[Federal Register Volume 64, Number 215 (Monday, November 8, 1999)]
[Rules and Regulations]
[Pages 60671-60672]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29093]


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

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 1999

RIN 0720-AA37


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); TRICARE Program; Reimbursement

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule, correction.

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

SUMMARY: This final rule makes an administrative correction to the 
final rule published in the Federal Register on Thursday, September 10, 
1998 (63 FR 48439). The second set of amendatory instructions for 
Sec. 199.14 did not include the word ``revised''. Therefore, the 
Department of Defense is republishing amendments to Sec. 199.14 which 
were unable to be incorporated into the CFR because of the missing 
word. All other amendments remain unchanged.

EFFECTIVE DATE: This rule is effective October 13, 1998, except 
amendments to Sec. 199.14(h) introductory text, which are effective 
January 1, 1999.

ADDRESSES: Tricare Management Activity, (TMA), Program Development 
Branch, Aurora, CO 80045-6900.

FOR FURTHER INFORMATION CONTACT: Kathleen Larkin, Office of the 
Assistant Secretary of Defense (Health Affairs)/TRICARE Management 
Activity, telephone (703) 681-3628.

Regulatory Procedures

    Executive Order 12866 requires certain regulatory assessments for 
any ``significant regulatory action,'' defined as one which would 
result in an annual effect on the economy of $100 million or more, or 
have other substantial impacts.
    The Regulatory Flexibility Act (RFA) requires that 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 significant regulatory action under the provisions of 
Executive Order 12866, and it would not have a significant impact on a 
substantial number of small entities.
    Pursuant to the Paperwork Reduction Act of 1995, the reporting 
provisions of this rule was submitted to OMB for review under 3507(d) 
of the Act.

List of Subjects in 32 CFR Part 199

    Claims, Health insurance, Individuals with disability, Military 
personnel, Reporting and recordkeeping requirements.

    Accordingly, 32 Part 199 is amended as follows:

PART 199--[AMENDED]

    1. The authority citation for Part 199 continues to read as 
follows:
    2. Section 199.14 is amended by revising paragraph (a)(1)(iii)(B), 
paragraph (a)(1)(iii)(D)(1) first sentence and paragraph 
(a)(1)(iii)(D)(5), paragraph (a)(1)(iii)(E)(1)(i)(A) and paragraph 
(a)(1)(iii)(E)(1)(i)(B), paragraph (a)(1)(iii)(E)(1)(ii)(A) and 
(a)(1)(iii)(E)(1)(ii)(B), paragraph (a)(1)(iii)(G)(3) introductory 
text, paragraph (d)(3)(iv), and paragraph (h) introductory text to read 
as follows:


Sec. 199.14  Provider reimbursement methods.

    (a) * * *
    (1) * * *
    (iii) * * *
    (B) Empty and low-volume DRGs. For any DRG with less than ten (10) 
occurrences in the CHAMPUS database, the Director, TSO, or designee, 
has the authority to consider alternative methods for estimating 
CHAMPUS weights in these low-volume DRG categories.
* * * * *
    (D) * * *
    (1) Differentiate large urban and other area charges. All charges 
in the database shall be sorted into large urban and other area groups 
(using the same definitions for these categories used in the Medicare 
program. * * *
* * * * *
    (5) Preliminary base year standardized amount. A preliminary base 
year standardized amount shall be calculated by summing all costs in 
the database applicable to the large urban or other area group and 
dividing by the total number of discharges in the respective group.
* * * * *
    (E) * * *
    (1) * * *
    (i) * * *
    (A) Short-stay outliers. Any discharge with a length-of-stay (LOS) 
less than 1.94 standard deviations from the DRG's arithmetic LOS shall 
be classified as a short-stay outlier. Short-stay outliers shall be 
reimbursed at 200 percent of the per diem rate for the DRG for each 
covered day of the hospital stay, not to exceed the DRG amount. The per 
diem rate shall equal the DRG amount divided by the arithmetic mean 
length-of-stay for the DRG.
    (B) Long-stay outliers. Any discharge (except for neonatal services 
and services in children's hospitals) which has a length-of-stay (LOS) 
exceeding a threshold established in accordance with the criteria used 
for the Medicare Prospective Payment System as contained in 42 CFR 
412.82 shall be classified as a long-stay outlier. Any discharge for 
neonatal services or for services in a children's hospital which has a 
LOS exceeding the lesser of 1.94 standard deviations or 17 days from 
the DRG's arithmetic mean LOS also shall be classified as a long-stay 
outlier. Long-stay outliers shall be reimbursed the DRG-based amount 
plus a percentage (as established for the Medicare Prospective Payment 
System) of the per diem rate for the DRG for each covered day of care 
beyond the long-stay outlier threshold. The per diem rate shall equal 
the DRG amount divided by the arithmetic mean LOS for the DRG. For 
admissions on or after October 1, 1997, the long stay

[[Page 60672]]

outlier has been eliminated for all cases except children's hospitals 
and neonates. For admissions on or after October 1, 1998, the long stay 
outlier has been eliminated for children's hospitals and neonates.
    (ii) * * *
    (A) Cost outliers except those in children's hospitals or for 
neonatal services. Any discharge which has standardized costs that 
exceed a threshold established in accordance with the criteria used for 
the Medicare Prospective Payment System as contained in 42 CFR 412.84 
shall qualify as a cost outlier. The standardized costs shall be 
calculated by multiplying the total charges by the factor described in 
paragraph (a)(1)(iii)(D)(4) of this section and adjusting this amount 
for indirect medical education costs. Cost outliers shall be reimbursed 
the DRG-based amount plus a percentage (as established for the Medicare 
Prospective Payment System) of all costs exceeding the threshold. 
Effective with admissions occurring on or after October 1, 1997, the 
standardized costs are no longer adjusted for indirect medical 
education costs.
    (B) Cost outliers in children's hospitals for neonatal services. 
Any discharge for services in a children's hospital or for neonatal 
services which has standardized costs that exceed a threshold of the 
greater of two times the DRG-based amount or $13,500 shall qualify as a 
cost outlier. The standardized costs shall be calculated by multiplying 
the total charges by the factor described in paragraph (a)(1) (iii) (D) 
(4) of this section (adjusted to include average capital and direct 
medical education costs) and adjusting this amount for indirect medical 
education costs. Cost outliers for services in children's hospitals and 
for neonatal services shall be reimbursed the DRG-based amount plus a 
percentage (as established for the Medicare Prospective Payment System) 
of all costs exceeding the threshold. Effective with admissions 
occurring on or after October 1, 1998, standardized costs are no longer 
adjusted for indirect medical education costs. In addition, CHAMPUS 
will calculate the outlier payments that would have occurred at each of 
the 59 Children's hospitals under the FY99 outlier policy for all cases 
that would have been outliers under the FY94 policies using the most 
accurate data available in September 1998. A ratio will be calculated 
which equals the level of outlier payments that would have been made 
under the FY94 outlier policies and the outlier payments that would be 
made if the FY99 outlier policies had applied to each of these 
potential outlier cases for these hospitals. The ratio will be 
calculated across all outlier claims for the 59 hospitals and will not 
be hospital specific. The ratio will be used to increase cost outlier 
payments in FY 1999 and FY 2000, unless the hospital has a negotiated 
agreement with a managed care support contractor which would affect 
this payment. For hospitals with managed care support agreements which 
affect these payments, CHAMPUS will apply these payments if the 
increased payments would be consistent with the agreements. In FY 2000 
the ratio of outlier payments (long stay and cost) that would have 
occurred under the FY 94 policy and actual cost outlier payments made 
under the FY 99 policy will be recalculated. If the ratio has changed 
significantly, the ratio will be revised for use in FY 2001 and 
thereafter. In FY 2002, the actual cost outlier cases in FY 2000 and 
2001 will be reexamined. The ratio of outlier payments that would have 
occurred under the FY94 policy and the actual cost outlier payments 
made under the FY 2000 and FY 2001 policies. If the ratio has changed 
significantly, the ratio will be revised for use in FY 2003.
* * * * *
    (G) * * *
    (3) Information necessary for payment of capital and direct medical 
education costs. All hospitals subject to the CHAMPUS DRG-based payment 
system, except for children's hospitals, may be reimbursed for allowed 
capital and direct medical education costs by submitting a request to 
the CHAMPUS contractor. Beginning October 1, 1998, such request shall 
be filed with CHAMPUS on or before the last day of the twelfth month 
following the close of the hospitals' cost reporting period, and shall 
cover the one-year period corresponding to the hospital's Medicare 
cost-reporting period. The first such request may cover a period of 
less than a full year--from the effective date of the CHAMPUS DRG-based 
payment system to the end of the hospital's Medicare cost-reporting 
period. All costs reported to the CHAMPUS contractor must correspond to 
the costs reported on the hospital's Medicare cost report. An extension 
of the due date for filing the request may only be granted if an 
extension has been granted by HCFA due to a provider's operations being 
significantly adversely affected due to extraordinary circumstances 
over which the provider has no control, such as flood or fire. (If 
these costs change as a result of a subsequent audit by Medicare, the 
revised costs are to be reported to the hospital's CHAMPUS contractor 
within 30 days of the date the hospital is notified of the change). The 
request must be signed by the hospital official responsible for 
verifying the amounts and shall contain the following information.
* * * * *
    (d) * * *
    (3) * * *
    (iv) Step 4: standard payment amount per group. The standard 
payment amount per group will be the volume weighted median per 
procedure cost for the procedures in that group. For cases in which the 
standard payment amount per group exceeds the CHAMPUS-determined 
inpatient allowable amount, the Director, TSO or his designee, may make 
adjustments.
* * * * *
    (h) Reimbursement of individual health care professionals and other 
non-institutional, non-professional provers. The CHAMPUS-determined 
reasonable charge (the amount allowed by CHAMPUS) for the service of an 
individual health care professional or other non-institutional, non-
professional provider (even if employed by or under contract to an 
institutional provider) shall be determined by one of the following 
methodologies, that is, whichever is in effect in the specific 
geographic location at the time covered services and supplies are 
provided to a CHAMPUS beneficiary.
* * * * *
    Dated: October 9, 1999.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 99-29093 Filed 11-5-99; 8:45 am]
BILLING CODE 5001-10-M