PROPOSED RULES
LABOR AND INDUSTRIES
Original Notice.
Preproposal statement of inquiry was filed as WSR 01-14-084.
Title of Rule: Medical aid rules. New WAC 296-23A-0221, 296-23A-0700, 296-23A-0710, 296-23A-0720, 296-23A-0730, 296-23A-0740, 296-23A-0750, 296-23A-0770 and 296-23A-0780; and amending WAC 296-23A-0220.
Purpose: The purpose of the proposed rule changes is to allow the department to implement an outpatient prospective payment system (OPPS) in order to better manage outpatient expenditures, improve consistency of payment policies, improve consistency between payment levels and actual costs of service, establish greater uniformity between state agencies regarding reimbursement methodologies, allow for greater analysis and prediction of utilization and costs, and allow for rate adjustments to be based on more consistent and applicable data.
Statutory Authority for Adoption: RCW 51.04.020, 51.04.030, 51.36.080, 51.36.085.
Statute Being Implemented: RCW 51.36.080 and 51.36.085.
Summary: This WAC revises the current POAC payment methodology used to determine reimbursement for hospital outpatient services provided in a hospital setting. The WAC implements an outpatient prospective payment system (OPPS) based upon the center for Medicare and Medicaid services' current OPPS.
Reasons Supporting Proposal: Enhances the payment methodology used to reimburse providers for outpatient services.
Name of Agency Personnel Responsible for Drafting: James King, Tumwater, (360) 902-4244; Implementation and Enforcement: Doug Connell, Tumwater, (360) 902-4209.
Name of Proponent: Department of Labor and Industries, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: WAC 296-23A-0700 through 296-23A-0780 revises the payment methodology used to determine reimbursement for outpatient services provided in a hospital setting. The current method is to reimburse outpatient hospital services using the percent of allowed changes. The WAC implements an outpatient prospective payment system (OPPS) based upon the center for Medicare and Medicaid services' current OPPS. The purpose of the proposed rule changes is to allow the department to implement an outpatient prospective payment system (OPPS) in order to better manage outpatient expenditures, improve consistency of payment policies, create a better relationship between payment levels and actual costs of service, establish greater uniformity between state agencies regarding reimbursement methodologies, allow for greater analysis and prediction of utilization and costs, and allow for rate adjustments to be based on more consistent and applicable data. The effects of the new rule will be a smaller increase in the outpatient payments over time, better control of outpatient services' costs, and a readjustment of payment levels to hospitals.
Proposal Changes the Following Existing Rules: Existing WAC 296-23A-0220 How does the department or self-insurer pay for hospital outpatient services?, is being amended to become consistent with proposed WAC 296-23A-0700 through 296-23A-0780, by adding language concerning the outpatient prospective payment system.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed amendments to chapter 296-23A WAC will primarily have impact on hospital-based outpatient services. The agency will still pay for services to the injured worker, but will do so on a blended rate consistent with the cost to provide such care. The department believes that the proposed additions to chapter 296-23A WAC will impact only large hospitals (those with more than fifty employees) and that, therefore, an SBEIS is not required.
RCW 34.05.328 applies to this rule adoption. This is a significant legislative rule and requires completion of the rule-making criteria analysis.
Hearing Location: Department of Labor and Industries, 7273 Linderson Way S.W., Tumwater, WA, on October 11, 2001, at 2:00 p.m.
Assistance for Persons with Disabilities: Jim King, Senior Health Policy Analyst, fax (360) 902-4249, e-mail kinp235@lni.wa.gov, TDD 1-800-833-6388.
Submit Written Comments to: Jim King, Department of Labor and Industries, P.O. Box 44321, Olympia, WA 98504-4321 or fax (ten pages or less) (360) 902-4249, e-mail kinp235@lni.wa.gov.
Date of Intended Adoption: November 29, 2001.
September 5, 2001
Gary Moore
Director
OTS-5120.1
AMENDATORY SECTION(Amending WSR 00-06-027, filed 2/24/00,
effective 3/26/00)
WAC 296-23A-0220
How does the department ((or
self-insurer)) pay for hospital outpatient services?
The
department ((or self-insurer)) will pay for hospital outpatient
services according to the following table:
| Yes)) |
| Hospital Type or Service Location | Does the Ambulatory Payment Classification System apply? | Do percent of allowed charges (POAC) payment methods apply? | Do the department's Medical Aid Rules and Fee Schedules apply to hospital outpatient radiology, laboratory, pathology, occupational therapy, and physical therapy services? |
| Children's hospitals | No | Yes, paid 100% of allowed charges | Yes |
| Chronic Pain Management Program | No | Exempt, paid per department agreement | Exempt, paid per department agreement |
| Health Maintenance Organizations | Yes, paid statewide average per APC rate | Yes, applies to certain hospital outpatient services excluded from OPPS except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
| Military | No | Yes, paid 100% of allowed charges | No, paid 100% of allowed charges |
| Veterans Administration | No | Yes, paid 100% of allowed charges | No, paid 100% of allowed charges |
| State psychiatric facility | No | Yes, paid 100% of allowed charges | Yes |
| Other psychiatric hospitals | No | Yes, applies to hospital outpatient services except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
| Rehabilitation hospitals | No | Yes, applies to hospital outpatient services except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
| Cancer hospitals | No | Yes, applies to hospital outpatient services except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
| Washington rural (Peer Group 1) | No | Yes, applies to hospital outpatient services except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
| All other Washington hospitals | Yes | Yes, applies to certain hospital outpatient services excluded from OPPS except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
See chapter 296-23 WAC for rules on radiology, pathology,
laboratory, physical therapy, occupational therapy, and work
hardening services. See WAC 296-23A-700 for rules on prospective payment system
for hospital outpatient services. See WAC 296-20-132 and 296-20-135 for information on the
conversion factor used for certain hospital outpatient services.
[Statutory Authority: RCW 51.04.020, 51.04.030, 51.36.080. 00-06-027, 296-23A-0220, filed 2/24/00, effective 3/26/00; 97-06-066, 296-23A-0220, filed 2/28/97, effective 4/1/97.]
OTS-5121.1
NEW SECTION
WAC 296-23A-0221
How does the self-insurer pay for hospital
outpatient services?
The self-insurer will pay for hospital
outpatient services according to the following table:
| Hospital Type or Service Location | Do percent of allowed charges (POAC) payment methods apply? | Do the department's Medical Aid Rules and Fee Schedules apply to hospital outpatient radiology, laboratory, pathology, occupational therapy, and physical therapy services? |
| Children's hospitals | Yes, paid 100% of allowed charges | Yes |
| Chronic Pain Management Program | Not Applicable | Not Applicable |
| Health Maintenance Organizations | Yes, paid 100% allowed charges. | Yes |
| Military | Yes, paid 100% of allowed charges | No, paid 100% of allowed charges |
| Veterans Administration | Yes, paid 100% of allowed charges | No, paid 100% of allowed charges |
| State psychiatric facility | Yes, paid 100% of allowed charges | Yes |
| Other psychiatric hospitals | Yes, applies to hospital outpatient services except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
| Rehabilitation hospitals | Yes, applies to hospital outpatient services except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
| Cancer hospitals | Yes, applies to hospital outpatient services except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
| Washington rural (Peer Group 1) | Yes, applies to hospital outpatient services except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
| All other Washington hospitals | Yes, applies to hospital outpatient services except radiology, laboratory, pathology, occupational therapy, and physical therapy | Yes |
Hospitals are reimbursed only for the technical component of rates listed in the fee schedules, for outpatient radiology, pathology and laboratory services.
See chapter 296-23 WAC for rules on radiology, pathology,
laboratory, physical therapy, occupational therapy, and work
hardening services. See WAC 296-23A-700 for rules on the prospective payment
system for hospital outpatient services. See WAC 296-20-132 and 296-20-135 for information on the
conversion factor used for certain hospital outpatient services.
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OTS-5122.1
PART 4 - AMBULATORY PAYMENT CLASSIFICATION PAYMENT METHODS AND
POLICIES
NEW SECTION
WAC 296-23A-0700
What is the "ambulatory payment
classification" (APC) payment system?
The APC outpatient
prospective payment system (OPPS) is a reimbursement method that
categorizes outpatient visits into groups according to the
clinical characteristics, the typical resource use, and the costs
associated with the diagnoses and the procedures performed. The
groups are called Ambulatory Payment Classifications (APCs). The
department uses the Centers for Medicare and Medicaid Services'
(CMS) Prospective Payment System for Hospital Outpatient
Department Services to pay some hospitals for covered outpatient
services provided to injured workers. The department will
utilize CMS' current outpatient code editor to categorize
outpatient visits.
The payment system methodology uses CMS' outpatient prospective payment system's relative weight factor for each APC group and a blend of statewide and hospital-specific rates for each APC.
For a complete description of CMS' Prospective Payment System for Hospital Outpatient Department Services see 42 CFR, Chapter IV, Part 419, et al.
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"Ambulatory payment classification (APC) bill." An outpatient bill for hospital services that are grouped and paid using APCs.
"Ambulatory payment classification (APC) weight." The relative value assigned to each APC by CMS. For information on calculating the APC weights, please see 42 CFR, Chapter IV, Part 419, et al. Medicare Program; Prospective Payment System for Hospital Outpatient Services.
"Ambulatory payment classification (APC)." A grouping for outpatient visits which are similar both clinically and in the resources used.
"Ambulatory surgery centers (ASCs)." Ambulatory surgery centers as defined by the department. ASCs are excluded from the APC payment system.
"Blended rate." The dollar amount used to determine APC payments. It is calculated by adding a defined percentage of the hospital-specific rate and a defined percentage of the statewide rate.
"Bundling." Including the costs of supplies and certain other items with the costs of APCs. Bundled services will not be paid separately.
"Cancer hospitals." Freestanding hospitals specializing in the treatment of individuals who have a neoplasm diagnosis.
"Children's hospitals." Freestanding hospitals specializing in the treatment of individuals less than fourteen years of age.
"CMS." Centers for Medicare and Medicaid Services, formerly the Health Care Financing Administration (HCFA).
"Correct coding initiative." A process to encourage hospitals to code the most appropriate diagnosis and procedure for the services rendered.
"Critical access hospitals." Critical access hospitals as defined by the department of health.
"Current procedural terminology (CPT)." A systematic listing of descriptive terms and identifying codes for reporting medical services, procedures, interventions performed by physicians; the American Medical Association (AMA) publishes it annually.
"Discount factor." The percentage applied to additional significant procedures when a claim has multiple significant procedures or when the same procedure is performed multiple times.
"Exempt services." Services and hospitals that have been identified by CMS and/or L&I as exempt from the APC-based payment system.
"Health care financing administration's common procedure coding system (HCPCS)." Medicare's procedure coding system, which consists of Level 1 CPT Codes, Level 2 National Codes, and Level 3 Local Codes.
"Incidental services." Proper and necessary services that are integral to the delivery of the significant procedure or medical visit and are not separately reimbursable.
"Inpatient only procedures." Certain procedures designated by CMS as being of sufficient resource intensity that an inpatient setting is always required.
"Modifier." A two-digit alphabetic and/or numeric identifier that is added to the procedure code to indicate the type of service performed. Modifiers add clarification to procedures and can affect payment. Modifiers are listed in the current CPT and HCPCS manuals.
"Non-APC services." Services specifically excluded by CMS or by L&I from APC payment.
"Out-of-state hospitals." Any hospital not physically located within the state of Washington.
"Outpatient code editor." A prepayment analysis program designed to exclude certain diagnostic and procedure codes from being classified within the APC payment system.
"Outpatient prospective payment system (OPPS)." A payment system that groups hospital outpatient visits into APCs and multiplies the relative weight factor by the OPPS conversion rate to determine the appropriate payment.
"Outpatient services." Proper and necessary healthcare services and treatment ordinarily furnished by a hospital in which the injured worker is not admitted as an inpatient.
"Outpatient." A patient who receives proper and necessary healthcare services or supplies in a hospital-type setting but is not admitted as an inpatient.
"Partial hospitalization." Mental health services provided in an inpatient setting without the traditional inpatient overnight stay.
"Pediatric services." Proper and necessary healthcare services and treatment ordinarily furnished by a hospital in which the injured worker is under the age of fourteen.
"Peer group." Categories of hospitals adopted by the department of health for rate setting purposes. The categories are:
Group 1 - Usually rural hospitals.
Group 2 - Usually urban hospitals without a medical education program.
Group 3 - Hospitals with a medical education program.
"Psychiatric hospitals." Freestanding hospitals specializing in the treatment of individuals with a mental health disease.
"Rehabilitation hospitals." Freestanding hospitals specializing in the treatment of individuals in need of rehabilitative services.
"Related encounters or related services." Multiple encounters which are:
Provided within the same window of service; and
By the same provider (hospital).
"Single visit." A single visit includes all related services that are combined for reimbursement when they occur with the same hospital during the window of service.
"Special programs." Programs specifically designated by the department.
"Transitional pass-through." Certain drugs, devices and biologicals, as identified by CMS that are entitled to a specified payment until CMS assigns and reimburses them under their own APC.
"Window of service." A single date of service. All services associated with the visit for that date constitute a single visit, even when those services are provided on different days.
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(2) For the statewide rate, the department:
(a) Determines the total number of APC procedures that the department paid the covered hospitals. The relative weights for all of these APCs are summed.
(b) Determines the total dollar amount the department paid for those APCs.
(c) Determines the total dollar amount the department paid as outlier payments.
(d) Subtracts the total outlier payments in (c) of this subsection from the total dollar amount in (b) of this subsection and then divides the adjusted dollar amount by the APC relative weight total from (a) of this subsection.
(a) Segregates all the APCs for each hospital and totals the relative weights for each hospital.
(b) Determines the total dollar amount the department historically paid each hospital for those APCs.
(c) Determines the total dollar amount the department historically paid each hospital as an outlier payment for those APCs.
(d) Subtracts the total hospital-specific outlier payments in (c) of this subsection from the total hospital-specific APC payments in (b) of this subsection and then divides the hospital's adjusted dollar amount by the hospital-specific APC relative weight total from (a) of this subsection.
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(2) Additional payment may be made for services classified by CMS as transitional pass-through.
(3) Incidental services are grouped within an APC and are not paid separately.
(4) The OPPS APC payment method uses an APC relative weight for each classification group (APC) and the current hospital-specific blended rate to determine the APC payment for an individual service.
(5) For each additional APC listed on a single claim for services, the payment is calculated with the same formula and then discounted. L&I follows all discounting policies used by CMS for the Medicare Prospective Payment System for Hospital Outpatient Department Services.
(6) APC payment for each APC = (APC relative weight x hospital-specific blended rate)* discount factor (if applicable) x units (if applicable).
(7) The total payment on an APC claim is determined mathematically as follows:
(a) Sum of APC payments for each APC +
(b) Additional payment for each transitional pass-through (if applicable) +
(c) Additional outlier payment (if applicable).
(8) L&I follows all billing policies used by CMS for the Medicare Prospective Payment System for Hospital Outpatient Department Services with respect to:
(a) Billing of units of service;
(b) Outlier claims;
(c) Use of modifiers;
(d) Distinguishing between single and multiple visits during a span of time and reporting a single visit on one claim, but multiple visits with unrelated medical conditions on multiple claims; and
(e) For paying terminated procedures based on services actually provided and documented in the medical record, and properly indicated by the hospital through the CPT codes and modifiers submitted on the claim.
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(2) Critical access hospitals as identified by the Washington state department of health (DOH).
(3) All out-of-state hospitals.
(4) Military/veterans hospitals.
(5) Psychiatric hospitals.
(6) Rehabilitation hospitals.
(7) Cancer hospitals.
(8) Children's hospitals.
(9) Ambulatory surgery centers.
(10) Any outpatient service identified by CMS as being a non-APC service.
(11) Any inpatient-only procedures as identified by CMS.
(12) Any APCs identified by the department as a non-APC service.
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