[Federal Register Volume 63, Number 212 (Tuesday, November 3, 1998)]
[Notices]
[Pages 59290-59291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29315]


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DEPARTMENT OF DEFENSE

Office of the Secretary


TRICARE/CHAMPUS; FY99 DRG Updates

AGENCY: Office of the Secretary, DOD.

ACTION: Notice of DRG revised rates.

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SUMMARY: This notice describes the changes made to the TRICARE/CHAMPUS 
DRG-based payment system in order to conform to changes made to the 
Medicare Prospective Payment System (PPS). It also provides the updated 
fixed loss cost outlier threshold, cost-to-charge ratios and the 
Internet address for accessing the updated adjusted standardized 
amounts, DRG relative weights, and beneficiary cost-share per diem 
rates to be used for FY 1999 under the TRICARE/CHAMPUS DRG-based 
payment system.

EFFECTIVE DATES: The rates, weights and Medicare PPS changes which 
affect the TRICARE/CHAMPUS DRG-based payment system contained in this 
notice are effective for admissions occurring on or after October 1, 
1998.

ADDRESSES: TRICARE Management Activity (TMA), Medical Benefits and 
Reimbursement Systems, 16401 East Centretech Parkway, Aurora, CO 80011-
9403.
    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, Medical Benefits and Reimbursement Systems, TMA, telephone 
(303) 676-3627. To obtain copies of this document, see the ADDRESSES 
section above. Questions regarding payment of specific claims under the 
TRICARE/CHAMPUS DRG-based payment system should be addressed to the 
appropriate 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), October 22, 1990 (55 FR 42560), and September 10, 1998 (63 FR 
48439).
    An explicit tenet of these final rules, and one based on the 
statute authorizing the use of DRGs by TRICARE/CHAMPUS, is that the 
TRICARE/CHAMPUS DRG-based payment system is modeled on the Medicare 
PPS, and that, whenever practicable, the TRICARE/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.

[[Page 59291]]

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

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

A. DRG Classifications

    Under both the Medicare PPS and the TRICARE/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 
TRICARE/CHAMPUS DRG-based payment system is the same as the current 
Medicare Grouper with two modifications. The TRICARE/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 resulted in all neonate tracheostomies and organ 
transplants to be grouped to MDC 15 DRGs and not to DRGs 480-483 or 
495. For admissions occurring on or after October 1, 1998, the CHAMPUS 
grouper hierarchy logic was changed to move DRG 103 to the PreMDC DRGs 
and to assign patients to PreMDC DRGs 480, 103 and 495 before 
assignment to MDC 15 DRGs and the neonatal DRGs. Grouping for all other 
DRGs under the TRICARE/CHAMPUS system is identical to the Medicare PPS.
    For FY 1999, 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

    TRICARE/CHAMPUS will continue to use the same wage index amounts 
used for the Medicare PPS. In addition, TRICARE/CHAMPUS will duplicate 
all changes with regard to the wage index for specific hospitals that 
are redesignated by the Medicare Geographic Classification Review 
Board.

C. Hospital Market Basket

    TRICARE/CHAMPUS will update the adjusted standardized amounts 
according to the final updated hospital market basket used for the 
Medicare PPS according to HCFA's July 31, 1998, final rule.

D. Outlier Payments

    Since TRICARE/CHAMPUS does not include capital payments in our DRG-
based payments, we will use the fixed loss cost outlier threshold 
calculated by HCFA for paying cost outliers in the absence of capital 
prospective payments. For FY99, the fixed loss cost outlier threshold 
is based on the sum of the applicable DRG-based payment rate plus any 
amounts payable for IDME plus a fixed dollar amount. Thus, for FY99, in 
order for a case to qualify for cost outlier payments, the costs must 
exceed the TRICARE/CHAMPUS DRG base payment rate for the DRG plus the 
IDME payment plus $10,129 (wage adjusted). The marginal cost factor for 
cost outliers continues to be 80 percent.

E. Graduate Medical Education

    TRICARE/CHAMPUS will adopt Medicare's PPS changes as they pertain 
to the counting and reporting of residents on the Medicare cost reports 
for purposes of reimbursing hospitals for the TRICARE/CHAMPUS share of 
graduate medical education costs.

F. Transfers

    TRICARE/CHAMPUS will adopt Medicare's PPS changes as they pertain 
to the expanded transfer definition. We will publish an interim final 
rule to reflect these changes in 32 CFR Part 199(a)(1).

G. Blood Clotting Factor

    TRICARE/CHAMPUS will adopt the two new HCPCS billing codes and 
payment rates for purified Factor IX products, as outlined in HCFA's 
May 12, 1998, final rule. These new codes and payment rates are 
effective for admissions on or after June 11, 1998. In addition, we 
will adopt the changes to the payment rates for blood clotting factor 
for hemophilia patients as outlined in HCFA's July 31, 1998, final 
rule, effective for admissions on or after October 1, 1998.

H. Bad Debt Increase

    TRICARE/CHAMPUS will adopt Medicare's PPS changes to gradually 
reduce the payment for bad debt for hospitals over the next several 
years.

II. Cost to Charge Ratio

    For FY 1999, the cost-to-charge ratio used for the TRICARE/CHAMPUS 
DRG-based payment system will be 0.5487, which is increased to 0.5562 
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 0.6085.

III. Updated Rates and Weights

    The updated rates and weights are accessible through the Internet 
at http://www.tso.osd.mil under the heading Provider Reimbursement 
Rates. Table 1 provides the ASA rates and Table 2 provides the DRG 
weights to be used under the TRICARE/CHAMPUS DRG-based payment system 
during FY 1999 and which is a result of the changes described above. 
The implementing regulations for the TRICARE/CHAMPUS DRG-based payment 
system are in 32 CFR Part 199.

    Dated: October 27, 1998.
L.M. Bynum,
Alternate Federal Register Liaison Officer, Department of Defense.
[FR Doc. 98-29315 Filed 11-2-98; 8:45 am]
BILLING CODE 5000-04-M