[Federal Register Volume 59, Number 197 (Thursday, October 13, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25339]


[[Page Unknown]]

[Federal Register: October 13, 1994]


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DEPARTMENT OF DEFENSE

Office of the Secretary

 

Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); FY95 DRG Updates

AGENCY: Office of the Secretary, DoD.

ACTION: Notice of DRG Revised Rates.

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SUMMARY: This notice provides the updated adjusted standardized 
amounts, DRG relative weights, outlier thresholds, and beneficiary 
cost-share per diem rates to be used for FY 1995 under the CHAMPUS DRG-
based payment system. It also describes the non-regulatory changes made 
to the CHAMPUS DRG-based payment system in order to conform to changes 
made to the Medicare Prospective Payment System (PPS).

EFFECTIVE DATES: The rates and weights contained in this notice are 
effective for admissions occurring on or after October 1, 1994.

ADDRESSES: Office of the Civilian Health and Medical Program of the 
Uniformed Services, (OCHAMPUS), Program Development Branch, Aurora, CO 
80045-6900.
    For copies of the Federal Register containing this notice, contact 
the Superintendent of Documents, U.S. Government Printing Office, 
Washington, D.C. 20402, (202) 783-3238. The charge for the Federal 
Register is $1.50 for each issue payable by check or money order to the 
Superintendent of Documents.

FOR FURTHER INFORMATION CONTACT:
Rose M. Sabo, M.P.A., Program Development Branch, OCHAMPUS, telephone 
(303) 361-1178.
    To obtain copies of this document, see the ADDRESSES section above. 
Questions regarding payment of specific claims under the CHAMPUS DRG-
based payment system should be addressed to the appropriate CHAMPUS 
contractor.

SUPPLEMENTARY INFORMATION: The final rule published on September 1, 
1987 (52 FR 32992) set forth the basic procedures used under the 
CHAMPUS DRG-based payment system. This was subsequently amended by 
final rules published August 31, 1988 (53 FR 33461), October 21, 1988 
(53 FR 41331), December 16, 1988 (53 FR 50515), May 30, 1990 (55 FR 
21863), and October 22, 1990 (55 FR 42560).
    An explicit tenet of these final rules, and one based on the 
statute authorizing use of DRGs by CHAMPUS, is that the CHAMPUS DRG-
based payment system is modeled on the Medicare prospective payment 
system (PPS), and that, whenever practicable, the CHAMPUS system will 
follow the same rules that apply to the Medicare PPS. HCFA publishes 
these changes annually in the Federal Register and discusses in detail 
the impact of the changes.
    In addition, this notice updates the rates and weights in 
accordance with our previous final rules. The actual changes we are 
making, along with a description of their relationship to the Medicare 
PPS, are detailed below.

I. Medicare PPS Changes Which Affect the CHAMPUS DRG-Based Payment 
System

    Following is a discussion of the changes the Health Care Financing 
Administration (HCFA) has made to the Medicare PPS which affect the 
CHAMPUS DRG-based payment system.

A. DRG Classifications

    Under both the Medicare PPS and the CHAMPUS DRG-based payment 
system, cases are classified into the appropriate DRG by a Grouper 
program. The Grouper classifies each case into a DRG on the basis of 
the diagnosis and procedure codes and demographic information (that is, 
sex, age, and discharge status). The Grouper used for the CHAMPUS DRG-
based payment system is the same as the current Medicare Grouper with 
two modifications. The CHAMPUS system has replaced Medicare DRG 435 
with two age-based DRGs (900 and 901), and we have implemented thirty-
four (34) neonatal DRGs in place of Medicare DRGs 385 through 390. 
Grouping for all other DRGs under the CHAMPUS system is identical to 
the Medicare PPS.
    For FY 1995, HCFA will implement a number of changes in major 
diagnostic categories (MDCs), revisions to secondary and major problems 
lists and surgical hierarchies to improve DRG classifications based on 
resource utilization. The CHAMPUS Grouper will incorporate all changes 
made to the Medicare Grouper.

B. Wage Index and Medicare Geographic Classification Review Board 
Guidelines

    CHAMPUS will continue to use the same wage index amounts used for 
the Medicare PPS. In addition, CHAMPUS will duplicate all changes with 
regard to the wage index for specific hospitals which are redesignated 
by the Medicare Geographic Classification Review Board. Consistent with 
HCFA, rural hospitals will receive the same payment rate as other urban 
hospitals.

C. Hospital Market Basket

    We will update the adjusted standardized amounts according to the 
final updated hospital market basket used for the Medicare PPS 
according to HCFA's September 1 final rule.

D. Outlier Payments

    CHAMPUS is adopting the HCFA outlier thresholds for FY95. The long-
stay threshold shall equal the lesser of 3.0 standard deviations or 22 
days above the DRG's geometric LOS. Long-stay outliers will be 
reimbursed the DRG-based amount plus 49 percent of the per diem rate 
for the DRG for each covered day of care beyond the long-stay outlier 
threshold. The cost outlier will be reimbursed the DRG-based amount 
plus 80 percent of the standardized costs exceeding the threshold. The 
cost outlier threshold shall be the DRG payment (wage-adjusted but 
prior to adjustment for indirect medical education) plus a flat rate of 
$18,800.

E. Hospitals Excluded from the Prospective Payment System

    CHAMPUS will continue to follow the limitations of exclusions for 
hospitals excluded from the prospective payment system. As HCFA 
clarified in its final rule of September 2, 1994, ``long-term care 
units'' of general hospitals are not exempt nor were they intended to 
be exempt from the prospective payment system. CHAMPUS shares HCFA's 
concern that excluding such units could inadvertently encourage 
hospitals to divert long-stay cases to the excluded unit, leaving only 
the shorter, less costly cases to be paid under the prospective payment 
system, circumventing the intent of Congress to use the DRG system to 
control hospital charges. Designation by Medicare as an exempt hospital 
will result in automatic exemption under CHAMPUS. A hospital which has 
been denied exemption status by Medicare cannot be exempt under 
CHAMPUS.

G. Medicare Changes Which Are Not Being Adopted by CHAMPUS

    Transfer cases will be paid as in previous years based on a per 
diem rate for each day of the patient's stay in that hospital not to 
exceed the DRG-based payment amount (including outlier payments). The 
per diem rate is determined by dividing the appropriate wage-adjusted 
prospective payment rate, including adjustment for indirect medical 
education, by the geometric mean length of stay for the DRG into which 
the case falls. CHAMPUS is not adopting the graduated per diem 
methodology discussed by HCFA at this time. Outlier cases will be paid 
as in previous years, applying HCFA's outlier thresholds as described 
above. Capital costs will continue to be handled as a pass-through cost 
under CHAMPUS. Only those hospitals not exempt from the prospective 
payment system are entitled to payment consideration for capital costs.

III. Cost-to-Charge Ratio

    For FY 1995, the cost-to-charge ratio used for the CHAMPUS DRG-
based payment system will be 0.6193 which is increased to 0.6293 to 
account for bad debts. This shall be used to calculate the adjusted 
standardized amounts and to calculate cost outlier payments, except for 
children's hospitals. For children's hospital cost outliers, the cost-
to-charge ratio used is 0.6900.

IV. Updated Rates and Weights

    Tables 1 and 2 provide the rates and weights to be used under 
CHAMPUS DRG-based payments system during FY 1995 and which are a result 
of the changes described above. The implementing regulations for the 
CHAMPUS DRG-based payment system are in 32 CFR Part 199.

    Dated: October 7, 1994.
L. M. Bynum,
Alternative Federal Register Liaison Officer, Department of Defense.

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[FR Doc. 94-25339 Filed 10-12-94; 8:45 am]
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