[Federal Register: October 12, 2006 (Volume 71, Number 197)]
[Notices]
[Page 60112-60114]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12oc06-35]
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DEPARTMENT OF DEFENSE
Office of the Secretary
TRICARE; Civilian Health and Medical Program of the Uniformed
Services (CHAMPUS); Fiscal Year 2007 Diagnosis Related Group (DRF)
Updates
AGENCY: Office of the Secretary, DoD.
ACTION: Notice of DRG revised rates.
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SUMMARY: This notice describes the changes made to the TRICARE DRG-
based payment system in order to conform to changes made to the
Medicare Prospective Payment System (PPS).
It also provides the updated fixed loss cost outliner 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 2007 under the TRICARE DRG-based payment system.
DATES: Effective Dates:
The rates, weights and Medicare PPS changes which affect the
TRICARE DRG-based payment system contained in this notice are effective
for admissions occurring on or after October 1, 2006.
ADDRESSES: TRICARE Management Activity (TMA), Medical Benefits and
Reimbursement Systems, 16401 East Centretech Parkway, Aurora, CO 80011-
9066.
FOR FURTHER INFORMATION CONTACT: Ann N. Fazzini, Medical Benefits and
Reimbursement Systems, TMA, telephone (303) 676-3803.
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 32993) 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.
[[Page 60113]]
I. Medicare PPS Changes Which Affect the TRICARE DRG-Based Payment
System
Following is a discussion of the changes CMS had 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 is 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
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 2007, CMS will implement
classification changes, including surgical hierarchy changes. The
TRICARE Grouper will incorporate all changes made to the Medicare
Grouper, with the exception of the pre-surgical hierarchy changes,
which will remain the same as FY 2006.
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' August 18, 2006, 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
2007, 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 2007, 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 $22,639 (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 2007 TRICARE National Operating Standard Cost as a Share of
Total Costs (NOSCASTC) used in calculating the cost outlier threshold
is 0.925. 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 2007 is 1.00.
H. Expansion of the Post Acute Care Transfer Policy
For FY 2007 TRICARE is adopting CMS' expanded post acute care
transfer policy according to CMS' final rule published August 18, 2006.
I. Blood Clotting Factor
For FY 2007, TRICARE is adopting CMS' payment methodology for blood
clotting factor according to CMS' final rule published August 18, 2006.
II. Cost to Charge Ratio
While CMS uses hospital-specific cost to charge ratios, TRICARE
uses a national cost to charge ratio. For FY 2007, the cost-to-charge
ratio used for the TRICARE DRG-based payment system for acute care
hospitals and neonates will be 0.3897 which is increased to 0.3967 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 0.4282.
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 2007 and
which is a result of the changes described above. The implementing
regulations for the
[[Page 60114]]
TRICARE/CHAMPUS DRG-based payment system are in 32 CFR part 199.
Dated: October 5, 2006.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 06-8624 Filed 10-11-06; 8:45 am]
BILLING CODE 5001-06-M