[Federal Register Volume 63, Number 175 (Thursday, September 10, 1998)]
[Rules and Regulations]
[Pages 48439-48448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-23842]
[[Page 48439]]
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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: Final rule.
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SUMMARY: This final rule revises certain requirements and procedures
for reimbursement under the CHAMPUS 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 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; clarification of payment reduction for noncompliance
with required utilization review procedures; clarification of
publication of list of ambulatory surgery procedures; limitation on
ambulatory surgery group payment rates; extension of the balance
billing limitations currently in place for individual and professional
providers to non-institutional, non-professional providers; adjustment
of the CHAMPUS maximum allowable charge (CMAC) rate in the small number
of cases where the CMAC rate is less than the Medicare rate;
implementation of the government-wide debarment rule where any provider
excluded or suspended from CHAMPUS shall be excluded from all other
programs and activities involving Federal financial assistance, such as
Medicare or Medicaid; elimination of the requirement for non-
participating providers to file claims; and revision of the ambulatory
surgery cost-share information to enable the cost-share to be assessed
against the facility claim instead of the primary surgeon's claim.
DATES: This rule is effective October 13, 1998, except amendments to:
1. Sec. 199.6, is effective October 1, 1997;
2. Sec. 199.14(h) introductory text, effective January 1, 1999;
3. Sec. 199.15, Paragraph (c)(2), effective July 11, 1995;
4. Sec. 199.15, Paragraph (b)(4)(iii)(B), effective October 1,
1996.
ADDRESSES: Tricare Management Activity, (TMA), Program Development
Branch, Aurora, CO 80045-6900.
FOR FURTHER INFORMATION CONTACT:
Kathleen Larkin, Office of the Assistant Secretary of Defense (Health
Affairs)/TRICARE Management Activity, telephone (703) 681-1745.
Questions regarding payment of specific claims under the CHAMPUS
allowable charge method should be addressed to the appropriate TRICARE/
CHAMPUS contractor.
SUPPLEMENTARY INFORMATION:
I. Introduction and Background
A. Congressional Action
The National Defense Authorization Act for 1984 provided CHAMPUS
with a statutory linkage to the Medicare Prospective Payment System,
upon which the CHAMPUS diagnosis-related group (DRG) based payment
system is modeled and required by law to follow whenever practicable.
In response to the rapid escalation of CHAMPUS costs in the 1980s,
the Congress urged DoD, beginning with the Appropriations Act for
Fiscal Year 1991 that physician payments under CHAMPUS be brought in
line with payments under Medicare.
The National Defense Authorization Act for 1996, section 731,
extended the balance billing limit authority to non-institutional, non-
professional providers.
Section 2455 of the Federal Acquisition Streamlining Act of 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.
B. Public Comments
The proposed rule was published in the Federal Register on November
14, 1997. We received three comment letters. We thank those who
provided comments; specific matters raised by commenters are summarized
below in the appropriate sections of the preamble.
II. Provisions of the Rule
A. Proposed Changes to the CHAMPUS DRG-Based Payment System
1. Heart and Liver Transplants (revisions to
Sec. 199.14(a)(1)(ii)(C)(2),(3) and (4))
Provisions of the Proposed Rule. This paragraph explains that 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 proposed 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.
Analysis of Major Public Comments. One commenter objected to the
provisions of the proposed rule in the belief that DRG weights for the
CHAMPUS program would be inappropriate for pediatric transplant
services.
Response. Our analysis of recent data indicates that both the
average lengths of stay and average billed charges are higher for
pediatric liver transplants, but both measures are lower for pediatric
heart transplants. Thus, given that the number of cases is sufficiently
large and that differences between pediatric and non-pediatric cases
are not significant, it seems reasonable to calculate combined
pediatric and non-pediatric DRG weights for heart and liver
transplants.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
2. Payment Requests for Capital and Direct Medical Education Costs
(Revisions to Sec. 199.14(a)(1)(iii)(G)(3))
Provisions of the Proposed Rule. Initially we required that
hospitals submit their request for payment of capital and direct
medical education
[[Page 48440]]
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 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
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 proposed to adopt these same requirements for
submitting requests for payment of capital and direct medical education
costs with CHAMPUS.
Currently, 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 us to close out our data for these
periods, we proposed that any capital and direct medical education
payment requests that fall within the six year statute of limitations
and October 1, 1998, must be submitted to the appropriate CHAMPUS
contractor no later than 5 months after October 1, 1998.
In addition, since capital and direct medical education costs are
included in the national children's hospital differential, we proposed
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.
Analysis of Major Public Comments. We received two comments with
respect to the time frame prescribed for requesting payment of capital
and direct medical education. One commenter suggested we adopt a one
year deadline from the end of the cost reporting period to file
information necessary to the initial payment of capital and direct
medical education costs. Another commenter suggested we allow a six
month period after the close of the fiscal year to submit cost reports,
and, since capital and direct medical education costs are included in
the national children's hospital differential, requested the
differential factor be updated annually with cost report information.
The commenter also suggested that the payments come directly to
hospitals and not be passed through the TRICARE Managed Care Support
contractors.
Response. With respect to the timeframe to submit capital and
direct medical education costs, we agree that a one year deadline is
appropriate. We disagree with an annual update to the national
children's hospital differential since it is designed to reflect the
historical relationship of children's hospitals to DRG reimbursed
institutional facilities. We also disagree with the suggestion that
payments not be passed through our TRICARE managed care support
contractors. It is in the Government's interest to continue to use our
regional managed care support contractors to process these payments
because they provide economies of scale for claims processing and are
acting as the government's fiscal agents in these cases.
Provisions of the Final Rule. The final rule includes a one year
timeframe to submit capital and direct medical education costs.
3. Indirect Medical Education Adjustment Factor (Revisions to
Sec. 199.14(a)(1)(iii)(A)(3), (a)(1)(iii)(D)(2), and
(a)(1)(iii)(E)(3)(i), (ii), (iii), (iv), and (v))
Provisions of the Proposed Rule. 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 hospital.
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 proposed 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 medical
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 hospitals' 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
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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.
Analysis of Major Public Comments. One commenter suggested that
supplemental payments for indirect medical education be continued under
CHAMPUS since current Medicare proposed reductions are appropriate for
adult populations but children's hospitals would be harmed, therefore
they suggested that the percentage reductions implied by the Medicare
formula be removed in application to children's hospitals.
Response. We disagree. We believe the incentives associated with
the existing IME adjustments are contrary to the Administration's
policy of decreasing the number of residents trained in the United
States, increasing the relative number of residents trained in primary
care, and encouraging more training in nonhospital-based sites thus it
is appropriate for CHAMPUS to adopt the Medicare formula.
Provisions of the Final Rule. In our November 14, 1997, proposed
rule, we proposed an alternative updating method for the indirect
medical education (IDME) adjustment factor. For those hospitals 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, we proposed to use the Medicare adjustment factor, if said
hospital was subject to the Medicare Prospective Payment System (PPS).
We stated HCFA uses a slightly different formula than that used by
CHAMPUS, and we were aware this would result in a different adjustment
factor than would otherwise be used, however, we believed the
difference was likely to be small.
In reassessing the proposed alternative method, we felt it would be
more equitable to use the ratio of interns and residents to beds, which
is a component of the IDME formula, from HCFA's Provider Specific File
(PSF), rather than use Medicare's IDME adjustment factor. The ratio of
interns and residents to beds will be provided to the contractors to
update each hospital's IDME adjustment factor at the same time we
routinely update the DRG rates and weights. The Provider Specific File
is sent to us by HCFA each year for use in calculating the updated DRG
rates and weights.
This method will be used beginning with the Fiscal Year 1999 DRG
update. If after October 1, 1998, the contractor receives a request for
payment of capital and direct medical education costs, they shall only
change the ratio of interns and residents to beds if the request for
payment is for a hospital's cost reporting period ending prior to
October 1, 1998. The only other time a hospital's IDME adjustment
factor should be changed is if the ratio of interns and residents to
beds changes as a result of a Medicare audit. This alternative method
shall only apply to those hospitals subject to the Medicare PPS.
For hospitals which have indirect medical education factors for
CHAMPUS but are not subject to the Medicare PPS, including children's
hospitals, the contractor shall send a notice each August to those
hospitals who have not provided the contractor with updated information
on the number of its interns, residents and beds, since the previous
October 1, and advise them the IDME factor will be eliminated if they
fail to provide the contractor with updated information by October 1 of
that same year. We anticipate the first notices to be sent in August of
1998.
Based on the above, we are removing the information contained in
the proposed rule regarding the alternative updating method for the
IDME adjustment factor. Since 32 CFR 199.14 already specifies the DRG
payment is to be adjusted for IDME costs, any additional information
regarding updating the IDME factor can be obtained from the contractor.
This change does not affect the adoption of the percentage reductions
being applied to the CHAMPUS IDME formula to gradually reduce the
current level of IDME adjustment over the next several years.
4. Length of Stay Outliers (Revisions to 32 CFR
199.14((a)(1)(iii)(E)(1)(i)(A) and (B))
Provisions of the Proposed Rule. 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
proposed 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 discharge 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 with extraordinary 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
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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 eliminate the long
stay outliers for all cases except children's hospitals and neonates
for Fiscal Year 1998, and proposed to eliminate the long stay outliers
for them in Fiscal Year 1999, we still proposed to adopt the arithmetic
mean to calculate the per diem, in order to be consistent with the
Medicare PPS in calculating payments of outlier cases.
Analysis of Major Public Comments. One commenter recommended that
children's hospitals' outlier cases be exempt from the 100-day Medicare
cap because children, unlike elderly adults in long stay cases are
almost never discharged to nursing home care from the hospital.
Response. CHAMPUS does not apply the 100 day Medicare cap to any
cases, therefore the comment is not applicable.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
5. Cost Outliers (Revisions to 32 CFR 199.14(a)(1)(iii)(E)(1)(ii) (A)
and (B))
Provisions of the Proposed Rule. 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 proposed to adopt this same requirement for children's
hospitals and neonates in Fiscal Year 1999.
Analysis of Major Public Comments. One commenter was concerned that
this policy is not budget neutral, there is no special per diem for
neonates, and that Children's hospitals are not exempt from the 100-day
Medicare cap. The commenter suggested that the 1998 HCFA-adopted
requirement be implemented in a budget neutral fashion. We agree and we
plan to establish an outlier ratio designed to be budget neutral.
Provisions of the Final Rule. Effective October 1, 1998, Children's
hospitals will have their cost outlier payments adjusted so that these
payments are budget neutral with the FY94 outlier policies for
children's hospitals. The Department will calculate an adjustment
factor which will be applied to all cost outlier payments in FY99 and
thereafter. This adjustment factor will be applied equally to the cost
outlier payments for all Children's hospitals. The adjustment factor
will be equal to the ratio of CHAMPUS outlier payments using the FY94
CHAMPUS long stay and cost outlier payment methods to the CHAMPUS
outlier payment methods using the FY99 cost outlier payment methods. We
will calculate this ratio in late FY98 once the CHAMPUS FY99 cost
outlier payment policy has been determined. The ratio will be
calculated using CHAMPUS claims data from the Children's hospitals in
FY95 and FY96. In order to ensure that budget neutrality is achieved
with this ratio, the Department will monitor outlier payments and
recalculate the ratio of payments under the FY94 outlier policies to
actual outlier payments in FY99 using actual cost outlier cases at
Children's hospitals in FY99. This calculation will be done in FY 2000.
If the ratio has changed significantly, a new ratio will be used to pay
Children's hospital outlier cases in FY 2001 and thereafter. The final
rule has been modified to reflect these adjustment procedures.
6. Payment for Transfer Cases (Revisions to 32 CFR
199.14(a)(1)(i)(C)(6)(iv))
Provisions of the Proposed Rule. 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
proposed to 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, we proposed paying the
transferring hospital 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 change
allows hospitals to be compensated more appropriately for the treatment
they furnish to patients before transfer. We proposed continuing to pay
transferring hospitals 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).
Analysis of Major Public Comments. One commenter suggested a higher
reimbursement rate of 150 percent for days after the first day for
Children's hospitals suggesting that their costs were higher.
Response. We were unable to determine any differences between
Children's hospitals and other hospitals in this regard. Thus we have
not changed the reimbursement rate.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
7. Elimination of Separate Adjusted Standardized Amounts for Rural
Areas (Revision to 32 CFR 199.14(a)(1)(iii)(D) (1) and (5))
Provisions of the Proposed Rule. 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. We proposed
that the adjusted standardized amounts for ``other urban'' and
``rural'' areas be listed as ``other'' areas.
Analysis of Major Public Comments. No comments were received.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
8. Payment for Blood Clotting Factor (Revisions to 32 CFR Section
199.14(a)(1)(ii)(C)(10))
Provisions of the Proposed Rule. 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 proposed to reinstate payments for discharges occurring on or
after October 1, 1997.
Analysis of Major Public Comments. No comments were received.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
[[Page 48443]]
9. Effect of Change of Ownership on Exclusion of Long-Term Care
Hospitals (Revisions to 32 CFR 199.14(a)(1)(ii)(D)(4))
Provisions of the Proposed Rule. 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 proposed to adopt these new requirements
beginning in Fiscal Year 1996.
Analysis of Major Public Comments. No comments were received.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
10. Empty and Low-Volume DRGs (Revision to 32 CFR 199.14(a)(1)(iii)(B))
Provisions of the Proposed Rule. Currently, 32 CFR
199.14(a)(1)(iii)(B) specifies that the Medicare weight shall be used
for any DRG with less then 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 proposed that the Director,
TRICARE Management Activity, or designee, has the authority to consider
alternative methods for estimating CHAMPUS weights in these low-volume
DRG categories.
Analysis of Major Public Comments. No comments were received.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
11. Hospitals Within Hospitals (Revisions to 32 CFR 199.14(a)(1)(ii)(D)
(5))
Provisions of the Proposed Rule. 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 proposed to adopt these requirements beginning in
Fiscal Year 1998.
Analysis of Major Public Comments. No comments were received.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
B. Proposed Changes Regarding Elimination of Physician Attestation
Requirement (Revision to 32 CFR 199.15(c)(2))
Provisions of the Proposed Rule. 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 acknowledge 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 proposed to adopt these requirements effective the
same date.
Analysis of Major Public Comments. One commenter appreciated DoD's
elimination of the annual physician attestation policy.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
C. Proposed Changes Regarding Clarification of Payment Reduction for
Noncompliance With Required Utilization Review Procedures (revision to
32 CFR 199.15(b)(4)(iii)(B))
Provisions of the Proposed Rule. To cover those situations where
network providers have agreements with the managed care contractors for
denial of payments of the provider's 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.
Analysis of Major Public Comments. No comments were received.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
D. Clarification Regarding List of Ambulatory Surgery Procedures
Provisions of the Proposed Rule. 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 final 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. We proposed that 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.
Analysis of Major Public Comments. No comments were received.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
E. Proposed Changes Regarding Limits on Ambulatory Surgery Group
Payment Rates (Revisions to 32 CFR 199.14(d)(3)(iv))
Provisions of the Proposed Rule. 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, the OCHAMPUS 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 proposed to add a provision that gives discretion to the
Director, TMA, 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
proposed multiplying the applicable DRG relative weight times the
national large urban adjusted standardized amount (ASA). We proposed to
use the large urban ASA rather than the ``other
[[Page 48444]]
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.
Analysis of Major Public Comments. No comments were received.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule. We want to clarify, however, that the CHAMPUS-determined
inpatient allowable amount that serves as a limit on the ambulatory
surgery group payment amounts includes adjustments for hospital wage
indexes.
F. Proposed Changes Regarding Balance Billing (Revisions to 32 CFR
199.14(h))
Provisions of the Proposed Rule. 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.
We proposed 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, we proposed that the limitation may be
waived on a case-by-case basis.
Analysis of Major Public Comments. While noting that the proposed
rule applied to non-institutional, non-professional providers, one
commenter was opposed to across-the-board balance billing limits for
physicians and called on the Department to articulate and publish
criteria for allowing a waiver of the balance billing limits on a case-
by-case basis.
Response. As we have stated in the past, we believe it is
appropriate to protect beneficiaries against excessive balance billing.
We have committed ourselves to monitoring carefully balance billing
trends with an objective of assuring that a majority of claims in all
localities for all procedures of appreciable volume have zero balance
billing. Where this is not maintained, we are willing to maintain
CHAMPUS payment rates a level higher than Medicare's. Based on our
willingness to do this, we do not believe providers need to also
maintain balance billing levels higher than Medicare, absent some
special circumstance. As we have noted, in a special circumstance, the
limitation can be waived if requested by the beneficiary. We do not
have set criteria we use when evaluating and granting a waiver to our
balance billing protections, rather each request is evaluated by the
Director, TMA, based on the specific facts provided by a beneficiary.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
G. Proposed Changes Regarding CMAC Rates (Revisions to 32 CFR
199.14(h)(1)(iii)(D))
Provisions of the Proposed Rule. 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 proposed 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 proposed 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
proposed to adopt an additional Medicare indicator of economic factors,
namely the data used for the Medicare fee determination, to adjust the
rates in these special cases. This is set forth in the proposed new
section 199.14(h)(1)(iii)(D).
Analysis of Major Public Comments. One commenter was pleased by the
proposed change and suggested that we publish the list of procedures
that will be increased to the Medicare rates. We agree and we have
included the list at the end of the preamble.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
H. Proposed Changes Regarding Government-Wide Effect of Exclusion or
Suspension From CHAMPUS (Revisions to 32 CFR 199.9(m))
Provisions of the Proposed Rule. 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, required 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 24 (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 issue of balance billing by
providers. Current regulations generally require providers to limit
balancing 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 a violation of this
requirement to the list of provider actions that are considered abuse
of the program for purposes of termination, suspension and other
administrative remedies.
A principal effect of this proposed revision is that any provider
who
[[Page 48445]]
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.
Analysis of Major Public Comments. One commenter suggested that
CHAMPUS should require the same level of intent as is currently
required for exclusion or suspension in the Medicare and Medicaid
programs. They recommended that there be evidence that the physician
``knowingly and willfully'' failed to comply with CHAMPUS requirements.
Response. The comment is not pertinent to the proposed rule because
the proposed rule does not make changes to our requirements in 32 CFR
199.6 which sets forth general policies and program requirements for
authorized providers.
Provisions of the Final Rule. The final rule is consistent with the
proposed rule.
I. Elimination of Mandatory Claims Filing Requirement (Revision to 32
CFR 199.6(a)(11))
This final rule conforms the CHAMPUS regulation to title 10, as
revised by a provision of the National Defense Authorization Act for
Fiscal Year 1998 that eliminated the requirement that all providers
file claims on behalf of CHAMPUS beneficiaries.
J. Revision of Ambulatory Surgery Cost-Share Information (Revision to
32 CFR 199.18(d)(3)(v))
When a dependent of an active-duty member receives approved
ambulatory surgery services, the cost-share is $25. This single cost-
sharing amount covers the facility claim as well as any claims for
professional (surgeon, anesthesia, etc.) services. In order to ensure
consistency and for administrative ease, we have required that the $25
cost-share be assessed against the facility claim. When the regulation
for the TRICARE uniform HMO benefit was published (32 CFR 199.18), that
part inadvertently stated that the ambulatory surgery cost-share is to
be assessed against the claim for the primary surgeon's services. Since
this does not conform to established practices, we are revising this
paragraph to enable the cost-share to be assessed against the facility
claim. This will have no effect on either the collection or the amount
of the cost-share.
III. 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 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 collection of information to allow TRICARE 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)(iii)(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.
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 submtited 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.
List of Subjects in 32 CFR Part 199
Claims, Health insurance, Individuals with disability, Military
personnel, Reporting and recordkeeping requirements.
Accordingly, 32 CFR Part 199 is 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.
Sec. 199.6 [Amended]
2. Section 199.6 is amended by removing paragraph (a)(11) and
redesignating paragraph (a)(12) as (a)(11).
3. Section 199.9 is 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.)
4. Section 199.14 is amended by revising first sentences of (a)(1)
introductory text and (a)(1)(i)(C)(6)(iv), and by revising paragraphs
(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), (a)(1)(iii)(B),
(a)(1)(iii)(D)(1) first sentence 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
[[Page 48446]]
by adding a new sentence after the first sentence of paragraph
(a)(1)(i)(C)(6)(iv), and by adding new paragraphs (a)(1)(ii)(D)(5), 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 operating
costs of inpatient hospital services furnished by hospitals subject to
the system is made on the basis of prospectively-determined rates and
applied 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
inpatients. * * *
(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 42 CFR 412.22 and the criteria for one or more of the
excluded hospital classifications described in Sec. 412.23 of Title 42
CFR.
* * * * *
(iii) * * *
(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.* * *
* * * * *
(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 outliner. 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.
(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 $13,500 shall
[[Page 48447]]
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, standardized costs
are no longer adjusted for indirect medical education costs. In
addition, CHAMPUS will calculate the outlier payments that would have
occurred at each of the 59 Children's hospitals under the FY99 outlier
policy for all cases that would have been outliers under the FY94
policies using the most accurate data available in September 1998. A
ratio will be calculated which equals the level of outlier payments
that would have been made under the FY94 outlier policies and the
outlier payments that would be made if the FY99 outlier policies had
applied to each of these potential outlier cases for these hospitals.
The ratio will be calculated across all outlier claims for the 59
hospitals and will not be hospital specific. The ratio will be used to
increase cost outlier payments in FY 1999 and FY 2000, unless the
hospital has a negotiated agreement with a managed care support
contractor which would affect this payment. For hospitals with managed
care support agreements which affect these payments, CHAMPUS will apply
these payments if the increased payments would be consistent with the
agreements. In FY 2000 the ratio of outlier payments (long stay and
cost) that would have occurred under the FY 94 policy and actual cost
outlier payments made under the FY 99 policy will be recalculated. If
the ratio has changed significantly, the ratio will be revised for use
in FY 2001 and thereafter. In FY 2002, the actual cost outlier cases in
FY 2000 and 2001 will be reexamined. The ratio of outlier payments that
would have occurred under the FY94 policy and the actual cost outlier
payments made under the FY 2000 and FY 2001 policies. If the ratio has
changed significantly, the ratio will be revised for use in FY 2003.
* * * * *
(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. Beginning October 1, 1998, such request shall
be filed with CHAMPUS on or before the last day of the twelfth 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.
Note: This paragraph will be implemented when CMAC rates are
published.
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.
5. Section 199.15 is 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.
* * * * *
(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 acknowledgement 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
[[Page 48448]]
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.
* * * * *
6. Section 199.18 is amended by revising paragraph (d)(3)(v)
introductory text to read as follows:
Sec. 199.18 Uniform HMO Benefit.
* * * * *
(d) * * *
(3) * * *
(v) For ambulatory surgery services, the per service fee is as
follows:
* * * * *
Dated: August 31, 1998.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 98-23842 Filed 9-9-98; 8:45 am]
BILLING CODE 5000-04-M
