TRICARE; Reimbursement of Sole Community Hospitals and Adjustment to Reimbursement of Critical Access Hospitals, 48303-48311 [2013-19154]
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Federal Register / Vol. 78, No. 153 / Thursday, August 8, 2013 / Rules and Regulations
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Parts 71
Issued in Seattle, Washington, on July 29,
2013.
Christopher Ramirez,
Manager, Operations Support Group, Western
Service Center.
[FR Doc. 2013–18869 Filed 8–7–13; 8:45 am]
[Docket FAA No. FAA–2013–0147; Airspace
Docket No. 13–AWP–1]
BILLING CODE 4910–13–P
Establishment of Class E Airspace;
Tuba City, AZ
DEPARTMENT OF DEFENSE
Office of the Secretary
Federal Aviation
Administration (FAA), DOT.
AGENCY:
ACTION:
32 CFR Part 199
Final rule; correction.
[DOD–2010–HA–0072]
This action corrects a final
rule published in the Federal Register
May 29, 2013 that establishes Class E en
route airspace at the Tuba City VHF
Omni-Directional Radio Range Tactical
Air Navigational Aid (VORTAC), Tuba
City, AZ. In that rule, an error was made
in the legal description for Tuba City,
identifying the region as ANM instead
of AWP.
SUMMARY:
Effective Date: 0901 UTC, August
22, 2013. The Director of the Federal
Register approves this incorporation by
reference action under 1 CFR Part 51,
subject to the annual revision of FAA
Order 7400.9 and publication of
conforming amendments.
DATES:
FOR FURTHER INFORMATION CONTACT:
Eldon Taylor, Federal Aviation
Administration, Operations Support
Group, Western Service Center, 1601
Lind Avenue SW., Renton, WA 98057;
telephone (425) 203–4537.
SUPPLEMENTARY INFORMATION:
History
The FAA published a final rule in the
Federal Register establishing Class E en
route airspace at the Tuba City
VORTAC, Tuba City, AZ (78 FR 32086,
May 29, 2013). In the regulatory text, the
region identifier ANM was incorrect,
and is now corrected to AWP.
mstockstill on DSK4VPTVN1PROD with RULES
Correction to Final Rule
Accordingly, pursuant to the
authority delegated to me, the legal
description as published in the Federal
Register on May 29, 2013 (78 FR 32086),
Airspace Docket No. 13–AWP–1, FR
Doc. 2013–12623, is corrected as
follows:
§ 71.1
[Amended]
On page 32087, column 1, line 4,
remove ANM AZ E6 Tuba City, AZ
[NEW], and insert AWP AZ E6 Tuba
City, AZ [Corrected].
■
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TRICARE; Reimbursement of Sole
Community Hospitals and Adjustment
to Reimbursement of Critical Access
Hospitals
Office of the Secretary,
Department of Defense (DoD).
ACTION: Final rule.
AGENCY:
This Final Rule implements
for Sole Community Hospitals (SCHs)
the statutory provision at title 10,
United States Code (U.S.C.), section
1079(j)(2) that TRICARE payment
methods for institutional care be
determined, to the extent practicable, in
accordance with the same
reimbursement rules as those that apply
to payments to providers of services of
the same type under Medicare. This
Final Rule implements a reimbursement
methodology similar to that applicable
to Medicare beneficiaries for inpatient
services provided by SCHs. It will be
phased in over a several-year period.
This Final Rule also provides for special
reimbursement for labor/delivery and
nursery services in SCHs and creates a
possible General Temporary Military
Contingency Payment Adjustment
(GTMCPA) for inpatient services in
SCHs and for Critical Access Hospitals
(CAHs).
DATES: This rule is effective October 7,
2013.
Applicability Date: The regulations
setting forth the revised reimbursement
system shall be applicable for all
admissions to Sole Community
Hospitals and Critical Access Hospitals
commencing on or after the first day of
the month which is at least 120 days
from the date of publication of this rule
in the Federal Register.
FOR FURTHER INFORMATION CONTACT: Ann
Fazzini, TRICARE Management Activity
(TMA), Medical Benefits and
Reimbursement Branch, telephone (303)
676–3803.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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48303
I. Executive Summary
A. Purpose of the Final Rule
The purpose of this Final Rule is to
implement for SCHs the statutory
requirement that TRICARE inpatient
care ‘‘payments 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.’’ Medicare pays SCHs the
greater of the amount under the general
inpatient prospective payment system
method based on diagnosis-related
groups (DRGs) or an amount based on
the hospital’s reported costs. TRICARE
pays for most hospital care under a
DRG-based prospective payment system
similar to Medicare’s, but exempted
SCHs from this system, instead paying
them billed charges. Paying billed
charges is fiscally imprudent and
inconsistent with TRICARE’s governing
statute. Paying SCHs under a method
similar to Medicare’s is prudent,
practicable, and harmonious with the
statute. The Final Rule will transition
over a several year period from the
current billed charge method to the new
method. The transition will be gradual
to reduce the impact on the SCHs.
Network SCHs will have payment
reductions limited to 10 percent per
year. Non-network SCHs will have
reductions limited to 15 percent per
year.
The legal authority for this Final Rule
is 10 U.S.C. 1079(j)(2).
B. Summary of the Major Provisions of
the Final Rule
1. Ultimate Payment Method for SCHs
Following the transition period,
TRICARE will reimburse SCHs for
inpatient care the higher of the DRGbased amount applicable to most
hospitals or an amount approximating
the SCH’s costs. The cost-based amount
will be determined by applying the
SCH’s most recent Medicare cost-tocharge ratio (CCR) to the SCH’s charges.
Individual claims will be paid under
this cost-based method, followed by a
year-end review to determine whether
in the aggregate the DRG-based method
would have paid more. If so, TRICARE
will pay the SCH the aggregate
difference.
2. Transition Period
To protect SCHs from sudden
significant reductions, the Final Rule
will gradually transition from the base
year of paying 100 percent of allowable
charges (which is either the billed
charge or, in the case of network
hospitals, a voluntary discounted
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charge) to paying the percentage equal
to the Medicare CCR (generally in the
range of 30 to 50 percent). The
transition rules prevent a reduction of
more than 10 percentage points per year
for network hospitals or 15 percentage
points per year for non-network
hospitals. So, for example, in the case of
a non-network hospital with a CCR of 40
percent, payment in the first year would
be 85 percent of the base year amount;
70 percent in the second year, 55
percent in the third year, and 40 percent
in the fourth and subsequent years. In
the case of a network hospital with a
CCR of 40 percent that had agreed to a
5 percent discount (i.e., the allowable
amount was 95 percent of billed
charges) in the base year, payment in
the first year would be 85 percent of the
base year amount, 75 percent in the
second year, 65 percent in the third
year, 55 percent in the fourth year, 45
percent in the fifth year, and 40 percent
in the sixth and subsequent years.
During each year, the resulting aggregate
payment amount would be compared to
the aggregate amount that would have
been provided under the DRG-based
system, and if that would have been
more, the difference will be paid.
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3. Special Payment Rule for Labor/
Delivery and Nursery Care
In response to public comments, the
Final Rule includes a special payment
rule for labor/delivery and nursery care
in SCHs. Based on an assessment that
the Medicare CCR does not accurately
reflect the cost to charge ratio for these
services, following the transition period,
rather than applying the Medicare CCR
to charges to labor/delivery and nursery
DRGs, TRICARE will apply 130 percent
of the Medicare CCR.
4. GTMCPA for SCHs and CAHs
One of the purposes of the TRICARE
program is to support military members
and their families during periods of war
or contingency operations, when
military facility capability may be
diverted or insufficient to meet military
readiness priorities. To preserve the
availability of SCHs during such
periods, the Final Rule includes
authority for a year-end discretionary,
temporary adjustment that the TMA
Director may approve in extraordinary
economic circumstances for a network
hospital that serves a disproportionate
share of Active Duty Service members
(ADSMs) and Active Duty dependents
(ADDs). This same adjustment
possibility is also made available to
Critical Access Hospitals since they
share some attributes of SCHs.
TRICARE is in the process of
developing policy and procedural
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instructions for exercising the
discretionary authority under the
qualifying criteria for the GTMCPAs for
inpatient services provided in SCHs and
CAHs. The policy and procedural
instructions will be available within 3 to
6 months following the applicability
date of the new inpatient
reimbursement methodology for SCHs.
Hospitals will be able to request a
GTMCPA approximately 14 months
from the applicability date of the new
reimbursement method as any GTMCPA
will be based on twelve months of
claims payment data under the new
method. Once finalized, the policy and
procedural instructions will be available
in the TRICARE Reimbursement Manual
at https://manuals.tricare.osd.mil. As
with any discretionary authority
exercised under the regulation, a
determination approving or denying a
GTMCPA for a hospital is not subject to
the appeal and hearing procedures set
forth in 32 CFR 199.10. Section
199.14(a)(8) of this final rule has been
revised to clarify this point.
C. Costs and Benefits
The economic impact of the Final
Rule is to reduce DoD payments to
SCHs, producing estimated DoD
budgetary savings (cost avoidance) as
follows:
FY 2013: $36.5 million
FY 2014: $80.2 million
FY 2015: $130.3 million
FY 2016: $186.1 million
FY 2017: $243.1 million
Total FY 2013–2017: $676.1 million
II. Discussion of Final Rule
A. Introduction and Background
In the Federal Register of July 5, 2011
(76 FR 39043), DoD published for public
comment a Proposed Rule regarding an
inpatient payment system for SCHs.
Under 10 U.S.C. 1079(j)(2), the amount
to be paid to hospitals, skilled nursing
facilities, and other institutional
providers under TRICARE, ‘‘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.’’ Medicare
reimburses SCHs for inpatient care the
greatest of these aggregate amounts:
(1) What the SCH would have been
paid under the Medicare DRG method
for all of that hospital’s Medicare
discharges; or
(2) The amount that would have been
paid if the SCH were paid the average
‘‘cost’’ per discharge at that hospital in
Fiscal Year (FY) 1982, 1987, 1996, or
2006 updated to the current year for all
its Medicare discharges.
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TRICARE currently pays SCHs for
inpatient care in one of two ways:
(1) Network hospitals: Payment is an
amount equal to billed charges less a
negotiated discount. The discounted
reimbursement is usually substantially
greater than what would be paid using
the DRG method, which TRICARE
generally uses to reimburse hospitals for
inpatient care; or
(2) Non-network hospitals: Payment is
equal to billed charges.
TRICARE’s current method results in
reimbursing SCHs substantially more
than Medicare does for equivalent
inpatient care. A change is needed to
conform to the statute.
Under 32 Code of Federal Regulations
(CFR) 199.14(a)(1)(ii)(D)(6), SCHs are
currently exempt from the TRICARE
DRG-based payment system. Based on
the above statutory mandate, TRICARE
is adopting in this Final Rule an
approach that approximates the Centers
for Medicare and Medicaid Services’
(CMS) method for SCHs.
B. SCH Reimbursement Methodology
Establishing a TRICARE SCH
inpatient reimbursement method
exactly matching that of Medicare is not
practicable. While TRICARE can
calculate the aggregate DRG
reimbursement for all TRICARE
discharges by an SCH during a year,
using the Medicare cost per discharge is
not appropriate for TRICARE.
Differences in the TRICARE and
Medicare beneficiary case mix render
the Medicare average cost per discharge
not directly applicable for TRICARE
purposes.
In addition, basing SCH
reimbursement on annual updates to a
TRICARE base-year average cost per
discharge could result in inappropriate
payments to some SCHs. At many SCHs,
the number of TRICARE discharges per
year is very low. Approximately half of
the SCHs had fewer than 20 TRICARE
discharges annually. The TRICARE
average cost per discharge in one year
may not be a good predictor of the
average cost per discharge in a future
year due to significant change in the
case mix that can occur between two
small sets of patients.
Alternatively, TRICARE could make
payments equal to the SCH’s Medicare
CCR multiplied by the hospital’s billed
charges for inpatient services. For
purposes of this rule, the Medicare CCR
is the sum of Medicare’s operating and
capital CCRs. This would avoid making
payments unrelated to case mix and
would be consistent with the Medicare
principle of relating payments for SCHs
to cost of services. This is the approach
adopted in the Final Rule.
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C. TRICARE’s SCH Phase-In Period
In introducing its current SCH
reimbursement method, Medicare used
a 3-year phase-in period to provide the
hospitals time for making business and
clinical process adjustments. TRICARE
will have a phase-in period with a
maximum 15 percent per-year reduction
from the starting point for non-network
hospitals and a 10 percent-per-year
reduction for network hospitals. This
involves calculating a hospital’s ratio of
allowed charges to billed charges for
TRICARE discharges and reducing that
by 15 percentage points each year for
non-network hospitals and 10
percentage points each year for network
hospitals until it reaches the hospital’s
Medicare CCR. For example, if a nonnetwork hospital has a TRICAREallowed to billed ratio of 100 percent, it
would be paid 85 percent of billed
charges in year 1, 70 percent in year 2,
55 percent in year 3, and 40 percent in
year 4. For a network hospital that had
a TRICARE-allowed to billed ratio of 98
percent, it would be paid 88 percent in
year 1, 78 percent in year 2, 68 percent
in year 3, and 58 percent in year 4. It
should be noted that in no year could
the TRICARE payment fall below costs,
as measured by the Medicare CCR (most
hospitals have costs equal to 30 to 50
percent of billed charges). This
transition method would approximately
follow the CHAMPUS Maximum
Allowable Charge physician payment
system reform precedent and limit
reductions to no more than 15 percent
per year during the phase-in period. It
also provides an incentive for hospitals
to remain in the network by allowing a
5 percentage point difference in
payment reductions per year. Finally, it
will buffer the revenue reductions
experienced upon initial
implementation of TRICARE’s SCH
payment reform while allowing
hospitals sufficient time to adjust and
budget for these reductions.
TRICARE will pay an SCH for
inpatient services it provides during a
year the greater of two aggregate
amounts: (1) What the SCH would have
been paid under the DRG method for all
of that hospital’s TRICARE discharges;
or (2) an amount equal to the SCH’s
specific CCR multiplied by the
hospital’s billed charges for inpatient
TRICARE services. This will be
accomplished through a year-end
adjustment to the reimbursements
provided during the year.
D. New SCHs and SCHs Without
Inpatient Claims
TRICARE will pay a new SCH using
the average Medicare CCR for all SCHs
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calculated in the most recent year until
its Medicare CCR is available in the
CMS Inpatient Provider Specific File
(PSF). For SCHs that had no inpatient
claims from TRICARE prior to
implementation of the SCH payment
reform but do have a claim, TRICARE
will pay them based directly on their
Medicare CCR.
E. SCH GTMCPA
In addition to the SCH phase-in
period outlined above, a GTMCPA for
inpatient services will be available for
TRICARE network hospitals deemed
essential for military readiness and
support during contingency operations.
The TMA Director, or designee, may
approve an SCH GTMCPA for hospitals
that serve a disproportionate share of
ADSMs and ADDs. Specific procedures
for requesting an SCH GTMCPA will be
outlined in the TRICARE
Reimbursement Manual.
F. Essential Access Community
Hospitals (EACH)
The SCH reform encompasses all
SCHs as defined by Medicare that have
inpatient stays for TRICARE patients. It
also include hospitals classified by CMS
as EACHs because for payment
purposes, CMS treats as an SCH any
hospital that CMS designates as an
EACH. In other words, EACHs are
subject to the SCH reform in this final
rule. There are two EACHs in existence:
Via Christi Hospital in Pittsburg,
Kansas; and Avera Queen of Peace
Hospital in Mitchell SD. Both have
submitted claims to TRICARE.
G. CAH GTMCPA
On August 31, 2009, we published in
the Federal Register a Final Rule (74 FR
44752), which implemented a
reimbursement methodology similar to
that furnished to Medicare beneficiaries
for services provided by CAHs (i.e.,
reimbursing them 101 percent of
reasonable costs). It was brought to our
attention that there may be some CAHs
that are deemed essential for military
readiness and support during
contingency operations. Consequently,
the Proposed Rule published in the
Federal Register of July 5, 2011 (76 FR
39043), also proposed a CAH GTMCPA
for TRICARE network hospitals deemed
essential for military readiness and
contingency operations. The TMA
Director, or designee, may approve a
CAH GTMCPA for hospitals that serve
a disproportionate share of ADSMs and
ADDs. Specific procedures for
requesting a CAH GTMCPA will be
outlined in the TRICARE
Reimbursement Manual.
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III. Public Comments
The TRICARE SCH Proposed Rule (76
FR 39043) published on July 5, 2011,
provided a 60-day public comment
period. Following is a summary of the
public comments and our responses.
Comment: Several commenters stated
that using the Medicare CCR is not
appropriate because of differences in the
type of services utilized by the
TRICARE beneficiary population, as
compared to the Medicare population,
especially services related to labor/
delivery and newborn care. These
commenters stated that use of the
Medicare CCR is not directly applicable
for TRICARE purposes and they
recommended DoD use an adjusted
Medicare CCR equal to the Medicare
CCR multiplied by a factor of 1.464 to
more accurately account for TRICARE
costs.
Response: Under the proposed
transition period outlined in the
Proposed Rule and adopted in this Final
Rule, it will take an average of 4 to 6
years for most network SCHs to reach
their Medicare CCR reimbursement
level. In response to these comments,
we have considered whether we should
modify our proposed approach of using
the Medicare CCR for all services. We
analyzed data from SCH cost centers
utilized by TRICARE beneficiaries,
including labor/delivery and nursery to
calculate a CCR for TRICARE patients,
referred to as the TRICARE-specific
CCR. We found that the TRICAREspecific CCR was similar to the
Medicare CCR at most SCHs. However,
we also found that, in addition to
TRICARE patients obviously using more
maternity services than Medicare
beneficiaries, the labor/delivery and
nursery cost centers have higher CCRs
than other cost centers. We found, on
average, that the TRICARE-specific CCR
for nursery and labor/delivery services
was 30 percent higher than the
Medicare CCR. As a result, this Final
Rule includes an adjustment for
inpatient nursery and labor/delivery
services. This adjustment will start at
the end of the transition period when
each SCH reaches its Medicare CCR
(approximately 4 to 6 years from
implementation of this Final Rule). The
adjustment will be 130 percent of the
Medicare CCR, rather than the Medicare
CCR, for care that groups to labor/
delivery and nursery DRGs.
Comment: These same commenters
recommended DoD modify its approach
so that TRICARE payments will be equal
to the highest of the SCH’s CCRs from
four base years (1982, 1987, 1996, and
2006) multiplied by the hospital’s billed
charge for services. They further state
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the CCR should be adjusted to reflect
TRICARE costs, as described in the
above comment.
Response: Medicare does not use
CCRs from these earlier years to pay
SCHs. Instead, Medicare uses the cost
per discharge from those years. Thus,
using the highest CCR from these earlier
years is not consistent with Medicare’s
approach. The approach proposed in
this rule uses the most recent CCR data
for a specific hospital which is the best
reflection of a hospital’s current costs
relative to its billed charges, not the
costs from 10–30 years ago.
Comment: One commenter requested
that TRICARE clarify that SCHs will
need to file requests for capital cost
reimbursement.
Response: TRICARE’s payment for
SCHs will be based on a CCR which is
equal to the sum of the Medicare
operating CCR and the Medicare capital
CCR. Thus, TRICARE SCH
reimbursement will include capital
costs and SCHs will not need to request
additional reimbursement for capital.
Comment: One commenter proposed
that TRICARE pay SCHs using the
average Medicare cost per discharge (the
highest cost per discharge from several
specified base year cost reports) inflated
forward using the same factor used to
update TRICARE DRG payments. Due to
differences between the TRICARE and
Medicare case mixes, the commenter
suggested that the Medicare cost per
discharge value be adjusted by the ratio
of the TRICARE standardized payment
amount (the Adjusted Standardized
Amount in the TRICARE Inpatient
Prospective Payment System) to the
Medicare standardized payment
amount.
Response: The TRICARE and
Medicare Inpatient Prospective Payment
Systems use different weights and the
allowed amounts per discharge are quite
different due to differences in the
weights and case mix. Thus, this
proposed method would not be
appropriate.
Comment: Two commenters
recommended DoD limit its per-year
reductions in payments to 5 percent for
all SCHs rather than the 10 and 15
percent proposed. Another commenter
requested the per-year reductions in
payments be limited to 5 percent for
network and 10 percent for non-network
SCHs.
Response: Currently, SCHs receive
TRICARE reimbursement for the most
common services at more than twice the
level of other acute hospitals. Under the
transition period outlined in the
Proposed Rule and adopted in the Final
Rule, it will take an average of 4 to 6
years for most network SCHs to reach
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their Medicare CCR reimbursement
levels. A reduction in payment of 10
percent for network SCHs and 15
percent for non-network SCHs buffers
the decrease in revenues that hospitals
will be experiencing during
implementation of the TRICARE SCH
reimbursement methodology. The
transition period will allow SCHs
sufficient time to adjust and budget for
these reductions. The proposed
payment reductions provide an
incentive for hospitals to remain in the
network by allowing a 5 percent
difference in payment reductions per
year. Additionally, reducing the
payment by 5 percent per year during
the transition would increase the time it
will take to comply with the statute that
governs TRICARE. A 10 to 15 percent
reduction in payment during the
transition is reasonable.
Comment: Several commenters
recommended DoD incorporate into
TRICARE reimbursement methodology
the additional payment protections that
Medicare affords SCHs, and asked that
other general Medicare payment
adjustments be incorporated, including
the low-volume adjustment, geographic
wage index reclassification, and
disproportionate share hospital (DSH)
payments.
Response: When TRICARE calculates
DRG payments, Medicare’s geographic
wage index classification will be used.
With respect to DSH payments, when
DoD implemented the TRICARE DRG
system in 1987, the supplementary
information in the Final Rule stated that
we would not implement the DSH
adjustment. DoD decided not to
implement the DSH adjustment because
the TRICARE DRG system would pay
hospitals adequately for TRICARE
patients. This is also true for the SCH
payment methodology adopted in this
Final Rule. By creating an adjustment
for labor/delivery and nursery services
as well as a possible GTMCPA for
hospitals that serve a disproportionate
share of ADSMs and ADDs, hospitals
are adequately compensated for care
received by TRICARE beneficiaries. We
believe that these specific adjustments
designed to address the needs of the
TRICARE beneficiaries negates the need
for any additional adjustments.
Comment: Several commenters
recommended TRICARE develop an
Medicare Dependent Hospital (MDH)
payment methodology comparable to
the SCH methodology because Medicare
payments to MDHs track the
methodology used to reimburse SCHs.
Two of these commenters also
recommended TRICARE recognize the
MDH classification and adopt special
payment provisions for MDHs.
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Response: Medicare identifies rural
hospitals with less than 100 beds which
have 60 percent or more of their
admissions or inpatient days
reimbursed by Medicare as MDHs.
Under Medicare rules, a hospital cannot
be both an SCH and an MDH. Under
current TRICARE rules, MDHs are paid
under the normal DRG payment
method. The Proposed Rule for
TRICARE reimbursement of SCHs did
not propose a special payment method
for MDHs. It is notable that having a
high percentage of Medicare admissions
or days does not mean the hospital has
a high percentage of TRICARE
admissions or days. Further, this SCH
rule does not change the status-quo for
TRICARE payments to MDH hospitals.
Outside the scope of this rule making,
TRICARE will analyze whether it is
practicable and appropriate to make any
changes in reimbursements to hospitals
classified by Medicare as MDHs based
on Medicare’s payment methodology for
MDHs.
Comment: One commenter requested
that the rules for reimbursement remain
unchanged.
Response: The statutory provision at
10 U.S.C. 1079(j)(2) mandates that
TRICARE payment methods for
institutional care be determined, to the
extent practicable, in accordance with
the same reimbursement rules as those
that apply to payments to providers of
services of the same type under
Medicare. Based on this statutory
requirement, TRICARE is adopting a
method similar to Medicare’s payment
system for reimbursement of SCH
inpatient services.
Comment: Several commenters are
concerned the proposed payment
methodology will result in significant
cuts and compromise access to care.
Response: TRICARE will make
payments equal to the SCH’s specific
Medicare CCR multiplied by the
hospital’s billed charges for inpatient
services. This is consistent with the
Medicare principle of relating payments
for SCHs to cost of services. Following
the transition, SCHs with patients in
delivery and newborn DRGs will receive
payments for these patients based on the
level of billed charges multiplied by a
factor equal to 130 percent of the
Medicare CCR. Those SCHs with a high
proportion of ADSMs/ADDs admissions
may be eligible to receive a GTMCPA.
Additionally, the phase-in period will
buffer the revenue reductions and will
allow hospitals sufficient time to adjust
and budget for this revised
reimbursement methodology. Hospitals
can also become network providers, for
which the percentage per-year reduction
of 10 percent is a more gradual step-
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down than the percentage per-year
reduction of 15 percent for non-network
hospitals. We believe these feature are
quite adequate to assure reasonable
reimbursement and protect access to
care.
Comment: One commenter states that
TRICARE’s higher inpatient payments
off-set losses on outpatient services
provided to TRICARE.
Response: The statutory provision at
10 U.S.C. 1079(j)(2) mandates that
TRICARE payment methods for
institutional care be determined, to the
extent practicable, in accordance with
the same reimbursement rules as those
that apply to payments to providers of
services of the same type under
Medicare. Based on this statutory
requirement, TRICARE is adopting
Medicare’s payment system for
reimbursement of SCH inpatient
services. In addition, TRICARE
payments for hospital outpatient
services are fully adequate.
Comment: The above commenter
further states the proposed cuts will
likely result in a reduction in service
line offerings.
Response: We value the services
offered by all hospitals and providers
who treat TRICARE beneficiaries,
including ADSMs, ADDs, Retirees, and
our Wounded Warriors. The transition
schedule in this Final Rule will reduce
the effects of the transition going from
a billed-charge reimbursement system to
payments aligned with Medicare
reimbursement levels. These provisions
include a multi-year transition period
and the possibility of a GTMCPA. Thus,
we believe the final rule not only
complies with our statutory mandate,
but does so in a fair and reasonable
manner to SCHs.
IV. Regulatory Impact Analysis
A. Overall Impact
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DoD has examined the impacts of this
Final Rule as required by Executive
Orders (E.O.s) 12866 (September 1993,
Regulatory Planning and Review) and
13563 (January 18, 2011, Improving
Regulation and Regulatory Review), the
Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96–354),
the Unfunded Mandates Reform Act of
1995 (Pub. L. 104–4), and the
Congressional Review Act (5 U.S.C.
804(2)).
1. Executive Order 12866 and Executive
Order 13563
E.O.s 12866 and 13563 direct agencies
to assess all costs and benefits of
available regulatory alternatives and, if
regulation is necessary, to select
regulatory approaches that maximize
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net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, reducing costs,
harmonizing rules, and promoting
flexibility. A regulatory impact analysis
(RIA) must be prepared for major rules
with economically significant effects
($100 million or more in any one year).
We estimate that the effects of the
SCH provisions that would be
implemented by this rule would result
in SCH revenue reductions exceeding
$100 million in at least one year. We
estimate the reduction in hospital
revenues under the SCH reform for its
first full year of implementation
compared to expenditures in that same
period without the proposed SCH
changes, to be well below the $100
million level because of the transition
features of the Final Rule. However,
after several years in the transition
period, the amount of revenue
reductions will reach the $100 million
per year threshold.
We estimate that this rulemaking is
‘‘economically significant’’ as measured
by the $100 million threshold and,
hence, also a major rule under the
Congressional Review Act. Accordingly,
we have prepared a regulatory impact
analysis that, to the best of our ability,
presents the costs and benefits of the
rulemaking.
2. Congressional Review Act. 5 U.S.C.
801
Under the Congressional Review Act,
a major rule may not take effect until at
least 60 days after submission to
Congress of a report regarding the rule.
A major rule is one that would have an
annual effect on the economy of $100
million or more or have certain other
impacts. This Final Rule is a major rule
under the Congressional Review Act.
3. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze
options for regulatory relief of small
businesses if a rule has a significant
impact on a substantial number of small
entities. For purposes of the RFA, small
entities include small businesses,
nonprofit organizations, and small
governmental jurisdictions. Most
hospitals are considered to be small
entities, either by being nonprofit
organizations or by meeting the Small
Business Administration (SBA)
definition of a small business (having
revenues of $34.5 million or less in any
one year). For purposes of the RFA, we
have determined that all SCHs would be
considered small entities according to
the SBA size standards. Individuals and
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48307
States are not included in the definition
of a small entity. Therefore, this Final
Rule would have a significant impact on
a substantial number of small entities.
The Regulatory Impact Analysis, as well
as the contents contained in the
preamble, also serves as the Final
Regulatory Flexibility Analysis.
4. Unfunded Mandates
Section 202 of the Unfunded
Mandates Reform Act of 1995 also
requires that agencies assess anticipated
costs and benefits before issuing any
rule whose mandates require spending
in any one year of $100 million in 1995
dollars, updated annually for inflation.
That threshold level is currently
approximately $140 million. This Final
Rule will not mandate any requirements
for State, local, or tribal governments or
the private sector.
5. Paperwork Reduction Act
This rule will not impose significant
additional information collection
requirements on the public under the
Paperwork Reduction Act of 1995 (44
U.S.C. 3502–3511). Existing information
collection requirements of the TRICARE
and Medicare programs will be utilized.
We do not anticipate any increased
costs to hospitals because of paperwork,
billing, or software requirements since
we are keeping TRICARE’s billing/
coding requirements (i.e., hospitals will
be coding and filing claims in the same
manner as they currently are with
TRICARE).
6. Executive Order 13132, ‘‘Federalism’’
This rule has been examined for its
impact under E.O. 13132, and it does
not contain policies that have
federalism implications that would have
substantial direct effects on the States,
on the relationship between the national
Government and the States, or on the
distribution of power and
responsibilities among the various
levels of Government. Therefore,
consultation with State and local
officials is not required.
B. Hospitals Included In and Excluded
From the SCH Reforms
1. The SCH reform encompasses all
SCHs as defined by Medicare that have
inpatient stays for TRICARE patients. It
also includes hospitals classified by
CMS as Essential Access Community
Hospitals (EACH) because for payment
purposes, CMS treats as an SCH any
hospital that CMS designates as an
EACH. In other words, EACHs are
subject to the SCH reform in this final
rule. There are two EACHs in existence:
Via Christi Hospital in Pittsburg,
Kansas; and Avera Queen of Peace
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Hospital in Mitchell SD. Both have
submitted claims to TRICARE. Over a
six month period, Via Christi hospital
submitted about $309,000 in TRICARE
inpatient claims and Avera Queen of
Peach submitted about $270,000 in
TRICARE inpatient claims.
2. Hospitals that are paid by Medicare
and TRICARE under a cost containment
waiver are not included in the SCH
Reform.
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C. Analysis of the Impact of Policy
Changes on Payment Under SCH
Reform Alternatives Considered
Alternatives that we considered, the
proposed changes that we will make,
and the reasons that we have chosen
each option are discussed below.
1. Alternatives Considered for
Addressing Reduction in SCH Payments
Analysis of the effects of paying SCHs
using the computation of either the
greater of what the SCH would have
been paid under the DRG method for all
of that hospital’s TRICARE discharges or
an amount equal to the SCH’s specific
CCR multiplied by the hospital’s billed
charges for the TRICARE services
approach would reduce the TRICARE
payments to these SCHs by an average
of over 50 percent. This approach would
pay each SCH the greater of two
aggregate amounts: (1) The sum of the
TRICARE-allowed amounts if all the
TRICARE inpatient admissions over a
12-month period were paid using the
TRICARE DRG method; or (2) the
TRICARE-allowed amounts if all the
TRICARE inpatient admissions over a
12-month period were paid using the
CCR approach (in which the TRICAREallowed amount for each admission is
equal to the billed charge for that
admission multiplied by the hospital’s
historical CCR). Table 3 provides our
estimate of the impact of this approach
without any transitions.
Because the impact of moving from a
charge-based reimbursement to a costbased reimbursement similar to
Medicare’s would produce large
reductions in the TRICARE-allowed
amounts for all types of SCHs, we
considered a phase-in of this approach
over a 4-year period. Under this option,
the CCR portion of the approach would
be modified so that the hospital’s billed
charge on each claim would not be
multiplied by the hospital’s CCR until
the fourth year (when the transition was
complete). In the first 3 years, the billed
charges for each claim would be
multiplied by a ratio so that there was
an equal reduction in the ratio used
each year over the 4-year transition. For
example, if the hospital were receiving
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100 percent of its billed charges prior to
implementation of the SCH reform and
it had a CCR of 0.32, then its billed
charges would be multiplied by factors
of 0.83, 0.66, and 0.49 in the first 3 years
respectively so that each year the
payment ratio declined by an equal
amount (in this case by a factor of 0.17).
In each year, the aggregate level of
allowed amounts produced using the
CCR approach at each SCH would be
compared with the aggregate level of
DRG-allowed amounts at the SCH, and
the SCH would be paid the greater of the
two aggregate amounts. This 4-year
transition would allow hospitals to have
a phased transition to the cost-based
rates. Although this option would
provide a multi-year period for SCHs to
transition to the cost-based rates, we did
not choose this option because it would
still result in large reductions for some
SCHs over a relatively short period.
A second option we considered was
to have a transition based on a reduction
of 15 percentage points per year in the
allowed amounts for each SCH. Under
this option, the CCR portion in this
approach would be modified. During
the transition period, the billed charges
on each claim at an SCH would be
multiplied by a factor so that the ratio
decreased by 15 percentage points each
year from the level in the previous year.
For example, if the SCH were receiving
100 percent of its billed charges prior to
SCH reform and it had a CCR of 0.32,
then its billed charges would be
multiplied by factors of 0.85, 0.70, 0.55,
and 0.40 in the first 4 years respectively,
so that each year the ratio declined by
15 percentage points. In the fifth year,
the ratio would be set at 0.32, the
hospital’s CCR. (The actual number of
years of transition will depend on the
hospital’s CCR and could be more or
less than the 4 years in this example as
the ratio will never be less than the
CCR.) In each year, the aggregate level
of allowed amounts produced using the
CCR approach at each SCH would be
compared with the aggregate level of
DRG-allowed amounts at the SCH and
the SCH would be paid the greater of the
two aggregate amounts. This type of
transition ensures that there is a
manageable reduction in the level of
payments each year for each hospital.
We selected this option for SCHs not in
the TRICARE network.
we were concerned that some hospitals
might leave the TRICARE network if
payments were reduced too quickly.
This was a particular concern because
24 of the 25 SCHs with the highest
levels of TRICARE-allowed amounts in
the first 6 months of Calendar Year 2010
were in the TRICARE network. Thus,
the SCHs that would face the largest
reductions in the level of TRICAREallowed amounts from TRICARE’s SCH
reform would be network hospitals.
An option we considered, and the one
we adopt in this rule, is to provide a 10
percent-per-year reduction in the
allowed amounts for SCHs in the
TRICARE network. This option would
modify the CCR portion of the approach
using the most recent adjudicated
Medicare cost report. During the
transition period, the billed charges on
each claim at an SCH in the TRICARE
network would be multiplied by a factor
so that the ratio decreased by 10
percentage points each year from a FY
2012 base year (in contrast to 15
percentage points for non-network
hospitals). For example, if a TRICARE
network SCH had allowed amounts
equal to 92 percent of its billed charges
prior to SCH reform, and it had a CCR
of 0.35, then its billed charges would be
multiplied by factors of 0.82, 0.72, 0.62,
0.52, and 0.42 in the first 5 years,
respectively, to calculate the allowed
amounts. Under this approach, each
year the ratio for network SCHs would
decline by ten percentage points. In the
sixth year, the ratio would be set at 0.35,
the hospital’s CCR (assuming that the
hospital’s CCR had remained at 0.35). In
each year, the aggregate level of allowed
amounts produced using the CCR
approach at each SCH would be
compared with the aggregate level of
DRG-allowed amounts at the SCH, and
the SCH would be paid the greater of the
two aggregate amounts. This type of
transition ensures that there is a
manageable reduction in the level of
payments each year for each hospital.
We selected this option for SCHs in the
TRICARE network. The impact
assessment of implementation of SCH
during the first year appears in Table 1.
The estimates of reduction are based on
TRICARE claims data.
2. Alternatives Considered for SCHs in
the TRICARE Network
We were concerned there might be
access problems at some hospitals with
a high concentration of TRICARE
patients if their payments were
decreased significantly. In particular,
Table 1 shows the impact of revised
SCH inpatient reimbursement during FY
2013. Table 2 shows projected TRICARE
reduction in reimbursement for the top
20 SCHs. Table 3 shows the full amount
of the reduction without phase-in and
transitional payments.
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D. Effects on SCHs
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48309
TABLE 1—ESTIMATED IMPACT OF SCH REFORMS ON TRICARE-ALLOWED AMOUNTS AT SOLE COMMUNITY HOSPITALS
DURING THE FY 2013 FIRST YEAR OF PHASE-IN (WITH TRANSITION PAYMENTS)
[Excludes any General Temporary Military Contingency Payment Adjustments]
Estimated allowed under current
policy
($M)
Allowed amounts under
SCH reform
($M)
Reduction in allowed amounts
($M)
SCH reform allowed as percent of
current policy allowed
$365
$328
$37
90
TABLE 2—IMPACT OF FIRST YEAR FOR TOP 20 SOLE COMMUNITY HOSPITALS
[Excludes any General Temporary Military Contingency Payment Adjustments]
Hospital
City
Onslow Memorial Hospital ................................................................................
Rapid City Regional Hospital ............................................................................
Cheyenne Regional Medical Center .................................................................
Sierra Vista Regional Health Center .................................................................
Beaufort County Memorial Hospital ..................................................................
Carolina East Health System ............................................................................
Benefis Health System ......................................................................................
Yuma Regional Medical Center ........................................................................
Trinity Medical Center .......................................................................................
Gerald Champion Hospital ................................................................................
Phelps County Regional Medical Center ..........................................................
Altru Hospital .....................................................................................................
Wayne Memorial Hospital .................................................................................
Samaritan Medical Center ................................................................................
Western Missouri Medical Center .....................................................................
Fairbanks Memorial Hospital ............................................................................
Lower Keys Medical Center ..............................................................................
Matsu Regional Hospital ...................................................................................
Camden Medical Center ...................................................................................
Flagstaff Medical Center ...................................................................................
Jacksonville .........................................
Rapid City ...........................................
Cheyenne ............................................
Sierra Vista .........................................
Beaufort ...............................................
New Bern ............................................
Great Falls ..........................................
Yuma ...................................................
Minot ...................................................
Alamogordo .........................................
Rolla ....................................................
Grand Forks ........................................
Goldsboro ............................................
Watertown ...........................................
Warrensburg .......................................
Fairbanks ............................................
Key West .............................................
Palmer .................................................
St. Marys .............................................
Flagstaff ..............................................
Reduction in
FY 2013
($M)
State
FL
SD
WY
AZ
SC
NC
MT
AZ
ND
NM
MO
ND
NC
NY
MO
AK
FL
AK
GA
AZ
2.0
1.6
1.6
1.5
1.8
1.6
1.4
1.6
1.1
0.7
0.7
0.7
0.7
1.5
0.6
0.6
0.6
0.5
0.5
0.7
TABLE 3—ESTIMATED HYPOTHETICAL FY 2013 IMPACT OF COST-BASED REIMBURSEMENT ON TRICARE-ALLOWED
AMOUNTS AT SOLE COMMUNITY HOSPITALS WITHOUT TRANSITION PAYMENTS
[Excludes any General Temporary Military Contingency Payment Adjustments]
Current policy
($M)
Cost-based reimbursement
($M)
Reduction in TRICARE-allowed
amounts
($M)
Allowed amount under cost-based
reimbursement as percent of
current policy allowed
$365
$157
$208
43
§ 199.2
List of Subjects in 32 CFR Part 199
Claims, Dental health, Health care,
Health insurance, Individuals with
disabilities, Military personnel.
Accordingly, 32 CFR Part 199 is
amended as follows:
PART 199—[AMENDED]
1. The authority citation for part 199
continues to read as follows:
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■
Authority: 5 U.S.C. 301; 10 U.S.C. Chapter
55.
2. Paragraph 199.2(b) is amended by
adding definitions for ‘‘Essential Access
Community Hospital (EACH)’’ and
‘‘Sole community hospital (SCH)’’ in
alphabetical order to read as follows:
■
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Definitions.
§ 199.6
*
*
*
*
*
(b) * * *
Essential Access Community Hospital
(EACH). A hospital that is designated by
the Centers for Medicare and Medicaid
Services (CMS) as an EACH and meets
the applicable requirements established
by § 199.14(a)(7)(vi).
*
*
*
*
*
Sole community hospital (SCH). A
hospital that is designated by CMS as an
SCH and meets the applicable
requirements established by
§ 199.6(b)(4)(xvii).
*
*
*
*
*
3. Section 199.6 is amended by adding
new paragraph (b)(4)(xvii) to read as
follows:
■
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TRICARE—authorized providers.
*
*
*
*
*
(b) * * *
(4) * * *
(xvii) Sole community hospitals
(SCHs). SCHs must meet all the criteria
for classification as an SCH under 42
CFR 412.92, in order to be considered
an SCH under the TRICARE program.
*
*
*
*
*
■ 4. Section 199.14 is amended by:
a. Revising paragraph (a)(1)(ii)(D)(6),
paragraph (a)(2)(viii)(D), paragraph
(a)(3), the first sentence of paragraph
(a)(4), and the introductory text of
paragraph (a)(6); and
b. Adding new paragraphs (a)(7) and
(8).
The revisions and additions read as
follows:
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mstockstill on DSK4VPTVN1PROD with RULES
§ 199.14 Provider reimbursement
methods.
(a) * * *
(1) * * *
(ii) * * *
(D) * * *
(6) Sole community hospitals (SCHs).
Prior to implementation of the SCH
reimbursement method described in
paragraph (a)(7) of this section, any
hospital that has qualified for special
treatment under the Medicare
prospective payment system as an SCH
(see subpart G of 42 CFR part 412) and
has not given up that classification is
exempt from the CHAMPUS DRG-based
payment system.
*
*
*
*
*
(2) * * *
(viii) * * *
(D) Sole community hospitals (SCHs).
Prior to implementation of the SCH
reimbursement method described in
paragraph (a)(7) of this section, any
hospital that has qualified for special
treatment under the Medicare
prospective payment system as an SCH
and has not given up that classification
is exempt.
*
*
*
*
*
(3) Reimbursement for inpatient
services provided by a CAH. (i) For
admissions on or after December 1,
2009, inpatient services provided by a
CAH, other than services provided in
psychiatric and rehabilitation distinct
part units, shall be reimbursed at
allowable cost (i.e., 101 percent of
reasonable cost) under procedures,
guidelines and instructions issued by
the TMA Director, or designee. This
does not include any costs of physician
services or other professional services
provided to CAH inpatients. Inpatient
services provided in psychiatric distinct
part units would be subject to the
CHAMPUS mental health payment
system. Inpatient services provided in
rehabilitation distinct part units would
be subject to billed charges.
(ii) The percentage amount stated in
paragraph (a)(3)(i) of this section is
subject to possible upward adjustment
based on a inpatient GTMCPA for
TRICARE network hospitals deemed
essential for military readiness and
support during contingency operations
under paragraph (a)(8) of this section.
(4) Billed charges and set rates. The
allowable costs for authorized care in all
hospitals not subject to the CHAMPUS
DRG-based payment system, the
CHAMPUS mental health per-diem
system, the reasonable cost method for
CAHs, or the reimbursement rules for
SCHs shall be determined on the basis
of billed charges or set rates. * * *
*
*
*
*
*
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(6) Hospital outpatient services. This
paragraph (a)(6) identifies and clarifies
payment methods for certain outpatient
services, including emergency services,
provided by hospitals.
*
*
*
*
*
(7) Reimbursement for inpatient
services provided by an SCH. (i) In
accordance with 10 U.S.C. 1079(j)(2),
TRICARE payment methods for
institutional care shall be determined, to
the extent practicable, in accordance
with the same reimbursement rules as
those that apply to payments to
providers of services of the same type
under Medicare. TRICARE’s SCH
reimbursements approximate
Medicare’s for SCHs. Inpatient services
provided by an SCH, other than services
provided in psychiatric and
rehabilitation distinct part units, shall
be reimbursed through a two-step
process.
(ii) The first step referred to in
paragraph (a)(7)(i) of this section will be
to calculate the TRICARE allowable cost
by multiplying the applicable TRICARE
percentage by the billed charge amount
on each institutional inpatient claim.
The applicable TRICARE percentage is
the greater of: the SCH’s most recently
available cost-to-charge ratio (CCR) from
the Centers for Medicare and Medicaid
Services’ (CMS’) inpatient Provider
Specific File (after the ratio has been
converted to a percentage), or the
TRICARE allowed-to-billed ratio,
defined as the ratio of the TRICARE
allowed amounts (including discounts)
to the amount of billed charges for
TRICARE inpatient admissions at the
SCH in FY 2012 (after it has been
converted to a percentage). The
TRICARE allowed-to-billed ratio in FY
2012 shall be reduced as follows (after
the ratio has been converted to a
percentage):
(A) In the first year of
implementation, 10 percentage points
for network SCHs and 15 percentage
points for non-network SCHs.
(B) In the second year of
implementation, 20 percentage points
for network SCHs and 30 percentage
points for non-network SCHs.
(C) In the third year of
implementation, 30 percentage points
for network SCHs and 45 percentage
points for non-network SCHs.
(D) In the fourth year of
implementation, 40 percentage points
for network SCHs and 60 percentage
points for non-network SCHs.
(E) In the fifth year of
implementation, 50 percentage points
for network SCHs and 75 percentage
points for non-network SCHs.
(F) In the sixth year of
implementation, 60 percentage points
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for network SCHs and 90 percentage
points for non-network SCHs.
(G) In the seventh year of
implementation, 70 percentage points
for network SCHs and 100 percentage
points for non-network SCHs.
(H) In the eighth year of
implementation, 80 percentage points
for network SCHs and 100 percentage
points for non-network SCHs.
(I) In the ninth year of
implementation, 90 percentage points
for network SCHs and 100 percentage
points for non-network SCHs.
(J) In the tenth year of
implementation, 100 percentage points
for network SCHs and 100 percentage
points for non-network SCHs.
(iii) The second step referred to in
paragraph (a)(7)(i) of this section is a
year-end adjustment. The year-end
adjustment will compare the aggregate
allowable costs over a 12-month period
under paragraph (a)(7)(ii) of this section
to the aggregate amount that would have
been allowed for the same care using the
TRICARE DRG-method (under
paragraph (a)(1) of this section). In the
event that the DRG method amount is
the greater, the year-end adjustment will
be the amount by which it exceeds the
aggregate allowable costs. In addition,
the year-end adjustment also may
incorporate a possible upward
adjustment for inpatient services based
on a GTMCPA for TRICARE network
hospitals under paragraph (a)(8) of this
section.
(iv) At the end of an SCH’s transition
period, when the SCH reaches its
Medicare CCR, a special allowable cost
shall be applicable for discharges that
group to inpatient nursery and labor/
delivery DRGs. For these discharges,
instead of using the percentage of the
SCH’s Medicare cost-to-charge ratio (as
described in paragraph (a)(7)(ii) of this
section), the percentage will be 130
percent of the Medicare CCR.
(v) The SCH reimbursement
provisions of paragraphs (a)(7)(i)
through (iv) of this section do not apply
to any costs of physician services or
other professional services provided to
SCH inpatients (which are subject to
individual provider payment provisions
of this section), inpatient services
provided in psychiatric distinct part
units (which are subject to the
CHAMPUS mental health per-diem
payment system), or inpatient services
provided in rehabilitation distinct part
units (which are reimbursed on the
basis of billed charges or set rates).
(vi) The SCH payment system under
this paragraph (a)(7) applies to hospitals
classified by CMS as Essential Access
Community Hospitals (EACHs).
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(vii) The SCH payment system under
this paragraph (a)(7) does not apply to
hospitals in States that are paid by
Medicare and TRICARE under a cost
containment waiver.
(8) General temporary military
contingency payment adjustment for
SCHs and CAHs. (i) Payments under
paragraph (a) of this section for
inpatient services provided by SCHs
and CAHs may be supplemented by a
GTMCPA. This is a year-end
discretionary, temporary adjustment
that the TMA Director may approve
based on all the following criteria:
(A) The hospital serves a
disproportionate share of ADSMs and
ADDs;
(B) The hospital is a TRICARE
network hospital;
(C) The hospital’s actual costs for
inpatient services exceed TRICARE
payments or other extraordinary
economic circumstance exists; and,
(D) Without the GTMCPA, DoD’s
ability to meet military contingency
mission requirements will be
significantly compromised.
(ii) Policy and procedural instructions
implementing the GTMCPA will be
issued as deemed appropriate by the
Director, TMA, or a designee. As with
other discretionary authority under this
Part, a decision to allow or deny a
GTMCPA to a hospital is not subject to
the appeal and hearing procedures of
§ 199.10.
*
*
*
*
*
safety of life and property on navigable
waters immediately prior to, during, and
immediately after regattas or marine
parades. This rule will establish
restrictions upon, and control the
movement of, vessels in a portion of the
Captain of the Port Lake Michigan Zone.
DATES: This final rule is effective
September 9, 2013.
ADDRESSES: Documents mentioned in
this preamble are part of docket USCG–
2013–0327. To view documents
mentioned in this preamble as being
available in the docket, go to https://
www.regulations.gov, type the docket
number in the ‘‘SEARCH’’ box and click
‘‘SEARCH.’’ Click on Open Docket
Folder on the line associated with this
rulemaking. You may also visit the
Docket Management Facility in Room
W12–140 on the ground floor of the
Department of Transportation West
Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays.
FOR FURTHER INFORMATION CONTACT: If
you have questions on this rule, contact
MST1 Joseph McCollum, Prevention
Department, Coast Guard Sector Lake
Michigan, Milwaukee, WI at (414) 747–
7148 or by email at
Joseph.P.McCollum@USCG.mil. If you
have questions on viewing or submitting
material to the docket, call Barbara
Hairston, Program Manager, Docket
Operations, telephone 202–366–9826.
SUPPLEMENTARY INFORMATION:
Dated: July 29, 2013.
Patricia L. Toppings,
OSD Federal Register Liaison Officer,
Department of Defense.
Table of Acronyms
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of Proposed Rulemaking
TFR Temporary Final Rule
[FR Doc. 2013–19154 Filed 8–7–13; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 100
[Docket No. USCG–2013–0327]
RIN 1625–AA08
mstockstill on DSK4VPTVN1PROD with RULES
Special Local Regulations; Regattas
and Marine Parades in the Captain of
the Port Lake Michigan Zone
Coast Guard, DHS.
Final rule.
AGENCY:
ACTION:
The Coast Guard is amending
special local regulations for annual
regattas and marine parades in the
Captain of the Port Lake Michigan Zone.
This rule is intended to provide for the
SUMMARY:
VerDate Mar<15>2010
16:04 Aug 07, 2013
Jkt 229001
A. Regulatory History and Information
On April 6, 2007, the Coast Guard
published an NPRM for the events that
are listed within this regulation and
made them available for public
comment (72 FR 17062). No comments
were received. The Coast Guard
followed this NPRM with an Final Rule
on September 27, 2007 (72 FR 54832).
On June 14, 2013, in an effort to
provide the public with the most
accurate and up-to-date information
regarding these same events, the Coast
Guard published an NPRM entitled
Regattas and Marine Parades in the
COTP Lake Michigan Zone in the
Federal Register (78 FR 35783). We did
not receive any comments in response
to the proposed rule. No public meeting
was requested and none was held.
B. Basis and Purpose
This rule is intended to ensure safety
of life and property on the navigable
PO 00000
Frm 00029
Fmt 4700
Sfmt 4700
48311
waters immediately prior to, during, and
immediately after regattas or marine
parades. This rule will establish
restrictions upon, and control the
movement of, vessels in a specified area
of the Captain of the Port Lake Michigan
zone.
For each of these events, the Captain
of the Port, Lake Michigan, has
determined that the likely combination
of a race involving a large number of
competitors, spectators, and transiting
water craft in a congested area of water
presents significant safety risks. These
risks include collisions among
competitor and spectator vessels, injury
to swimmers from transiting water craft,
capsizing, and drowning.
The authority for this regulation is 33
U.S.C. 1233.
C. Discussion of Comments, Changes,
and the Final Rule
The Coast Guard received no
comments on this rule. No changes have
been made.
This rule will remove 1 event and
amend 5 annual marine events listed in
33 CFR Part 100. This rule will amend
33 CFR Part 100 by making updates
within the following sections:
33 CFR 100.903, Harborfest Dragon
Boat Race; South Haven, MI. The
Harborfest Dragon Boat Race is an
annual event involving an estimated 250
participants maneuvering self-propelled
vessels within a portion of the Black
River in South Haven, MI. The organizer
for this event submitted a 2013
application showing a date that is
different from what is currently codified
within the CFR. For that reason the
Coast Guard will amend 33 CFR 100.903
to reflect an updated effective date for
this event of Saturday and Sunday of
the 4th weekend of June, from 6 a.m.
until 7 p.m.
33 CFR 100.904; Celebrate
Americafest; Green Bay, WI. This event
will be removed by this rule because it
has been codified within 33 CFR
165.929 Safety Zones; Annual events
requiring safety zones in the Captain of
the Port Lake Michigan zone. The Coast
Guard determined from past experience
that a safety zone best addresses the
safety hazards associated with this
event.
33 CFR 100.905; Door County
Triathlon; Door County, WI. The swim
portion of the Door County Triathlon is
expected to involve thousands of
participants in the waters of Horseshoe
Bay—a portion of Green Bay. As this
event is currently listed, the effective
date expired on July 23 and 24, 2011.
The Coast Guard has spoken with the
event organizer and confirmed that this
Triathlon is expected to reoccur
E:\FR\FM\08AUR1.SGM
08AUR1
Agencies
[Federal Register Volume 78, Number 153 (Thursday, August 8, 2013)]
[Rules and Regulations]
[Pages 48303-48311]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-19154]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 199
[DOD-2010-HA-0072]
RIN 0720-AB41
TRICARE; Reimbursement of Sole Community Hospitals and Adjustment
to Reimbursement of Critical Access Hospitals
AGENCY: Office of the Secretary, Department of Defense (DoD).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This Final Rule implements for Sole Community Hospitals (SCHs)
the statutory provision at title 10, United States Code (U.S.C.),
section 1079(j)(2) that TRICARE payment methods for institutional care
be determined, to the extent practicable, in accordance with the same
reimbursement rules as those that apply to payments to providers of
services of the same type under Medicare. This Final Rule implements a
reimbursement methodology similar to that applicable to Medicare
beneficiaries for inpatient services provided by SCHs. It will be
phased in over a several-year period. This Final Rule also provides for
special reimbursement for labor/delivery and nursery services in SCHs
and creates a possible General Temporary Military Contingency Payment
Adjustment (GTMCPA) for inpatient services in SCHs and for Critical
Access Hospitals (CAHs).
DATES: This rule is effective October 7, 2013.
Applicability Date: The regulations setting forth the revised
reimbursement system shall be applicable for all admissions to Sole
Community Hospitals and Critical Access Hospitals commencing on or
after the first day of the month which is at least 120 days from the
date of publication of this rule in the Federal Register.
FOR FURTHER INFORMATION CONTACT: Ann Fazzini, TRICARE Management
Activity (TMA), Medical Benefits and Reimbursement Branch, telephone
(303) 676-3803.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Purpose of the Final Rule
The purpose of this Final Rule is to implement for SCHs the
statutory requirement that TRICARE inpatient care ``payments 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.'' Medicare pays SCHs the greater of the
amount under the general inpatient prospective payment system method
based on diagnosis-related groups (DRGs) or an amount based on the
hospital's reported costs. TRICARE pays for most hospital care under a
DRG-based prospective payment system similar to Medicare's, but
exempted SCHs from this system, instead paying them billed charges.
Paying billed charges is fiscally imprudent and inconsistent with
TRICARE's governing statute. Paying SCHs under a method similar to
Medicare's is prudent, practicable, and harmonious with the statute.
The Final Rule will transition over a several year period from the
current billed charge method to the new method. The transition will be
gradual to reduce the impact on the SCHs. Network SCHs will have
payment reductions limited to 10 percent per year. Non-network SCHs
will have reductions limited to 15 percent per year.
The legal authority for this Final Rule is 10 U.S.C. 1079(j)(2).
B. Summary of the Major Provisions of the Final Rule
1. Ultimate Payment Method for SCHs
Following the transition period, TRICARE will reimburse SCHs for
inpatient care the higher of the DRG-based amount applicable to most
hospitals or an amount approximating the SCH's costs. The cost-based
amount will be determined by applying the SCH's most recent Medicare
cost-to-charge ratio (CCR) to the SCH's charges. Individual claims will
be paid under this cost-based method, followed by a year-end review to
determine whether in the aggregate the DRG-based method would have paid
more. If so, TRICARE will pay the SCH the aggregate difference.
2. Transition Period
To protect SCHs from sudden significant reductions, the Final Rule
will gradually transition from the base year of paying 100 percent of
allowable charges (which is either the billed charge or, in the case of
network hospitals, a voluntary discounted
[[Page 48304]]
charge) to paying the percentage equal to the Medicare CCR (generally
in the range of 30 to 50 percent). The transition rules prevent a
reduction of more than 10 percentage points per year for network
hospitals or 15 percentage points per year for non-network hospitals.
So, for example, in the case of a non-network hospital with a CCR of 40
percent, payment in the first year would be 85 percent of the base year
amount; 70 percent in the second year, 55 percent in the third year,
and 40 percent in the fourth and subsequent years. In the case of a
network hospital with a CCR of 40 percent that had agreed to a 5
percent discount (i.e., the allowable amount was 95 percent of billed
charges) in the base year, payment in the first year would be 85
percent of the base year amount, 75 percent in the second year, 65
percent in the third year, 55 percent in the fourth year, 45 percent in
the fifth year, and 40 percent in the sixth and subsequent years.
During each year, the resulting aggregate payment amount would be
compared to the aggregate amount that would have been provided under
the DRG-based system, and if that would have been more, the difference
will be paid.
3. Special Payment Rule for Labor/Delivery and Nursery Care
In response to public comments, the Final Rule includes a special
payment rule for labor/delivery and nursery care in SCHs. Based on an
assessment that the Medicare CCR does not accurately reflect the cost
to charge ratio for these services, following the transition period,
rather than applying the Medicare CCR to charges to labor/delivery and
nursery DRGs, TRICARE will apply 130 percent of the Medicare CCR.
4. GTMCPA for SCHs and CAHs
One of the purposes of the TRICARE program is to support military
members and their families during periods of war or contingency
operations, when military facility capability may be diverted or
insufficient to meet military readiness priorities. To preserve the
availability of SCHs during such periods, the Final Rule includes
authority for a year-end discretionary, temporary adjustment that the
TMA Director may approve in extraordinary economic circumstances for a
network hospital that serves a disproportionate share of Active Duty
Service members (ADSMs) and Active Duty dependents (ADDs). This same
adjustment possibility is also made available to Critical Access
Hospitals since they share some attributes of SCHs.
TRICARE is in the process of developing policy and procedural
instructions for exercising the discretionary authority under the
qualifying criteria for the GTMCPAs for inpatient services provided in
SCHs and CAHs. The policy and procedural instructions will be available
within 3 to 6 months following the applicability date of the new
inpatient reimbursement methodology for SCHs. Hospitals will be able to
request a GTMCPA approximately 14 months from the applicability date of
the new reimbursement method as any GTMCPA will be based on twelve
months of claims payment data under the new method. Once finalized, the
policy and procedural instructions will be available in the TRICARE
Reimbursement Manual at https://manuals.tricare.osd.mil. As with any
discretionary authority exercised under the regulation, a determination
approving or denying a GTMCPA for a hospital is not subject to the
appeal and hearing procedures set forth in 32 CFR 199.10. Section
199.14(a)(8) of this final rule has been revised to clarify this point.
C. Costs and Benefits
The economic impact of the Final Rule is to reduce DoD payments to
SCHs, producing estimated DoD budgetary savings (cost avoidance) as
follows:
FY 2013: $36.5 million
FY 2014: $80.2 million
FY 2015: $130.3 million
FY 2016: $186.1 million
FY 2017: $243.1 million
Total FY 2013-2017: $676.1 million
II. Discussion of Final Rule
A. Introduction and Background
In the Federal Register of July 5, 2011 (76 FR 39043), DoD
published for public comment a Proposed Rule regarding an inpatient
payment system for SCHs. Under 10 U.S.C. 1079(j)(2), the amount to be
paid to hospitals, skilled nursing facilities, and other institutional
providers under TRICARE, ``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.''
Medicare reimburses SCHs for inpatient care the greatest of these
aggregate amounts:
(1) What the SCH would have been paid under the Medicare DRG method
for all of that hospital's Medicare discharges; or
(2) The amount that would have been paid if the SCH were paid the
average ``cost'' per discharge at that hospital in Fiscal Year (FY)
1982, 1987, 1996, or 2006 updated to the current year for all its
Medicare discharges.
TRICARE currently pays SCHs for inpatient care in one of two ways:
(1) Network hospitals: Payment is an amount equal to billed charges
less a negotiated discount. The discounted reimbursement is usually
substantially greater than what would be paid using the DRG method,
which TRICARE generally uses to reimburse hospitals for inpatient care;
or
(2) Non-network hospitals: Payment is equal to billed charges.
TRICARE's current method results in reimbursing SCHs substantially
more than Medicare does for equivalent inpatient care. A change is
needed to conform to the statute.
Under 32 Code of Federal Regulations (CFR) 199.14(a)(1)(ii)(D)(6),
SCHs are currently exempt from the TRICARE DRG-based payment system.
Based on the above statutory mandate, TRICARE is adopting in this Final
Rule an approach that approximates the Centers for Medicare and
Medicaid Services' (CMS) method for SCHs.
B. SCH Reimbursement Methodology
Establishing a TRICARE SCH inpatient reimbursement method exactly
matching that of Medicare is not practicable. While TRICARE can
calculate the aggregate DRG reimbursement for all TRICARE discharges by
an SCH during a year, using the Medicare cost per discharge is not
appropriate for TRICARE. Differences in the TRICARE and Medicare
beneficiary case mix render the Medicare average cost per discharge not
directly applicable for TRICARE purposes.
In addition, basing SCH reimbursement on annual updates to a
TRICARE base-year average cost per discharge could result in
inappropriate payments to some SCHs. At many SCHs, the number of
TRICARE discharges per year is very low. Approximately half of the SCHs
had fewer than 20 TRICARE discharges annually. The TRICARE average cost
per discharge in one year may not be a good predictor of the average
cost per discharge in a future year due to significant change in the
case mix that can occur between two small sets of patients.
Alternatively, TRICARE could make payments equal to the SCH's
Medicare CCR multiplied by the hospital's billed charges for inpatient
services. For purposes of this rule, the Medicare CCR is the sum of
Medicare's operating and capital CCRs. This would avoid making payments
unrelated to case mix and would be consistent with the Medicare
principle of relating payments for SCHs to cost of services. This is
the approach adopted in the Final Rule.
[[Page 48305]]
C. TRICARE's SCH Phase-In Period
In introducing its current SCH reimbursement method, Medicare used
a 3-year phase-in period to provide the hospitals time for making
business and clinical process adjustments. TRICARE will have a phase-in
period with a maximum 15 percent per-year reduction from the starting
point for non-network hospitals and a 10 percent-per-year reduction for
network hospitals. This involves calculating a hospital's ratio of
allowed charges to billed charges for TRICARE discharges and reducing
that by 15 percentage points each year for non-network hospitals and 10
percentage points each year for network hospitals until it reaches the
hospital's Medicare CCR. For example, if a non-network hospital has a
TRICARE-allowed to billed ratio of 100 percent, it would be paid 85
percent of billed charges in year 1, 70 percent in year 2, 55 percent
in year 3, and 40 percent in year 4. For a network hospital that had a
TRICARE-allowed to billed ratio of 98 percent, it would be paid 88
percent in year 1, 78 percent in year 2, 68 percent in year 3, and 58
percent in year 4. It should be noted that in no year could the TRICARE
payment fall below costs, as measured by the Medicare CCR (most
hospitals have costs equal to 30 to 50 percent of billed charges). This
transition method would approximately follow the CHAMPUS Maximum
Allowable Charge physician payment system reform precedent and limit
reductions to no more than 15 percent per year during the phase-in
period. It also provides an incentive for hospitals to remain in the
network by allowing a 5 percentage point difference in payment
reductions per year. Finally, it will buffer the revenue reductions
experienced upon initial implementation of TRICARE's SCH payment reform
while allowing hospitals sufficient time to adjust and budget for these
reductions.
TRICARE will pay an SCH for inpatient services it provides during a
year the greater of two aggregate amounts: (1) What the SCH would have
been paid under the DRG method for all of that hospital's TRICARE
discharges; or (2) an amount equal to the SCH's specific CCR multiplied
by the hospital's billed charges for inpatient TRICARE services. This
will be accomplished through a year-end adjustment to the
reimbursements provided during the year.
D. New SCHs and SCHs Without Inpatient Claims
TRICARE will pay a new SCH using the average Medicare CCR for all
SCHs calculated in the most recent year until its Medicare CCR is
available in the CMS Inpatient Provider Specific File (PSF). For SCHs
that had no inpatient claims from TRICARE prior to implementation of
the SCH payment reform but do have a claim, TRICARE will pay them based
directly on their Medicare CCR.
E. SCH GTMCPA
In addition to the SCH phase-in period outlined above, a GTMCPA for
inpatient services will be available for TRICARE network hospitals
deemed essential for military readiness and support during contingency
operations. The TMA Director, or designee, may approve an SCH GTMCPA
for hospitals that serve a disproportionate share of ADSMs and ADDs.
Specific procedures for requesting an SCH GTMCPA will be outlined in
the TRICARE Reimbursement Manual.
F. Essential Access Community Hospitals (EACH)
The SCH reform encompasses all SCHs as defined by Medicare that
have inpatient stays for TRICARE patients. It also include hospitals
classified by CMS as EACHs because for payment purposes, CMS treats as
an SCH any hospital that CMS designates as an EACH. In other words,
EACHs are subject to the SCH reform in this final rule. There are two
EACHs in existence: Via Christi Hospital in Pittsburg, Kansas; and
Avera Queen of Peace Hospital in Mitchell SD. Both have submitted
claims to TRICARE.
G. CAH GTMCPA
On August 31, 2009, we published in the Federal Register a Final
Rule (74 FR 44752), which implemented a reimbursement methodology
similar to that furnished to Medicare beneficiaries for services
provided by CAHs (i.e., reimbursing them 101 percent of reasonable
costs). It was brought to our attention that there may be some CAHs
that are deemed essential for military readiness and support during
contingency operations. Consequently, the Proposed Rule published in
the Federal Register of July 5, 2011 (76 FR 39043), also proposed a CAH
GTMCPA for TRICARE network hospitals deemed essential for military
readiness and contingency operations. The TMA Director, or designee,
may approve a CAH GTMCPA for hospitals that serve a disproportionate
share of ADSMs and ADDs. Specific procedures for requesting a CAH
GTMCPA will be outlined in the TRICARE Reimbursement Manual.
III. Public Comments
The TRICARE SCH Proposed Rule (76 FR 39043) published on July 5,
2011, provided a 60-day public comment period. Following is a summary
of the public comments and our responses.
Comment: Several commenters stated that using the Medicare CCR is
not appropriate because of differences in the type of services utilized
by the TRICARE beneficiary population, as compared to the Medicare
population, especially services related to labor/delivery and newborn
care. These commenters stated that use of the Medicare CCR is not
directly applicable for TRICARE purposes and they recommended DoD use
an adjusted Medicare CCR equal to the Medicare CCR multiplied by a
factor of 1.464 to more accurately account for TRICARE costs.
Response: Under the proposed transition period outlined in the
Proposed Rule and adopted in this Final Rule, it will take an average
of 4 to 6 years for most network SCHs to reach their Medicare CCR
reimbursement level. In response to these comments, we have considered
whether we should modify our proposed approach of using the Medicare
CCR for all services. We analyzed data from SCH cost centers utilized
by TRICARE beneficiaries, including labor/delivery and nursery to
calculate a CCR for TRICARE patients, referred to as the TRICARE-
specific CCR. We found that the TRICARE-specific CCR was similar to the
Medicare CCR at most SCHs. However, we also found that, in addition to
TRICARE patients obviously using more maternity services than Medicare
beneficiaries, the labor/delivery and nursery cost centers have higher
CCRs than other cost centers. We found, on average, that the TRICARE-
specific CCR for nursery and labor/delivery services was 30 percent
higher than the Medicare CCR. As a result, this Final Rule includes an
adjustment for inpatient nursery and labor/delivery services. This
adjustment will start at the end of the transition period when each SCH
reaches its Medicare CCR (approximately 4 to 6 years from
implementation of this Final Rule). The adjustment will be 130 percent
of the Medicare CCR, rather than the Medicare CCR, for care that groups
to labor/delivery and nursery DRGs.
Comment: These same commenters recommended DoD modify its approach
so that TRICARE payments will be equal to the highest of the SCH's CCRs
from four base years (1982, 1987, 1996, and 2006) multiplied by the
hospital's billed charge for services. They further state
[[Page 48306]]
the CCR should be adjusted to reflect TRICARE costs, as described in
the above comment.
Response: Medicare does not use CCRs from these earlier years to
pay SCHs. Instead, Medicare uses the cost per discharge from those
years. Thus, using the highest CCR from these earlier years is not
consistent with Medicare's approach. The approach proposed in this rule
uses the most recent CCR data for a specific hospital which is the best
reflection of a hospital's current costs relative to its billed
charges, not the costs from 10-30 years ago.
Comment: One commenter requested that TRICARE clarify that SCHs
will need to file requests for capital cost reimbursement.
Response: TRICARE's payment for SCHs will be based on a CCR which
is equal to the sum of the Medicare operating CCR and the Medicare
capital CCR. Thus, TRICARE SCH reimbursement will include capital costs
and SCHs will not need to request additional reimbursement for capital.
Comment: One commenter proposed that TRICARE pay SCHs using the
average Medicare cost per discharge (the highest cost per discharge
from several specified base year cost reports) inflated forward using
the same factor used to update TRICARE DRG payments. Due to differences
between the TRICARE and Medicare case mixes, the commenter suggested
that the Medicare cost per discharge value be adjusted by the ratio of
the TRICARE standardized payment amount (the Adjusted Standardized
Amount in the TRICARE Inpatient Prospective Payment System) to the
Medicare standardized payment amount.
Response: The TRICARE and Medicare Inpatient Prospective Payment
Systems use different weights and the allowed amounts per discharge are
quite different due to differences in the weights and case mix. Thus,
this proposed method would not be appropriate.
Comment: Two commenters recommended DoD limit its per-year
reductions in payments to 5 percent for all SCHs rather than the 10 and
15 percent proposed. Another commenter requested the per-year
reductions in payments be limited to 5 percent for network and 10
percent for non-network SCHs.
Response: Currently, SCHs receive TRICARE reimbursement for the
most common services at more than twice the level of other acute
hospitals. Under the transition period outlined in the Proposed Rule
and adopted in the Final Rule, it will take an average of 4 to 6 years
for most network SCHs to reach their Medicare CCR reimbursement levels.
A reduction in payment of 10 percent for network SCHs and 15 percent
for non-network SCHs buffers the decrease in revenues that hospitals
will be experiencing during implementation of the TRICARE SCH
reimbursement methodology. The transition period will allow SCHs
sufficient time to adjust and budget for these reductions. The proposed
payment reductions provide an incentive for hospitals to remain in the
network by allowing a 5 percent difference in payment reductions per
year. Additionally, reducing the payment by 5 percent per year during
the transition would increase the time it will take to comply with the
statute that governs TRICARE. A 10 to 15 percent reduction in payment
during the transition is reasonable.
Comment: Several commenters recommended DoD incorporate into
TRICARE reimbursement methodology the additional payment protections
that Medicare affords SCHs, and asked that other general Medicare
payment adjustments be incorporated, including the low-volume
adjustment, geographic wage index reclassification, and
disproportionate share hospital (DSH) payments.
Response: When TRICARE calculates DRG payments, Medicare's
geographic wage index classification will be used. With respect to DSH
payments, when DoD implemented the TRICARE DRG system in 1987, the
supplementary information in the Final Rule stated that we would not
implement the DSH adjustment. DoD decided not to implement the DSH
adjustment because the TRICARE DRG system would pay hospitals
adequately for TRICARE patients. This is also true for the SCH payment
methodology adopted in this Final Rule. By creating an adjustment for
labor/delivery and nursery services as well as a possible GTMCPA for
hospitals that serve a disproportionate share of ADSMs and ADDs,
hospitals are adequately compensated for care received by TRICARE
beneficiaries. We believe that these specific adjustments designed to
address the needs of the TRICARE beneficiaries negates the need for any
additional adjustments.
Comment: Several commenters recommended TRICARE develop an Medicare
Dependent Hospital (MDH) payment methodology comparable to the SCH
methodology because Medicare payments to MDHs track the methodology
used to reimburse SCHs. Two of these commenters also recommended
TRICARE recognize the MDH classification and adopt special payment
provisions for MDHs.
Response: Medicare identifies rural hospitals with less than 100
beds which have 60 percent or more of their admissions or inpatient
days reimbursed by Medicare as MDHs. Under Medicare rules, a hospital
cannot be both an SCH and an MDH. Under current TRICARE rules, MDHs are
paid under the normal DRG payment method. The Proposed Rule for TRICARE
reimbursement of SCHs did not propose a special payment method for
MDHs. It is notable that having a high percentage of Medicare
admissions or days does not mean the hospital has a high percentage of
TRICARE admissions or days. Further, this SCH rule does not change the
status-quo for TRICARE payments to MDH hospitals. Outside the scope of
this rule making, TRICARE will analyze whether it is practicable and
appropriate to make any changes in reimbursements to hospitals
classified by Medicare as MDHs based on Medicare's payment methodology
for MDHs.
Comment: One commenter requested that the rules for reimbursement
remain unchanged.
Response: The statutory provision at 10 U.S.C. 1079(j)(2) mandates
that TRICARE payment methods for institutional care be determined, to
the extent practicable, in accordance with the same reimbursement rules
as those that apply to payments to providers of services of the same
type under Medicare. Based on this statutory requirement, TRICARE is
adopting a method similar to Medicare's payment system for
reimbursement of SCH inpatient services.
Comment: Several commenters are concerned the proposed payment
methodology will result in significant cuts and compromise access to
care.
Response: TRICARE will make payments equal to the SCH's specific
Medicare CCR multiplied by the hospital's billed charges for inpatient
services. This is consistent with the Medicare principle of relating
payments for SCHs to cost of services. Following the transition, SCHs
with patients in delivery and newborn DRGs will receive payments for
these patients based on the level of billed charges multiplied by a
factor equal to 130 percent of the Medicare CCR. Those SCHs with a high
proportion of ADSMs/ADDs admissions may be eligible to receive a
GTMCPA. Additionally, the phase-in period will buffer the revenue
reductions and will allow hospitals sufficient time to adjust and
budget for this revised reimbursement methodology. Hospitals can also
become network providers, for which the percentage per-year reduction
of 10 percent is a more gradual step-
[[Page 48307]]
down than the percentage per-year reduction of 15 percent for non-
network hospitals. We believe these feature are quite adequate to
assure reasonable reimbursement and protect access to care.
Comment: One commenter states that TRICARE's higher inpatient
payments off-set losses on outpatient services provided to TRICARE.
Response: The statutory provision at 10 U.S.C. 1079(j)(2) mandates
that TRICARE payment methods for institutional care be determined, to
the extent practicable, in accordance with the same reimbursement rules
as those that apply to payments to providers of services of the same
type under Medicare. Based on this statutory requirement, TRICARE is
adopting Medicare's payment system for reimbursement of SCH inpatient
services. In addition, TRICARE payments for hospital outpatient
services are fully adequate.
Comment: The above commenter further states the proposed cuts will
likely result in a reduction in service line offerings.
Response: We value the services offered by all hospitals and
providers who treat TRICARE beneficiaries, including ADSMs, ADDs,
Retirees, and our Wounded Warriors. The transition schedule in this
Final Rule will reduce the effects of the transition going from a
billed-charge reimbursement system to payments aligned with Medicare
reimbursement levels. These provisions include a multi-year transition
period and the possibility of a GTMCPA. Thus, we believe the final rule
not only complies with our statutory mandate, but does so in a fair and
reasonable manner to SCHs.
IV. Regulatory Impact Analysis
A. Overall Impact
DoD has examined the impacts of this Final Rule as required by
Executive Orders (E.O.s) 12866 (September 1993, Regulatory Planning and
Review) and 13563 (January 18, 2011, Improving Regulation and
Regulatory Review), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), the Unfunded Mandates Reform Act of 1995 (Pub.
L. 104-4), and the Congressional Review Act (5 U.S.C. 804(2)).
1. Executive Order 12866 and Executive Order 13563
E.O.s 12866 and 13563 direct agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). E.O. 13563 emphasizes the
importance of quantifying both costs and benefits, reducing costs,
harmonizing rules, and promoting flexibility. A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects ($100 million or more in any one year).
We estimate that the effects of the SCH provisions that would be
implemented by this rule would result in SCH revenue reductions
exceeding $100 million in at least one year. We estimate the reduction
in hospital revenues under the SCH reform for its first full year of
implementation compared to expenditures in that same period without the
proposed SCH changes, to be well below the $100 million level because
of the transition features of the Final Rule. However, after several
years in the transition period, the amount of revenue reductions will
reach the $100 million per year threshold.
We estimate that this rulemaking is ``economically significant'' as
measured by the $100 million threshold and, hence, also a major rule
under the Congressional Review Act. Accordingly, we have prepared a
regulatory impact analysis that, to the best of our ability, presents
the costs and benefits of the rulemaking.
2. Congressional Review Act. 5 U.S.C. 801
Under the Congressional Review Act, a major rule may not take
effect until at least 60 days after submission to Congress of a report
regarding the rule. A major rule is one that would have an annual
effect on the economy of $100 million or more or have certain other
impacts. This Final Rule is a major rule under the Congressional Review
Act.
3. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small businesses if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most hospitals are considered to be small
entities, either by being nonprofit organizations or by meeting the
Small Business Administration (SBA) definition of a small business
(having revenues of $34.5 million or less in any one year). For
purposes of the RFA, we have determined that all SCHs would be
considered small entities according to the SBA size standards.
Individuals and States are not included in the definition of a small
entity. Therefore, this Final Rule would have a significant impact on a
substantial number of small entities. The Regulatory Impact Analysis,
as well as the contents contained in the preamble, also serves as the
Final Regulatory Flexibility Analysis.
4. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any one year of
$100 million in 1995 dollars, updated annually for inflation. That
threshold level is currently approximately $140 million. This Final
Rule will not mandate any requirements for State, local, or tribal
governments or the private sector.
5. Paperwork Reduction Act
This rule will not impose significant additional information
collection requirements on the public under the Paperwork Reduction Act
of 1995 (44 U.S.C. 3502-3511). Existing information collection
requirements of the TRICARE and Medicare programs will be utilized. We
do not anticipate any increased costs to hospitals because of
paperwork, billing, or software requirements since we are keeping
TRICARE's billing/coding requirements (i.e., hospitals will be coding
and filing claims in the same manner as they currently are with
TRICARE).
6. Executive Order 13132, ``Federalism''
This rule has been examined for its impact under E.O. 13132, and it
does not contain policies that have federalism implications that would
have substantial direct effects on the States, on the relationship
between the national Government and the States, or on the distribution
of power and responsibilities among the various levels of Government.
Therefore, consultation with State and local officials is not required.
B. Hospitals Included In and Excluded From the SCH Reforms
1. The SCH reform encompasses all SCHs as defined by Medicare that
have inpatient stays for TRICARE patients. It also includes hospitals
classified by CMS as Essential Access Community Hospitals (EACH)
because for payment purposes, CMS treats as an SCH any hospital that
CMS designates as an EACH. In other words, EACHs are subject to the SCH
reform in this final rule. There are two EACHs in existence: Via
Christi Hospital in Pittsburg, Kansas; and Avera Queen of Peace
[[Page 48308]]
Hospital in Mitchell SD. Both have submitted claims to TRICARE. Over a
six month period, Via Christi hospital submitted about $309,000 in
TRICARE inpatient claims and Avera Queen of Peach submitted about
$270,000 in TRICARE inpatient claims.
2. Hospitals that are paid by Medicare and TRICARE under a cost
containment waiver are not included in the SCH Reform.
C. Analysis of the Impact of Policy Changes on Payment Under SCH Reform
Alternatives Considered
Alternatives that we considered, the proposed changes that we will
make, and the reasons that we have chosen each option are discussed
below.
1. Alternatives Considered for Addressing Reduction in SCH Payments
Analysis of the effects of paying SCHs using the computation of
either the greater of what the SCH would have been paid under the DRG
method for all of that hospital's TRICARE discharges or an amount equal
to the SCH's specific CCR multiplied by the hospital's billed charges
for the TRICARE services approach would reduce the TRICARE payments to
these SCHs by an average of over 50 percent. This approach would pay
each SCH the greater of two aggregate amounts: (1) The sum of the
TRICARE-allowed amounts if all the TRICARE inpatient admissions over a
12-month period were paid using the TRICARE DRG method; or (2) the
TRICARE-allowed amounts if all the TRICARE inpatient admissions over a
12-month period were paid using the CCR approach (in which the TRICARE-
allowed amount for each admission is equal to the billed charge for
that admission multiplied by the hospital's historical CCR). Table 3
provides our estimate of the impact of this approach without any
transitions.
Because the impact of moving from a charge-based reimbursement to a
cost-based reimbursement similar to Medicare's would produce large
reductions in the TRICARE-allowed amounts for all types of SCHs, we
considered a phase-in of this approach over a 4-year period. Under this
option, the CCR portion of the approach would be modified so that the
hospital's billed charge on each claim would not be multiplied by the
hospital's CCR until the fourth year (when the transition was
complete). In the first 3 years, the billed charges for each claim
would be multiplied by a ratio so that there was an equal reduction in
the ratio used each year over the 4-year transition. For example, if
the hospital were receiving 100 percent of its billed charges prior to
implementation of the SCH reform and it had a CCR of 0.32, then its
billed charges would be multiplied by factors of 0.83, 0.66, and 0.49
in the first 3 years respectively so that each year the payment ratio
declined by an equal amount (in this case by a factor of 0.17). In each
year, the aggregate level of allowed amounts produced using the CCR
approach at each SCH would be compared with the aggregate level of DRG-
allowed amounts at the SCH, and the SCH would be paid the greater of
the two aggregate amounts. This 4-year transition would allow hospitals
to have a phased transition to the cost-based rates. Although this
option would provide a multi-year period for SCHs to transition to the
cost-based rates, we did not choose this option because it would still
result in large reductions for some SCHs over a relatively short
period.
A second option we considered was to have a transition based on a
reduction of 15 percentage points per year in the allowed amounts for
each SCH. Under this option, the CCR portion in this approach would be
modified. During the transition period, the billed charges on each
claim at an SCH would be multiplied by a factor so that the ratio
decreased by 15 percentage points each year from the level in the
previous year. For example, if the SCH were receiving 100 percent of
its billed charges prior to SCH reform and it had a CCR of 0.32, then
its billed charges would be multiplied by factors of 0.85, 0.70, 0.55,
and 0.40 in the first 4 years respectively, so that each year the ratio
declined by 15 percentage points. In the fifth year, the ratio would be
set at 0.32, the hospital's CCR. (The actual number of years of
transition will depend on the hospital's CCR and could be more or less
than the 4 years in this example as the ratio will never be less than
the CCR.) In each year, the aggregate level of allowed amounts produced
using the CCR approach at each SCH would be compared with the aggregate
level of DRG-allowed amounts at the SCH and the SCH would be paid the
greater of the two aggregate amounts. This type of transition ensures
that there is a manageable reduction in the level of payments each year
for each hospital. We selected this option for SCHs not in the TRICARE
network.
2. Alternatives Considered for SCHs in the TRICARE Network
We were concerned there might be access problems at some hospitals
with a high concentration of TRICARE patients if their payments were
decreased significantly. In particular, we were concerned that some
hospitals might leave the TRICARE network if payments were reduced too
quickly. This was a particular concern because 24 of the 25 SCHs with
the highest levels of TRICARE-allowed amounts in the first 6 months of
Calendar Year 2010 were in the TRICARE network. Thus, the SCHs that
would face the largest reductions in the level of TRICARE-allowed
amounts from TRICARE's SCH reform would be network hospitals.
An option we considered, and the one we adopt in this rule, is to
provide a 10 percent-per-year reduction in the allowed amounts for SCHs
in the TRICARE network. This option would modify the CCR portion of the
approach using the most recent adjudicated Medicare cost report. During
the transition period, the billed charges on each claim at an SCH in
the TRICARE network would be multiplied by a factor so that the ratio
decreased by 10 percentage points each year from a FY 2012 base year
(in contrast to 15 percentage points for non-network hospitals). For
example, if a TRICARE network SCH had allowed amounts equal to 92
percent of its billed charges prior to SCH reform, and it had a CCR of
0.35, then its billed charges would be multiplied by factors of 0.82,
0.72, 0.62, 0.52, and 0.42 in the first 5 years, respectively, to
calculate the allowed amounts. Under this approach, each year the ratio
for network SCHs would decline by ten percentage points. In the sixth
year, the ratio would be set at 0.35, the hospital's CCR (assuming that
the hospital's CCR had remained at 0.35). In each year, the aggregate
level of allowed amounts produced using the CCR approach at each SCH
would be compared with the aggregate level of DRG-allowed amounts at
the SCH, and the SCH would be paid the greater of the two aggregate
amounts. This type of transition ensures that there is a manageable
reduction in the level of payments each year for each hospital. We
selected this option for SCHs in the TRICARE network. The impact
assessment of implementation of SCH during the first year appears in
Table 1. The estimates of reduction are based on TRICARE claims data.
D. Effects on SCHs
Table 1 shows the impact of revised SCH inpatient reimbursement
during FY 2013. Table 2 shows projected TRICARE reduction in
reimbursement for the top 20 SCHs. Table 3 shows the full amount of the
reduction without phase-in and transitional payments.
[[Page 48309]]
Table 1--Estimated Impact of SCH Reforms on TRICARE-Allowed Amounts at Sole Community Hospitals During the FY
2013 First Year of Phase-In (With Transition Payments)
[Excludes any General Temporary Military Contingency Payment Adjustments]
----------------------------------------------------------------------------------------------------------------
SCH reform allowed as
Estimated allowed under Allowed amounts under SCH Reduction in allowed percent of current policy
current policy ($M) reform ($M) amounts ($M) allowed
----------------------------------------------------------------------------------------------------------------
$365 $328 $37 90
----------------------------------------------------------------------------------------------------------------
Table 2--Impact of First Year for Top 20 Sole Community Hospitals
[Excludes any General Temporary Military Contingency Payment
Adjustments]
------------------------------------------------------------------------
Reduction in FY
Hospital City State 2013 ($M)
------------------------------------------------------------------------
Onslow Memorial Hospital..... Jacksonville... FL 2.0
Rapid City Regional Hospital. Rapid City..... SD 1.6
Cheyenne Regional Medical Cheyenne....... WY 1.6
Center.
Sierra Vista Regional Health Sierra Vista... AZ 1.5
Center.
Beaufort County Memorial Beaufort....... SC 1.8
Hospital.
Carolina East Health System.. New Bern....... NC 1.6
Benefis Health System........ Great Falls.... MT 1.4
Yuma Regional Medical Center. Yuma........... AZ 1.6
Trinity Medical Center....... Minot.......... ND 1.1
Gerald Champion Hospital..... Alamogordo..... NM 0.7
Phelps County Regional Rolla.......... MO 0.7
Medical Center.
Altru Hospital............... Grand Forks.... ND 0.7
Wayne Memorial Hospital...... Goldsboro...... NC 0.7
Samaritan Medical Center..... Watertown...... NY 1.5
Western Missouri Medical Warrensburg.... MO 0.6
Center.
Fairbanks Memorial Hospital.. Fairbanks...... AK 0.6
Lower Keys Medical Center.... Key West....... FL 0.6
Matsu Regional Hospital...... Palmer......... AK 0.5
Camden Medical Center........ St. Marys...... GA 0.5
Flagstaff Medical Center..... Flagstaff...... AZ 0.7
------------------------------------------------------------------------
Table 3--Estimated Hypothetical FY 2013 Impact of Cost-Based Reimbursement on TRICARE-Allowed Amounts at Sole
Community Hospitals WITHOUT Transition Payments
[Excludes any General Temporary Military Contingency Payment Adjustments]
----------------------------------------------------------------------------------------------------------------
Allowed amount under cost-
Cost-based reimbursement Reduction in TRICARE- based reimbursement as
Current policy ($M) ($M) allowed amounts ($M) percent of current policy
allowed
----------------------------------------------------------------------------------------------------------------
$365 $157 $208 43
----------------------------------------------------------------------------------------------------------------
List of Subjects in 32 CFR Part 199
Claims, Dental health, Health care, Health insurance, Individuals
with disabilities, Military personnel.
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. Paragraph 199.2(b) is amended by adding definitions for ``Essential
Access Community Hospital (EACH)'' and ``Sole community hospital
(SCH)'' in alphabetical order to read as follows:
Sec. 199.2 Definitions.
* * * * *
(b) * * *
Essential Access Community Hospital (EACH). A hospital that is
designated by the Centers for Medicare and Medicaid Services (CMS) as
an EACH and meets the applicable requirements established by Sec.
199.14(a)(7)(vi).
* * * * *
Sole community hospital (SCH). A hospital that is designated by CMS
as an SCH and meets the applicable requirements established by Sec.
199.6(b)(4)(xvii).
* * * * *
0
3. Section 199.6 is amended by adding new paragraph (b)(4)(xvii) to
read as follows:
Sec. 199.6 TRICARE--authorized providers.
* * * * *
(b) * * *
(4) * * *
(xvii) Sole community hospitals (SCHs). SCHs must meet all the
criteria for classification as an SCH under 42 CFR 412.92, in order to
be considered an SCH under the TRICARE program.
* * * * *
0
4. Section 199.14 is amended by:
a. Revising paragraph (a)(1)(ii)(D)(6), paragraph (a)(2)(viii)(D),
paragraph (a)(3), the first sentence of paragraph (a)(4), and the
introductory text of paragraph (a)(6); and
b. Adding new paragraphs (a)(7) and (8).
The revisions and additions read as follows:
[[Page 48310]]
Sec. 199.14 Provider reimbursement methods.
(a) * * *
(1) * * *
(ii) * * *
(D) * * *
(6) Sole community hospitals (SCHs). Prior to implementation of the
SCH reimbursement method described in paragraph (a)(7) of this section,
any hospital that has qualified for special treatment under the
Medicare prospective payment system as an SCH (see subpart G of 42 CFR
part 412) and has not given up that classification is exempt from the
CHAMPUS DRG-based payment system.
* * * * *
(2) * * *
(viii) * * *
(D) Sole community hospitals (SCHs). Prior to implementation of the
SCH reimbursement method described in paragraph (a)(7) of this section,
any hospital that has qualified for special treatment under the
Medicare prospective payment system as an SCH and has not given up that
classification is exempt.
* * * * *
(3) Reimbursement for inpatient services provided by a CAH. (i) For
admissions on or after December 1, 2009, inpatient services provided by
a CAH, other than services provided in psychiatric and rehabilitation
distinct part units, shall be reimbursed at allowable cost (i.e., 101
percent of reasonable cost) under procedures, guidelines and
instructions issued by the TMA Director, or designee. This does not
include any costs of physician services or other professional services
provided to CAH inpatients. Inpatient services provided in psychiatric
distinct part units would be subject to the CHAMPUS mental health
payment system. Inpatient services provided in rehabilitation distinct
part units would be subject to billed charges.
(ii) The percentage amount stated in paragraph (a)(3)(i) of this
section is subject to possible upward adjustment based on a inpatient
GTMCPA for TRICARE network hospitals deemed essential for military
readiness and support during contingency operations under paragraph
(a)(8) of this section.
(4) Billed charges and set rates. The allowable costs for
authorized care in all hospitals not subject to the CHAMPUS DRG-based
payment system, the CHAMPUS mental health per-diem system, the
reasonable cost method for CAHs, or the reimbursement rules for SCHs
shall be determined on the basis of billed charges or set rates. * * *
* * * * *
(6) Hospital outpatient services. This paragraph (a)(6) identifies
and clarifies payment methods for certain outpatient services,
including emergency services, provided by hospitals.
* * * * *
(7) Reimbursement for inpatient services provided by an SCH. (i) In
accordance with 10 U.S.C. 1079(j)(2), TRICARE payment methods for
institutional care shall be determined, to the extent practicable, in
accordance with the same reimbursement rules as those that apply to
payments to providers of services of the same type under Medicare.
TRICARE's SCH reimbursements approximate Medicare's for SCHs. Inpatient
services provided by an SCH, other than services provided in
psychiatric and rehabilitation distinct part units, shall be reimbursed
through a two-step process.
(ii) The first step referred to in paragraph (a)(7)(i) of this
section will be to calculate the TRICARE allowable cost by multiplying
the applicable TRICARE percentage by the billed charge amount on each
institutional inpatient claim. The applicable TRICARE percentage is the
greater of: the SCH's most recently available cost-to-charge ratio
(CCR) from the Centers for Medicare and Medicaid Services' (CMS')
inpatient Provider Specific File (after the ratio has been converted to
a percentage), or the TRICARE allowed-to-billed ratio, defined as the
ratio of the TRICARE allowed amounts (including discounts) to the
amount of billed charges for TRICARE inpatient admissions at the SCH in
FY 2012 (after it has been converted to a percentage). The TRICARE
allowed-to-billed ratio in FY 2012 shall be reduced as follows (after
the ratio has been converted to a percentage):
(A) In the first year of implementation, 10 percentage points for
network SCHs and 15 percentage points for non-network SCHs.
(B) In the second year of implementation, 20 percentage points for
network SCHs and 30 percentage points for non-network SCHs.
(C) In the third year of implementation, 30 percentage points for
network SCHs and 45 percentage points for non-network SCHs.
(D) In the fourth year of implementation, 40 percentage points for
network SCHs and 60 percentage points for non-network SCHs.
(E) In the fifth year of implementation, 50 percentage points for
network SCHs and 75 percentage points for non-network SCHs.
(F) In the sixth year of implementation, 60 percentage points for
network SCHs and 90 percentage points for non-network SCHs.
(G) In the seventh year of implementation, 70 percentage points for
network SCHs and 100 percentage points for non-network SCHs.
(H) In the eighth year of implementation, 80 percentage points for
network SCHs and 100 percentage points for non-network SCHs.
(I) In the ninth year of implementation, 90 percentage points for
network SCHs and 100 percentage points for non-network SCHs.
(J) In the tenth year of implementation, 100 percentage points for
network SCHs and 100 percentage points for non-network SCHs.
(iii) The second step referred to in paragraph (a)(7)(i) of this
section is a year-end adjustment. The year-end adjustment will compare
the aggregate allowable costs over a 12-month period under paragraph
(a)(7)(ii) of this section to the aggregate amount that would have been
allowed for the same care using the TRICARE DRG-method (under paragraph
(a)(1) of this section). In the event that the DRG method amount is the
greater, the year-end adjustment will be the amount by which it exceeds
the aggregate allowable costs. In addition, the year-end adjustment
also may incorporate a possible upward adjustment for inpatient
services based on a GTMCPA for TRICARE network hospitals under
paragraph (a)(8) of this section.
(iv) At the end of an SCH's transition period, when the SCH reaches
its Medicare CCR, a special allowable cost shall be applicable for
discharges that group to inpatient nursery and labor/delivery DRGs. For
these discharges, instead of using the percentage of the SCH's Medicare
cost-to-charge ratio (as described in paragraph (a)(7)(ii) of this
section), the percentage will be 130 percent of the Medicare CCR.
(v) The SCH reimbursement provisions of paragraphs (a)(7)(i)
through (iv) of this section do not apply to any costs of physician
services or other professional services provided to SCH inpatients
(which are subject to individual provider payment provisions of this
section), inpatient services provided in psychiatric distinct part
units (which are subject to the CHAMPUS mental health per-diem payment
system), or inpatient services provided in rehabilitation distinct part
units (which are reimbursed on the basis of billed charges or set
rates).
(vi) The SCH payment system under this paragraph (a)(7) applies to
hospitals classified by CMS as Essential Access Community Hospitals
(EACHs).
[[Page 48311]]
(vii) The SCH payment system under this paragraph (a)(7) does not
apply to hospitals in States that are paid by Medicare and TRICARE
under a cost containment waiver.
(8) General temporary military contingency payment adjustment for
SCHs and CAHs. (i) Payments under paragraph (a) of this section for
inpatient services provided by SCHs and CAHs may be supplemented by a
GTMCPA. This is a year-end discretionary, temporary adjustment that the
TMA Director may approve based on all the following criteria:
(A) The hospital serves a disproportionate share of ADSMs and ADDs;
(B) The hospital is a TRICARE network hospital;
(C) The hospital's actual costs for inpatient services exceed
TRICARE payments or other extraordinary economic circumstance exists;
and,
(D) Without the GTMCPA, DoD's ability to meet military contingency
mission requirements will be significantly compromised.
(ii) Policy and procedural instructions implementing the GTMCPA
will be issued as deemed appropriate by the Director, TMA, or a
designee. As with other discretionary authority under this Part, a
decision to allow or deny a GTMCPA to a hospital is not subject to the
appeal and hearing procedures of Sec. 199.10.
* * * * *
Dated: July 29, 2013.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2013-19154 Filed 8-7-13; 8:45 am]
BILLING CODE 5001-06-P