PROPOSED RULES
SOCIAL AND HEALTH SERVICES
(Medical Assistance Administration)
Original Notice.
Preproposal statement of inquiry was filed as WSR 01-20-075.
Title of Rule: New WAC 388-550-2598 Critical access hospital (CAH) program.
Purpose: To comply with HB 1162, Laws of 2001 2nd sp.s. that requires the Department of Social and Health Services (DSHS) to establish an inpatient cost reimbursement system for rural hospitals that are designated as CAHs.
Statutory Authority for Adoption: RCW 74.08.090, 74.04.050, 74.09.5225 as required by HB 1162, section 2, Laws of 2001 2nd sp.s.
Statute Being Implemented: RCW 74.08.090, 74.04.050, 74.09.5225.
Summary: The new rule establishes an inpatient cost reimbursement system for rural hospitals that have been designated as CAHs, and establishes a uniform set of procedures that will apply to all CAH reimbursement procedures for inpatient services. Aging and Adult Services of DSHS, the Department of Health, and the Center for Medicare and Medicaid Services (CMS) also regulate parts of this program.
Reasons Supporting Proposal: Required by state law.
Name of Agency Personnel Responsible for Drafting: Kathy Sayre, P.O. Box 45533, Olympia, WA 98504, (360) 725-1342; Implementation and Enforcement: Dee Hahn, P.O. Box 45510, Olympia, WA 98504, (360) 725-1832.
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: The new rule incorporates into rule MAA's CAH program as required by HB 1152, Laws of 2001 2nd sp.s. that requires DSHS to establish an inpatient cost reimbursement system for rural hospitals that are designated as CAHs. The rule establishes a uniform set of procedures that will apply to all CAH reimbursement procedures for inpatient services, and contains audit and quality provisions to insure compliance. It also clarifies and defines terms used in the program, and describes the requirements for a CAH facility. Its anticipated effects are to stabilize reimbursement payments to rural hospitals for services provided to MAA clients, and to ensure that MAA clients continue to have access to health care in their local area.
Proposal does not change existing rules.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The department has analyzed the proposed rule amendments and concluded that no new costs will be imposed on businesses affected by them. The hospital providers are already being reimbursed by MAA under other programs and the CAH program will use the electronic billing systems currently in use (MMIS).
RCW 34.05.328 applies to this rule adoption. The department has analyzed the proposed rule and determined that it meets the definition of a "significant legislative rule." A determination of the probable costs and benefits is available from the persons listed above.
Hearing Location: Office Building 2 Auditorium (DSHS Headquarters) (parking entrance at 12th and Washington), 1115 Washington, Olympia, WA, on June 4, 2002, at 10:00 a.m.
Assistance for Persons with Disabilities: Contact Andy Fernando, DSHS Rules Coordinator, by May 31, 2002, phone (360) 664-6094, TTY (360) 664-6178, e-mail fernaax@dshs.wa.gov.
Submit Written Comments to: Identify WAC Numbers, DSHS Rules Coordinator, Rules and Policies Assistance Unit, P.O. Box 45850, Olympia, WA 98504-5850, fax (360) 664-6185, e-mail fernaax@dshs.wa.gov, by 5:00 p.m., June 4, 2002.
Date of Intended Adoption: No sooner than June 5, 2002.
April 25, 2002
Brian H. Lindgren, Manager
Rules and Policies Assistance Unit
3031.8(2) The following definitions and abbreviations and those found in WAC 388-500-0005 and 388-550-1050 apply to the CAH program:
(a) "CAH," see "critical access hospital."
(b) "CAH fee-for-service (FFS) cost settlement adjustment" means the department's annual reimbursement or recoupment adjustment to a CAH's fee-for-service interim payment.
(c) "CAH Healthy Options (HO) cost settlement payment" means the department's annual reimbursement adjustment related to a CAH's HO utilization.
(d) "CAH HFY" see "CAH hospital fiscal year."
(e) "CAH hospital fiscal year" means each individual hospital's fiscal year.
(f) "Cost settlement" means a reconciliation of the interim CAH payments with a CAH's actual costs determined after the end of the CAH's HFY.
(g) "Critical access hospital (CAH)" means an MAA-approved hospital that is Medicare-certified by the Centers for Medicare and Medicaid Services (CMS) to operate as a CAH.
(h) "IDWCC rate" see "inpatient departmental weighted cost-to-charge (IDWCC) rate."
(i) "Inpatient departmental weighted cost-to-charge (IDWCC) rate" means a rate MAA uses to determine a fee-for-service interim inpatient CAH payment.
(j) "Interim CAH payment" means the actual payment the department makes, per claim, to a CAH during its HFY, using the appropriate IDWCC or ODWCC rate, as determined by MAA.
(k) "ODWCC rate" see "outpatient departmental weighted cost-to-charge (ODWCC) rate."
(l) "Outpatient departmental weighted cost-to-charge (ODWCC) rate" means a rate MAA uses to determine a fee-for-service interim outpatient CAH payment.
(m) "Per service" means services provided during a healthy options (HO) equivalent admission. (For an example of how to calculate a HO equivalent admission, see subsection (12), step 2.)
(3) An MAA-approved CAH must be Medicare-certified as a CAH. A CAH must provide proof of certification to MAA upon request.
(4) An MAA-approved CAH must also meet the general applicable requirements in chapter 388-502 WAC, Administration of medical programs--Providers. For information on audits conducted by department staff, see WAC 388-502-0240.
(5) MAA may conduct a postpay or on-site review of any CAH to ensure quality of care.
(6) To ensure a client receives necessary care:
(a) A CAH is responsible to investigate any reports of substandard care or violations of the facility's medical staff bylaws;
(b) A CAH provider must have and follow written procedures that provide a resolution to complaints and grievances; and
(c) A complaint or grievance regarding substandard conditions or care may be investigated by any one or more of the following:
(i) Department of health (DOH); or
(ii) Other agencies with review authority for MAA programs.
(7) Subject to the restrictions and limitations in this section and other published WAC, the MAA CAH fee-for-service reimbursement method uses the:
(a) IDWCC rate; and
(b) ODWCC rate.
(8) This section describes the parallel steps MAA uses to calculate both the fee-for-service IDWCC rate and fee-for-service ODWCC rate for each CAH. Consideration will be given to recalculation of the interim payment rates if a CAH submits changes to the initially submitted Medicare HCFA-2552 Cost Report. MAA:
(a) Obtains the following information for each CAH from the Medicare HCFA-2552 Cost Report the CAH initially submits for the period to be cost settled:
(i) Cost-to-charge ratio of each respective ancillary service cost center; and
(ii) Total costs and number of patient days of each respective accommodation cost center.
(b) Obtains from the Medicaid Management Information System (MMIS) the following summary claims data submitted by each CAH for the HFY to be cost settled:
(i) Medical assistance program codes;
(ii) Inpatient and outpatient claim types;
(iii) Procedure codes, revenue codes or diagnosis-related group (DRG) codes;
(iv) Allowed charges and third party liability/client and MAA paid amounts;
(v) Number of claims; and
(vi) Units of service.
(c) Separates the inpatient claims data and outpatient claims data.
(d) Obtains the cost center allowed charges by classifying inpatient allowed charges billed by a CAH (using any one of, or a combination of, procedure codes, revenue codes, or DRG codes) into the related cost center in the CAH's Medicare HCFA-2552 cost report the CAH initially submits to MAA.
(e) Determines the MAA departmental-weighted costs for each cost center by multiplying the cost center's allowed charges for the appropriate inpatient or outpatient claim type by the related ancillary service cost center ratio or accommodation cost center per diem.
(f) Obtains totals from the cost centers used for cost settlement and interim rates from (e) of this subsection by:
(i) Summing all allowed charges; and
(ii) Summing all MAA departmental-weighted costs.
(g) Determines a CAH's fee-for-service IDWCC rate and fee-for-service ODWCC rate by dividing the total MAA departmental-weighted costs from (f)(ii) of this subsection by the total allowed charges from (f)(i) of this subsection. Neither the IDWCC rate nor the ODWCC rate may exceed one hundred percent.
(9) MAA makes interim CAH payments to a CAH during the CAH's HFY using the IDWCC rate for inpatient services provided, and the ODWCC rate for outpatient services provided, as determined in the CAH's most recent cost settlement.
(10) MAA performs a cost settlement for a CAH after the end of the CAH's HFY. MAA calculates the cost settlement using:
(a) MAA claims data; and
(b) The following information submitted by the CAH to MAA at the close of the CAH's HFY:
(i) The Medicare HCFA-2552 Cost Report (see requirements in WAC 388-550-5700); and
(ii) Total HO inpatient and outpatient allowed charges for the CAH's HFY dates of services.
(11) MAA rebases and implements a CAH's new IDWCC rate and ODWCC rate at cost settlement. The rebased IDWCC and ODWCC rates:
(a) Are used to determine a CAH's adjustment for services in the cost-settled HFY; and
(b) Become the current interim payment rates.
(12) See the example in this subsection for how MAA calculates a fee-for-service and managed care CAH cost settlement adjustment. A cost settlement payment for services provided through a Healthy Options managed care plan is limited to no more than the additional amounts per service paid under the CAH program for other medical assistance programs.
| Example of the payment calculation for a fee-for-service (FFS) and Healthy Options (HO) Critical Access Hospital (CAH) cost settlement adjustment using charges from claims and the hospital's inpatient departmental weighted cost-to-charge (IDWCC) and outpatient departmental weighted cost-to-charge (ODWCC) | ||||
| STEP 1 CAH FFS Cost Settlement Adjustment for Hospital XYZ | ||||
| CAH's Hospital Fiscal Year (HFY) | ||||
| Programs | ||||
| Inpatient Medical Assistance Programs |
Outpatient Medical + Assistance Programs |
Total Cost Settlement = Adjustment |
||
| CAH HFY Total allowed charges | $96, 735 | $33,265 | $130,000 | |
| IDWCC and ODWCC used for CAH cost settlement |
x | 84.3% | 70.5% | |
| CAH actual FFS cost | = | $81,548 | $23,452 | $105,000 |
| FFS interim CAH payment | - | $80,833 | $19,167 | $100,000 |
| * CAH FFS cost settlement adjustment | = | $ 715 | $ 4,285 | $ 5,000 |
| *If the CAH FFS cost settlement adjustment total is zero or less, a HO cost settlement is not performed. (Go directly to step 3.) If the CAH FSS cost settlement adjustment total is greater than zero, proceed to step 2. |
| STEP 2 Calculate Total CAH HO Cost Settlement Payment | |
| $130,000 ÷ 10 |
Total allowed CAH HFY charges FFS inpatient admissions during CAH HFY |
| = $ 13,000 | Average charge per FFS inpatient admission used for HO equivalent admissions |
| $5,000 ÷ 10 |
CAH FFS cost settlement adjustment (from Step 1) FFS admissions during CAH HFY |
| = $ 500 | CAH settlement for each FFS admission |
| $ 78,000 ÷ $ 13,000 |
Total allowed HO charges (includes inpatient and outpatient charges) Average charge per FFS admission used for HO equivalent admissions |
| 6 | HO equivalent admissions |
| $ 500 x 6 |
CAH settlement for each FFS admission HO equivalent admissions |
| = $ 3,000 | CAH HO cost settlement payment due the CAH |
| STEP 3 Calculate Total Additional CAH Cost Settlement Adjustment | |
| $ 5,000 + $ 3,000 |
CAH FFS cost settlement adjustment (from Step 1) CAH HO cost settlement payment (from Step 2) |
| = $ 8,000 | Total additional CAH cost settlement adjustment due from the department |
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