Collection From Third Party Payers of Reasonable Charges for Healthcare Services, 64768-64771 [2018-27186]
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64768
Federal Register / Vol. 83, No. 242 / Tuesday, December 18, 2018 / Proposed Rules
amount received by a nonqualified
intermediary that is a participating FFI
or a registered deemed-compliant FFI if
the nonqualified intermediary reports
such amount as having been withheld
upon under chapter 3 to the extent
permitted under § 1.1461–1(c)(4)(iv).
* * *
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■ Par. 13. Section 1.1474–2 is amended
by revising the second sentence of
paragraph (a)(3)(i) introductory text,
paragraphs (a)(3)(i)(A) through (C), and
paragraph (a)(4) to read as follows:
amozie on DSK3GDR082PROD with PROPOSALS1
§ 1.1474–2 Adjustments for
overwithholding or underwithholding of tax.
(a) * * *
(3) * * *
(i) * * * In such a case, the
withholding agent may reimburse itself
by reducing, by the amount of tax
actually repaid to the beneficial owner
or payee, the amount of any deposit of
withholding tax otherwise required to
be made by the withholding agent under
§ 1.6302–2(a)(1)(iii) for any subsequent
payment period occurring before the
end of the calendar year following the
calendar year of overwithholding. * * *
(A) The repayment to the beneficial
owner or payee occurs before the
earliest of the due date (including
extensions) for filing the Form 1042–S
for the calendar year of
overwithholding, the date the Form
1042–S is actually filed with the IRS, or
the date the Form 1042–S is furnished
to the beneficial owner or payee;
(B) The withholding agent states on a
timely filed (including extensions) Form
1042–S for the calendar year of
overwithholding the amount of tax
withheld and the amount of any actual
repayment; and
(C) The withholding agent states on a
timely filed (including extensions) Form
1042 for the calendar year of
overwithholding the amount of
adjustments made to overwithholding
under paragraph (a)(1) of this section
and the amount of any credit claimed
under § 1.6414–1.
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(4) Set-off. Under the set-off
procedure, the withholding agent may
repay the beneficial owner or payee by
applying the amount overwithheld
against any amount of tax which
otherwise would be required under
chapter 3 or 4 of the Internal Revenue
Code or the regulations under part 1 of
this chapter to be withheld from income
paid by the withholding agent to such
person. Any such set-off that occurs for
a payment period in the calendar year
following the calendar year of
overwithholding shall be allowed only
if—
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(i) The repayment to the beneficial
owner or payee occurs before the
earliest of the due date (including
extensions) for filing the Form 1042–S
for the calendar year of
overwithholding, the date the Form
1042–S is actually filed with the IRS, or
the date the Form 1042–S is furnished
to the beneficial owner or payee;
(ii) The withholding agent states on a
timely filed (including extensions) Form
1042–S for the calendar year of
overwithholding the amount of tax
withheld and the amount of any
repayment made through set-off; and
(iii) The withholding agent states on
a timely filed (including extensions)
Form 1042 for the calendar year of
overwithholding the amount of
adjustments made to overwithholding
under paragraph (a)(1) of this section
and the amount of any credit claimed
under § 1.6414–1.
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Kirsten Wielobob,
Deputy Commissioner for Services and
Enforcement.
[FR Doc. 2018–27290 Filed 12–13–18; 4:15 pm]
BILLING CODE 4830–01–P
DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 220
[Docket ID: DOD–2016–HA–0107]
RIN 0720–AB68
Collection From Third Party Payers of
Reasonable Charges for Healthcare
Services
Office of the Assistant
Secretary of Defense (Health Affairs),
DoD.
ACTION: Proposed rule.
AGENCY:
This rule exercises the
Department of Defense’s (DoD’s)
authority to update current regulations
to compute reasonable charges for
inpatient and ambulatory (outpatient)
institutional resources and also for
pharmaceuticals, durable medical
equipment (DME), supplies,
immunizations, injections or other
medications administered or furnished
by DoD military treatment facilities
(MTFs) under their three existing
healthcare cost recovery programs—
Third Party Collections, Medical
Services Account, and Medical
Affirmative Claims. Specifically, the
rule updates the reasonable charges
methodologies for inpatient and
ambulatory institutional billing to allow
SUMMARY:
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for the use of Itemized Resource
Utilization (IRU) based rates—
developed from the cost to provide
inpatient and ambulatory institutional
healthcare resources—in addition to
current bundled prospective
reimbursement approaches of diagnostic
related group (DRG), ambulatory
payment classification (APC),
ambulatory surgery center (ASC) and
ambulatory procedure visit (APV) based
rates. It also revises the reasonable
charges methodology for
pharmaceuticals, DME, supplies,
immunizations, injections or medication
administered to allow for their
calculation using either Civilian Health
and Medical Program of the Uniformed
Services (CHAMPUS) prevailing rates or
IRU based rates—developed from the
cost to provide these healthcare items
and resources– regardless of whether
CHAMPUS prevailing rates are
available. The additional IRU
methodology implements an itemized
rate and reasonable charges structure
that improves collections and operation
of DoD’s healthcare cost recovery
programs by ensuring MTFs receive
appropriate reimbursement for
institutional healthcare resources as
well as for pharmaceuticals, DME,
supplies, immunizations, injections or
medication provided or administered
and is more consistent with civilian
health insurance industry practice. The
proposed rule also replaces ‘‘hospital’’
with ‘‘institutional’’ throughout most of
the regulation to align it with civilian
health insurance industry terminology
and better promote identification and
separate billing of institutional and
professional services.
DATES: Comments must be received by
February 19, 2019.
ADDRESSES: You may submit comments,
identified by docket number and/or
Regulatory Information Number (RIN)
and title, by any of the following
methods:
• Federal Rulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Mail: Department of Defense, Office
of the Deputy Chief Management
Officer, Directorate for Oversight and
Compliance, 4800 Mark Center Drive,
Mailbox #24, Alexandria, VA 22350–
1700.
Instructions: All submissions received
must include the agency name and
docket number or RIN for this Federal
Register document. The general policy
for comments and other submissions
from members of the public is to make
these submissions available for public
viewing on the internet at https://
www.regulations.gov as they are
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Federal Register / Vol. 83, No. 242 / Tuesday, December 18, 2018 / Proposed Rules
received without change, including any
personal identifiers or contact
information.
FOR FURTHER INFORMATION CONTACT: Ms.
DeLisa E. Prater, Program Manager,
Defense Health Agency Uniform
Business Office, (703) 275–6380.
SUPPLEMENTARY INFORMATION:
A. Executive Summary
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1. Purpose of the Proposed Rule
The purpose of this proposed rule is
to incorporate new additional statutory
authority for calculating reasonable
institutional facility charges for: (a)
Inpatient services and resources
provided at DoD (MTFs in addition to
the current authorized methodology
which uses all-inclusive prospective
Civilian Health and Medical Program of
the Uniformed Services (CHAMPUS)
diagnostic related group (DRG) based
payment rates (including professional
charges), and (b) ambulatory services
provided at DoD MTFs in addition to
the current authorized methodologies
which use all-inclusive CHAMPUS
ambulatory procedure classification
(APC) and ambulatory surgery center
(ASC) based payment rates and MHS
ambulatory procedure visit (APV) based
payment rates. As defined in 32 CFR
199.2, the term ‘‘facility charges’’ means
the charges, either inpatient or
outpatient, made by a MTF to cover the
overhead costs of providing the service
(e.g., building costs such as depreciation
and interest, staffing costs, drugs and
supplies; overhead costs such as
utilities, housekeeping, maintenance). It
also revises the reasonable charges
methodology for pharmaceuticals, DME,
supplies, immunizations, injections or
medication administered or provided to
allow for their reasonable charges
calculation using either CHAMPUS
prevailing or cost based rates regardless
of whether CHAMPUS prevailing rates
are available. The legal authority for this
proposed rule is 10 U.S.C. 1095(f),
1097b(b) and 1079b.
2. Summary of the Major Provisions of
the Proposed Rule
a. It would create an additional
exception to the general rule that
reasonable charges under 32 CFR
220.8(a), 220.8(b), 220.8(f)(5) and
220.8(f)(6) for inpatient and ambulatory
institutional resources as well as for
pharmaceuticals, DME, supplies,
immunizations, injections or medication
administered are based on the rates used
by CHAMPUS under 32 CFR 199.14 to
reimburse authorized providers.
Specifically, it authorizes DoD MTFs to
use an alternative reasonable charges
methodology based on Itemized
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Resource Utilization (IRU) rates—
developed from the cost to provide
these resources and items—in addition
to the use of aggregated and prospective
DRG, APC, ASC and APV and prevailing
CHAMPUS based encounter rates.
b. As a ‘‘housekeeping’’ change, it
would replace ‘‘hospital’’ with
‘‘institutional’’ throughout most of the
regulation to align it with civilian health
insurance industry terminology and
better promote identification and
separate billing of institutional and
professional services as required by 32
CFR 220.8(b).
B. Background
DoD is authorized to collect
‘‘reasonable charges’’ from third party
payers for the cost of inpatient and
ambulatory (outpatient) institutional
services and also for pharmaceuticals,
DME, supplies, immunizations,
injections or medication administered
or provided at DoD MTFs to military
retirees, all dependents, and other
eligible beneficiaries who have private
health insurance. See 10 U.S.C. 1095
and 32 CFR 220.2. Also, DoD must
collect from nonbeneficiaries (or their
insurers) the cost of trauma or other
medical care provided to them and from
other federal agencies, the average cost
of healthcare provided to their
beneficiaries at DoD MTFs (10 U.S.C.
1079b(a) and 1085). Currently, DoD uses
all-inclusive prospective CHAMPUS
DRG based payment rates (including
professional charges) as the reasonable
charges for inpatient care and allinclusive CHAMPUS APC and ASC
based and MHS APV charges for
miscellaneous institutional ambulatory
care in its healthcare cost recovery
programs—Third Party Collection,
Medical Services Account and Medical
Affirmative Claims. The MHS APV rate
is authorized by the Assistant Secretary
of Defense (Health Affairs) (ASD(HA))
Policy Memorandum, ‘‘Use of CPT Code
99199’’ (September 14, 2004) because
MTFs currently do not have the
appropriate software to group
encounters into APCs and ASCs. Also,
DoD uses the average cost for
pharmaceutical rates because
CHAMPUS prevailing rates are not
available. However, DoD uses
CHAMPUS based rates for DME,
supplies, immunizations, injections or
medication administered.
C. Expected Costs
IRU based rates are more
representative of actual costs specific to
the institutional resources and also to
pharmaceuticals, DME, supplies,
immunizations, injections or medication
administered or consumed in the
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provision of care to a patient. Also, IRU
based rates provide DoD the ability it
does not currently have to bill third
party payers in an itemized manner that
they are accustomed to. With the
availability of this alternative reasonable
charges methodology, DoD MTFs can
bill for institutional resources and also
for pharmaceuticals, DME, supplies,
immunizations, injections or medication
administered using charge descriptions
(i.e., an MTF’s comprehensive list of
items and services for which it can
charge) and individual cost-based rates
associated with those descriptions. As a
result, institutional bills are much more
consistent with the actual resources and
services provided to the patient, third
party payers who receive MTF claims
will have the detailed data needed for
reimbursement, and the potential for
MTFs to receive appropriate
reimbursement improves. MTF claims
are frequently returned for additional
information or denied because they are
not in an itemized format consistent
with standard industry health insurance
practice. The format of resulting lineitem inpatient charges based on IRU
rates will more closely resemble the
format currently used in the health
insurance industry and promote more
efficient claim adjudication. This rule
will not affect any payments by
TRICARE as this rule does not pertain
to purchased care. It specifically applies
to rate development for cost recovery in
the direct care setting.
In addition, using only the current
methodologies for reasonable charges
based on bundled prospective DRG/
APC/ASC/APV based rates methods and
CHAMPUS prevailing rates methods for
pharmaceuticals, DME, supplies,
immunizations, injections or medication
administered limits MTFs’ flexibility
and ability to effectively accommodate
current and new provider
reimbursement methodologies and is
likely reducing and resulting in missed
reimbursement opportunities from third
party payers. Third party payers do not
uniformly have nor apply payment
methods and rates to claims received.
Rather, they each have their own
distinct set of rules for and levels of
payment that are not necessarily DRG/
APC/ASC/APV/CHAMPUS rate based.
For example, there are multiple versions
of groupers, and a payer’s
reimbursement policy may use a
different grouper than DoD or not
involve a grouper at all. Moreover, third
party payers are increasingly replacing
fee-for-service with value-based
performance payment portfolios (e.g.,
pay for performance, bundled payments,
shared savings/accountable care
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Federal Register / Vol. 83, No. 242 / Tuesday, December 18, 2018 / Proposed Rules
organizations) for providers, including
DoD MTFs. Itemized billing using IRU
based rates provides payers with the
detailed data needed for whatever
reimbursement process they use
yielding fewer requests for additional
information and re-processing of claims
and increased potential reimbursement.
Additional benefits from allowing for
IRU based charges include:
(1) Providing greater transparency of
DoD MTFs’ financial efficiency and
performance through more detailed
purchasing, dispensing, and financial
billing functions. IRU based charges
provide information necessary to
complete detailed analyses into what
and how a MTF is purchasing,
dispensing, and billing, which will lead
to more informed decisions on how to
save money, time, and effort at each of
those three stages.
(2) Enabling different MTF
departments and decision makers to
come together to discuss common
practices, terminology, and reporting,
allowing for the development and
analysis of benchmarks evaluating
clinical performance, and identifying
and implementing the most costeffective delivery modes available.
(3) Providing the ability to track and
monitor resources used to treat patients,
thereby allowing MTF staff,
management, and leadership to better
control and manage costs, and optimize
the efficiency of operations to deliver
efficient care or prevent unnecessary
care.
This IRU based charges approach is
consistent with 10 U.S.C. 1095(f) and
1097b(b) that authorize the ASD(HA) to
calculate all third party payment
collections and rates charged to
civilians and interagency payers based
on any appropriate method. It is the
Assistant Secretary’s determination that
itemized IRU based rates for inpatient
and ambulatory resources and also for
pharmaceuticals, DME, supplies,
immunizations, injections or medication
administered or provided better
represents the reasonable charges and
costs of providing care to all patients in
MTFs.
The rule also replaces ‘‘hospital’’ with
‘‘institutional’’ throughout most of the
regulation to align it with civilian
healthcare insurance industry
terminology. The current regulation
uses ‘‘hospital’’ interchangeably to mean
both: (1) A facility that provides
emergency, inpatient, and in some cases
outpatient medical care for sick or
injured people; and (2) the institutional
component of a hospital stay (i.e.,
overhead and ancillary, diagnostic and
treatment services, other than
professional services provided by the
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facility during the inpatient stay such as
room and board, laboratory tests and the
technical component of radiology
services). It is the general rule under
CHAMPUS, 32 CFR 220.8(b) and also
industry best practice to identify and
charge separately for institutional and
inpatient professional services. This
nomenclature change helps DoD MTFs
reinforce the distinction and better
promotes identification and separate
billing of institutional and professional
services as required by 32 CFR 220.8(b)
and in accordance with health
insurance industry best practice.
D. Regulatory Procedures
Executive Order 12866, ‘‘Regulatory
Planning and Review,’’ and Executive
Order 13563, ‘‘Improving Regulation
and Regulatory Review’’
Executive Orders 13563 and 12866
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, distribute impacts, and equity).
Executive Order 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. It has been determined that
this rule is not a significant regulatory
action. The rule does not: (1) Have an
annual effect on the economy of $100
million or more or adversely affect in a
material way the economy; a section of
the economy; productivity; competition;
jobs; the environment; public health or
safety; or State, local, or tribal
governments or communities; (2) Create
a serious inconsistency or otherwise
interfere with an action taken or
planned by another Agency; (3)
Materially alter the budgetary impact of
entitlements, grants, user fees, or loan
programs, or the rights and obligations
of recipients thereof; or (4) Raise novel
legal or policy issues arising out of legal
mandates, the President’s priorities, or
the principles set forth in these
Executive Orders.
Executive Order 13771, ‘‘Reducing
Regulation and Controlling Regulatory
Costs’’
There are no cost savings to the public
anticipated by amending the current 32
CFR part 220. Consistent with the
analysis of transfer payments under
OMB Circular A–4, this proposed rule
does not involve regulatory costs subject
to Executive Order 13771, ‘‘Reducing
Regulation and Controlling Regulatory
Costs.’’
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Unfunded Mandates Reform Act (Sec.
202, Pub. L. 104–4)
Section 202 of Public Law 104–4,
‘‘Unfunded Mandates Reform Act,’’ (2
U.S.C. 1532) requires that an analysis be
performed to determine whether any
federal mandate may result in the
expenditure by State, local and tribal
governments, in the aggregate, or by the
private sector of $100 million in any one
year. It has been certified that this
proposed rule does not contain a
Federal mandate that may result in the
expenditure by State, local and tribal
governments, in aggregate, or by the
private sector, of $100 million or more
in any one year, and thus this proposed
rule is not subject to this requirement.
Public Law 96–354, ‘‘Regulatory
Flexibility Act’’ (5 U.S.C. 601 et seq.)
Public Law 96–354, ‘‘Regulatory
Flexibility Act’’ (RFA) (5 U.S.C. 601),
requires that each Federal agency
prepare a regulatory flexibility analysis
when the agency issues a regulation
which would have a significant impact
on a substantial number of small
entities. This proposed rule is not an
economically significant regulatory
action, and it has been certified that it
will not have a significant impact on a
substantial number of small entities.
Therefore, this proposed rule is not
subject to the requirements of the RFA.
Public Law 96–511, ‘‘Paperwork
Reduction Act’’ (44 U.S.C. Chapter 35)
This rule does not contain a
‘‘collection of information’’ requirement
and will not impose additional
information collection requirements on
the public under Public Law 96–511,
‘‘Paperwork Reduction Act’’ (44 U.S.C.
Chapter 35).
Executive Order 13132, ‘‘Federalism’’
E.O. 13132, ‘‘Federalism,’’ requires
that an impact analysis be performed to
determine whether the rule has
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. It has been
certified that this proposed rule does
not have federalism implications, as set
forth in E.O. 13132.
List of Subjects in 32 CFR Part 220
Claims, Health care, Health insurance,
and Military personnel.
Accordingly, 32 CFR part 220 is
proposed to be amended as follows:
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Federal Register / Vol. 83, No. 242 / Tuesday, December 18, 2018 / Proposed Rules
PART 220—[AMENDED]
1. The authority citation for part 220
is revised to read as follows:
■
Authority: 5 U.S.C. 301; 10 U.S.C. 1095(f),
1097b(b) and 1079b.
2. Amend § 220.8 by:
a. Revising paragraphs (b), (c)(1), (5),
(f)(2), (5) and (6),
■ b. Adding new paragraph (f)(8); and
■ c. Removing in paragraph (d) the
wording ‘‘inpatient hospital care’’ and
adding in its place ‘‘care.’’
The revisions and additions read as
follows:
■
■
§ 220.8
Reasonable charges.
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(b) Inpatient institutional and
professional services on or after October
1, 2017. Reasonable charges for
inpatient institutional services provided
on or after October 1, 2017, are based on
either of two methods as determined by
the ASD(HA). The first uses the
CHAMPUS Diagnosis Related Group
(DRG) payment system rates under 32
CFR 199.14(a)(1). Certain adjustments
are made to reflect differences between
the CHAMPUS payment system and
MHS billing solutions. Among these are
to include in the inpatient hospital
service charges adjustments related to
direct medical education and capital
costs (which in the CHAMPUS system
are handled as annual pass through
payments). Additional adjustments are
made for long stay outlier cases. The
second method uses Itemized Resource
Utilization (IRU) rates based on the cost
to provide inpatient institutional
resources. Like the CHAMPUS system,
inpatient professional services are not
included in the inpatient institutional
services charges calculated under either
methodology, but are billed separately
in accordance with paragraph (e) of this
section. In lieu of either method
described in this paragraph (b), the
method in effect prior to April 1, 2003
(described in paragraph (c) of this
section), may continue to be used for a
period of time after April 1, 2003, if the
ASD(HA) determines that effective
implementation requires a temporary
deferral.
(c) Inpatient institutional and
inpatient professional services before
April 1, 2003. (1) In general. Prior to
April 1, 2003, the computation of
reasonable charges for inpatient
institutional and professional services is
reasonable costs based on diagnosis
related groups (DRGs). Costs shall be
based on the inpatient full
reimbursement rate per hospital
discharge, weighted to reflect the
intensity of the principal diagnosis
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involved. The average charge per case
shall be published annually as an
inpatient standardized amount. A
relative weight for each DRG shall be
the same as the DRG weights published
annually for hospital reimbursement
rates under CHAMPUS pursuant to 32
CFR 199.14(a)(1). The method in effect
prior to April 1, 2003 (as described in
this paragraph (c)), may continue to be
used for a period of time after April 1,
2003, if the ASD(HA) determines that
effective implementation requires a
temporary deferral of the method
described in paragraph (b) of this
section.
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(5) Identification of professional and
institutional charges. For purposes of
billing third party payers other than
automobile liability and no-fault
insurance carriers, inpatient billings are
subdivided into two categories:
(i) Institutional charges (which refer
to routine service charges associated
with the facility encounter or hospital
stay and ancillary charges).
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(2) With respect to inpatient
institutional charges in the Burn Center
at Brooke Army Medical Center, the
ASD(HA) may establish an adjustment
to the rate otherwise applicable under
the payment methodologies under this
section to reflect unique attributes of the
Burn Center.
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(5) The charge for immunizations,
allergin extracts, allergic condition tests,
and the administration of certain
medications when these services are
provided by or through a facility of the
Uniformed Services or a separate
immunizations or shot clinic, are based
either on CHAMPUS prevailing rates or
on IRU rates based on the cost to
provide these items, exclusive of any
costs considered for purposes of any
outpatient visit. A separate charge shall
be made for each immunization,
injection or medication administered.
(6) The charges for pharmacy, durable
medical equipment and supply
resources are based either on
CHAMPUS prevailing rates or on IRU
rates based on the cost to provide these
items, exclusive of any costs considered
for purposes of any outpatient visit. A
separate charge shall be made for each
item provided.
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(8) Ambulatory (outpatient)
institutional services on or after October
1, 2017. Reasonable charges for
institutional facility charges for
ambulatory services provided on or after
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64771
October 1, 2017, are based on any of
three methods as determined by the
ASD(HA). The first uses the CHAMPUS
Ambulatory Payment Classification
(APC) and Ambulatory Surgery Center
(ASC) payment system rates under 32
CFR 199.14(a)(1)(ii) and (iii) and 32 CFR
199.14(d) respectively. The second uses
a bundled MHS Ambulatory Procedure
Visit (APV) payment system rate charge
reflected by the average cost of
providing an APV exclusive of
professional services. The third method
uses IRU rates based on the cost to
provide ambulatory institutional
resources. Like the CHAMPUS system,
ambulatory professional services are not
included in the ambulatory institutional
facility charges calculated under any of
the three methodologies, but are billed
separately in accordance with paragraph
(e) of this section.
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Dated: December 11, 2018.
Aaron T. Siegel,
Alternate OSD Federal Register Liaison
Officer, Department of Defense.
[FR Doc. 2018–27186 Filed 12–17–18; 8:45 am]
BILLING CODE 5001–06–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
33 CFR Part 165
[Docket Number USCG–2018–1065]
RIN 1625–AA00
Safety Zone; Oregon Inlet, Dare
County, NC
Coast Guard, DHS.
Notice of proposed rulemaking.
AGENCY:
ACTION:
The Coast Guard is proposing
to establish a temporary safety zone on
the navigable waters of Oregon Inlet in
Dare County, North Carolina in support
of demolition of the old Herbert C.
Bonner Bridge. This temporary safety
zone is intended to protect mariners,
vessels, and demolition crews from the
hazards associated with demolishing the
old bridge, and will restrict vessel traffic
on portions of Oregon Inlet near active
demolition work and demolition
equipment. This proposed rulemaking
would prohibit vessels or persons from
being in the safety zone. We invite your
comments on this proposed rulemaking.
DATES: Comments and related material
must be received by the Coast Guard on
or before January 17, 2019.
ADDRESSES: You may submit comments
identified by docket number USCG–
SUMMARY:
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]]>Agencies
[Federal Register Volume 83, Number 242 (Tuesday, December 18, 2018)]
[Proposed Rules]
[Pages 64768-64771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27186]
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 220
[Docket ID: DOD-2016-HA-0107]
RIN 0720-AB68
Collection From Third Party Payers of Reasonable Charges for
Healthcare Services
AGENCY: Office of the Assistant Secretary of Defense (Health Affairs),
DoD.
ACTION: Proposed rule.
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SUMMARY: This rule exercises the Department of Defense's (DoD's)
authority to update current regulations to compute reasonable charges
for inpatient and ambulatory (outpatient) institutional resources and
also for pharmaceuticals, durable medical equipment (DME), supplies,
immunizations, injections or other medications administered or
furnished by DoD military treatment facilities (MTFs) under their three
existing healthcare cost recovery programs--Third Party Collections,
Medical Services Account, and Medical Affirmative Claims. Specifically,
the rule updates the reasonable charges methodologies for inpatient and
ambulatory institutional billing to allow for the use of Itemized
Resource Utilization (IRU) based rates--developed from the cost to
provide inpatient and ambulatory institutional healthcare resources--in
addition to current bundled prospective reimbursement approaches of
diagnostic related group (DRG), ambulatory payment classification
(APC), ambulatory surgery center (ASC) and ambulatory procedure visit
(APV) based rates. It also revises the reasonable charges methodology
for pharmaceuticals, DME, supplies, immunizations, injections or
medication administered to allow for their calculation using either
Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)
prevailing rates or IRU based rates--developed from the cost to provide
these healthcare items and resources- regardless of whether CHAMPUS
prevailing rates are available. The additional IRU methodology
implements an itemized rate and reasonable charges structure that
improves collections and operation of DoD's healthcare cost recovery
programs by ensuring MTFs receive appropriate reimbursement for
institutional healthcare resources as well as for pharmaceuticals, DME,
supplies, immunizations, injections or medication provided or
administered and is more consistent with civilian health insurance
industry practice. The proposed rule also replaces ``hospital'' with
``institutional'' throughout most of the regulation to align it with
civilian health insurance industry terminology and better promote
identification and separate billing of institutional and professional
services.
DATES: Comments must be received by February 19, 2019.
ADDRESSES: You may submit comments, identified by docket number and/or
Regulatory Information Number (RIN) and title, by any of the following
methods:
Federal Rulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Department of Defense, Office of the Deputy Chief
Management Officer, Directorate for Oversight and Compliance, 4800 Mark
Center Drive, Mailbox #24, Alexandria, VA 22350-1700.
Instructions: All submissions received must include the agency name
and docket number or RIN for this Federal Register document. The
general policy for comments and other submissions from members of the
public is to make these submissions available for public viewing on the
internet at https://www.regulations.gov as they are
[[Page 64769]]
received without change, including any personal identifiers or contact
information.
FOR FURTHER INFORMATION CONTACT: Ms. DeLisa E. Prater, Program Manager,
Defense Health Agency Uniform Business Office, (703) 275-6380.
SUPPLEMENTARY INFORMATION:
A. Executive Summary
1. Purpose of the Proposed Rule
The purpose of this proposed rule is to incorporate new additional
statutory authority for calculating reasonable institutional facility
charges for: (a) Inpatient services and resources provided at DoD (MTFs
in addition to the current authorized methodology which uses all-
inclusive prospective Civilian Health and Medical Program of the
Uniformed Services (CHAMPUS) diagnostic related group (DRG) based
payment rates (including professional charges), and (b) ambulatory
services provided at DoD MTFs in addition to the current authorized
methodologies which use all-inclusive CHAMPUS ambulatory procedure
classification (APC) and ambulatory surgery center (ASC) based payment
rates and MHS ambulatory procedure visit (APV) based payment rates. As
defined in 32 CFR 199.2, the term ``facility charges'' means the
charges, either inpatient or outpatient, made by a MTF to cover the
overhead costs of providing the service (e.g., building costs such as
depreciation and interest, staffing costs, drugs and supplies; overhead
costs such as utilities, housekeeping, maintenance). It also revises
the reasonable charges methodology for pharmaceuticals, DME, supplies,
immunizations, injections or medication administered or provided to
allow for their reasonable charges calculation using either CHAMPUS
prevailing or cost based rates regardless of whether CHAMPUS prevailing
rates are available. The legal authority for this proposed rule is 10
U.S.C. 1095(f), 1097b(b) and 1079b.
2. Summary of the Major Provisions of the Proposed Rule
a. It would create an additional exception to the general rule that
reasonable charges under 32 CFR 220.8(a), 220.8(b), 220.8(f)(5) and
220.8(f)(6) for inpatient and ambulatory institutional resources as
well as for pharmaceuticals, DME, supplies, immunizations, injections
or medication administered are based on the rates used by CHAMPUS under
32 CFR 199.14 to reimburse authorized providers. Specifically, it
authorizes DoD MTFs to use an alternative reasonable charges
methodology based on Itemized Resource Utilization (IRU) rates--
developed from the cost to provide these resources and items--in
addition to the use of aggregated and prospective DRG, APC, ASC and APV
and prevailing CHAMPUS based encounter rates.
b. As a ``housekeeping'' change, it would replace ``hospital'' with
``institutional'' throughout most of the regulation to align it with
civilian health insurance industry terminology and better promote
identification and separate billing of institutional and professional
services as required by 32 CFR 220.8(b).
B. Background
DoD is authorized to collect ``reasonable charges'' from third
party payers for the cost of inpatient and ambulatory (outpatient)
institutional services and also for pharmaceuticals, DME, supplies,
immunizations, injections or medication administered or provided at DoD
MTFs to military retirees, all dependents, and other eligible
beneficiaries who have private health insurance. See 10 U.S.C. 1095 and
32 CFR 220.2. Also, DoD must collect from nonbeneficiaries (or their
insurers) the cost of trauma or other medical care provided to them and
from other federal agencies, the average cost of healthcare provided to
their beneficiaries at DoD MTFs (10 U.S.C. 1079b(a) and 1085).
Currently, DoD uses all-inclusive prospective CHAMPUS DRG based payment
rates (including professional charges) as the reasonable charges for
inpatient care and all-inclusive CHAMPUS APC and ASC based and MHS APV
charges for miscellaneous institutional ambulatory care in its
healthcare cost recovery programs--Third Party Collection, Medical
Services Account and Medical Affirmative Claims. The MHS APV rate is
authorized by the Assistant Secretary of Defense (Health Affairs)
(ASD(HA)) Policy Memorandum, ``Use of CPT Code 99199'' (September 14,
2004) because MTFs currently do not have the appropriate software to
group encounters into APCs and ASCs. Also, DoD uses the average cost
for pharmaceutical rates because CHAMPUS prevailing rates are not
available. However, DoD uses CHAMPUS based rates for DME, supplies,
immunizations, injections or medication administered.
C. Expected Costs
IRU based rates are more representative of actual costs specific to
the institutional resources and also to pharmaceuticals, DME, supplies,
immunizations, injections or medication administered or consumed in the
provision of care to a patient. Also, IRU based rates provide DoD the
ability it does not currently have to bill third party payers in an
itemized manner that they are accustomed to. With the availability of
this alternative reasonable charges methodology, DoD MTFs can bill for
institutional resources and also for pharmaceuticals, DME, supplies,
immunizations, injections or medication administered using charge
descriptions (i.e., an MTF's comprehensive list of items and services
for which it can charge) and individual cost-based rates associated
with those descriptions. As a result, institutional bills are much more
consistent with the actual resources and services provided to the
patient, third party payers who receive MTF claims will have the
detailed data needed for reimbursement, and the potential for MTFs to
receive appropriate reimbursement improves. MTF claims are frequently
returned for additional information or denied because they are not in
an itemized format consistent with standard industry health insurance
practice. The format of resulting line-item inpatient charges based on
IRU rates will more closely resemble the format currently used in the
health insurance industry and promote more efficient claim
adjudication. This rule will not affect any payments by TRICARE as this
rule does not pertain to purchased care. It specifically applies to
rate development for cost recovery in the direct care setting.
In addition, using only the current methodologies for reasonable
charges based on bundled prospective DRG/APC/ASC/APV based rates
methods and CHAMPUS prevailing rates methods for pharmaceuticals, DME,
supplies, immunizations, injections or medication administered limits
MTFs' flexibility and ability to effectively accommodate current and
new provider reimbursement methodologies and is likely reducing and
resulting in missed reimbursement opportunities from third party
payers. Third party payers do not uniformly have nor apply payment
methods and rates to claims received. Rather, they each have their own
distinct set of rules for and levels of payment that are not
necessarily DRG/APC/ASC/APV/CHAMPUS rate based. For example, there are
multiple versions of groupers, and a payer's reimbursement policy may
use a different grouper than DoD or not involve a grouper at all.
Moreover, third party payers are increasingly replacing
fee[hyphen]for[hyphen]service with value-based performance payment
portfolios (e.g., pay for performance, bundled payments, shared
savings/accountable care
[[Page 64770]]
organizations) for providers, including DoD MTFs. Itemized billing
using IRU based rates provides payers with the detailed data needed for
whatever reimbursement process they use yielding fewer requests for
additional information and re-processing of claims and increased
potential reimbursement.
Additional benefits from allowing for IRU based charges include:
(1) Providing greater transparency of DoD MTFs' financial
efficiency and performance through more detailed purchasing,
dispensing, and financial billing functions. IRU based charges provide
information necessary to complete detailed analyses into what and how a
MTF is purchasing, dispensing, and billing, which will lead to more
informed decisions on how to save money, time, and effort at each of
those three stages.
(2) Enabling different MTF departments and decision makers to come
together to discuss common practices, terminology, and reporting,
allowing for the development and analysis of benchmarks evaluating
clinical performance, and identifying and implementing the most cost-
effective delivery modes available.
(3) Providing the ability to track and monitor resources used to
treat patients, thereby allowing MTF staff, management, and leadership
to better control and manage costs, and optimize the efficiency of
operations to deliver efficient care or prevent unnecessary care.
This IRU based charges approach is consistent with 10 U.S.C.
1095(f) and 1097b(b) that authorize the ASD(HA) to calculate all third
party payment collections and rates charged to civilians and
interagency payers based on any appropriate method. It is the Assistant
Secretary's determination that itemized IRU based rates for inpatient
and ambulatory resources and also for pharmaceuticals, DME, supplies,
immunizations, injections or medication administered or provided better
represents the reasonable charges and costs of providing care to all
patients in MTFs.
The rule also replaces ``hospital'' with ``institutional''
throughout most of the regulation to align it with civilian healthcare
insurance industry terminology. The current regulation uses
``hospital'' interchangeably to mean both: (1) A facility that provides
emergency, inpatient, and in some cases outpatient medical care for
sick or injured people; and (2) the institutional component of a
hospital stay (i.e., overhead and ancillary, diagnostic and treatment
services, other than professional services provided by the facility
during the inpatient stay such as room and board, laboratory tests and
the technical component of radiology services). It is the general rule
under CHAMPUS, 32 CFR 220.8(b) and also industry best practice to
identify and charge separately for institutional and inpatient
professional services. This nomenclature change helps DoD MTFs
reinforce the distinction and better promotes identification and
separate billing of institutional and professional services as required
by 32 CFR 220.8(b) and in accordance with health insurance industry
best practice.
D. Regulatory Procedures
Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review''
Executive Orders 13563 and 12866 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, distribute impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. It has been determined that this rule is not a significant
regulatory action. The rule does not: (1) Have an annual effect on the
economy of $100 million or more or adversely affect in a material way
the economy; a section of the economy; productivity; competition; jobs;
the environment; public health or safety; or State, local, or tribal
governments or communities; (2) Create a serious inconsistency or
otherwise interfere with an action taken or planned by another Agency;
(3) Materially alter the budgetary impact of entitlements, grants, user
fees, or loan programs, or the rights and obligations of recipients
thereof; or (4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
these Executive Orders.
Executive Order 13771, ``Reducing Regulation and Controlling Regulatory
Costs''
There are no cost savings to the public anticipated by amending the
current 32 CFR part 220. Consistent with the analysis of transfer
payments under OMB Circular A-4, this proposed rule does not involve
regulatory costs subject to Executive Order 13771, ``Reducing
Regulation and Controlling Regulatory Costs.''
Unfunded Mandates Reform Act (Sec. 202, Pub. L. 104-4)
Section 202 of Public Law 104-4, ``Unfunded Mandates Reform Act,''
(2 U.S.C. 1532) requires that an analysis be performed to determine
whether any federal mandate may result in the expenditure by State,
local and tribal governments, in the aggregate, or by the private
sector of $100 million in any one year. It has been certified that this
proposed rule does not contain a Federal mandate that may result in the
expenditure by State, local and tribal governments, in aggregate, or by
the private sector, of $100 million or more in any one year, and thus
this proposed rule is not subject to this requirement.
Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601 et
seq.)
Public Law 96-354, ``Regulatory Flexibility Act'' (RFA) (5 U.S.C.
601), requires that each Federal agency prepare a regulatory
flexibility analysis when the agency issues a regulation which would
have a significant impact on a substantial number of small entities.
This proposed rule is not an economically significant regulatory
action, and it has been certified that it will not have a significant
impact on a substantial number of small entities. Therefore, this
proposed rule is not subject to the requirements of the RFA.
Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)
This rule does not contain a ``collection of information''
requirement and will not impose additional information collection
requirements on the public under Public Law 96-511, ``Paperwork
Reduction Act'' (44 U.S.C. Chapter 35).
Executive Order 13132, ``Federalism''
E.O. 13132, ``Federalism,'' requires that an impact analysis be
performed to determine whether the rule has 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. It has been certified that this proposed rule does not have
federalism implications, as set forth in E.O. 13132.
List of Subjects in 32 CFR Part 220
Claims, Health care, Health insurance, and Military personnel.
Accordingly, 32 CFR part 220 is proposed to be amended as follows:
[[Page 64771]]
PART 220--[AMENDED]
0
1. The authority citation for part 220 is revised to read as follows:
Authority: 5 U.S.C. 301; 10 U.S.C. 1095(f), 1097b(b) and 1079b.
0
2. Amend Sec. 220.8 by:
0
a. Revising paragraphs (b), (c)(1), (5), (f)(2), (5) and (6),
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b. Adding new paragraph (f)(8); and
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c. Removing in paragraph (d) the wording ``inpatient hospital care''
and adding in its place ``care.''
The revisions and additions read as follows:
Sec. 220.8 Reasonable charges.
* * * * *
(b) Inpatient institutional and professional services on or after
October 1, 2017. Reasonable charges for inpatient institutional
services provided on or after October 1, 2017, are based on either of
two methods as determined by the ASD(HA). The first uses the CHAMPUS
Diagnosis Related Group (DRG) payment system rates under 32 CFR
199.14(a)(1). Certain adjustments are made to reflect differences
between the CHAMPUS payment system and MHS billing solutions. Among
these are to include in the inpatient hospital service charges
adjustments related to direct medical education and capital costs
(which in the CHAMPUS system are handled as annual pass through
payments). Additional adjustments are made for long stay outlier cases.
The second method uses Itemized Resource Utilization (IRU) rates based
on the cost to provide inpatient institutional resources. Like the
CHAMPUS system, inpatient professional services are not included in the
inpatient institutional services charges calculated under either
methodology, but are billed separately in accordance with paragraph (e)
of this section. In lieu of either method described in this paragraph
(b), the method in effect prior to April 1, 2003 (described in
paragraph (c) of this section), may continue to be used for a period of
time after April 1, 2003, if the ASD(HA) determines that effective
implementation requires a temporary deferral.
(c) Inpatient institutional and inpatient professional services
before April 1, 2003. (1) In general. Prior to April 1, 2003, the
computation of reasonable charges for inpatient institutional and
professional services is reasonable costs based on diagnosis related
groups (DRGs). Costs shall be based on the inpatient full reimbursement
rate per hospital discharge, weighted to reflect the intensity of the
principal diagnosis involved. The average charge per case shall be
published annually as an inpatient standardized amount. A relative
weight for each DRG shall be the same as the DRG weights published
annually for hospital reimbursement rates under CHAMPUS pursuant to 32
CFR 199.14(a)(1). The method in effect prior to April 1, 2003 (as
described in this paragraph (c)), may continue to be used for a period
of time after April 1, 2003, if the ASD(HA) determines that effective
implementation requires a temporary deferral of the method described in
paragraph (b) of this section.
* * * * *
(5) Identification of professional and institutional charges. For
purposes of billing third party payers other than automobile liability
and no-fault insurance carriers, inpatient billings are subdivided into
two categories:
(i) Institutional charges (which refer to routine service charges
associated with the facility encounter or hospital stay and ancillary
charges).
* * * * *
(f) * * *
* * * * *
(2) With respect to inpatient institutional charges in the Burn
Center at Brooke Army Medical Center, the ASD(HA) may establish an
adjustment to the rate otherwise applicable under the payment
methodologies under this section to reflect unique attributes of the
Burn Center.
* * * * *
(5) The charge for immunizations, allergin extracts, allergic
condition tests, and the administration of certain medications when
these services are provided by or through a facility of the Uniformed
Services or a separate immunizations or shot clinic, are based either
on CHAMPUS prevailing rates or on IRU rates based on the cost to
provide these items, exclusive of any costs considered for purposes of
any outpatient visit. A separate charge shall be made for each
immunization, injection or medication administered.
(6) The charges for pharmacy, durable medical equipment and supply
resources are based either on CHAMPUS prevailing rates or on IRU rates
based on the cost to provide these items, exclusive of any costs
considered for purposes of any outpatient visit. A separate charge
shall be made for each item provided.
* * * * *
(8) Ambulatory (outpatient) institutional services on or after
October 1, 2017. Reasonable charges for institutional facility charges
for ambulatory services provided on or after October 1, 2017, are based
on any of three methods as determined by the ASD(HA). The first uses
the CHAMPUS Ambulatory Payment Classification (APC) and Ambulatory
Surgery Center (ASC) payment system rates under 32 CFR 199.14(a)(1)(ii)
and (iii) and 32 CFR 199.14(d) respectively. The second uses a bundled
MHS Ambulatory Procedure Visit (APV) payment system rate charge
reflected by the average cost of providing an APV exclusive of
professional services. The third method uses IRU rates based on the
cost to provide ambulatory institutional resources. Like the CHAMPUS
system, ambulatory professional services are not included in the
ambulatory institutional facility charges calculated under any of the
three methodologies, but are billed separately in accordance with
paragraph (e) of this section.
* * * * *
Dated: December 11, 2018.
Aaron T. Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2018-27186 Filed 12-17-18; 8:45 am]
BILLING CODE 5001-06-P
