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

§9792.1 Payment of Inpatient Services of Health Facilities.

Appendix A. Hospital Composite Factors and Cost to Charge Rations

Appendix B. DRG Weights and Revised Drg Weights 2001 Rates (California revisions shown in italics incorporate the DWC Revised Ratios)

(a) Maximum reimbursement for inpatient medical services shall be determined by multiplying 1.20 by the product of the health facility's composite factor and the applicable DRG weight or revised DRG weight if a revised weight has been adopted by the administrative director. The fee determined under this subdivision shall be a global fee, constituting the maximum reimbursement to a health facility for inpatient medical services not exempted under this section. However, preadmission services rendered by a health facility more than 24 hours before admission are separately reimbursable.

(b) Health facilities billing for fees under this section shall present with their bill the name and address of the facility, the facility's Medicare ID number, and the applicable DRG codes.

(c) The following are exempt from the maximum reimbursement formula set forth in subdivision (a):

(1) Inpatient services for the following diagnoses: Psychiatry (DRGs 424-432), Substance Abuse (DRGs 433-437), Organ Transplants (DRGs 103, 302, 480, 481, 495), Rehabilitation (DRG 462 and inpatient rehabilitation services provided in any rehabilitation center that is authorized by the Department of Health Services in accordance with Title 22, §§70301, 70595 - 70603 of the California Code of Regulations to provide rehabilitation services), Tracheostomies (DRGs 482, 483), and Burns (DRGs 475 and 504-511).

(2) Inpatient services provided by a Level I or Level II trauma center, as defined in Title 22, California Code of Regulations sections 100260, 100261, to a patient with an immediately life threatening or urgent injury.

(3) Inpatient services provided by a health facility for which there is no composite factor.

(4) Inpatient services provided by a health facility located outside the State of California.

(5) The cost of durable medical equipment provided for use at home.

(6) Inpatient services provided by a health facility transferring an inpatient to another hospital. Maximum reimbursement for inpatient medical services of a health facility transferring an inpatient to another hospital shall be a per diem rate for each day of the patient's stay in that hospital, not to exceed the amount that would have been paid under Title 8, California Code of Regulations §9792.1(a). However, the first day of the stay in the transferring hospital shall be reimbursed at twice the per diem amount. The per diem rate is determined by dividing the maximum reimbursement as determined under Title 8, California Code of Regulations §9792.1(a) by the average length of stay for that specific DRG. However, if an admission to a health facility transferring a patient is exempt from the maximum reimbursement formula set forth in subdivision (a) because it satisfies one or more of the requirements of Title 8, California Code of Regulations §9792.1(c)(1) through (c)(4), subdivision (c)(6) shall not apply. Inpatient services provided by the hospital receiving the patient shall be reimbursed under the provisions of Title 8, California Code of Regulations §9792.1(a).

(7) Implantable hardware and/or instrumentation for DRGs 496 through 500, where the admission occurs on or after April 13, 2001. Implantable hardware and/or instrumentation for DRGs 496 through 500, where the admission occurs on or after April 13, 2001, shall be separately reimbursed at the provider's documented paid cost, plus an additional 10% of the provider's documented paid cost not to exceed a maximum of $250.00, plus any sales tax and/or shipping and handling charges actually paid.

(8) Cost Outlier cases. Inpatient services for cost outlier cases where the admission occurs on or after June 29, 2001, shall be reimbursed as follows:

Step 1: Determine the Inpatient Hospital Fee Schedule payment amount (DRG relative weight x 1.2 x hospital specific composite factor).

Step 2: Determine costs. Costs = (total billed charges x total cost-to-charge ratio).

Step 3: Determine outlier threshold. Outlier threshold = (Inpatient Hospital Fee Schedule payment amount + hospital specific outlier factor).

If costs exceed the outlier threshold, the case is a cost outlier case and the admission is reimbursed at the Inpatient Hospital Fee Schedule payment amount + (0.8 x (costs - cost outlier threshold)).

NOTE: For purposes of determining whether a case qualifies as a cost outlier case under this subsection, implantable hardware and/or instrumentation reimbursed under subsection (8) below is excluded from the calculation of costs. Once an admission for DRGs 496 through 500 qualifies as a cost outlier case, any implantable hardware and/or instrumentation shall be separately reimbursed under subsection (8) below.

(d) Any health care facility that believes its composite factor or hospital specific outlier factor was erroneously determined because of an error in tabulating data may request the Administrative Director for a re-determination of its composite factor or hospital specific outlier factor. Such requests shall be in writing, shall state the alleged error, and shall be supported by written documentation. Within 30 days after receiving a complete written request, the Administrative Director shall make a redetermination of the composite factor or hospital specific outlier factor or reaffirm the published factor.

(e) This section, except as provided in subsections (c)(7) and (c)(8), shall apply to covered inpatient hospital stays for which the day of admittance is on or after April 1, 1999.

(f) Subsections (c)(7) and (c)(8) shall remain in effect only through December 31, 2001, and shall not apply to admissions occurring on or after January 1, 2002.

AN IMPORTANT NOTE CONCERNING SUBSECTIONS (c)(7) AND (c)(8):

Labor Code Section 5318, (as added by Statutes of 2001, chapter 252, effective January 1, 2002,) provides that: “Notwithstanding any other provision of law, the termination date of December 31, 2001, provided in Section 9792.1(f) of Title 8 of the California Code of Regulations shall be extended until the effective date of new regulations adopted by the administrative director, as required by Section 5307.1, providing for the biennial review of the fee schedule for health care facilities.” Sections 9792.1(c)(7) and (c)(8) will therefore remain in effect for admissions on or after January 1, 2002, and will not sunset.

NOTE

Authority cited: Sections 133, 4603.5, 5307.1, 5307.3 and 5318, Labor Code. Reference: Sections 4600, 4603.2, 5307.1 and 5318, Labor Code.

HISTORY

1. New section 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).

2. Amendment of section and new appendices A-C filed 2-23-99; operative 4-1-99 (Register 99, No. 9).

3. New subsection (c)(8), amendment of subsection (e) and new subsection (f) filed 3-14-2001; operative 4-13-2001. Submitted to OAL for printing only pursuant to Government Code section 11343(a)(1) (Register 2001, No. 22).

4. Amendment of section and repealer and new Appendices A and B 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).

5. Change without regulatory effect adding final two paragraphs and amending Note filed 12-31-2001 pursuant to section 100, title 1, California Code of Regulations (Register 2002, No. 1).

Appendix A. Hospital Composite Factors and Cost to Charge Rations

Appendix B. DRG Weights and Revised Drg Weights 2001 Rates (California revisions shown in italics incorporate the DWC Revised Ratios)