[Federal Register Volume 62, Number 220 (Friday, November 14, 1997)]
[Proposed Rules]
[Pages 61058-61065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29975]
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 199
RIN-0720-AA37
Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS); TRICARE Program; Reimbursement
AGENCY: Office of the Secretary, DoD.
ACTION: Proposed rule.
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SUMMARY: This rule proposes to revise certain requirements and
procedures for reimbursement under the TRICARE program, the purpose of
which is to implement a comprehensive managed health care delivery
system composed of military medical treatment facilities and CHAMPUS.
Issues addressed in this proposed rule include: implementation of
changes made to the Medicare Prospective Payment System (PPS) upon
which the CHAMPUS DRG-based payment system is modeled and required by
law to follow wherever practicable, along with changes to make our DRG-
based payment system operate better; extension of the balance billing
limitations currently in place for individual and professional
providers to non-institutional, non-professional providers; adjusting
the CHAMPUS maximum allowable charge (CMAC) rate in the small number of
cases where the CMAC rate is less than the Medicare rate; and
implementing the government-wide debarment rule where any provider
excluded or suspended form CHAMPUS shall be excluded from all other
programs and activities involving Federal financial assistance, such as
Medicare or Medicaid, and adding violations of our balance billing or
claims filing requirements to the list of provider actions considered
violations of the TRICARE/CHAMPUS program.
DATES: Comments must be received on or before January 13, 1998.
ADDRESSES: Tricare Support Office (TSO), Program Development Branch,
Aurora, CO 80045-6900.
FOR FURTHER INFORMATION CONTACT: Kathleen Larkin, Office of the
Assistant Secretary of Defense (Health Affairs), telephone (703) 695-
3350.
Questions regarding payment of specific claims under the CHAMPUS
allowable charge method should be addressed to the appropriate TRICARE/
CHAMPUS contractor.
SUPPLEMENTARY INFORMATION:
I. Proposed Changes Regarding The Champus DRG-Based Payment System
The final rule published on September 1, 1987, (52 FR 32992) set
forth the basic procedures used under the CHAMPUS DRG-based payment
system. This was subsequently amended by final rules published on
August 31, 1988 (53 FR 33461), October 21, 1988 (53 FR 41331), December
16, 1988 (53 FR 50515), May 30, 1990 (55 FR 21863), and October 22,
1990 (55 FR 42560). This rule proposes to amend 32 CFR 199 to conform
to changes made to the Medicare Prospective Payment System (PPS) upon
which the CHAMPUS DRG-based payment system is modeled and required by
law to follow whenever practicable. In addition, the rule proposes to:
eliminate the requirement for the physician attestation form and change
the requirement for physician acknowledgment statements; clarify
authorized payment reductions by managed care support contractors for
noncompliance with required utilization review procedures and; limit
the ambulatory surgery group payment rate to the amount that would be
allowed if the services were provided on an inpatient basis.
A. Heart and Liver Transplants
When we first implemented the CHAMPUS DRG-based payment system in
1987, we exempted all services related to heart and liver
transplantation. Although both of these types of transplants are
subject to the Medicare PPS, we initially exempted them because at that
time we had limited experience and claims data for them. We believed
these limitations could significantly skew the relative weights we
would calculate for such transplants.
Since 1987 we have continued to collect data on these services.
From the beginning, heart transplants were grouped to DRG 103 and
exempted. For Fiscal Year 1991 the Health Care Financing Administration
(HCFA) created DRG 480 for liver transplants, but we continued to
exempt them.
In our notice of updated rates and weights for Fiscal Year 1991,
which was published on November 5, 1990 (55 FR 46545), we noted that we
intended to consider including both heart and liver transplants in our
DRG system in the future, and we invited any comments in that regard.
We received none.
Since we have enough claims data to calculate accurate weights for
these transplants, we are proposing to end the DRG exemption for all
CHAMPUS covered solid organ transplants for which there is an assigned
DRG and enough data to calculate the DRG weight. Just as Medicare does,
we will continue to exempt acquisition costs for all CHAMPUS covered
solid organ transplants.
B. Payment Requests for Capital and Direct Medical Education Costs
Initially we required that hospitals submit their request for
payment of capital and direct medical education costs within three
months of the end of the hospital's Medicare cost-reporting period.
However, some hospitals encountered difficulties in meeting this
deadline, because HCFA implemented changes which resulted in extensions
to the filing deadline. Therefore, we often did not enforce our
deadline, and as of October 1988 we eliminated the requirement
entirely.
We eliminated the requirement because we believed hospitals would
submit their requests at the earliest possible time anyway. Also, we
believed there would be no adverse impact on TRICARE/CHAMPUS. Neither
of these has proven to be correct. We continually receive these
requests well after the end of the Medicare cost-reporting period--in
some cases several years later. As a result, it is necessary for our
contractors to retain claims data in their systems indefinitely, so
that they can verify the reported amounts when the requests are
submitted. This is proving to be a very burdensome and costly
requirement for our contractors.
On June 27, 1995, HCFA published a final rule (60 FR 33137)
extending the time frame providers have to file cost reports from no
later than 3 months after the close of the period covered by the report
to no later than 5 months after the close of that period. The rule also
[[Page 61059]]
changed the regulations for granting extensions to providers. Under the
new regulation, an extension may be granted by the intermediary only
when a provider's operations were significantly adversely affected due
to extraordinary circumstances over which the provider had no control,
such as flood or fire. We are proposing to adopt these same
requirements for submitting requests for payment of capital and direct
medical education costs with TRICARE/CHAMPUS.
Currently, TRICARE/CHAMPUS has no deadline, other than the six year
statute of limitations, for submitting payment requests for Medicare
cost-reporting periods. In order to allow up to close out our data for
these periods, we are proposing that any capital and direct medical
education payment requests that fall within the six year statute of
limitations and the effective date of this change must be submitted to
the appropriate TRICARE/CHAMPUS contractor no later than 5 months after
the effective date of this change.
In addition, since capital and direct medical education costs are
included in the national children's hospital differential, we are
proposing to eliminate the clause allowing children's hospitals to
request reimbursement of capital and direct medical education costs as
an alternative to being paid the national differential.
C. Indirect Medical Education Adjustment Factor
An indirect medical education (IDME) adjustment factor is
calculated for all hospitals which have teaching programs approved
under the Medicare regulation. This factor is calculated using a
formula developed by HCFA (see our previous final rules for a
discussion of the application of this formula to CHAMPUS), and is based
on the number of interns and residents and the number of beds in the
hospital. Each DRG-based payment is increased by this factor for that
hopsital.
Initially, the number of residents and interns for each hospital
was derived from the most recently available audited HCFA cost report,
and the number of beds was derived from the American Hospital
Association Annual Survey of Hospitals. The factors have been updated
annually based on data submitted by hospitals on the annual request for
payment of capital and direct medical education costs.
While this updating procedure ensures that hospitals' factors are
as current as possible, it is dependent upon the hospitals' submission
of requests for payment of capital and direct medical education costs.
Since the crucial components (number of interns, residents and beds)
can change from year to year, and since many hospitals do not submit
requests for payment of capital and direct medical education costs, we
believe it is necessary to establish an alternative updating method.
We are proposing to use the Medicare adjustment factor for any
hospital for which a CHAMPUS-specific factor has not been calculated
based on the hospital's request for payment of capital and direct
education costs. We will update the factors using the Medicare amounts
as of October 1 of each year when we routinely update the DRG rates and
weights. Any hospital which has not submitted a capital and direct
medical education payment request to CHAMPUS since the previous October
1, will be assigned the most recent Medicare adjustment factor.
HCFA uses a slightly different formula than that used by CHAMPUS,
and we are aware that this will result in a different adjustment factor
than would otherwise be used. Nevertheless, we believe this is
justified. When the Medicare factor is used, the difference is likely
to be small. In addition, CHAMPUS accounts for a very small portion of
most hospital's claims, and those hospitals which do not request
payment of capital and direct medical education costs probably have
few, if any, CHAMPUS admissions. Therefore, the financial impact of
using the Medicare factor will be negligible. Yet it will ensure that
the factors are kept current, so that factors which are no longer
representative of a hospital's teaching program are not used
indefinitely. And, of course, hospitals can ensure that a CHAMPUS-
specific factor is used simply by submitting a request for payment of
capital and direct medical education costs.
For hospitals which have indirect medical education factors for
CHAMPUS but are not subject to the Medicare PPS, we will eliminate the
factor if a CHAMPUS-specific factor cannot be calculated based on a
current request from the hospital for payment of capital and direct
medical education costs. The factor will be eliminated as of October 1
if no capital and direct medical education payment request has been
received since the previous October 1.
In any case where a hospital submits a capital and direct medical
education payment request after the Medicare factor has been
implemented (or the factor has been eliminated for hospitals not
subject to the Medicare PPS, including children's hospitals), the
CHAMPUS-specific factor will become effective in accordance with
existing requirements. In no case will the CHAMPUS-specific factor be
effective retroactively.
For children's hospitals which have indirect medical education
factors for CHAMPUS, the factor will be eliminated as of October 1 of
each year if during the past year, the hospital did not provide the
contractor with updated information on the number of its interns,
residents and beds. Since amounts for capital and direct medical
education are included in the national children's hospital
differential, children's hospitals are not required to submit capital
and direct medical education payment requests. Because of this, the
contractor is not able to update the CHAMPUS-specific factor unless
requested by the children's hospital.
For Fiscal Year 1998, HCFA revised its indirect medical education
adjustment formula to gradually reduce the current level of IDME
adjustment over the next several years. Since the IDME formula used by
CHAMPUS does not include disproportionate share hospitals (DSHs), the
variables in the formula are different from Medicare's however, the
percentage reductions that will be applied to Medicare's formula are
being adopted by CHAMPUS.
D. Long Stay Outliers
For Fiscal Year 1998, HCFA eliminated payment for day outliers,
referred to as long stay outliers under CHAMPUS. CHAMPUS also
eliminated long stay outliers for all cases except children's hospitals
and neonates for Fiscal Year 1998. We are proposing to eliminate the
long stay outliers for children's hospitals and neonates for Fiscal
Year 1999.
For Fiscal Year 1993, HCFA changed the payment procedures for day
outlier per diems under the PPS. Prior to this change, the day outlier
per diem was calculated using the DRGs geometric mean length of stay
and a marginal payment factor of 60 percent. For discharges occurring
on or after October 1, 1992, HCFA revised the day outlier payment
policy to reflect that the per diem payment would be calculated using
the arithmetic mean and a marginal payment factor of 55 percent. This
meant that the per diem day outlier payment under the PPS for operating
costs would be determined by dividing the standard DRG payment by the
arithmetic mean length of stay for that DRG, and multiplying the result
by 55 percent. The change in the payment policy for day outliers
provided better protection against costly cases for hospitals, while
maintaining a more appropriate level of payment for cases
[[Page 61060]]
with extraordinarily long lengths of stay that were not also
extraordinarily costly.
CHAMPUS did not adopt the PPS per diem day outlier changes at that
time because it required a regulatory change and there was a moratorium
on publication of rules. Over the years, HCFA has reduced the marginal
payment factor for day outliers from 55 percent to 47 percent to 44
percent, to 33 percent, to the point of eliminating payment of day
outliers, effective with discharges occurring after September 30, 1997.
CHAMPUS adopted the day outlier marginal payment factor of 47 percent
for Fiscal Year 1995, 44 percent for Fiscal Year 1996, and 33 percent
for Fiscal Year 1997, but has not adopted the arithmetic mean to
calculate the per diem payment. As a result, CHAMPUS has been paying
more than Medicare on claims qualifying for long-stay day outliers.
Although we eliminated the long stay outliers for all cases except
children's hospitals and neonates for Fiscal Year 1998, and are
proposing to eliminate the long stay outliers for them in Fiscal Year
1999, we are still proposing to adopt the arithmetic mean to calculate
the per diem, in order to be consistent with the Medicare PPS in
calculating payments for transfer cases.
E. Cost Outliers
Beginning in Fiscal Year 1998, HCFA adopted a requirement that in
determining the additional payment for IME (referred to as IDME under
CHAMPUS), the IME adjustment factor will only be applied to the base
DRG payment. In addition, the fixed loss cost outlier threshold is
based on the sum of the DRG payment plus IME plus a fixed dollar
amount. CHAMPUS adopted this requirement in Fiscal Year 1998 for all
cases except children's hospitals and neonates. We are proposing to
adopt this same requirement for children's hospitals and neonates
Fiscal Year in 1999.
F. Payment for Transfer Cases
Beginning in Fiscal Year 1996, HCFA adopted a graduated per diem
payment methodology for transfer cases. As of October 1, 1996, CHAMPUS
adopted this payment methodology; however, we elected not to offset
these additional payments with reductions in outlier payments. Using
this payment methodology, CHAMPUS will pay transferring hospitals twice
the per diem amount for the first day of any transfer stay plus the per
diem amount for each of the remaining days before transfer, up to the
full DRG amount. For neonatal cases, other than normal newborns, the
transferring hospital will be paid twice the per diem amount for the
first day of any transfer stay plus 125 percent of the per diem rate
for all remaining days before transfer, up to the full DRG amount. This
proposed change will allow hospitals to be compensated more
appropriately for the treatment they furnish to patients before
transfer. Transferring hospitals will continue to be paid in full for
discharges classified into DRG 456 (burns, transferred to another acute
care facility or DRG 601 (neonate, transferred less or equal to 4 days
old).
G. Elimination of Separate Adjusted Standardized Amounts for Rural
Areas
Beginning in Fiscal Year 1995, HCFA's average standardized amounts
for hospitals located in ``rural'' areas were required to be equal to
the average standardized amount for hospitals located in ``other
urban'' areas. Based on this, separate national average standardized
amounts for ``other urban'' and ``rural'' areas no longer existed. As
of Fiscal Year 1995, CHAMPUS no longer differentiated between ``other
urban'' and ``rural'' areas. The adjusted standardized amounts for
``other urban'' and ``rural'' areas are now listed as ``other'' areas.
H. Payment for Blood Clotting Factor
For Fiscal Year 1994, HCFA reinstated payments for the cost of
administering blood clotting factor to beneficiaries who have
hemophilia through discharges occurring before October 1, 1994. CHAMPUS
also reinstated payments for the cost of administering blood clotting
factor through discharges occurring before October 1, 1994. For Fiscal
Year 1998, HCFA again reinstated payments for the cost of administering
blood clotting factor. CHAMPUS also reinstated payments for discharges
occurring on or after October 1, 1997.
I. Effect of Change of Ownership on Exclusion of Long-Term Care
Hospitals
Beginning in Fiscal Year 1996, HCFA adopted new requirements for
certain long-term care hospitals excluded from the PPS. The
requirements specify that if a hospital undergoes a change of ownership
at the start of a cost reporting period or at any time within the
preceding 6 months, the hospital may be excluded from the prospective
payment system as a long-term care hospital for a cost reporting period
if, for the 6 months immediately preceding the start of the period
(including time before the change of ownership), the hospital has the
required average length of stay, continuously operated as a hospital,
and continuously participated as a hospital in Medicare. CHAMPUS also
adopted these new requirements beginning in Fiscal Year 1996.
J. Empty and Low-Volume DRGs
Currently, 32 CFR 199.14 (a)(1)(iii)(B) specifies that the Medicare
weight shall be used for any DRG with less than 10 occurrences in the
CHAMPUS database. Since the CHAMPUS weights are used by military
treatment facilities and by an increasingly large number of state
Medicaid programs, the direct substitution of the Medicare weight for
the CHAMPUS weight, causes inconsistencies. These inconsistencies may
pose more of a problem for other payors than it does for CHAMPUS,
particularly if they have more cases in the DRG categories where the
substitutions have occurred. Because of these inconsistencies, we are
proposing that the Director, TSO, or designee, has the authority to
consider alternative methods for estimating CHAMPUS weights in these
low-volume DGR categories.
K. Hospitals Within Hospitals
For Fiscal Year 1998, HCFA established additional criteria for
excluding from the PPS, long-term care hospitals that occupy space in
the same building or on the same campus as another hospital, sometimes
called ``hospitals within hospitals.'' The additional criteria extends
the hospital within hospital criteria to excluded hospitals other than
long-term care hospitals. CHAMPUS also adopted these requirements
beginning in Fiscal Year 1998.
II. Proposed Changes Regarding Elimination of Physician Attestation
Requirement
On September 1, 1995, Medicare eliminated the requirement for the
physician attestation form that requires doctors to certify the
accuracy of all diagnoses and procedures before submitting claims for
payment. In addition, instead of requiring a physician to sign an
acknowledgment statement every year, Medicare changed its regulations
to require a physician need only sign the acknowledgment statement upon
receiving admitting privileges at a hospital. CHAMPUS adopted these
requirements effective the same date.
III. Proposed Changes Regarding Clarification of Payment Reduction for
Noncompliance with Required Utilization Review Procedures
To cover those situations where network providers have agreements
with the managed care contractors for denial of payments for the
provider's
[[Page 61061]]
failure to obtain the required preauthorization, we are proposing to
add the words ``at least'' before the words ``ten percent''. By adding
the words ``at least'', the managed care support contractor is
authorized to apply reductions in payments in accordance with the
network provider's contract.
IV. Clarification Regarding List of Ambulatory Surgery Procedures
On October 1, 1993, we published a final rule (58 FR 51227) which
included prospective payment procedures for ambulatory surgery. These
procedures were modeled on the Medicare methodology. In that rule, we
stated that ``A list of ambulatory surgery procedures will appear as
Attachment 2 (to be published later) to this preamble.'' We
subsequently published the list of procedures on October 15, 1993, (58
FR 53411).
The list of procedures published on October 15, 1993, was not made
part of the Code of Federal Regulations (CFR) at that time, and it was
not, and continues not to be, our intention that it be part of the CFR.
However, the final rule did not make this clear. The list of procedures
to be ``published periodically by the Director, OCHAMPUS,'' as cited in
section 199.14 paragraph (d)(1), is contained in the TRICARE/CHAMPUS
Policy Manual.
V. Proposed Changes Regarding Limits On Ambulatory Surgery Group
Payment Rates
Effective November 1, 1994, CHAMPUS identified a number of
procedures which can be performed safely and effectively as ambulatory
surgery and established prospective payment procedures for reimbursing
these services. Ambulatory surgery often is less disruptive to the
patient's life than an inpatient stay. It also provides a less
expensive alternative to an inpatient stay, since the patient does not
require a hospital room and all the costs associated with it. As a
result, TSO wants to encourage the use of ambulatory surgery whenever
it is reasonable, but we do not believe it ever should be more
expensive than an inpatient stay. Therefore, we are adding a provision
that gives discretion to the Director, TSO, to limit the ambulatory
surgery group payment rate to the amount that would be allowed if the
services were provided on an inpatient basis. To calculate the
allowable inpatient amount we will multiply the applicable DRG relative
weight times the national large urban adjusted standardized amount
(ASA). We will use the large urban ASA rather than the ``other area''
ASA because it is higher and will not economically disadvantage any
provider, and we expect that most ambulatory surgery centers are
located in large urban areas.
VI. Proposed Changes Regarding Balance Billing
Section 731 of the National Defense Authorization Act for Fiscal
Year 1996, revised 10 U.S.C. 1079(h) which provides the statutory basis
for limits on balance billing of CHAMPUS beneficiaries established in
section 199.14(h)(1)(i)(D). Section 731 extends the balance billing
limit authority to non-institutional, non-professional providers, such
as clinical laboratories and ambulance companies.
This paragraph explains that non-institutional, non-professional
providers will be limited in the amount they may bill a TRICARE/
CHAMPUS-eligible beneficiary an actual charge in excess of the
allowable amount. This provides financial protection for our
beneficiaries by preventing excessively high billing by providers by
establishing the balance billing limit to these new categories of
providers as the same percentage as that used for TRICARE/CHAMPUS
professional providers: 115 percent of the allowable charge. In order
to provide flexibility to continue CHAMPUS benefits in special
circumstances in which a beneficiary may feel strongly about using a
particular provider, notwithstanding high fees, the proposed rule
states that the limitation may be waived on a case-by-case basis.
VII. Proposed Changes Regarding CMAC Rates
CHAMPUS policy, based on Congressional enactment, is to set CHAMPUS
Maximum Allowable Charge (CMAC) rates comparable to Medicare rates. For
almost all procedure codes, the CMAC rate has been reduced to equal the
Medicare rate or is in the process of being phased down to that level.
For a very small number of procedures, for unusual reasons or
idiosyncrasies of the data used for calculations, however, the CMAC
rate is less than the Medicare rate. We propose to establish a special
rule for these cases to permit an increase in the CMAC up to the
Medicare rate. This is based on the authority of 10 U.S.C. 1079(h)(4),
which allows for exceptions to the normal statutory payment limitation
if DoD determines it necessary to assure that beneficiaries have
adequate access to health care services. Because the Medicare rates are
products of a system that reflects careful governmental judgments of
factors suggesting fair payment rates, we propose to adopt these rates
as indicators of payment levels associated with adequate access. In
addition, under the applicable Appropriations Act general provision,
DoD may increase CMAC rates that are lower than Medicare rates by
reference to appropriate economic index data similar to that used by
Medicare. We have heretofore utilized only the Medicare Economic Index
in this connection, but we propose to adopt an additional Medicare
indicator of economic factors, namely the data used for the Medicare
fees determination, to adjust the rates in these special cases. This is
set forth in the proposed new section 199.14(h)(1)(iii)(D).
VIII. Proposed Changes Regarding Government-Wide Effect Of Exclusion Or
Suspension From Champus
Section 2455 of the Federal Acquisition Streamlining Act of 1994,
Pub. L. 103-355, October 13, 1994, and Executive Order 12549,
``Debarment and Suspension from Federal Financial and Nonfinancial
Assistance Programs,'' February 18, 1986, require that any entity
debarred, suspended, or otherwise excluded under any program or
activity involving Federal financial assistance shall also be debarred,
suspended, or otherwise excluded from all other programs and activities
involving Federal financial assistance. We are restating this
requirement in the context specific to CHAMPUS through a proposed
addition to section 199.9. The proposed addition provides that any
health care provider excluded or suspended from CHAMPUS shall, as a
general rule, also be debarred, suspended, or otherwise excluded from
all other programs and activities involving the Federal financial
assistance. Among these other such programs are Medicare and Medicaid.
Other regulations related to this authority are 32 CFR Part 25 (DoD
rules) and 45 CFR Part 76 (HHS rules).
In conjunction with implementation of this government-wide
debarment rule, we are strengthening the linkage between CHAMPUS and
these other programs on the important issues of submittal of claims and
balance billing by providers. Current regulations generally require
providers to file claims on behalf of beneficiaries and to limit
balance billing to 15% greater than the CHAMPUS Maximum Allowable
Charge (CMAC). These regulations also provide that violations are
grounds for exclusion or suspension from CHAMPUS. We are proposing to
reinforce these compliance provisions by adding violations of these
requirements to the list of provider actions that are considered abuse
of the program for purposes of termination,
[[Page 61062]]
suspension and other administrative remedies.
A principal effect of these proposed revisions is that any provider
who fails to file CHAMPUS claims or exceeds the balance billing limits
risks not only exclusion or suspension from CHAMPUS, but also exclusion
or suspension from Medicare, Medicaid, and other Federal programs.
IX. Regulatory Procedures
Executive Order 12866 requires certain regulatory assessments for
any ``significant regulatory action,'' defined as one which would
result in an annual effect on the economy of $100 million or more, or
have other substantial impacts.
The Regulatory Flexibility Act (RFA) requires that each Federal
agency prepare, and make available for public comment, a regulatory
flexibility analysis when the agency issues a regulation which would
have a significant impact on a substantial number of small entities.
This is not a significant regulatory action under the provisions of
Executive Order 12866, and it would not have a significant impact on a
substantial number of small entities.
Pursuant to the Paperwork Reduction Act of 1995, the reporting
provisions of this proposed rule have been submitted to OMB for review
under 3507(d) of the Act.
In compliance with Section 3506(c)(2)(A) of the Paperwork Reduction
Act of 1995, the Office of the Assistant Secretary of Defense (Health
Affairs) announces the proposed public information collection and seeks
public comment on the provisions thereof. Comments are invited on: (1)
whether the proposed collection of information is necessary for the
proper performance of the functions of the agency, including whether
the information shall have any practical utility; (2) the accuracy of
the agency's estimated burden of the proposed information collection;
(3) ways to enhance the quality, utility, and clarity of the
information to be collected; and (4) ways to minimize the burden of the
information collection on respondents, including through the use of
automated collection techniques or other forms of information
technology.
The collection of information allows TRICARE to collect the
information necessary to properly reimburse institutional providers
based on diagnosis-related groups (DRGs) for their share of these
costs. The collection of this information is authorized by 32 CFR
199.14(a)(1)(G)(1) and (2). The CHAMPUS DRG-based payment system is
modeled on the Medicare Prospective Payment System (PPS) and was
implemented on October 1, 1987.
Affected Public: Individuals; Business or Other For Profit.
Annual Burden Hours: 5,532.
Number of Respondents: 5,400.
Responses Per Respondent: 1.
Average Burden Per Response: 5 minutes for physicians, 1 hour for
institutions.
Frequency: On occasion.
Respondents are institutional providers and admitting physicians.
Institutional providers are requesting reimbursement for allowed
capital and direct medical education costs from the TRICARE/CHAMPUS
contractor. The information can be submitted in any form, most likely
in the form of a letter. The contractor will calculate the TRICARE/
CHAMPUS share of capital and direct medical education costs and make a
lump-sum payment to the hospital.
Physicians sign a physician acknowledgement, maintained by the
institution, at the time the physician is granted admitting privileges.
This acknowledgement indicates the physician understands the importance
of a correct medical record, and misrepresentation may be subject to
penalties.
Comments on these requirements should be submitted to the Office of
Information and Regulatory Affairs, OMB, 725 17th Street, N.W.,
Washington, DC 20503, marked ``Attention Desk Officer for Department of
Defense, Health Affairs.'' Copies should be sent to the Office of the
Assistant Secretary of Defense (Health Affairs), 1200 Pentagon,
Washington, DC 20301-1200, Attention: Kathleen Larkin. When the
Department of Defense promulgates the Final Rule, the Department will
respond to comments by OMB or the public regarding the information
collection provisions of the rule.
The is a proposed rule. Public comments are invited. All comments
will be considered. A discussion of the major issues raised by public
comments will be included with issuance of the final rule, anticipated
approximately 60 days after the end of the comment period.
List of Subjects in 32 CFR Part 199
Administrative practice and procedure, Claims, Fraud, Health care,
Health insurance, individuals with disabilities, Military personnel.
Accordingly, 32 CFR Part 199 is proposed to be amended as follows:
PART 199--[AMENDED]
1. The authority citation for Part 199 continues to read as
follows:
Authority: 5 U.S.C. 301; 10 U.S.C. chapter 55.
2. Section 199.9 is proposed to be amended by adding new paragraph
(m) to read as follows:
Sec. 199.9 Administrative remedies for fraud, abuse, and conflict of
interest.
* * * * *
(m) Government-wide effect of exclusion or suspension from CHAMPUS.
As provided by section 2455 of the Federal Acquisition Streamlining Act
of 1994, Pub. L. 103-355, October 13, 1994, and Executive Order 12549,
``Debarment and Suspension from Federal Financial and Nonfinancial
Assistance Programs,'' February 18, 1986, any health care provider
excluded or suspended from CHAMPUS under this section shall, as a
general rule, also be debarred, suspended, or otherwise excluded from
all other programs and activities involving Federal financial
assistance. Among the other programs for which this debarment,
suspension, or exclusion shall operate are the Medicare and Medicaid
programs. This debarment, suspension, or termination requirement is
subject to limited exceptions in the regulations governing the
respective Federal programs affected.
Note: Other regulations related to this government-wide
exclusion or suspension authority are 32 CFR part 25 and 45 CFR part
76.
3. Section 199.14 is proposed to be amended by revising the first
sentence of (a)(1) introductory text, and paragraphs
(a)(1)(i)(C)(6)(iv), (a)(1)(ii)(C) (2), (3), (4) and (10) first
sentence, (a)(1)(ii)(D)(4), redesignating paragraphs (a)(1)(ii)(D)(5)
through (a)(1)(ii)(D)(8) as (a)(1)(ii)(D)(6) through (a)(1)(ii)(D)(9),
revising (a)(1)(iii)(a)(3), (a)(1)(iii)(B), (a)(1)(iii)(D) (1), (2) and
(5), (a)(1)(iii)(E)(1)(i) (A) and (B), (a)(1)(iii)(E)(1)(ii) (A) and
(B), (a)(1)(iii)(G)(3) introductory text, (d)(3)(iv), and (h)
introductory text, and by adding new paragraphs (a)(1)(ii)(D)(5),
(a)(1)(iii)(E)(3) (i), (ii), (iii), (iv), and (v), and (h)(1)(iii)(D),
to read as follows:
Sec. 199.14 Provider reimbursement methods.
* * * * *
(a) * * *
(1) CHAMPUS Diagnosis Related Group (DRG)-based payment system.
Under the CHAMPUS DRG-based payment system, payment for the
[[Page 61063]]
operating costs of inpatient hospital service furnished by hospitals
subject to the system is made on the basis of prospectively-determined
rates and applies on a per discharge basis using DRGs. * * *
(i) * * *
(C) * * *
(6) * * *
(iv) Payment to a hospital transferring an inpatient to another
hospital. If a hospital subject to the CHAMPUS DRG-based payment system
transfers an inpatient to another such hospital, the transferring
hospital shall be paid a per diem rate (except that in neonatal cases,
other than normal newborns, the hospital will be paid at 125 percent of
that per diem rate), as determined under instructions issued by TSO,
for each day of the patient's stay in that hospital, not to exceed the
DRG-based payment that would have been paid if the patient had been
discharged to another setting. For admissions occurring on or after
October 1, 1995, the transferring hospital shall be paid twice the per
diem rate for the first day of any transfer stay, and the per diem
amount for each subsequent day up to the limit described in this
paragraph.
* * * * *
(ii) * * *
(C) * * *
(2) All services related to solid organ acquisition for CHAMPUS
covered transplants by CHAMPUS-authorized transplantation centers.
(3) All services related to heart and liver transplantation for
admissions prior to October 1, 1998, which would otherwise be paid
under DRG 103 and 480, respectively.
(4) All services related to CHAMPUS covered solid organ
transplantations for which there is no DRG assignment.
* * * * *
(10) For admissions occurring on or after October 1, 1990, and
before October 1, 1994, and for discharges occurring on or after
October 1, 1997, the costs of blood clotting factor for hemophilia
patients. * * *
(D) * * *
(4) Long-term hospitals. A long-term hospital which is exempt from
the Medicare prospective payment system is also exempt from the CHAMPUS
DRG-based payment system. In order for a long-term hospital which does
not participate in Medicare to be exempt from the CHAMPUS DRG-based
payment system, it must meet the same criteria (as determined by the
Director, TSO, or a designee) as required for exemption from the
Medicare Prospective Payment System as contained in Sec. 412.23 of
title 42 CFR.
(5) Hospitals within hospitals. A hospital within a hospital which
is exempt from the Medicare prospective payment system is also exempt
from the CHAMPUS DRG-based payment system. In order for a hospital
within a hospital which does not participate in Medicare to be exempt
from the CHAMPUS DRG-based payment system, it must meet the same
criteria (as determined by the Director, TSO, or a designee) as
required for exemption from the Medicare Prospective Payment System as
contained in Sec. 412.22 and the criteria for one or more of the
excluded hospital classifications described in Sec. 412.23 of Title 42
CFR.
* * * * *
(iii) * * *
(A) * * *
(3) Indirect medical education standardization. The charges shall
be standardized for the cost effects of indirect medical educational
factors. If the Medicare adjustment factor was used in calculating a
teaching hospital's indirect medical education adjustment factor, the
Medicare factor shall be used when standardizing the charges.
* * * * *
(B) Empty and low-volume DRGs. For any DRG with less than ten (10)
occurrences in the CHAMPUS database, the Director, TSO, or designee,
has the authority to consider alternative methods for estimating
CHAMPUS weights in these low-volume DRG categories.
* * * * *
(D) * * *
(1) Differentiate large urban and other area charges. All charges
in the database shall be sorted into large urban and other area groups
(using the same definitions for these categories used in the Medicare
program).
(2) Indirect medical education standardization. The charges shall
be standardized for the cost effects of indirect medical education
factors. If the Medicare adjustment factor was used in calculating a
teaching hospital's indirect medical education adjustment factor, the
Medicare factor shall be used when standardizing the charges.
* * * * *
(5) Preliminary base year standardized amount. A preliminary base
year standardized amount shall be calculated by summing all costs in
the database applicable to the large urban or other area group and
dividing by the total number of discharges in the respective group.
* * * * *
(E) * * *
(1) * * *
(i) * * *
(A) Short-stay outliers. Any discharge with a length-of-stay (LOS)
less than 1.94 standard deviations from the DRG's arithmetic LOS shall
be classified as a short-stay outlier. Short-stay outliers shall be
reimbursed at 200 percent of the per diem rate for the DRG for each
covered day of the hospital stay, not to exceed the DRG amount. The per
diem rate shall equal the DRG amount divided by the arithmetic mean
length-of stay for the DRG.
(B) Long-stay outliers. Any discharge (except for neonatal services
and services in children's hospitals) which has a length-of-stay (LOS)
exceeding a threshold established in accordance with the criteria used
for the Medicare Prospective Payment System as contained in 42 CFR
412.82 shall be classified as a long-stay outlier. Any discharge for
neonatal services or for services in a children's hospital which has a
LOS exceeding the lesser of 1.94 standard deviations or 17 days from
the DRG's arithmetic mean LOS also shall be classified as a long-stay
outlier. Long-stay outliers shall be reimbursed the DRG-based amount
plus a percentage (as established for the Medicare Prospective Payment
System) of the per diem rate for the DRG for each covered day of care
beyond the long-stay outlier threshold. The per diem rate shall equal
the DRG amount divided by the arithmetic mean LOS for the DRG. For
admissions on or after October 1, 1997, the long stay outlier has been
eliminated for all cases except children's hospitals and neonates. For
admissions on or after October 1, 1998, the long stay outlier has been
eliminated for children's hospitals and neonates.
(ii) * * *
(A) Cost outliers except those in children's hospitals or for
neonatal services. Any discharge which has standardized costs that
exceed a threshold established in accordance with the criteria used for
the Medicare Prospective Payment System as contained in 42 CFR 412.84
shall qualify as a cost outlier. The standardized costs shall be
calculated by multiplying the total charges by the factor described in
Sec. 199.14(a)(1)(iii)(D)(4) and adjusting this amount for indirect
medical education costs. Cost outliers shall be reimbursed the DRG-
based amount plus a percentage (as established for the Medicare
Prospective Payment System) of all costs exceeding the threshold.
Effective with admissions occurring on or after October 1, 1997, the
standardized costs are no longer adjusted for indirect medical
education costs.
[[Page 61064]]
(B) Cost outliers in children's hospitals and for neonatal
services. Any discharge for services in a children's hospital or for
neonatal services which has standardized costs that exceed a threshold
of the greater of two times the DRG-based amount or $13,800 shall
qualify as a cost outlier. The standardized costs shall be calculated
by multiplying the total charges by the factor described in
Sec. 199.14(a)(1)(iii)(D)(4) (adjusted to include average capital and
direct medical education costs) and adjusting this amount for indirect
medical education costs. Cost outliers for services in children's
hospitals and for neonatal services shall be reimbursed the DRG-based
amount plus a percentage (as established for the Medicare Prospective
Payment System) of all costs exceeding the threshold. Effective with
admissions occurring on or after October 1, 1998, the cost outlier
thresholds for children's hospitals and neonatal services are the same
as other hospitals and the standardized costs are no longer adjusted
for indirect medical education costs.
* * * * *
(3) * * *
(i) The indirect medical education adjustment factor is calculated
for all hospitals which have teaching programs approved under the
Medicare regulation. The factor is based on the number of interns,
residents and beds in the hospital. Each DRG-based payment is increased
by this factor for that hospital. The factors are updated yearly based
on data submitted by hospitals on the annual request for payment of
capital and direct medical education costs.
(ii) To ensure the indirect medical education factors are as
current as possible, the Medicare adjustment factor will be used for
any hospital for which a CHAMPUS-specific factor has not been
calculated based on the hospital's request for payment of capital and
direct medical education costs. The factors will be updated using the
Medicare amounts as of October 1 of each year; the same time the DRG
rates and weights are updated. Any hospital which has not submitted a
capital and direct medical education payment request to CHAMPUS since
the previous October 1, will be assigned the most recent Medicare
adjustment factor.
(iii) For hospitals which have indirect medical education factors
for CHAMPUS but are not subject to the Medicare prospective payment
system, the indirect medical education adjustment factor will be
eliminated if a CHAMPUS-specific factor cannot be calculated based on a
current request from the hospital for payment of capital and direct
medical education costs. The factor will be eliminated as of October 1
if no capital and direct medical education payment request has been
received since the previous October 1.
(iv) For children's hospitals which have indirect medical education
factors for CHAMPUS, the factor will be eliminated as of October 1 of
each year if during the past year, the hospital did not provide the
contractor with updated information on the number of interns, residents
and beds. Since amounts for capital and direct medical education are
included in the national children's hospital differential, children's
hospitals are not required to submit capital and direct medical
education payment requests. Because of this, the contractor is not able
to update the CHAMPUS-specific factor unless requested by the
children's hospital.
(v) In any case where a hospital submits a capital and direct
medical education payment request after the Medicare factor has been
implemented (or the factor has been eliminated for hospitals not
subject to the Medicare prospective payment system, including
children's hospitals), the CHAMPUS specific factor will become
effective in accordance with existing requirements. In no case will the
CHMPUS-specific factor be effective retroactively.
* * * * *
(G) * * *
(3) Information necessary for payment of capital and direct medical
education costs. All hospitals subject to the CHAMPUS DRG-based payment
system, except for children's hospitals, may be reimbursed for allowed
capital and direct medical education costs by submitting a request to
the CHAMPUS contractor. Such request shall be filed with CHAMPUS on or
before the last day of the fifth month following the close of the
hospitals' cost reporting period, and shall cover the one-year period
corresponding to the hospital's Medicare cost-reporting period. The
first such request may cover a period of less than a full year--from
the effective date of the CHAMPUS DRG-based payment system to the end
of the hospital's Medicare cost-reporting period. All costs reported to
the CHAMPUS contractor must correspond to the costs reported on the
hospital's Medicare cost report. An extension of the due date for
filing the request may only be granted if an extension has been granted
by HCFA due to a provider's operations being significantly adversely
affected due to extraordinary circumstances over which the provider has
no control, such as flood or fire. (If these costs change as a result
of a subsequent audit by Medicare, the revised costs are to be reported
to the hospital's CHAMPUS contractor within 30 days of the date the
hospital is notified of the change.) The request must be signed by the
hospital official responsible for verifying the amounts and shall
contain the following information.
* * * * *
(d) * * *
(3) * * *
(iv) Step 4: standard payment amount per group. The standard
payment amount per group will be the volume weighted median per
procedure cost for the procedures in that group. For cases in which the
standard payment amount per group exceeds the CHAMPUS-determined
inpatient allowable amount, the Director, TSO, or his designee, may
make adjustments.
* * * * *
(h) Reimbursement of individual health care professionals and other
non-institutional, non-professional providers. The CHAMPUS-determined
reasonable charge (the amount allowed by CHAMPUS) for the service of an
individual health care professional or other non-institutional, non-
professional provider (even if employed by or under contract to an
institutional provider) shall be determined by one of the following
methodologies, that is, whichever is in effect in the specific
geographic location at the time covered services and supplies are
provided to a CHAMPUS beneficiary.
(1) * * *
(iii) * * *
(D) Special rule for cases in which the national CMAC is less than
the Medicare rate. In any case in which the national CMAC calculated in
accordance with paragraphs (h)(1) (i) through (iii) of this section is
less than the Medicare rate, the Director, TSO, may determine that the
use of the Medicare Economic Index under paragraph (h)(1)(iii)(B) of
this section will result in a CMAC rate below the level necessary to
assure that beneficiaries will retain adequate access to health care
services. Upon making such a determination, the Director, TSO, may
increase the national CMAC to a level not greater than the Medicare
rate.
* * * * *
4. Section 199.15 is proposed to be amended by revising paragraphs
(b)(4)(iii)(B), (c)(2), (d)(2)(iii) and (e)(3) (i) and (ii), to read as
follows:
Sec. 199.15 Quality and utilization review peer review organization
program.
* * * * *
[[Page 61065]]
(b) * * *
(4) * * *
(iii) * * *
(B) In a case described in paragraph (b)(4)(iii)(A) of this
section, reimbursement will be reduced, unless such reduction is waived
based on special circumstances. The amount of this reduction shall be
at least ten percent of the amount otherwise allowable for services for
which preauthorization (including preauthorization for continued stays
in connection with concurrent review requirements) approval should have
been obtained, but was not obtained.
* * * * *
(c) * * *
(2) The physician acknowledgment required for Medicare under 42 CFR
412.46 is also required for CHAMPUS as a condition for payment and may
be satisfied by the same statement as required for Medicare, with
substitution or addition of ``CHAMPUS'' when the word ``Medicare'' is
used.
* * * * *
(d) * * *
(2) * * *
(iii) Review for physician's acknowledgment of annual receipt of
the penalty statement as contained in the Medicare regulation at 42 CFR
412.46.
* * * * *
(e) * * *
(3) * * *
(i) If the diagnostic and procedural information in the patient's
medical record is found to be inconsistent with the hospital's coding
or DRG assignment, the hospital's coding on the CHAMPUS claim will be
appropriately changed and payments recalculated on the basis of the
appropriate DRG assignment.
(ii) If the information stipulated under paragraph (d)(2) of this
section is found not to be correct, the PRO will change the coding and
assign the appropriate DRG on the basis of the changed coding.
* * * * *
Dated: November 7, 1997.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 97-29975 Filed 11-13-97; 8:45 am]
BILLING CODE 5000-04-M