[Federal Register: July 30, 2007 (Volume 72, Number 145)]
[Notices]
[Page 41501-41502]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30jy07-34]
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DEPARTMENT OF DEFENSE
Office of the Secretary
Expansion of a TRICARE Demonstration Project for the State of
Alaska
AGENCY: Department of Defense.
ACTION: Notice of expansion of a TRICARE demonstration project for the
State of Alaska.
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SUMMARY: This notice is to advise interested parties of an expansion of
a Military Health System (MHS) demonstration project entitled TRICARE
Provider Reimbursement Demonstration Project for the State of Alaska.
The original demonstration notice was published on November 20, 2006
(71 FR 67112-67113) and described a demonstration project to increase
reimbursement for individual providers in the State of Alaska. The
demonstration project will now also include increased reimbursement for
health care services by hospitals that have been designated as Critical
Access Hospitals (CAH) in the State of Alaska. TRICARE, under the
demonstration project, will reimburse CAHs in a similar manner as they
are reimbursed under Medicare. The expansion of the demonstration
project will test the effect of this change on CAH provider
participation in TRICARE, beneficiary access to care, cost of health
care services, military medical readiness, morale and welfare. In
particular, the demonstration will test whether the increased costs of
provider payments are offset in whole or part by savings in travel
costs, lost duty time, and other factors. This demonstration will be
conducted under statutory authority provided in 10 U.S.C. 1092.
DATES: Effective Date: The expansion of the demonstration will be
effective July 1, 2007, and will continue for a period of 3 years from
the date of the original demonstration.
ADDRESSES: TRICARE Management Activity (TMA), Medical Benefits and
Reimbursement Systems (MB&RS), 16401 E. Centretech Parkway, Aurora, CO
80011.
FOR FURTHER INFORMATION CONTACT: For questions pertaining to the
expansion of the demonstration/Critical Access Hospital portion of the
demonstration, Ann N. Fazzini, 303.676.3803.
SUPPLEMENTARY INFORMATION:
A. Background
For additional information on the TRICARE demonstration project for
the State of Alaska, please see 71 FR 67112-67113. The demonstration
notice focused on increased payment rates for individual providers to
determine the impact on access to care.
This expansion of the demonstration applies to Critical Access
Hospitals (CAH) within the State of Alaska. Hospitals are authorized
TRICARE institutional providers under 10 U.S.C. 1079(j)(2) and (4).
Under 10 U.S.C. 1079(j)(2), the amount to be paid to hospitals, skilled
nursing facilities (SNFs), and other institutional providers under
TRICARE, shall, by regulation, ``shall be determined to the extent
practicable in accordance with the same reimbursement rules as apply to
payments to providers of services of the same type under Medicare.''
Under 32 CFR 199.14(a)(1)(ii)(D)(1) through (9) it specifically lists
those hospitals that are exempt from the DRG-based payment system.
Critical access hospitals are not listed as excluded, thereby making
them subject to the DRG-based payment system. Critical access hospitals
are not listed as exempt, because at the time this regulatory provision
was written, CAHs were not a recognized entity.
Legislation enacted as part of the Balanced Budget Act (BBA) of
1997 authorized states to establish State Medicare Rural Hospital
Flexibility Programs, under which certain facilities participating in
Medicare could become Critical Access Hospitals (CAHs). CAHs represent
a separate provider type with their own Medicare conditions of
participation as well as a separate payment method. Since that time, a
number of hospitals have taken the necessary steps to be designated as
CAHs. Since the statutory authority requires TRICARE to apply the same
reimbursement rules as apply to payments to providers of services of
the same type under Medicare to the extent practicable, TRICARE has the
authority through the publication of a proposed and final rule to
exempt critical access hospitals from the DRG-based payment system and
adopt a method similar to Medicare principles for these hospitals. The
purpose of the demonstration is to provide this exemption immediately
to CAHs in the State of Alaska.
Currently under TRICARE, CAHs are subject to the TRICARE DRG-based
payment system. Under the demonstration project, CAHs will be
reimbursed under a manner similar to the Centers for Medicare and
Medicaid Services (CMS) payment methodology of 101 percent of
reasonable costs for inpatient care and outpatient care. CAHs in the
State of Alaska are currently receiving reimbursement for billed
charges for facility charges for outpatient care. Under the
demonstration, the 101% of reasonable
[[Page 41502]]
costs will be calculated by multiplying the billed charge of each claim
by the hospital's cost-to-charge ratio, and then adding 1% to that
amount.
B. Current Status of Access
CAH providers in Alaska have notified the Department that they are
considering no longer treating military beneficiaries due to low
payment rates. The alternatives to local purchase of services for
military officials are to transport patients to Seattle or another
location for treatment, or to relocate scarce military medical assets
to Alaska to provide services. The first is an expensive proposition
that brings with it considerable lost duty time and other
complications; the second approach is untenable in wartime, and as a
practical matter medical practice in Alaska would not provide
sufficient opportunity for military medical specialists to maintain
their skills.
C. Description of Expansion of Demonstration Project
Under this demonstration, DoD will also waive, for services
provided in the State of Alaska, the provisions of 10 U.S.C.
1079(j)(2), as implemented by 32 CFR 199.14(a) that do not exempt CAH
providers from the Medicare Diagnostic Related Group payment
methodology for inpatient services. Instead, CAHs will be reimbursed
under the Centers for Medicare and Medicaid Services (CMS) payment
methodology of 101 percent of reasonable costs for inpatient care and
outpatient care.
This action will directly increase overall reimbursement levels for
CAH providers, and is expected to result in increased access to care
for military beneficiaries; reduced travel to Seattle, accompanied by a
reduction in lost duty days; and improved morale for military members
and families as a result of increased access and reduced separation.
D. Implementation
The expansion of the demonstration will be effective for inpatient
admissions on and after July 1, 2007 and for outpatient services
provided on and after July 1, 2007.
E. Evaluation
An independent evaluation of the demonstration will be conducted.
The evaluation will be designed to use a combination of administrative
and survey measures of health care access to provide analyses and
comment on the effectiveness of the demonstration in meeting its goal
of improving beneficiary access to healthcare by maximizing the
potential pool of healthcare providers in Alaska.
Dated: July 24, 2007.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, DoD.
[FR Doc. E7-14681 Filed 7-27-07; 8:45 am]
BILLING CODE 5001-06-P