[Federal Register: October 24, 2005 (Volume 70, Number 204)]
[Rules and Regulations]
[Page 61368-61379]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24oc05-7]
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 199
RIN 0720-AA73
TRICARE; Sub-Acute Care Program; Uniform Skilled Nursing Facility
Benefit; Home Health Care Benefit; Adopting Medicare Payment Methods
for Skilled Nursing Facilities and Home Health Care Providers
AGENCY: Office of the Secretary, DoD.
ACTION: Final rule.
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SUMMARY: This rule partially implements the TRICARE ``sub-acute and
long-term care program reform'' enacted by Congress in the National
Defense Authorization Act for Fiscal Year 2002, specifically:
Establishment of ``an effective, efficient, and integrated sub-acute
care benefits program,'' with skilled nursing facility (SNF) and home
health care benefits modeled after those of the Medicare program;
adoption of Medicare payment methods for skilled nursing facility, home
health care, and certain other institutional health care providers;
adoption of Medicare rules on balance billing of beneficiaries,
prohibiting it by institutional providers and limiting it by non-
institutional providers; and change in the statutory exclusion of
coverage for custodial and domiciliary care.
DATES: Effective Dates: This rule is effective August 1, 2003, except
the amendments to Sec. 199.14(h), which are effective June 1, 2004.
ADDRESSES: Medical Benefits and Reimbursement Systems, TRICARE
Management Activity, 16401 East Centretech Parkway, Aurora, Colorado
80011-9066.
FOR FURTHER INFORMATION CONTACT: For payments to Skilled Nursing
Facilities and Skilled Nursing Facility (SNF) services, Tariq Shahid,
Medical Benefits and Reimbursement Systems, TRICARE Management
Activity, telephone (303) 676-3801. For Home Health Care (HHC) benefits
and payment methods, David E. Bennett, TRICARE Management Activity,
Medical Benefits and Reimbursement Systems, telephone (303) 676-3494.
For payments for clinical laboratory and certain other services in
hospital outpatient departments and emergency departments and balance
billing limits, Stan Regensberg, Medical Benefits and Reimbursement
Systems, TRICARE Management Activity, telephone (303) 676-3742. For
custodial care issues, Mike Kottyan, Medical Benefits and Reimbursement
Systems, TRICARE Management Activity, telephone (303) 676-3520.
SUPPLEMENTARY INFORMATION:
I. Overview
In the National Defense Authorization Act for Fiscal Year 2002
(NDAA-02), Pub. L. 107-107 (December 28, 2001), Congress enacted
several reforms relating to TRICARE coverage and payment methods for
skilled nursing and home health care services. The statutory ``Sub-
Acute and Long-Term Care Program Reform'' under section 701 of this Act
added a new 10 U.S.C. 1074j, which provides in pertinent part:
Sec. 1074j Sub-acute care program.
(a) Establishment.--The Secretary of Defense shall establish an
effective, efficient, and integrated sub-acute care benefits program
under this chapter. * * *
(b) Benefits.--(1) The program shall include a uniform skilled
nursing facility benefit that shall be provided in the same manner
and under the conditions described in Section 1861(h) and (i) of the
Social Security Act (42 U.S.C. 1395x(h) and (i)), except that the
limitation on the number of days of coverage under Section 1812(a)
and (b) of such Act (42 U.S.C. 1395d(a) and (b)) shall not be
applicable under the program. Skilled nursing facility care for each
spell of illness shall continue to be provided for as long as
medically necessary and appropriate.
* * * * *
(3) The program shall include a comprehensive, part-time or
intermittent home health care benefit that shall be provided in the
manner and under the conditions described in Section 1861(m) of the
Social Security Act (42 U.S.C. 1395x(m)).
In addition to these requirements that TRICARE establish an
integrated sub-acute care program consisting of skilled nursing
facility and home health care services modeled after the Medicare
program, Congress also, in section 707 of NDAA-02, changed the
statutory authorization (in 10 U.S.C. 1079(j)(2)) that TRICARE payment
methods for institutional care ``may be'' determined to the extent
practicable in accordance with Medicare payment rules to a mandate that
TRICARE payment methods ``shall be'' so determined. This amendment is
effective 90 days after the date of enactment.
A third Congressional action in NDAA-02, also in Section 707, is
the statutory codification of existing TRICARE policy--modeled after
Medicare--that institutional providers are not permitted to balance
bill beneficiaries for charges above the TRICARE payment amount and
that non-institutional providers may not balance bill in excess of 15
percent over the TRICARE Maximum Allowable Charge.
A fourth component of this reform program (in Section 701(c)) is
the narrowing of the regulatory definition of custodial care, which
previously was statutorily excluded but not defined, by the adoption of
the new statutory definition of ``custodial care'' that has the effect
of eliminating current program restrictions on paying for certain
medically necessary custodial care. The new statutory definition of
domiciliary care is consistent with the previous regulatory definition,
and no changes are required.
This final rule implements these statutory requirements. We are
adopting for TRICARE a skilled nursing facility (SNF) benefit similar
to Medicare's, but as specified in the statute, without Medicare's day
limits. We are also adopting Medicare's prospective payment method for
SNF care. Similarly, we are adopting the Medicare benefit structure and
payment method for home health care (HHC) services. We are applying to
SNF and HHC providers the statutory prohibition against balance
billing. In addition, we are incorporating the new statutory
definitions of ``custodial care'' and ``domiciliary care.'' Finally,
this rule also provides clarification of existing payment policies for
laboratory services including clinical laboratory; rehabilitation
therapy services; radiology services; diagnostic services; ambulance
services; durable medical equipment (DME) and supplies; oxygen and
related supplies; drugs administered other than oral method; all
professional provider services that are provided in an emergency room,
clinic, hospital outpatient departments, etc.; and routine venipuncture
in hospital outpatient and emergency departments that were adopted
under the allowable charge methodology under 32 CFR 199.14.
We note that the series of sub-acute and long-term care program
reforms adopted by Congress in NDAA-02 included several parts that are
not a part of implementation in this final rule. Most significant are:
repeal of the Case Management Program under 10 U.S.C. 1079(a)(17)
(repealed--along with several other related enactments--by Section
701(g)(2) of NDAA-02); continuation of the Case Management Program for
certain beneficiaries currently covered by it (Section 701(d)); and
establishment of a new program of extended benefits for disabled family
members of active duty service members (Section 701(b)). These and
several other related statutory changes are being implemented through
separate regulatory changes.
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Finally, we note that Congress included as Section 8101 of the DoD
2002 Appropriations Act, a general provision identical to a provision
included in the 2000 (Section 8118) and 2001 (Section 8100)
Appropriations Acts concerning implementation of the case management
program under 10 U.S.C. 1079(a)(17). Although Sections 8118 and 8100 of
the 2000 and 2001 Appropriations Acts were repealed by Section
701(g)(1)(B) and (C) of NDAA-02, the same provision was reenacted in
the 2002 Appropriations Act. By its terms, Section 8101 of the DoD 2002
Appropriations Act, exclusively addresses implementation of a program
(the case management program under 10 U.S.C. 1079(a)(17)) that has now
been repealed. Thus, we consider Section 8101 as not affecting
implementation of the sub-acute and long-term care reform program
adopted by Congress in NDAA-02.
The program reforms adopted by Congress and implemented in this
final rule take major steps toward achieving the Congressional
objective of an effective, efficient, and integrated sub-acute care
benefits program.
II. Skilled Nursing Facility Benefits
As noted above, 10 U.S.C. 1074j requires TRICARE to include a
skilled nursing facility benefit that shall for the most part be
provided in the manner and under the conditions described under
Medicare. As a result, TRICARE is adopting Medicare's three-day prior-
hospitalization requirement for coverage of a SNF admission.
Accordingly, for a SNF admission to be covered under TRICARE, the
beneficiary must have a qualifying hospital stay (meaning an inpatient
hospital stay), of not less than three consecutive days before the
beneficiary is discharged from the hospital. The beneficiary must enter
the SNF within 30 days after discharge from the hospital or within such
time as it would be medically appropriate to begin an active course of
treatment where the individual's condition is such that SNF care would
not be medically appropriate within 30 days after discharge from a
hospital. The skilled services must be for a medical condition that was
either treated during the qualifying three-day hospital stay, or
started while the beneficiary was already receiving covered SNF care.
Additionally, an individual shall be deemed not to have been discharged
from a SNF, if within 30 days after discharge from a SNF, the
individual is again admitted to the same or a different SNF. These
coverage requirements are the same as applied under Medicare. We are
not, however, adopting Medicare's 100-day limit on SNF services.
Consistent with the statute, SNF coverage for each spell of illness
shall continue to be provided for as long as medically necessary and
appropriate.
III. Payments for Skilled Nursing Facility Services
TRICARE had not reformed payment methods applicable to SNFs due to
the very small volume of SNF services paid for by TRICARE. The volume
of such services is now expected to increase significantly because of
the Congressional action in 2000 reinstating TRICARE coverage secondary
to Medicare for Medicare-eligible DoD health care beneficiaries
(Section 712 of the Floyd D. Spence National Defense Authorization Act
for Fiscal Year 2001, Pub. L. 106-398). Coincident with Congressional
action in directing adoption of Medicare payment methods for
institutional providers, we have undertaken a review of the Medicare
payment method and rates for SNF care under Section 1888(e) of the
Social Security Act (42 U.S.C. 1395yy) and 42 CFR Part 413, subpart J.
That review and assessment have convinced us that adoption of Medicare
SNF payment methods and rates is not only required by law, but also
fair, feasible, practicable, and appropriate.
Medicare implemented its per diem Prospective Payment System (PPS)
for SNF care covering all costs (routine, ancillary and capital) of
Medicare-covered SNF services as of July 1, 1998. The Medicare payment
rates are based upon resident assessments. All Medicare-certified SNFs
are required to conduct assessments on residents using a standardized
assessment tool, called the Minimum Data Set (MDS). Medicare then uses
information from this assessment to categorize SNF patients into major
categories, such as: (1) Rehabilitation; (2) Extensive Services; (3)
Special Care; (4) Clinically Complex; (5) Impaired Cognition; (6)
Behavior Problems; and (7) Reduced Physical Function. This is done
using the Resource Utilization Group (RUG)-III grouper. The RUG-III
grouper is a computer program that converts resident specific
assessment data into a case-mix classification. In classifying patients
into groups based upon their clinical and functional characteristics,
the grouper further subdivides each of these major categories resulting
in specific patient RUGs.
For each RUG, the Medicare SNF per diem payment is calculated as
the sum of three parts--the nursing component, the therapy component
and the non-case-mix component. Under the nursing and therapy
components of the payment rate, each of RUG carries a uniquely assigned
relative weight factor. This relative weight factor, or case mix index,
represents a relative index or resource consumption. Resource-intensive
patients are assigned to a RUG that carries a higher relative weight
factor. This RUG-specific relative weight factor is multiplied by the
applicable nursing and therapy base rates (which vary depending on
whether the SNF is urban or rural) to develop the nursing and therapy
components of the per diem payment rate. These two components are then
added to the non-case-mix adjusted component resulting in the PPS per
diem payment rate.
A key part of the Medicare SNF payment system is the use of the MDS
to classify SNF residents into one of the RUG groups. An important
issue is whether the RUG-III classification system used by Medicare to
classify patients into the RUG groups would be practicable for the
TRICARE SNF benefit. We think that it would be practicable. Much of the
SNF care for which TRICARE will be paying is as second payer to
Medicare for the same patient. Even for non-Medicare-eligible patients
(e.g., most patients under age 65), the characteristics recognized by
the RUG-III system would be equally applicable. In this regard, we note
that more than ten states have decided to use the RUG-III system to
classify Medicaid patients into RUGs and several other states are
currently in the developmental stages of implementing the RUG-III
system. This reflects a broad view that the MDS and RUGs are
appropriate for non-Medicare SNF residents. In our review and
discussions, we could not identify any significant barriers to the use
of the RUG-III system to classify TRICARE patients.
One implementation issue that we have identified related to
classification concerns the timing of resident assessments. The
Medicare SNF payment system requires periodic patient assessments. The
Centers for Medicare and Medicaid Services (CMS) requires that SNF
patients be assessed on days 5, 14, 30, 60, and 90, as well as to be
reassessed if there are status changes between these periodic
assessments. We have considered the level of assessment required after
100 days when TRICARE becomes primary payer for patients whose SNF care
must continue beyond the Medicare benefit limit. We believe continuing
to assess patients every 30 days would be consistent with Medicare's
practice of skilled authorization.
A second implementation issue concerns the use of MDS for neonates
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and very young children. The MDS was not designed for very young
children. As a result, we believe that children under ten should not be
assessed using the MDS. We will review the methods used by Medicaid
programs and may adopt one of their assessment methods at a later time.
Until then, the allowed charge for children under age ten in a SNF will
continue to be the billed charge or negotiated rates.
We have also considered whether the Medicare SNF payment rates and
weights are appropriate for TRICARE. We believe they are. For some of
the payment methods TRICARE has adopted for non-SNF providers that are
based on the Medicare's system, we have developed DoD-specific weights
and rates. In some, such as for physician payments, we implemented our
own phase-in process, but have now reached comparability with Medicare.
In the case of SNF PPS, the Medicare weights and rates were developed
to be used nationally--like TRICARE--thus, we have no special State
considerations that some Medicaid programs would have. In addition, the
TRICARE population group that will be the primary user of SNF services
and the Medicare population group are quite similar. Thus, we believe
that there is no reason why the Medicare weights and rates would not be
appropriate to use. However, we will carefully monitor the TRICARE SNF
patient characteristics to ensure that the weights and rates are
appropriate. If necessary, the weights and rates could be modified
after one or more years of experience.
Based on all of these considerations and the statutory
requirements, the Department is adopting for TRICARE the Medicare
payment methods and rates, including MDS assessments, RUG-III
classifications, and Medicare weights and per diem rates. For patient
stays longer than 90 days, MDS assessments would be required every 30
days.
In adopting the Medicare's SNF payment methodology, we are also
incorporating into our rule a provision that has been in the TRICARE
Operations Manual requiring that TRICARE-eligible SNFs are required to
be Medicare-certified institutions. We believe this policy facilitates
assurance of quality of care and is consistent with the payment
approach we are adopting. For pediatric SNFs, TRICARE will accept
Medicaid certification in lieu of the Medicare certification as the
pediatric SNFs might choose not to apply for Medicare certification and
the Medicaid certification standards are quite similar to the Medicare
certification standards.
For overseas, the SNF PPS will be applicable to those areas as it
applies under Medicare.
On July 7, 2003, DoD published a notice (68 FR 40251) to announce
the effective and implementation date for the new SNF benefit
provisions and SNF PPS. The notice established that the new SNF benefit
provisions and SNF PPS is effective for SNF admissions on or after
August 1, 2003.
IV. Home Health Care Benefits
Home health agencies (HHAs) are recognized as authorized providers
under TRICARE, but payment only extended to services rendered by
otherwise authorized TRICARE individual professional providers, such as
registered nurses, physical and occupational therapists, and speech
pathologists. Coverage of services provided by home health aides and
medical social workers were not allowed except under case management
and the hospice benefit. Payment is also extended under the TRICARE-
allowable charge methodology for medical supplies that are essential in
enabling HHA professional staff to effectively carry out physician
ordered treatment of the beneficiary's illness or injury. Unlike
Medicare, TRICARE required HHAs to have either Community Health
Accreditation Program or Joint Commission on the Accreditation of
Healthcare Organizations accreditation to qualify as network providers.
These certification requirements have been changed to make them
consistent with those of Medicare in order to effectively accommodate
adoption of the new HHA prospective payment system, i.e., to require
Medicare certification/approval for provider authorization status under
TRICARE.
Medicare's home health benefit structure and conditions for
coverage are being adopted coincident with implementation of the new
prospective payment system including those provisions under Sections
1861(m), 1861(o), and 1891 of the Social Security Act and 42 CFR part
484. In general, coverage extends to part-time or intermittent skilled
nursing care and home health aide services from qualified providers.
The specific benefit structure and conditions for coverage are set
forth in the new Section 199.4(e)(21) of the regulation.
In adopting this new benefit structure for TRICARE, we note the
potential need for some transition time or other accommodation for some
patients currently receiving home health services under present program
coverage rules. Our regulation (Section 199.1(n)) allows the
recognition of special circumstance and authority of the Director to
address them.
V. Payment Method for Home Health Care Services
TRICARE is adopting Medicare's benefit structure and prospective
payment system for reimbursement of HHAs that are currently in effect
for the Medicare program under Section 4603 of the Balanced Budget Act
of 1997, as amended by Section 5101 of the Omnibus Consolidated and
Emergency Supplemental Appropriations Act for Fiscal Year 1999, and by
Sections 302, 305, and 306 of the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act of 1999. This includes adoption of the
comprehensive Outcome and Assessment Information Set (OASIS) and
consolidated billing requirements.
The adoption of the Medicare HHA prospective payment system
replaces the retrospective physician-oriented fee-for-service model
used for payment of home health services under TRICARE. Under the new
prospective payment system, TRICARE will reimburse HHAs a fixed case-
mix and wage-adjusted 60-day episode payment amount for professional
home health services, along with routine and non-routine medical
supplies provided under the beneficiary's plan of care. Durable medical
equipment and osteoporosis drugs receive a separate payment amount in
addition to the prospective payment system amount for home health care
services.
The variation in reimbursement among beneficiaries receiving home
health care under this newly adopted prospective payment system will be
dependent on the severity of the beneficiary's condition and expected
resource consumption over a 60-day episode-of-care, with special
reimbursement provisions for major intervening events, significant
changes in condition, and low or high resource utilization. The
resource consumption of these beneficiaries will be assessed using
OASIS selected data elements. The score values obtained from these
selected data elements will be used to classify home health
beneficiaries into one of 80 Home Health Resource Groups (HHRGs) based
on their average expected resource costs relative to other home health
care patients.
The HHRG classification determines the cost weight, i.e., the
appropriate case-mix weight adjustment factor that indicates the
relative resources used and costliness of treating different patients.
The cost weight for a particular HHRG is then multiplied by a standard
average
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prospective payment amount for a 60-day episode of home health care.
The case-mix adjusted standard prospective payment amount is then
adjusted to reflect the geographic variation in wages to come up with
the final HHA payment amount. As indicated above, the ordinary unit of
payment is based on a 60-day episode of care. Payment covers the entire
episode of care regardless of the number of days of care actually
provided during the 60-day period. There are exceptions to this
standard payment period under certain conditions that will result in
reduced or additional amounts being paid. If the beneficiary is still
in treatment at the end of the initial 60-day episode of care, a
physician must re-certify the beneficiary's continuing need for home
health services and the homebound status of the patient, and a new
episode of care may begin. There is currently no limit on the number of
medically necessary consecutive 60-day episodes that beneficiaries may
receive under the HHA prospective payment system.
As noted above, the variation in reimbursement among beneficiaries
receiving HHC under this newly adopted prospective payment system will
be dependent on the severity of the beneficiary's condition and
expected resource consumption over a 60-day episode-of-care, with
special reimbursement provisions for major intervening events,
significant changes in condition, and low or high resource utilization.
A case mix system has been developed to measure the severity and
projected resource utilization of beneficiaries receiving home health
services using selected data elements off of the OASIS assessment
instrument (i.e., the assessment document submitted by HHAs for
reimbursement) and an additional element measuring receipt of at least
ten visits for therapy services. These key data elements are organized
and assigned a score value in order to measure the impact of clinical,
functional and services utilization dimensions on total resource use.
The resulting summed scores are used to assign a beneficiary to a
particular severity level within each of the following dimensions:
Clinical Dimension--The clinical dimension has four
severity levels (0-3) and takes into account the beneficiary's primary
diagnosis and prevalent medical conditions.
Functional Dimension--The functional dimension assesses
the beneficiary's ability to perform various activities of daily living
(e.g., the beneficiary's ability to dress and bathe) and consists of
five severity levels (0-4).
Services Utilization Dimension--The services utilization
dimension has four severity levels (0-3) and indicates whether the
beneficiary was discharged from a skilled nursing facility or
rehabilitation hospital within the past 14 days and whether the patient
is expected to receive ten or more occupational, physical and/or speech
therapy visits.
A case-mix grouper is used for assigning a severity level within
each of the above dimensions and for classifying the beneficiary into
one of 80 HHRGs. The HHRG indicates the extent and severity of the
beneficiary's home health needs reflected in its relative case-mix
weight (cost weight). The case-mix weight indicates the group's
relative resource use and cost of treating different patients. The
case-mix weights for Fiscal Year 2001 ranged from 0.5265 to 2.8113. The
standardized prospective payment rate is multiplied by the
beneficiary's assigned HHRG case-mix weight to come up with the 60-day
episode payment.
On March 30, 2004, DoD published a notice (69 FR 16531) to announce
the phased-in implementation of the HHA prospective payment system with
the start health care delivery date under each of the TRICARE Next
Generation of Contracts (T-Nex). The implementation date for the
regional groupings of states under each of the T-Nex contracts is
provided in that notice. This implementation began on June 1, 2004, and
was fully phased-in on November 1, 2004.
VI. Balance Billing Limitations
Consistent with the Congressional action discussed above, we are
revising Section 199.6 of the regulation to specify that institutional
providers, including SNFs and HHAs, are required, in order to be
TRICARE-authorized providers, to be participating providers on all
claims. They must accept, except for any required beneficiary
deductible and co-payment amounts, the TRICARE payment as payment in
full. Medicare and TRICARE payment rates are designed to fully
reimburse the institutions and are required by Medicare and TRICARE to
be accepted as full reimbursement. TRICARE eligible hospitals, SNFs,
and HHAs must enter into a participation agreement.
VII. Definitions of ``Custodial Care'' and ``Domiciliary Care''
As noted above, Congress adopted definitions of ``custodial care''
and ``domiciliary care'' that we are incorporating into the TRICARE
regulation. Custodial and domiciliary care continue to be excluded by
the statute and regulation. However, the new definition for custodial
care narrows the exclusion, resulting in increasing coverage of
medically necessary custodial care. This is also consistent with the
Congressional effort largely to standardize TRICARE and Medicare sub-
acute care coverage and payment policies. As a corollary to these
definitions, we are also adopting a definition of the term ``activities
of daily living.''
VIII. Payment Methods for Hospital Outpatient Services
Medicare implemented a new Outpatient Prospective Payment System
(OPPS) on August 1, 2000, as a payment methodology for facility charges
in hospital outpatient departments and emergency departments. This
system replaced Medicare's prior payment methodology for such services,
which was largely based on provider cost reports, but included some fee
schedules. The Medicare OPPS is in process of being phased in, with a
series of transitional payment adjustments that were based partly upon
the prior Medicare cost reports and Medicare's prior cost-based
methodology. Consistent with the TRICARE payment reform statutory
authority and general policy, we plan to follow the Medicare approach.
However, because of complexities of the Medicare transition process and
the lack of TRICARE cost report data comparable to Medicare's, it is
not practicable for the Department to adopt Medicare OPPS for hospital
outpatient services at this time. A separate regulatory initiative will
address hospital outpatient services not covered by this regulation. We
anticipate eventual adoption of the Medicare OPPS for most TRICARE
hospital outpatient services covered by the Medicare OPPS.
This rule clarifies payments for hospital based outpatient services
that have established allowable TRICARE charges. These services would
include laboratory services including clinical laboratory;
rehabilitation therapy services; radiology services; diagnostic
services; ambulance services; durable medical equipment (DME) and
supplies; oxygen and related supplies; drugs administered other than
oral method; all professional provider services that are provided in an
emergency room, clinic, or hospital outpatient department, etc.; and
routine venipuncture. For these services, payments are based on the
TRICARE-allowable cost method in effect for professional providers or
the CHAMPUS Maximum Allowable Charge (CMAC). Some services have a
professional and a technical component
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such as laboratory, radiology, and diagnostic services. If only the
technical component is billed by the hospital, the technical component
of the TRICARE allowable charge will be applied to the TRICARE payment.
If the professional outpatient hospital services are billed by a
professional provider group, not by the hospital, no payment shall be
made to the hospital for these services. All other outpatient hospital
services, except for ambulatory surgery services, shall be paid as
billed such as facility charges. Ambulatory surgery services shall be
paid in accordance with Section 199.14(d) of the regulation.
IX. Public Comments
We published the interim final rule on June 13, 2002, and provided
a 60-day comment period. We received public comments from several
commentors. These comments and the Department's responses are
summarized below.
Comment. One commentor felt that it would be preferable to adopt
Medicare standards for coverage and payment through references to
applicable Medicare statutory and regulatory provisions rather than
incorporating the actual regulatory language itself. The commentor felt
that inclusion of language beyond these references could result in the
loss of uniformity; i.e., that the Department may not be able to keep
current with changes in Medicare standards.
Response. The Department believes that incorporation of actual
regulatory language, in addition to applicable cross references to
Medicare statutes and regulations, will only tend to strengthen the
uniformity between the programs. The conditions for participation,
along with a general overview of the prospective payment methodology,
will ensure a basic understanding of the benefit coverage and payments
among managed care support contractors, providers and eligible
beneficiary groups. As with other adopted Medicare reimbursement
systems (e.g., those Medicare reimbursement systems for hospice and
acute inpatient hospitalization), uniformity is maintained through
annual policy manual updates. These routine changes ensure compliance
with existing Medicare regulations and internal Program Memoranda
(i.e., Medicare internal procedural guidelines for the processing and
payment of home health services). The updating process also ensures
that the most current rates and wage indexes are being used in
reimbursement of home health services. We also believe that the
Medicare cross references (i.e., the statutory and regulatory
provisions) cited in the interim final rule are sufficient to maintain
uniformity in benefit structure and reimbursement between the programs
(i.e., consistency in benefit coverage and reimbursement between the
Medicare and TRICARE programs). The cross referenced regulatory
provisions implement key sections of the Social Security Act relating
to covered services, conditions of participation and the prospective
payment of home health services.
Comment. One commentor felt that the Department had exceeded the
statutory authority granted it under the National Defense Authorization
Act for Fiscal Year 2002 (NDAA-02), Pub. L. 107-107 for home health
services through the adoption of conditions of coverage and
participation prescribed under Sections 1861(o) and 1891 of the Social
Security Act and 42 CFR Part 484. The commentor also expressed the view
that restricting eligibility to home care based on a ``qualifying
service,'' would limit an effective way to decrease aide visits, while
at the same time provide compensatory strategies needed to increase
beneficiary safety and independence.
Response. The Department does not believe it has exceeded the
statutory authority granted to it under the NDAA-02, Pub. L. 107-107,
given the fact that the conditions of coverage and participation
prescribed under 1861(o) and 1891 of the Social Security Act and 42 CFR
Part 484 are an integral part of the Medicare home health benefit from
which HHA PPS rates were extrapolated; i.e., the national mean
utilization for each of the six home health disciplines was used in
calculating the initial unadjusted national 60-day episode payment.
Since the conditions of coverage/participation determine the mix and
level of services (e.g., the beneficiary must need skilled nursing care
on an intermittent basis, or physical therapy or speech-language
pathology services, or have continued need for occupational therapy
after the need for skilled nursing care, physical therapy, or speech-
language pathology services have ceased, on which the prospective
payment rates were based), it is illogical to believe that it was
Congress' intent to exclude their adoption under the TRICARE program. A
shift in the mix and level of services (e.g., the substitution of
occupational services for home health aide services) resulting from
elimination of the Medicare conditions of coverage/participation would
deviate from the resource allocation used in establishing the
prospective payment rates.
Comments. Two commentors expressed concern over the weakness of
Medicare's Outcome and Assessment Information Set (OASIS) instrument as
a payment setting mechanism for maternity patients and individuals
under the age of 18. The commentors felt that, while an abbreviated
OASIS format (i.e., a core of 23 elements used to determine the
reimbursement amount) might be workable, it would not accurately
reflect the needs of a younger TRICARE population, or generate an
appropriate payment for home health services.
Response. A fixed case-mix and wage adjusted 60-day episode payment
will be paid to Medicare-certified home health agencies providing home
health services to beneficiaries who are under the age of 18 and/or
receiving maternity care. However, this prospective payment amount will
be determined through the manual completion and scoring of an
abbreviated assessment form (Home Health Resource Group Worksheet). The
23 items in this assessment will provide the minimal amount of data
necessary for generating a Health Insurance Prospective Payment System
(HIPPS) code for reimbursement under the HHA PPS. While an abbreviated
assessment may facilitate payment under the HHA PPS, it does not
adequately reflect the management oversight required to ensure quality
of care for beneficiaries under the age of 18, and obstetrical
patients. As a result, TRICARE contractors will have to continue to
case manage these beneficiary categories through the use of appropriate
evaluation criteria as required under the specific terms of their
contract to ensure the quality and appropriateness of home health
services (e.g., the use of Interqual criteria for managing the
appropriateness of home health services).
The program intends to conduct a follow-up analysis after at least
a year's worth of accumulated data to evaluate the appropriateness of
Medicare weights and rates in reimbursement of these specialty provider
categories.
If a Medicare-certified HHA is not available within the service
area, the TRICARE contractor may authorize care in a non-Medicare
certified HHA (e.g., a HHA which has not sought Medicare certification/
approval due to the specialized beneficiary categories it services--
patients receiving maternity care and/or patients under the age of 18)
that qualifies for corporate services provider status under TRICARE.
The freestanding corporate entity will be reimbursed for otherwise
covered professional services under the TRICARE Maximum Allowable
Charge (TMAC) reimbursement system, subject to any restrictions and
limitations as
[[Page 61373]]
may be prescribed under existing TRICARE policy. Payment will also be
allowed for supplies used by a TRICARE authorized individual provider
employed by or under contract with a corporate services provider in the
direct treatment of a TRICARE eligible beneficiary. Allowable supplies
will be reimbursed in accordance with TRICARE allowable charge
methodology. There are also regulatory and contractual provisions
currently in place that grant contractors the authority to establish
alternative network reimbursement systems as long as they do not exceed
what would have otherwise been allowed under Standard TRICARE payment
methologies.
Comment. One commentor wanted to know how children under the age of
ten would be reimbursed given the fact that they are exempt from the
HHA PPS.
Response. The exemption has been removed for children under the age
of ten. A fixed case-mix and wage adjusted 60-day episode payment will
be paid to Medicare-certified home health agencies providing home
health services to beneficiaries who are under the age of 18. This
prospective payment amount will be determined through the manual
completion and scoring of an abbreviated assessment form (Home Health
Resource Group Worksheet). The 23 items in this assessment will provide
the minimal amount of data necessary for generating a Health Insurance
Prospective Payment System (HIPPS) code for reimbursement under the HHA
PPS.
Comment. Another commentor requested that the requirement for
physician certification of the correctness of the Home Health Resource
Group (HHRG) referenced in the SUPPLEMENTARY INFORMATION section of the
interim final rule be removed and implementation monitored to ensure
that the requirement is not enforced. The commentor felt that a
physician was in no position to oversee the reimbursement methodology
or to maintain the expertise necessary to offer such certification.
Response. The Department agrees that a physician does not have the
necessary expertise to certify the correctness of the Home Health
Resource Group (HHRG). As a result, the requirement has been removed
from the SUPPLEMENTARY INFORMATION section of the final rule.
Contractor enforcement of the deleted requirement is not anticipated
since it does not appear in any of the implementing instructions (i.e.,
TRICARE Policy Manual issuances). The physician's fundamental role is
to certify the continuing need for home health services and the
homebound status of the patient through the development and maintenance
of a formal Plan of Care (POC). The POC must specify the medical
treatments/services to be furnished, the type of home health
disciplines that will furnish the ordered services, and the frequency
of the services furnished.
Comment. One commentor felt that the absence of a definitive
effective date would cause confusion for TRICARE beneficiaries and
providers of home health services. It was recommended that a Federal
Register notice be issued at least 60 days prior to the actual
implementation date in order to give both patients and providers the
opportunity to take appropriate steps to transition into the new
benefit.
Response. On March 30, 2004, DoD published a notice (69 FR 16531)
to announce the phased-in implementation of the HHA prospective payment
system with the start health care delivery date under each of the
TRICARE Next Generation of Contracts (T-Nex). The implementation date
for the regional groupings of states under each of the T-Nex contracts
was provided in that notice. This implementation began on June 1, 2004,
and was fully phased-in on November 1, 2004. There were also provisions
within the implementing guidelines which gave both patients and
providers the necessary time to transition into the new benefit. Under
those provisions, TRICARE contractors were responsible for identifying
all beneficiaries receiving home health care services 60 days prior to
implementation of the HHA PPS, and for notifying them and the HHA of
any change in their benefit.
Comment. Another commentor suggested that ``Activities of Daily
Living'' as defined in 32 CFR 199.2(b) be modified to include the
phrase ``that reasonably can be performed by an untrained adult with
minimum structure or supervision,'' since many of the listed activities
can rise to the level of skilled nursing or therapy services in
complicated or abnormal circumstances.
Response. Similar language already appears in the definition.
Comment. One commentor recommended that ``Home Health Discipline''
as defined in 32 CFR 199.2(b) be modified to include ``home health aide
services'' since only 5 of the 6 disciplines appeared in the original
rule.
Response. The definition of ``Home Health Discipline'' has been
modified to include ``home health aide services''.
Comment. One commentor recommended that decisions on policy changes
remain solely with TRICARE Management Activity and not with individual
contractors. The commentor felt that variations in contractor policies
could lead to lingering confusion between patients, providers and
regulatory officials regarding actual policy interpretation.
Response. TRICARE Management Activity will be responsible for
issuing all policy decisions and/or changes pertaining to the coverage
and reimbursement of home health services.
Comment. Another commentor requested further clarification
regarding the circumstances in which TRICARE would consider care
``custodial.''
Response. ``Custodial Care'' is treatment or services that can be
rendered safely and reasonably by a person who is not medically
skilled, and is designed mainly to help the patient with the activities
of daily living. The activities of daily care consist of providing food
(including special diets), clothing, and shelter; personal hygiene
services, observation and general monitoring; bowel training or
management (unless abnormalities in bowel function are of a severity to
result in a need for medical or surgical intervention in the absence of
skilled services); safety precautions; general preventive procedures
(such as turning to prevent bedsores); passive exercise; companionship;
recreation; transportation; and such other elements of personal care
that reasonably can be performed by an untrained adult with minimal
instruction or supervision.
Comment. Another commentor felt that the reference to ``all
services'' in paragraph 199.6(b)(4)(xv)(F)(1) might be confusing, as it
is intended to apply to all home health services. The commentor
recommended that ``home health'' be added prior to ``services.''
Response. The commentor's recommendation has been adopted. ``All
services'' in paragraph 199.6(b)(4)(xv)(F)(1) has been further
clarified in this final rule by adding ``home health'' prior to
``services.''
Comment. A commentor recommended that ``Custodial Care'' as defined
in 32 CFR 199.2(b) be modified to indicate that its application in the
context of the home health benefit be limited to circumstances where
the overall plan of care does not include any skilled nursing or
therapy services. It was felt that additional guidance was necessary to
avoid misapplication of the custodial care exclusion given the fact
that home health aide services by their very nature are: (1) Services
that can be rendered safely and reasonably by a person who is not
medically skilled, or (2) designed to help a patient with the
activities of daily living.
[[Page 61374]]
Response. The definition contained in the interim final rule is
statutory, that is, the language was contained in the National Defense
Authorization Act for Fiscal Year 2002 (NDAA-02), Public Law 107-107,
Section 701(c). Custodial care remains excluded.
Comment. A beneficiary advocacy organization expressed concern that
(1) not all NDAA-02 reforms are addressed in the interim final rule;
(2) family members may experience breaks in coverage for services
allowed pre- NDAA-02 until all NDAA-02 reforms are implemented; and (3)
a desire that active-duty family members are provided all services
authorized by NDAA-02.
Response. (1) Because of the complexity of developing the proposed
programs, including significant agency decisions regarding the
discretionary elements of NDAA-02, and the requirement to follow the
prescribed rule-making process, the Agency has determined it is more
timely and fiscally prudent to implement certain NDAA-02 authorized
programs separate from those covered by this rule; (2) there are no
pre- NDAA-02 benefits which require implementation of NDAA-02 benefits
in order to be allowed; and (3) those services required by NDAA-02 to
be provided to active-duty family members are available through
existing programs; discretionary NDAA-02 elements will be implemented
following the rule-making process and incorporation into the managed
care support contracts.
Comment. The same organization wanted to know how the new home
health benefit and reimbursement methodology was going to be
transitioned into the program since the existing coverage is more
robust than that being implemented through statute.
Response. The new home health benefit and reimbursement system has
been transitioned into the program as part of the next generation of
TRICARE contracts. There were provisions within the implementing
guidelines which gave both patients and providers the necessary time to
transition into the new benefit. Under these provisions, TRICARE
contractors were responsible for identifying all beneficiaries
receiving home health care services 60 days prior to implementation of
the HHA PPS, and for notifying them and the HHA of any change in their
benefit.
Comment. The same organization also wanted to know how the cases of
beneficiaries who are already getting a benefit and who did not have a
three-day qualifying hospital stay (required for a skilled nursing
facility (SNF) benefit) be handled. The commentor raised concerns about
the education for providers treating non-Medicare eligible
beneficiaries and wanted to know how providers will know that the
three-day Medicare rule will also apply to these TRICARE beneficiaries.
Response. The three-day qualifying hospital stay and the SNF
prospective payment system (PPS) requirements apply to those cases that
have an SNF admission date of August 1, 2003, or after. This
implementation date allowed for the education of providers. Under the
new requirements, SNFs are required to enter into a participation
agreement with TRICARE. Along with this participation agreement, the
Managed Care Support (MCS) contractors are required to send a letter to
SNFs explaining the new requirements. This letter specifically states
that the new requirements also apply to those TRICARE beneficiaries who
are not Medicare-eligible. Prior to the implementation of SNF PPS, MCS
contractors spent considerable effort in educating the providers
regarding the new SNF benefit and PPS requirements and entered into a
participation agreement with SNFs.
Comment. The same organization suggested that guidelines regarding
benefits available to active-duty family members versus non-active-duty
family members be incorporated into this rule.
Response. As mentioned above, the benefits authorized by NDAA-02
for active-duty family members are either currently available or will
be so as a result of separate rule-making and implementation in the T-
Nex contracts, therefore, suggested guidelines are not necessary in
this rule.
Comment. That organization commented that the Resource Utilization
Groups (RUG-III) used to calculate SNF payments and the Minimum Data
Set (MDS) assessments may not be designed to reflect coverage of
conditions affecting children and supported the Department's proposal
not to use the MDS for children under age ten. They believed it
appropriate that the ``billed charge'' for the care of these children
will be deemed the ``allowed charge.'' The organization also commented
that it is concerned about the transition for care of children as they
get older and that there may be a period where coverage for slightly
more home care will allow the family to have the child with them at
home before having to place the child in an institutional setting. It
suggested that the procedures allow for some flexibility to meet the
needs and wishes of the family where cost effective.
Response. For the benefits authorized by section 701(b) of NDAA-02,
the allowed charges will be the ``billed charges'' or ``negotiated
rates'' for children under age 10. As stated in the rule, the MDS will
not be used for assessment of these children until further review by
the Department is completed. Currently, the applicability of MDS will
be determined based on the child's age (10 years) on the date of his/
her SNF admission. We believe the medical necessity and medical
appropriateness should determine the most cost effective level and
setting of care. In certain cases, home health care may be the most
cost effective and appropriate care based upon the medical necessity
and medical need of a child's condition.
Comment. The same commentor was also concerned that the definition
of ``homebound'' may be too restrictive for families with children. The
commentor believed this definition needed to be modified to reflect the
characteristics of the entire TRICARE beneficiary population, and not
just the Medicare-eligible segment.
Response. An exception is being made to the definitional homebound
criteria for beneficiaries under the age of 18 and those receiving
maternity care. The only homebound requirement for these special
beneficiary categories is written certification from a physician
attesting to the fact that leaving the home would place the beneficiary
at medical risk.
Comment. Two commentors recommended elimination of the significant
change in condition (SCIC) adjustment in 32 CFR 199.14(h)(4), as it
creates an unnecessary administrative burden and unfairly reimburses
providers when patients' conditions deteriorate.
Response. Section 707 of National Defense Authorization Act for
Fiscal Year 2002 (NDAA-02) was quite specific in its intent that
TRICARE home health payment amounts be determined to the extent
practicable in accordance with the same reimbursement rates as apply to
payments to providers of services of the same type under title XVIII of
the Social Security Act (42 U.S.C. 1295). Elimination of the
significant change in condition (SCIC) adjustment would represent a
major deviation from the Medicare HHA PPS methodology, and as such,
would be contrary to the statutorily mandated reimbursement provisions
under Section 707 of NDAA-02.
Comment. Another commentor wanted to know if TRICARE would be
adopting changes to the OASIS data collection instrument as a result of
upcoming Center for Medicare and
[[Page 61375]]
Medicaid Services (CMS) Technical Expert Panel (TEP) assessments.
Response. TRICARE will be adopting all upcoming Center for Medicare
and Medicaid Services (CMS) changes to the OASIS data collection
instrument.
Comment. Two commentors felt that the requirement for TMA Director
approval of home health aide training programs, as specified in 32 CFR
199.4(e)(21)(i)(D), would impose an additional standard beyond that set
out in the Medicare conditions of participation for home health
agencies. It was recommended that the requirement for home health aide
training programs be modified to reflect the current Conditions of
Participation under the Medicare Program.
Response. The requirement for home health aide training programs
has been modified to reflect the current condition of participation
under the Medicare program; i.e., the home health aide must have
successfully completed a state-established or other training program
that meets the requirements of 42 CFR 484.36 Condition of
participation: Home health aide services.
Comment. One commentor wanted to know if the concept of ``TRICARE-
authorized physician'' was more restrictive than that of Medicare's--as
it relates to general supervision/direction of ``skilled nursing
services'' as defined in 32 CFR 199.2(b). The commentor recommended
that ``TRICARE-authorized physician'' either be defined, or the
reference eliminated from the definition of ``skilled nursing
services.''
Response. Physician as defined in 32 CFR 199.2(b) is a person with
a degree of Doctor of Medicine (M.D.) or Doctor of Osteopathy (D.O.)
who is licensed to practice medicine by an appropriate authority. Based
on this definition, it appears that the concept of ``TRICARE-authorized
physician'' is comparable to that of Medicare's--as it relates to
general supervision/direction of ``skilled nursing services.''
Comment. One commentor recommended adding the phrase ``subject to
appropriate adjustments'' at the end of the second and fourth sentences
of subparagraph 32 CFR 199.14(h)(1), since residual final payment
depends upon the actual HHRG and the impact of other payment
adjustments that cannot be made prior to final claim submission.
Response. The phrase ``subject to appropriate adjustments'' is
being added to the recommended sentences in subparagraph 32 CFR
199.14(h)(1), since it is agreed that residual final payments are
impacted by other payment adjustments that cannot be made prior to
final claim submission.
Comment. Several commentors felt that the OASIS was an unsuitable
data collection tool for active duty dependents since it was developed
primarily for the elderly with very different health care needs. The
commentor recommended development of an assessment tool which would
more closely correlate with a younger, healthier TRICARE population.
Response. The program intends to conduct a follow-up analysis after
at least a year's worth of accumulated data to evaluate the
appropriateness of Medicare weights and rates in reimbursement of
TRICARE beneficiaries.
Comment. Another commentor recommended adding the phrase ``to
another home health agency'' following ``transfer'' in subparagraph 32
CFR 199.14(h)(3), since transfer is limited to a transfer to another
home health agency for continuation of receiving the home health
benefit.
Response. The commentor's recommendation has been adopted by adding
the phrase ``to another home health agency'' following ``transfer'' in
subparagraph 32 CFR 199.14(h)(3) of the final rule.
Comment. One commentor recommended modification of the citation
references in 32 CFR 199.4(e)(21)(ii)(I). The commentor felt that the
existing citations were related solely to Medicare conditions of
participation for home health agencies rather than conditions of
coverage for home health services.
Response. The citation reference 42 CFR 409, Subpart E, has been
added to subparagraph 32 CFR 199.4(e)(21)(ii)(I). This subpart
implements Sections 1814(a)(2)(C), 1835(a)(2)(A), and 1861(m) of the
Social Security Act with respect to the requirements that must be met
for Medicare payment to be made for home health services furnished to
eligible beneficiaries.
Comment. Another commentor felt that a description of the outlier
payment methodology was warranted in the regulatory text.
Response. A description of the outlier payment methodology has been
incorporated into the final rule.
Comment. Another commentor felt that the Medicare qualifying
condition for payment definition of ``intermittent skilled nursing
services'' be included in 32 CFR 199.2(b), since it is distinct from
the scope of coverage standards available under the home health benefit
(i.e., the definitions of ``intermittent home health aide and skilled
nursing services'' and ``part time home health aide and skilled nursing
services'').
Response. The definitions of intermittent or part-time skilled
nursing and home health aide services have been consolidated and
revised to reflect the statutory definition under Sec. 1861 of the
Social Security Act (42 U.S.C. 1395x(m)).
Comment. One commentor felt that the new definitions of custodial
care, domiciliary care and activities of daily living combined with the
anticipated ``significant increase'' in patient volume and the
elimination of Medicare day limits require careful administration and
oversight that can best be provided through case management and
suggested to include operational guidelines for the Managed Care
Support Contractors.
Response. The Department will administer the provisions consistent
with the statutory requirements. Detailed operational guidelines have
been developed for the Managed Care Support contractors.
Comment. The same commenter stated that the Medicare payment system
was not designed for an active duty population and misses the mark
completely with respect to children.
Response. These issues have been addressed above and the Department
plans to carefully monitor and evaluate the issues pertaining to
children.
Comment. The commenter stated that there is some concern as to how
well the rule will serve the needs of those living outside the
continental United States.
Response. The SNF PPS will be applicable to those areas outside the
continental United States as it is applicable under Medicare.
Comment. The commentor felt that there was a gap in the level of
nursing care afforded under the new home health benefit.
Response. 32 CFR 199.4(e)(21) ``Home health services,'' provides
the broad range of services available under the new home health benefit
structure.
Comment. The commentor pointed out that home health aide and
medical social worker services were currently being covered under case
management as well as under the hospice benefit.
Response. Section IV of the SUPPLEMENTARY INFORMATION portion of
the rule has been modified to reflect this additional coverage.
Comment. The same commentor suggested that the rule specify what,
if any, benefit exclusions remain following the change in the
definitions of ``custodial care'' and ``domiciliary care.''
Response. The existing regulatory language provides the benefit
exclusions; relevant TRICARE policies have been or will be modified as
[[Page 61376]]
necessary to reflect the revised definitions.
Comment. The commentor also suggested adding a regulatory
definition for ``medically necessary care.''
Response. That term is consistent with the existing regulatory
definitions of ``appropriate medical care'' and ``medically or
psychologically necessary''; a separate definition is not necessary.
Comment. The same commentor recommended that the case manager's
involvement in the plan of care be recognized in the final rule.
Response. The regulatory provisions for establishment of a plan of
care are consistent with those provided under the Medicare program.
X. Regulatory Procedures
We have examined the impacts of the Final Rule under Executive
Order 12866. Executive Order 12866 directs agencies to assess all costs
and benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any one
year).
We originally thought that this final rule was a major one because
it had an impact of more than $100 million per year. However, we now
believe that the impact will be significantly less. We had originally
projected that the skilled nursing facility (SNF) benefit change and
the reduced TRICARE payments to SNFs would reduce SNF payments by more
than $100 million per year. However, analysis of actual SNF payments
that have been made since the benefit changes and payment system were
implemented in August 2003 indicate that the impact has been much less
than expected. Based on the analysis of actual SNF payments and other
benefit changes, we have determined that this rule is not economically
significant under Executive Order 12866.
SNF Changes
The objective of the SNF benefit change and the revised SNF payment
system is to make TRICARE's SNF benefit consistent with Medicare, which
satisfies a Congressional goal. A second objective is to increase the
quality of care by requiring a more detailed review of SNF cases and
more appropriate placement of SNF patients. There will also be an
increase in payment efficiency because SNF payments will cease when SNF
care is no longer necessary.
We assessed the quantitative impact of the SNF change by comparing
TRICARE's payments for SNF care prior to the changes with payments
after the changes were implemented in August 2003. These payment trends
capture both the impact of the SNF benefit changes and reimbursement
changes.
We examined SNF payments for beneficiaries under age 65 and age 65
and over separately. Table 1 shows that the level of government
payments for SNF services for beneficiaries under age 65 declined by
about 48 percent from the quarter immediately prior to implementation
of the new rules to the quarter immediately after their implementation
(we did not use data from August 2003 because some persons were in SNFs
under the old rules and some were there under the new rules). We
believe that most of this impact is due to TRICARE's shift from paying
billed charges for SNF services to using the SNF PPS method. The
percentage reduction in government SNF payments was less for persons
age 65 and over: we found an 11 percent decline in SNF payments for
these beneficiaries. We believe that the impact is less for
beneficiaries age 65 and over because TRICARE is second payer to
Medicare. Because Medicare's payments for these beneficiaries have been
based on Medicare's SNF-PPS payment system for a number of years,
TRICARE's introduction of the new payment system had a very small
impact. In aggregate, the benefit changes and the new SNF payment
system reduced TRICARE government payments to SNFs by 18 percent, which
is equal to about $4.2 million per quarter or about $17 million per
year.
Table 1.--Change in Government Payments for SNF Care for TRICARE
Beneficiaries
[In thousands]
------------------------------------------------------------------------
Under age Age 65 and
65 above Total
------------------------------------------------------------------------
May-July 2003.................... $4,790 $18,051 $22,841
Sep-Nov 2003..................... $2,571 $16,048 $18,619
% Change......................... -48 -11 -18
------------------------------------------------------------------------
Home Health
The objective of the home health (HH) benefit change and the
revised HH payment system is to make TRICARE's HH benefit consistent
with Medicare, which satisfies a Congressional goal. A second objective
is to increase the quality of care by requiring a more detailed review
of HH cases and more appropriate placement of HH patients. The HH
payment system also increases efficiency because its per-episode method
of payment discourages unnecessary utilization.
For home health claims, the benefit and reimbursement changes have
just gone into effect and the data have not developed as of yet.
Therefore, the retrospective method of analysis we used for SNF
services is not possible for home health claims. We analyzed recent HH
payments under TRICARE and found that TRICARE paid about $21 million
per year in home health allowed amounts in the 2002-2003 period. We
estimate that the new HH system will decrease HH payments by
approximately 20 percent. Thus, we estimate that TRICARE payments for
HH care will be reduced by approximately $4 million per year. We
estimate an impact of less than $1 million per year for beneficiaries
age 65 and over because TRICARE is secondary payer to Medicare and
Medicare has been using the HH PPS method to pay HH services for a
number of years.
Change in Definition of Custodial Care
The narrowing of the definition of custodial care expanded the
benefits available to certain TRICARE beneficiaries. This satisfied the
Congressional goal of revising TRICARE's definition of custodial care
and expanding TRICARE's benefits.
We assessed the quantitative impact of the change by examining the
level of additional benefits that TRICARE paid for persons who received
benefits under the expanded program. We were able to identify the
TRICARE beneficiaries who received services due to the expanded TRICARE
benefits. We found that
[[Page 61377]]
TRICARE payments were approximately $6.9 million in FY 2003 for these
beneficiaries. All of these benefit payments represented additional
government payments due to the change in the definition of custodial
care. The payments were $6.2 million in the first six months of FY
2004. Reliable data are not available beyond the first six months of
FY04. We believe that the FY04 impact is more appropriate and believe
that the annual impact of the change in the definition of custodial
care is about $12.4 million.
Summary
The quantitative impact of the three changes consists of $17
million in savings for the SNF change, $4 million in savings for the HH
change, and $12 million in costs for the change in the definition of
custodial care.
Paperwork Reduction Act
This rule will not impose additional information collection
requirements on the public under the Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3511). Existing information collection requirements of
the TRICARE and Medicare programs will be utilized. Comments on
information collection requirements should be submitted to Kim Frazier,
5111 Leesburg Pike, Suite 810, Falls Church, VA 22041-3206, telephone
703-681-3636.
Implementation
This rule implements specific statutory requirements with specific
statutory effective dates. The implementation of new SNF benefit
requirements and SNF prospective payment system is effective for
admissions on or after August 1, 2003. The implementation of the other
benefit requirements and the home health care prospective payment
system is effective with the start health care delivery date under each
of the TRICARE Next Generation of Contracts (T-Nex). The implementation
of T-Nex contracts was fully phased-in on November 1, 2004. These other
benefit requirements and the home health care prospective payment
system are part of the contractual requirements of the T-Nex contracts,
and were not negotiated or directed as a change to the previous
contracts.
List of Subjects in 32 CFR Part 199
Claims, Dental health, Health care, Health insurance, Individuals
with disabilities, Military personnel.
0
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 199.2(b) is amended by adding the definitions of ``facility
charge'' and ``part-time or intermittent home health aide and skilled
nursing services'' in alphabetical order, by revising the definitions
of ``homebound'' and ``home health discipline'', by removing the
definitions of ``intermittent home health aide and skilled nursing
services'' and ``part-time home health aide and skilled nursing
services'', to read as follows:
Sec. 199.2 Definitions.
* * * * *
(b) * * *
Facility charge. The term ``facility charge'' means the charge,
either inpatient or outpatient, made by a hospital or other
institutional provider to cover the overhead costs of providing the
service. These costs would include building costs, i.e. depreciation
and interest; staffing costs; drugs and supplies; and overhead costs,
i.e., utilities, housekeeping, maintenance, etc.
* * * * *
Homebound. A beneficiary's condition is such that there exists a
normal inability to leave home and, consequently, leaving home would
require considerable and taxing effort. Any absence of an individual
from the home attributable to the need to receive health care
treatment--including regular absences for the purpose of participating
in therapeutic, psychosocial, or medical treatment in an adult day-care
program that is licensed or certified by a state, or accredited to
furnish adult day-care services in the--state shall not disqualify an
individual from being considered to be confined to his home. Any other
absence of an individual from the home shall not disqualify an
individual if the absence is infrequent or of relatively short
duration. For purposes of the preceding sentence, any absence for the
purpose of attending a religious service shall be deemed to be an
absence of infrequent or short duration. Also, absences from the home
for non-medical purposes, such as an occasional trip to the barber, a
walk around the block or a drive, would not necessarily negate the
beneficiary's homebound status if the absences are undertaken on an
infrequent basis and are of relatively short duration. An exception is
made to the above homebound definitional criteria for beneficiaries
under the age of 18 and those receiving maternity care. The only
homebound criteria for these special beneficiary categories is written
certification from a physician attesting to the fact that leaving the
home would place the beneficiary at medical risk.
Home health discipline. One of six home health disciplines covered
under the home health benefit (skilled nursing services, home health
aide services, physical therapy services, occupational therapy
services, speech-language pathology services, and medical social
services).
* * * * *
Part-time or intermittent home health aide and skilled nursing
services. Part-time or intermittent means skilled nursing and home
health aide services furnished any number of days per week as long as
they are furnished (combined) less than 8 hours each day and 28 or
fewer hours each week (or, subject to review on a case-bay-case basis
as to the need for care, less than 8 hours each day and 35 or fewer
hours per week).
* * * * *
0
3. Section 199.4 is amended by revising the second sentence in
paragraph (b)(3)(xiv), by removing and reserving paragraph (e)(12), by
revising paragraphs (e)(21)(i)(D), (e)(21)(ii)(I), by revising ``Sec.
199.14(i)'' to read ``Sec. 199.14(e)'' in paragraphs (f)(8)(i) and
(f)(8)(ii)(A), and by revising paragraphs (g)(7) and (g)(8) to read as
follows:
Sec. 199.4 Basic program benefits.
(b) * * *
(3) * * *
(xiv) * * * Skilled nursing facility care for each spell of illness
shall continue to be provided for as long as medically necessary and
appropriate. * * *
* * * * *
(e) * * *
(21) * * *
(i) * * *
(D) Part-time or intermittent services of a home health aide who
has successfully completed a state-established or other training
program that meets the requirements of 42 CFR Part 484;
* * * * *
(ii) * * *
(I) Any other conditions of coverage/participation that may be
required under Medicare's HHA benefit; i.e., coverage guidelines as
prescribed under Sections 1861(o) and 1891 of the Social Security Act
(42 U.S.C. 1395x(o) and 1395bbb), 42 CFR Part 409, Subpart E and 42 CFR
Part 484.
* * * * *
(g) * * *
[[Page 61378]]
(7) Custodial care. Custodial care as defined in Sec. 199.2.
(8) Domiciliary care. Domiciliary care as defined in Sec. 199.2.
* * * * *
0
4. Section 199.6 is amended by revising paragraph (a)(8)(i)(B), by
adding a note in paragraph (b)(4)(vi)(K), and by revising paragraph
(b)(4)(xv)(F)(1), to read as follows:
Sec. 199.6 TRICARE authorized providers.
(a) * * *
(8) * * *
(i) * * *
(B) A SNF or a HHA, in order to be an authorized provider under
TRICARE, must enter into a participation agreement with TRICARE for all
claims.
* * * * *
(b) * * *
(4) * * *
(vi) * * *
(K) * * *
Note: If a pediatric SNF is certified by Medicaid, it will be
considered to meet the Medicare certification requirement in order
to be an authorized provider under TRICARE.
* * * * *
(xv) * * *
(F) * * *
(1) The HHA must submit all TRICARE claims for all home health
services, excluding durable medical equipment (DME), while the
beneficiary is under the home health plan without regard to whether or
not the item or service was furnished by the HHA, by others under
arrangement with the HHA, or under any other contracting or consulting
arrangement.
* * * * *
0
5. Section 199.14 is amended as follows:
0
a. Amend paragraph (a)(4) by revising ``paragraph (i)'' to read
``paragraph (l)'';
0
b. Revise paragraphs (a)(5) introductory text and (a)(5)(i);
0
c. Amend paragraphs (a)(5)(ii) and (a)(5)(iii) by revising ``paragraph
(h)(1)'' to read ``paragraph (j)(1)'' in both places;
0
d. Revise paragraph (a)(5)(iv);
0
e. Add paragraphs (a)(5)(v) through (a)(5)(xii);
0
f. Revise paragraphs (h) introductory text; (h)(1), (h)(3), and (h)(5);
0
g. Amend paragraph (j)(1)(i)(B) by revising ``paragraph (g)(1)(iv)'' to
read ``paragraph (j)(1)(iv)'';
0
h. Amend paragraph (j)(1)(i)(D) by revising ``paragraph (h)(1)(i)(B)''
to read ``paragraph (j)(1)(i)(B)'' and by revising ``paragraph
(h)(1)(i)(C)'' to read ``paragraph (j)(1)(i)(C)'';
0
i. Amend paragraph (j)(1)(ii)(B) by revising ``paragraph
(g)(1)(ii)(A)'' to read ``paragraph (j)(1)(ii)(A)''
0
j. Amend paragraph (j)(1)(ii)(C) by revising ``paragraph
(g)(1)(ii)(B)'' to read ``paragraph (j)(1)(ii)(B)'';
0
k. Amend paragraph (j)(1)(iii) introductory text by revising
``paragraphs (g)(1)(iii)(A) and (B)'' to read ``paragraphs
(j)(1)(iii)(A) and (B)'';
0
l. Amend paragraph (j)(1)(iii)(D) by revising ``paragraphs (h)(1)(i)
through (iii)'' to read ``paragraphs (j)(1)(i) through (iii)'' and by
revising ``paragraph (h)(1)(iii)(B)'' to read ``(j)(1)(iii)(B)'';
0
m. Amend paragraph (j)(1)(iv)(B)(2) by revising ``paragraph
(g)(1)(iv)(B)(1)'' to read ``paragraph (j)(1)(iv)(B)(1)'';
0
n. Amend paragraph (j)(1)(iv)(C) by revising ``paragraph
(g)(1)(iii)(A)(1)'' to read ``paragraph (j)(1)(iii)(A)(1)'', by
revising ``paragraphs (g)(1)(iii) and (g)(1)(iv)'' to read ``paragraphs
(j)(1)(iii) and (j)(1)(iv)'', and by revising ``paragraph
(g)(1)(iii)(C)'' to read ``paragraph (j)(1)(iii)(C)'';
0
o. Amend paragraph (j)(1)(iv)(C)(1) by revising ``paragraph
(g)(1)(iv)(C)(2)'' to read ``paragraph (j)(1)(iv)(C)(2)'';
0
p. Amend paragraph (j)(1)(ii)(C)(2) by revising ``paragraph
(g)(1)(iv)(C)(1)'' to read ``paragraph (j)(1)(iv)(C)(1)'', and by
revising ``paragraph (g)(1)(iv)(C)(3)'' to read ``paragraph
(j)(1)(iv)(C)(3)'';
0
q. Amend paragraph (j)(1)(iv)(D) introductory text by revising
``paragraph (h)(1)(iv)(C)'' to read ``paragraph (j)(1)(iv)(C)'', and by
revising ``paragraph (h)(1)'' to read ``paragraph (j)(1)'';
0
r. Amend paragraph (j)(1)(iv)(D)(2)(i) by revising ``paragraph (h)(1)''
to read ``paragraph (j)(1)'';
0
s. Amend paragraph (j)(1)(iv)(D)(2)(ii) by revising ``paragraph
(h)(1)(ii)'' to read ``paragraph (j)(1)(ii)'' and by revising
``paragraph (h)(1)(iv)(A)'' to read ``paragraph (j)(1)(iv)(A)'';
0
t. Amend paragraph (j)(1)(iv)(D)(3) by revising ``paragraph
(h)(1)(iv)(D)'' to read ``paragraph (j)(1)(iv)(D)'';
0
u. Amend paragraph (j)(1)(iv)(E) introductory text by revising
``paragraph (h)(1)'' to read ``paragraph (j)(1)'', and by revising
``paragraph (h)(1)(iv)(E)'' to read ``paragraph (j)(1)(iv)(E)'';
0
v. Amend paragraph (j)(1)(iv)(E)(2) by revising ``paragraph (h)(1)'' to
read ``paragraph (j)(1)'';
0
w. Amend paragraph (j)(1)(v)(A) by revising ``paragraph (g)(1)(v)'' to
read ``paragraph (j)(1)(v)'';
0
x. Amend paragraph (j)(1)(v)(B) by revising ``(g)(1)(v)(B)(1) through
(3)'' to read ``paragraphs (j)(1)(v)(B)(1) through (3)'';
0
y. Amend paragraph (j)(1)(v)(C) introductory text by revising
``paragraph (g)(i)(v)'' to read ``paragraph (j)(1)(v)'';
0
z. Amend paragraph (j)(1)(vi)(A) by revising ``paragraph
(g)(1)(ii)(B)'' to read ``paragraph (j)(1)(ii)(B)'' and by revising
``paragraph (g)(1)(v)'' to read ``paragraph (j)(1)(v)'';
0
aa. Amend paragraph (j)(1)(vi)(B) introductory text by revising
``paragraph (g)(1)(vi)(A)'' to read ``paragraph (j)(1)(vi)(A)'';
0
bb. Amend paragraph (j)(1)(vi)(B)(1) by revising ``paragraph
(g)(1)(vi)(B)(2)'' to read ``paragraph (j)(1)(vi)(B)(2)'', and by
revising ``paragraph (g)(1)(v)'' to read ``paragraph (j)(1)(v)'';
0
cc. Amend paragraph (j)(1)(vi)(B)(2) by revising ``paragraph
(g)(1)(v)'' to read ``paragraph (j)(1)(v)'' and by revising ``paragraph
(g)(1)(v)(B)(2)'' to read ``(j)(1)(v)(B)(2)'';
0
dd. Amend paragraph (j)(1)(vii)(A) by revising ``paragraphs (g)(1)(iii)
and (g)(1)(v)'' to read ``paragraphs (j)(1)(iii) and (j)(1)(v)'';
0
ee. Amend paragraph (j)(1)(viii) introductory text by revising
``paragraphs (g)(1)(i) through (g)(1)(iv)'' to read ``paragraphs
(j)(1)(i) through (j)(1)(iv)'';
0
ff. Amend paragraph (j)(1)(viii)(A) by revising ``paragraph
(g)(1)(viii)'' to read ``paragraph (j)(1)(viii)'';
0
gg. Amend paragraph (j)(1)(viii)(B) by revising ``paragraph
(g)(1)(iii)'' to read ``paragraph (j)(1)(iii)'';
0
hh. Amend paragraph (j)(1)(viii)(C) by revising ``paragraph
(g)(1)(iv)'' to read ``paragraph (j)(1)(iv)'';
0
ii. Amend paragraph (j)(1)(viii)(D) by revising ``paragraph
(g)(1)(iv)(B)'' to read ``paragraph (j)(1)(iv)(B)'';
0
jj. Amend paragraph (l)(2) introductory text by revising ``paragraph
(g)'' to read ``paragraph (j)''; and
0
kk. Amend paragraph (l)(2) by revising ``paragraph (g)'' to read
``paragraph (j)''.
Sec. 199.14 Provider reimbursement methods.
(a) * * *
(5) Hospital outpatient services. This paragraph (a)(5) identifies
and clarifies payment methods for certain outpatient services,
including emergency services, provided by hospitals.
(i) Laboratory services. TRICARE payments for hospital outpatient
laboratory services including clinical laboratory services are based on
the allowable charge method under paragraph (j)(1) of the section. In
the case of laboratory services for which the CMAC rates are
established under that paragraph, a payment rate for the technical
component of the laboratory services is provided. Hospital charges for
an outpatient laboratory service are reimbursed using the CMAC
technical component rate.
* * * * *
(iv) Radiology services. TRICARE payments for hospital outpatient
[[Page 61379]]
radiology services are based on the allowable charge method under
paragraph (j)(1) of the section. In the case of radiology services for
which the CMAC rates are established under that paragraph, a payment
rate for the technical component of the radiology services is provided.
Hospital charges for an outpatient radiology service are reimbursed
using the CMAC technical component rate.
(v) Diagnostic services. TRICARE payments for hospital outpatient
diagnostic services are based on the allowable charge method under
paragraph (j)(1) of the section. In the case of diagnostic services for
which the CMAC rates are established under that paragraph, a payment
rate for the technical component of the diagnostic services is
provided. Hospital charges for an outpatient diagnostic service are
reimbursed using the CMAC technical component rate.
(vi) Ambulance services. Ambulance services provided on an
outpatient basis by hospitals are paid on the same basis as ambulance
services covered by the allowable charge method under paragraph (j)(1)
of this section.
(vii) Durable medical equipment (DME) and supplies. Durable medical
equipment and supplies provided on an outpatient basis by hospitals are
paid on the same basis as durable medical equipment and supplies
covered by the allowable charge method under paragraph (j)(1) of this
section.
(viii) Oxygen and related supplies. Oxygen and related supplies
provided on an outpatient basis by hospitals are paid on the same basis
as oxygen and related supplies covered by the allowable charge method
under paragraph (j)(1) of this section.
(ix) Drugs administered other than oral method. Drugs administered
other than oral method provided on an outpatient basis by hospitals are
paid on the same basis as drugs administered other than oral method
covered by the allowable charge method under paragraph (j)(1) of this
section. The allowable charge for drugs administered other than oral
method is established from a schedule of allowable charges based on a
formulary of the average wholesale price.
(x) Professional provider services. TRICARE payments for hospital
outpatient professional provider services rendered in an emergency
room, clinic, or hospital outpatient department, etc., are based on the
allowable charge method under paragraph (j)(1) of the section. In the
case of professional services for which the CMAC rates are established
under that paragraph, a payment rate for the professional component of
the services is provided. Hospital charges for an outpatient
professional service are reimbursed using the CMAC professional
component rate. If the professional outpatient hospital services are
billed by a professional provider group, not by the hospital, no
payment shall be made to the hospital for these services.
(xi) Facility charges. TRICARE payments for hospital outpatient
facility charges that would include the overhead costs of providing the
outpatient service would be paid as billed. For the definition of
facility charge, see Sec. 199.2(b).
(xii) Ambulatory surgery services. Hospital outpatient ambulatory
surgery services shall be paid in accordance with Sec. 199.14(d).
* * * * *
(h) Reimbursement of Home Health Agencies (HHAs). HHAs will be
reimbursed using the same methods and rates as used under the Medicare
HHA prospective payment system under Section 1895 of the Social
Security Act (42 U.S.C. 1395fff) and 42 CFR Part 484, Subpart E except
as otherwise necessary to recognize distinct characteristics of TRICARE
beneficiaries and as described in instructions issued by the Director,
TMA. Under this methodology, an HHA will receive a fixed case-mix and
wage-adjusted national 60-day episode payment amount as payment in full
for all costs associated with furnishing home health services to
TRICARE-eligible beneficiaries with the exception of osteoporosis drugs
and DME. The full case-mix and wage-adjusted 60-day episode amount will
be payment in full subject to the following adjustments and additional
payments:
(1) Split percentage payments. The initial percentage payment for
initial episodes is paid to an HHA at 60 percent of the case-mix and
wage adjusted 60-day episode rate. The residual final payment for
initial episodes is paid at 40 percent of the case-mix and wage
adjusted 60-day episode rate subject to appropriate adjustments. The
initial percentage payment for subsequent episodes is paid at 50
percent of the case-mix and wage-adjusted 60-day episode rate. The
residual final payment for subsequent episodes is paid at 50 percent of
the case-mix and wage-adjusted 60-day episode rate subject to
appropriate adjustments.
* * * * *
(3) Partial episode payment (PEP). A PEP adjustment is used for
payment of an episode of less than 60 days resulting from a
beneficiary's elected transfer to another HHA prior to the end of the
60-day episode or discharge and readmission of a beneficiary to the
same HHA before the end of the 60-day episode. The PEP payment is
calculated by multiplying the proportion of the 60-day episode during
which the beneficiary remained under the care of the original HHA by
the beneficiary's assigned 60-day episode payment.
* * * * *
(5) Outlier payment. Outlier payments are allowed in addition to
regular 60-day episode payments for beneficiaries generating
excessively high treatment costs. The following methodology is used for
calculation of the outlier payment:
(i) TRICARE makes an outlier payment for an episode whose estimated
cost exceeds a threshold amount for each case-mix group.
(ii) The outlier threshold for each case-mix group is the episode
payment amount for that group, the PEP adjustment amount for the
episode or the total significant change in condition adjustment amount
for the episode plus a fixed dollar loss amount that is the same for
all case-mix groups.
(iii) The outlier payment is a proportion of the amount of
estimated cost beyond the threshold.
(iv) TRICARE imputes the cost for each episode by multiplying the
national per-visit amount of each discipline by the number of visits in
the discipline and computing the total imputed cost for all
disciplines.
(v) The fixed dollar loss amount and the loss sharing proportion
are chosen so that the estimated total outlier payment is no more than
the predetermined percentage of total payment under the home health PPS
as set by the Centers for Medicare & Medicaid Services (CMS).
* * * * *
Dated: October 5, 2005.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 05-20415 Filed 10-21-05; 8:45 am]
BILLING CODE 5001-06-P