[Federal Register Volume 74, Number 189 (Thursday, October 1, 2009)]
[Notices]
[Pages 50785-50787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-23738]


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DEPARTMENT OF DEFENSE

Office of the Secretary


TRICARE; Civilian Health and Medical Program of the Uniformed 
Services (CHAMPUS); Fiscal Year 2010 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

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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 data necessary to update the Fiscal Year 
(FY) 2010 rates.

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, 2009.

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

FOR FURTHER INFORMATION CONTACT: Ann N. Fazzini, Medical Benefits and 
Reimbursement Branch, TMA, telephone (303) 676-3803.
    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.

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 (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 Major Diagnostic Category 
(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 admissions occurring on or after 
October 1, 2004, DRG 483 was deleted and replaced with DRGs 541 and 
542, splitting the assignment of cases on the basis of the performance 
of a major operating room procedure. The description for DRG 480 was 
changed to ``Liver Transplant and/or Intestinal Transplant,'' and the 
description for DRG 103 was changed to ``Heart/Heart Lung Transplant or 
Implant of Heart Assist System.'' For Fiscal Year 2007, CMS implemented 
classification changes, including surgical hierarchy changes. The 
TRICARE Grouper incorporated all changes made to the Medicare Grouper, 
with the exception of the pre-surgical hierarchy changes, which will 
remain the same as Fiscal Year 2006. For Fiscal Year 2008, Medicare 
implemented their Medicare-Severity DRG (MS-DRG) based payment system. 
TRICARE, however, continued with the Centers for Medicare and Medicaid 
Services DRG-based (CMS-DRG) payment system for Fiscal Year 2008. For 
Fiscal Year 2009, the TRICARE/CHAMPUS DRG-based payment system shall be 
modeled on the MS-DRG system, with the following modifications.
    The MS-DRG system consolidated the 43 pediatric CMS DRGs that were 
defined based on age less than or equal to 17 into the most clinically 
similar MS-DRGs. In their Inpatient Prospective Payment System final 
rule for MS-DRGs, Medicare stated for their population these pediatric 
CMS DRGs contained a very low volume of Medicare patients. At the same 
time, Medicare encouraged private insurers and other non-Medicare 
payers to make refinements to MS-DRGs to better suit the needs of the 
patients they serve. Consequently, TRICARE finds it appropriate to 
retain the pediatric CMS-DRGs for our population. TRICARE is also 
retaining the TRICARE-specific DRGs for neonates and substance use.
    TRICARE has retained the MS-DRG numbering system for Fiscal Year 
2009, and those TRICARE-specific DRGs have been assigned available, 
blank DRG numbers unused in the MS-DRG system. We refer the reader to 
http://www.tricare.mil/drgrates for a complete crosswalk containing the 
TRICARE DRG numbers for Fiscal Year 2009.
    For Fiscal Year 2009, TRICARE will use the MS-DRG v26.0 pre-MDC 
hierarchy, with the exception that MDC 15 is applied after DRG 011-012 
and before MDC 24.
    For Fiscal Year 2010, there are no additional or deleted DRGs.

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. TRICARE will also duplicate all changes with regard 
to the wage index for specific hospitals that are redesignated by the 
Medicare Geographic Classification Review Board. In addition, TRICARE 
will continue to utilize the out commuting wage index adjustment.

C. Revision of the Labor-Related Share of the Wage Index

    TRICARE is adopting CMS' percentage of labor-related share of the 
standardized amount. For wage index values greater than 1.0, the labor-
related portion of the Adjusted Standardized Amount (ASA) shall equal 
68.8 percent. For wage-index values less than or equal to 1.0, the 
labor related portion of the ASA shall continue to equal 62 percent.

D. Hospital Market Basket

    TRICARE will update the adjusted standardized amounts according to 
the

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final updated hospital market basket used for the Medicare PPS for all 
hospitals subject to the TRICARE DRG-based payment system according to 
CMS' August 27, 2009, final rule. For Fiscal Year 2010, the market 
basket is 2.1 percent.

E. Outlier Payments

    Since TRICARE does not include capital payments in our DRG-based 
payments (TRICARE reimburses hospitals for their capital costs as 
reported annually to the contractor on a pass-through basis), we will 
use the fixed-loss cost-outlier threshold calculated by CMS for paying 
cost outliers in the absence of capital prospective payments. For 
Fiscal Year 2010, the fixed-loss cost-outlier threshold is based on the 
sum of the applicable DRG-based payment rate plus any amounts payable 
for Indirect Medical Education (IDME) plus a fixed-dollar amount. Thus, 
for Fiscal Year 2010, 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 $21,358 (wage 
adjusted). The marginal cost factor for cost outliers continues to be 
80 percent.

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

    The Fiscal Year 2010 TRICARE National Operating Standard Cost as a 
Share of Total Costs (NOSCASTC) used in calculating the cost outlier 
threshold is 0.923. TRICARE uses the same methodology as CMS for 
calculating the NOSCASTC; however, the variables are different because 
TRICARE uses national cost to charge ratios while CMS uses hospital-
specific cost-to-charge ratios.

G. Indirect Medical Education (IDME) Adjustment

    Passage of the Medicare Prescription Drug Improvement and 
Modernization Act (MMA) of 2003 modified the formula multipliers to be 
used in the calculation of the indirect medical education IDME 
adjustment factor. Since the IDME formula used by TRICARE does not 
include disproportionate share hospitals (DSHs), the variables in the 
formula are different than Medicare's; however, the percentage 
reductions that will be applied to Medicare's formula will also be 
applied to the TRICARE IDME formula. The new multiplier for the IDME 
adjustment factor for TRICARE for Fiscal Year 2010 is 1.02.

H. Expansion of the Post-Acute-Care Transfer Policy

    For Fiscal Year 2010 TRICARE is adopting CMS' expanded post-acute-
care transfer policy according to CMS' final rule published August 27, 
2009.

I. Blood Clotting Factor

    For Fiscal Year 2010, TRICARE is adopting CMS' payment methodology 
for blood clotting factor according to CMS' final rule published August 
18, 2006.

J. Cost-to-Charge Ratio

    While CMS uses hospital-specific cost-to-charge ratios, TRICARE 
uses a national cost-to-charge ratio. For Fiscal Year 2010, the cost-
to-charge ratio used for the TRICARE DRG-based payment system for acute 
care hospitals and neonates will be 0.3740. 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 0.4047.

K. 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 Fiscal Year 
2010. The implementing regulations for the TRICARE/CHAMPUS DRG-based 
payment system are in 32 CFR part 199.

    Dated: September 25, 2009.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. E9-23738 Filed 9-30-09; 8:45 am]
BILLING CODE 5001-06-P