[Federal Register Volume 77, Number 123 (Tuesday, June 26, 2012)]
[Notices]
[Page 38043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-15505]


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DEPARTMENT OF DEFENSE

Office of the Secretary


TRICARE; Revised Guideline for Determining the Outpatient 
Prospective Payment System (OPPS) General Temporary Military 
Contingency Payment Adjustment (TMCPA) Amount

AGENCY: Department of Defense (DoD).

ACTION: Notice of revised guideline for determining TRICARE's OPPS 
General TMCPA amount.

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SUMMARY: This notice advises interested parties of a guideline 
concerning the methodology to calculate TRICARE's OPPS General TMCPA 
amount for qualifying hospitals.

DATES: The guideline for calculating TRICARE's OPPS General TMCPA 
amount is effective for OPPS year 4 (May 1, 2012-April 30, 2013) and 
subsequent years.

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

FOR FURTHER INFORMATION CONTACT: Ms. Martha M. Maxey, TMA, Medical 
Benefits and Reimbursement Branch, telephone (303) 676-3627.

SUPPLEMENTARY INFORMATION: TRICARE's OPPS Final Rule that was published 
in the Federal Register on December 10, 2008, states that TMCPAs are 
intended to provide additional payments above the Medicare payment 
level for hospitals that are ``deemed essential for military readiness 
and deployment in time of contingency operations.''
    The final rule stated that the procedures to be followed when 
submitting a TMCPA request would be outlined in the TRICARE 
Reimbursement Manual (TRM). For the first three OPPS years, (May 1, 
2009-April 30, 2012), TMA implemented the criteria for General TMCPA 
payments and reviewed applications for General TMCPA payments. The TRM 
states that for qualifying hospitals, the General TMCPA adjustment 
cannot exceed 95 percent of the amount that would have been paid prior 
to implementation of OPPS.
    We experienced two major problems with the approach:
    1. The use of the current approach allows the payments to exceed 
the average payment-to-cost ratios (PCRs) paid by other payers. When 
DoD adopted the Medicare OPPS, the intent was to align our payment 
structure more closely with Medicare and assist those facilities that 
are ``deemed essential for military readiness and deployment in time of 
contingency operations'' by giving them a reasonable adjustment. As 
discussed below, paying hospitals up to 95 percent of the pre-OPPS 
amounts for hospital outpatient department services could be equivalent 
to reimbursing them at very high (PCRs), resulting in DoD paying higher 
rates than most purchasers of care at these facilities.
    2. There is also a lack of fairness in the current method of 
determining General TMCPA payments for the various facilities because 
it is tied to the level of pre-OPPS allowed amounts. For the most part, 
pre-OPPS payments were made on the basis of the charges billed by the 
facility. DoD policy at that time was to pay these ``billed charge 
amounts.'' Thus, using 95 percent of pre-OPPS allowed amounts could 
allow hospitals that had higher billed charges to receive higher levels 
of General TMCPA payments than those that had billed at lower ``billed 
charge amounts'' for the same services. This could be true even if a 
lower charging facility saw the same or greater number of DoD active 
duty and family members or if the facilities' percentage of revenue 
received from DoD were the same. This result is inequitable to the 
various facilities and inconsistent with the intent of the General 
TMCPA.
    In an attempt to resolve these inequities, the Department looked at 
the rates paid by other private payers. A report published by the 
American Hospital Association (AHA) in December 2010 indicates that the 
aggregate PCRs for private payers are in the range of 1.15 to 1.35. A 
ratio of 1.0 means a hospital meets their costs and a ratio of greater 
than 1.0 means payments exceeds costs. Using an adjustment guideline to 
allow the Department to apply General TMCPA payments so that the total 
of payments to a qualifying hospital falls within these private pay 
norms was chosen as a method to more equitably meet DoD's objectives in 
making these payment adjustments. As a result, TRICARE is revising its 
guidelines for determining the level of payment for a General TMCPA 
from a maximum 95 percent of the pre-OPPS amount to a maximum PCR of 
1.3 for OPPS year 4 (May 1, 2012-April 30, 2013) and subsequent years. 
The ratio 1.30 was selected because this is the average level of 
aggregate PCRs that AHA reports that hospitals have received from 
private payers during the 2003-2009 period. The use of a PCR as a 
guideline to determine the limit on the level of payment for General 
TMCPA payments is simple, transparent, and will provide fair and 
equitable payments to the qualifying hospitals and is supported by data 
indicating it is a reasonable approach.
    The procedures that are to be followed when submitting a TMCPA 
request will be outlined in the TRM.

    Dated: June 20, 2012.
Patricia Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2012-15505 Filed 6-25-12; 8:45 am]
BILLING CODE 5001-06-P