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Chapter 4.5. Division of Workers' Compensation
Subchapter 1. Administrative Director--Administrative Rules
Article 5.5. Application of the Official Medical Fee Schedule (Treatment)

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§9790.1. Definitions.

(a) “Capital outlier factor” means (California fixed loss cost outlier threshold x geographic adjustment factor x large urban add-on x (capital cost-to-charge ratio to total cost-to-charge ratio)). The geographic adjustment factor is specified in the Federal Register of August 1, 2000 at Vol. 65, page 47126, Table 1a, which document is hereby incorporated by reference and will be made available upon request to the Administrative Director. The “large urban add-on” is indicated by the post-reclassification urban/rural location published in the Payment Impact File at positions 229-235. As stated in Title 42, Code of Federal Regulations, Section 412.316(b), as it is in effect on September 29, 2000, the “large urban add-on” is an additional 3% of what would otherwise be payable to the health facility.

(b) “California fixed loss cost outlier threshold” means the factor calculated by adjusting the Medicare fixed loss cost outlier threshold for California workers' compensation inpatient admissions. The California fixed loss cost outlier threshold is $14,500.

(c) “Composite factor” means the factor calculated by the administrative director for a health facility by adding the prospective operating costs and the prospective capital costs for the health facility, excluding the DRG weight and any applicable outlier payment, as determined by the federal Health Care Financing Administration for the purpose of determining reimbursement under Medicare.

(1) Prospective capital costs are determined by the following formula:

Capital standard federal payment rate x capital wage index x large urban add-on x [1 + capital disproportionate share adjustment factor + capital indirect medical education adjustment factor]

The “capital standard federal payment rate” is $382.03 as published by HCFA in the Federal Register of August 1, 2000, at Vol. 65, page 47127, Table 1d, which document is hereby incorporated by reference and will be made available upon request to the Administrative Director.

The “capital wage index” was published in the Payment Impact File at positions 243-252.

The “large urban add-on” is indicated by the post-reclassification urban/rural location published in the Payment Impact File at positions 229-235. As stated in Title 42, Code of Federal Regulations, Section 412.316(b), as it is in effect on September 29, 2000, the “large urban add-on” is an additional 3% of what would otherwise be payable to the health facility.

The “capital disproportionate share adjustment factor” was published in the Payment Impact File at positions 117-126.

The “capital indirect medical education adjustment factor” (capital IME adjustment) was published in Payment Impact File at positions 202-211.

(2) Prospective operating costs are determined by the following formula:

[(Labor-related national standardized amount x operating wage index) + nonlabor-related national standardized amount] x [1 + operating disproportionate share adjustment factor + operating indirect medical education adjustment]

The “labor-related national standardized amount” is $2,864.19 for large urban areas and $2,818.85 for other areas, as published by the federal Health Care Financing Administration [HCFA] in the Federal Register of August 1, 2000, at Vol. 65, page 47126, Table 1a, which document is hereby incorporated by reference and will be made available upon request to the Administrative Director. The “labor-related national standardized amount” is $2,894.99 for large urban area sole community hospitals and $2,849.16 for other areas sole community hospitals, as published by the federal Health Care Financing Administration [HCFA] in the Federal Register of August 1, 2000, at Vol. 65, page 47127, Table 1e, which document is hereby incorporated by reference and will be made available upon request to the Administrative Director.

The “operating wage index” was published in the Payment Impact File at positions 253-262.

The “nonlabor-related national standardized amount” is $1,164.21 for large urban areas and $1,145.78 for other areas, as published by HCFA in the Federal Register of August 1, 2000, at Vol. 65, page 47126, Table 1a, which document is hereby incorporated by reference and will be made available upon request to the Administrative Director. The “nonlabor-related national standardized amount” is $1,176.73 for large urban area sole community hospitals and $1,158.10 for other areas sole community hospitals as published by the federal Health Care Financing Administration [HCFA] in the Federal Register of August 1, 2000, at Vol. 65, page 47127, Table 1e, which document is hereby incorporated by reference and will be made available upon request to the administrative director.

The “operating disproportionate share adjustment factor” was published in the Payment Impact File at positions 127-136.

The “operating indirect medical education adjustment” was published in the Payment Impact File at positions 212-221.

(3) A table of composite factors for each health facility in California is contained in Appendix A to Section 9792.1.

(d) “Costs” means the total billed charges for an admission, excluding non-medical charges such as television and telephone charges, multiplied by the hospital's total cost-to-charge ratio. For DRGs 496 through 500, for purposes of determining whether an admission is a cost outlier, “costs” exclude implantable hardware and/or instrumentation reimbursed under subsection (7) of Section 9792.1.

(e) “Cost-to-charge ratio” means the sum of the hospital specific operating cost-to-charge ratio and the hospital specific capital cost-to-charge ratio. The operating cost-to-charge ratio for each hospital was published in the Payment Impact File at positions 161-168. The capital cost-to-charge ratio for each hospital was published in the Payment Impact File at positions 99-106. A table of hospital specific capital cost-to-charge, operating cost-to-charge and total cost-to-charge ratios for each health facility in California is contained in Appendix A to Section 9792.1.

(f) “Cost outlier case” means a hospitalization for which the hospital's costs, as defined in subdivision (d) above, exceed the Inpatient Hospital Fee Schedule payment amount by the hospital's outlier factor. If costs exceed the cost outlier threshold, the case is a cost outlier case.

(g) “Cost outlier threshold” means the sum of the Inpatient Hospital Fee Schedule payment amount plus the hospital specific outlier factor.

(h) “DRG weight” means the weighting factor for a diagnosis-related group assigned by the Health Care Financing Administration for the purpose of determining reimbursement under Medicare. A table is contained in Appendix B to Section 9792.1. Appendix B shows DRG weights as assigned by HCFA and, where applicable, “Revised DRG weights” in italics.

(i)(1) “Revised DRG weight” means the product of the DRG weight multiplied by the ratio set forth in subsection (i)(2) for 48 specified DRGs to reflect the different resource usage between the workers' compensation population and the Medicare population.

(2) The ratios that were applied to the DRG weights are contained in the column identified as “DWC Revised Ratio” in Appendix B of Section 9792.1.

(j) “Health facility” means any facility as defined in Section 1250 of the Health and Safety Code.

(k) “Inpatient” means a person who has been admitted to a health facility for the purpose of receiving inpatient services. A person is considered an inpatient when he or she is formally admitted as an inpatient with the expectation that he or she will remain at least overnight and occupy a bed, even if it later develops that such person can be discharged or is transferred to another facility and does not actually remain overnight.

(l) “Inpatient Hospital Fee Schedule payment amount” is that amount determined by multiplying the DRG weight x hospital composite factor x 1.2.

(m) “Labor-related portion” is that portion of operating costs attributable to labor costs, as specified in the Federal Register of August 1, 2000 at Vol. 65, page 47126, Table 1a, which document is hereby incorporated by reference and will be made available upon request to the Administrative Director.

(n) “Medical services” means those goods and services provided pursuant to Article 2 (commencing with Section 4600) of Chapter 2 of Part 2 of Division 4 of the Labor Code.

(o) “Average length of stay” means the geometric mean length of stay for a diagnosis-related group assigned by the Health Care Financing Administration.

(p) “Operating outlier factor” means ((California fixed loss cost outlier threshold x ((labor-related portion x MSA wage index) + nonlabor-related portion)) x (operating cost-to-charge ratio to total cost-to-charge ratio)). The MSA wage index is specified at Federal Register of August 1, 2000 at Vol. 65, page 47149, Table 4a, which document is hereby incorporated by reference and will be made available upon request to the Administrative Director. The nonlabor-related portion is that portion of operating costs as defined in the Federal Register of August 1, 2000 at Vol. 65, page 47126, Table 1a, which document is hereby incorporated by reference and will be made available upon request to the Administrative Director.

(q) “Outlier factor” means the sum of the capital outlier factor and the operating outlier factor. A table of hospital specific outlier factors for each health facility in California is contained in Appendix A to Section 9792.1.

(r) “Payment Impact File” means the FY 2001 Prospective Payment System Payment Impact File (August 2000 Update) (IMPCTF01.EXE) published by the federal Health Care Financing Administration, which document is hereby incorporated by reference. The description of the file is found at http://www.hcfa.gov/stats/impctf01.doc. The file is accessible through http://www.hcfa.gov/stats/pufiles.htm#ppfexmtp. A paper copy of the Payment Impact File, with explanatory material, is available from the Administrative Director upon request. An electronic copy is available from the Administrative Director at http://www.dir.ca.gov.

NOTE

Authority cited: Sections 133, 4603.5, 5307.1 and 5307.3, Labor Code. Reference: Sections 4600, 4603.2 and 5307.1, Labor Code.

HISTORY

1. New section filed 10-7-93; operative 1-1-94 (Register 93, No. 41). This filing is exempt from much of the APA (including OAL review) pursuant to Government Code section 11351.

2. New subsections (a)-(c)(2), subsection relettering, and new subsection (g) filed 12-31-96; operative 12-31-96 pursuant to Government Code section 11343.4(d). Submitted to OAL for printing only pursuant to Government Code section 11351 (Register 97, No. 1).

3. New subsections (a)(1)-(3), amendment of subsections (b) and (c)(2) and new subsection (h) filed 2-23-99; operative 4-1-99 (Register 99, No. 9).

4. Amendment filed 5-30-2001; operative 6-29-2001. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2001, No. 23).


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