[Federal Register Volume 60, Number 191 (Tuesday, October 3, 1995)]
[Notices]
[Pages 51779-51780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24577]



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DEPARTMENT OF DEFENSE
Office of the Secretary


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); FY96 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 1996 under the CHAMPUS DRG-
based payment system. It also describes the 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 and Medicare PPS changes which 
affect the CHAMPUS DRG-based payment system contained in this notice 
are effective for admissions occurring on or after October 1, 1995.

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: Marty Maxey, Program Development 
Branch, OCHAMPUS, telephone (303) 361-1227.
    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 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. For 
admissions occurring on or after October 1, 1995 the CHAMPUS grouper 
hierarchy logic has been changed so the age split (age (<29 days) and 
assignments to MDC 15 occur before assignment of the PreMDC DRGs. This 
will result in all neonate tracheostomies and organ transplants to be 
grouped to MDC 15 DRGs and not to DRGs 480-483 or 495. Grouping for all 
other DRGs under the CHAMPUS system is identical to the Medicare PPS.
    For FY 1995, HCFA will implement a number of classification 
changes, including surgical hierarchy changes, revisions to the Major 
Problem Diagnosis List, and refinements to the Complications and 
Comorbidities (CC) List. 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.

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 FY96. The long-
stay threshold shall equal the lesser of 3.0 standard deviations or 23 
days above the DRG's geometric LOS. Long-stay outliers will be 
reimbursed the DRG-based amount plus 44 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 
$13,800.

E. Capital-Related Costs

    Effective for discharges occurring on or after October 1, 1995, 
HCFA will increase its inpatient capital-related prospective payment 
rate. The major factor contributing to the increase is the expiration 
of the budget-neutrality requirement that mandated estimated payments 
for capital costs equal 90% of the amount that would have been payable 
each year from FY 1992 through FY 1995 on a reasonable cost basis. 
Since CHAMPUS pays for capital-related costs on a retrospective basis 
based on actual costs instead of prospectively like Medicare, we will 
reimburse 100% of capital-related costs for CHAMPUS days occurring on 
or after October 1, 1995.

F. Determination of Number of Beds for Purposes of Calculating the 
Indirect Medical Education Adjustment

    We will clarify our bed counting policy. We will specify that beds 
or bassinets in a healthy, or regular, baby nursery are excluded from 
the bed count 

[[Page 51780]]
for purposes of calculating the Indirect Medical Education Adjustment.

G. Payment for Transfer Cases

    CHAMPUS is adopting HCFA's graduated per diem payment methodology 
for transfer cases. Under this payment methodology, CHAMPUS will pay 
transferring hospitals, twice the per diem amount for the first day of 
any transfer stay plus the per diem amount for each of the remaining 
days before transfer, up to the full DRG amount. For neonatal cases, 
other than normal newborns, the transferring hospital will be paid 
twice the per diem amount for the first day of any transfer stay plus 
125 percent of the per diem rate for all remaining days before 
transfer, up to the full DRG amount. This change will allow hospitals 
to be compensated more appropriately for the treatment they furnish to 
patients before transfer. Transferring hospitals will continue to be 
paid in full for discharges classified into DRG 456 (burns, transferred 
to another acute care facility) or DRG 601 (neonate, transferred less 
than or equal to 4 days old).

H. Effect of Change of Ownership on Exclusion of Long-Term Care 
Hospitals

    CHAMPUS is adopting HCFA's new requirements for certain long-term 
care hospitals excluded from the PPS. CHAMPUS will clarify its policy 
by specifying that if a hospital undergoes a change of ownership at the 
start of a cost reporting period or at any time within the preceding 6 
months, the hospital may be excluded from the prospective payment 
system as a long-term care hospital for a cost reporting period if, for 
the 6 months immediately preceding the start of the period (including 
time before the change of ownership), the hospital has the required 
average length of stay, continuously operated as a hospital, and 
continuously participated as a hospital in Medicare.

II. Cost-to-Charge Ratio

    For FY 1996, the cost-to-charge ratio used for the CHAMPUS DRG-
based payment system will be 0.6003 which is increased to 0.6103 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 0.6691.

III. Updated Rates and Weights

    Tables 1 and 2 provide the rates and weights to be used under 
CHAMPUS DRG-based payment system during FY 1996 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.

IV. Elimination of Physician Attestation Form

    CHAMPUS is adopting Medicare's process for eliminating the 
physician attestation form that requires doctors to certify the 
accuracy of all diagnoses and procedures before submitting claims for 
payment to CHAMPUS.

    Editorial Note.--This table will not appear in the code of 
Federal Regulations.
Table 1--National Urban and Rural Adjusted Standardized Amounts, Labor/
Nonlabor, and Cost-Share Per Diem
    The following summary provides the adjusted standardized amounts 
and the cost-share per diem for beneficiaries other than dependents of 
active-duty members.
    The adjusted standardized amounts are effective for admissions 
occurring on or after October 1, 1995.

National Large Urban Adjusted:                                          
  Standardized Amount.....................................    $  ,   .  
    Labor portion.........................................    $  ,   .  
    Nonlabor portion......................................    $  ,   .  
National Other Areas:                                                   
  Standardized Amount.....................................    $  ,   .  
    Labor protion.........................................    $  ,   .  
    Nonlabor portion......................................    $  ,   .  
                                                                        

    The cost-share per diem is effective for inpatient days of care 
occurring on or after October 1, 1995.

Cost-share per diem for beneficiaries other than                        
 dependents of active-duty members........................    $      .  
                                                                        

    Dated: September 28, 1995.
L.M. Bynum,
Alterate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 95-24577 Filed 10-2-95; 8:45 am]
BILLING CODE 5000-04-M