Health Care Authority to Adjust November 1 Rate Cut for PPS Hospitals

December 2, 2015

On November 1, the Washington State Health Care Authority (HCA) reduced inpatient and outpatient hospital payments to prospective payment hospitals by 8 percent in order to apply budget neutrality adjustments due to the recent rebasing of the payment systems. In response to this significant change in Medicaid rates, WSHA requested HCA and its consultant, Navigant, review the calculations and provide WSHA with data sets to enable an independent analysis. WSHA also suggested hospitals file a rate appeal with HCA until a determination on the accuracy of the reduction could be made.

Early last week, HCA informed us that there was an error in the calculation of the reduction percentage for inpatient services. Rather than apply an 8 percent reduction for inpatient services for the period November 1, 2015 to January 31, 2016, it appears the correct reduction should be only about 3 percent.  We have been exchanging messages with HCA staff about this correction. It is unclear if HCA is going to reprocess inpatient claims retroactive to November 1 to correct this error or make a correction on a prospective basis. In any case, WSHA intends to continue its plan to do additional analysis on the data sets to determine if the corrected adjustments appear to be accurate.

These adjustments to the rates stem from the rebasing effective July 1, 2014. At the time, HCA was concerned about increases in payment levels due to the sensitivity of the new systems to coding refinements. Under WAC 182-550-3850, HCA compares payments made under the methodologies adopted July 2014 with what the same services would have been under the previous payment methodologies and rates. If there is a difference in the aggregate payment amounts of over 1 percent, the rates are adjusted prospectively to ensure budget neutrality. If you would like more background information, WSHA hosted a­ webcast about the November 1 reductions. We will continue to keep you posted as we learn more from HCA about their correction plans and as we learn more from our internal analysis.


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