[Federal Register Volume 78, Number 212 (Friday, November 1, 2013)]
[Notices]
[Pages 65618-65620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-26108]


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DEPARTMENT OF DEFENSE

Office of the Secretary


TRICARE; Civilian Health and Medical Program of the Uniformed 
Services (CHAMPUS); Fiscal Year 2014 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 data 
necessary to update the FY 2014 rates.

DATES: Effective 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, 
2013.

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

FOR FURTHER INFORMATION CONTACT: Amber L. Butterfield, Medical Benefits 
and Reimbursement Office, TMA, telephone (303) 676-3565.
    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

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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 in this notice.

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 pre-MDC 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 pre-MDC DRGs and to assign patients to pre-MDC 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 pre-MDC 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 FY 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 FY 2006. For FY 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 FY 2008. For FY 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.
    For FY 09, 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 FY 10, there are no additional or deleted DRGs.
    For FY 11, the added DRGs and deleted DRGs are the same as those 
included in CMS' final rule published on August 16, 2010 (75 FR 50041-
50677). That is, DRG 009 is deleted; DRGs 014 and 015 are being added.
    For FY 12, the added DRGs and deleted DRGs are the same as those 
included in CMS' Final rule published on August 18, 2011 (76 FR 51475-
51846). That is, DRG 015 is deleted; DRGs 016 and 017 are being added.
    For FY 2013 there are no new, revised, or deleted DRGs.
    For FY 2014 there are no new, revised, 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 
69.6 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 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 19, 2013 final rule (78 FR 50495-51040). For FY 2014, 
the market basket is 2.5 percent. Medicare applied reductions to the 
market basket in FY 2014; however, these reductions do not apply to the 
TRICARE Program.

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 FY 
2014, the TRICARE 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 
FY 2014, 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 $20,008 (wage adjusted). The 
marginal cost factor for cost outliers continues to be 80 percent.
    An incorrect FY 2013 TRICARE Cost Outlier Threshold of $24,230 was 
published in the Federal Register notice (77 FR 71180-71182). However, 
the correct FY 2013 TRICARE Cost Outlier

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Threshold of $20,075 was published in the TRICARE Reimbursement Manual 
(TRM) and was effective as of October 1, 2012.

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

    The FY 2013 TRICARE National Operating Standard Cost as a Share of 
Total Costs (NOSCASTC) used in calculating the cost outlier threshold 
is 0.92. 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 Medical Modernization Act of 2003 modified the 
formula multipliers to be used in the calculation of 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 multiplier for the IDME adjustment factor for 
TRICARE for FY 2014 is 1.02.

H. Cost to Charge Ratio

    TRICARE uses a national Medicare cost-to-charge ratio (CCR). For FY 
2014, the Medicare CCR used for the TRICARE DRG-based payment system 
for acute care hospitals and neonates will be 0.2778. This is based on 
a weighted average of the hospital-specific Medicare CCRs (weighted by 
the number of Medicare discharges) after excluding hospitals not 
subject to the TRICARE DRG system (Sole Community Hospitals, Indian 
Health Service hospitals, and hospitals in Maryland). The Medicare CCR 
is used to calculate cost outlier payments, except for children's 
hospitals. The Medicare CCR has been increased by a factor of 1.0065 to 
include an additional allowance for bad debt. The 1.0065 factor 
reflects the provisions of the Middle Class Tax Relief and Job Creation 
Act of 2012. For children's hospital cost outliers, the CCR used is 
0.3012.

I. Updated Rates and Weights

    The updated rates and weights are accessible through the Internet 
at http://www.tricare.mil/drgrates. The implementing regulations for 
the TRICARE/CHAMPUS DRG-based payment system are in 32 CFR Part 199.

    Dated: October 29, 2013.
Aaron Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2013-26108 Filed 10-31-13; 8:45 am]
BILLING CODE 5001-06-P