[Federal Register: October 24, 2005 (Volume 70, Number 204)]
[Notices]
[Page 61434-61435]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24oc05-33]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Office of the Secretary
TRICARE; Civilian Health and Medical Program of the Uniformed
Services (CHAMPUS); Fiscal Year 2006 Diagnosis Related Group (DRG)
Updates
AGENCY: Office of the Secretary, DoD.
ACTION: Notice of DRG revised rates.
-----------------------------------------------------------------------
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
Internet address for accessing the updated adjusted standardized amount
and DRG relative weights to be used for FY 2006 under the TRICARE DRG-
based payment system.
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, 2005.
ADDRESSES: TRICARE Management Activity (TMA), Medical Benefits and
Reimbursement Systems, 16401 East Centretech Parkway, Aurora, CO 80011-
9066.
FOR FURTHER INFORMATION CONTACT: Marty Maxey, Medical Benefits and
Reimbursement Systems, TMA, telephone (303) 676-3627. Questions
regarding payment of specific claims under the TRICARE DRG-based
payment system should be addressed to the appropriate contractor.
SUPPLEMENTARY INFORMATION: The final rule published on September 1,
1987 (52 FR 32992) set forth the basic procedures used under the
CHAMPUS DRG-based payment system. This was subsequently amended by
final rules published August 31, 1988 (53 FR 33461), October 21, 1988
(53 FR 41331), December 16, 1988 (53 FR 50515), May 30, 1990 (55 FR
21863), October 22, 1990 (55 FR 42560), and September 10, 1998 (63 FR
48439). An explicit tenet of these final rules, and one based on the
statute authorizing the use of DRGs by TRICARE, is that the TRICARE
DRG-based payment system is modeled on the Medicare PPS, and that,
whenever practicable, the TRICARE system will follow the same rules
that apply to the Medicare PPS. The Centers for Medicare and Medicaid
Services (CMS) publishes these changes annually in the Federal Register
and discusses in detail the impact of the changes. In addition, this
notice updates the rates and weights in accordance with our previous
final rules. The actual changes we are making, along with a description
of their relationship to the Medicare PPS, are detailed below.
I. Medicare PPS Changes Which Affect the TRICARE DRG-Based Payment
System
Following is a discussion of the changes CMS has made to the
Medicare PPS that affect the TRICARE DRG-based payment system.
A. DRG Classifications
Under both the Medicare PPS and the TRICARE DRG-based payment
system, cases are classified into the appropriate DRG by a Grouper
program. The Grouper classifies each case into a DRG on the basis of
the diagnosis and procedure codes and demographic information (that is,
sex, age, and discharge status). The Grouper used for the TRICARE DRG-
based payment system is the same as the current Medicare Grouper with
two modifications. The TRICARE system has replaced Medicare DRG 435
with two age-based DRGs (900 and 901), and has implemented thirty-four
(34) neonatal DRGs in place of Medicare DRGs 385 through 390. For
admissions occurring on or after October 1, 2001, DRG 435 has been
replaced by DRG 523. The TRICARE system has replaced DRG 523 with the
two age-based DRGs (900 and 901). For admissions occurring on or after
October 1, 1995, the CHAMPUS grouper hierarchy logic was changed so the
age split (age < 29 days) and assignments to MDC 15 occur before
[[Page 61435]]
assignment of the PreMDC DRGs. This resulted in all neonate
tracheostomies and organ transplants to be grouped to MDC 15 and not to
DRGs 480-483 or 495. For admissions occurring on or after October 1,
1998, the CHAMPUS grouper hierarchy logic was changed to move DRG 103
to the PreMDC DRGs and to assign patients to PreMDC DRGs 480, 103 and
495 before assignment to MDC 15 DRGs and the neonatal DRGs. For
admissions occurring on or after October 1, 2001, DRGs 512 and 513 were
added to the PreMDC DRGs, between DRGs 480 and 103 in the TRICARE
grouper hierarchy logic. For admissions occurring on or after October
1, 2004, DRG 483 was deleted and replaced with DRGs 541 and 542,
splitting the assignment of cases on the basis of the performance of a
major operating room procedure. The description for DRG 480 was changed
to ``Liver Transplant and/or Intestinal Transplant'', and the
description for DRG 103 was changed to ``Heart/Heart Lung Transplant or
Implant of Heart Assist System''. For FY 2006, CMS will implement
classification changes, including surgical hierarchy changes. The
TRICARE Grouper will incorporate all changes made to the Medicare
Grouper.
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 ASA shall equal 69.7 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's August 12, 2005, final rule.
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
2006, the fixed loss cost outlier threshold is based on the sum of the
applicable DRG-based payment rate plus any amounts payable for IDME
plus a fixed dollar amount. Thus, for FY 2006, in order for a case to
qualify for cost outlier payments, the costs must exceed the TRICARE
DRG base payment rate (wage adjusted) for the DRG plus the IDME payment
plus $21,783 (wage adjusted). The marginal cost factor for cost
outliers continues to be 80 percent.
F. National Operating Standard Cost as a Share of Total Costs
The FY 2006 TRICARE National Operating Standard Cost as a Share of
Total Costs (NOSCASTC) used in calculating the cost outlier threshold
is 0.923. TRICARE uses the same methodology as CMS for calculating the
NOSCASTC however, the variables are different because TRICARE uses
national cost to charge ratios while CMS uses hospital specific cost to
charge ratios.
G. Indirect Medical Education (IDME) Adjustment
Passage of the MMA of 2003 modified the formula multipliers to be
used in the calculation of the indirect medical education IDME
adjustment factor. Since the IDME formula used by TRICARE does not
include disproportionate share hospitals (DSHs), the variables in the
formula are different than Medicare's however; the percentage
reductions that will be applied to Medicare's formula will also be
applied to the TRICARE IDME formula. The new multiplier for the IDME
adjustment factor for TRICARE for FY 2006 is 1.04.
H. Expansion of the Post Acute Care Transfer Policy
For FY 2006 TRICARE is adopting CMS' expanded post acute care
transfer policy according to CMS' final rule published August 12, 2005.
I. Blood Clotting Factor
For FY 2006, TRICARE is adopting CMS' payment methodology for blood
clotting factor according to CMS' final rule published August 12, 2005.
II. Cost to Charge Ratio
While CMS uses hospital-specific cost to charge ratios, TRICARE
uses a national cost to charge ratio. For FY 2006, the cost-to-charge
ratio used for the TRICARE DRG-based payment system will be 0.4060,
which is increased to 0.4130 to account for bad debts. This shall be
used to calculate the adjusted standardized amounts and to calculate
cost outlier payments, except for children's hospitals. For children's
hospital cost outliers, the cost-to-charge ratio used is 0.4468. For FY
2006, the neonatal cost-to-charge ratio of .64 is being reduced to the
same cost-to-charge ratio of .4130 for acute care hospitals.
III. Updated Rates and Weights
The updated rates and weights are accessible through the Internet
at http://www.tricare.osd.mil under the sequential headings TRICARE
Provider Information, Rates and Reimbursements, and DRG Information.
Table 1 provides the ASA rates and Table 2 provides the DRG weights to
be used under the TRICARE DRG-based payment system during FY 2006 and
which is a result of the changes described above. The implementing
regulations for the TRICARE/CHAMPUS DRG-based payment system are in 32
CFR Part 199.
Dated: October 18, 2005.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 05-21184 Filed 10-21-05; 8:45 am]
BILLING CODE 5001-06-M