WSR 10-05-083



(Health and Recovery Services Administration)

[ Filed February 15, 2010, 12:42 p.m. ]

     Original Notice.

     Preproposal statement of inquiry was filed as WSR 09-24-030.

     Title of Rule and Other Identifying Information: The department is amending WAC 388-550-7050 OPPS--Definitions, 388-550-7200 OPPS--Payment method, and 388-550-7300 OPPS--Payment limitations.

     Hearing Location(s): Blake Office Park East, Rose Room, 4500 10th Avenue S.E., Lacey, WA 98503 (one block north of the intersection of Pacific Avenue S.E. and Alhadeff Lane. A map or directions are available at or by calling (360) 664-6094), on March 23, 2010, at 10:00 a.m.

     Date of Intended Adoption: Not earlier than March 24, 2010.

     Submit Written Comments to: DSHS Rules Coordinator, P.O. Box 45850, Olympia, WA 98504-5850, delivery 4500 10th Avenue S.E., Lacey, WA 98503, e-mail, fax (360) 664-6185, by 5 p.m. on March 23, 2010.

     Assistance for Persons with Disabilities: Contact Jennisha Johnson, DSHS rules consultant, by March 9, 2010, TTY (360) 664-6178 or (360) 664-6094 or by e-mail at

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The amendments add language to inform hospital providers of the requirements to bill for outpatient hospital services according to the national correct coding initiative (NCCI) standards.

     Reasons Supporting Proposal: The rules are necessary to incorporate into rule the NCCI standards.

     Statutory Authority for Adoption: RCW 74.04.050, 74.04.057, 74.08.090, 74.09.500, and 74.09.530.

     Statute Being Implemented: RCW 74.04.050, 74.04.057, 74.08.090, 74.09.500, and 74.09.530.

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

     Name of Proponent: Department of social and health services, governmental.

     Name of Agency Personnel Responsible for Drafting: Kathy Sayre, P.O. Box 45505, Olympia, WA 98504-5504, (360) 725-1342; Implementation and Enforcement: Carolyn Adams, P.O. Box 45510, Olympia, WA 98504-5510, (360) 725-1854.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. These rules do not impact small businesses.

     A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Carolyn Adams, Health and Recovery Services Administration, P.O. Box 45510, Olympia, WA 98504-45510 [98504-5510], phone (360) 725-1854, fax (360) 753-9152, e-mail

February 8, 2010

Don Goldsby, Manager

Rules and Policies Assistance Unit

AMENDATORY SECTION(Amending WSR 09-12-062, filed 5/28/09, effective 7/1/09)

WAC 388-550-7050   OPPS -- Definitions.   The following definitions and abbreviations and those found in WAC 388-550-1050 apply to the department's outpatient prospective payment system (OPPS):

     "Ambulatory payment classification (APC)" means a grouping that categorizes outpatient visits according to the clinical characteristics, the typical resource use, and the costs associated with the diagnoses and the procedures performed.

     "Budget target" means the amount of money appropriated by the legislature or through the department's budget process to pay for a specific group of services, including anticipated caseload changes or vendor rate increases.

     "Budget target adjustor" means a department-established component of the APC payment calculation applied to all payable ambulatory payment classifications (APCs) to allow the department to reach and not exceed the established budget target.

     "Discount factor" means the percentage applied to additional significant procedures when a claim has multiple significant procedures or when the same procedure is performed multiple times on the same day. Not all significant procedures are subject to a discount factor.

     "Medical visit" means diagnostic, therapeutic, or consultative services provided to a client by a healthcare professional in an outpatient setting.

     "Modifier" means a two-digit alphabetic and/or numeric identifier that is added to the procedure code to indicate the type of service performed. The modifier provides the means by which the reporting hospital can describe or indicate that a performed service or procedure has been altered by some specific circumstance but not changed in its definition or code. The modifier can affect payment or be used for information only. Modifiers are listed in fee schedules.

     "National correct coding initiative (NCCI) is a national standard for the accurate and consistent description of medical goods and services using procedural codes. The standard is based on coding conventions defined in the American Medical Associations's Current Procedural Terminology (CPT¦) manual, current standards of medical and surgical coding practice, input from specialty societies, and analysis of current coding practices. The centers for medicare and medicaid services (CMS) maintain NCCI policy. Information can be found at

     "National payment rate (NPR)" means a rate for a given procedure code, published by the centers for medicare and medicaid (CMS), that does not include a state or location specific adjustment.

     "Nationwide rate" see "national payment rate."

     "NCCI edit" is a software step used to determine if a claim is billing for a service that is not in accordance with federal and state statutes, federal and state regulations, department fee schedules, billing instructions, and other publications. The department has the final decision whether the NCCI edits allow automated payment for services that were not billed in accordance with governing law, NCCI standards or department policy.

     "Observation services" means services furnished by a hospital on the hospital's premises, including use of a bed and periodic monitoring by hospital staff, which are reasonable and necessary to evaluate an outpatient's condition or determine the need for possible admission to the hospital as an inpatient.

     "Outpatient code editor (OCE)" means a software program that the department uses for classifying and editing claims in ambulatory payment classification (APC) based OPPS.

     "Outpatient prospective payment system (OPPS)" means the payment system used by the department to calculate reimbursement to hospitals for the facility component of outpatient services. This system uses ambulatory payment classifications (APCs) as the primary basis of payment.

     "Outpatient prospective payment system (OPPS) conversion factor" see "outpatient prospective payment system (OPPS) rate."

     "Outpatient prospective payment system (OPPS) rate" means a hospital-specific multiplier assigned by the department that is one of the components of the APC payment calculation.

     "Pass-throughs" means certain drugs, devices, and biologicals, as identified by centers for medicare and medicaid services (CMS), for which providers are entitled to additional separate payment until the drugs, devices, or biologicals are assigned their own ambulatory payment classification (APC).

     "Significant procedure" means a procedure, therapy, or service provided to a client that constitutes the primary reason for the visit to the healthcare professional.

     "Status indicator (SI)" means a code assigned to each medical procedure or service by the department that contributes to the selection of a payment method.

     "SI" see "status indicator."

[Statutory Authority: RCW 74.04.050, 74.04.057, 74.08.090, 74.09.500, and 2009-11 Omnibus Operating Budget (ESHB 1244). 09-12-062, § 388-550-7050, filed 5/28/09, effective 7/1/09. Statutory Authority: RCW 74.08.090, 74.09.500. 07-13-100, § 388-550-7050, filed 6/20/07, effective 8/1/07; 04-20-061, § 388-550-7050, filed 10/1/04, effective 11/1/04.]

     Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
AMENDATORY SECTION(Amending WSR 07-13-100, filed 6/20/07, effective 8/1/07)

WAC 388-550-7200   OPPS -- Billing requirements and payment method.   (1) This section describes hospital provider billing requirements and the payment methods the department uses to pay for covered outpatient hospital services provided by hospitals not exempted from the outpatient prospective payment system (OPPS).

     (2) Providers must bill according to national correct coding initiative (NCCI) standards. NCCI standards are based on:

     (a) Coding conventions defined in the American Medical Association's Current Procedural Terminology (CPT¦) manual;

     (b) Current standards of medical and surgical coding practice;

     (c) Input from specialty societies; and

     (d) Analysis of current coding practices.

     The centers for medicare and medicaid services (CMS) maintains NCCI policy.


     (((2))) (3) The department uses the APC method when ((the centers for medicare and medicaid services (CMS))) (CMS) has established a national payment rate to pay for covered services. The APC method is the primary payment methodology for OPPS. Examples of services paid by the APC methodology include, but are not limited to:

     (a) Ancillary services;

     (b) Medical visits;

     (c) Nonpass-through drugs or devices;

     (d) Observation services;

     (e) Packaged services subject to separate payment when criteria are met;

     (f) Pass-through drugs;

     (g) Significant procedures that are not subject to multiple procedure discounting (except for dental-related services);    

     (h) Significant procedures that are subject to multiple procedure discounting; and    

     (i) Other services as identified by the department.


     (((3))) (4) The department uses the outpatient fee schedule published in the department's billing instructions to pay for covered:

     (a) Services that are exempted from the APC payment methodology or services for which there are no established weight(s);

     (b) Procedures that are on the CMS inpatient only list;

     (c) Items, codes, and services that are not covered by medicare;    

     (d) Corneal tissue acquisition;

     (e) Devices that are pass-throughs (see WAC 388-550-7050 for definition of pass-throughs); and

     (f) Dental clinic services.


     (((4))) (5) The department uses the hospital outpatient rate described in WAC 388-550-3900 and 388-550-4500 to pay for the services listed in subsection (((3))) (4) of this section for which the department has not established a maximum allowable fee.

[Statutory Authority: RCW 74.08.090, 74.09.500. 07-13-100, § 388-550-7200, filed 6/20/07, effective 8/1/07; 04-20-061, § 388-550-7200, filed 10/1/04, effective 11/1/04.]

AMENDATORY SECTION(Amending WSR 07-13-100, filed 6/20/07, effective 8/1/07)

WAC 388-550-7300   OPPS -- Payment limitations.   (1) The department limits payment for covered outpatient hospital services to the current published maximum allowable units of services listed in the outpatient fee schedule and published in the department's hospital billing instructions, subject to the following:    

     (a) To receive payment for services, providers must bill claims according to national correct coding initiative (NCCI) standards. See WAC 388-550-7200(2) for more information on NCCI standards. When a unit limit for services is not stated in the outpatient fee schedule, department pays for services according to the program's unit limits stated in applicable WAC and published issuances.

     (b) Because multiple units for services may be factored into the ambulatory payment classification (APC) weight, department pays for services according to the unit limit stated in the outpatient fee schedule when the limit is not the same as the program's unit limit stated in applicable WAC and published issuances.

     (2) The department does not pay separately for covered services that are packaged into the APC rates. These services are paid through the APC rates.

     (3) The department:

     (a) Limits surgical dental services payment to the ambulatory surgical services fee schedule and pays:

     (i) The first surgical procedure at the applicable ambulatory surgery center group rate; and

     (ii) The second surgical procedure at fifty percent of the ambulatory surgery center group rate.

     (b) Considers all surgical procedures not identified in subsection (a) to be bundled.

     (4) The department limits outpatient services billing to one claim per episode of care. If there are late charges, or if any line of the claim is denied, the department requires the entire claim to be adjusted.

[Statutory Authority: RCW 74.08.090, 74.09.500. 07-13-100, § 388-550-7300, filed 6/20/07, effective 8/1/07; 04-20-061, § 388-550-7300, filed 10/1/04, effective 11/1/04.]

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