Original Notice.

Exempt from preproposal statement of inquiry under RCW 34.05.310(4).

Title of Rule:

WAC NUMBER	SECTION TITLE
388-96-010	Definitions.
388-96-202	Scope of audit or department audit.
388-96-218	Proposed, preliminary, and final settlements.
388-96-384	Liquidation or transfer of resident personal funds.
388-96-559	Cost basis of land and depreciation base.
388-96-565	Lives.
388-96-572	Handling of gains and losses upon retirement of depreciable assets--Other periods.
388-96-585	Unallowable costs.
388-96-708	Reinstatement of beds previously removed from service under chapter 70.38 RCW--Effect on prospective payment rate.
388-96-709	Prospective rate revisions--Reduction in licensed beds.
388-96-710	Prospective payment for new contractors.
388-96-714	Nursing facility Medicaid rate allocations--Economic trends and conditions adjustment factors.
388-96-718	Public process for determination of rates.
388-96-723	How often will the department compare the state-wide weighted average payment rate for the capital and noncapital portions of the rate for all nursing facilities with the state-wide weighted average payment rate for the capital and noncapital portions of the rate identified in the Biennial Appropriations Act?
388-96-724	How much advance notice will a nursing facility receive of a rate reduction?
388-96-725	After a RCW 74.46.421 rate reduction, when will a nursing facility's rates return to their previous level?
388-96-726	If a nursing facility's capital and/or noncapital component rates are below the state-wide weighted average payment rate for the capital and/or noncapital portion(s) of the rate identified in the Biennial Appropriations Act, will the department reduce the facility's capital and/or noncapital component rates when it reduces rates under RCW 74.46.421?
388-96-730	How will the department reduce a nursing facility's capital and/or noncapital portion(s) of its rate so that the state-wide weighted average payment rate for the capital and/or noncapital portions of the rate is equal to or less than the state-wide weighted average for the capital and/or noncapital portion(s) of the rate identified in the Biennial Appropriations Act?
388-96-731	When will the department reduce all nursing facilities capital and/or noncapital portion(s) of their rates?
388-96-748	Financing allowance component rate allocation.
388-96-766	Notification of rates--References to rates.
388-96-767	Appraisal values.
388-96-771	Receivership.
388-96-776	Add-ons to the payment rate--Capital improvements.

Purpose:

388-96-010	Adds definitions for "anticipated resident days" and "anticipated resident occupancy." These terms are used in E2SHB 1484, chapter 353, Laws of 1999 Medicaid payment--Nursing facility. Also, defines "nursing facility occupancy percentage," "total rate allocation" and "component rate allocation," which are terms used in chapter 388-96 WAC.
388-96-202	Clarifies that department will audit all resident trust funds.
388-96-218	States how the department will settle calendar year 1998 per directive of RCW 74.46.165.
388-96-384	Changes from forty-five days to thirty days the time allowed for a contractor to transfer personal funds of a deceased resident and final accounting to appropriate jurisdiction or DSHS/Office of Financial Recovery.
388-96-559	Removes return on investment (ROI) and substitutes financing allowance.
388-96-565	Requires new buildings receiving certificate of need (CON) approval or exemptions after July 1, 1999 must be depreciated over forty years. Also, for new or replacement buildings or for major renovations receiving CON approval or exemption on or after July 1, 1999, the department will depreciate fixed equipment the same number of years as the life of the building to which it is affixed. In addition, section was revised for clarity.
388-96-572	Removes incorrect reference.
388-96-585	Adds that allowable bad debts will be accounted for in the final settlement process only.
388-96-708	Removes the requirement that to receive an increased rate, the contractor must notify the department thirty days in advance of reinstating banked beds. Clarifies that the post unbanking number of licensed beds must be used in all rate setting.
388-96-709	Uses new definitions in describing how a nursing facility's rate will be changed when it banks beds. Clarifies that the post banking number of licensed beds must be used in all rate setting.
388-96-710	Removes ROI and replaces with financing allowance and variable return.
388-96-714	New section to implement ESSB 5967, chapter 376, Laws of 1999 requiring two economic trends and conditions adjustment factors.
388-96-718	In the public process for determination of rate changes the time allowed for public comment from thirty days to fourteen.
388-96-723; 724; 725, 726 and 731	These sections are revised to identify the Medicaid payment rate as consisting of two parts: Capital and noncapital.
388-96-730	States how the department will reduce a nursing facility's capital and/or noncapital portion(s) of its rate so that the state-wide weighted average payment rate for the capital and/or noncapital portions of the rate is equal to or less than the state-wide weighted average for the capital and/or noncapital portion(s) of the rate identified in the Biennial Appropriations Act.
388-96-748	New section on determining the financing allowance component rate allocation.
388-96-766	Adjustments and updates made after the calendar year in which the adjustments and updates were effective will be accounted for in the final settlement process.
388-96-767, 771 and 776	Changes to these sections reflect the elimination of ROI and the introduction of the two rate components financing allowance and variable return.

Statutory Authority for Adoption: RCW 74.46.165, 74.46.431 as amended by E2SHB 1484, chapter 353, Laws of 1999, ESSB 5967, chapter 376, Laws of 1999 and RCW 74.46.800.

Statute Being Implemented: RCW 74.46.165, [74.46.]020, [74.46.]360, [74.46.]421, [74.46.]431 and ESSB 5967, section 3, chapter 376, Laws of 1999 Sec. 3 1999 c amending (ESSB 5180) s 207 (uncodified).

Summary: The following new WAC sections will implement the changes required by E2SHB 1484, chapter 353, Laws of 1999: WAC 388-96-714 implements two economic trends and conditions adjustment factors; WAC 388-96-748 implements the determination of financing allowance component rate allocation; and WAC 388-96-730 implements the department's methodology (required by RCW 74.46.421 a new section from chapter 322, Laws of 1998) for reducing a nursing facility's capital and/or noncapital portion(s) of its rate so that the state-wide weighted average payment rate for the capital and/or noncapital portion(s) of the rate is equal to or less than the state-wide weighted average for the capital and/or noncapital portion(s) of the rate identified in the Biennial Appropriations Act (split of total rate allocation between capital and noncapital in the process required by amendment to RCW 74.46.421, E2SHB 1484, chapter 353, Laws of 1999).

The following existing sections were revised to implement E2SHB 1484, chapter 353, Laws of 1999: WAC 388-96-559, 388-96-710, 388-96-767, 388-96-771, and 388-96-776 are revised to remove references to return on investment and incorporate financing allowance and variable return component rate allocations; WAC 388-96-565 is revised for clarity and to include new requirement that new buildings after July 1, 1999 must be depreciated over forty years and fixed equipment is depreciated over the life of the building to which it is affixed; and WAC 388-96-723, 388-96-724, 388-96-726 and 388-96-731 are revised to identify the Medicaid payment rate as consisting of two parts: Capital and noncapital.

Unless otherwise specified the following existing WAC sections were revised under the department's rule-making authority of RCW 74.46.800: WAC 388-96-202 clarifies all resident trust fund audits are subject to audit; WAC 388-96-218 is to implement RCW 74.46.165(7), section 10, chapter 322, Laws of 1998; WAC 388-96-384 although RCW 74.46.711 allows forty-five days for transfer of a deceased resident's funds, WAC 388-97-070 (6)(e) follows the federal requirement of thirty days. Both RCW 74.46.700 and 74.46.840 require WAC 388-96-384 to state thirty days; WAC 388-96-572 removes incorrect reference; WAC 388-96-585 adds that allowable bad debts will be accounted for in the final settlement process only; WAC 388-96-708 removes the requirement that to receive an increased rate, the contractor must notify the department thirty days in advance of reinstating banked beds; WAC 388-96-709 uses new definitions in describing how a NF's rate will be changed when it banks beds. New subsections in WAC 388-96-708 and 388-96-709 clarify that the post unbanking or banking number of licensed beds must be used in all future minimum occupancy tests; WAC 388-96-718 in the public process for determination of rate changes the time allowed for public comment is reduced from thirty days to fourteen; and WAC 388-96-766 adjustments and updates made after the calendar year in which the adjustments and updates were effective will be accounted for in the final settlement process.

Reasons Supporting Proposal: See Summary above.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Patricia Hague, 600 Woodland Square Loop S.E., Lacey, WA 98503, (360) 753-0631.

Name of Proponent: Department of Social and Health Services, governmental.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: See Purpose above.

Proposal Changes the Following Existing Rules: The following existing sections were revised to implement E2SHB 1484, chapter 353, Laws of 1999: WAC 388-96-559, 388-96-710, 388-96-767, 388-96-771, and 388-96-776 are revised to remove references to ROI and incorporate FA and VR component rate allocations; WAC 388-96-565 is revised for clarity and to include new requirement that new buildings after July 1, 1999 must be depreciated over forty years and fixed equipment is depreciated over the life of the building to which it is affixed; and WAC 388-96-723, 388-96-724, 388-96-726, and 388-96-731 are revised to identify the Medicaid payment rate as consisting of two parts: Capital and noncapital.

Unless otherwise specified the following existing WAC sections were revised under the department's rule-making authority of RCW 74.46.800: WAC 388-96-202 clarifies all resident trust fund audits are subject to audit; WAC 388-96-218 is to implement RCW 74.46.165(7) amended by section 10, chapter 322, Laws of 1998; WAC 388-96-384 although RCW 74.46.711 allows forty-five days for transfer a [of] deceased resident funds, the federal requirement is thirty days. Both RCW 74.46.700 and 74.46.840 require the change to thirty days; WAC 388-96-572 removes incorrect reference; WAC 388-96-585 adds that allowable bad debts will be accounted for in the final settlement process only. Makes lobbying expenses unallowable costs; WAC 388-96-708 removes the requirement that to receive an increased rate, the contractor must notify the department thirty days in advance of reinstating banked beds; WAC 388-96-709 uses new definitions in describing how a NF's rate will be changed when it banks beds. New subsections in WAC 388-96-708 and 388-96-709 clarify that the post unbanking or banking number of licensed beds must be used in all rate setting; WAC 388-96-718 in the public process for determination of rates changes the time allowed for public comment from thirty days to fourteen; and WAC 388-96-766 adjustments and updates made after the calendar year in which the adjustments and updates were effective will be accounted for in the final settlement process.

No small business economic impact statement has been prepared under chapter 19.85 RCW. Under RCW 18.85.020(1) a small business is defined as one with fewer that fifty employees and whose purpose is to make profit. The revisions to chapter 388-96 WAC only impact businesses with fifty or more employees and approximately one third the businesses are nonprofit. Also the proposed new sections and revisions to chapter 388-96 WAC are exempt from a small business economic impact statement under RCW 19.85.025(2) and 34.05.310 (4)(d) rules that only correct typographical errors make address or name changes, or clarify language of a rule without changing its effect; (e) rules the content of which is explicitly and specifically dictated by statute; and (f) rules that set or adjust fees or rates pursuant to legislative standards.

RCW 34.05.328 applies to this rule adoption. Under RCW 34.05.328 (5)(b)(vi), rules that set or adjust fees or rates pursuant to legislative standards are exempt from RCW 34.05.328. Amendments to and new sections for chapter 388-96 WAC are to implement new sections and amendments to chapter 74.46 RCW made by E2SHB 1484, chapter 353, Laws of 1999 and ESSB 5967, chapter 376, Laws of 1999. RCW 74.46.010 reads as follows: This chapter may be known and cited as the "nursing facility Medicaid payment system." The purposes of this chapter are to specify the manner by which legislative appropriations for Medicaid nursing facility services are to be allocated as payment rates among nursing facilities, and to set forth auditing billing, and other administrative standards associated with payments to nursing home facilities.

Hearing Location: Lacey Government Center (behind Tokyo Bento Restaurant), 1009 College Street S.E., Room 104-B, Lacey, WA 98503, on November 9, 1999, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Paige Wall by October 29, 1999, phone (360) 664-6094, TTY (360) 664-6178, e-mail wallpg@dshs.wa.gov.

Submit Written Comments to: Identify WAC Numbers, Paige Wall, Rules Coordinator, Rules and Policies Assistance Unit, P.O. Box 45850, Olympia, WA 98504-5850, fax (360) 664-6185, by November 9, 1999.

Date of Intended Adoption: November 30, 1999.

September 1, 1999

Marie Myerchin-Redifer, Manager

Rules and Policies Assistance Unit

Reviser's note: The material contained in this filing exceeded the page-count limitations of WAC 1-21-040 for appearance in this issue of the Register. It will appear in the 99-20 issue of the Register.

© Washington State Code Reviser's Office