[Federal Register: April 1, 2008 (Volume 73, Number 63)]
[Proposed Rules]
[Page 17271-17289]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01ap08-14]
[[Page 17271]]
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DEPARTMENT OF DEFENSE
Office of the Secretary
[DOD-2007-HA-0048; RIN 0720-AB19]
32 CFR Part 199
TRICARE; Outpatient Hospital Prospective Payment System (OPPS)
AGENCY: Office of the Secretary, DoD.
ACTION: Proposed rule.
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SUMMARY: This proposed rule implements a prospective payment system for
hospital outpatient services similar to that furnished to Medicare
beneficiaries, as set forth in section 1833(t) of the Social Security
Act. The rule also recognizes applicable statutory requirements and
changes arising from Medicare's continuing experience with this system
including certain related provisions of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003. The Department is
publishing this rule to implement an existing statutory requirement for
adoption of Medicare payment methods for institutional care which will
ultimately provide incentives for hospitals to furnish outpatient
services in an efficient and effective manner.
DATES: Written comments received at the address indicated below by June
2, 2008 will be accepted.
ADDRESSES: You may submit comments, identified by docket number and or
Regulatory Information Number (RIN) number and title, by either of the
following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Federal Docket Management System Office, 1160
Defense Pentagon, Washington, DC 20301-1160.
Instructions: All submissions received must include the agency name
and docket number or RIN for this Federal Register document. The
general policy for comments and other submissions from members of the
public is to make these submissions available for public viewing on the
Internet at http://regulations.gov as they are received without change,
including any personal identifiers or contact information.
FOR FURTHER INFORMATION CONTACT: David E. Bennett, TRICARE Management
Activity, Medical Benefits, and Reimbursement Systems, telephone (303)
676-3494.
SUPPLEMENTARY INFORMATION:
I. Introduction and Background
The OPPS evolved out of Congressional mandates for replacement of
Medicare's cost-based payment methodology with a prospective payment
system (PPS). Medicare implemented OPPS for services furnished on or
after August 1, 2000, with temporary transitional provisions to buffer
the financial impact of the new prospective payment system (e.g.,
incorporating transitional pass-through adjustments and proportional
reductions in beneficiary cost-sharing to lessen potential payment
reductions experienced under the new OPPS).
Congress likewise established enabling legislation under section
707 of the National Defense Authorization Act of Fiscal Year 2002
(NDAA-02), Public Law 107-107 (December 28, 2001) changing the
statutory authorization [in 10 U.S.C. 1079(j)(2)] that TRICARE payment
methods for institutional care shall be determined, to the extent
practicable, in accordance with the same reimbursement rules used by
Medicare. Similarly, under 10 U.S.C. 1079(h), the amount to be paid to
health care professional and other non-institutional health care
providers ``shall be equal to an amount determined to be appropriate,
to the extent practicable, in accordance with the same reimbursement
rules used by Medicare''. Based on these statutory mandates, TRICARE is
adopting Medicare's prospective payment system for reimbursement of
hospital outpatient services currently in effect for the Medicare
program as required under the Balanced Budget Act of 1997 (BBA 1997),
(Pub. L. 105-33) which added section 1833(t) of the Social Security Act
providing comprehensive provisions for establishment of a Medicare
hospital OPPS. The Act required development of a classification system
for covered outpatient services that consisted of groups arranged so
that the services within each group were comparable clinically and with
respect to the use of resources. The Act also described the method for
determining the Medicare payment amount and beneficiary coinsurance
amount for services covered under the outpatient PPS. This included the
formula for calculating the conversion factor and data requirements for
establishing relative payment weights.
Centers for Medicare & Medicaid Services (CMS) published a proposed
rule in the Federal Register on September 8, 1998 (63 FR 47552) setting
forth the proposed PPS for hospital outpatient services. On June 30,
1999, a correction notice was published (64 FR 35258) to correct a
number of technical and typographical errors contained in the September
8, 1998 proposed rule.
Subsequent to publication of the proposed rule, the Medicare,
Medicaid, and State Child Health Insurance Program (SCHIP) Balanced
Budget Refinement Act of 1999 (BBRA 1999) (Pub. L. 106-133) enacted on
November 29, 1999, made major changes that affected the proposed
Medicare OPPS. The following BBRA 1999 provisions were implemented in a
final rule (65 FR 18434) published on April 7, 2000.
Made adjustments for covered services whose costs exceed a
given threshold (i.e., an outlier payment).
Established transitional pass-through payments for certain
medical devices, drugs, and biologicals.
Placed limitations on judicial review for determining
outlier payments and the determination of additional payments for
certain medical devices, drugs, and biologicals.
Included as covered outpatient services implantable
prosthetics and durable medical equipment and diagnostic x-ray,
laboratory, and other tests associated with those implantable items.
Limited the variation of costs of services within each
payment classification group.
Required at least annual review of the groups, relative
payment weights, and the wage and other adjustments to take into
account changes in medical practice, the addition of new services, new
cost data, and other relevant information or factors.
Established transitional corridors that would limit
payment reductions under the hospital outpatient PPS.
Established hold harmless provisions for rural and cancer
hospitals.
Provided that the coinsurance amount for a procedure
performed in a year could not exceed the hospital inpatient deductible
for the year.
Section 1833(t) of the Social Security Act was subsequently amended
by the Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act (BIPA) of 2000 (Pub. L. 106-554) and the Medicare
Prescription Drug, Improvement, and Modernization Act (MMA) of 2003
(Pub. L. 108-173) making additional changes in the OPPS.
As a prelude to implementation of the OPPS, Congress enacted the
Omnibus Budget Reconciliation Act of 1986 (OBRA) (Pub. L. 99-509) which
paved the way for development of a PPS for hospital outpatient services
by prohibiting payment for non-physician services furnished to hospital
patients (inpatients and outpatients), unless the services were
furnished either directly or under arrangement with the hospital,
except for services of physician
[[Page 17272]]
assistants, nurse practitioners and clinical nurse specialists.
Exceptions were also made for clinical diagnostic procedures, the
payment of which may only be made to the person or entity that
performed, or supervised the performance of, the test; and for
exceptionally intensive hospital outpatient services provided to
Skilled Nursing Facility (SNF) residents that lie well beyond the scope
of the care that SNFs would ordinarily furnish, and thus beyond the
ordinary scope of the SNF care plan. Consolidated billing facilitated
the payment of services included within the scope of each ambulatory
payment classification (APC). The OBRA also mandated hospitals to
report claims for services under the Healthcare Common Procedure Coding
System (HCPCS) which enabled the identification of specific procedures
and services used in the development of outpatient PPS rates.
Ongoing changes and refinement to the OPPS have been accomplished
through annual proposed and final rulemaking, along with interim
transmittals and program memoranda taking into consideration changes in
medical practice, addition of new services, new cost data, and other
relevant information and factors. TRICARE will recognize to the extent
practicable all applicable statutory requirements and changes arising
from Medicare's continuing experience with this prospective payment
system, including changes to the amounts and factors used to determine
the payment rates for hospital outpatient services paid under the
prospective payment system [e.g., annual recalibration (updating) of
group weights and conversion factors and adjustments for area wage
differences (wage index updates)]. The agency will adopt all of
Medicare's CY 2008 OPPS changes published in the Federal Register on
November 27, 2007, (72 FR 66580); e.g., extending the current packaging
to include guidance services, image processing services, intraoperative
services, imaging supervision and interpretation services, diagnostic
radiopharmaceuticals, contrast agents, and observation services; and
reduction of payments in cases where a hospital receives a substantial
partial credit from the manufacturer toward the cost of a replacement
device implanted in a procedure.
While TRICARE intends to remain as true as possible to Medicare's
basic OPPS methodology (i.e., adoption and updating of the Medicare
data elements used to calculate the prospective payment amounts), there
will be some deviations required to accommodate the uniqueness of the
TRICARE program. These deviations have been designed to accommodate
existing TRICARE benefit structure and claims processing procedures/
systems implemented under the TRICARE Next Generation Contracts (T-
NEX), while at the same time eliminating any undue financial burden to
TRICARE Prime, Extra, and Standard beneficiary populations. Following
is a brief discussion of each of these deviations:
[cir] Outpatient Code Editor (OCE)--The Medicare Outpatient Code
Editor with APC program edits data to help identify possible errors in
coding and assigns Ambulatory Payment Classification numbers based on
HCPCS codes for payment under the OPPS. The OPPS APC is an outpatient
equivalent of the inpatient Diagnosis Related Group (DRG)-based PPS.
Like the inpatient system based on DRGs, each APC has a pre-established
prospective payment amount associated with it. However, unlike the
inpatient system that assigns a patient to a single DRG, multiple APCs
can be assigned to one outpatient claim. If a patient has multiple
outpatient services during a single visit, the total payment for the
visit is computed as the sum of the individual payments for each
service. Medicare provides updated versions of the OCE, along with
installation and user manuals, to its fiscal intermediaries on a
quarterly basis. The updated OCE reflects all new coding and editing
changes during that quarter.
It was found upon initial testing of the OCE that it could not be
used in its present form given the fact that the extensive editing
embedded in its software program was specific to Medicare's benefit
structure and internal claims processing requirements. As a result, the
Agency has developed a TRICARE-specific OCE which will better
accommodate the benefit structure and claims processing systems
currently in place under the T-NEX contracts. This modified software
package will edit claims data for errors and indicate actions to be
taken and reasons why the actions are necessary. This expanded
functionality will facilitate the linkage between the action being
taken, the reasons for the action, and the information on the claim
that caused the action. The edits will be specific for TRICARE,
ensuring compliance with current claims processing criteria. The OCE
will also assign an APC number for each service covered under the OPPS
and return information to be used as input to the TRICARE PRICER
program.
Like Medicare's OCE, the TRICARE-specific OCE will be updated on a
quarterly basis incorporating, to the extent practicable, all Medicare
changes/updates (i.e., those changes initiated through rulemaking and
transmittals/program memoranda). Periodic updating of the TRICARE-
specific OCE will ensure consistency and accuracy of claims processing
and payment under the OPPS.
[cir] Deductible and Cost-Sharing--Medicare's OPPS coinsurance was
initially frozen at 20 percent of the national median charge for the
services within each APC (wage adjusted for the provider's geographic
area) or 20 percent of the APC payment rate, whichever was greater
(i.e., the coinsurance for an APC could not fall below 20 percent of
the APC payment rate). This was designed so that, as the total payment
to the provider increased each year based on market basket updates, the
present or frozen coinsurance amount would become a smaller portion of
the total payment until the coinsurance represented 20 percent of the
total. Once the coinsurance became 20 percent of the payment amount,
annual updates would be applied to the coinsurance so that it would
continue to account for 20 percent of the total charge. Wage adjusted
coinsurance amounts were further limited by the Medicare inpatient
deductible. Subsequent legislation has accelerated the reduction of
beneficiary copayment amounts by imposing prescribed percentage
limitations off of the APC payment rate. For example, for all services
paid under the OPPS in CY 2005, the national unadjusted copayment
amount cannot exceed 45 percent of the APC rate. Accelerated reductions
were imposed specifically for those APC groups for which coinsurance
represented a relatively high proportion of the total payment.
A program payment percentage is calculated for each APC by
subtracting the unadjusted national coinsurance amount for the APC from
the unadjusted payment rate and dividing the result by the unadjusted
payment rate. The payment rate for each APC group is the basis for
determining the total payment (subject to wage-index adjustment) that a
hospital will receive from the beneficiary and the Medicare program.
Since imposition of Medicare's unadjusted national coinsurance
amounts would have an adverse financial impact on TRICARE beneficiaries
(i.e., imposition of significantly higher cost-sharing for Prime
beneficiaries), the Agency has opted to use the following hospital
[[Page 17273]]
outpatient deductible and cost-sharing/copayments currently being
applied in Tables 1 and 2 below for Prime, Extra, and Standard TRICARE
programs for hospital outpatient services:
Table 1.--Hospital Outpatient Deductibles
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Active duty family members
TRICARE programs ---------------------------------------------------- Retirees, their family
E1-E4 E5 & above members & survivors
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Prime............................. None.................... None.................... None.
Extra............................. $50 per Individual...... $150 per Individual..... $150 per Individual.
$100 Maximum per family. $300 Maximum per family. $300 Maximum per family.
Standard.......................... $50 per Individual...... $150 per Individual..... $150 per Individual.
$100 Maximum per family. $300 Maximum per family. $300 Maximum per family.
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Table 2.--Hospital Outpatient Copayments/Cost-Sharing
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TRICARE prime program
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Type of service Active duty family member TRICARE extra program TRICARE standard
------------------------------------------------ Retirees, their family program
E1-E4 E5 & above members & survivors
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Hospital Outpatient Departments: $0 copayment per $0 copayment per $12 copayment per Active Duty Family Active Duty Family
Clinic visits; therapy visits; visit. visit. visit. Members: Cost-share-- Members: Cost-share--
treatment rooms, etc. ...................... ...................... ...................... 15% of fee 20% of the allowable
...................... ...................... ...................... negotiated by charge.
Emergency Services: Emergency and ...................... ...................... ...................... contractor Retirees, Their
urgently needed care obtained in $0 copayment per $0 copayment per $30 copayment per Retirees, Their Family Members &
hospital emergency room. visit. visit. emergency room visit. Family Members & Survivors: Cost-
Survivors: Cost- share--25% of the
share--20% of the allowable charge.
fee negotiated by
the contractor
Ambulatory Surgery (same day): $0 copayment per $0 copayment per $25 copayment ADFMs: Cost-share-- ADFMs: Cost-share--
Hospital-based ambulatory visit. visit. No separate copayment/ $25 $25.
surgical center. ...................... ...................... cost-share for Retirees, Their Retirees, Their
...................... ...................... separately billed Family Members & Family Members &
...................... ...................... professional Survivors: Cost- Survivors: Lesser of
...................... ...................... charges. share--20% of the 25% of group rate or
...................... ...................... ...................... institutional fee 25% of billed
Birthing Centers Prenatal care, ...................... ...................... ...................... negotiated by the charge.
outpatient delivery, and $0 copayment per $0 copayment per $25 copayment contractor.
postnatal care provided in visit. visit.
hospital-based birthing center.
Partial Hospitalization Programs $0 copayment per $0 copayment per 40 per diem charge ADFMs: $20 per diem ADFMs: $20 per diem
(PHPs): Mental health services visit. visit. No separate copayment/ charge charge.
provided in authorized hospital- cost-share for Retirees, Their Retirees, Their
based PHP. separately billed Family Members & Family Members &
professional charges Survivors: Cost- Survivors: Cost-
share--20% of the share--25% of the
TRICARE allowed TRICARE allowed
amount amount.
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[cir] Hold-Harmless Protection--Since the inception of the Medicare
OPPS, providers have been eligible to receive additional transitional
outpatient payments (TOPs) if the payments they received under the OPPS
were less than the payments they could have received for the same
services under the payment system in effect before the OPPS. Prior to
January 1, 2004, most hospitals that realized lower payments under OPPS
received transitional corridor payments based on a percent of the
decreased payments, with the exception of cancer hospitals, children's
hospitals and rural hospitals having 100 or fewer beds which were held
harmless under this provision and paid the full amount of the decrease
in payment under the OPPS. Since transitional corridor payments were
intended to be temporary payments to ease the provider's transition
from a prior cost-based payment system to a prospective payments
system, they were terminated as of January 1, 2004, with the exception
of cancer and children's hospitals which were held harmless permanently
under transitional corridor provisions of the statute (section
1833(t)(7) of the Social Security Act). The authority for making
transitional corridor payments under section 1833(t)(7)(D)(i) of the
Act, as amended by section 411 Public Law 108-173, expired for rural
hospitals having 100 or fewer beds, and sole community hospitals (SCHs)
located in rural areas as of December 31, 2005. However, subsequent
legislation (Section 5105 of Pub. L. 109-171) reinstituted the hold-
harmless transitional outpatient payments (TOPs)
[[Page 17274]]
for covered OPD services furnished on or after January 1, 2006, and
before January 1, 2009, for rural hospitals having 100 or fewer beds
that are not SCHs. This provision provided an increased payment for
such hospitals for outpatient services if the OPPS payment they
received was less than the pre-BBA payment amount (i.e., the amount
that was received prior to implementation of OPPS) that they would have
received for the same covered service. When the OPPS payment is less
than the payment the provider would have received prior to OPPS
implementation, the amount of payment is increased by 90 percent of the
amount of that difference for CY 2007, and by 85 percent of the amount
of the difference for CY 2008. The amount of payment under section
1833(t)(13)(B) of the Act, as amended by section 411 of Public Law 108-
73, also provided a payment increase for rural SCHs of 7.1 percent for
all services and procedures paid under the OPPS, excluding drugs,
biologicals, brachytherapy seeds and services paid under pass-through
payments effective January 1, 2006, if justified by a study of the
difference in costs for rural SCHs, which include Medicare essential
access community hospitals or EACHs.
While the Agency adopted the hold-harmless TOPs for rural hospitals
having 100 or fewer beds and SCHs, it opted to totally exempt cancer
and children's hospitals from the OPPS in lieu of imposing the hold-
harmless provision, given the administrative complexity of capturing
the data required for payment of monthly interim TOP amounts. TOPs
would require a comparison of what would have been paid [i.e., billed
charges and CHAMPUS Maximum Allowable Charge (CMAC) amounts] prior to
implementation of the OPPS for hospital outpatient services to those
amounts actually paid under the OPPS for the same services. A TOP would
be allowed in addition to the OPPS amount if payment to a cancer or
children's hospital was lower than the amount that would have been paid
prior to implementation of the OPPS. Since transitional corridor
payments were specifically designed to supplement the losses
experienced under the OPPS (i.e., to pay for services at the full
amount that would have been allowed prior to implementation of the
OPPS), and most, if not all, outpatient services paid at a billed or
CMAC would exceed the OPPS amount, the program cannot justify the
administrative burden/expense of maintaining the hold-harmless
provisions for cancer and children's hospitals. As a result, TRICARE
will continue to reimburse cancer and children's hospitals on a fee-
for-services basis using billed charges and CMAC rates; i.e., they will
be excluded altogether from the OPPS.
Adoption of the Medicare OPPS has also highlighted other policy
considerations which must be addressed in order to accommodate
preexisting authorization criteria and reimbursement systems. Following
are these identified policy considerations and prescribed resolutions:
[cir] Partial Hospitalization Programs (PHP)--Currently, TRICARE
coverage extends to both full- and half-day psychiatric partial
hospitalization services furnished by TRICARE-authorized partial
psychiatric hospitalization programs and authorized mental health
providers for the active treatment of a mental disorder. Each
psychiatric partial hospitalization program must be either a distinct
part of an otherwise authorized institutional provider or a
freestanding program certified pursuant to TRICARE certification
standards; i.e., the facility must be accredited by the Joint
Commission on Accreditation of Healthcare Organizations (JCAHO) under
the current edition of the Accreditation Manual for Mental Health,
Chemical Dependency, and Mental Retardation/Developmental Disabilities
Services and meet all other requirements as prescribed under 32 CFR
199.6(b)(4)(xii)(A) through (D). These authorized and participating
partial hospitalization programs are paid a percentage off of the
average inpatient per diem amount per case to both high- and low-volume
psychiatric hospitals. Full-day partial hospitalization programs
(minimum of 6 hours) receive 40 percent of the average inpatient per
diem, while partial hospitalization programs with less than 6 hours
(with a minimum of three hours) will be paid a per diem of 75 percent
of the rate for full-day partial hospitalization programs.
Although the prescribed payment methodology for PHP under OPPS is
similar to that currently being used (i.e., payment under a per diem
recognizing the provider's overhead costs and support staff), there are
subtle differences in that OPPS' all-inclusive per diems represent
actual median costs of furnishing a day of partial hospitalization
while per diems under the existing TRICARE system as prescribed under
32 CFR 199.14(a)(2)(ix) are extrapolated from inpatient costs based on
the intensity of the program (i.e., dependent on whether it is
classified as a full- or half-day program). Another notable difference
between the two programs is the continuation of reimbursement of half-
day PHPs (>= to 3 hrs. but < 6 hrs.) under TRICARE which are currently
not recognized for payment under the Medicare OPPS (i.e., Medicare has
not established a separate APC for half-day PHPs which can be used for
reimbursement under the TRICARE OPPS). This deviation from the Medicare
PHP required the establishment of an additional APC, the per diem of
which was set at 75 percent of the unadjusted full-day PHP APC amount
(i.e., 75 percent of the APC 0033 amount of $234.73, equaling $176.05
for CY 2007). This will ensure continued coverage of a well established
mental health treatment modality (half-day PHP) which has been in place
under TRICARE for over a decade. The above-established per diems
reflect the structure and scheduling of PHPs, and the composition of
the PHP APC consists of the cost of all services provided each day.
Although there is a requirement that each PHP day include a
psychotherapy service, there is no specification regarding the specific
mix of other services furnished within the day.
The TRICARE criteria under which PHP services may be rendered are
different than Medicare's--both with regard to the need for PHP
services and facility requirements. Currently, Medicare OPPS partial
hospitalization services may be provided to patients in lieu of
inpatient psychiatric care in hospital outpatient departments or
Medicare-certified community mental health centers (CMHCs). The Agency
has opted to retain the existing mental health review criteria under 32
CFR 199.4(b)(10) in order to ensure the continued level and quality of
mental health care afforded under the basic program. Following are the
TRICARE review criteria for determining the medical necessity of
psychiatric partial hospitalization services:
The patient is suffering significant impairment from a
mental disorder (as defined in Sec. 199.2) which interferes with age
appropriate functioning.
The patient is unable to maintain himself or herself in
the community, with appropriate support, at a sufficient level of
functioning to permit an adequate course of therapy exclusively on an
outpatient basis (but is able, with appropriate support, to maintain a
basic level of functioning to permit partial hospitalization services
and presents no substantial imminent risk of harm to self or others).
The patient is in need of crisis stabilization, treatment
of partially stabilized mental health disorders, or
[[Page 17275]]
services as a transition from an inpatient program.
The admission into the partial hospitalization program is
based on the development of an individualized diagnosis and treatment
plan expected to be effective for the patient and permit treatment at a
less intensive level.
Based on existing mental health review criteria under 32 CFR
199.4(b)(10) and certification requirements prescribed under 32 CFR
199.6(b)(4)(xii)(A), including accreditation by the JCAHO, under the
current edition of the Accreditation Manual for Mental Health, Chemical
Dependency, and Mental Retardation/Developmental Disabilities Services,
not all hospital-based PHPs will be assured of receiving payment under
the OPPS unless they meet the above prescribed certification
requirements and enter into a participation agreement with TRICARE.
CMHC PHPs have been excluded from payment under the TRICARE OPPS since
CMHCs are not recognized as authorized providers under the TRICARE
program.
While the authorization standards under 32 CFR 199.6(b)(4)(xii)(A)
through (D) will be retained/applied for both hospital-based and
freestanding PHPs currently recognized under the Program, including the
requirement for a written participation agreement with TRICARE,
freestanding PHPs will be exempt from OPPS and will continue to be
reimbursed under the old TRICARE PHP per diem system as prescribed
under 32 CFR 199.14(a)(2)(ix), subject to their own unique mental
health copayment/cost-sharing provisions.
[cir] Ambulatory Surgery Procedures--Currently, ambulatory surgery
procedures provided in both freestanding ambulatory surgery centers
(ASCs) and hospital outpatient departments or emergency rooms are paid
using prospectively determined rates established on a cost basis and
divided into eleven groups as prescribed under 32 CFR 199.14(d). These
payment groups are further adjusted for area labor costs based on
Metropolitan Statistical Areas (MSAs). The payment rates established
under this system apply only to facility charges for ambulatory surgery
(e.g., standard overhead amounts that include, but are not limited to,
nursing and technician services, use of the facility and supplies and
equipment directly related to the surgical procedure) and do not
include such items as physician's fees, laboratory, X-rays or
diagnostic procedures (other than those directly related to the
performance of the surgical procedure), prosthetics and durable medical
equipment for use in the patient's home. Ambulatory surgery procedures
(both provided in hospital-based and freestanding ambulatory surgery
centers) are subject to their own unique copayment/cost-sharing
provisions under the current TRICARE ambulatory surgery benefit.
With implementation of the OPPS, hospital-based ambulatory surgery
procedures will no longer be reimbursed under the original eleven tier
payment system, but will instead be paid on a rate-per-service basis
that varies according to the APC group to which the surgical procedure
is assigned. The relative weight of the APC group will represent the
median hospital cost of the services included in the APC relative to
the median cost of services included in APC 0606, Level 3 Clinic Visit.
The prospective payment rate for each APC will be calculated by
multiplying the APC's relative weight by a nationally established
conversion factor and adjusting it for geographic wage differences. The
APC payment will be subject to the deductible and cost-sharing/
copayment amounts currently being applied under Prime, Extra, and
Standard TRICARE programs for hospital outpatient services. Denial of
Medicare inpatient procedures will also be adhered to under the OPPS
(i.e., denial of inpatient surgical procedures performed in a hospital
outpatient setting) except for those inpatient procedures, which upon
medical review, could be safely and efficaciously rendered in an
outpatient setting due to TRICARE's younger, healthier beneficiary
population. Exceptions to Medicare's inpatient surgical procedure
listing were based in major part to standardized utilization management
review criteria, (i.e., Interqual and Milliman), used by TRICARE
Managed Care Support Contractors' medical review staff. TRICARE-
specific APCs will be developed for these designated inpatient
procedures based on median costs from the most recent 12 months of
claims history. OPPS reimbursement will also be extended for an
inpatient procedure performed to resuscitate or stabilize a patient
with an emergent, life-threatening condition who dies before being
admitted as a patient, which in this case, will be paid under a new
technology APC.
Freestanding ASCs will be exempt from OPPS and will continue to be
paid under the existing eleven tier payment system. ASC procedures will
be placed into one of ten groups by their median per procedure cost,
starting with $0 to $299 for Group 1, and ending with $1,000 to $1,299
for Group 9 and $1,300 and above for Group 10, subject to their own
unique copayment/cost-sharing provisions under the TRICARE freestanding
ambulatory surgery benefit. The eleventh payment tier/group was added
to the ASC reimbursement system as of November 1, 1998, for
extracorporeal shock wave lithotripsy, with a rate established off of
the inpatient Diagnostic Related Group (DRG) 323 which is currently
$3,289.
[cir] Birthing Centers--As described in 32 CFR 199.6(b)(4)(xi), a
birthing center is a freestanding or institution-affiliated outpatient
maternity care program which principally provides a planned course of
outpatient prenatal care and outpatient childbirth services limited to
low-risk pregnancies. These all-inclusive maternity and childbirth
services are currently being reimbursed in accordance with 32 CFR
199.14(e) at the lower of the TRICARE established all-inclusive rate or
the billed charge. The all-inclusive rate includes laboratory studies,
prenatal management, labor management, delivery, post-partum
management, newborn care, birth assistant, certified nurse-midwife
professional services, physician professional services, and the use of
the facility to the extent that they are usually associated with a
normal pregnancy and childbirth. Since institutional-affiliated
maternity centers will continue to be reimbursed under the TRICARE
maximum allowable birthing center all-inclusive rate methodology as
prescribed under 32 CFR 199.14(e), payment will be equal to the sum of
the Class 3 CMAC for total obstetrical care for a normal pregnancy and
delivery (CPT code 59400) and the TMA supplied non-professional
component amount, which includes both the technical and professional
components of tests usually associated with a normal pregnancy and
childbirth. As a result, hospital-based birthing centers will continue
to be reimbursed the same as freestanding birthing centers except that
updating of the hospital-based all inclusive rate, consisting of the
CMAC for procedure code 59400 (Birthing Center, all-inclusive charge,
complete) and the state specific non-professional component, will lag
two months behind the freestanding birthing center all-inclusive
update; i.e., the freestanding birthing center all-inclusive rate
components will usually be updated on February 1 of each year to
coincide with the annual CMAC file update, followed by the hospital-
based birthing center all-inclusive rate component updates on April 1
of the same year.
[cir] Observation Stays--Observation Services are those services
furnished on a hospital's premises, including the use of a bed and
periodic monitoring by a
[[Page 17276]]
hospital's staff, which are reasonable and necessary to evaluate an
outpatient's condition or to determine the need for a possible
admission to the hospital as an inpatient. Under Medicare, prior to CY
2008, a hospital may receive separate APC payments for observation
services for patients having diagnoses of chest pain, asthma, or
congestive heart failure, when billed in conjunction with an evaluation
and management visit for a minimum of 8 hours. Since these qualifying
diagnoses would greatly restrict separate payment of observation stays
currently being reimbursed based solely on medical necessity, they are
being expanded to accommodate the special needs of unique TRICARE
beneficiary populations (e.g., separate payment for maternity
observations stays). Separate payment of maternity observation stays
required the modification of the existing conditional criteria for
separate payment of observation stays associated with pain, asthma or
congestive heart failure. Under the TRICARE OPPS, additional hospital
services (e.g., separate emergency room visit or clinic visit) will not
be required on a claim with a maternity diagnosis in order to receive
separate payment for an observation stay. The minimum time requirements
have also been reduced from 8 to 4 hours to ensure maximum coverage of
medically necessary maternity observation stays.
[cir] End-State Renal Disease (ESRD) Dialysis Services--In
accordance with sections 1881(b)(2) and (b)(7) of the Social Security
Act, a facility that furnishes dialysis services to Medicare patients
with ESRD is paid a prospectively determined rate for each dialysis
treatment furnished. The rate is a composite that includes all costs
associated with furnishing dialysis services except for the costs of
physician services and certain laboratory tests and drugs that are
billed separately. CMS has exercised the authority granted under
section 1833(t)(1)(B)(i) to exclude from the outpatient PPS those
services for patients with ESRD that are paid under the ESRD composite
rate. Since TRICARE does not have a comparable composite rate in effect
for payment of ESRD services, they will be reimbursed under TRICARE's
OPPS.
II. Treatment Settings Subject to Outpatient Prospective Payment System
The outpatient prospective payment system is applicable to any
hospital participating in the Medicare program except for Critical
Access Hospitals (CAHs), Indian Health Service hospitals, certain
hospitals in Maryland that qualify for payment under the state's cost
containment waiver, and hospitals located outside one of the 50 states,
the District of Columbia and Puerto Rico and specialty care providers
which include: (1) Cancer and children's hospitals; (2) freestanding
ASCs; (3) freestanding Partial Hospitalization Programs (PHPs); (4)
freestanding psychiatric and Substance Use Disorder Rehabilitation
Facilities (SUDRFs); (5) Comprehensive Outpatient Rehabilitation
Facilities (CORFs); (6) Home Health Agencies (HHAs); (7) hospice
programs; (8) other corporate services providers (e.g., freestanding
cardiac catheterization centers, freestanding sleep diagnostic centers,
and freestanding hyperbaric oxygen treatment centers); (9) freestanding
birthing centers; (10) VA hospitals; and (11) freestanding ESRD
centers. Due to their inability to meet the more stringent requirements
imposed for hospital-based and freestanding PHPs under the Program,
CMHCs have also been excluded from payment under OPPS for partial
hospitalization program (PHP) services since they are not recognized as
authorized providers under the TRICARE program.
An outpatient department, remote location hospital, satellite
facility, or other provider-based entity must also be either created
by, or acquired by, a main provider (hospital qualifying for payment
under OPPS) for the purpose of furnishing health care services of the
same type as those furnished by the main provider under the name,
ownership, and financial administrative control of the main provider,
in accordance with the following requirements under 42 CFR Sec. 413.65
(Medicare Regulation) in order to qualify for payment under the OPPS:
Licensure--The outpatient department, remote location
hospital, or the satellite facility and the main hospital are operated
under the same license, except in areas where the State requires a
separate license for the department of the provider.
Clinical integration--Professional staff of the outpatient
department, remote location hospital or satellite facility are
monitored by, and have clinical privileges at the main hospital. The
medical director of the outpatient facility must also maintain a
reporting relationship with the chief medical officer at the main
hospital that has the same frequency, intensity and level of
accountability that exists in the relationship between other
departmental medical directors and the chief medical officer of the
main hospital. Medical records for patients treated in the facility or
organization must be integrated into a unified retrieval system (or
cross reference) of the main hospital and there must be full access to
all services provided at the main hospital for patients treated in the
outpatient facility requiring further care.
Financial integration. The financial operation of the
outpatient facility must be fully integrated within the financial
system of the main hospital, as evidenced by shared income and expenses
between the main hospital and outpatient facility.
Public awareness. The outpatient department, remote
location hospital, or a satellite facility is held out to the public
and other payers as part of the main provider. When patients enter the
outpatient facility they are aware that they are entering the main
provider and are billed accordingly.
Having clear criteria for provider-based status is important
because this designation can result in additional TRICARE payments for
services at the provider-based facility (i.e., the incorporation of
additional facility costs for covered outpatient services/procedures).
TRICARE will accept the providers' determination on whether they meet
the regulatory criteria for provider-based status for purposes of
seeking reimbursement under the TRICARE OPPS.
III. Application of Ambulatory Payment Classification (APC) Model
Payment for services under the OPPS is based on grouping outpatient
services into APC groups in accordance with provisions outlined in
section 1833(t) of the Social Security Act and its implementing
regulation 42 CFR Part 419. This grouping is accommodated through the
reporting of HCPCS codes and descriptors that are used to group
homogenous services (both clinically and in terms of resource
consumption) into their respective APC groups.
During the development of the hospital OPPS it was recognized that
certain hospital outpatient services were being paid based on fee
schedules or other prospectively determined rates that were being
applied across other ambulatory care settings. As a result, the
following services were excluded from the OPPS in order to achieve
consistency of payment across different service delivery sites: (1)
Physician services; (2) nurse practitioner and clinical nurse
specialist services; (3) physician assistant services; (4) certified
nurse-midwife services; (5) services of a qualified psychologist; (6)
clinical social worker services, except under half- and full-day
partial hospitalization programs in which the services are included
within the per diem payment amount;
[[Page 17277]]
(7) services of an anesthetist; (8) screening and diagnostic
mammographies; (9) clinical diagnostic services; (10) non-implantable
DME, orthotics, prosthetics, and prosthetic devices and supplies; (11)
hospital outpatient services furnished to SNF inpatients as part of
their comprehensive care plan; (12) physical therapy; (13) speech-
language pathology; (14) occupational therapy; (15) influenza and
pneumococcal pneumonia vaccines; (16) take-home surgical dressings;
(17) services and procedures designated as requiring inpatient care;
and (18) ambulance services. These services will continue to be
reimbursed under the current CMAC fee schedule or other TRICARE-
recognized allowable charge methodology (e.g., statewide prevailings).
The remaining outpatient procedures which were not being paid under
current fee schedules or other prospectively determined rates were
grouped under an APC based on the following criteria:
Resource Homogeneity--The amount and type of facility
resources (for example, operating room, medical supplies, and
equipment) that are used to furnish or perform the individual
procedures or services within each APC group should be homogeneous.
That is, the resources used are relatively constant across all
procedures or services even though resources used may vary somewhat
among individual patients.
Clinical Homogeneity--The definition of each APC should be
``clinically meaningful.'' That is, the procedures or services included
within the APC group relate generally to a common organ system or
etiology, have the same degree of extensiveness, and utilize the same
method of treatment.
Provider Concentration--The degree of provider
concentration associated with the individual services that comprise the
APC is considered. If a particular service is offered only in a limited
number of hospitals, then the impact of payment for the services is
concentrated in a subset of hospitals. Therefore, it is important to
have an accurate payment level for services with a high degree of
provider concentration. Conversely, the accuracy of payment levels for
services that are routinely offered by most hospitals does not bias the
payment system against any subset of hospitals.
Frequency of Service--Unless there is a high degree of
provider concentration, creating separate APC groups for services that
are infrequently performed is avoided. Since it is difficult to
establish reliable payment rates for low-volume groups, HCPCS codes are
assigned to an APC that is most similar in terms of resource use and
clinical coherence.
Minimal Opportunities for Upcoding and Code
Fragmentation--The APC system is intended to discourage using a code in
a higher paying group to define the care. That is, putting two related
codes such as the codes for excising a lesion for 1.1 cm and one of 1.0
cm, in different APC groups may create an incentive to exaggerate the
size of the lesions in order to justify the incrementally higher
payment. APC groups based on subtle distinctions would be susceptible
to this kind of coding. Therefore, APC groups were kept as broad and
inclusive as possible without sacrificing resource or clinical
homogeneity.
These procedures, along with their specific HCPCS coding and
descriptors, were used to identify and group services within each
established APC group. They included: (1) Surgical procedures
(including hospital-based ASC procedures currently being paid under the
eleven tier ASC payment methodology); (2) radiology, including
radiation therapy; (3) clinic visits; (4) emergency department visits;
(5) diagnostic services and other diagnostic tests; (6) partial
hospitalization for the mentally ill; (7) surgical pathology; (8)
cancer therapy; (9) implantable medical items (e.g., prosthetic
implants, implantable DME and implantable items used in performing
diagnostic x-rays and laboratory tests); (10) specific hospital
outpatient services furnished to a beneficiary who is admitted to a
SNF, but in which case the services are beyond the scope of SNF
comprehensive care plans; (11) certain preventive services, such as
colorectal cancer screening; (12) acute dialysis (e.g., dialysis for
poisoning); and (13) ESRD services. These hospital outpatient
procedures will be paid on a rate-per-service basis that varies
according to the APC group to which they are assigned.
In accordance with section 1833(t)(2) of the Social Security Act,
services and items within an APC group cannot be considered comparable
with respect to the use of resources in the APC group if the highest
median cost is more than 2 times the lowest median cost for an item or
service within the same group (referred to a the ``2 times rule'').
Exceptions may be granted in unusual cases, such as low-volume items
and services.
IV. Packaging and Special Payment Provisions Under OPPS
The prospective payment system establishes a national payment rate,
standardized for geographic wage differences, that includes operating
and capital-related costs that are directly related and integral to
performing a procedure or furnishing a service on an outpatient basis,
which has ultimately resulted in the establishment of distinct groups
of surgical, diagnostic, and partial hospitalization services, as well
as medical visits. No separate payment is made for packaged services,
because the cost of these items is included in the APC payment for the
service of which they are an integral part. These costs include, but
are not limited to: (1) Use of operating suite; (2) use of procedure
room or treatment room; (3) use of recovery room or area; (4) use of an
observation bed; (5) anesthesia, along with supplies and equipment for
administering and monitoring anesthesia or sedation; (6) certain drugs,
biologicals, and other pharmaceuticals; (7) medical and surgical
supplies; (8) surgical dressings; (9) devices used for external
reduction of fractures and dislocations; (10) intraocular lenses
(IOLs); (11) capital related costs; (12) costs incurred to procure
donor tissue other than corneal tissue; (13) incidental services such
as venipuncture; (14) implantable items used in connection with
diagnostic laboratory tests, and other diagnostics; and (15)
implantable prosthetic devices (other than dental) which replace all or
part of an internal body organ (including colostomy bags and supplies
directly related to colostomy care), including replacement of these
devices.
Payments for packaged services under the OPPS are bundled into the
payment providers receive for separately payable services provided on
the same day and are identified by the status indicator (SI) ``N''
(unconditionally packaged) or SI ``Q'' (conditionally packaged).
Hospitals include charges for packaged services on their claims, and
the costs associated with these packaged services are bundled into the
costs for separately payable procedures in calculating their payment
rates. The following criteria are used in determining whether
procedures should be packaged: (1) Whether the service is normally
provided separately or in conjunction with other services; (2) how
likely it is for the costs of the packaged code to be appropriately
mapped to the separately payable codes with which it was performed; (3)
whether the APC payment to which the services were packaged will offset
the hospital's actual
[[Page 17278]]
costs; and (4) whether the expected cost of the service is relatively
low.
Special logic has also been programmed into the OCE which will have
the OPPS PRICER automatically assign payment for a special packaged
service reported on a claim if there were no other services separately
payable under the OPPS claim for the same date. A new status indicator
``Q'' will be assigned to these special packaged codes to indicate that
they are usually packaged, except for special circumstances when they
are separately payable.
Based on the above packaging criteria, it was determined that
certain other expensive items and services which were otherwise
considered an integral part of another procedure should not be packaged
within that procedure's APC payment rate, since the resulting payment
would not offset the costs of those items and services. This could have
a potentially negative impact, thereby jeopardizing access to these
items and services in a hospital outpatient setting. As a result, the
costs associated with these items and services were not packaged within
the APC of the primary procedure with which they were normally
associated. Instead, separate APCs were developed for payment of these
items and services under the following payment provisions:
[cir] Transitional Pass-Through for Additional Costs of Drugs,
Biologicals, and Radiopharmaceuticals. Although the costs of drugs,
biologicals and pharmaceuticals are generally packaged into the APC
payment rate for the primary procedure or treatment with which the
drugs are usually furnished, there are special temporary additional
payments or ``transitional pass-through payments'' available under
section 1833(t)(6) of the Social Security Act for at least two years,
but not more than three years for the following drugs and biologicals:
(1) Current orphan drugs, as designated under section 526 of the
Federal Food, Drugs, and Cosmetics Act; (2) current drugs and
biological agents used for treatment of cancer; (3) current
radiopharmaceutical drugs and biological products; and (4) new drugs
and biologic agents in instances where the item was not being paid as a
hospital outpatient service as of December 31, 1996, and where the cost
of the item is ``not insignificant'' in relation to the hospital OPPS
payment amount.
Section 1833(t)(6)(D)(i) of the Social Security Act sets the
payment rate for pass-through eligible drugs as amounts determined
under section 1842(o) of the Act. Section 1847A of the Act establishes
the use of average sales price (ASP) methodology (i.e., 106 percent of
the ASP which is the rate equivalent to the payment that would be
received in a physician office setting) as the basis for payment for
drugs and biologicals described in section 1842(o)(1)(C) of the Act.
Section 1883(t)(6)(D)(i) also states if a drug or biological is covered
under a competitive acquisition contract under section 1847B of the
Act, the payment rate is equal to the average price for the drug or
biologicals for all competitive acquisition areas. Thus, drugs and
biologicals with pass-through status in CY 2007 will receive payment
consistent with the provision of section 1842(o) of the Act, at a rate
that is equivalent to the payment they would receive in a physician
office setting (106 percent of the ASP) or the rate that would be paid
under the competitive acquisitions program, while pass-through
radiopharmaceuticals will be paid the hospital's charge for the
radiopharmaceutical adjusted to the cost using the hospital's overall
cost-to-charge ratio (CCR).
[cir] Packaging and Payment for Drugs, Biologicals and
Radiopharmaceuticals Without Pass-Through Status. Drugs, biologicals,
and radiopharmaceuticals that do not have pass-through status are paid
in one of two ways: either packaged into the APC payment rate for the
procedure or treatment with which the products are usually furnished,
or separately based on a packaging threshold which has been set at $55
for CY 2007. Therefore, for CY 2007 and beyond, drugs, biologicals and
radiopharmaceuticals that are not new and do not have pass-through
status will be packaged if their calculated per-day cost is less than
$55 for CY 2007 or less than the updated threshold (i.e., the packaging
threshold inflated annually by the Producer Price Index (PPI) for
prescription drugs), with the exception of 5HT3 antiemetics which will
continue to be paid separately regardless of their calculated per-day
cost.
Section 1833(t)(14) of the Act requires special classification of
certain separately payable drugs, biologicals and radiopharmaceuticals
and mandates payment under section 1833(t)(14)(A)(iii) of the Act for
specified covered outpatient drugs in CY 2006 and subsequent years to
be equal to the average acquisition cost for the drug subject to any
adjustment for overhead costs, which for CY 2007 is a combined rate of
106 percent of the ASP. Separately payable drugs and biologicals
without ASP-based data will be paid at their mean cost calculated from
Medicare CY 2005 hospital claims data. The preadmission-related
services associated with intravenous immune globulin (IVIG) will
continue to be paid under a New Technology APC with a rate of $75.
Also, payment for blood clotting factors in the outpatient setting will
be set at 106 percent of the ASP, plus the updated furnishing fee of
$0.15. The temporary policy of paying radiopharmaceuticals at charges
reduced to costs is also being extended for one additional year since
it is still considered the best proxy for radiopharmaceutical
acquisition and overhead costs. However, separate payment will only
apply to those radiopharmaceuticals with per-day costs greater than
$55.
[cir] Payment for Nonpass-Through Drugs, Biologicals, and
Radiopharmaceuticals With HCPCS Codes, But Without OPPS Claims Data.
For CY 2007, hospitals will receive payment for nonpass-through
radiopharmaceuticals without hospital claims data that have been
assigned HCPCS codes as of January 1, 2007, at the hospital's charge
for the radiopharmaceutical adjusted to cost using the hospital's
overall cost-to-charge ratio, which will be the same methodology used
in the payment for pass-through radiopharmaceuticals. For new drugs
without pass-through status or hospitals claims data, payment will be
made at the lesser of the ASP or competitive acquisition contract price
(Part B CAP). In rare instances where a drug does not have a Part B
drug CAP rate or data available for use for ASP methodology, payment
will be made at 95 percent of the product's most recent AWP.
Established drugs without hospital claims data that have been
classified as separately payable in CY 2007 will be paid per the ASP-
based methodology at a rate of 106 percent of the ASP.
New drugs, biologicals and devices which qualify for separate
payment under OPPS, but have not yet been assigned to a transitional
APC (i.e., assigned to a temporary APC for separate payment of an
expensive drug or device) will be reimbursed under the TRICARE standard
allowable charge methodology. This allowable charge payment will
continue until a transitional APC has been assigned (i.e., until CMS
has had the opportunity to assign the new drug, biological or device to
a temporary APC for separate payment).
[cir] Drug Administration Coding and Payment. For CY 2007,
hospitals will be expected to report the full set of CPT drug
administration codes in a manner consistent with their descriptors, CPT
instructions and correct coding
[[Page 17279]]
principles. They will no longer be able to report the alphanumeric
HCPCS codes (C8950, C8951, C8952, C8954, and C8955) that were
recognized prior to January 1, 2007. These newly recognized CPT codes
will be assigned to six new drug administration APCs, with payment
rates based on median costs for the APCs as calculated from Medicare's
CY 2005 claims data.
[cir] Payment for Blood and Blood Products. Since Medicare's
implementation of the OPPS in August 1, 2000, separate payments have
been made for blood and blood products through APCs rather than
packaging them into the procedures with which they were administered.
Hospital payment for the costs of blood and blood products, as well as
the costs of collecting, processing, and storing blood products, are
made through the OPPS payments for specific blood product APCs. For CY
2007, these blood product payments will be based on the unadjusted,
simulated median costs for blood and blood products that are derived
from CY 2005 Medicare claims data, with the exception of the seven
products for which there will be a payment adjustment to smooth their
transition to full claims-based payments in the future.
[cir] Other Procedure or Service Costs Not Packaged in APC Payment.
Costs for casting, splinting and strapping services, immunosuppressive
drugs for patients following organ transplant, and certain other high-
cost drugs that are infrequently administered are not packaged into the
costs of the primary procedures with which they are normally
associated. Instead, new APC groups have been created for these items
and services, which will allow separate payment.
[cir] Corneal Tissue Acquisition Costs. Corneal tissue acquisition
costs will not be packaged with the APC payment for corneal transplant
surgical procedures. Instead, separate payment will be made based on
the hospital's reasonable costs incurred to acquire corneal tissue.
Corneal acquisition costs must be submitted using HCPCS code V2785
(Processing, Preserving and Transporting Corneal Tissue), indicating
the actual cost of the acquisition rather than the hospital's charge on
the bill.
[cir] Transitional Pass-Through Payment for Devices. Transitional
payments will only apply to new and innovative medical devices meeting
the following criteria: (1) Were not recognized for payment as a
hospital outpatient service prior to 1997 (i.e., payment was not being
made as of December 31, 1996) or treated as meeting the time
constraints under special prescribed conditions; (2) have been
approved/cleared for use by the Food and Drug Administration (FDA); (3)
are determined to be reasonable and necessary for the diagnosis or
treatment of an illness or injury or to improve the functioning of a
malformed body part; (4) are an integral and subordinated part of the
procedure performed; (5) are used for one patient only (except for
reprocessed single-use devices meeting FDA's most recent regulatory
criteria on single-use devices); (6) are surgically implanted or
inserted via a natural or surgically created orifice on incision and
remain with the patient after the patient is released from the hospital
outpatient department; (7) are not equipment, instruments, apparatus,
implements, or such items for which depreciation and financing expenses
are recovered as depreciable assets; (8) are not materials and supplies
such as sutures, clips or customized surgical kits furnished incidental
to a service or procedure; (9) are not material such as biologicals or
synthetics that are used to replace human skin; (10) no existing or
previously existing device category is appropriated for the device;
(11) associated cost is not insignificant in relation to the APC
payment for the service in which the innovative medical equipment is
packaged; and (12) it has been demonstrated that utilization of the
device provides substantial clinical improvement for beneficiaries
compared with currently available treatments, including procedures
utilizing devices in existing or previously existing device categories.
The duration of transitional pass-through payments for devices is
for at least two, but not more than three years. This period begins
with the first date on which a transitional pass-through payment is
made for any medical device that is described by the new medical
category. The costs of the devices will be packaged into the costs of
the procedures with which they are normally billed once they are no
longer eligible for pass-through payment.
Device pass-through payments (those procedures designated with a SI
``H'') are calculated by applying the statewide cost-to-charge ratio
(CCR), which is based on the geographical CBSA (2 digit = rural, 5
digit = urban), to the hospital's charges on the claims and subtracting
any appropriate pass-through offset. The offset adjustment only applies
when a pass-through device is billed in addition to the primary
procedure with which it is normally associated.
Provisions are also in place in accordance with 1833(t)(6)(D)(ii)
of the Social Security Act for reducing transitional pass-through
payments by the estimated portion of each APC payment rate that could
reasonably be attributed to the cost of the associated devices that are
eligible for pass-through payments. Offsets are calculated by comparing
the median APC cost without device packaging to the median APC cost
(including device packaging), developed from claims with device codes,
to determine the percentage of median APC costs attributable to the
associated pass-through device. These percentages are then applied to
the APC payment amounts in order to determine the applicable amounts to
be deducted from the pass-through payments, known as the ``offset''
amounts. Offset amounts are only applied when it can be determined that
an APC contained cost is actually associated with the device.
Currently, there is only one transitional pass-through payment offset
in effect for device category C1820 (generator, neurostimulator
(implantable), with rechargeable battery and charging system) with an
amount of $8,668.94, which represents 77.65 percent of the CY 2007
payment rate for APC 0222.
Two new device categories have been established for pass-through
payment starting in 2007: (1) L8690--auditory osseointegrated device,
external sound processor, replacement; and (2) C1821--interspinous
process distraction device (implantable). The offset amounts for both
of these new device categories were set to $0 for CY 2007, since there
were no identifiable device-related costs associated with their
procedure APCs (i.e., APC 0256 for L8690 and APC 0050 for C1821). The
pass-through status of this rechargeable neurostimulator device (C1820)
is scheduled to expire on January 1, 2008.
[cir] Payment When Devices are Replaced Without Cost or Where
Credit for a Replacement Device is Furnished to the Hospital. Payments
will be reduced for selected APCs in cases in which an implanted device
is replaced without cost to the hospital or with full credit for the
removed device in accordance with 42 CFR 419.45. The amount of the
reduction to the APC rate will be calculated in the same manner as the
offset amount that would be applied if the implanted device assigned to
the APC had pass-through status as defined under 42 CFR 419.66. OPPS
payments would be contingent on section 1833(t)(2)(E) of the Social
Security Act, which permits equitable adjustments to the OPPS payments
contingent on meeting all of the following criteria: (1) All procedures
assigned to the selected APCs must require implantable devices that
would be reported if device replacement procedures were performed; (2)
the
[[Page 17280]]
required devices must be surgically inserted or implanted devices that
remain in the patient's body after the conclusion of the procedures, at
least temporarily; and (3) the offset percent for the APC (i.e., the
median cost of the APC without device costs divided by the median cost
of the APC with device costs) must be significant--significant offset
percent is defined as exceeding 40 percent.
The presence of the modifier ``FB'' [``Item Provided Without Cost
to Provider, Supplier, or Practitioner or Credit Received for
Replacement (examples include, but are not limited to: devices covered
under warranty, replaced due to defect, or provided as free samples)'']
would trigger the adjustment in payment if the procedure code to which
the modifier ``FB'' was amended appeared in Table 3 and was also
assigned to one of the APCs listed in Table 4 below.
Table 3.--Devices For Which the FB Modifier Must Be Reported With the
Procedure When Furnished Without Cost or at Full Credit for a
Replacement Device
------------------------------------------------------------------------
Device Description
------------------------------------------------------------------------
C1721.................................. AICD, dual chamber.
C1722.................................. AICD, single chamber.
C1764.................................. Event recorder, cardiac.
C1767.................................. Generator, neurostim, imp.
C1771.................................. Rep dev, urinary, w/sling.
C1772.................................. Infusion pump, programmable.
C1776.................................. Joint device (implantable).
C1777.................................. Lead, AICD, endo single coil.
C1778.................................. Lead, neurostimulator.
C1779.................................. Lead, pmkr, transvenous VDD.
C1785.................................. Pmkr, dual, rate-resp.
C1786.................................. Pmkr, single, rate-resp.
C1813.................................. Prostheses, penile, inflatab.
C1815.................................. Pros, urinary sph, imp.
C1820.................................. Generator, neuro, rechg bat
sys.
C1882.................................. AICD, other than sing/dual.
C1891.................................. Infusion pump, non-prog, perm.
C1895.................................. Lead, AICD, endo dual coil.
C1896.................................. Lead, AICD, non sing/dual
C1897.................................. Lead, neurostim, test kit.
C1898.................................. Lead, pmkr, other than trans.
C1899.................................. Lead, pmkr/ACID combination.
C1900.................................. Lead coronary venous.
C2619.................................. Pmkr, dual, non rate-resp.
C2620.................................. Pmkr, single, non rate-resp.
C2621.................................. Pmkr, other than sing/dual.
C2622.................................. Prosthesis, penile, non-inf.
C2626.................................. Infusion pump, non-prog, temp.
C2631.................................. Rep dev, urinary, w/o sling.
L8614.................................. Cochlear device/system.
------------------------------------------------------------------------
Table 4.--Adjustments to APCs in Cases of Devices Reported Without Cost
or For Which Full Credit Is Received
------------------------------------------------------------------------
CY 2007
APC SI APC group title offset amt.
(percent)
------------------------------------------------------------------------
0039............ S............... Level I Implantation of 78.85
Neurostimulator.
0040............ S............... Percutaneous 54.06
Implantation of
Neurostimulator
Electrodes, Excluding
Cranial Nerve.
0061............ S............... Laminectomy or Incision 60.06
for Implantation of
Neurostimulator
Electrodes, Excluded.
0089............ T............... Insertion/Replacement 77.11
of Permanent Pacemaker
and Electrodes.
0090............ T............... Insertion/Replacement 74.74
of Pacemaker Pulse
Generator.
0106............ T............... Insertion/Replacement/ 41.88
Repair of Pacemaker
and/or Electrodes.
0107............ T............... Insertion of 90.44
Cardioverter-
Defibrillator.
0108............ T............... Insertion/Replacement/ 77.75
Repair of Cardioverter-
Defibrillator Leads.
0222............ T............... Implantation of 77.65
Neurological Device.
0225............ S............... Implantation of 79.04
Neurostimulator
Electrodes, Cranial.
0227............ T............... Implantation of Drug 80.27
Infusion Devices.
0229............ T............... Transcatheter Placement 46.17
of Intravascular
Shunts.
0259............ T............... Level IV ENT Procedures 84.61
0315............ T............... Level II Implantation 76.03
of Neurostimulator.
0385............ S............... Level I Prosthetic 83.19
Urological Procedures.
0386............ S............... Level II Prosthetic 61.16
Urological Procedures.
0418............ T............... Insertion of Left 87.32
Ventricular Pacing
Elect..
0654............ T............... Insertion/Replacement 77.35
of a Permanent Dual
Chamber Pacemaker.
0655............ T............... Insertion/Replacement/ 76.59
Conversion of a
Permanent Dual Chamber
Pacemaker.
0680............ S............... Insertion of Patient 76.40
Activated Event
Recorders.
0681............ T............... Knee Arthroplasty...... 73.37
------------------------------------------------------------------------
If the device code (i.e., one of the codes in Table 3 above) is
assigned to one of the APCs listed in Table 4 above, the unadjusted
payment rate for the procedure APC will be reduced by an amount equal
to the percent in Table 4 times the unadjusted payment rate. The actual
adjustments can be viewed on the following CMS Web site: http://
www.cms.hhs.gov/HospitalOutpatientPPS/
In cases in which the device is being replaced without cost, the
hospital will report a token device charge. However, if the device is
being inserted as an upgrade, the hospital will report the difference
between its usual charge for the device being replaced and the credit
for the replacement device. Multiple procedure reductions would also
continue to apply even after the APC payment adjustment to remove
payment for the device cost, because there would still be the expected
efficiencies in performing the procedure if it was provided in the same
operative session as another surgical procedure. Similarly, if the
procedure was interrupted before administration of anesthesia (i.e.,
there was a modifier 52 or 73 on the same line as the procedure), a 50
percent reduction would be taken from the adjusted amount.
[cir] Coding and Payment of Emergency Department Visits. The
following five Type B emergency department G-codes have been
established for emergency departments meeting the definition of a
dedicated emergency department (DED) under the Emergency Medical
Treatment and Labor Act (EMTALA) regulations in 42 CFR 489.24, but
which are not Type A emergency departments (i.e., they may meet the DED
definition but are not available 24 hours a day, 7 days a week).
[[Page 17281]]
Table 5.--CY 2007 Final HCPCS Codes To Be Used To Report Emergency Department Visits Provided in Type B
Emergency Departments
----------------------------------------------------------------------------------------------------------------
HCPCS code Short descriptor Long descriptor
----------------------------------------------------------------------------------------------------------------
G0380................................ Level 1 hosp. type B Level 1 hospital emergency department visit
visit. provided in a Type B emergency department. (The
ED must meet at least one of the following
requirements: (1) It is licensed by the State
in which it is located under applicable State
law as an emergency room or emergency
department; (2) It is held out to the public
(by name, posted signs, advertising, or other
means) as a place that provides care for
emergency medical conditions on an urgent basis
without requiring a previously scheduled
appointment; or (3) During the calendar year
immediately preceding the calendar year in
which a determination under this section is
being made, based on a representative sample of
patient visits that occurred during that
calendar year, it provides at least one-third
of all of its outpatient visits for the
treatment of emergency medical conditions on an
urgent basis without requiring a previously
scheduled appointment.).
G0381................................ Level 2 hosp. type B Level 2 hospital emergency department visit
visit. provided in a Type B emergency department. (The
ED must meet at least one of the following
requirements: (1) It is licensed by the State
in which it is located under applicable State
law as an emergency room or emergency
department; (2) It is held out to the public
(by name, posted signs, advertising, or other
means) as a place that provides care for
emergency medical conditions on an urgent basis
without requiring a previously scheduled
appointment; or (3) During the calendar year
immediately preceding the calendar year in
which a determination under this section is
being made, based on a representative sample of
patient visits that occurred during that
calendar year, it provides at least one-third
of all of its outpatient visits for the
treatment of emergency medical conditions on an
urgent basis without requiring a previously
scheduled appointment.).
G0382................................ Level 3 hosp. type B Level 3 hospital emergency department visit
visit. provided in a Type B emergency department. (The
ED must meet at least one of the following
requirements: (1) It is licensed by the State
in which it is located under applicable State
law as an emergency room or emergency
department; (2) It is held out to the public
(by name, posted signs, advertising, or other
means) as a place that provides care for
emergency medical conditions on an urgent basis
without requiring a previously scheduled
appointment; or (3) During the calendar year
immediately preceding the calendar year in
which a determination under this section is
being made, based on a representative sample of
patient visits that occurred during that
calendar year, it provides at least one-third
of all of its outpatient visits for the
treatment of emergency medical conditions on an
urgent basis without requiring a previously
scheduled appointment.).
G0384................................ Level 4 hosp. type B Level 4 hospital emergency department visit
visit. provided in a Type B emergency department. (The
ED must meet at least one of the following
requirements: (1) It is licensed by the State
in which it is located under applicable State
law as an emergency room or emergency
department; (2) It is held out to the public
(by name, posted signs, advertising, or other
means) as a place that provides care for
emergency medical conditions on an urgent basis
without requiring a previously scheduled
appointment; or (3) During the calendar year
immediately preceding the calendar year in
which a determination under this section is
being made, based on a representative sample of
patient visits that occurred during that
calendar year, it provides at least one-third
of all of its outpatient visits for the
treatment of emergency medical conditions on an
urgent basis without requiring a previously
scheduled appointment.).
G0385................................ Level 5 hosp. type B Level 5 hospital emergency department visit
visit. provided in a Type B emergency department. (The
ED must meet at least one of the following
requirements: (1) It is licensed by the State
in which it is located under applicable State
law as an emergency room or emergency
department; (2) It is held out to the public
(by name, posted signs, advertising, or other
means) as a place that provides care for
emergency medical conditions on an urgent basis
without requiring a previously scheduled
appointment; or (3) During the calendar year
immediately preceding the calendar year in
which a determination under this section is
being made, based on a representative sample of
patient visits that occurred during that
calendar year, it provides at least one-third
of all of its outpatient visits for the
treatment of emergency medical conditions on an
urgent basis without requiring a previously
scheduled appointment.).
----------------------------------------------------------------------------------------------------------------
The use of these G-codes, along with the following redefinition of
a Type A emergency department, will serve as a vehicle to capture
median cost and resource differences among visits to Type A emergency
departments, Type B emergency departments and clinics:
Type A Emergency Department--A type A emergency department is a
hospital-based facility or department that must be open 24 hours a day,
7 days a week and meet at least one of the following requirements: (1)
It is licensed by the State in which it is located under applicable
State laws as an emergency department; or (2) It is held out to the
public (by name, posted signs, advertising, or other means) as a place
that provides care for emergency medical conditions on an urgent basis
without requiring a previously scheduled appointment.
A new G-code (G0390--Trauma response team activation associated
with hospital critical care services) was also created (effective
January 1, 2007) to be used in addition to CPT codes 99291 and 99292 to
address the meaningful cost difference between critical care when
billed with and without trauma activation. If critical care is provided
without trauma activation, the hospital will bill with either CPT 99291
or 99292, receiving payment for APC 0617 with a median cost of $402.67.
However, if trauma activation occurs, the hospital would be allowed to
bill one unit of G-code (G0390), reported with revenue code 68x on the
same date of service, thereby receiving $491.66 under APC 0618.
Hospitals will continue to bill CPT codes for both clinic and Type A
Emergency department visits until national guidelines have been
established.
The above CPT E/M codes and other HCPCS codes currently assigned to
the
[[Page 17282]]
clinic visit APCs have been mapped in Table 6 to eleven new APCs; five
for clinic visits; five for emergency department visits; and one for
critical care services, based on median costs and clinical
consideration.
Table 6.--Assignment of CPT E/M Codes and Other HCPCS Codes to New Visit APCs for CY 2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
CY 2007 APC title CY 2007 APC HCPCS Short descriptor
--------------------------------------------------------------------------------------------------------------------------------------------------------
Level 1 Hospital Clinic Visits.................................................... 0604 92012 Eye exam, established pat.
.............. 99201 Office/outpatient visit, new (Level
1).
.............. 99211 Office/outpatient visit, est (Level
1).
.............. G0101 CA screen; pelvic/breast exam.
.............. G0245 Initial foot exam pt lops.
.............. G0241 Office consultation (Level 1).
.............. G0271 Confirmatory consultation (Level 1).
.............. G0264 Assmt otr CHF, CP, asthma.
Level 2 Hospital Clinic Visits.................................................... 0605 92002 Eye exam, new patient.
.............. 92014 Eye exam and treatment.
.............. 99202 Office/outpatient visit, new (Level
2).
.............. 99212 Office/outpatient visit, est (Level
2).
.............. 99213 Office/outpatient visit, est (Level
3).
.............. 99243 Office consultation (Level 3).
.............. 99242 Office consultation (Level 2).
.............. 99273 Confirmatory consultation (Level 3).
.............. 99272 Confirmatory consultation (Level 2).
.............. 99431 Initial care, normal newborn.
.............. G0246 Follow-up eval of foot pt lop.
.............. G0344 Initial preventive exam.
Level 3 Hospital Clinic Visits.................................................... 0606 92004 Eye exam, new patient.
.............. 99203 Office/outpatient visit, new (Level
3).
.............. 99214 Office/outpatient visit, est (Level
4).
.............. 99274 Confirmatory consultation (Level 4).
.............. 99244 Office consultation (Level 4).
Level 4 Hospital Clinic Visits.................................................... 0607 99204 Confirmatory consultation (Level 1).
.............. 99215 Office/outpatient visit, est (Level
5).
.............. 99245 Office consultation (Level 5).
.............. 99275 Confirmatory consultation (Level 5).
Level 5 Hospital Clinic Visits.................................................... 0608 99205 Office/outpatient visit, new (Level
5).
.............. G0175 OPPS service, sched team conf.
Level 1 Type A Emergency Visits................................................... 0609 99281 Emergency department visit.
Level 2 Type A Emergency Visits................................................... 0613 99282 Emergency department visit.
Level 3 Type A Emergency Visits................................................... 0614 99283 Emergency department visit.
Level 4 Type A Emergency Visits................................................... 0615 99284 Emergency department visit.
Level 5 Type A Emergency Visits................................................... 0616 99285 Emergency department visit.
Critical Care..................................................................... 0617 99291 Critical care, first hour.
--------------------------------------------------------------------------------------------------------------------------------------------------------
[cir] Inpatient Only Procedures. The inpatient list on TMA's OPPS
Web site at http://www.tricare.mil/opps specifies those services that
are only paid when provided in an inpatient setting because of the
nature of the procedure, the need for at least 20 hours of
postoperative recovery time or monitoring before the patient can be
safely discharged, or the underlying physical condition of the patient.
The following criteria will be used when reviewing procedures to
determine whether or not they should be moved from the inpatient list
and assigned to an APC group for payment under OPPS: (1) The simplest
procedure described by the code may be performed in most outpatient
departments; (2) the procedure is related to codes that have already
been removed from the inpatient list; (3) the procedure is being
performed in numerous hospitals on an outpatient basis; and (4) the
procedure can be appropriately and safely performed in an ASC. While it
is anticipated that TRICARE will be following the Medicare inpatient
listing fairly closely, there may be occasions where, upon medical
review, it is found that a particular inpatient procedure can be
provided safely in an outpatient setting due to TRICARE's younger,
healthier beneficiary population. These procedures will be removed from
the TRICARE inpatient listing and will be assigned to either an
existing or new APC group based on their median costs.
If a patient was not admitted as an inpatient, and the procedure
designated as an inpatient-only procedure (by OPPS payment status
indicator ``C'') was performed to resuscitate or stabilize a patient
with an emergency, life-threatening condition and the patient dies
before being admitted as an inpatient, the hospital would bill for
payment under the OPPS for the services that were furnished on that
date and included modifier--``CA'' on the line with the HCPCS code for
the inpatient procedure. Payment for all services other than the
inpatient procedure designated under OPPS by status indicator ``C'',
furnished on the same date, would be bundled into a single payment
under APC 0375 (Ancillary Outpatient Services the Patient Expires)
whose CY 2007 median cost is $3,539.
[cir] Partial Hospitalization Services. Partial hospitalization
services are those services furnished by TRICARE-authorized partial
hospitalization programs and authorized mental health providers for the
active treatment of a mental disorder. All services must follow a
medical model and patient care must be under the general direction of a
licensed psychiatrist employed by the partial hospitalization program
to ensure medication and physical needs of all the patients are
considered. The OPPS established per diem payment for both half- and
full-day partial hospitalization represents the hospital's costs for
overhead, support staff and the services of clinical social workers
(CSWs) and occupational therapists
[[Page 17283]]
(OTs). For Substance Use Disorder Rehabilitation Facilities (SUDRFs),
the cost of alcohol and addiction counselor services would also be
included in the PHP per diem. However, the OPPS does not include the
cost of services for physicians, clinical psychologists, and
psychiatric nurse practitioners (NPs), which will continue to be billed
separately for covered mental health services. In order to receive
payment under OPPS, the hospital must use specific HCPCS and revenue
codes and report partial hospitalization services under bill type 13X,
along with condition code 41 on the UB-04 (HCFA 1450 claim form). The
claim must also include a mental health diagnosis and an authorization
on file for each day of service, along with a designated H-code (i.e.,
either H0035 for half-day PHP or H0037 for full-day PHP) and its
accompanying revenue code, prior to assigning a half-or full-day
partial hospitalization APC. Specific therapy codes (e.g., coding for
family, group and individual psychotherapy) will be reported in
addition to the designated partial hospitalization codes H0035 and
H0037 and will be packaged into a single PHP code for the same date of
service, with the exception of electroconvulsive therapy (ECT). Claims
that do not meet the above criteria (e.g., claims filed without
condition code 41, appropriate H-coding--H0035 or H0037, and/or revenue
code) will undergo further payment review to ensure that outpatient
mental health procedures do not exceed the full-day partial
hospitalization per diem amount; i.e., the sum of the individual mental
health APC amounts on any particular day does not exceed the full-day
partial hospitalization per diem amount. The half-day PHP per diem (APC
T0001) will be priced at 75 percent of the full-day APC (0033) amount
of $233.37 for CY 2007. Free-standing psychiatric partial
hospitalization services will continue to be reimbursed the all-
inclusive PHP per diem rates as established under 32 CFR
199.14(a)(2)(ix), subject to their own unique mental health copayment/
cost-sharing provisions.
[cir] Separate Payment for Observation Stays. Observation care is a
well-defined set of specific, clinically appropriate services that
include short-term treatment, assessment, and reassessment before a
decision can be made regarding whether patients will require further
treatment as hospital inpatients, or if they are able to be discharged
from the hospital. The determination of whether or not observation
services are separately payable under APC 0339 (observation) has been
shifted from the hospital billing department to the OPPS claims
processing logic using two HCPCS codes (i.e., G0378--Hospital
observation services per hour, and G0379--Direct admission of patient
for hospital observation care). These HCPCS codes will be assigned
status indicator ``Q'' (package service subject to separate payment
based on criteria) that will trigger the OCE logic during the
processing of the claim to determine if the observation service or
direct admission service is packaged with the other separately payable
hospital services provided, or if a separate APC payment for
observation services or direct admission to observation is appropriate.
Following are the criteria that must be met in order to receive
separate payment under APC 0039: (1) The beneficiary must have one of
four medical conditions--congestive heart failure, chest pain, asthma,
or maternity--as documented by specific ICD-9-CM diagnosis codes; (2)
the number of units reported with HCPCS code G0378 must be equal to or
exceed 8 hours for observation stays with diagnoses of chest pain,
asthma or congestive heart failure and a minimum of 4 hours for
maternity observation services; (3) an emergency department visit,
clinic visit, critical care visit, or direct admission to observation
services using HCPCS code G037 must be provided on the same day as, or
the day before the observation except for maternity observation stays;
(4) ongoing physician evaluation must be provided. The FY 2007 median
cost for the observation APC 0339 is $442.81.
Direct admissions to observation will continue to be paid at a rate
equal to that of a Level 1 Clinic Visit (APC 0604) with a CY 2007
median cost of $50.37 when a beneficiary is seen by a physician in the
community and then is directly admitted into a hospital outpatient
department for observation care that does not qualify for separate
payment under APC 0039, or under T0002. In order to receive separate
payment for a direct admission into observation (APC 0604), the claim
must show: 1) Both HCPCS codes G0378 (Hourly Observation) and G0379
(Direct Admit to Observation) with the same date of service; 2) that
there are no services with status indictor ``T'' or ``V'' (clinic or
emergency department visit) or critical care (APC 0620) provided on the
same day of service as HCPCS code G0379; and 3) that the observation
care does not qualify for separate payment under APC 0339.
If the period of observation spans more than one calendar day,
hospitals should include all of the hours for the entire period of
observation on a single line and enter as the date of service for that
line the date the patient is admitted to observation. Also, if there
are multiple maternity observation stays on the same day without
condition code G0 or 27 to indicate that the visits were distinct and
independent of each other, the first listed observation stay will be
paid and the rest will be denied.
[cir] Payment for Brachytherapy Sources. In accordance with section
1833(t)(2)(H) of the Social Security Act, brachytherapy sources are
being paid separately under their own service groups (APCs) reflecting
the number, isotope, and radioactive intensity of the devices of
brachytherapy furnished, including separate groups for palladium-103
and iodine-125 devices. The payment for devices of brachytherapy based
on hospitals' charges, adjusted to costs as prescribed under section
1833(t)(16)(C) of the Social Security Act, has been extended under the
Tax Relief and Health Care Act of 2006 to January 1, 2008. As a result,
brachytherapy sources will continue to be assigned to status indicator
``H'' and will not be eligible for outlier payments in CY 2007. The
codes for the CY 2007 separately paid sources, long descriptors and
APCs are listed in Table 7 below:
Table 7.--Separately Paid Brachytherapy Sources With Long Descriptors
and Assigned APCs
------------------------------------------------------------------------
CPT/HCPCS Long descriptor SI APC
------------------------------------------------------------------------
A9527............ Iodine 1-125, sodium H.............. 2632
iodide solution,
therapeutic, per
millicurie.
C1716............ Brachytherapy source, H.............. 1716
Gold 198, per source.
C1717............ Brachytherapy source, H.............. 1717
High Dose Rate Iridium
192, per source.
C1718............ Brachytherapy source, H.............. 1718
Iodine 125, per source.
C1719............ Brachytherapy source, H.............. 1719
Non-High Dose Rate
Iridium 192, per
source.
C1720............ Brachytherapy source, H.............. 1720
Palladium 103, per
source.
[[Page 17284]]
C2616............ Brachytherapy source, H.............. 2616
Yttrium-90, per source.
C2632............ (See note below)....... D.............. ...........
C2633............ Brachytherapy source, H.............. 2633
Cesium-131, per source.
C2634............ Brachytherapy source, H.............. 2634
High Activity, Iodine-
125, greater than 1.01
mCi (NIST), per source.
C2635............ Brachytherapy source, H.............. 2635
High Activity,
Palladium-103, greater
than 2.2 mCi (NIST),
per source.
C2636............ Brachytherapy linear H.............. 2636
source, Palladium-103,
per 1 MM.
C2637............ Brachytherapy source, H.............. 2637
Ytterbium-169, per
source.
------------------------------------------------------------------------
Note: C2632 has been deleted and replaced by A9527, effective January 1,
2007.
[cir] APC for Vaginal Hysterectomy. When billing for vaginal
hysterectomies, hospitals must use procedure 58260, which will be
assigned to APC 0202.
[cir] New Technology APCs. A process has also been developed that
will recognize new technologies that do not otherwise meet the
definition of current orphan drugs, or current cancer therapy drugs and
biologicals and brachytherapy, or current radiopharmaceutical drugs and
biological products, and which are considered a covered benefit under
TRICARE. In contrast to the other APC groups, the new technology APC
groups do not take into account clinical aspects of the services they
are to contain, but only their costs. This process, along with
transitional pass-throughs, will provide additional payment for a
significant share of new technologies. New items and services will be
assigned to new technology APCs when it is determined that they cannot
appropriately be placed into existing APC groups. The new technology
APC groups have established payment rates based on the midpoint of
ranges of possible costs providing a mechanism for initiating payment
at an appropriate level within a relatively short timeframe. The cost
bands for New Technology APCs range from: $0 to $50, in increments of
$10; $50 to $100, in increments of $50; $100 to $2,000, in increments
of $100; and $2,000 to $6,000, in increments of $500. These increments
which are in two parallel sets of New Technology APCs--one with status
indictor ``S'' and the other with ``T''--allow assignment to the same
APC group procedures that are appropriately subject to a multiple
procedure payment reduction (T) with those that should not be
discounted (S).
[cir] Coding Requirement for Reimbursement Under TRICARE OPPS. To
receive TRICARE reimbursement under OPPS, providers must follow, and
contractors shall enforce, all Medicare specific coding requirements.
TRICARE Management Activity (TMA) will develop specific APCs (those
APCs beginning with a ``T'') for those services that are unique to the
TRICARE beneficiary population (e.g., those TRICARE specific APCs for
half-day partial hospitalization program (PHP) services and maternity
observation stays).
V. OPPS Reimbursement Methodology
[cir] General Overview. Under the TRICARE OPPS, hospital outpatient
services are paid on a rate-per-services basis that varies according to
the APC group to which the service is assigned. The APC classification
system is composed of groups of services that are comparable clinically
and with respect to the use of resources. Level 1 (CPT) and Level II
HCPCS codes and descriptors are used to identify and group the services
within each APC. Costs associated with items or services that are
directly related and integral to performing a procedure or furnishing a
service have been packaged into each procedure or service within an APC
group with the exception of: (1) New temporary technology APCs for
certain approved services that are structured based on cost rather than
clinical homogeneity; and (2) separate APCs for certain medical
devices, drugs, biologicals, radiopharmaceuticals and devices of
brachytherapy under transitional pass-through provisions. TRICARE is
adopting Medicare's classification system, along with its nationally
established APC payment amounts as prescribed in section 1833(t) of the
Social Security Act and in its accompanying Medicare regulation (42 CFR
part 419) for reimbursement of hospital outpatient services, to the
extent practicable, in accordance with 10 U.S.C. 1079(j)(2), with the
realization that there will be subtle differences occurring between the
TRICARE and Medicare OPPS methodologies based on differences in the age
and general health of the populations they serve (i.e., it can be
assumed that the TRICARE population is younger and healthier than the
population being served by Medicare). For example, TRICARE has already
found it necessary to develop two new TRICARE specific APCs, one for
maternity observation stays (T0002) and the other for a half-day
partial hospitalization program (T0001) to accommodate its unique
benefit structure and beneficiary population. There may also be subtle
differences in the inpatient-only procedure listings being maintained
by the two programs since some of the Medicare inpatient-only
procedures may be determined by TRICARE, upon medical review, to be
safe for administration in an outpatient setting due to its younger,
healthier population. This may require the development of additional
APC groups, along with nationally established payment amounts based on
their median costs from the previous year's claims history.
The payment rate for each APC is calculated by multiplying the
APC's relative weight by the conversions factor. Weights are derived
based on median hospital costs for services/procedures assigned to the
hospital outpatient APC groups. Billed charges for items integral to
performing the major procedure or visit, which include packaged HCPCS
codes (i.e., codes with SI = ``N'') and revenue codes appearing on the
same claim, are converted to costs by multiplying each revenue center
charge by the appropriate hospital-specific CCR. Centers for Medicare
and Medicaid Services (CMS) currently use a four-tiered hierarchy of
cost center CCRs to match a cost center to every possible revenue code
appearing in the outpatient claims, with the top tier being the most
common cost center and the lowest tier being the default CCR. If a
hospital's cost center CCR was deleted by trimming, another cost center
CCR in the revenue hierarchy can be applied. If no other department CCR
can be applied to the revenue code on the claim, CMS uses the
hospital's overall CCR for the revenue code.
The costs of the above services/procedures are then standardized
for geographic wage variations by dividing
[[Page 17285]]
the labor-related portion of the operating and capital costs (currently
estimated at 60 percent on the average for each billed item) by the
hospital inpatient prospective payment system (IPPS) wage index. The
standardized labor-related cost and the nonlabor-related cost component
for each billed item are summed to derive the total standardized cost
for each separately payable HCPCS code. Extreme costs outside three
standard deviations from the geometric mean will be eliminated prior to
calculating the median cost for each separately payable HCPCS code. The
median costs of these procedures will then be mapped to their assigned
APCs, and the median costs of those assigned procedures will be used in
establishing the overall APC median cost.
The relative payment weights are calculated for each APC by
dividing the median cost of each APC by the median cost for APC 0606
(Level 3 Clinic Visit), which is $83.88 for CY 2007, as a
reconfiguration of the visit APCs. APC 0606 was chosen in order to
maintain consistency in using a median for calculating unscaled weights
representing the median cost of some of the most frequently provided
services. The relative payment weights were further adjusted by
1.364598352 for budget neutrality, based on a comparison of aggregate
payments using CY 2006 relative weights to aggregate payments using the
CY 2007 final relative weights.
The other component used in establishing national APC payment
amounts is the conversion factor, updated on an annual basis in
accordance with section 1833(t)(3)(C)(iv) of the Social Security Act,
which provides for CY 2007 an updated amount equal to the hospital
inpatient market basket percentage increase applicable to hospital
discharges under section 1886(b)(3)(B)(iii) of the Act. The market
basket increase update factor of 3.4 percent for CY 2007, along with
the required wage index budget neutrality adjustment of approximately
0.999331979, the adjustment of 0.04 percent for the difference in the
pass-through set-aside, and the adjustment for the rural payment
adjustment for rural SCHs (including EACHs) of 0.999975941, resulted in
a standard conversion factor for CY 2007 of $61.468.
The national unadjusted APC payment rates that were calculated by
multiplying the CY 2007 scaled weight for each APC by the final CY 2007
conversion factor apply to all the services that are classified within
the APC group. These national rates (i.e., the unadjusted national
rates for both APCs and the HCPCS to which OPPS payment was assigned)
are listed on TMA's OPPS Web site at http://www.tricare.mil/opps.
[cir] Determination of Payment. A payment status indicator (SI) is
provided for every code in the HCPCS to identify how the service or
procedure described by the code would be paid under the hospital
outpatient prospective payment system (OPPS); i.e., it indicates if a
service represented by a HCPCS code is payable under the OPPS or
another payment system, and also which particular OPPS payment policies
apply. One, and only one, SI is assigned to each APC and to each HCPCS
code. Following are the CY 2007 payment status indicators, along with a
description of the particular services each indicator identifies.
Table 8.--CY 2007 Payment Status Indicators for Hospital OPPS
------------------------------------------------------------------------
Indicator Description OPPS payment status
------------------------------------------------------------------------
A............... Services paid under some Not paid under OPPS. Paid
payment method other than by contractors under a
OPPS (e.g., payment for fee schedule or payment
non-implantable system other than OPPS.
prosthetic and orthotic
devices, DME, ambulance
services, and individual
professional services).
B............... More appropriate code Not paid under OPPS.
required for TRICARE OPPS.
C............... Inpatient procedures...... Not paid under OPPS. Admit
patient. Bill as
inpatient.
E............... Items or services not Not paid under OPPS.
covered by TRICARE.
F............... Acquisition of corneal Not paid under OPPS. Paid
tissue, certain CRNA on allowable charge
services, and Hepatitis B basis.
vaccines.
G............... Pass-through drugs and Paid separate APCs under
biologicals. OPPS.
H............... (1) Pass-through device (1) Separate cost-based
categories. pass-through payment; not
subject to cost-share/co-
payment.
(2) Brachytherapy sources. (2) Separate cost-based
non-pass-through payment.
(3) Radiopharmaceutical (3) Separate cost-based
agents. non-pass-through payment.
K............... Non-pass-through drugs and Paid separate APCs under
biologicals and blood and OPPS.
blood products.
N............... Packaged incidental items Packaged into the primary
and services. procedure APC payment
amount to which the
incidental item or
service is normally
associated.
P............... Partial hospitalization... Per diem APC payments for
both half-day and full-
day partial
hospitalization programs.
Q............... Services either separately Paid under OPPS; services
payable or packaged. either packaged or
separately payable
depending on the specific
circumstances of the
HCPCS billing. OCE logic
will be applied in
determining if the
services will be packaged
or separately payable.
S............... Significant procedures Paid under OPPS; separate
allowed under the OPPS APC payment.
for which multiple
procedure reduction does
not apply.
T............... Surgical services allowed Paid under OPPS; separate
under OPPS with multiple APC payment.
procedure payment
reduction.
V............... Medical visits (including Paid under OPPS; separate
clinic or emergency APC payment.
department visits).
W............... Invalid HCPCS or invalid Not paid under OPPS.
revenue code with blank
HCPCS.
X............... Ancillary services........ Paid under OPPS; separate
APC payment.
Z............... Valid revenue code with Not paid under OPPS.
blank HCPCS and no other
SI assigned.
TB.............. Reimbursement not allowed Not paid under OPPS.
for CPT/HCPCS code
submitted.
------------------------------------------------------------------------
[[Page 17286]]
[cir] Adjustments for Specific Hospital Payment. The hospital DRG
wage adjustment factor will be used to adjust the portion of the
payment rate that is attributable to labor-related costs for relative
differences in labor and labor-related costs across geographic regions,
with the exception of APCs with SIs ``K'' and ``G'' because of the
inseparable, subordinate status of the outpatient department within the
overall hospital setting. The OPPS will also adhere to the same wage
index changes as the TRICARE-DRG based payment system, except the
effective date for changes will be January 1 of each year instead of
October 1. This way only one wage index file will have to be maintained
for both the OPPS and DRG-based payment systems. Following are the
steps taken in achieving this adjustment for APCs in which multiple
procedure discounting is not applied:
Step 1. Calculate 60 percent (labor-related portion) of the
national unadjusted payment rate.
Step 2. Determine the wage index area in which the hospital is
located and identify the wage index that applies to the specified
hospital. The wage index values assigned to each hospital area reflect
the new geographic statistical areas as a result of revised OMB
standards (urban and rural) to which hospitals are assigned for FY 2007
under the IPPS.
Step 3. Adjust the wage index of hospitals located in certain
qualifying counties that have a relatively high percentage of hospital
employees who reside in the county, but who work in a different county
with a higher wage index.
Step 4. Multiply the applicable wage index determined under Steps 2
and 3 by the amount determined in Step 1 that represents the labor-
related portion of the national unadjusted payment rate.
Step 5. Calculate 40 percent (the nonlabor-related portion) of the
national unadjusted payment rate and add the amount to the resulting
product in step 4. The result is the wage index adjusted payment rate
for the relevant wage index area in which the hospital is located.
Step 6. If the provider is a Sole Community Hospital (SCH),
multiply the wage adjusted payment rate by 1.071 to calculate the total
payment. This adjustment will apply to all services and procedures paid
under the OPPS (i.e., SIs ``P,'' ``S,'' ``T,'' ``V,'' and ``X''),
excluding drugs, biologicals and services paid subject to pass-through
payment (i.e., SIs ``G,'' ``H,'' and ``K'').
Applicable deductibles and/or cost-sharing/copayment amounts will
be subtracted from the wage adjusted APC payment rate based on the
eligibility status of the beneficiary at the time outpatient services
were rendered (i.e., those deductibles and cost-sharing/copayment
amounts applicable to Prime, Extra, and Standard beneficiary
categories). TRICARE will retain its current hospital outpatient
deductibles, cost-sharing/copayment amounts (refer to Tables 1 and 2
above) and catastrophic loss protection under the OPPS. The ASC cost-
sharing provision (i.e., assessment of a single copayment for both the
professional and facility charge for a Prime beneficiary) will be
adopted as long as it is administratively feasible. This will not apply
to Extra and Standard beneficiaries since their cost-sharing is based
on a percentage of the total allowed amount.
[cir] Additional APC Payment Adjustments. OPPS payment amounts are
discounted when more than one surgical procedure (SI= T) is performed
during a single operative session. Under these circumstances, TRICARE
will reimburse the full payment and the beneficiary will pay the full
cost-share/copayment for the procedure having the highest payment rate,
while the remaining surgical procedure payments will be reduced by 50
percent, along with the beneficiary associated cost-share/copayment to
reflect the savings associated with having to prepare the patient only
once and the incremental costs associated with anesthesia, operating
and recovery room use, and other services required for the second and
subsequent procedures. A 50 percent discount will also be applied to
the OPPS payment amounts and beneficiary copayments/cost-shares for
procedures terminated before anesthesia is induced, as identified by
modifiers -73 (Discounted Outpatient Procedure Prior to Anesthesia
Administration) and -52 (Reduced Services). Full payment will be
received for a procedure that is started but discontinued after the
induction of anesthesia as reported by modifier -74 (Discounted
Procedure). In this case, payment would recognize the costs incurred by
the hospital to prepare the patient for surgery and the resources
expended in the operating room and recovery room of the hospital.
Discounting will also be applied to conditional, inherent, and
independent bilateral procedures.
An additional payment is provided for outpatient services for which
a hospital's charges, adjusted to cost, exceed the sum of the wage
adjusted APC rate plus a fixed dollar threshold and a fixed multiple of
the wage adjusted APC rate. Only line item services with SIs ``P,''
``S,'' ``T'', ``V,'' or ``X'' will be eligible for outlier payment
under OPPS. No outlier payments will be calculated for line item
services with SIs ``G,'' ``H,'' ``K,'' and ``N,'' with the exception of
blood and blood products.
For CY 2007, the outlier threshold is met when the cost of
furnishing a service or procedure exceeds 1.75 times the APC payment
amount and exceeds the APC payment rate plus the $1,825 fixed-dollar
threshold. The fixed-dollar threshold was added to better target
outliers to those high cost and complex procedures where a very costly
service could present a hospital with significant financial loss. If a
provider meets both of these conditions (i.e., the multiple threshold
and the fixed-dollar threshold), the outlier payment is calculated at
50 percent of the amount by which the cost of furnishing the service
exceeds 1.75 times the APC payment rate. The hospital would receive the
normal APC payment rate along with the additional outlier amount. For
example, suppose a hospital charges $26,000 for a procedure for which
the APC adjusted amount is $3,000 and the overall facility CCR is 0.30.
The estimated cost to the hospital is $7,800 (0.30 x $26,000). In order
to determine whether the procedure is eligible for outlier payment, it
first must be determined whether the cost for the service exceeds both
the APC multiple outlier cost threshold of $5,250 (1.75 x $3,000) and
the fixed-dollar threshold of $4,825 ($3,000 + $1,825). Since the
estimated cost to the hospital ($7,800) exceeds both threshold amounts,
the hospital would be eligible for 50 percent of the difference, which
in this case would be $1,275 ($7,800--$5,250/2).
[cir] Payment Hierarchy for Non-OPPS Procedures. If the outpatient
procedure is not assigned an APC payment amount (i.e., is not assigned
SI ``G,'' ``H,'' ``K,'' ``P,'' ``S,'' ``T,'' ``V,'' or ``X''), but may
be reimbursed under an existing TRICARE fee schedule or other
prospectively determined rate (i.e., procedures assigned to SI ``A''),
the following hierarchy will be used in pricing the procedure. The
PRICER will first look to see if there is an appropriate CMAC available
for pricing. If a CMAC cannot be found, it will then look to the
Durable Medical Equipment Claims: Prosthetics, Orthotics, and Supplies
(DMEPOS) fee schedule for pricing. If a DMEPOS fee schedule rate is not
available for pricing, it will turn to statewide prevailings. If a
statewide prevailing cannot be found, the PRICER will reimburse the
procedure at the billed charge.
[[Page 17287]]
VI. Military Readiness/Contingency Options for Payment Under OPPS
In recognition of the Department's requirement to support military
readiness and contingency operations, and in response to recent
congressional concerns regarding same, the agency has developed two
options for implementation of OPPS. The first option involves a three-
year transitional implementation of payment adjustments that may be
utilized to limit the decline in payments under OPPS for TRICARE
network hospitals that are in close proximity to military bases and
treat a disproportionate share of military family members and/or
hospitals that provide essential network specialty care. These
temporary payment adjustments would target TRICARE network hospitals
that are most vulnerable to OPPS revenue reductions and that are
essential for continued military readiness and support of contingency
operations.
This adjustment would increase payment for primary care and
emergency room visits to hospital outpatient departments (HOPDs) over a
3-year transitional period. Primary care and emergency room visits to
HOPDs are categorized into 10 APC categories (APC codes 604-609 and
613-616) which represent over 600,000 hospital visits annually. On
average, about one quarter of the revenues from TRICARE for HOPD
services are for these 10 codes, representing the biggest payment
reduction under OPPS. Under this transitional payment adjustment, the
APC payment levels for network hospitals for the 5 clinical visit APCs
would be set at 130 percent of the Medicare APC level, while the 5
emergency room (ER) visit APCs would be increased by 150 percent in the
first year of OPPS implementation. In the second year, the APC payment
levels would be set at 120 percent of the Medicare APC level for clinic
visits and at 130 percent for ER APCs. In the third year, the APC visit
amounts would be set at 110 and 120 percent, respectively, and in the
fourth year, the TRICARE and Medicare payment levels for the 10 APC
visit codes would be identical. Two sets of adjustment factors (i.e.,
one for clinic visits and the other for ER visits) are being used since
revenue cuts for ER visits are generally greater than those associated
with clinic visits. Transitional payment adjustments for these 10 visit
codes would buffer the initial revenue reductions which will be
experienced upon implementation of TRICARE's OPPS, providing hospitals
with sufficient time to adjust and budget for potential revenue
reductions for hospitals most vulnerable to implementation of OPPS.
The second option involves authority for the Director, TRICARE
Management Activity, or a designee, under provisions of this rule to
adopt, modify, and/or extend temporary adjustments to OPPS payments for
TRICARE network hospitals deemed essential for military readiness and
support during contingency operations. Upon a determination by the TMA
Director, or designee, at any time following implementation that it is
impracticable to support military readiness or contingency operations
by making OPPS payments in accordance with the same reimbursement rules
implemented by Medicare, a temporary deviation may be granted. This
will ensure the availability of adequate civilian healthcare resources
necessary to meet all ongoing military readiness and contingencies. The
criteria for adopting, modifying and/or extending temporary adjustments
to OPPS payments under this authority shall be issued through TRICARE
policies, instructions, procedures and guidelines as deemed appropriate
by the Director, TRICARE Management Activity, or a designee, for those
network hospitals essential for continued military readiness and
deployment in a time of contingency operations.
VII. Regulatory Procedures
Executive Order 12866, ``Regulatory Planning and Review''
Section 801 of title 5, United States Code (U.S.C.), and Executive
Order (E.O.) 12866 requires certain regulatory assessments and
procedures for any major rule or significant regulatory action, defined
as one that would result in an annual effect of $100 million or more on
the national economy or which would have other substantial impacts. It
has been certified that this rule is not an economically significant
rule, however, it is a regulatory action which has been reviewed by the
Office of Management and Budget as required under the provisions of
E.O. 12866.
Section 202, Public Law 104-4, ``Unfunded Mandates Reform Act''
It has been certified that his rule does not contain a Federal
mandate that may result in the expenditure by State, local and tribal
governments, in aggregate, or by the private sector, of $100 million or
more in any one year.
Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)
The Regulatory Flexibility Act (RFA) requires 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 major rule under 5 U.S.C. 801 since the projected
reduction in TRICARE payments to affected hospitals would be below the
$100 million threshold. The estimates of reduction are based on
historical TRICARE costs and an assessment of potential users times
average benefit costs per person for implementation of the new
prospective payment system. Following is a projected government impact
analysis, reflecting an overall cost savings of $81.0 million dollars
for the first 12 months of implementation based on 2006 TRICARE claims
data. This rule also
Impact Assessment of Implementation of OPPS
[$Millions--first 12 months]
------------------------------------------------------------------------
------------------------------------------------------------------------
Projected Cost Savings Based On Current Data............... $231.0
Offsets to Cost Savings:
Application of Existing Cost-Sharing..................... (12.0)
Reduction/Rebalancing of Discounts....................... (72.0)
Transitional Adjustments................................... (44.0)
Military Contingency Adjustments........................... (8.0)
Effects of OHI............................................. (14.0)
------------
Net Cost Savings*...................................... 81.0
------------------------------------------------------------------------
does not require a regulatory flexibility analysis, as the significant
policy action was taken by Congress and the rule merely puts it into
effect. The policy of the Regulatory Flexibility Act that agencies
adequately evaluate all potential options for an action does not apply
when Congress has already dictated the action. In addition, it has been
certified that this proposed rule will not significantly affect a
substantial number of small entities.
Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)
This rule will not impose significant additional information
collection requirements on the public under the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501-3511). Existing information collection
requirements of the TRICARE and Medicare programs will be utilized.
Executive Order 13132, ``Federalism''
This proposed rule has been examined for its impact under E.O.
13132 and it does not contain policies that have federalism
implications that would have substantial direct effects on the States,
on the relationship between
[[Page 17288]]
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government; therefore,
consultation with State and local officials is not required.
List of Subjects in 32 CFR Part 199
Claims, Dental health, Health care, Health insurance, Individuals
with disabilities, Military personnel.
Accordingly, 32 CFR part 199 is proposed to be amended as follows:
PART 199--[AMENDED]
1. The authority citation for part 199 continues to read as
follows:
Authority: 5 U.S.C. 301; 10 U.S.C. Chapter 55.
2. Section 199.2(b) is amended by adding definitions for Ambulatory
Payment Classifications (APCs) and TRICARE Outpatient Prospective
Payment System (OPPS) and placing them in alphabetical order to read as
follows:
Sec. 199.2 Definitions.
* * * * *
(b) * * *
Ambulatory Payment Classifications (APCs). Payment of services
under the TRICARE OPPS is based on grouping outpatient procedures and
services into ambulatory payment classification groups based on
clinical and resource homogeneity, provider concentration, frequency of
service and minimal opportunities for upcoding and code fragmentation.
Nationally established rates for each APC are calculated by multiplying
the APC's relative weight derived from median costs for procedures
assigned to the APC group, scaled to the median cost of the APC group
representing the most frequently provided services, by the conversion
factor.
TRICARE Outpatient Prospective Payment System (OPPS). OPPS is a
hospital outpatient prospective payment system, based on nationally
established APC payment amounts and standardized for geographic wage
differences that includes operating and capital-related costs that are
directly related and integral to performing a procedure or furnishing a
service in a hospital outpatient department.
* * * * *
Sec. 199.4 [Amended]
3. Section 199.4 is proposed to be amended by removing paragraph
(c)(3)(i)(C)(1) and redesignating paragraphs (c)(3)(i)(C)(2) and
(c)(3)(i)(C)(3) as (c)(3)(i)(C)(1) and (c)(3)(i)(C)(2).
4. Section 199.14 is amended by revising paragraphs (a)(2)(ix)(A);
redesignating paragraphs (a)(5)(i) through (a)(5)(xii) as (a)(5)(i)(A)
through (a)(5)(i)(L); adding new paragraphs (a)(5)(i) introductory text
and (a)(5)(ii); and revising paragraph (d)(1) to read as follows:
Sec. 199.14 Provider reimbursement methods.
(a) * * *
(2) * * *
(ix) * * *
(A) In general. Psychiatric and substance use disorder
rehabilitation partial hospitalization services authorized by Sec.
199.4(b)(10) and (e)(4) and provided by institutional providers
authorized under Sec. 199.6(b)(4)(xii) and (b)(4)(xiv) are reimbursed
on the basis of prospectively determined, all-inclusive per diem rates
pursuant to the provisions of paragraph (a)(2)(ix)(C) of this section,
with the exception of hospital-based psychiatric and substance use
disorder rehabilitation partial hospitalization services which are
reimbursed in accordance with provisions of paragraph (a)(5)(ii) of
this section. The per diem payment amount must be accepted as payment
in full for all institutional services provided, including board,
routine nursing service, ancillary services (includes music, dance,
occupational and other such therapies), psychological testing and
assessment, overhead and any other services for which the customary
practice among similar providers is included as part of the
institutional charges.
* * * * *
(5) * * *
(i) Outpatient Services Not Subject to Hospital Outpatient
Prospective Payment System (OPPS). The following are payment methods
for outpatient services that are either provided in an OPPS exempt
hospital or paid outside the OPPS payment methodology under existing
fee schedules or other prospectively determined rates in a hospital
subject to OPPS reimbursement.
* * * * *
(ii) Outpatient Services Subject to OPPS. Outpatient services
provided in hospitals subject to Medicare OPPS as specified in 42 CFR
413.65 and 42 CFR 419.20 will be paid in accordance with the provisions
outlined in sections 1833(t) of the Social Security Act and its
implementing Medicare regulation (42 CFR Part 419). Under the above
governing provisions, CHAMPUS will recognize to the extent practicable,
in accordance with 10 U.S.C. 1079(j)(2), Medicare's OPPS reimbursement
methodology to include specific coding requirements, ambulatory payment
classifications (APCs), nationally established APC amounts and
associated adjustments (e.g., discounting for multiple surgery
procedures, wage adjustments for variations in labor-related costs
across geographical regions and outlier calculations). During the
transition to OPPS, temporary deviations from Medicare's statutory and/
or regulatory requirements and future changes arising from its
continuing experience with OPPS may be granted for any TRICARE network
hospital by the Director, TRICARE Management Activity (TMA), or a
designee, to accommodate CHAMPUS' unique benefit structure and
beneficiary population. In addition, the Director, TMA, or a designee,
may at any time after implementation adopt, modify and/or extend
temporary adjustments to OPPS payments for TRICARE network hospitals
deemed essential for military readiness and deployment in time of
contingency operations. Any temporary adjustment to OPPS payments shall
be made only on the basis of a determination that it is impracticable
to support military readiness or contingency operations by making OPPS
payments in accordance with the same reimbursement rules implemented by
Medicare. The criteria for adopting, modifying, and/or extending
deviations and/or adjustments to OPPS payments shall be issued through
TRICARE policies, instructions, procedures and guidelines as deemed
appropriate by the Director, TMA, or a designee.
* * * * *
(d) * * *
(1) In general. CHAMPUS pays institutional facility costs for
ambulatory surgery on the basis of prospectively determined amounts, as
provided in this paragraph, with the exception of ambulatory surgery
procedures performed in hospital outpatient departments, which are to
be reimbursed in accordance with the provisions of paragraph (a)(5)(ii)
of this section. This payment method is similar to that used by the
Medicare program for ambulatory surgery. This paragraph applies to
payment for freestanding ambulatory surgical centers. It does not apply
to professional services. A list of ambulatory surgery procedures
subject to the payment method set forth in the paragraph shall be
published periodically by the Director, TRICARE Management Activity
(TMA). Payment to freestanding ambulatory surgery centers is limited to
these procedures.
* * * * *
[[Page 17289]]
March 21, 2008.
L. M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. E8-6514 Filed 3-31-08; 8:45 am]
BILLING CODE 5001-06-P