[Federal Register Volume 68, Number 206 (Friday, October 24, 2003)]
[Notices]
[Pages 60970-60971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-26855]



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DEPARTMENT OF DEFENSE

Office of the Secretary


TRICARE; Civilian Health and Medical Program of the Uniformed 
Services (CHAMPUS); Fiscal Year 2004 Diagnosis-Related Group Updates

AGENCY: Office of the Secretary, DoD.

ACTION: Notice of diagnosis-related group (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 2004 under the TRICARE DRG-based payment system.

EFFECTIVE DATE: 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, 2003.

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 practical, 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.

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 the 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 (00 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 MDS 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 2004, SCMS 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, 2003, 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 2004, the fixed loss cost outlier the absence of 
capital prospective payments. For FY 2004, 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 2004, 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 $28,365 (wage adjusted). The 
marginal cost factor for cost outliers continues to be 80 percent.

E. Blood Clotting Factor

    For FY 2004, the contractors shall price the blood clotting factors 
using the ``J'' code pricing file provided by TRICARE Management 
Activity. TRICARE uses the same ICD-9-CM diagnosis codes as CMS for 
add-on payment for blood clotting factors.

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

    The FY 2004 TRICARE National Operating Standard Cost as a Share of 
Total Costs used in calculating the cost outlier threshold is 0.915.

G. Expansion of the Post Acute Care Transfer Policy

    For FY 2004 TRICARE is adopting CMS' expanded post acute care 
transfer policy according to CMS' final rule published August 1, 2003.

II. Cost to Charge Ratio

    For FY 2004, the cost-to-charge ratio used for the TRICARE DRG-
based payment system will be 0.4865, which is increased to 0.4935 to 
account for bad

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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 outlier, the cost-to-charge 
ratio used is 0.5388.

III. Updated Rates and Weights

    The updated rates and weights are accessible through the Internet 
at www.tricare.osd.mil under the sequential heading 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 2004 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 16, 2003.
Patricia L. Toppings,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 03-26855 Filed 10-23-03; 8:45 am]
BILLING CODE 5001-08-M