covered and paid through the DRG payment method (see WAC 388-550-4400 for exceptions):
(i) General assistance programs; and
(ii) Other state-only administered programs.
(e) Out-of-state hospitals excluding hospitals located in designated bordering cities as described in WAC 388-501-0175. Inpatient services provided in out-of-state hospitals to clients eligible under the following programs are not covered or paid by the department:
(i) General assistance programs; and
(ii) Other state administered programs.
(f) Military hospitals when no other specific arrangements have been made with the department. Military hospitals may individually elect or arrange for one of the following payment methods in lieu of the RCC payment method:
(i) A negotiated per diem rate; or
(ii) DRG.
(g) Nonstate-owned specifically identified psychiatric hospitals and designated hospitals with medicare certified distinct psychiatric units. The department uses the same criteria as the medicare program to identify exempt psychiatric hospitals and distinct psychiatric units of hospitals.
(i) Inpatient psychiatric services provided to clients eligible under the following programs are paid through the DRG payment method:
(A) General assistance programs; and
(B) Other state administered programs.
(ii) Mental health division (MHD) designees that arrange to reimburse nonstate-owned psychiatric hospitals and designated distinct psychiatric units of hospitals directly, may use the department's payment methods or contract with the hospitals to reimburse using different methods. Claims not paid directly through a MHD are paid through the department's payment system.
(3) The department limits inpatient hospital stays for dates of admission before August 1, 2007 that are exempt from the DRG payment method and identified in subsection (2) of this section to the number of days established at the seventy-fifth percentile in the current edition of the publication, "Length of Stay by Diagnosis and Operation, Western Region," unless the stay is:
(a) Approved for a specific number of days by the department, or for psychiatric inpatient stays, by the regional support network (RSN);
(b) For chemical dependency treatment which is subject to WAC 388-550-1100; or
(c) For detoxification of acute alcohol or other drug intoxication.
(4) If subsection (3)(c) of this section applies to an eligible client, the department will:
(a) Pay for three-day detoxification services for an acute alcoholic condition; or
(b) Pay for five-day detoxification services for acute drug addiction when the services are directly related to detoxification; and
(c) Extend the three- and five-day limitations for up to six additional days if either of the following is invoked on a client under care in a hospital:
(i) Petition for commitment to chemical dependency treatment; or
(ii) Temporary order for chemical dependency treatment.
(5) For dates of admission on and after August 1, 2007, the department)) Inpatient services provided by hospitals and units are exempt from the DRG payment method only if they qualify for payment methods specifically mentioned in other sections of this chapter or in this section.
(2) The agency exempts the following hospitals, units, and services from the DRG payment method for inpatient services provided to ((medicaid-eligible)) clients eligible for Washington apple health:
(a) ((Peer group E hospitals as described in WAC 388-550-3300(2), i.e.,)) Hospitals participating in the ((department's)) agency's certified public expenditure (CPE) payment program((.)) (see WAC ((388-550-4650.)) 182-550-4650);
(b) ((Peer group F hospitals, i.e., critical)) Hospitals participating in the agency's critical access hospital((s.)) program (see WAC ((388-550-2598.)) 182-550-2598);
(c) Rehabilitation services. All rehabilitation services are paid through the per diem payment method except as indicated in (((b), (c), and (f))) (a), (b), and (d) of this subsection((. See WAC 388-550-3010. Inpatient psychiatric services, Involuntary Treatment Act services, and detoxification services provided in out-of-state hospitals are not covered or paid by the department or a MHD designee. The department does not cover or pay for other hospital services provided to clients eligible for those services in the following programs, when the services are provided in out-of-state hospitals that are not in designated bordering cities:
(i) General assistance programs; and
(ii) Other state-administered programs.
(f))) (See WAC 182-550-3000);
(d) Military hospitals when no other specific arrangements have been made with the ((department)) agency. The ((department)) agency, or the military hospital, may elect or arrange for one of the following payment methods in lieu of the RCC payment method:
(i) Per diem payment method; or
(ii) DRG payment method((.
(g))); and
(e) Psychiatric services. All psychiatric services are paid through the per diem payment method except as indicated in (((b), (c), and (f))) (a), (b), and (d) of this subsection (see WAC 182-550-3000). ((See WAC 388-550-3010. A MHD)) A mental health designee that arranges to directly pay a hospital and/or a designated distinct psychiatric unit of a hospital ((directly,)) may use the ((department's)) agency's payment methods or contract with the hospital((s)) to pay using different methods. Claims not paid directly through a ((MHD)) mental health designee are paid through the ((department's)) agency's payment system.
(((6) For dates of admission on and after August 1, 2007, the department)) (3) Inpatient psychiatric services, Involuntary Treatment Act services, and detoxification services provided in out-of-state hospitals are not covered or paid by the agency or the agency's mental health designee. The agency does not cover or pay for other hospital services provided to clients eligible for those services in the following programs, when the services are provided in out-of-state hospitals that are not in designated bordering cities:
(a) Medical care services; and
(b) Other state-administered programs.
(4) The agency has established an average length of stay (ALOS) for each DRG classification((. The DRG ALOS is based on the claims data used during the rebasing period. For DRGs with an exceptionally low volume of claims, the department uses a proxy DRG ALOS)) and publishes it on the agency's web site. The agency uses the DRG ALOS ((is used)) as a benchmark to authorize and pay inpatient hospital stays exempt from the DRG payment method. When an inpatient hospital stay exceeds the ((department's)) agency's DRG ALOS benchmark or prior authorized LOS:
(a) For a psychiatric inpatient stay, the hospital must obtain approval for additional days beyond the prior authorized days from the ((MHD)) division of behavioral health and recovery (DBHR) or the ((MHD)) mental health designee who prior authorized the admission. See WAC ((388-550-2600)) 182-550-2600;
(b) For an acute physical medicine and rehabilitation (PM&R) or a long term acute care (LTAC) stay, the hospital must obtain approval for additional days beyond the prior authorized days from the ((department)) agency unit that prior authorized the admission. See WAC ((388-550-2561 and 388-550-2590)) 182-550-2561 and 182-550-2590;
(c) For an inpatient hospital stay for detoxification for a chemical ((dependent)) using pregnant (CUP) client, see WAC ((388-550-1100)) 182-550-1100;
(d) For other medical inpatient stays for detoxification, see WAC ((388-550-1100)) 182-550-1100 and subsection (((7))) (5) of this section;
(e) For an inpatient stay in a certified public expenditure (CPE) hospital, see WAC ((388-550-4690)) 182-550-4690; and
(f) For an inpatient hospital stay not identified in (a) through (e) of this subsection, the ((department)) agency may perform retrospective utilization review to determine if the LOS was medically necessary and at the appropriate level of care.
(((7))) (5) If subsection (((6))) (4)(d) of this section applies to an eligible client, the ((department)) agency will:
(a) Pay for three-day detoxification services for an acute alcoholic condition; or
(b) Pay for five-day detoxification services for acute drug addiction when the services are directly related to detoxification; and
(c) If WAC 182-550-1100 (5)(b) applies, extend the three- and five-day limitations ((for up to six additional days if either of the following is invoked on a client under care in a hospital:
(i) Petition for commitment to chemical dependency treatment; or
(ii) Temporary order for chemical dependency treatment)) when the following are true:
(i) The days are billed as covered;
(ii) A medical record is submitted with the claim;
(iii) The medical record clearly documents that the days are medically necessary; and
(iv) The level of care is appropriate according to WAC 182-550-2900.
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-4400 Services—Exempt from DRG payment.
(((1) Except when otherwise specified, inpatient services exempt from the diagnosis-related group (DRG) payment method are paid under the ratio of costs-to-charges (RCC) payment method described in WAC 388-550-4500, the per diem payment method described in WAC 388-550-3010, the per case rate payment method described in WAC 388-550-3020, or other payment methods identified in this chapter (e.g., long term acute care (LTAC), certified public expenditure (CPE), critical access hospital (CAH), etc.). The department limits inpatient hospital stays based on the department's determinations from medical necessity and quality assurance reviews.
(2) Subject to the restrictions and limitations in this section, for dates of admission before August 1, 2007, the department exempts the following services for medicaid clients from the DRG payment method:
(a) Neonatal services for DRGs 602-619, 621-628, 630, 635, and 637-641.
(b) Acquired immunodeficiency syndrome (AIDS)-related inpatient services for those cases with a reported diagnosis of AIDS-related complex and other human immunodeficiency virus infections. These services are also exempt from the DRG payment method when funded by the department through the general assistance programs and any other state administered program.
(c) Alcohol or other drug detoxification services when provided in a hospital having a detoxification provider agreement with the department to perform these services. These services are also exempt from the DRG payment method when funded by the department through the general assistance programs and any other state administered program.
(d) Hospital-based intensive inpatient detoxification, medical stabilization, and drug treatment services provided to chemically dependent pregnant women (CUP program) by a certified hospital. These are medicaid program services and are not funded by the department for the general assistance programs or any other state administered program.
(e) Acute physical medicine and rehabilitation services provided in department-approved rehabilitation hospitals and hospital distinct units, and services for physical medicine and rehabilitation patients. See WAC 388-550-4300 (2)(d). Rehabilitation services provided to clients under the general assistance programs and any other state-only administered program are also reimbursed through the RCC payment method.
(f) Psychiatric services provided in nonstate-owned psychiatric hospitals and designated distinct psychiatric units of hospitals. Inpatient psychiatric services provided to clients eligible under the following programs are reimbursed through the DRG payment method:
(i) General assistance programs; and
(ii) Other state administered programs.
(g) Chronic pain management treatment provided in department-approved pain treatment facilities.
(h) Administrative day services. The department pays administrative days based on the statewide average medicaid nursing facility per diem rate, which is adjusted annually each November 1. The department applies this rate to patient days identified as administrative days on the hospital's notice of rates. Hospitals must request an administrative day designation on a case-by-case basis.
(i) Inpatient services recorded on a claim that is grouped by the department to a DRG for which the department has not published an all patient DRG relative weight, except that claims grouped to DRGs 469 and 470 will be denied payment. This policy also applies to covered services paid through the general assistance programs and any other state administered program.
(j) Organ transplants that involve the heart, kidney, liver, lung, allogeneic bone marrow, pancreas, autologous bone marrow, or simultaneous kidney/pancreas. These services are also exempt from the DRG payment method when funded by the department through the general assistance programs and any other state administered program.
(k) Bariatric surgery performed in hospitals that meet the criteria in WAC 388-550-2301. The department pays hospitals for bariatric surgery on a per case rate basis. See WAC 388-550-3470.
(3) Inpatient services provided through a managed care plan contract are paid by the managed care plan.
(4))) (1) Inpatient services are exempt from the diagnosis-related group (DRG) payment method only if they qualify for payment methods specifically mentioned in other sections of this chapter or in this section.
(2) Subject to the restrictions and limitations in this section, ((for dates of admission on and after August 1, 2007, the department)) the agency exempts the following services for medicaid and ((SCHIP)) CHIP clients from the DRG payment method. This policy also applies to covered services paid through ((the general assistance programs)) medical care services (MCS) and any other state-administered program, except when otherwise indicated in this section. The exempt services are:
(a) Alcohol or other drug detoxification services when provided in a hospital having a detoxification provider agreement with the ((department)) agency to perform these services.
(b) Hospital-based intensive inpatient detoxification, medical stabilization, and drug treatment services provided to ((chemically-using)) chemical-using pregnant (CUP) women ((program)) by a certified hospital. These are medicaid program services and are not covered or funded by the ((department)) agency through ((the general assistance programs)) MCS or any other state-administered program.
(c) Acute physical medicine and rehabilitation (acute PM&R) services.
(d) Psychiatric services. A mental health ((division (MHD))) designee that arranges to pay a hospital directly for psychiatric services((,)) may use the ((department's)) agency's payment methods or contract with the hospital to pay using different methods. Claims not paid directly through a ((MHD)) mental health designee are paid through the ((department's)) agency's payment system.
(e) Chronic pain management treatment provided in a hospital approved by the ((department)) agency to provide that service.
(f) Administrative day services. ((The department)) For patient days during an inpatient stay where no acute care services were provided, a hospital may request an administrative day designation on a case-by-case basis. The agency pays administrative days based on the statewide average medicaid nursing facility per diem rate, which is adjusted annually. The ((department applies this rate to patient days identified as administrative days on the hospital's notice of rates. A hospital must request an administrative day designation on a case-by-case basis. The department)) agency may designate part of a client's stay to be paid an administrative day rate upon review of the claim ((and/or)) or the client's medical record, or both.
(g) Inpatient services recorded on a claim ((that is)) grouped by the ((department)) agency to a DRG for which the ((department)) agency has not published an all-patient DRG (AP-DRG) or all-patient refined DRG (APR-DRG) relative weight. The agency will deny payment for claims grouped to DRG 469 ((or)), DRG 470 ((will be denied payment)), APR DRG 955, or APR DRG 956.
(h) Organ transplants that involve heart, intestine, kidney, liver, lung, allogeneic bone marrow, autologous bone marrow, pancreas, or simultaneous kidney/pancreas. The ((department)) agency pays hospitals for these organ transplants using the ratio of costs-to-charges (RCC) payment method. The agency maintains a list of DRGs which qualify as transplants on the agency's web site.
(i) Bariatric surgery performed in hospitals that meet the criteria in WAC ((388-550-2301)) 182-550-2301. The ((department)) agency pays hospitals for bariatric surgery on a per case rate basis for clients in medicaid and state-administered programs when the services are prior authorized and take place at an approved hospital. The agency approves bariatric services at Sacred Heart Medical Center, the University of Washington Medical Center, and the Oregon Health Sciences University and may approve other hospitals based on agency discretion. See WAC ((388-550-3020 and 388-550-3470)) 182-550-3000 and 182-550-3470.
(((j) Services provided by a critical access hospital (CAH).
(k) Services provided by a hospital participating in the certified public expenditure (CPE) payment program. The CPE "hold harmless" provision allows a reconciliation that is described in WAC 388-550-4670.
(l) Services provided by a long term acute care (LTAC) hospital.))
AMENDATORY SECTION (Amending WSR 11-14-075, filed 6/30/11, effective 7/1/11)
WAC 182-550-4800 Hospital payment methods—State-administered programs.
((Subsections (1) through (11) of this section apply to hospital payment methods for state administered programs for dates of admission before August 1, 2007. Subsections (12) through (19) of this section apply to hospital payment methods for state administered programs for dates of admission on and after August 1, 2007.
(1) Except as provided in subsection (2) of this section, the department uses the ratio of costs-to-charges (RCC) and diagnosis-related group (DRG) payment methods described in this section to pay hospitals at reduced rates for covered services provided to a client who is not eligible under a medicaid program, the SCHIP program, or alien emergency medical (AEM) program and:
(a) Who qualifies for the general assistance unemployable (GAU) program; or
(b) Is involuntarily detained under the Involuntary Treatment Act (ITA).
(2) The department exempts the following services from the state-administered programs' payment methods and/or reduced rates:
(a) Detoxification services when the services are provided under a department-assigned provider number starting with "thirty-six." (The department pays these services using the Title XIX medicaid RCC payment method.)
(b) Program services provided by department-approved critical access hospitals (CAHs) to clients eligible under state-administered programs. (The department pays these services through cost settlement as described in WAC 388-550-2598.)
(c) Program services provided by Peer group E hospitals to clients eligible under the GAU program. (The department these services through the "full cost" public hospital certified public expenditure (CPE) payment program (see WAC 388-550-4650).)
(3) The department determines:
(a) A state-administered program RCC payment by reducing a hospital's Title XIX medicaid RCC rate using the hospital's ratable.
(b) A state-administered program DRG payment by reducing a hospital's Title XIX medicaid DRG cost based conversion factor (CBCF) using the hospital's ratable and equivalency factor (EF).
(4) The department determines:
(a) The RCC rate for the state-administered programs mathematically as follows:
State-administered programs' RCC rate = current Title XIX medicaid RCC rate x (one minus the current hospital ratable)
(b) The DRG conversion factor (CF) for the state-administered programs mathematically as follows:
State-administered programs' DRG CF = current Title XIX medicaid DRG CBCF x (one minus the current hospital ratable) x EF
(5) The department determines payments to hospitals for covered services provided to clients eligible under the state-administered programs mathematically as follows:
(a) Under the RCC payment method:
State-administered programs' RCC payment = state-administered programs' RCC Rate x allowed charges
(b) Under the DRG payment method:
State-administered programs' DRG payment = state-administered programs' DRG CF x all patient DRG relative weight (see subsection (6) of this section for how the department determines payment for state-administered program claims that qualify as DRG high-cost outliers).
(6) For state-administered program claims that qualify as DRG high-cost outliers, the department determines:
(a) In-state children's hospital payments for state-administered program claims that qualify as DRG high-cost outliers mathematically as follows:
Eighty-five percent of the allowed charges above the outlier threshold x the specific hospital's RCC rate x (one minus the current hospital ratable) plus the DRG allowed amount
(b) Psychiatric DRG high-cost outlier payments for DRGs 424 through 432 mathematically as follows:
One hundred percent of the allowed charges above the outlier threshold x the specific hospital's RCC rate x (one minus the current hospital ratable) plus the applicable DRG allowed amount
(c) Payments for all other claims that qualify as DRG high-cost outliers as follows:
Sixty percent x the specific hospital's RCC rate x (one minus the current hospital ratable) plus the applicable DRG allowed amount
(7) See WAC 388-550-3700(5) for how claims qualify as low-cost outliers.
(8) The department determines payments for claims that qualify as DRG low-cost outliers mathematically as follows:
Allowed charges for the claim x the specific hospital's RCC rate x (one minus the current hospital ratable)
(9) To calculate a hospital's ratable that is applied to both the Title XIX medicaid RCC rate and the Title XIX medicaid DRG CBCF used to determine the respective state-administered program's reduced rates, the department:
(a) Adds the hospital's medicaid revenue (medicaid revenue as reported by department of health (DOH) includes all medicaid revenue and all other medical assistance revenue) and medicare revenue to the value of the hospital's charity care and bad debts, all of which is taken from the most recent complete calendar year data available from DOH at the time of the ratable calculation; then
(b) Deducts the hospital's low-income disproportionate share hospital (LIDSH) revenue from the amount derived in (a) of this subsection to arrive at the hospital's community care dollars; then
(c) Subtracts the hospital-based physicians revenue that is reported in the hospital's most recent HCFA-2552 medicare cost report received by the department at the time of the ratable calculation, from the total hospital revenue reported by DOH from the same source as discussed in (a) of this subsection, to arrive at the net hospital revenue; then
(d) Divides the amount derived in (b) of this subsection by the amount derived in (c) of this subsection to obtain the ratio of community care dollars to net hospital revenue (also called the preliminary ratable factor); then
(e) Subtracts the amount derived in (d) of this subsection from 1.0 to obtain the hospital's preliminary ratable; then
(f) Determines a neutrality factor by:
(i) Multiplying hospital-specific medicaid revenue that is reported by DOH from the same source as discussed in (a) of this subsection by the preliminary ratable factor; then
(ii) Multiplying that same hospital-specific medicaid revenue by the prior year's final ratable factor; then
(iii) Summing all hospital-medicaid revenue from the hospital-specific calculations that used the preliminary ratable factor discussed in (f)(i) of this subsection; then
(iv) Summing all hospital revenue from the hospital-specific calculations that used the prior year's final ratable factor discussed in (f)(ii) of this subsection; then
(v) Comparing the two totals; and
(vi) Setting the neutrality factor at 1.0 if the total using the preliminary ratable factor is less than the total using the prior year's final ratable factor; or
(vii) Establishing a neutrality factor that is less than 1.0 that will reduce the total using the preliminary ratable factor to the level of the total using the prior year's final ratable factor, if the total using the preliminary ratable factor is greater than the total using the prior year's ratable factor; then
(g) Multiplies, for each specific hospital, the preliminary ratable by the neutrality factor to establish hospital-specific final ratables for the year; then
(h) Subtracts each hospital-specific final ratable from 1.0 to determine hospital-specific final ratable factors for the year; then
(i) Calculates an instate-average ratable and an instate-average ratable factor used for new hospitals with no prior year history.
(10) The department updates each hospital's ratable annually on August 1.
(11) The department:
(a) Uses the equivalency factor (EF) to hold the hospital specific state-administered programs' DRG CF at the same level prior to rebasing, adjusted for inflation; and
(b) Calculates a hospital's EF as follows:
EF = State-administered programs' prior DRG CF divided by current Title XIX medicaid DRG CBCF x (one minus the prior ratable)
(12) For dates of admission on and after August 1, 2007, the department)) This section does not apply to out-of-state hospitals unless they are border hospitals (critical or noncritical).
(1) The agency:
(a) Pays for services provided to a client eligible for a state-administered program (SAP) based on ((state-administered program)) SAP rates((. The state administered program));
(b) Establishes SAP rates ((are established)) independently from the process used in setting the medicaid payment rates((. The state administered program rates may not be changed unless the legislature authorizes the changes. The department uses the));
(c) Calculates a ratable ((factor and)) each year to adjust each hospital's SAP rates for their percentage of community-based dollars to the total revenues for all hospitals;
(d) Calculates an equivalency factor (EF) to keep the ((state administered program)) SAP payment rates at the same level ((they were at)) before and after the ((state)) medicaid rates ((are)) were rebased.
(((13) The table in this subsection shows a comparison of the payment policy for the department's inpatient payment system for dates of admission before August 1, 2007, and the inpatient payment system effective for dates of admission on and after August 1, 2007. Under this inpatient payment system effective August 1, 2007, the per diem rates are used to pay for many services previously paid using the RCC payment method.
The following table indicates differences in policy for the two inpatient payment systems:
See specific sections in the chapter 388-550 WAC to determine how the department pays hospitals participating in the critical access hospital (CAH) program, the long term acute care (LTAC) program, and the certified public expenditure (CPE) payment program.
(14) Due to changes in payment methodologies established for the inpatient payment system effective August 1, 2007, the department)) (2) The agency has established the following ((state administered program rates used for dates of admission on and after August 1, 2007)):
(a) ((State administered program)) SAP diagnosis-related group (DRG) conversion factor (CF) for claims grouped under ((stable)) DRG classifications services((.));
(b) ((State administered program)) SAP per diem rates for claims grouped under the following specialty service categories:
(i) Chemical-using pregnant (CUP) women;
(ii) Detoxification; ((and))
(iii) Physical medicine and rehabilitation((.)) (PM&R); and
(iv) Psychiatric;
(c) ((State administered program per diem rates for the claims grouped to unstable DRG classifications under the following nonspecialty service categories:
(i) Surgical;
(ii) Medical;
(iii) Burns; and
(iv) Neonate and pediatric.
(d) State administered program per diem rates for claims grouped under psychiatric services.
(e) State administered program)) SAP per case rate for claims grouped under bariatric services((.
(f) State administered program)); and
(d) SAP ratio of costs-to-charges (RCC) ((rates)) for claims grouped under transplant services.
(((15))) (3) This subsection describes the ((state administered program (DRG) conversion factor)) SAP DRG CF and payment calculation processes used by the ((department)) agency to pay claims ((paid)) using the DRG payment method. The ((department)) agency pays for services grouped to a ((stable)) DRG classification ((that are)) provided to clients eligible for a ((state administered program)) SAP based on the use of a DRG ((conversion factor and)) CF, a DRG relative weight, and a maximum service adjustor. This process is similar to the payment method used to pay for medicaid and ((SCHIP)) CHIP services ((that are)) grouped to a ((stable)) DRG classification.
(a) The ((department's state administered program DRG conversion factor)) agency's SAP DRG CF calculation process is as follows:
(i) ((For instate and critical border hospitals,)) The hospital's specific DRG ((conversion factor that is)) CF used to calculate payment for a ((state administered program claim, is based on the medicaid conversion factor adjusted by the most available ratable factor and the applicable equivalency factor. Mathematically the calculation is:
State administered program DRG CF =
((Medicaid DRG CF x applicable Equivalency Factor) x most available ratable factor))) SAP claim is the medicaid DRG CF multiplied by the applicable EF multiplied by the ratable;
(ii) For ((instate and critical border)) hospitals that do not have ((a current state administered program DRG conversion factor)) a ratable or an EF, the ((state administered program conversion factor)) SAP CF is the hospital's specific ((proposed)) medicaid ((conversion factor)) CF multiplied by the average ((applicable equivalent factor and average applicable ratable.)) EF and the average ratable; and
(iii) For ((bordering city hospitals that are not critical border hospitals, and for other out-of-state hospitals that are not critical border hospitals, the state administered program DRG conversion factor)) noncritical border hospitals, the SAP DRG CF is the lowest in-state medicaid DRG ((conversion factor)) CF multiplied by the average ratable and ((equivalency factor)) the average EF.
(b) The ((department's state administered program DRG equivalency factor calculation process is)) agency calculates the SAP DRG EF as follows:
(i) The ((equivalency factor is a factor used to hold the hospital's specific state administered program DRG conversion factor or rates at the same level before and after the medicaid DRG rate is rebased. Mathematically the calculation is:
Equivalency factor = (State administered program DRG CF/(medicaid DRG CF x ratable))
(ii) The department may make an adjustment to the equivalency factor to address the differences in the relative weight values of the two DRG grouper versions due to the recalibration of the weights.
(iii) Refer to the ratable and ratable factor definition and calculation for the ratable factor determination.)) hospital-specific current SAP DRG CF is divided by the rebased medicaid DRG CF and then divided by the ratable factor to compute the preliminary EF.
(ii) The current SAP DRG payment is determined by multiplying the hospital specific SAP DRG CF by the AP-DRG version 23 relative weight.
(iii) The current aggregate DRG payment is determined by summing the current SAP DRG payments for all hospitals.
(iv) The hospital projected SAP DRG payment is determined by multiplying the hospital specific current SAP DRG CF by the APR-DRG relative weights version 31.0 and the maximum service adjustor.
(v) The projected aggregate DRG payment is determined by summing the projected SAP program DRG payments for all hospitals.
(vi) The aggregate amounts derived in (b)(iii) and (v) of this subsection are compared to identify a neutrality factor that keeps the projected aggregate SAP DRG payment (based on DRG-APR relative weights version 31.0) at the same level as the current aggregate SAP DRG payment (based on AP-DRG relative weights version 23.0).
(vii) The neutrality factor is multiplied by the hospital specific preliminary EF to determine the hospital specific final EF that is used to determine the SAP DRG conversion factors for the rebased system implementation.
(c) The ((department's)) agency calculates the DRG payment ((calculation process for DRG classifications grouped to stable DRG relative weights is)) for services paid under the DRG payment method as follows:
(i) The ((department determines)) agency calculates the allowed amount for the inlier portion of the ((state administered program)) SAP DRG payment ((calculation. Mathematically the calculation is:
State administered program DRG inlier portion allowed amount of the payment = (State administered program DRG CF x DRG relative weight)
(ii) The department determines the high outlier claim calculation for the state administered program DRG payment. See WAC 388-550-3700 for more information about high outlier qualification and calculation processes. Mathematically the calculation is:
State-administered program DRG inlier and outlier portion allowed amount of the payment = (State-administered program DRG CF x DRG relative weight) + outlier adjustment
(iii) The outlier payment adjustment calculation for a state administered program claim is different than the outlier payment calculation for a medicaid claim. The outlier adjustment for a state administered program claim is adjusted by the ratable factor.
(iv) The outlier threshold amount for claims that are eligible for a high outlier payment and are grouped to nonneonatal DRGs and nonpediatric DRGs, equals one hundred seventy-five percent of the DRG inlier allowed amount calculation. This same outlier threshold is used for claims that are eligible for a high outlier payment in hospitals other than Children's Hospital Regional Medical Center and Mary Bridge Children's Hospital and Health Center.
(v) The outlier threshold amount for claims that are eligible for a high outlier payment and are grouped to neonatal DRGs, pediatric DRGs, equals one hundred fifty percent of the DRG inlier allowed amount calculation. This same outlier threshold is used for claims that are eligible for a high outlier payment when the claim is from Children's Hospital Regional Medical Center or Mary Bridge Children's Hospital and Health Center.
(vi) The outlier transfer provision is applied for the calculation of services paid under the state administered program DRG payments.
(vii) Refer to the medicaid percent of outlier adjustment factor described in WAC 388-550-3700 and (d) of this subsection for how the percent of outlier adjustment factor is reduced by a ratable to determine the outlier portion allowed amount for the claim.
(d) The department determines the outlier portion allowed amount calculation for the state-administered program high outlier claim DRG payment as follows. Mathematically the calculation is:
State administered program outlier portion allowed amount of claim = ((Covered charges x RCC) - outlier threshold) x (Percent of outlier adjustment factor x ratable factor)
(i) A claim is an outlier claim when the claim cost (covered charges x RCC) is greater than both the fixed loss amount of fifty thousand dollars and one hundred seventy-five percent (one hundred fifty percent for neonatal, pediatric DRGs, Children's Hospital Regional Medical Center or Mary Bridge Children's Hospital and Health Center) of the DRG inlier allowed amount for payment.
(ii) The outlier threshold used in calculation of the outlier payment adjustment will always be one hundred seventy-five percent (one hundred fifty percent for neonatal, pediatric DRGs, Children's Hospital Regional Medical Center or Mary Bridge Children's Hospital and Health Center) of the DRG inlier allowed amount for payment.
(iii) Refer to the ratable and ratable factor definition and calculation for the ratable factor determination.
(16))) by multiplying the SAP DRG CF by the DRG relative weight and the maximum service adjustor.
(ii) SAP claims are also subject to outlier pricing. See WAC 182-550-3700 for details on outlier pricing.
(4) This subsection describes ((the state-administered program)) how the agency calculates the SAP per diem rate and payment ((calculation for the following specialty service categories and unstable DRG nonspecialty service categories.
(a) The per diem rate is separately established for each of the following services:
(i) CUP;
(ii) Detoxification;
(iii) Physical medicine and rehabilitation;
(iv) Surgical;
(v) Medical;
(vi) Burns; and
(v) Neonate and pediatric.
(b) The per diem rate calculation process for CUP, detoxification, physical medicine and rehabilitation, surgical, medical, burns, and neonate and pediatric services is,)) for CUP, detoxification, PM&R, and psychiatric services.
(a) The agency calculates the SAP per diem rate for in-state and critical border hospitals((, the hospital's specific state administered program per diem rate is based on the Title XIX medicaid rates multiplied by the most available ratable factor and the equivalency factor. Mathematically the calculation is:
State administered program per diem rate =
((Hospital's specific medicaid per diem x ratable factor) x Equivalency factor)
(c) The per diem equivalency factor calculation process is as follows:
(i) The per diem equivalency factor is a factor used to hold the aggregate payment for all nonmedicaid claims grouped under per diem payment method at the same level before and after the per diem medicaid rate is rebased. The equivalency factor is the calculated based on the estimate nonmedicaid per diem, the medicaid per diem, and the hospital's specific ratable factor. Mathematically the calculation is:
Equivalency factor =
(Estimated state administered program per diem rate/(medicaid per diem rate x ratable))
(ii) For bordering city hospitals that are not critical border hospitals, and for other out-of-state hospitals that are not critical border hospitals, the state administered program per diem rate is the lowest instate medicaid per diem rate multiplied by the average ratable and equivalency factor.
(iii) The state administered program per diem rate is an estimate based on the actual payment per day. The actual payment per day equals the aggregate payment amount (inflated from the base year to the implementation year) divided by the number of days associated with the aggregate costs.
(iv) For a hospital with more than twenty state administered program claims that grouped in the base year data to DRG classifications that are paid using the per diem payment method, a hospital's specific equivalency factor is established based on the hospital's data.
(v) For a hospital with less than twenty state administered program claims that grouped in the base year data to DRG classifications are paid using the per diem payment method, an average equivalency factor is established based on the hospital data base of all hospitals.
(d) The state administered program)) by multiplying the hospital's specific medicaid per diem by the ratable and the per diem EF.
(b) The agency calculates the SAP per diem rate for noncritical border hospitals by multiplying the lowest in-state medicaid per diem rate by the average ratable and the average per diem EF.
(c) For hospitals with more than twenty nonpsychiatric SAP per diem paid services during SFY 2011, the agency calculates a per diem EF for each hospital using the individual hospital's claims as follows:
(i) The agency calculates a SAP average payment per day by dividing the total current SAP per diem payments by the total number of days associated with the payments.
(ii) The agency calculates a medicaid average payment per day by dividing the aggregate payments based on the rebased medicaid rates by the total number of days associated with the aggregate payments (same claims used in (c)(i) of this subsection).
(iii) The agency divides the hospital estimated SAP average payment per day in (a) of this subsection by the hospital medicaid average payment per day in (b) of this subsection.
(iv) The agency divides the result of (c)(iii) of this subsection by the hospital specific ratable factor to determine the EF.
(d) For hospitals with twenty or less nonpsychiatric SAP per diem paid services during SFY 2011, the EF is an average for all hospitals. The agency uses the following process to determine the average EF:
(i) The agency calculates a SAP average payment per day by dividing the total current SAP per diem payments for all hospitals by the total number of days associated with the aggregate payments.
(ii) The agency calculates a medicaid average payment per day by dividing the aggregate payments based on the rebased medicaid rates by the total number of days associated with the aggregate payment (same claims used in (d)(i) of this subsection).
(iii) The agency divides the SAP average per day in (a) of this subsection by the medicaid average payment per day in (b) of this subsection.
(iv) The agency divides the result of (d)(iii) of this subsection by the hospital specific ratable factor to determine the EF. The EF is an average based on claims for all the hospitals in the group.
(e) A psychiatric EF is used to keep SAP psychiatric rates at the level required by the Washington state legislature. The agency's SAP psychiatric rates are eighty-five and four one hundredths of a percent (85.04%) of the agency's medicaid psychiatric rates. The factor is applied to all hospitals.
(f) The agency calculates the SAP per diem allowed amount ((of payment calculation process)) for CUP, detoxification, ((and physical medicine and rehabilitation)) PM&R, and psychiatric services ((is as follows. Mathematically the calculation is:
Per diem payment =
Hospital's state administered program)) by multiplying the hospital's SAP per diem rate ((x patient stay LOS recognized by the department for payment)) by the agency's allowed patient days.
(g) The agency does not apply the high outlier ((and)) or transfer policy ((is not applied)) to the payment calculations for CUP, detoxification, ((and physical medicine and rehabilitation)) PM&R, and psychiatric services.
(((e) The state administered program per diem allowed amount of payment calculation process for surgical, medical, burns, and neonate services is as follows. Mathematically the calculation is:
Per diem payment =
Hospital's state administered program per diem rate x patient stay LOS recognized by the department for payment
(i) The outlier policy is applied to payment calculations for a claim grouped to an unstable DRG classification when the claim is for surgical, medical, burns, neonate and pediatric services (see WAC 388-550-3700). Refer to the state administered program outlier DRG adjustment payment calculation for the outlier calculation.
(ii) The transfer policy is not applied to payment calculations for a claim grouped to an unstable DRG classification when the claim is for surgical, medical, burns, neonate and pediatric services.
(17) The state administered program per diem rate and payment calculation for psychiatric services is as follows:
(a) The department uses a payment method similar to the method used to pay for medicaid psychiatric services, for state administered program psychiatric services provided to clients eligible for those services. Psychiatric services provided to state administered program clients are paid using a psychiatric per diem rate. The per diem rate calculation process for state administered program psychiatric services is as follows:
(i) For instate hospitals, the hospital's specific state administered program psychiatric per diem rate used to calculate the allowed amount for payment is based on the Title XIX medicaid rate adjusted by a ratable factor specified by the legislature to reduce the medicaid psychiatric per diem to a state program per diem. Mathematically the calculation is:
State administered program psychiatric per diem rate =
Medicaid psychiatric per diem x a ratable factor specified by the legislature to reduce the medicaid psychiatric per diem to a state program per diem.
(ii) For hospitals located outside the state of Washington, including bordering city hospitals, critical border hospitals, and other out-of-state hospitals, psychiatric services and Involuntary Treatment Act (ITA) services are not covered or paid by the department.
(b) The per diem payment calculation process for state-administered program psychiatric services is as follows. Mathematically the calculation is:
Psychiatric payment =
State administered program hospital's specific per diem rate x patient stay LOS recognized by the department's MHD designee for payment
(i) Outlier payment and transfer policies are not applied to state administered program psychiatric claims.
(ii) The ratable factor was provided to the department by the legislature.
(18))) (5) This subsection describes the ((state administered program)) SAP per case rate and payment processes for bariatric surgery services.
(a) ((The department limits provision of bariatric surgery services to medical assistance clients to hospitals that are approved by the department to provide those services. Bariatric surgery services provided to a medical assistance client by an approved hospital must also be prior authorized by the department for the hospital to receive payment from the department for those services. Effective August 1, 2007, the department approved bariatric surgery services programs at the Sacred Heart Medical Center, the University of Washington Medical Center, and the Oregon Health Science University. The department may approve other programs based on department discretion.
(b) The department)) The agency calculates the ((state administered program)) SAP per case rate for bariatric surgery services by multiplying the hospital's ((specific)) medicaid per case rate for bariatric surgery services by the hospital's ((specific)) ratable ((factor and DRG-equivalency factor. Mathematically the calculation is:
State administered program per case rate =
Medicaid per case rate x hospital's specific ratable factor x DRG equivalency factor)).
(b) The per case payment rate for bariatric surgery services is an all-inclusive rate. ((No outlier provision is applied to the per case rate.
(19) This subsection describes the state administered program RCC rates and payment calculation processes for transplant services and other RCC paid services. Transplant services provided to a client eligible for those services through a state administered program are paid using the RCC payment method. There are some other services that may be paid using the RCC payment method, e.g., services provided by military hospitals when no other payment method is agreed upon by the department and the hospital. The state administered program RCC rate is calculated by multiplying the medicaid RCC rate by the ratable factor. Mathematically the calculation is:
State administered program RCC rate = Medicaid RCC x ratable factor
(20) The department may pay for authorized psychiatric indigent inpatient claims submitted by an instate community hospital designated as an institution for mental diseases (IMD) using state funds when such funds are provided by the state legislature specifically for this purpose.
(21) The department's policy for payment on state-administered program claims that involve third party liability (TPL) and/or client responsibility payments is the same policy indicated in the table in WAC 388-550-2800, except that when the department determines the payment on the claim, it applies state-administered program rates, not medicaid or SCHIP rates, when comparing the lesser of billed charges or the allowed amount on the claim.))
(c) The agency does not apply the high outlier or transfer policy to the payment calculations for bariatric surgery services.
(6) The agency calculates the SAP RCC by multiplying the medicaid RCC by the hospital's ratable.
(7) The agency establishes annually the hospital-specific ratable factor used in the calculation of SAP payment rate based on the most current hospital revenue data available from the department of health (DOH). The agency uses the following process to determine the hospital ratable factor:
(a) The agency adds the hospital's medicaid revenue, medicare revenue, charity care, and bad debts as reported in DOH data.
(b) The agency determines the hospital's community care dollars by subtracting the hospital's low-income disproportionate share hospital (LIDSH) payments from the amount derived in (a) of this subsection.
(c) The agency calculates the hospital net revenue by subtracting the hospital-based physician revenue (based on information available from the hospital's medicare cost report or provided by the hospitals) from the DOH total hospital revenue report.
(d) The agency calculates the preliminary hospital-specific ratable by dividing the amount derived in (b) of this subsection by the amount derived in (c) of this subsection.
(e) The agency determines a neutrality factor by comparing the hospital-specific medicaid revenue (used in (a) of this subsection) multiplied by the preliminary ratable to the hospital-specific medicaid revenue (used in (a) of this subsection) multiplied by the prior year ratable. The neutrality factor is used to keep the projected SAP payments at the same current payment level.
(f) The agency determines the final hospital-specific ratable by multiplying the hospital-specific preliminary ratable by the neutrality factor.
(g) The agency applies to the allowable for each SAP claim all applicable adjustments for client responsibility, any third-party liability, medicare payments, and any other adjustments as determined by the agency.
(8) The agency does not pay an SAP claim paid by the DRG method at greater than the billed charges.
(9) SAP rates do not apply to the critical access hospital (CAH) program's weighted cost-to-charges, to the long-term acute care (LTAC) program's per diem rate, or to the certified public expenditure (CPE) program's RCC (except as the RCC applies to the CPE hold harmless described in WAC 182-550-4670).
REPEALER
The following sections of the Washington Administrative Code are repealed:
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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