SOCIAL AND HEALTH SERVICES
Subject: Change in payment methodology for federally qualified health centers and rural health clinics.
Effective Date: January 1, 2002.
Required Information: Description of Changes in Method: Effective January 1, 2002, the Department of Social and Health Services (DSHS), Medical Assistance Administration (MAA) implemented a prospective payment system (PPS) for federally qualified health centers (FQHC) and rural health clinics (RHC) as described in section 702 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000. MAA made the following changes to its reimbursement methodology:
• Prior to January 1, 2002, MAA reimbursed FQHCs based on 100% of their reasonable and necessary costs for Medicaid-covered services each year, as reported by the centers in an annual cost report. MAA audited these cost reports in order to insure their accuracy, and established an all-inclusive encounter rate based on the audited cost reports. In order to insure the center was receiving cost-based reimbursement for MAA clients assigned to a managed care plan, MAA also paid an enhanced premium to each FQHC for enrolled members on a per member, per month basis.
• Prior to January 1, 2002, MAA reimbursed RHCs using an all-inclusive encounter rate for RHC-covered services, using Medicare-determined rates and services. In order to insure the center was receiving cost-based reimbursement for MAA clients assigned to a managed care plan, MAA also paid each RHC an enhanced premium for enrolled members on a per member, per month basis.
• Effective January 1, 2002, MAA pays both FQHCs and RHCs on an all-inclusive encounter rate basis as defined in BIPA 2000, using a PPS methodology. This methodology sets the payment prospectively, using a weighted average of 100% of the FQHC or RHC's total reasonable costs for calendar years 1999 and 2000 and adjusted for any increase or decrease in scope of services furnished during calendar year 2001; this establishes a base encounter rate. Beginning calendar year 2002 and any year thereafter, the base encounter rate is increased by the percentage increase in the Medicare Economic Index (MEI) for primary care services, and adjusted for any increases or decreases within the clinic's scope of services. For clients enrolled with a managed care plan, the state pays the clinic a supplemental payment of a per member, per month basis in addition to the amount paid by the managed care plan. The state will obtain data from the plan on a quarterly basis to insure these supplemental payments meet the amount of payments the clinic is entitled to under BIPA PPS.
Estimate of any expected increase or decrease in annual aggregate expenditures: The state expects to see a decrease of approximately $5 million in annual aggregate expenditures with implementation of the FQHC/RHC PPS methodology.
Explanation of why agency is changing its methods and standards: MAA is changing its payment methodology for FQHCs and RHCs in order to conform to the requirements of BIPA and to simplify its administrative procedures for reimbursing FQHCs and RHCs.
Local agency in each county where copies of the proposed changes are available for public review: Available from DSHS/Medical Assistance Administration in Olympia, Washington, from the person identified below.
To receive a copy of the state plan amendment, contact Joanie Scotson, Department of Social and Health Services, Medical Assistance Administration, Division of Client Support, P.O. Box 45534, Olympia, WA 98504, phone (360) 725-1330, TDD 1-800-204-6430, fax (360) 664-0910, e-mail scottsjk@dshs.wa.gov.
January 29, 2002
Larry Laux