[Federal Register Volume 62, Number 210 (Thursday, October 30, 1997)]
[Notices]
[Pages 58711-58724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28686]
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DEPARTMENT OF DEFENSE
Office of the Secretary
TRICARE/CHAMPUS; FY98 DRG Updates
AGENCY: Office of the Secretary, DoD.
ACTION: Notice of DRG revised rates.
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SUMMARY: This notice provides the updated adjusted standardized
amounts, DRG relative weights, outlier thresholds, and beneficiary
cost-share per diem rates to be used for FY98 under the TRICARE/CHAMPUS
DRG-based payment system. It also describes the changes made to the
TRICARE/CHAMPUS DRG-based payment system in order to conform to changes
made to the Medicare Prospective Payment System (PPS).
EFFECTIVE DATES: The rates and weights and Medicare PPS changes which
affect the TRICARE/CHAMPUS DRG-based payment system contained in this
notice are effective for admissions occurring on or after October 1,
1997.
ADDRESSES: TRICARE Support Office (TSO), Program Development Branch,
Aurora, CO 80045-6900.
FOR FURTHER INFORMATION CONTACT:
Marty Maxey, Program Development Branch, TSO, telephone (303) 361-1227.
To obtain copies of this document, see the ADDRESSES section above.
Questions regarding payment of specific claims under the TRICARE/
CHAMPUS DRG-Based payment system should be addressed to the appropriate
TRICARE/CHAMPUS contractor.
SUPPLEMENTARY INFORMATION: The final rule published on September 1,
1987 (52 FR 32992) set forth the basic procedures used under the
TRICARE/CHAMPUS DRG-based payment system. This was subsequently amended
by final rules published 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).
An explicit tenet of these final rules, and one based on the
statute authorizing the use of DRGs by TRICARE/CHAMPUS, is that the
TRICARE/CHAMPUS DRG-based payment system is modeled on the Medicare
PPS, and that, whenever practicable, the TRICARE/CHAMPUS system will
follow the same rules that apply to the Medicare PPS. The Health Care
Financing Administration (HCFA) publishes these changes annually in the
Federal Register and discusses in detail the impact of the changes.
In addition, this notice updates the rates and weights in
accordance with our previous final rules. The actual changes we are
making, along with a description of their relationship to the Medicare
PPS, are detailed below.
I. Medicare PPS Changes Which Affect the TRICARE/CHAMPUS DRG-Based
Payment System
Following is a discussion of the changes HCFA has made to the
Medicare PPS which affect the TRICARE/CHAMPUS DRG-based payment system
A. DRG Classifications
Under both the Medicare PPS and the TRICARE/CHAMPUS DRG-based
payment system, cases are classified into the appropriate DRG by a
Grouper program. The Grouper classifies each case into a DRG on the
basis of the diagnosis and procedure codes and demographic information
(that is, sex, age, and discharge status). The Grouper used for the
TRICARE/CHAMPUS DRG-based payment system is the same as the current
Medicare Grouper with two modifications. The TRICARE/CHAMPUS system has
replaced Medicare DRG 435 with two age-based DRGs (900 and 901), and we
have implemented thirty-four (34) neonatal DRGs in place of Medicare
DRGs 385 through 390. Grouping for all other DRGs under the TRICARE/
CHAMPUS system is identical to the Medicare PPS.
For FY98, HCFA will implement a number of classification changes,
including surgical hierarchy changes, revisions to the Major Problem
Diagnosis List, and refinements to the Complications and Comorbidities
(CC) List. In addition, DRGs 214 and 215 (Back and Neck Procedures)
will be replaced with five new DRGs (DRGs 496-500) and DRGs 221 and 222
will be replaced with three new DRGs (DRGs 501-503). The TRICARE/
CHAMPUS Grouper will incorporate all changes made to the Medicare
Grouper.
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B. Wage Index and Medicare Geographic Classification Review Board
Guidelines
TRICARE/CHAMPUS will continue to use the same wage index amounts
used for the Medicare PPS, including the floor on area wage index.
Beginning with FY98, the wage index for an urban hospital may not be
lower than the Statewide area rural wage index. In addition, TRICARE/
CHAMPUS will duplicate all changes with regard to the wage index for
specific hospitals which are redesignated by the Medicare Geographic
Classification Review Board.
C. Hospital Market Basket
As outlined in HCFA's August 29, 1997, final rule, the applicable
percentage change in the standardized amounts have been frozen at the
FY97 levels resulting in a 0 percent increase for FY98.
In connection with the revisions to the hospital market basket,
HCFA reestimated the labor-related share of the standardized amounts.
Accordingly, effective with TRICARE/CHAMPUS discharges occurring on or
after October 1, 1997, the labor-related share of the standardized
amount will be 71.1 percent and the nonlabor-related portion will be
28.9 percent.
D. Changes to Outlier Payments
In accordance with HCFA's August 29, 1997, final rule, we will
eliminate payment for day outliers, referred to as long stay outliers
under TRICARE/CHAMPUS, for all cases except neonates and children's
hospitals.
Since TRICARE/CHAMPUS does not include capital payments in our DRG-
based payments, we will use the thresholds calculated by HCFA for
paying cost outliers in the absence of capital prospective payments.
In addition, effective with discharges occurring on or after
October 1, 1997, in determining the additional payment for IDME, the
IDME adjustment factor will only be applied to the base DRG payment,
not the sum of the base DRG payment and any cost outlier payments. The
fixed loss cost outlier threshold will be based on the sum of DRG
payments and IDME payments for purposes of comparing costs to payment.
In determining whether a case meets the cost outlier threshold, we will
not standardize the costs of the case to account for IDME.
For FY98, the fixed loss cost outlier threshold is based on the sum
of the applicable DRG-based payment rate plus any amounts payable for
IDME plus a fixed dollar amount. Thus, for FY98, in order for a case to
qualify for cost outlier payments, the costs must exceed the TRICARE/
CHAMPUS DRG base payment rate for the DRG plus the IDME payment plus
$10,180. The marginal cost factor for cost outliers continues to be 80
percent. The above changes to the cost outlier payments will not be
adopted for children's hospitals or neonates at this time.
E. Changes to Indirect Medical Education (IDME) Adjustment
We will adopt Medicare's PPS changes to revise the IDME formula to
gradually reduce the current level of IDME adjustment over the next
several years. Since the IDME formula used by TRICARE/CHAMPUS does not
include disproportionate share hospitals (DSHs), the variables in the
formula are different than Medicare's, however, the percentage
reductions that will be applied to Medicare's formula will also be
applied to the TRICARE/CHAMPUS IDME formula. We will also adopt
Medicare's PPS changes as they pertain to the counting and reporting of
residents and beds on the Medicare cost reports for purposes of
reimbursing hospitals for the TRICARE/CHAMPUS share of IDME costs.
F. Graduate Medical Education
We will adopt Medicare's PPS changes as they pertain to the
counting and reporting of residents on the Medicare cost reports for
purposes of reimbursing hospitals for the TRICARE/CHAMPUS share of
graduate medical education costs.
G. Capital-Related Costs
TRICARE/CHAMPUS reimburses hospitals for our share of hospitals'
capital costs on a pass through basis. As provided for in our previous
final rules, these annual payments are subject to any reductions which
are required for the Medicare PPS. Accordingly, for days of care
occurring on or after October 1, 1997, through September 30, 2003, a
reduction of 17.68 percent will be applied to all capital payments.
H. Blood Clotting Factor
We will reinstate the add-on payment for the costs of administering
blood clotting factor provided to beneficiaries who have hemophilia and
who are hospital inpatients for discharges occurring on or after
October 1, 1997.
The new payment levels which TRICARE/CHAMPUS will use are:
Factor VIII (antihemophilic factor- $0.76 per unit.
human).
Factor VIII (antihemophilic factor- 1.00 per unit.
recombinant).
Factor IX (complex).................... 0.32 per unit
Other hemophilia clotting factors 1.10 per unit.
(e.g., anti-inhibitors).
I. Hospitals Excluded From the Prospective Payment System
TRICARE/CHAMPUS will adopt the changes outlined in HCFA's August
29, 1997, final rule as they apply to hospitals and units excluded from
the Medicare PPS.
II. Cost-to-Charge Ratio
For FY98, the cost-to-charge ratio used for the TRICARE/CHAMPUS
DRG-based payment system will be 0.5436 which is increased to 0.5536 to
account for bad debts. This shall be used to calculate the adjusted
standardized amounts and to calculate cost outlier payments, except for
children's hospitals. For children's hospital cost outliers, the cost-
to-charge ratio used is 0.6027.
III. Updated Rates and Weights
Tables 1 and 2 provide the rates and weights to be used under the
TRICARE/CHAMPUS DRG-based payment system during FY98 and which are a
result of the change described above. The implementing regulations for
the TRICARE/CHAMPUS DRG-based payment system are in 32 CFR Part 199.
The rates and weights are also available on the Internet at htt://
www.ochampus.mil under the heading of Reports.
As a courtesy, we will provide a separate list of the updated DRG
weights that includes the long-stay thresholds for use by MTFs and
other non-DoD users of the TRICARE/CHAMPUS DRG weights and rates
through TSO's home page. The list will also be found under the Heading
of Reports but will specifically indicate the list is for MTFs and non
DoD users. Beginning next year, the updated rates and weights will no
longer be published in the Federal Register and will only be available
on-line.
Dated: October 23, 1997.
L.M. Bynum,
Alternate Federal Register Liaison Officer, Department of Defense.
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[FR Doc. 97-28686 Filed 10-29-97; 8:45 am]
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