[Federal Register Volume 78, Number 31 (Thursday, February 14, 2013)]
[Proposed Rules]
[Pages 10579-10581]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-03419]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[Docket ID DOD-2012-HA-0105]
RIN 0720-AB58


TRICARE Revision to CHAMPUS DRG-Based Payment System, Pricing of 
Hospital Claims

AGENCY: Office of the Secretary, Department of Defense.

ACTION: Proposed rule.

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SUMMARY: This rule proposes to change TRICARE's current regulatory 
provision for hospital claims priced under the DRG-based payment 
system. Claims are currently priced by using the rates and weights that 
are in effect on a beneficiary's date of admission. This rule proposes 
to change that provision to price such claims by using the rates and 
weights that are in effect on a beneficiary's date of discharge.

DATES: Written comments received at the address indicated below by 
April 15, 2013 will be accepted.

ADDRESSES: You may submit comments, identified by docket number and or 
Regulatory Information Number (RIN) number and title, by either of the 
following methods:
     Federal eRulemaking Portal: www.regulations.gov. Follow 
the instructions for submitting comments.
     Mail: Federal Docket Management System Office, 4800 Mark 
Center Drive, East Tower, Suite 02G09, Alexandria, VA 22350-3100.
    Instructions: All submissions received must include the agency name 
and

[[Page 10580]]

docket number or RIN for this Federal Register document. The general 
policy for comments and other submissions from members of the public is 
to make these submissions available for public viewing on the Internet 
at http://www.regulations.gov as they are received without change, 
including any personal identifiers or contact information.

FOR FURTHER INFORMATION CONTACT: Ms. Amber Butterfield, TRICARE 
Management Activity, Medical Benefits and Reimbursement Systems, 
telephone (303) 676-3565.

SUPPLEMENTARY INFORMATION:

Executive Summary and Overview

I. Purpose of the Regulatory Action

    This rule proposes to amend the TRICARE/CHAMPUS regulatory 
provision of pricing hospital claims that are reimbursed under the DRG-
based payment system from the beneficiary's date of admission, to 
pricing such claims based on the beneficiary's date of discharge.
    The TRICARE/CHAMPUS DRG-based payment system applies to hospitals, 
unless such hospital is exempt by regulation from the payment system. 
Under the TRICARE DRG-based payment system, payment for the operating 
costs of inpatient hospital services subject to the payment system are 
made on the basis of prospectively determined rates.
    The TRICARE DRG-based payment system is modeled on the Medicare 
Inpatient Prospective Payment System (IPPS). Although many of the 
procedures in the TRICARE DRG-based payment system are similar or 
identical to the procedures in the Medicare IPPS, the actual payment 
amounts, DRG weights, and certain procedures are different. This is 
necessary because of the differences in the two programs, especially in 
the beneficiary population.
    Since the inception of the DRG-based payment system in 1987, claims 
have been priced following the beneficiary's discharge by the hospital, 
but using the rules, weights, and rates that were in effect on the 
beneficiary's date of admission. That is, claims submitted for the 
beneficiary's inpatient stay are grouped to a specific DRG, and the 
pricing (i.e., payment rate) is determined by using the rules, weights 
and rates that were in effect on the date of the beneficiary's 
admission to the hospital. The August 31, 1988, Final Rule (53 FR 
33461) published in the Federal Register explains TRICARE's decision to 
utilize the date of admission to price claims. Using the date of 
admission to price claims allowed hospitals to be reimbursed for 
inpatient services under the same payment methodology they expected to 
be used when the patient was admitted. Prior to implementation of the 
DRG-based payment system, the hospital could expect to be reimbursed at 
the billed charge rate since that was the method TRICARE used to 
reimburse hospitals at that time. For patients admitted after 
implementation of the DRG-based payment system, the hospital could 
expect to be reimbursed using the DRG-based payment system. The Final 
Rule continues by stating that since certain services were previously 
excluded from the DRG-based system, but may have already involved an 
interim bill prior to the effective date of the Final Rule, it would be 
administratively difficult and fiscally unfair to hospitals, to attempt 
to reconcile the total payments with the DRG-based allowed amounts. As 
a result of the analysis at the time, the provision stated, ``except 
for interim claims submitted for qualifying outlier cases, all claims 
reimbursed under the CHAMPUS DRG-based payment system are to be priced 
as of the date of admission, regardless of when the claim is 
submitted.''

II. Summary of the Major Provisions of the Regulatory Action

    The major provision of this proposed rule is to revise TRICARE's 
regulation on the pricing of claims paid under the DRG-based payment 
system. Claims are currently priced by using the rates and weights that 
are in effect on a beneficiary's date of admission. This rule proposes 
to change that provision to price such claims by using the rates and 
weights that are in effect on a beneficiary's date of discharge.
    In the early stages of the DRG-based payment system, the approach 
of pricing claims based on the date of the beneficiary's admission to 
the hospital was an effective operational policy for TRICARE. It is now 
time, however, to revise this policy to be consistent with industry 
standards. Medicare and other payers have an operational policy of 
pricing all claims, to include interim claims, based on the date of 
discharge. While pricing using the date of discharge applies to all 
claims, it becomes an issue only for those relatively few claims that 
span Fiscal Years (FY). That is, if an admission occurs on September 
29, 2013, (FY 2013) and the discharge occurs on October 2, 2013, 
(FY2014) the payment rate is currently based upon the DRG rates and 
weights in effect on September 29, 2013, (FY2013) rather than on 
October 2, 2013, (FY2014). Using this same example, if the provisions 
of this proposed rule are made final and the date of discharge is used 
to price the claim, the claim will be priced using the rates and 
weights in place on October 2, 2013, (FY2014). The rates and weights 
for the DRG-based payment system are updated every FY, and are based on 
the previous year's TRICARE claims data.

III. Costs and Benefits

    The benefits of this change include, aligning TRICARE pricing of 
hospital claims practices with industry standards and enhancing 
provider satisfaction because we are following Medicare and industry 
standards.
    There are known cost impacts associated with this change:
    1. One-time information technology costs associated with changes to 
Managed Care Support Contractors' claims processing systems and one 
time administrative costs associated with the review change order and 
the assessment of the impact on Claims Operations, Customer Service, 
Provider Administration and Contracts Maintenance. The total one time 
information technology and administrative costs is estimated at 
$88,208.
    2. An annual cost of reprocessing interim claims of $2,500.
    3. An increase in health care costs to account for using the 
weights and rates in place on the date of discharge. Using 2009 claims 
data, it is estimated about 1,200 inpatient claims will span FYs. 
Consequently, reimbursing using the updated weights and rates in place 
for the new FYs date of discharge is expected to increase the payment 
for approximately 1,200 claims with estimated additional cost of 
$500,000 annually.
    4. Total costs for this change equal approximately $600,000.

IV. Regulatory Procedures

Executive Order 12866, ``Regulatory Planning and Review'' and Executive 
Order 13563, ``Improving Regulation and Regulatory Review''

    Section 801 of title 5, United States Code, and Executive Orders 
12866 and 13563 require certain regulatory assessments and procedures 
for any major rule or significant regulatory action, defined as one 
that would result in an annual effect of $100 million or more on the 
national economy or which would have other substantial impacts. It has 
been certified that this rule is not economically significant, and has 
been reviewed by the Office of Management and Budget as required under 
the provisions of E.O. 12866.

[[Page 10581]]

Public Law 104-4, Section 202, ``Unfunded Mandates Reform Act''

    Section 202 of Public Law 104-4, ``Unfunded Mandates Reform Act,'' 
requires that an analysis be performed to determine whether any federal 
mandate may result in the expenditure by State, local and tribal 
governments, in the aggregate, or by the private sector of $100 million 
in any one year. It has been certified that this proposed rule does not 
contain a Federal mandate that may result in the expenditure by State, 
local and tribal governments, in aggregate, or by the private sector, 
of $100 million or more in any one year, and thus this proposed rule is 
not subject to this requirement.

Public Law 96-354, ``Regulatory Flexibility Act'' (RFA) (5 U.S.C. 601)

    Public Law 96-354, ``Regulatory Flexibility Act'' (RFA) (5 U.S.C. 
601), requires that each Federal agency prepare a regulatory 
flexibility analysis when the agency issues a regulation which would 
have a significant impact on a substantial number of small entities. 
This proposed rule is not an economically significant regulatory 
action, and it has been certified that it will not have a significant 
impact on a substantial number of small entities. Therefore, this 
proposed rule is not subject to the requirements of the RFA.

Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)

    This rule does not contain a ``collection of information'' 
requirement, and will not impose additional information collection 
requirements on the public under Public Law 96-511, ``Paperwork 
Reduction Act'' (44 U.S.C. Chapter 35).

Executive Order 13132, ``Federalism''

    E.O. 13132, ``Federalism,'' requires that an impact analysis be 
performed to determine whether the rule has federalism implications 
that would have substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. It has been certified that this proposed rule does not have 
federalism implications, as set forth in E.O. 13132.

List of Subjects in 32 CFR part 199

    Claims, Dental health, Health care, Health insurance, Individuals 
with disabilities, Military personnel.

    Accordingly, 32 CFR Part 199 is amended as follows:

PART 199--[AMENDED]

0
1. The authority citation for Part 199 continues to read as follows:

    Authority:  5 U.S.C. 301; 10 U.S.C. chapter 55.

0
2. Section 199.14 is amended by revising paragraph (a)(1)(i)(C)(3) to 
read as follows:


Sec.  199.14  Provider Reimbursement Methods

    (a) * * *
    (1) * * *
    (i) * * *
    (C) * * *
    (3) Pricing of claims. All claims reimbursed under the CHAMPUS DRG-
based payment system are to be priced as of the date of discharge, 
regardless of when the claim is submitted.
* * * * *

    Dated: February 1, 2013.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2013-03419 Filed 2-13-13; 8:45 am]
BILLING CODE 5001-06-P