[Federal Register Volume 59, Number 81 (Thursday, April 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10126]
[Federal Register: April 28, 1994]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 220
[RIN 0790-AF63]
Collection From Third Party Payers of Reasonable Costs of
Healthcare Services
AGENCY: Office of the Secretary, DoD.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would replace the current method of per
diem billings based on diagnostic related groups and expand the single
outpatient billing category to as many as forty to fifty, and expand
the billing for outpatient services to include land ambulance service,
air ambulance service and hyperbaric services. This proposed rule
improves billing methods for both inpatient and outpatient care. This
creates a greater level of specificity which more accurately reflects
the cost of the care provided. In addition, the proposed rule will
identify additional outpatient services for which recovery of costs
will be sought.
DATES: Comments must be received by June 27, 1994.
ADDRESSES: Comments should be sent to: Office of the Deputy Assistant
Secretary of Defense (Health Services Operations), Attn: Operations and
Management Support, room 3E343, The Pentagon, Washington, DC 20301-
1200.
FOR FURTHER INFORMATION CONTACT:
CMSgt Kathleen I. Reents at (703) 756-8910.
SUPPLEMENTARY INFORMATION:
I. Background
Congress enacted 10 U.S.C. 1095 as part of the Consolidated Omnibus
Budget Reconciliation Act of 1985, Pub. L. 99-272, Sec. 2001(a)(1), to
permit the Department of Defense to collect from third party payers
reasonable inpatient hospital care costs incurred on behalf of most DoD
health care beneficiaries. To implement this statute, the Department of
Defense issued a proposed rule October 8, 1986, and a final rule
September 25, 1987. The final rule has been amended several times since
1987, most recently on September 9, 1992 (57 FR 41096). That rule
changed the unified per diem rate for inpatient care to a set of 12
clinical group per diem rates. It also implemented authority to bill
for outpatient services by establishing a single per visit rate for
most outpatient services.
II. Provisions of the Proposed Rule
A. Inpatient Services
In October 1992, the Department of Defense began a transition from
the traditional single rate for reimbursement for various health care
services to multiple rates reflective of the clinical care provided.
The multiple rates result in charges that more closely approximate the
actual costs of delivering specific categories of medical services,
such as surgical care, obstetrical care, pediatric care, etc. The rates
are based on the actual costs of rendering healthcare services as
reflected in the Medical Expense and Performance Reporting System
(MEPRS).
We propose a change to paragraph 220.8(c) to replace the current
twelve billing categories with a billing method based on diagnostic
related groups (DRGs), as specifically authorized by 10 U.S.C.
1095(f)(3). We believe the DRG-based method for determining reasonable
costs of inpatient care will produce more accurate and equitable
billings.
Billings will more accurately reflect the costs associated with the
actual services provided. Our proposal is to model our DRG-based cost
methodology on the DRG-based payment system for hospital care under the
Civilian Health and Medical Program of the Uniformed Services
(CHAMPUS). However, in some respects, we propose simplification of
CHAMPUS methods, with authority to introduce the additional refinements
at a later date.
For example, we propose initially to use a single national
standardized amount, rather than the three standardized amounts (large
urban, other urban, and rural) used by CHAMPUS. The three amounts do
not differ significantly and are probably not as relevant in connection
with a unified federal hospital system, such as DoD's. However, the
proposed rule would allow us to adapt the multiple standardized amounts
at a later date.
The standardized amount will be the result of dividing total
system-wide costs of inpatient care by the total number of discharges
system-wide. With respect to DRG relative weights, we propose to use
the same weights as are used for the CHAMPUS DRG-based payment method.
The CHAMPUS weights were calculated from a data base of actual CHAMPUS
claims filed by civilian hospitals. Because the patient population
under military treatment facilities and CHAMPUS are quite similar, we
believe it appropriate to use the same weights.
The CHAMPUS DRG-based payment method uses a number of adjustments
to the product of standardized amount multiplied by the relative weight
of the DRG involved. The adjustments relate to outlier cases, area wage
differences and indirect medical education. We propose initially not to
use these adjustments, but to allow all related costs to be reflected
in the standardized amount. This approach has the advantage of
simplicity and predictability for payers. However, the proposed rule
would allow these adjustments to be introduced at a later date.
In accordance with current practice, the standard DRG-based rate
shall be subdivided into three categories: Hospital charges,
Professional charges, and Ancillary charges.
The intended effective date for implementation of a multiple rate
schedule shall be October 1, 1994, the effective date of this rule,
barring unforeseen difficulties in automation support. The specific
rates will be published in the Federal Register.
B. Outpatient Services
As with the inpatient rates, the outpatient rates will be based on
the actual costs of rendering healthcare services as reflected in the
Medical Expense and Performance Reporting System (MEPRS). MEPRS is the
standard expense reporting system for all fixed medical treatment
facilities (MTFs) within the Department of Defense (DoD) and is the
accepted source of healthcare information for Congress and offices and
agencies of the Executive Branch. The reimbursement categories will be
selected based on board certified specialties/subspecialties widely
accepted by graduate medical accrediting organizations such as the
Accreditation Council for Graduate Medical Education (ACGME) or the
American Board of Medical Specialties (ABMS).
Rates may be established but need not be limited to each of the
following clinical reimbursement categories: Internal Medicine,
Allergy, Cardiology, Diabetic, Endocrinology, Gastroenterology,
Hematology, Hypertension, Nephrology, Neurology, Nutrition, Oncology,
Pulmonary Disease, Rheumatology, Dermatology, Infectious Disease,
Physical Medicine, General Surgery, Cardiovascular and Thoracic
Surgery, Neurosurgery, Ophthalmology, Organ Transplant, Otolaryngology,
Plastic Surgery, Procotology, Urology, Pediatric Surgery, Family
Planning, Obstetrics, Gynecology, Pediatrics, Adolocent Pediatrics,
Well Baby, Orthopaedics, Cast, Orthotic Laboratory, Hand Surgery,
Podiatry, Psychiatry, Psychology, Child Guidance, Mental Health, Social
Work, Substance Abuse Rehabilitation, Family Practice, and Occupational
and Physical Therapy. We will not necessarily establish a separate rate
for each of these clinical reimbursement categories. Similar categories
may be combined for purposes of billing.
Another proposed revision to section 220.8 involves the expansion
of a single outpatient rate to multiple reimbursement category rates
similar to that for inpatient care. The Department of Defense proposes
to adopt a methodology for computing rates for outpatient care similar
to that used for computing multiple rates for inpatient care. Thus,
collections for most outpatient services will be based on a standard
per visit fee to a specialty/subspecialty which is representative of
the average cost in facilities of the Uniformed Services of an
outpatient visit to that specialty clinic. Multiple outpatient visits
on the same day to different clinics will result in one charge for each
clinic visit. Multiple visits on the same day to the same clinic will
only have one charge. As a general rule, each standard per visit amount
to the specialty/subspecialty clinic will be all-inclusive. No
additional charge will be made for routine laboratory, radiology,
pharmacy or other ancillary or overhead services provided in
conjunction with an outpatient visit.
Although most outpatient services will be billed based on the
standard per visit fee for a specialty/subspecialty, there are several
special rules for particular types of care. One special rule is that a
separate charge for the same day/ambulatory surgery will be published
annually.
The proposed effective date of the proposed expanded number of
billing categories is targeted for October 1, 1994. The specific rates
will be published in the Federal Register.
C. Miscellaneous Healthcare Services
Initial implementation of the Third Party Collection Program was
somewhat limited in scope and concentrated on inpatient and ambulatory
care areas. We propose to expand the program to include outpatient
services which may not traditionally be provided in hospitals or which
are not traditional clinical specialties or subspecialties. This
includes, but is not limited to, ambulance service, hyperbaric
treatments, dental care services and immunizations. We propose to
recover the cost of these services to the extent they are generally
applicable coverage provisions of a third party payer.
We propose to recover the cost of ambulance service which includes
the cost of providing emergency aid and then transportation of
beneficiaries to a medical treatment facility. It would also include
the transport of patients to other medical facilities or the
specialized clinics for diagnostic or therapeutic services which also
is frequently necessary. We propose to recover costs on the basis of
the length of time the ambulance is in service with one hour to be the
minimum amount billed. Our reimbursement rates for ambulance care will
only cover the costs of operating the vehicle, including labor costs
(driver and attendant), supplies, fuel, and overhead.
We also propose to recover the cost of hyperbaric treatments
provided to beneficiaries as part of a course of treatment. For
example, high pressure oxygenation treatments, burn treatments and
decompression treatments in response to diving incidents are frequently
provided. We only intend to recover the cost of providing these
treatments which includes the operating cost of the chamber, e.g.,
labor costs, (operators and attending medical personnel), supplies, and
overhead. We do not intend to include amortization of either the actual
or replacement cost of the hyperbaric chamber or the building.
Dental services are provided to beneficiaries on a space available
basis and in remote locations. Dental services may include oral
diagnosis and prevention, periodontics, prosthodontics (fixed and
removable), implantology, oral surgery, orthodontics, pediatric
dentistry and endodontics.
We also provide a wide range of immunizations to Military Health
Service beneficiaries, including immunizations against common childhood
diseases such as measles, smallpox and diphtheria and regional endemic
diseases such as yellow fever, plague and cholera. We also administer a
variety of medications and test beneficiaries for allergic conditions.
Immunizations costs are not included as part of the reimbursement rates
for either inpatient or ambulatory care. We intend to seek
reimbursement for immunizations against childhood diseases and diseases
characteristic of the United States and its Territories. We will also
seek reimbursement for the administration of all medications or allergy
extracts, when the medication or extract is purchased by the medical
treatment facility, and for the testing for allergic conditions. We do
not intend to seek recovery for immunizations administered incident to
overseas travel or transfer or for those medications purchased by the
beneficiary and simply administered at the medical treatment facility.
Our reimbursement rate shall be based on the average fully burdened
cost of an immunization and we shall apply a separate charge for each
immunization which is administered.
D. Other Revisions
Finally, the proposed rule would eliminate the special provision
regarding PRIMUS and NAVCARE clincis, which are DOD's contractor owned
and operated freestanding clinics. Under special demonstration program
authority, these clinics have functioned under rules applicable to
military medical treatment facilities. The proposed change would
conform with other proposed regulatory action of DOD, which would make
the PRIMUS/NAVCARE clinic program permanent under the auspices of the
CHAMPUS program. With this action, CHAMPUS coordination of benefits
procedures, rather than Third Party Collection Program procedures, will
become applicable.
III. Regulatory Procedures
This proposed rule is not a significant regulatory action under
Executive Order 12866. It would not have an impact of $100 million or
other significant economic impacts. Similarly, the rule does not
significantly affect a substantial number of small entities within the
meaning of the Regulatory Flexibility Act. As stated above, for the
most part, this proposed rule would simply incorporate into the third
party collection program regulation more precise cost calculation
methods. In addition, this rule does not impose new information
collection requirements for purposes of the Paperwork Reduction Act.
This is a proposed rule. We invite public comments on all matters
covered by this proposal.
For the reasons stated in the preamble, 32 CFR Part 220 is proposed
to be amended as follows:
PART 220--COLLECTION FROM THIRD PARTY PAYERS OF REASONABLE COSTS OF
HEALTHCARE SERVICES
1. The authority citation for part 220 continues to read as
follows:
Authority: 5 U.S.C. 301: 10 U.S.C. 1095.
2. Section 220.8 is proposed to be amended by revising paragraph
(a), the heading and first sentence of paragraph (c), introductory
text, and by paragraphs (e), (g), (h), (i), and (1) to read as follows:
Sec. 220.8 Reasonable costs.
* * * * *
(a) Diagnosis related group (DRG)-based method for calculating
reasonable costs for inpatient services.
(1) In general. As authorized by 10 U.S.C. 1095(f)(3), the
calculation of reasonable costs for purposes of collections for
inpatient hospital care under 10 U.S.C. 1095 and this part shall be
based on diagnosis related groups (DRGs). Costs shall be based on the
inpatient full reimbursement rate per hospital discharge, weighted to
reflect the intensity of the principal diagnosis involved. The average
cost per case shall be published annually as an inpatient standardized
amount. A relative weight for each DRG shall be the same as the DRG
weights published annually for hospital reimbursement rates under the
Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)
pursuant to 32 CFR 199.14(a)(1).
(2) Standardized amount. The Standardized amount shall be
determined by dividing the total costs of all inpatient care in all
military medical treatment facilities by the total number of
discharges. This will produce a single national standardized amount.
The Department of Defense is authorized, but not required by this part
to calculate three standardized amounts, one each for large urban
areas, other urban areas, and rural areas, utilizing the same
distinctions in identifying those areas as is used for CHAMPUS under 32
CFR part 199, paragraph 199.14(a)(1).
(3) DRG relative weights. Costs for each DRG will be determined by
multiplying the standardized amount per discharge by the DRG relative
weight. For this purpose, the DRG relative weights used for CHAMPUS
pursuant to 32 CFR part 199, paragraph 199.14(a)(1) shall be used.
(4) Adjustments for outliers, area wages, and indirect medical
education. The Department of Defense may, but is not required by this
part, to adjust cost determinations in particular cases for length-of-
stay outliers (long stay and short stay), cost outliers, area wage
rates, and indirect medical education. If any such adjustments are
used, the method shall be comparable to that used for CHAMPUS hospital
reimbursements pursuant to 32 CFR part 199, paragraph
199.14(a)(1)(iii)(E), and the calculation of the standardized amount
under paragraph (a)(2) of this section will reflect that such
adjustments will be used.
(5) Identification of professional and hospital costs. For purposes
of billing third party payers other than automobile liability and no-
fault insurance carriers, billings will be subdivided into three
categories:
(i) Hospital charges (which refers to routine services charges
associated with the hospital stay).
(ii) Professional charges (which refers to professional services
provided by physicians and certain other providers).
(c) Clinical groups per diem rates for care provided on or after
October 1, 1992, and prior to October 1, 1994. For inpatient hospital
care provided on or after October 1, 1992, and prior to October 1,
1994, the computation of reasonable costs shall be based on the per
diem full reimbursement rate applicable to the clinical category of
services involved.* * *
(d) Special rule for partnership program providers. In cases in
which the professional provider services are provided under the
Partnership Program (or similar program operated under the authority of
10 U.S.C. 1096), the professional charges component of the total
standard rate will be deleted, as applicable, from the claim from the
facility of the Uniformed Services. The third party payer will receive
a claim for professional services directly from the individual
healthcare provider, who is not an employee or agent of the Department
of Defense. Such claims are not covered by 10 U.S.C. 1095 or this part,
but are governed by statutory and regulatory requirements of the
CHAMPUS program (see 32 CFR part 199). The same is true for
professional services provided on an outpatient basis under the
Partnership Program.
(e) Per visit rates.
(1) As authorized by 10 U.S.C. 1095(f)(2), the computation of
reasonable costs for purposes of collections for most outpatient
services shall be based on a per visit rate for a clinical specialty or
subspecialty. The per visit charge shall be equal to the outpatient
full reimbursement rate for that clinical specialty or subspecialty and
includes all routine ancillary services. A separate charge will be
calculated for cases that are considered same day/ambulatory surgeries.
These rates shall be updated and published annually. As with inpatient
billing categories, clinical groups representing selected board
certified specialties/subspecialties widely accepted by graduate
medical accrediting organizations such as the Accreditation Council for
Graduate Medical Education (ACGME) or the American Board of Medical
Specialties will be used for ambulatory billing categories. Related
clinical groups may be combined for purposes of billing categories.
(2) The following clinical reimbursement categories are
representative, but not all-inclusive of the billing category clinical
groups referred to in paragraph (E)(1) of this section: Internal
Medicine, Allergy, Cardiology, Diabetic, Endocrinology,
Gastroenterology, Hematology, Hypertension, Nephrology, Neurology,
Nutrition, Oncology, Pulmonary Disease, Rheumatology, Dermatology,
Infectious Disease, Physical Medicine, General Surgery, Cardiovascular
and Thoracic Surgery, Neurosurgery, Ophthalmology, Organ Transplant,
Otolaryngology, Plastic Surgery, Protology, Urology, Pediatric Surgery,
Family Planning, Obstetrics, Gynecology, Pediatrics, Adolescent
Pediatrics, Well Baby, Orthopaedics, Cast, Orthotic Laboratory, Hand
Surgery, Podiatry, Psychiatry, Psychology, Child Guidance, Mental
Health, Social Work, Substance Abuse Rehabilitation, Family Practice,
and Occupational and Physical Therapy.
* * * * *
(g) Special rule for services ordered and paid for by a facility of
the Uniformed Services but provided by another provider. In cases where
a facility of the Uniformed Services purchases ancillary services or
procedures, from a source other than a Uniformed Services facility, the
cost of the purchased services will be added to the standard rate.
Examples of ancillary services and other procedures covered by this
special rule include (but are not limited to): laboratory, radiology,
pharmacy, pulmonary function, cardiac catheterization, hemodialysis,
hyperbaric medicine, electrocardiography, electroencephalography,
electroneuromyography, pulmonary function, inhalation and respiratory
therapy and physical therapy services.
(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 based on a request from 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 per diem or per visit rate. Rather, a separate
standard rate shall be established based on the cost of the particular
high-cost service, drug or procedure provided. This special rule
applies only to services, drugs or procedures having a cost of at least
$60. The reasonable cost for the services, drugs or procedures to which
this special rule applies shall be calculated and published annually.
(i) Miscellaneous health care services. Some outpatient services
are provided which may not traditionally be provided in hospitals or
which are not traditional clinical specialties or subspecialties. This
includes, but is not limited to, land ambulance service, air ambulance
service, hyperbaric treatments, dental care services and immunications.
(1) The charge for ambulance services shall be based on the full
costs of operating the ambulance service.
(2) For hyperbaric treatments (such as high pressure oxygenation
treatments, burn treatments and decompression treatments in response to
diving incidents), charges will be based on the full operating costs of
the hyperbaric treatment services.
(3) Charges for dental services (including oral diagnosis and
prevention, periodontics, prosthodontics (fixed and removable),
implantology, oral surgery, orthodontics, pediatric dentistry and
endodontics) will be based on a full cost of the dental services.
(4) The charge for immunications, allergin extracts, allergic
condition tests, and the administration of certain medications when
these services are provided in a separate immunizations or shot clinic,
will be based on the average full cost of these services, exclusive of
any costs considered for purposes of any outpatient visit. A separate
charge shall be made for each immunization, injection or medication
administered.
* * * * *
(1) Alternative determination of reasonable costs. Any third party
payer that can satisfactorily demonstrate a prevailing rate of payment
in the same geographic area for the same or similar aggregate groups of
services that is less than the standard rate (or other amount as
determined under paragraphs (f) through (k) of this section) of the
facility of the Uniformed Services may, with the agreement of the
facility of the Uniformed Services (or other authorized representatives
of the United States), limit payments under 10 U.S.C. 1095 to that
prevailing rate for that aggregate category of services. The
determination of the third party payer's prevailing rate shall be based
on a review of valid contractual arrangements with other facilities or
providers constituting a majority of the services for which payment is
made under the third party payer's plan. This paragraph does not apply
to cases covered by Sec. 220.11.
* * * * *
3. Section 220.10 is proposed to be amended by revising paragraph
(c)(1)(ii), as follows:
Sec. 220.10 Special rules for Medicare supplemental plans.
* * * * *
(c) Charges for health care services other than the inpatient
hospital deductible amount.
(1) * * *
(ii) Include adjustments, as appropriate, to identify major
components of the all inclusive per diem or per visit rates for which
Medicare has special rules.
* * * * *
Dated: April 22, 1994.
L. M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 94-10126 Filed 4-26-94; 8:45 am]
BILLING CODE 5000-04-M
