HEALTH CARE AUTHORITY

(Washington Apple Health)

(1) The medicaid agency updates all the following components of a hospital's specific diagnosis-related group (DRG) factor and per diem rates between rebasing periods:

(a) Effective July 1st of each year, the agency updates all of the following:

(i) Wage index adjustment;

(ii) Direct graduate medical education (DGME);

(iii) Indirect medical education (IME).

(b) Effective January 1, 2015, the agency updates the sole community hospital adjustment.

(2) The agency does not update the statewide average DRG factor between rebasing periods, except:

(a) To satisfy the budget neutrality conditions in WAC 182-550-3850; and

(b) When directed by the legislature.

(3) The agency updates the wage index to reflect current labor costs in the core-based statistical area (CBSA) where a hospital is located. The agency:

(a) Determines the labor portion by multiplying the base factor or rate by the labor factor established by medicare; then

(b) Multiplies the amount in (a) of this subsection by the most recent wage index information published by the centers for medicare and medicaid services (CMS) when the rates are set; then

(c) Adds the nonlabor portion of the base rate to the amount in (b) of this subsection to produce a hospital-specific wage adjusted factor.

(4) DGME. The agency obtains DGME information from the hospital's most recently filed medicare cost report that is available in the CMS health care cost report information system (HCRIS) dataset.

(a) The hospital's medicare cost report must cover a period of twelve consecutive months in its medicare cost report year.

(b) If a hospital's medicare cost report is not available on HCRIS, the agency may use the CMS Form 2552-10 to calculate DGME.

(c) In the case where a hospital has not submitted a CMS medicare cost report in more than eighteen months from the end of the hospital's cost reporting period, the agency considers the current DGME costs to be zero.

(d) The agency calculates the hospital-specific DGME by dividing the DGME cost reported on worksheet B, part 1 of the CMS cost report by the adjusted total costs from the CMS cost report.

(5) IME. The agency sets the IME adjustment equal to the "IME adjustment factor for Operating PPS" available in the most recent CMS final rule impact file available on CMS's web site as of May 1st of the rate-setting year.

(6)(a) Effective January 1, 2015, the agency multiplies the hospital's specific conversion factor and per diem rates by 1.25 if the hospital meets the agency's sole community hospital criteria in this subsection.

(b) The agency considers an in-state hospital to be a sole community hospital if all of the following conditions apply. The hospital must:

(i) Be certified by CMS as a sole community hospital as of January 1, 2013.

(ii) Have a level III adult trauma service designation from the department of health as of January 1, 2014.

(iii) Have less than one hundred fifty acute care licensed beds in fiscal year 2011.

(iv) Be owned and operated by the state or a political subdivision.

(v) Not qualify for the certified public expenditures (CPE) payment program defined in WAC 182-550-4650.

(1) The medicaid agency calculates hospital-specific outpatient prospective payment system (OPPS) rates using all of the following:

(a) A base conversion factor established by the agency;

(b) ((The latest wage index information established and published by the centers for medicare and medicaid services (CMS) at the time the OPPS rates are set for the upcoming year. Wage index information reflects labor costs in the cost-based statistical area (CBSA) where a hospital is located; and

(c))) An adjustment for direct graduate medical education (((GME))) (DGME); and

(c) The latest wage index information established and published by the centers for medicare and medicaid services (CMS) when the OPPS rates are set for the upcoming year. Wage index information reflects labor costs in the cost-based statistical area (CBSA) where a hospital is located.

(2) Base conversion factors. The agency calculates the ((average, or)) base((,)) enhanced ambulatory patient group (EAPG) conversion factor during a hospital payment system rebasing. 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 will publish base conversion factors on its web site.

(3) Wage index adjustments reflect labor costs in the CBSA where a hospital is located.

(a) The agency determines the labor portion of the base rate by multiplying the base ((factor or)) rate by the labor factor established by medicare; then

(b) Multiplying the amount in (a) of this subsection is multiplied by the most recent wage index information published by CMS ((at the time)) when the rates are set; then

(c) The agency adds the nonlabor portion of the base rate to the amount in (b) of this subsection to produce a hospital-specific wage adjusted factor.

(4) ((GME)) DGME. The agency obtains the ((GME)) DGME information from the hospital's most recently filed medicare cost report as available in the CMS health care cost report information system (HCRIS) dataset.

(a) The hospital's medicare cost report must cover a period of twelve consecutive months in its medicare cost report year.

(b) If a hospital's medicare cost report is not available on HCRIS, the agency may use the CMS Form 2552-10 to calculate ((GME)) DGME.

(c) In the case where a hospital has not submitted a CMS medicare cost report in ((greater)) more than eighteen months from the end of the hospital's cost reporting period, the agency may remove the hospital's ((GME)) DGME adjustment.

(d) The agency calculates the hospital-specific ((GME)) DGME by dividing the ((durable medical equipment)) DGME cost reported on worksheet B, part 1 of the CMS cost report by the adjusted total costs from the CMS cost report.

(5) The formula for calculating the hospital's final specific conversion factor is:

EAPG base rate x (.6(wage index) + .4)/(1-((GME)) DGME)