[Federal Register Volume 67, Number 215 (Wednesday, November 6, 2002)]
[Notices]
[Pages 67604-67605]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-28108]


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DEPARTMENT OF DEFENSE

Office of the Secretary


TRICARE; Civilian Health and Medical Program of the Uniformed 
Services (CHAMPUS); Fiscal Year 2003 Diagnosis Related Group (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 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 and DRG relative weights to be 
used for FY 2003 under the TRICARE DRG-based payment system.

DATES: The rates, weights and Medicare PPS changes which affect the 
TRICARE DRG-based payment system contained in this notice are effective 
for admissions occurring on or after October 1, 2002.

ADDRESSES: TRICARE Management Activity (TMA), Medical Benefits and 
Reimbursement Systems, 16401 East Centretech Parkway, Aurora, CO 80011-
9066.

FOR FURTHER INFORMATION CONTACT: Marty Maxey, Medical Benefits and 
Reimbursement Systems, TMA, telephone (303) 676-3627.
    Questions regarding payment of specific claims under the TRICARE 
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, is that the TRICARE 
DRG-based payment system is modeled on the Medicare PPS, and that, 
whenever practicable, the TRICARE system will follow the same rules 
that apply to the Medicare PPS. The Centers for Medicare and Medicaid 
Services (CMS) 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 67605]]

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

    Following is a discussion of the changes CMS has made to the 
Medicare PPS that affect the TRICARE DRG-based payment system.

A. DRG Classifications

    Under both the Medicare PPS and TRICARE 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 DRG-based payment 
system is the same as the current Medicare Grouper with two 
modifications. The TRICARE system has replaced Medicare DRG 435 with 
two age-based DRGs (900 and 901), and has implemented thirty-four (34) 
neonatal DRGs in place of Medicare DRGs 385 through 390. For admissions 
occurring on or after October 1, 2001, DRG 435 has been replaced by DRG 
523.
    The TRICARE system has replaced DRG 523 with the two age-based DRGs 
(900 and 901). 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 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. For admissions occurring on or after 
October 1, 2001, DRGs 512 and 513 were added to the PreMDC DRGs, 
between DRGs 480 and 103 in the TRICARE grouper hierarchy logic.
    For FY 2003, CMS will implement classification changes, including 
surgical hierarchy changes. The TRICARE Grouper will incorporate all 
changes made to the Medicare Grouper.

B. Wage Index and Medicare Geographic Classification Review Board 
Guidelines

    TRICARE will continue to use the same wage index amounts used for 
the Medicare PPS. In addition, TRICARE 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 will update the adjusted standardized amounts according to 
the final updated hospital market basket used for the Medicare PPS 
according to CMS's August 1, 2002, final rule.

D. Outlier Payments

    Since TRICARE does not include capital payments in our DRG-based 
payments, we will use the fixed loss cost outlier threshold calculated 
by CMS for paying cost outliers in the absence of capital prospective 
payments. For FY 2003, 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 FY 2003, in 
order for a case to qualify for cost outlier payments, the costs must 
exceed the TRICARE DRG base payment rate (wage adjusted) for the DRG 
plus the IDME payment plus $30,707 (wage adjusted). The marginal cost 
factor for cost outliers continues to be 80 percent.

E. Blood Clotting Factor

    For FY 2003, the updated HCPCS codes and payment rates for blood 
clotting factors can be found in the TRICARE Reimbursement Manual, 
Chapter 6, Section 4, which is accessible through the Internet at 
http://www.tricare.osd.mil under the sequential headings TRICARE 
Beneficiaries, Other Resources, TRICARE Manuals, TRICARE Reimbursement 
Manual. TRICARE uses the same ICD-9-CM diagnosis codes as CMS for add-
on payment for blood clotting factors.

F. Indirect Medical Education (IDME) Adjustment

    Passage of The Benefits Improvement and Protection Act (BIPA) of 
2000, modified the transition for the IDME adjustment that was first 
established by the Balanced Budget Act (BBA) of 1997 and revised by the 
Balanced Budget Refinement Act of 1999. The formula multiplier for the 
TRICARE IDME adjustment has been revised to 1.02 for FY 2003 and 
thereafter.

G. National Operating Standard Cost as a Share of Total Costs

    The FY 2003 TRICARE National Operating Standard Cost as a Share of 
Total Costs used in calculating the cost outlier threshold is 0.915.

II. Cost to Charge Ratio

    For FY 2003, the cost-to-charge ratio used for the TRICARE DRG-
based payment system will be 0.5062, which is increased to 0.5132 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 0.5604.

III. Updated Rates and Weights

    The updated rates and weights are accessible through the Internet 
at http://www.tricare.osd.mil under the sequential headings TRICARE 
Provider Information, Rates and Reimbursements, and DRG Information. 
Table 1 provides the ASA rates and Table 2 provides the DRG weights to 
be used under the TRICARE DRG-based payment system during FY 2003 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 30, 2002.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 02-28108 Filed 11-5-02; 8:45 am]
BILLING CODE 5001-08-M