[Federal Register Volume 61, Number 202 (Thursday, October 17, 1996)]
[Notices]
[Pages 54160-54173]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26531]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Office of the Secretary


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); FY97 DRG Updates

AGENCY: Office of the Secretary, DoD.

ACTION: Notice of DRG revised rates.

-----------------------------------------------------------------------

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 1997 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, 1996.

ADDRESSES: Office of the Civilian Health and Medical Program of the 
Uniformed Services (OCHAMPUS), Program Development Branch, Aurora, CO 
80045-6900.

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 the 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 was changed so the age split (age <29 days) and 
assignments to MDC 15 occur before assignment of the PreMDC DRGs. This 
results 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 1997, 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 update hospital market basket used for the Medicare PPS according 
to HCFA's August 30, 1996, final rule.

[[Page 54161]]

D. Outlier Payments

    CHAMPUS is adopting the HCFA outlier thresholds for FY97. The long-
stay threshold shall equal the lesser of 3.0 standard deviations or 24 
days above the DRG's geometric LOS. Long-stay outliers will be 
reimbursed the DRG-based amount plus 33 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 
$8,850.

E. Capital-Related Costs

    For FY97 HCFA will increase its inpatient capital-related 
prospective payment rate. 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 the effective day of the Medicare 
PPS update.

II. Cost-to-Charge Ratio

    For FY 1997, the cost-to-charge ratio used for the CHAMPUS DRG-
based payment system will be 0.5795 which is increased to 0.5895 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 0.6459.

III. Updated Rates and Weights

    Tables 1 and 2 provide the rates and weights to be used under the 
CHAMPUS DRG-based payment system during FY 1997 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 10, 1996.

L.M. Bynum,
Alternate Federal Register Liaison Officer, Department of Defense.

BILLING CODE 5000-04-M

[[Page 54162]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.005



[[Page 54163]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.006



[[Page 54164]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.007



[[Page 54165]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.008



[[Page 54166]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.009



[[Page 54167]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.010



[[Page 54168]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.011



[[Page 54169]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.012



[[Page 54170]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.013



[[Page 54171]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.014



[[Page 54172]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.015



[[Page 54173]]

[GRAPHIC] [TIFF OMITTED] TN17OC96.016



[FR Doc. 96-26531 Filed 10-16-96; 8:45 am]
BILLING CODE 5000-04-C