Original Notice.

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

Title of Rule: WAC 388-550-4800 Hospital payment method--State only programs.

Purpose: Amend rule to reflect current policy and practice. Reorganize and consolidate sections and clarify language to meet the goals of the Governor's Executive Order 97-02, which mandates that rules be reviewed for clarity, foundation in law, etc.

Statutory Authority for Adoption: RCW 74.08.090, 74.09.730, 42 U.S.C. 1395x(v) and 1396r-4, 42 C.F.R. 447.271, 2652, and 11303.

Statute Being Implemented: RCW 74.08.090, 74.09.730, 42 U.S.C. 1395x(v) and 1396r-4, 42 C.F.R. 447.271, 2652, and 11303.

Summary: Amending rule to reflect current policy and practice. Reorganizing and consolidating sections to eliminate duplication. Rewriting sections to clarify language.

Reasons Supporting Proposal: To comply with the Governor's Executive Order 97-02.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Alan McMullen, DOSS, 623 8th Avenue S.E., Olympia, WA 98501, (360) 586-6698.

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

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

Explanation of Rule, its Purpose, and Anticipated Effects: The rule states the payment methodology for hospitals participating in state-only funded medical assistance programs.

The purpose is to state the methodology clearly, consolidate certain sections that are repeated several times, and ensure that rule reflects current policy and practice.

The anticipated effect is to increase user understanding.

Proposal Changes the Following Existing Rules: Amends rules listed in Title of Rule above to reflect current policy and clarify payment methodology.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The department has analyzed the proposed rules and concludes that no new costs will be imposed on small businesses that are affected by the rules.

RCW 34.05.328 does not apply to this rule adoption. This rule does not meet the definition of a significant legislative rule.

Hearing Location: Lacey Government Center (behind Tokyo Bento Restaurant), 1009 College Street S.E., Room 104-B, Lacey, WA 98503, on May 25, 1999, at 10:00 a.m.

Assistance for Persons with Disabilities: Contact Paige Wall by May 14, 1999, phone (360) 902-7540, TTY (360) 902-8324, e-mail pwall@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) 902-8292, by May 25, 1999.

Date of Intended Adoption: May 26, 1999.

April 19, 1999

Marie Myerchin-Redifer, Manager

Rules and Policies Assistance Unit

(1) The medical assistance administration (MAA):

(a) ((MAA)) Calculates payments to hospitals for state-only MI/medical care services to clients according to the:

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

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

(b) ((MAA)) Reduces hospitals' Title XIX rates by their ratable and/or equivalency (((EQ))) factors (EQ), as applicable.

(2) MAA calculates ratables ((as follows)) by:

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

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

(c) Divides the amount derived in step (2)(a) ((is divided)) 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) ((is subtracted)) from 1.000 to ((derive)) obtain the hospital's ratable.  The hospital's Title XIX cost-based conversion factor (CBCF) or RCC rate is multiplied by (1-ratable) for ((an)) a MI or medical care services client.

(e) The ((reimbursements)) payments for MI/medical care services clients are mathematically represented as follows:

MI/medical care services RCC = Title XIX RCC x (1-Ratable)

MI/medical care services CBCF = Title XIX Conversion Factor x (1-Ratable) x EQ

(3) MAA ((updates each hospital's ratable annually on August 1)) may adjust all cost-based conversion factors (CBCF) by an inflation factor determined by the legislature.

(4) MAA:

(a) ((MAA)) Uses the ((equivalency factor ())EQ(())) to hold the DRG reimbursement rates for the MI/medical care services programs at their current level prior to any rebasing.  MAA applies the EQ only to the Title XIX DRG CBCFs.   MAA does not apply the EQ when the DRG rate change is due to the application of ((the annual)) an inflation factor ((from the PPS-type hospital market-basket index from the most recent McGraw-Hill Data Resources, Inc., (DRI) forecast)).

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

EQ = (Current MI/medical care services conversion factor)/(Title XIX DRG rate x (1-ratable))

(5) Effective for hospital admissions on or after December 1, 1991, MAA reduces its payment for MI (but not medical care services) clients further by multiplying ((it)) the payment by ninety-seven percent.  MAA applies this payment reduction adjustment to the MIDSH methodology in accordance with section 3(b) of the "Medicaid Voluntary Contributions and Provider-Specific Tax Amendment of 1991."

(6) When the MI/medical care services client has a trauma that qualifies under the trauma program, MAA pays the full Medicaid Title XIX amount when care has been provided in a nongovernmental hospital designated by the department of health (DOH) as a trauma services center.  MAA ((applies the reduction in MI cases which do not qualify under the trauma program.  MAA)) gives an annual grant for trauma services to governmental hospitals certified by DOH.

[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.]

Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.

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