96-3518. Collection From Third Party Payers of Reasonable Costs of Healthcare Services  

  • [Federal Register Volume 61, Number 35 (Wednesday, February 21, 1996)]
    [Rules and Regulations]
    [Pages 6540-6542]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 96-3518]
    
    
    
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    [[Page 6541]]
    
    
    DEPARTMENT OF DEFENSE
    
    Office of the Secretary
    
    32 CFR Part 220
    
    
    Collection From Third Party Payers of Reasonable Costs of 
    Healthcare Services
    
    AGENCY: Office of the Secretary, DoD.
    
    ACTION: Final rule.
    
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    SUMMARY: This final rule establishes a new rule under the Third Party 
    Collection program for determining the reasonable costs of health care 
    services provided by facilities of the uniformed services in cases in 
    which care is provided under TRICARE Resource Sharing Agreements. For 
    purposes of the Third Party Collection program such services will be 
    treated the same as other services provided by facilities of the 
    uniformed services. The final rule also lowers the high cost ancillary 
    threshold value from $60 to $25 per 24-hour day for patients that come 
    to the uniformed services facility for ancillary services requested by 
    a source other than a uniformed services facility. The reasonable costs 
    of such services will be accumulated on a daily basis. The Department 
    of Defense is now implementing TRICARE, a major structural reform of 
    the military health care system, featuring adoption of managed care 
    practices in military hospitals and by special civilian contract 
    provider networks. Consistent with TRICARE, as part of the Third Party 
    Collection Program, DoD is transitioning to a billing and collection 
    system in which all costs borne by DoD Medical Treatment Facilities 
    (MTFs) will be billed by the MTF providing the care. Thus, all care 
    performed within the facility, plus an added amount for supplemental 
    care purchased by the facility, will be billed by the MTF. Conversely, 
    care provided outside the MTF under other arrangements will be billed 
    by the provider of that care.
    
    DATES: The amendment to Sec. 220.8(h) is effective March 15, 1996, and 
    the amendment to Sec. 220.8(k) is effective June 1, 1996.
    
    FOR FURTHER INFORMATION CONTACT:
    LCDR Patrick Kelly, (703) 681-8910.
    
    SUPPLEMENTARY INFORMATION: DoD published the proposed rule on August 2, 
    1995 (60 FR 39285-39287). We received two responses from the public 
    during the 60 day public comment period. Both responses concerned 
    resource sharing fee-for-service arrangements these organizations had 
    negotiated prior to these proposed changes to 32 CFR part 220. Both 
    comments recommended that existing resource sharing fee-for-service 
    agreements continue to be treated as fee-for-service partnership 
    agreements on the grounds that the proposed changes would require 
    significant changes to their existing agreements. It is our view that 
    the advantages of the rule overcome the temporary difficulties for 
    TRICARE contractors. However, in response to these comments, we have 
    decided to defer until June 1, 1996, the effective date of this change. 
    This will give the affected contractors time to make appropriate 
    arrangements under the new procedure.
        Currently, the Third Party Collection program regulation includes a 
    special rule for Partnership Program providers. The Partnership Program 
    allows civilian health care providers authorized to provide care under 
    the CHAMPUS program to provide services to CHAMPUS beneficiaries in 
    military hospitals and to receive payment from the CHAMPUS program. 
    Pursuant to CHAMPUS payment rules, CHAMPUS is always the secondary 
    payer to other health insurance plans; thus, CHAMPUS may not make 
    payment to the Partnership Program provider in cases in which the 
    beneficiary has other health insurance. To accommodate this CHAMPUS 
    requirement, the Third Party Collection program currently excludes 
    Partnership Program provider services from the military hospital 
    claims. Thus, for example, for inpatient hospital care, the Third Party 
    Payer now receives two claims, one from the military facility for the 
    hospital and ancillary costs, and a separate claim from the provider 
    for the professional services.
        The current practice has produced some confusion in that it is a 
    departure from the normal procedure for claims arising from care 
    provided by military hospitals. In addition, because the Partnership 
    Program providers function independently from the military hospital's 
    management system, there are no DoD standards that govern the amounts 
    claimed by various Partnership Program providers.
        DoD is now proceeding with implementation of a major managed care 
    program, called TRICARE, in its military medical treatment facilities 
    and CHAMPUS. Under TRICARE, regional managed care support contractors 
    will work with military treatment facilities on a wide range of managed 
    care activities. Among the activities of the managed care contractors 
    is the Resource Sharing Program. Under this program, the contractor 
    makes agreements with military hospitals in the region under which the 
    contractor will supply personnel and other resources in order to allow 
    the facility to increase the services it can make available to DoD 
    health care beneficiaries. The TRICARE program is the subject of a 
    final rule published October 5, 1995 (60 Federal Register 52078-52103), 
    with comprehensive regulations codified at 32 CFR 199.17. TRICARE 
    Resource Sharing Agreements are similar to Partnership Program payment 
    arrangements in that both result in civilian providers coming into the 
    military facility and providing care in that facility. However, a 
    significant difference exists in the method of payment. Under the 
    Partnership Program, payment is on a fee-for-service basis under the 
    normal operation of the CHAMPUS program. Under Resource Sharing, the 
    method of payment may be on a salary basis or other arrangement made by 
    the managed care support contractor. Under the Partnership Program, the 
    CHAMPUS second payer requirement applies. Under Resource Sharing 
    Agreements, the overall managed care contract separates the financing 
    from the normal CHAMPUS payment rules and allows for special payment 
    rules.
        Based on this, we are establishing a special rule for Resource 
    Sharing Agreements. Or, more accurately, we are establishing the normal 
    rule for Resource Sharing Agreements. That is to say that care provided 
    in whole or in part through TRICARE Resource Sharing Agreements will be 
    handled for purposes of third party billings just like all other 
    services provided in the military facility, and will be billed at the 
    same rates. The special rule applicable to the Partnership Program 
    providers, under which two claims are made to the third party payer, 
    will not apply under TRICARE Resource Sharing Agreements. As a result, 
    care provided in military facilities will be billed to third party 
    payers in the same manner and same amount, regardless of whether the 
    professional services were provided by a military physician or Resource 
    Sharing Agreement provider.
        The TRICARE program is being phased in region-by-region throughout 
    the United States. As it takes hold, the Partnership Program is being 
    phased out and replaced by TRICARE Resource Sharing Agreements. Thus, 
    possibly before the end of 1997, the special Partnership Program rule 
    will no longer be needed, and the simpler, single-claim rule for 
    TRICARE Resource Sharing Agreements will apply. We view this as both a 
    simplification and an improvement in the Third Party Collection 
    program.
        DoD published the proposed rule on August 2, 1995, (60 Federal 
    Register 
    
    [[Page 6542]]
    39285-39287). We received two responses from the public during the 60 
    day public comment period. Both responses concerned resource sharing 
    fee-for-service arrangements these organizations had negotiated prior 
    to these proposed changes to 32 CFR part 220. Both comments recommended 
    that existing resource sharing fee-for-service agreements continue to 
    be treated as fee-for-service partnership agreements on the grounds 
    that the proposed changes would require significant changes to their 
    existing agreements. It is our view that the advantages of the rule 
    overcome the temporary difficulties for TRICARE contractors. However, 
    in response to these comments, we have decided to defer until June 1, 
    1996, the effective date of this change. This will give the affected 
    contractors time to make appropriate arrangements under the new 
    procedure. With respect to regulatory procedures, this final rule is 
    not a significant regulatory action under Executive Order 12866, nor 
    does it significantly affect a substantial number of small entities 
    under the Regulatory Flexibility Act, nor impose new information 
    collection requirements under the Paperwork Reduction Act.
    
    List of Subjects in 32 CFR Part 220
    
        Claims, Health care, Health insurance.
    
        For the reasons stated in the preamble, 32 CFR part 220 is amended 
    as follows:
    
    PART 220--COLLECTION FROM THIRD PARTY PAYERS OF REASONABLE COSTS OF 
    HEALTHCARE SERVICES
    
        1. The authority citation for 32 CFR part 220 continues to read as 
    follows:
    
        Authority: 5 U.S.C. 301; 10 U.S.C. 1095.
    
        2. Section 220.8 is amended by revising paragraphs (h) and (k) to 
    read as follows:
    
    
    Sec. 220.8  Reasonable costs.
    
    * * * * *
        (h) Special rule for certain ancillary services ordered by outside 
    providers and provided by a facility of the Uniformed Services. If a 
    Uniformed Services facility provides certain ancillary services, 
    prescription drugs or other procedures requested by a source other than 
    a Uniformed Services facility and are not incident to any outpatient 
    visit or inpatient services, the reasonable cost will not be based on 
    the usual Diagnostic Related Group (DRG) or per visit rate. Rather, a 
    separate standard rate shall be established based on the accumulated 
    cost of the particular service, drugs, or procedures provided during a 
    twenty-four hour period ending at midnight. Effective March 15, 1996, 
    this special rule applies only to services, drugs or procedures having 
    a cost of at least $25. The reasonable cost for the services, drugs or 
    procedures to which this special rule applies shall be calculated and 
    made available to the public annually.
    * * * * *
        (k) Special rules for TRICARE Resource Sharing Agreements and 
    Partnership Program providers.
        (1) In general. Paragraph (k) establishes special Third Party 
    Collection program rules for TRICARE Resource Sharing Agreements and 
    Partnership Program providers.
        (i) TRICARE Resource Sharing Agreements are agreements under the 
    authority of 10 U.S.C. 1096 and 1097 between uniformed services 
    treatment facilities and TRICARE managed care support contractors under 
    which the TRICARE managed care support contractor provides personnel 
    and other resources to the uniformed services treatment facility 
    concerned in order to help the facility increase the availability of 
    health care services for beneficiaries. TRICARE is the managed care 
    program authorized by 10 U.S.C. 1097 (and several other statutory 
    provisions) and established by regulation at 32 CFR 199.17.
        (ii) Partnership Program providers provide services in facilities 
    of the uniformed services under the authority of 10 U.S.C. 1096 and the 
    CHAMPUS program. They are similar to providers providing services under 
    TRICARE Resource Sharing Agreements, except that payment arrangements 
    are different. Those functioning under TRICARE Resource Sharing 
    Agreements are under special payment arrangements with the TRICARE 
    managed care contractor; those under the Partnership Program file 
    claims under the standard CHAMPUS program on a fee-for-service basis.
        (2) Special rule for TRICARE Resource Sharing Agreements. Services 
    provided in facilities of the uniformed services in whole or in part 
    through personnel or other resources supplied under a TRICARE Resource 
    Sharing Agreement are considered for purposes of this part as services 
    provided by the facility of the uniformed services. Thus, third party 
    payers will receive a claim for such services in the same manner and 
    for the same costs as any similar services provided by a facility of 
    the uniformed services. This paragraph (k)(2) becomes effective June 1, 
    1996.
        (3) Special rule for Partnership Program providers. For inpatient 
    services for which the professional provider services were provided by 
    a Partnership Program participant, the professional charges component 
    of the bill will be deleted from the claim from the facility of the 
    uniformed services. In these cases, the uniformed service facility's 
    claim shall not be considered solely a ``facility charge.'' As an all-
    inclusive bill, room and board, nursing services and all ancillary 
    services (radiology, pharmaceuticals, respiratory therapy, etc.) are 
    factored into the bill. The third party payer will receive a separate 
    claim for professional services directly from the individual health 
    care provider. The same is true for the professional services provided 
    on an outpatient basis under the Partnership Program. Claims from 
    Partnership Program providers are not covered by 10 U.S.C. 1095 or this 
    part, but are governed by statutory and regulatory requirements of the 
    CHAMPUS program.
    * * * * *
        Dated: February 12, 1996.
    L.M. Bynum,
    Alternate OSD Federal Register Liaison Officer, Department of Defense.
    [FR Doc. 96-3518 Filed 2-20-96; 8:45 am]
    BILLING CODE 5000-04-M
    
    

Document Information

Effective Date:
3/15/1996
Published:
02/21/1996
Department:
Defense Department
Entry Type:
Rule
Action:
Final rule.
Document Number:
96-3518
Dates:
The amendment to Sec. 220.8(h) is effective March 15, 1996, and the amendment to Sec. 220.8(k) is effective June 1, 1996.
Pages:
6540-6542 (3 pages)
PDF File:
96-3518.pdf
CFR: (1)
32 CFR 220.8