WSR 02-21-019

PERMANENT RULES

DEPARTMENT OF

SOCIAL AND HEALTH SERVICES
(Medical Assistance Administration)

[ Filed October 8, 2002, 4:11 p.m. ]

Date of Adoption: October 4, 2002.

Purpose: Updates policy regarding enhanced payments for trauma care and grants administered by MAA. Clarifies rate setting methods related to state-administered rates and payment methods and the hospital outpatient payment rate and payment methods. Identifies payment methods for critical access hospitals (CAHs) and long-term acute care (LTAC) hospitals. Removes language that identifies the percentage of funding from the legislatively appropriated pool assigned to the state teaching financing program disproportionate share hospital (STHFPDSH) and the county teaching hospital financing program disproportionate share hospital (CTHFPDSH).

Citation of Existing Rules Affected by this Order: Amending WAC 388-550-2800, 388-550-4800, 388-550-5300, 388-550-5350, and 388-550-6000.

Statutory Authority for Adoption: RCW 74.08.090, 74.09.500, 74.09.035(1), and 43.88.290.

Adopted under notice filed as WSR 02-17-082 on August 19, 2002.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 5, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 5, Repealed 0.
Effective Date of Rule: Thirty-one days after filing.

October 4, 2002

Brian H. Lindgren, Manager

Rules and Policies Assistance Unit

3152.2
AMENDATORY SECTION(Amending WSR 01-16-142, filed 7/31/01, effective 8/31/01)

WAC 388-550-2800   Inpatient payment methods and limits.   (1) The department reimburses hospitals for Medicaid inpatient hospital services using the rate setting methods identified in the department's approved state plan that includes:


Method Used for
Diagnoses related group (DRG) negotiated conversion factor Hospitals participating in the Medicaid hospital selective contracting program under waiver from the federal government
DRG cost-based conversion factor Hospitals not participating in or exempt from the Medicaid hospital selective contracting program
Ratio of costs-to-charges (RCC) Hospitals or services exempt from DRG payment methods
Fixed per diem rate Acute physical medicine and rehabilitation (Acute PM&R) Level B ((contracted)) facilities and long-term acute care (LTAC) hospitals
Cost settlement MAA-approved critical access hospitals (CAHS)

(2) The department's annual aggregate Medicaid payments to each hospital for inpatient hospital services provided to Medicaid clients will not exceed the hospital's usual and customary charges to the general public for the services (42 CFR 447.271). The department recoups annual aggregate Medicaid payments that are in excess of the usual and customary charges.

(3) The department's annual aggregate payments for inpatient hospital services, including state-operated hospitals, will not exceed the estimated amounts that the department would have paid using Medicare payment principles.

(4) When hospital ownership changes, the department's payment to the hospital will not exceed the amount allowed under 42 U.S.C. Section 1395x (v)(1)(O).

(5) Hospitals participating in the medical assistance program must annually submit to the medical assistance administration:

(a) A copy of the hospital's HCFA 2552 Medicare Cost Report; and

(b) A disproportionate share hospital application.

(6) Reports referred to in subsection (5) 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 MAA.

(7) The department requires hospitals to follow generally accepted accounting principles unless federally or state regulated.

(8) Participating hospitals must permit the department to conduct periodic audits of their financial and statistical records.

(9) ((Payments for trauma services may be enhanced per WAC 246-976-935)) Under WAC 246-976-935, MAA may:

(a) Enhance payments for trauma care provided to a client under a Title XIX Medicaid program when the trauma:

(i) Qualifies under the trauma program; and

(ii) Care is provided in a nongovernmental hospital designated by the department of health (DOH) as a trauma services center.

(b) Provide an annual grant for trauma services to:

(i) A governmental hospital certified by DOH as a trauma services center; and

(ii) An MAA-approved critical access hospital (CAH).

(10) The department reimburses hospitals for claims involving clients with third-party liability insurance:

(a) At the lesser of either the DRG:

(i) Billed amount minus the third-party payment amount; or

(ii) Allowed amount minus the third-party payment amount; or

(b) The RCC allowed payment minus the third-party payment amount.

[Statutory Authority: RCW 74.08.090 and 42 U.S.C. 1395x(v), 42 C.F.R. 447.271, .11303, and .2652. 01-16-142, 388-550-2800, filed 7/31/01, effective 8/31/01. Statutory Authority: RCW 74.09.090, 42 U.S.C. 1395x(v) and 1396r-4, 42 C.F.R. 447.271, 11303 and 2652. 99-14-027, 388-550-2800, filed 6/28/99, effective 7/1/99. Statutory Authority: RCW 74.08.090, 42 USC 1395 x(v), 42 CFR 447.271, 447.11303, and 447.2652. 99-06-046, 388-550-2800, filed 2/26/99, effective 3/29/99. Statutory Authority: RCW 74.08.090, 74.09.730, 74.04.050, 70.01.010, 74.09.200, [74.09.]500, [74.09.]530 and 43.20B.020. 98-01-124, 388-550-2800, filed 12/18/97, effective 1/18/98.]


AMENDATORY SECTION(Amending WSR 01-16-142, filed 7/31/01, effective 8/31/01)

WAC 388-550-4800   Hospital payment methods--State((-only)) administered programs.   (1) ((The medical assistance administration (MAA):

(a) Calculates payments to hospitals for covered services provided to eligible clients under the state-only MI and medical care services programs using one of the following payment methods:

(i) Diagnosis-related group (DRG); or

(ii) Ratio of costs-to-charges (RCC) methodologies; and

(b) Calculates\ the respective state-only program RCC rate and cost based conversion factor (CBCF) by reducing:

(i) The hospital's Title XIX inpatient RCC rate by the hospital's ratable; and

(ii) The hospital's Title XIX DRG CBCF.

(2) To calculate ratables, MAA:

(a) Adds a hospital's Medicare and Medicaid revenues, to the value of the hospital's charity care and bad debts. MAA deducts the hospital's low-income disproportionate share hospital (LIDSH) revenue from this total to arrive at the hospital's community care dollars; then

(b) Subtracts revenue generated by hospital-based physicians from total hospital revenue. Both revenues are as reported in the hospital's HCFA 2552 cost report; then

(c) Divides the amount derived in step (2)(a) by the amount derived in step (2)(b) to obtain the ratio of community care dollars to total revenue; then

(d) Subtracts the result of step (2)(c) from 1.000 to obtain the hospital's ratable. The hospital's Title XIX CBCF is multiplied by (1 minus the ratable), and that result is multiplied by the equivalency factor (EF) to calculate the state-only CBCF. The hospital's Title XIX RCC rate is multiplied by (1 minus the ratable) to calculate the state-only program RCC.

(e) The payments for services under the state-only MI and medical care services programs are mathematically represented as follows:

State-only program RCC = Title XIX RCC x (1 minus the ratable) x EF

State-only program CBCF = Title XIX Conversion Factor x (1 minus the ratable) x EF

(3) MAA updates each hospital's ratable annually on August 1.

(4) MAA:

(a) Uses the EF to hold the DRG reimbursement rates for the state-only programs at their current level prior to any rebasing. MAA applies the EF only to the Title XIX DRG CBCFs, not to the Title XIX RCCS. The EF does not apply when the DRG rate change is due to the application of an inflation factor.

(b) Calculates a hospital's equivalency factor as follows:

EF = (Current state-only program CBCF divided by (Title XIX CBCF) multiplied by (1 minus the ratable))

(5) When a client eligible for the MI program or medical care services program has a trauma that qualifies under the trauma program, the hospital is reimbursed the full Medicaid reimbursement amount when care has been provided in a nongovernmental hospital designated by the department of health (DOH) as a trauma services center. MAA gives an annual grant for trauma services to governmental hospitals certified by DOH)) Except as provided in subsection (2) of this section, the medical assistance administration (MAA) uses the ratio of costs-to-charges (RCC) and diagnosis-related group (DRG) payment methods described in this section to reimburse hospitals at reduced rates for covered services provided to clients eligible under the following state-administered programs:

(a) Medically indigent (MI) program;

(b) General assistance unemployable (GAU) program;

(c) Alcoholism and Drug Addiction Treatment and Support Act (ADATSA) program; and

(d) Involuntary Treatment Act (ITA)-Q program. (The ITA-Q program covers ITA services for non-Medicaid eligible clients.)

(2) MAA exempts the following services from the state-administered programs' payment methods and reduced rates:

(a) Detoxification services when the services are provided under an MAA-assigned provider number starting with "thirty-six." (MAA reimburses these services using the Title XIX Medicaid RCC payment method.)

(b) Program services provided by MAA-approved critical access hospitals (CAHs) to clients eligible under state-administered programs. (MAA reimburses these services through cost settlement as described in WAC 388-550-2598.)

(3) MAA 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) MAA 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) MAA 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 (to include any necessary high-cost outlier payment)

(6) 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, MAA:

(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 MAA 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.

(7) MAA updates each hospital's ratable annually on August 1.

(8) MAA:

(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)

(9) Effective December 1, 1991, for hospital admissions of clients eligible under the state-administered MI program, MAA:

(a) Further reduces RCC and DRG payments to a hospital for covered services provided to clients eligible under the MI program by multiplying the respective payment referred to in subsection (5) of this section by ninety-seven percent; and

(b) Applies this payment reduction to the medically indigent disproportionate share hospital (MIDSH) payment methodology in accordance with section 3(b) of the "Medicaid Voluntary Contributions and Provider-Specific Tax Amendment of 1991."

(10) Under WAC 246-976-935, MAA may:

(a) Enhance payments for trauma care provided to a client eligible under the MI program or GAU program when the trauma:

(i) Qualifies under the trauma program; and

(ii) Care is provided in a nongovernmental hospital designated by DOH as a trauma services center.

(b) Provide an annual grant for trauma services to:

(i) A governmental hospital certified by DOH as a trauma services center; and

(ii) An MAA-approved critical access hospital (CAH).

[Statutory Authority: RCW 74.08.090. and 42 U.S.C. 1395x(v), 42 C.F.R. 447.271, .11303, and .2652. 01-16-142, 388-550-4800, filed 7/31/01, effective 8/31/01. Statutory Authority: RCW 74.09.080, 74.09.730, 42 U.S.C. 1395x(v) and 1396r-4, 42 C.F.R. 447.271 and 2652. 99-14-026, 388-550-4800, filed 6/28/99, effective 7/1/99. Statutory Authority: RCW 74.08.090, 42 USC 1395 x(v), 42 CFR 447.271, 447.11303, and 447.2652. 99-06-046, 388-550-4800, filed 2/26/99, effective 3/29/99. Statutory Authority: RCW 74.08.090, 74.09.730, 74.04.050, 70.01.010, 74.09.200, [74.09.]500, [74.09.]530 and 43.20B.020. 98-01-124, 388-550-4800, filed 12/18/97, effective 1/18/98.]


AMENDATORY SECTION(Amending WSR 99-14-025, filed 6/28/99, effective 7/1/99)

WAC 388-550-5300   Payment method--STHFPDSH.   (1) The medical assistance administration (MAA) considers a hospital eligible for the state teaching hospital financing program disproportionate share hospital (STHFPDSH) program if the hospital:

(a) Meets the criteria in WAC 388-550-4900 (2)(b) and (4);

(b) Is a state-owned university or public corporation hospital (border area hospitals are excluded);

(c) Provides a major medical teaching program, defined as a program in a hospital with more than one hundred residents and/or interns; and

(d) Has a Medicaid inpatient utilization rate (MIPUR) of at least twenty percent.

(2) MAA, using a prospective payment method:

(a) Pays hospitals ((deemed eligible under)) meeting the criteria in subsection (1) of this section a STHFPDSH payment from the legislatively appropriated pool specifically designated for disproportionate share hospital (DSH) payments to state and county teaching hospitals.

(b) Limits STHFPDSH payments to eligible hospitals to ((seventy percent)) an annually determined amount of the legislatively appropriated pool for DSH payments to state and county teaching hospitals. MAA establishes the annual amount by identifying the amount of available DSH funding the hospital has within its individual hospital DSH cap as determined through hospital data used for the prospective payment method.

[Statutory Authority: RCW 74.08.090, 74.09.730, chapter 74.46 RCW and 42 U.S.C. 1396r-4. 99-14-025, 388-550-5300, filed 6/28/99, effective 7/1/99. Statutory Authority: RCW 74.08.090, 74.09.730, 74.04.050, 70.01.010, 74.09.200, [74.09.]500, [74.09.]530 and 43.20B.020. 98-01-124, 388-550-5300, filed 12/18/97, effective 1/18/98.]


AMENDATORY SECTION(Amending WSR 99-14-025, filed 6/28/99, effective 7/1/99)

WAC 388-550-5350   Payment method--CTHFPDSH.   (1) The medical assistance administration (MAA) considers a hospital eligible for the county teaching hospital financing program disproportionate share hospital (CTHFPDSH) payment if the hospital:

(a) Meets the criteria in WAC 388-550-4900 (2)(b) and (4);

(b) Is a county hospital in Washington state (border area hospitals are excluded), so designated by the county in which located;

(c) Provides a major medical teaching program, defined as a program in a hospital with more than one hundred residents and/or interns; and

(d) Has a low-income utilization rate (LIUR) of at least twenty-five percent.

(2) MAA, using a prospective payment method:

(a) Pays hospitals ((considered eligible under)) meeting the criteria in subsection (1) of this section a CTHFPDSH payment from the legislatively appropriated pool specifically designated for disproportionate share hospital (DSH) payments to state and county teaching hospitals.

(b) Limits CTHFPDSH payments to eligible hospitals to ((thirty percent)) an annually determined amount of the legislatively appropriated pool for DSH payments to state and county teaching hospitals. MAA establishes the annual amount by identifying the amount of available DSH funding the hospital has within its individual hospital DSH cap as determined through historical data used for the prospective payment method.

[Statutory Authority: RCW 74.08.090, 74.09.730, chapter 74.46 RCW and 42 U.S.C. 1396r-4. 99-14-025, 388-550-5350, filed 6/28/99, effective 7/1/99. Statutory Authority: RCW 74.08.090, 74.09.730, 74.04.050, 70.01.010, 74.09.200, [74.09.]500, [74.09.]530 and 43.20B.020. 98-01-124, 388-550-5350, filed 12/18/97, effective 1/18/98.]


AMENDATORY SECTION(Amending WSR 99-14-028, filed 6/28/99, effective 7/1/99)

WAC 388-550-6000   Payment--Outpatient hospital services.   (1)(((a))) Excluding nonallowable revenue codes and the services specified in subsection (2) ((below)) of this section, MAA determines ((allowable costs for hospital outpatient services by the application of the hospital-specific outpatient ratio of costs to charges (RCC).

(b) MAA does not pay separately for ancillary hospital services which are included in the hospital's RCC reimbursement rate)) payment and reimburses for outpatient hospital services by multiplying a hospital's outpatient rate by the allowed charges on the hospital's outpatient claim. MAA's rate-setting method for a hospital outpatient rate is described in WAC 388-550-4500.

(2) MAA ((pays the lesser of billed charges or MAA's published maximum allowable fees for the following outpatient services)) excludes the following outpatient services from the outpatient rate reimbursement method described in subsection (1) of this section and reimburses for these services the lesser of the hospital billed charges or MAA's maximum allowable fees:

(a) Laboratory/pathology;

(b) Radiology, diagnostic and therapeutic;

(c) Nuclear medicine;

(d) Computerized tomography scans, magnetic resonance imaging, and other imaging services;

(e) Physical therapy;

(f) Occupational therapy;

(g) Speech/language therapy; ((and))

(h) Sleep studies;

(i) Synagis; and

(j) Other hospital services as identified and listed in MAA's published ((by the department)) fee schedule.

(3) ((MAA is not responsible for payment of hospital care and/or services provided to a client enrolled in a MAA-contracted, prepaid medical plan when the client fails to use:

(a) For a nonemergent condition, a hospital provider under contract with the plan;

(b) In a bona fide emergent situation, a hospital provider under contract with the plan; or

(c) The provider whom MAA has authorized to provide and receive payment for a service not covered by the prepaid plan, but covered under the client's medical assistance program)) For outpatient observation room, the department reimburses the lesser of the:

(a) Allowed charges multiplied by the hospital outpatient rate; or

(b) Administrative day rate described in WAC 388-550-4500 (8)(a).

(4) ((Providers or managed care entities that charge Medicare beneficiaries excess amounts are subject to sanctions as listed in 42 U.S.C. 1320A-7b (d)(1). These sanctions include a fine of up to twenty-five thousand dollars or imprisonment of up to five years, or both.

(5) MAA considers a hospital stay of twenty-four hours or less as an outpatient short stay. MAA does not pay an outpatient short stay under the DRG system except when it involves one of the following situations))

The department considers hospital stays of twenty-four hours or less outpatient short stays and uses the outpatient payment method to reimburse a hospital for these stays. However, when an outpatient short stay involves one of the following situations, the department uses inpatient payment methods to reimburse a hospital for covered services:

(a) Death of a client;

(b) Obstetrical delivery;

(c) Initial care of a newborn; or

(d) Transfer of a client to another acute care hospital.

(((6) MAA does not pay for patient room and ancillary services charges beyond the twenty-four period for outpatient stays.

(7) MAA does not cover short stay unit, emergency room facility, and labor room charges in combination when these billing periods overlap.

(8) MAA requires that the hospital's bill to the department shows the admitting, principal, and secondary diagnoses. Include the attending physician's name and MAA provider number.

(9) Payments for trauma services may be enhanced per WAC 246-976-935))

(5) Under WAC 246-976-935, MAA may:

(a) Enhance payments for trauma care provided to a client eligible under the medically indigent MI) program or a Title XIX Medicaid program when the trauma:

(i) Qualifies under the trauma program; and

(ii) Care is provided in a nongovernmental hospital designated by the department of health (DOH) as a trauma services center.

(b) Provide an annual grant for trauma services to:

(i) A governmental hospital certified by DOH as a trauma services center; and

(ii) An MAA-approved critical access hospital (CAH).

(6) The department uses the outpatient payment method to reimburse covered inpatient hospital services provided within twenty-four hours of a client's inpatient admission that are not related to the admission. Inpatient hospital services provided within twenty-four hours of a client's inpatient admission that are related to the admission are paid according to WAC 388-550-2900(12).

(7) For a client enrolled in an MAA-contracted Healthy Options managed care plan, the plan is responsible to reimburse a hospital provider for hospital services that the plan covers. MAA reimburses for a service not covered by the managed care plan only when:

(a) The service is included in the scope of coverage under the client's medical assistance program;

(b) The service is medically necessary as defined in WAC 388-550-1050; and

(c) The provider has a current core provider agreement with MAA and meets applicable MAA program requirements in other published WACs.

(8) The department does not reimburse for:

(a) Room and ancillary services charges beyond the twenty-four hour period for outpatient short stays; or

(b) Emergency room, labor room, observation room, and other room charges in combination when billing periods for theses charges overlap.

(9) In order to be reimbursed for covered outpatient hospital services, hospitals must bill MAA according to the conditions of payment under WAC 388-502-0100, time limits under WAC 388-502-0150, and other applicable published issuances. In addition, MAA requires hospitals to bill outpatient claims using the line item date of service and the appropriate revenue codes, CPT codes, and modifiers listed in MAA's published fee schedule. A hospital's bill to the department must show the admitting, principal, and secondary diagnoses and include the attending physician's name and MAA-assigned provider number.

[Statutory Authority: RCW 74.09.090, 42 U.S.C. 1395x(v), 42 C.F.R. 447.271 and 42 C.F.R. 11303. 99-14-028, 388-550-6000, filed 6/28/99, effective 7/1/99. Statutory Authority: RCW 74.08.090, 42 USC 1395 x(v), 42 CFR 447.271, 447.11303, and 447.2652. 99-06-046, 388-550-6000, filed 2/26/99, effective 3/29/99. Statutory Authority: RCW 74.08.090, 74.09.730, 74.04.050, 70.01.010, 74.09.200, [74.09.]500, [74.09.]530 and 43.20B.020. 98-01-124, 388-550-6000, filed 12/18/97, effective 1/18/98.]

Washington State Code Reviser's Office