HCA Announces Intent to Change Weights for Outpatient Payment Rates

November 10, 2016

On October 27th, the WSHA Medicaid Payment Task Force met with staff from the Health Care Authority to discuss the Authority’s proposal to update the method of payment for Medicaid hospital outpatient services for prospective payment system hospitals.  The current method, using Enhanced Ambulatory Payment Groups (EAPGs), is based on version 3.7, but HCA intends to implement version 3.11 in the next several months.  The newest version has changes reflecting relative differences in the resource requirements across outpatient services, particularly for the highest severity and drugs.

According to HCA staff, implementation of the newest version must be budget neutral, which means the state cannot spend more than it is currently spending in terms of payment rates.  To assure budget neutrality, HCA hired Navigant Consulting to model the impact of the updated version.  Navigant has determined an update to the new weights will result in an increase in payments.  The conclusion is based on comparing payments under the version 3.7 and 3.11 version using Medicaid claims from state fiscal year 2015 and 2016. According to the Navigant analysis, the 3.11 version results in payments which are higher by about 10 percent.  Therefore, it is necessary to multiply the new weights by a factor of 0.9056 in order to achieve budget neutrality on an aggregate basis.

This factor will be included in the new payment system when the version is updated.  While the Navigant analysis was done on a statewide basis, the impact on hospitals will vary facility by facility based on the types of services offered.  Navigant has provided WSHA with a facility specific analysis, and WSHA will be distributing to hospital CFOs shortly.

Published weights will continue to include some of the prior adjustments agreed upon during implementation of the new EAPG system, such as an adjustment for high drugs and a separate claim payment adjustment for pediatric services.

HCA originally intended to implement the new EAPG weights in January 2017. Members of the WSHA Task Force asked for a delay in order to make sure that both hospitals and the managed care plans were able to implement the new grouper software and process claims.  claudias@wsha.org


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