Rule2023-06452
TRICARE; Reimbursement of Ambulatory Surgery Centers and Outpatient Services Provided in Cancer and Children's Hospitals
Primary source
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Published
April 4, 2023
Effective
October 1, 2023
Issuing agencies
Defense Department
Abstract
The DoD is amending TRICARE reimbursement of ambulatory surgery centers (ASCs) and outpatient services provided in Cancer and Children's Hospitals (CCHs). These amendments are in accordance with the TRICARE statute that requires TRICARE's payment methodologies for institutional care 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. In accordance with this requirement, TRICARE finalizes the adoption of Medicare's payment methodology for ASCs, and adoption of Medicare's payment methodology for outpatient services provided in CCHs as set forth in this final rule.
Full Text
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[Federal Register Volume 88, Number 64 (Tuesday, April 4, 2023)]
[Rules and Regulations]
[Pages 19844-19856]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-06452]
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 199
[Docket ID: DOD-2019-HA-0056]
RIN 0720-AB73
TRICARE; Reimbursement of Ambulatory Surgery Centers and
Outpatient Services Provided in Cancer and Children's Hospitals
AGENCY: Office of the Secretary, Department of Defense (DoD).
ACTION: Final rule.
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SUMMARY: The DoD is amending TRICARE reimbursement of ambulatory
surgery centers (ASCs) and outpatient services provided in Cancer and
Children's Hospitals (CCHs). These amendments are in accordance with
the TRICARE statute that requires TRICARE's payment methodologies for
institutional care 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. In accordance
with this requirement, TRICARE finalizes the adoption of Medicare's
payment methodology for ASCs, and adoption of Medicare's payment
methodology for outpatient services provided in CCHs as set forth in
this final rule.
DATES: This rule is effective 180 October 1, 2023.
FOR FURTHER INFORMATION CONTACT: Jahanbakhsh Badshah, Defense Health
Agency, 303-676-3881.
SUPPLEMENTARY INFORMATION:
I. Discussion of Public Comments and Changes
On Friday, November 29, 2019 (84 FR 65718-65727), the Department of
Defense published a proposed rule titled ``TRICARE; Reimbursement of
Ambulatory Surgery Centers and Outpatient Services Provided in Cancer
and Children's Hospitals'' for a 60-day public comment period. Eleven
public comments were received. This section responds to those public
comments.
1. General Comments on Reimbursement, Access to Care, and Difference in
Beneficiary Population for Ambulatory Surgery Centers (ASCs)
Comment: Several commenters expressed concern that this change in
reimbursement methods and rates might lead to access to care issues
because providers might opt out of providing services because the
Medicare rate is lower than the previously paid TRICARE rates. One
commenter urged the Defense Health Agency (DHA) to ``take a more
granular examination of changes in reimbursement that will occur as the
result of the proposed alignment and take steps to ensure that any
procedures that are being performed in significant volume in ASCs do
not experience a reduction in reimbursement.'' Another commenter
recommended that DHA should not adopt the Medicare ASC fee schedule
(FS) because Medicare patients have different needs from those seen
under TRICARE. The commenter requested DHA to consider differences in
[[Page 19845]]
procedure types performed on TRICARE patients, in part because this
commenter found that their TRICARE patients ``tend to undergo
Orthopedic and ENT surgeries at a much higher rate than our Medicare
patients do.''
Response: We appreciate the commenters' concerns regarding the
potential impact of adopting Medicare's ASC FS in the TRICARE program.
As discussed in the notice of proposed rulemaking, we are adopting the
Medicare ASC system because, first, TRICARE is statutorily obligated to
reimburse like Medicare where practicable, second, the current TRICARE
ASC system is based primarily on Medicare's retired ASC reimbursement
system, and finally, the TRICARE rates are difficult to update and in
some cases anomalous. The Medicare ASC rates, which TRICARE is
adopting, are based on assessments made each year by the Centers for
Medicare and Medicaid Services (CMS) of the appropriate level of
reimbursement for ASCs. In contrast to adopting a system that CMS will
update each year for the appropriate level of reimbursement for each
ASC surgery, over one-half of the procedures under the current TRICARE
ASC system have rates and groups based on assignments made prior to
2001. DHA has found that TRICARE's current patchwork system can produce
reimbursement anomalies, particularly in comparison to Medicare's ASC
rates and Outpatient Prospective Payment System (OPPS) rates. For
example, we compared the January 2020 TRICARE ASC rates with Medicare
ASC rates for 40 high-volume, higher-cost procedures and found that for
one-fifth of the cases, the Medicare ASC rate is more than 40 percent
higher than the current TRICARE ASC rate and that in only one quarter
of the cases are the Medicare ASC rates within 10 percent of the
TRICARE rates. In two cases, the TRICARE ASC rate is even greater than
the OPPS rate, which is anomalous. These anomalies would be corrected
using the Medicare ASC rates.
We agree with the commenter that it is important to look at the
impact of proposed reimbursement changes for high-volume codes. DHA did
this type of analysis prior to publishing the notice of proposed
rulemaking and we have now used data from 2019 to examine the impact of
reimbursement changes on high-volume ASC procedures as suggested by the
commenter. We selected all TRICARE ASC procedures with 660 or more
claims in the January-June 2019 period plus any other procedures that
were among the highest 10 in terms of TRICARE ASC allowed amounts in
2019. The combined group of 40 high-volume, high-cost surgical
procedures accounted for over 71 percent of all TRICARE ASC surgery
claims and 63 percent of all TRICARE ASC allowed amounts in the
January-June 2019 period.
We found that the maximum allowable Medicare ASC rates in January
2020 were higher than the current TRICARE ASC rates for almost half (43
percent) of the 40 high-volume, high cost procedures, including 3 of
the 6 highest-volume TRICARE ASC surgeries. We also found that the
Medicare rates for an additional one-eighth of the 40 procedures had
Medicare ASC rates that were only slightly less (0 to 9 percent) than
the current TRICARE ASC rates. On average, the Medicare rates for the
40 high-volume, high-cost procedures were 14 percent lower than the
January 2020 TRICARE ASC rates. Thus, we were re-assured that for over
half of the high-volume, high-cost procedures, the Medicare rates will
represent either an increase or a small decrease compared with the
TRICARE ASC rates.
We disagree with the commenter that DHA should ensure that none of
the high-volume procedures experience a reduction in reimbursement
rates. Even though there will be an overall reduction in TRICARE
reimbursement rates, many codes will have higher rates and the benefits
of adopting an updated, internally-consistent reimbursement system
outweigh the disadvantages of reduced rates for some ASC surgeries. In
addition, it is not practical for DHA to have TRICARE pay different
amounts for procedures in ASCs compared to Medicare solely because a
procedure is common.
We also disagree with the comment that Medicare ASC rates are not
appropriate for TRICARE patients because the patients have different
needs. First, the TRICARE population is generally younger and healthier
on average than Medicare patients. Second, DHA has already adopted the
use of the Medicare OPPS and the Medicare Physician Fee Schedule, with
Medicare rates, and Medicare's ASC FS rates are simply a hybrid of
those two systems' rates. Furthermore, many of the procedures that DHA
has added to the TRICARE ASC FS in the last few years were priced based
on the Medicare ASC FS rate. Fourth, there is nothing unique about
freestanding ASCs that make Medicare rates inappropriate due to
beneficiary characteristics compared to those payment systems. Fifth,
we have no evidence that the Medicare ASC rates are too low because
TRICARE beneficiaries generally do not require more costly care than
Medicare beneficiaries. Sixth, the fact that a procedure is more common
in one population than another does not, in itself, argue for different
payment rates because procedures are billed by specific Common
Procedural Terminology (CPT) code. As the commenter suggested, we did
examine the change in maximum reimbursement rates for ear nose and
throat (audiology and respiratory) surgeries and orthopedic
(musculoskeletal) surgeries. We found that almost one-quarter of the 40
high-volume, high-cost TRICARE surgical procedures are ENT or
orthopedic and that the maximum TRICARE reimbursement rate would
decrease by 6 percent for ENT surgeries and by 4 percent for orthopedic
surgeries. In comparison, the rates would decrease by an average of 14
percent for all 40 surgeries. Thus, our analysis of the high-volume,
high-cost procedures for TRICARE ASC patients indicates that although
the mix of TRICARE and Medicare ASC surgeries is different, the types
of surgeries identified by the commenter as being more common among the
non-Medicare population will have modest reductions and smaller
reductions than for other procedures. For all these reasons, DHA
concludes that adopting the Medicare ASC rates is appropriate for
TRICARE patients.
2. Non-Opioid Pain Management in ASCs
Comment: One commenter requested that DHA evaluate including non-
opioid pain management medications in the list of covered ancillary
services for ASC reimbursement, as Medicare did in 2019.
Response: DHA intends to adopt Medicare's ASC FS rules, payment
rates, and addenda, including their list of ancillary procedures
allowed to be paid outside the packaged procedure rate (Addendum BB,
ASC Covered Ancillary Services). Currently, as finalized in the CY 2021
OPPS/ASC final rule (86 FR 63484), Medicare has approved four such
substances including Exparel (C9290; Injection, bupivacaine liposome, 1
mg), Omidria (J1097; Phenylephrine 10.16 mg/ml and ketorolac 2.88 mg/ml
ophthalmic irrigation solution, 1 ml), Zynrelef (C9088; Instillation,
bupivacaine and meloxicam, 1 mg/0.03 mg), and Xaracoll (C9089;
Bupivacaine, collagen-matrix implant, 1 mg). These codes can be found
in Addendum BB of the Medicare ASC FS rule files, with a payment rate
given.
[[Page 19846]]
3. Annual Update Factor Used for ASCs
Comment: One commenter suggested that DHA should update the
Medicare ASC rates for inflation using the hospital market basket
update factor for CY 2023, not the CPI-U.
Response: We agree with the commenter that DHA should use the
hospital market basket adjusted for productivity update factor for CY
2023, which aligns with Medicare and is practicable to adopt under the
TRICARE program. The TRICARE updates will match the method that CMS
uses each year to update the Medicare ASC rates. Therefore, we have
revised the rule accordingly.
4. Beneficiary Copayment and Cost-Share Amounts for ASCs
Comment: One commenter indicated that the proposed rule did not
describe cost-sharing for ASC care under the new reimbursement
methodology.
Response: TRICARE's cost sharing structure varies by type of
service (IP vs OP), type of beneficiary (active duty dependent versus
retiree), and by type of enrollment (Prime vs. Select). The cost
sharing for ASC care has been established by regulation and the cost
sharing structure for ASC care will not be affected by TRICARE's
adoption of the Medicare ASC rates. Most active duty family members in
Prime pay no cost sharing for ASC care and those enrolled to Select
generally pay $25 per surgery. Most retirees and their family members
in Prime pay $67 per surgery (in 2022) and most Select enrollees pay 20
percent of the allowed amount for in-network ASC care and 25 percent of
the allowed amount for out-of-network ASC care. Given that there will
be a reduction in TRICARE allowed amounts under the Medicare ASC rates,
most TRICARE retirees enrolled in Select will see reduced cost sharing,
another benefit of adopting the new ASC system.
5. Maintain Current Exclusion of CCHs From OPPS
Comment: One commenter stated that the adoption of OPPS
reimbursement for CCHs will have an undesirable financial impact on
their Children's hospital and other Children's Hospitals that serve
large TRICARE populations. Their concerns include that Medicare
payments have been historically below cost, and that changes to the
TRICARE fee structure, when combined with Medicare's rates, pose a
significant threat to their ability to service military families. The
suggestions ranged from continuing to reimburse Children's Hospitals at
billed charges or ``grandfathering'' certain facilities that are in
close proximity to military bases that treat a disproportionate share
of TRICARE beneficiaries.
Response: DHA agrees that some children's hospitals will have
reduced TRICARE payments due to the rule's provisions although DHA's
analysis also indicates that some children's hospitals will see large
increases in their TRICARE payments.
The proposed rule contained a provision for a General Temporary
Military Contingency Payment Adjustment (GTMCPA) which will allow
children's hospitals and cancer hospitals that meet certain criteria to
receive additional payments for services which will be paid under OPPS.
The criteria will not be based on criteria similar to those specified
under TRICARE's OPPS for GTMCPAs. These criteria, which have been
tailored for CCHs, will include: (1) 10 percent or more of the
hospital's revenue is from TRICARE for care of ADSMs/ADDs; (2) the
hospital having 10,000 or more TRICARE visits that would fall under the
OPPS payment system for ADSMs/ADDs annually; and (3) the hospital being
deemed as essential for TRICARE operations. Hospitals that meet these
criteria will be eligible to receive up to 115 percent of the
hospital's costs for OPPS services. These provisions can be implemented
for children's hospitals without jeopardizing access for TRICARE
beneficiaries, because of the ability of children's hospitals to apply
for a GTMCPA.
6. Transition Period for ASCs
Comment: Several commenters remarked that the lack of a transition
period between the current TRICARE ASC reimbursement and the adoption
of the Medicare rates may mean that there would be an immediate access
to care effect, exacerbated by the abrupt change in fees. One commenter
suggested a three year transition period, to allow ASCs time to adjust
to the new rates. Another commenter suggested that without a
transition, some beneficiaries would be forced to use higher-cost
options, such as hospital outpatient departments, which would reduce
DHA's expected savings from adopting the new ASC rates.
Response: DHA is adopting the new ASC reimbursement system to be
consistent with Medicare's, as required by statute, which states that
TRICARE institutional service payments shall be determined to the
extent practicable in accordance with the same reimbursement rules as
apply under Medicare. DHA has concluded that it is practicable for
TRICARE to adopt Medicare's ASC rates. DHA is not adopting the Medicare
ASC rates in order to reduce TRICARE costs. DHA recognizes that there
will be both increases and decreases in TRICARE maximum allowed amounts
using the Medicare ASC rates. Although DHA expects a decrease in total
TRICARE payments for ASCs, DHA also expects that these savings would be
reduced if TRICARE beneficiaries increase their use of hospital
outpatient departments (HOPDs).
As noted in the proposed rule, DHA considered a transition period
but decided against one because the overall impact of the new system is
small (for the 40 high-volume, high-cost procedures a reduction of 14
percent) and because there are many ASC procedures that will have rate
increases under the new Medicare ASC system (over 40 percent of the
high-volume surgeries). In addition, DHA has reviewed carefully
Medicare Payment Advisory Committee (MedPAC's) most recent assessment
of Medicare's ASC rates. The March 2022 MedPAC report to Congress found
that there has been growth in the number of ASCs and that the number of
Medicare beneficiaries using ASCs had increased from 2015 to 2019,
which MedPAC states are both indicators of adequate access to ASCs.
MedPAC also found in its March 2022 report that ASCs had adequate
access to capital. As a result, MedPAC concluded that access to ASCs
was adequate and that indicators of payment adequacy for ASCs were
positive. Given that TRICARE will be adopting the Medicare ASC rates,
DHA finds MedPAC's conclusions to be particularly relevant to issues of
access and payment adequacy.
DHA also notes that even if some ASCs denied access to TRICARE
beneficiaries for some surgeries, TRICARE beneficiaries would be
largely protected from access problems because these patients could
have their surgeries performed in HOPDs.
One commenter argued that a transition period would allow ASCs a
chance to budget for the rate decreases and potential revenue loss.
However, since rates will be decreased by a modest amount (14 percent
for the 40 high-volume, high-cost surgeries) and because TRICARE
beneficiaries are typically a small percentage of ASCs total revenue,
as evidenced by the fact that 2019 TRICARE payments to ASCs
(approximately $250 M) were less than 5 percent of the 2019 Medicare
payments to ASCs ($5.2B), we have determined that a transition is not
warranted. The TRICARE updates will match the method that CMS uses each
year to update the Medicare ASC rates.
[[Page 19847]]
In addition, as noted above, the rates for almost half the high-volume
ASC surgeries will increase under the Medicare ASC rates. A transition
would mean that the full rate increases would not go into effect for a
number of years.
7. Exemption of Common Procedural Terminology (CPT) Code 41899 for ASCs
Comment: Several commenters suggested that DHA should maintain CPT
code 41899 (unlisted dentoalveolar structures) in the TRICARE ASC fee
schedule, even though it is not payable under Medicare's ASC fee
schedule. Commenters added that dental procedures are commonly
performed on TRICARE beneficiaries and are needed for TRICARE's
pediatric population with special needs, who may require anesthesia
when undergoing dental procedures. One commenter expressed concerns
that removing CPT code 41899 from the TRICARE ASC fee schedule will
result in TRICARE beneficiaries losing access to this code, without
providing any explanation.
Response: While DHA intends to adopt Medicare's ASC payment rules,
to the extent practicable, we do recognize that in the case of dental
care, an exception may be required, as Section 702 of the John Warner
National Defense Authorization Act (NDAA) for Fiscal Year 2007 provides
that, institutional and anesthesia services may be covered for both
hospital and in-out surgery settings related to dental care for
pediatric and certain other patients. Generally, Medicare does not pay
for unlisted procedure codes in a freestanding ASC according to 42 CFR
416.166(c), because CMS must ensure that procedures allowed in an ASC
are not a safety risk and that a patient would not typically be
required to stay overnight or have active medical monitoring. However,
we recognize that CPT 41899 is commonly utilized to bill for the
facility fees associated with dental care for pediatric and certain
other patients, who may require anesthesia during dental procedures. We
agree that CPT 41899 is appropriate in an ASC setting and we have added
this exception to the ASC list of covered surgical procedures, in
accordance with Section 702 of NDAA for Fiscal Year 2007. For covered
dental services as defined in Sec. 199.4 of this part, this rule will
permit reimbursement for the ASC facility fee for dental procedures
that are excluded from Medicare's ASC list, such as CPT 41899
(including subsequent codes, if renumbered or renamed). The TRICARE
payment for such covered dental procedures without an ASC rate would be
based on the same rate under the TRICARE OPPS. DHA will not maintain a
separate ASC list to accommodate this exception; instead the TRICARE
contractors will be instructed to reimburse the procedure code at the
OPPS rate. This approach ensures access in freestanding facilities
while implementing a practicable solution to accommodate the needs of
our younger population.
II. Summary of Changes From Proposed Rule
In this final rule, after consideration of public comments, we are
revising our proposed rule and adopting the method that CMS uses each
year to update the Medicare ASC reimbursement rates to update the
TRICARE ASC payment system, instead of specifying a specific method,
such as consumer price index for all urban consumers (CPI-U). We are
also revising the criteria for CCHs to apply for the GTMCPA.
Clarifications have been made regarding DHA's intention to reimburse
like Medicare, where practicable.
We are making changes to the ASC provider participation agreement,
adding a new ``hold harmless'' provision under Sec.
199.6(b)(4)(x)(B)(1)(ii) and (iii) that will prohibit ASC facilities
from billing TRICARE beneficiaries for non-covered procedures, unless
the beneficiary agreed in advance in writing to pay for the services.
The advanced notice would inform TRICARE beneficiaries about potential
costs prior to receiving services, which will protect beneficiaries
from unintended liability. Incorporating the ``hold harmless''
provision is appropriate because providers have a responsibility of
knowing whether specific services or items are covered, as required by
Sec. 199.6(a). Providers seeking authorized provider status and
payment from the Federal Government through programs such as TRICARE
have a responsibility to familiarize themselves with, and comply with
program requirements. Therefore, the provider should be held
financially responsible for failing to properly inform TRICARE
beneficiaries about patient costs before services are rendered. While
the ASC facility charges would be denied, the professional charges for
the non-ASC procedure or service could potentially be reimbursed.
Corrections have been made to the regulations text at Sec.
199.14(a)(6)(ii) to reflect the current version of the regulation,
because the proposed rule used an older version. Therefore, we are only
revising the current version of Sec. 199.14(a)(6)(ii)(A) to
specifically include CCHs as being added to the OPPS controlled
reimbursements, as they have been excluded to date; we are revising
Sec. 199.14(a)(6)(ii)(E) to specifically exclude CCHs from the any
Temporary Transitional Payment Adjustments (TTPAs) under Sec.
199.14(a)(6)(ii)(E)(1) and (2); we are revising Sec.
199.14(a)(6)(ii)(E)(3) to specifically name the additional available
military contingency payment adjustment as a ``general temporary
military contingency payment adjustment (GTMCPA)'' to further
distinguish it from the TTPAs, and have added specific criteria for
CCHs to qualify for GTMCPA; and, we are inserting a new Sec.
199.14(a)(6)(ii))(E)(4) which provides CCHs with annual hold-harmless
adjustments to OPPS payments. Finally, we have permitted a limited
exception to allow payment for covered dental care by revising Sec.
199.14(d) to address how covered dental procedures will be reimbursed
in the absence of a Medicare ASC payment rate. All other aspects of the
proposed rule remained the same.
III. Executive Summary
A. Purpose of the Final Rule
The purpose of this rule is to finalize TRICARE regulation
modifications necessary to implement for Ambulatory Surgery Centers
(ASC) and Cancer and Children's Hospitals (CCHs) the statutory
requirement that payments for TRICARE institutional services ``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].'' Although Medicare's reimbursement
methods for ASC and CCHs are different, it is prudent to finalize
adopting both the Medicare ASC system and the Outpatient Prospective
Payment System (OPPS) with hold-harmless adjustments (meaning the
provider is not reimbursed less than their costs) for CCHs
simultaneously to align with our statutory requirement to reimburse
like Medicare at the same time. This rule sets forth the regulatory
modifications necessary to implement TRICARE reimbursement
methodologies similar to those applicable to Medicare beneficiaries for
outpatient services rendered in ASCs and cancer and children's
hospitals.
1. TRICARE is adopting the Medicare reimbursement methodology for
ASCs. Currently, TRICARE reimburses surgical services performed in
TRICARE authorized ambulatory surgery settings (i.e., freestanding ASCs
and other TRICARE providers exempt from the TRICARE OPPS reimbursement
methodology including cancer and children's hospitals) institutional
[[Page 19848]]
facility costs on the basis of prospectively determined amounts, in
accordance with 32 Code of Federal Regulations (CFR) 199.14(d). The
current system was modeled after Medicare's previous ASC reimbursement
system. TRICARE's current reimbursement system for services provided in
these ambulatory surgery settings is based on Medicare's retired
system, and is difficult to update. Adoption of Medicare's ASC
reimbursement system will bring TRICARE reimbursement for ambulatory
surgery care into alignment with the statutory requirement that payment
methods for institutional care be, to the extent practicable, in
accordance with the same reimbursement rules used by Medicare.
2. TRICARE is adopting the Medicare payment methodology for
outpatient services provided in CCHs. In a final rule, published
December 10, 2008, (73 FR 74945-74966), TRICARE adopted Medicare's
payment methodology for outpatient hospital services-the Outpatient
Prospective Payment System (OPPS). Under Medicare, CCHs were held
harmless and were paid the full amount of the decrease they experienced
(as prior to OPPS the hospital had been paid 100 percent of their
costs) after the implementation of OPPS, under section 1833(t) (7) of
the Social Security Act. These payments are transitional outpatient
payments (TOPs). Because of the complexity and because of the
administrative burden/expense of calculating and maintaining the TOPs,
TRICARE opted to totally exempt CCHs from OPPS initially. The agency is
now revisiting the exemption of CCHs from OPPS. In this final rule,
TRICARE is adopting the Medicare methodology for reimbursement of
outpatient facility services (including ambulatory surgery) rendered in
a cancer or children's hospital, with modifications to address the
administrative burden and complexity. The DHA now has the capability,
and it is feasible, to adopt these reimbursement provisions with a
modification that the hold-harmless provisions will be calculated and
paid annually, rather than in monthly interim payments.
B. Summary of the Major Provisions of the Final Rule
1. Adopting Medicare's Ambulatory Surgical Center Reimbursement
System for TRICARE Authorized Ambulatory Surgery Centers. Per Title 10
United States Code (U.S.C.), section 1079(i) (2), TRICARE's payment
methods for institutional care shall be determined, to the extent
practicable, in accordance with the same reimbursement rules used by
Medicare. Under this final rule, TRICARE will reimburse ASCs for
ambulatory surgical services using a method similar to Medicare's ASC
reimbursement methodology. Under the TRICARE ASC reimbursement method,
payment for a TRICARE patient will be made at the lower of the billed
charge or the Medicare-determined ASC payment rate with applicable
TRICARE cost-sharing provisions. The TRICARE ASC reimbursement method
would include payment for all facility services associated with the
surgical procedure that are included in the payment methodology by
Medicare, but would exclude certain services also excluded by Medicare
under the ASC reimbursement methodology (e.g., certain ancillary
services and implantable devices with pass-through status).
2. Adopting Medicare's Outpatient Prospective Payment System (OPPS)
for Cancer and Children's Hospitals. In a final rule, dated December
10, 2008 (73 FR 74945-74966), TRICARE adopted Medicare's payment
methodology for outpatient hospital services--the outpatient
prospective payment system (OPPS). Under Medicare, CCHs were held
harmless and were paid the full amount of the decrease they experienced
after the implementation of OPPS, under section 1833(t) (7) of the
Social Security Act. These payments are transitional outpatient
payments (TOPs). Because of the complexity and because of the
administrative burden/expense of calculating and maintaining the TOPs,
TRICARE opted to totally exempt CCHs from the TRICARE OPPS
reimbursement methodology initially.
Ten years after the implementation of OPPS, the agency is now
revisiting the exemption of cancer and children's hospitals from OPPS.
This final rule with comment period finalizes the adoption of the
Medicare methodology for reimbursement of outpatient facility services
rendered in a cancer or children's hospital, with modifications to
address the administrative burden and complexity that initially led the
agency to exclude these facilities from OPPS. DHA now has the
capability, and it is feasible, to adopt Medicare's reimbursement
provisions with two modifications: (1) that the hold-harmless
provisions will be calculated annually, rather than in monthly interim
payments; and (2) that the agency will use the hospital's cost-to-
charge ratio (CCR) rather than the payment-to-cost ratio. With adoption
of OPPS for cancer and children's hospitals, these institutions will no
longer be considered TRICARE ambulatory surgery sites for application
of the TRICARE ASC reimbursement methodology.
3. Transition Period. When implementing the ASC fee schedule,
Medicare included a four-year transition which blended the payment
rates of the old methodology with the new for those procedures that
were paid under both methods. We evaluated the feasibility of including
a similar transition, where, the TRICARE-allowed amount would be 75
percent of the old rate and 25 percent of the new rate in year one; 50
percent of the old rate and 50 percent of the new rate in year two; and
25 percent of the old rate and 75 percent of the new rate in year
three. In the fourth year the rate would be 100 percent of the new
rate. However, many of the services reimbursed under TRICARE's current
ASC reimbursement methodology have lower rates under Medicare, so
providers would have to wait for higher reimbursements under the new
system.
Therefore, we are finalizing a no transition period for the
implementation of the ASC reimbursement system. Some providers may see
substantialincreases in reimbursement, and a transition period would
not be beneficial for these providers. Additionally, because
alternative locations are available for these services (e.g., Hospital
Outpatient Departments), concerns regarding access to care are
unfounded.
Similarly, we are finalizing no transition period for cancer and
children's hospitals, with the rationale that providers will be held
harmless under this reimbursement system. CCHs will receive, at a
minimum, one hundred percent of their costs, or the OPPS payment,
whichever is higher. Because many CCH providers will receive payment
increases, a transition period would not be beneficial for them.
C. Costs and Benefits
Although this rule will be effective near fiscal year 2024, the
overall economic impact of the rule is estimated based on an analysis
of expected outcomes had the rule been implemented during calendar year
(CY) 2021. Such analysis may be used to provide a reasonable estimate
of future economic impact.
The economic impact of adopting Medicare's payment methodology for
ASCs is anticipated to result in total cost-savings to the DoD of
approximately $10 million for CY 2021.
The economic impact of the proposal to adopt OPPS for CCHs,
including the hold harmless provisions will be reduced payments to
these providers of
[[Page 19849]]
approximately $35 million per year if implemented in 2021.
We estimate that the effects of the provisions that would be
implemented by this final rule would have an impact of increased cost-
savings to the DoD of approximately $45 million, offset by an estimate
$1.5 million in administrative costs to implement these changes.
II. Introduction and Background
1. TRICARE ASC PPS Reimbursement
A. Reimbursement
Medicare replaced their previous ASC system on January 1, 2008.
Medicare's reimbursement system for ASCs uses OPPS relative payment
rates as a guide. OPPS rates are reduced by a factor to account for the
fact that ASCs have lower overhead costs than hospitals. In 2012,
Medicare's ASC rates averaged 61 percent of the OPPS rates paid to
acute care hospitals for surgical procedures. Under Medicare, ASCs are
paid the lesser of the billed charge or the standard ASC reimbursement
rate, a method which we are finalizing under the TRICARE program.
Under Medicare, the standard payment rate for ASC covered surgical
procedures is calculated as the product of the ASC conversion factor
and the ASC relative payment weight for each separately payable
procedure or service. Payments are then geographically adjusted using
wage-index values. Payments may also be adjusted for multiple surgical
procedures or when surgical procedures are started and then
discontinued.
Like Medicare, we are finalizing our approach to make a single
payment to ASCs for covered procedures, which includes the facility
services furnished in connection with the covered procedure (e.g.,
nursing services, certain drugs, surgical dressings, and administrative
services). We are also finalizing our approach to separately reimburse
for ancillary services that are integral to a covered service (e.g.,
drugs and biologicals that are separately paid under OPPS; radiology
services that are separately paid under OPPS; brachytherapy services;
implantable devices with OPPS pass-through status; and corneal tissue
acquisition), similar to Medicare. The TRICARE ASC payment system will
not reimburse for services of individual professional providers,
Durable Medical Equipment (DME), non-implantable prosthetics, ambulance
services, or independent laboratory services. These services will be
reimbursed using other payment systems, which include the CMAC, Durable
Medical Equipment Prosthetics Orthotics and Supplies (DMEPOS) Fee
Schedule and the Ambulance Fee Schedule. If there is no payment rate
under the ASC reimbursement system for services that are medical in
nature (such as office visits and diagnostic tests), the ASC will be
reimbursed as though services were furnished in a physician's office
utilizing the TRICARE CMAC methodology, with no additional payment for
facility charges.
B. Definition and Requirements for Ambulatory Surgery Centers
This regulatory action finalizes a definition for ASCs, which will
mirror Medicare's, with exceptions made for TRICARE's pediatric
patients. Medicare defines an ASC as, ``a distinct entity that operates
exclusively for the purpose of furnishing outpatient surgical services
to patients''; in this action we are finalizing our proposal to adopt a
definition at 32 CFR 199.2 that defines ASCs as those that meet the
definition of an ASC under 42 CFR 416.2, including the requirement that
they must participate in Medicare as ASCs per 42 CFR 416.25, with
exceptions for ASCs that do not have an agreement with Medicare due to
the specialty populations they serve. Medicare also requires the
provider to have an agreement with CMS; we are finalizing as proposed
that in lieu of separate certification by TRICARE, the ASC will simply
provide evidence of a valid agreement with Medicare. While the terms of
the agreement with Medicare will not apply to TRICARE, only those
providers with an agreement with Medicare (or those providers that meet
certain exceptions as noted below), are eligible for reimbursement for
ambulatory surgery services provided in ASCs. We are finalizing our
approach to accept Medicare's determination of a facility as an ASC. If
the facility meets the definition of an ASC at 42 CFR 416.2 and has an
agreement with Medicare as an ASC, they will be considered a TRICARE
authorized ASC and subject to all requirements for authorized
institutional provider status under 32 CFR 199.6. ASCs must also enter
into a participation agreement with TRICARE, to ensure that the ASC
accepts the TRICARE reimbursement rate, and meets all other conditions
of coverage. Additionally, due to the differences between the TRICARE
and Medicare populations, there may be ASCs that specifically serve
pediatric populations. As such, these ASCs may not routinely enter into
agreements with Medicare. Therefore, we are finalizing the proposal to
allow certain pediatric ASCs without a valid Medicare participation
agreement to be eligible for reimbursement under TRICARE's ASC system,
when such facilities are accredited by the Joint Commission, the
Accreditation Association for Ambulatory Health Care, Inc. (AAAHC), or
other accrediting body as authorized by the Director, DHA and published
in the implementing instructions. Additionally, the ASC must enter into
a participation agreement with TRICARE to receive reimbursement for
covered services provided to TRICARE beneficiaries. This provision will
not negatively affect access to care, as ambulatory surgery services
are also available in hospital outpatient departments. The flexibility
offered to pediatric specialty ASCs is sufficient to serve the unique
needs of our patient population, while still ensuring the program
complies with the requirements of 10 U.S.C. 1079(i). TRICARE-authorized
pediatric ASCs will be subject to the same reimbursement system as
finalized in this regulatory action.
Section 32 CFR 199.6(b)(4)(x)(B)(1) currently includes specific
requirements for ambulatory surgery centers. With this regulatory
action, we are changing the regulations text at Sec.
199.6(b)(4)(x)(B)(1) to state that ASCs participating in Medicare meet
all program requirements to be an authorized TRICARE provider. However,
for ASCs that do not participate in Medicare (due to the specialized
nature of the patients they treat, i.e., pediatric patients) but are
otherwise accredited by an accrediting body as approved by the
Director, DHA, must continue to meet all the requirements stated. All
ASCs must also enter into participation agreements with TRICARE.
C. Ambulatory Surgical Center Services List
Medicare identifies and maintains a list of surgical procedures
that may be performed in an ASC. This list is updated at least annually
by Medicare. The ASC list of covered procedures indicates those
procedures which are covered and paid for if performed in the ASC
setting. The ASC list is comprised of those surgical procedures that
CMS has determined do not pose a significant safety risk and are not
expected to require an overnight stay following the surgical procedure.
Procedures on the Medicare Hospital Outpatient Prospective Payment
System (HOPPS) inpatient-only list (42 CFR 419.22(n)) are not eligible
for designation and coverage as ASC surgical procedures. Procedures
that are reported utilizing unlisted category I Current Procedural
Technology[supreg] codes are also excluded from the ASC list. TRICARE
is adopting
[[Page 19850]]
the Medicare ASC List, in its entirety, including any updates made by
Medicare to the list in the future, without any deviations (except for
certain covered dental procedures) from the ASC List, as maintained and
updated by CMS. No separate TRICARE ASC list would be maintained; the
TRICARE program would rely upon CMS's determinations regarding those
procedures determined to be appropriate in an ASC setting. The
maintenance of a separate ASC List for TRICARE is unnecessary as
adoption of Medicare's list is practicable, and maintenance of a
separate list would be extremely complex for the agency and providers
to review, maintain, and update. We invited comments on this approach,
especially from facilities that specialize in care for young adult,
pediatric, and other specialized populations not routinely covered by
Medicare. We reviewed procedures that would commonly be performed on
pediatric patients and found that these were generally included on the
Medicare ASC list. These procedures included: adenoidectomy;
myringotomy; nasal endoscopy; tonsillectomy; circumcision; inguinal and
umbilical hernia repair; eye muscle repair; syndactyly repair; and
hypospadias repair. Fowler-Stephens Orchiopexy is not listed on
Medicare's ASC list, but is priced in OPPS.
If an ASC provides a surgical service not listed as covered on
Medicare's ASC list, except for certain dental procedures, we are
finalizing our proposal to deny the ASC facility charges, similar to
Medicare. However, related professional services may be reimbursed
utilizing TRICARE's allowable charge methodology. TRICARE finalizes the
adoption of the Medicare requirement that facility charges may be
reimbursed for only those services on the ``ASC List.'' We are
confident that there will be no access to care concerns with this
approach, as surgical care continues to be available in hospital
outpatient departments, and in inpatient settings, as appropriate.
However, we are allowing an exception to this list for dental
procedures covered under Sec. 199.4 of this part, as Section 702 of
the NDAA for Fiscal Year 2007 provides that, institutional and
anesthesia services may be covered for both hospital and in-out surgery
settings related to dental care for pediatric and certain other
patients. In the case that a dental procedure is performed and the
procedure is not listed as covered on Medicare's ASC list (e.g., CPT
Code 41899), the TRICARE contractors may make payment for that
procedure at the OPPS rate. For example, CPT 41899 under OPPS is
currently assigned to ambulatory payment classification (APC) 5161,
which has a CY 2022 base-rate of $216; therefore, TRICARE's payment in
an ASC setting would also be $216.
D. Services Included in the ASC Payment
We are finalizing as proposed that, like Medicare, the following
items currently fall within the scope of ASC facility services. Future
modifications made by Medicare to the services included in the ASC
payment will be adopted by TRICARE in the implementing instructions.
ASCs must incorporate charges for packaged services into the charges
reported for the separately payable services with which they are
provided to ensure appropriate payment.
Covered ASC facility services include:
(1) Nursing, technician, and related services;
(2) Use of the facility where the surgical procedures are
performed;
(3) Any laboratory testing performed under a Clinical Laboratory
Improvement Amendments of 1988 (CLIA) certificate of waiver;
(4) Drugs and biologicals for which separate payment is not allowed
under the hospital outpatient prospective payment system (OPPS);
(5) Medical and surgical supplies not on pass-through status under
subpart G of 42 CFR part 419;
(6) Equipment;
(7) Surgical dressings;
(8) Implanted prosthetic devices, including intraocular lenses
(IOLs), and related accessories and supplies not on pass-through status
under subpart G of 42 CFR part 419;
(9) Implanted DME and related accessories and supplies not on pass-
through status under subpart G of 42 CFR part 419;
(10) Splints and casts and related devices;
(11) Radiology services for which separate payment is not allowed
under the OPPS, and other diagnostic tests or interpretive services
that are integral to a surgical procedure;
(12) Administrative, recordkeeping and housekeeping items and
services;
(13) Materials, including supplies and equipment for the
administration and monitoring of anesthesia; and
(14) Supervision of the services of an anesthetist by the operating
surgeon.
CMS may make further changes and refinements to the items included
within the ASC reimbursement system. TRICARE will adopt all future
modifications and refinements to this system made by CMS, unless found
to be impracticable, as approved by the Director, DHA.
E. Covered Ancillary Items and Services
We are finalizing our approach to allow separate payment for
covered ancillary items and services that are integral to a covered
surgical procedure, consistent with Medicare. CMS defines these
services at 42 CFR 416.61.
CMS may make further changes and refinements to the ancillary
services that are paid separately within this reimbursement system.
TRICARE will adopt all future modifications and refinements to this
system made by CMS, unless found to be impracticable, as approved by
the Director, DHA.
F. Surgical Dressings, Supplies, Splints, Casts, Appliances, and
Equipment
We are finalizing our approach that the TRICARE payment for
surgical dressings, supplies, splints, casts, appliances, and equipment
(e.g., gowns, masks) will mirror Medicare's payment. Currently, these
items are included in the payment for the surgical procedure. TRICARE
will adopt all future modifications and refinements to the payment for
these supplies and equipment provided in ASCs, as made by CMS, unless
found to be impracticable, as approved by the Director, DHA.
G. Drugs and Biologicals
ASC facility payment for a surgical procedure includes payment for
drugs and biologicals that are usually not self-administered and that
are considered to be packaged into the payment for the surgical
procedure under OPPS. Similar to Medicare, we are finalizing our
approach to allow separate payment to ASCs for drugs and biologicals
that are furnished integral to an ASC covered surgical procedure and
that are separately payable under OPPS, as defined by Medicare. TRICARE
will adopt all future modifications and refinements to the payment for
drugs and biologicals provided in ASCs, as made by CMS, unless found to
be impracticable, as approved by the Director, DHA.
H. Diagnostic and Therapeutic Items
Simple diagnostic tests that are generally included in facility
charges may be considered facility services (e.g., urinalysis,
hematocrit levels). Diagnostic tests performed by the ASC other than
those generally included in the facility's charge are not covered by
this reimbursement system. ASCs with laboratories certified as
independent
[[Page 19851]]
laboratories under Medicare may bill for tests, or alternatively, the
ASC may make arrangements with an independent laboratory or other
laboratory to perform the diagnostic tests it requires prior to
surgery. Payment for these diagnostic and therapeutic items will be
made under the existing provisions of 32 CFR 199.14. TRICARE will adopt
all future modifications and refinements to the payment for diagnostic
and therapeutic items provided in ASCs, as made by CMS, unless found to
be impracticable, as approved by the Director, DHA.
I. Blood and Blood Products
We are finalizing our approach that these items will be considered
a facility service and no separate reimbursement will be made, similar
to Medicare. TRICARE will adopt all future modifications and
refinements to the payment for these blood and blood products provided
in ASCs, as made by CMS, unless found to be impracticable, as approved
by the Director, DHA.
J. Anesthesia
We are finalizing as proposed that anesthetic agents that are not
paid separately under OPPS, as well as materials necessary for
administration will be included in the facility payment. TRICARE will
adopt all future modifications and refinements to the payment for
anesthesia provided in ASCs, as made by CMS, unless found to be
impracticable, as approved by the Director, DHA.
K. Implantable Durable Medical Equipment
We are finalizing our approach that the payment for implantable DME
will be included in the payment for the covered surgical procedure,
with the exception of OPPS pass-through devices which are paid
separately. TRICARE will adopt all future modifications and refinements
to the payment for implanted DME provided in ASCs, as made by CMS,
unless found to be impracticable, as approved by the Director, DHA.
L. Intraocular Lenses (IOL) and New Technology IOLs (NTIOL)
This final rule finalizes the adoption of Medicare's payment
provisions for IOLs and NTIOLs provided during or subsequent to
cataract surgery in ASCs. As such, the payment for IOLs will be
included in the ASC payment for the associated surgical procedure,
except for NTIOLs designated by Medicare, and covered by TRICARE.
NTIOLs may be subject to a payment adjustment, as determined by
Medicare, and adopted by TRICARE. TRICARE will adopt all future
modifications and refinements to the payment for IOLs and NTIOLs
provided in ASCs, as made by CMS, unless found to be impracticable, as
approved by the Director, DHA.
M. Payment for ASC Facility Services
We are finalizing our approach to make a single payment to ASCs for
covered procedures, which will include the facility services furnished
in connection with the covered procedure (e.g., nursing services,
certain drugs, surgical dressings, and administrative services), when
the services are rendered by a provider described in the finalized
definition of an ASC in 32 CFR 199.2. This payment will be the lower of
the ASC payment rate or the billed charge. We are finalizing our
approach to adopt the Medicare ASC payment rates, without making any
TRICARE-specific adjustments or modifications to Medicare rates.
We are finalizing our approach to allow separate payment for
ancillary services that are integral to a covered service (e.g., drugs
and biologicals that are separately paid under OPPS; radiology services
that are separately paid under OPPS; brachytherapy services;
implantable devices with OPPS pass-through status; and corneal tissue
acquisition). Like OPPS, payment under this system will not include
reimbursement for services of individual professional providers, DME,
non-implantable prosthetics, ambulance services, or independent
laboratory services. These services will be reimbursed using other
payment systems like the Medicare Physician Fee Schedule (similar to
CHAMPUS Maximum Allowable Charges, or CMAC), DMEPOS Fee Schedule, and
the Ambulance Fee Schedule.
We are also finalizing our proposal that covered ancillary services
(including OPPS pass-through devices) that are contractor-priced under
Medicare's ASC reimbursement system will be priced under TRICARE
utilizing the allowable charge methodology for procedures paid outside
of the OPPS under 32 CFR 199.14(j)(1).
Some items are paid the same amount in ASCs as they are paid under
OPPS. These items include drugs and biologicals paid separately under
OPPS when they are integral to covered surgical procedures and
brachytherapy sources where prospective rates are available. Corneal
tissue acquisition payment is based on acquisition cost or invoice.
The actual payment to ASCs requires a comparison between billed
charges and the ASC payment rate for each separately payable procedure
and service. Reimbursement is based on the lower of the ASC payment
rate or the billed charge. Ancillary services should be billed on the
same claim as the related ASC procedure. Should Medicare modify this
process in the future, TRICARE will adopt all modifications, unless
deemed to be impracticable, as approved by the Director, DHA.
N. Wage Adjustments and Labor Share
We are finalizing as proposed that the labor related adjustments to
the ASC payment rates will be based on Medicare's methodology,
currently the Core-Based Statistical Area methodology. The adjustment
for geographic wage variation will be made based on a 50 percent labor
share, subject to change by CMS. There is no adjustment for geographic
wage differences for: corneal tissue acquisition; drugs and devices
with pass-through status under OPPS; brachytherapy sources; payment
adjustment for NTIOLs; and separately payable drugs and biologicals. We
are adopting this methodology, as well as any future refinements or
adjustments made by Medicare to the labor-related share, the items and
services subject to wage adjustments, and the methodology by which wage
adjustments are made, unless determined to be impracticable by the
Director, DHA.
O. Annual Adjustments
Since CY 2012, Medicare has applied an annual update to ASC
payments based on the CPI-U reduced by the productivity adjustment. The
proposed rule planned to adopt these annual updates. However, effective
for CY 2019 through CY 2023, Medicare adopted the hospital market
basket update reduced by the productivity adjustment to update ASC
payments. DHA will adopt the update factors used in the Medicare ASC
rates each year.
P. Payment for Terminated Procedures
This final rule with comment period finalizes the adoption of
Medicare's payment provisions for terminated procedures, as well as the
adoption of all future refinements and adjustments. Currently, this
process is as follows:
1. Payment will be denied when an ASC submits a claim for a
procedure that is terminated before the patient is taken into the
treatment or operating room.
2. Payment will be made at 50 percent of the rate if a surgical
procedure is terminated due to the onset of medical complications after
the patient has been prepared for surgery and taken to the
[[Page 19852]]
operating room but before anesthesia has been induced or the procedure
initiated.
3. Full payment will be made for a surgical procedure if a medical
complication arises which causes the procedure to be terminated after
anesthesia has been induced or the procedure initiated.
Q. Payment for Multiple Procedures
We are finalizing the adoption of Medicare's payment provisions for
multiple procedures, as well as the adoption of all future refinements
and adjustments. When multiple procedures are performed in the same
operative session that are subject to the multiple procedure discount,
100 percent of the highest paying surgical procedure on the claim is
paid, plus 50 percent of the applicable payment rates for the other ASC
covered surgical services. In determining the ranking of the procedures
for the discounting, the lower of the billed charge or the ASC payment
amount will be used.
R. Offset for Payment for Pass-Through Devices
The ASC payment may be reduced for certain procedures when provided
in conjunction with a specific pass-through device. We are finalizing
our proposal to adopt this methodology, and accept the code pairs as
assigned and updated by CMS, as well as any other future refinements or
adjustments to this methodology.
S. Payment for Devices Furnished With No Cost or Full or Partial Credit
Reduced payments are made for certain procedures when a specified
device is furnished without cost or for which either a partial or full
credit is received (e.g., device recall). We are finalizing as proposed
to adopt this methodology as well as any other future refinements or
adjustments to this methodology.
T. Payment for Non-ASC Services
ASCs may furnish and be paid under alternate established
reimbursement methodologies for services not considered ASC facility
services. For example, ASCs may be reimbursed the CMAC rate for a
physician office visit; facility charges are not allowed. If there is
no ASC payment for services that are medical in nature (such as office
visits and diagnostic tests), the ASC is reimbursed as though the
service was performed in a physician's office, with no additional
payment for facility charges. Surgical services that do not have an
established reimbursement rate under this system may not be reimbursed
in an ASC setting.
U. Transitions
We are finalizing as proposed, no transition period, since many
providers will see increases in payments under this reimbursement
methodology.
V. ASC Quality Report Program and Value Based Purchasing
Medicare utilizes the ASC Quality Reporting program (ASCQR), under
which ASCs must submit data on quality measures to receive the full
payment update each year. ASCs that do not submit the required data
have their payment update reduced by 2 percent. Performance on these
measures does not impact ASC payments. For 2016, the measures included:
<bullet> ASC-1 Patient Burn
<bullet> ASC-2 Patient Fall
<bullet> ASC-3 Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure,
Wrong Implant
<bullet> ASC-4 Hospital Transfer/Admission
<bullet> ASC-5 Prophylactic Intravenous (IV) Antibiotic Timing
<bullet> ASC-6 Safe Surgery Checklist Use
<bullet> ASC-7 ASC Facility Volume Data on Selected ASC Surgical
Procedures
<bullet> ASC-8 Influenza Vaccination Coverage among Healthcare
Personnel
Medicare contracts with outside entities to collect this quality
data. Because the TRICARE program represents a small fraction of the
ASC services rendered as a whole, we are finalizing our proposal to
provide the full ASC update to all ASCs, regardless of whether they
report quality data. Collecting information regarding which ASCs report
quality data and which do not, and building that information into the
reimbursement system in a timely manner will be impracticable for the
program. However, TRICARE may utilize this data, which is publicly
reported at <a href="http://data.medicare.gov">data.medicare.gov</a>, for future initiatives related to
reimbursement for ASCs. The ASCQR may lead to a value based purchasing
(VBP) program for ASCs in the future; however, there were no specific
proposals in Medicare's most recent ASC final rule (2016). TRICARE will
adopt reimbursement modifications to the ASC reimbursement system
related to VBP, if determined to be practicable by the Director, DHA.
Such changes will be incorporated into the implementing instructions,
as appropriate.
2. Adopt Medicare's Payment Methodology for Outpatient Services
Provided in Cancer and Children's Hospitals
A. Reimbursement
This final rule implements the adoption of Medicare's reimbursement
methodology for outpatient services rendered in cancer and children's
hospitals, with modifications made due to the administrative complexity
of the Medicare system, as well as finalizes a combined OPPS and cost-
reimbursement system. We are finalizing as proposed to pay these
hospitals under TRICARE's existing OPPS, and then reimburse the
hospitals the higher of the OPPS payment or one hundred percent of the
hospital-specific costs for those same services, based on the hospital-
specific outpatient cost to charge ratio (CCR), through an annual
adjustment. We are also finalizing as proposed to change the
regulations text at Sec. 32 CFR 199.14(a)(6) to include cancer and
children's hospitals as providers subject to OPPS, and will further
describe how these providers will be held harmless under the finalized
methodology.
B. Hospitals Subject to This Proposed Reimbursement System
We are finalizing our proposal that cancer and children's hospitals
that were specifically excluded in TRICARE's OPPS final rule at 73 FR
74945, and are currently held harmless from OPPS under Medicare, will
be subject to the provisions of this final rule.
C. Transitional Outpatient Payments
While Medicare provides reimbursement through TOPs for the
difference between OPPS and hospital-specific costs on a monthly basis,
we are finalizing our approach to make these payments on an annual
basis. This approach reduces the administrative complexity of the
system and makes the system practicable to adopt for TRICARE's
comparatively smaller beneficiary population. A precedent can be found
in TRICARE's implementation of the reimbursement system for SCHs; the
TRICARE contractors perform a year-end comparison of the primary
methodology with the Diagnosis Related Group (DRG)-based payment
methodology, and provide reimbursement where the DRG-based payment
amount would have been higher than the primary methodology.
Additionally, Medicare holds CCHs harmless by calculating their
pre-Balanced Budget Act (BBA) amount. The pre-BBA amount is an estimate
of
[[Page 19853]]
what the provider would have been paid during the CY for the same
services under the Medicare system that was in effect prior to OPPS.
This amount is calculated by multiplying the provider's payment-to-cost
ratio (PCR), based on the provider's base year cost report (generally
CY 1996), times the reasonable costs the provider incurred during a
calendar year to furnish the services that were paid under the OPPS.
However, we are finalizing as proposed to simply hold the hospital
harmless based on their costs; with costs defined as the product of
multiplying the hospital's total charges for covered OPPS services for
a twelve-month period by the hospital-specific outpatient CCR. This
modification still holds the hospital harmless and ensures payment at
costs, and is also practicable to adopt for TRICARE's comparatively
smaller beneficiary population, and addresses issues of administrative
complexity which led the agency to exempt CCHs in the original
implementation of OPPS. Additionally, for cancer hospitals, Medicare
has adopted an additional adjustment, mandated by the Patient
Protection and Affordable Care Act (PPACA), which applied an additional
payment adjustment to account for higher costs incurred by cancer
hospitals. Because TRICARE is not subject to the PPACA and due to the
administrative complexity of the calculation, we are not adopting this
additional adjustment to adjust for the average payment-to-cost ratio
for cancer hospitals.
For cancer and children's hospitals, we are finalizing the annual
process as follows:
Step One: Identify the costs of the hospital by multiplying the
total billed charges for OPPS services on claims paid during the 12-
month period by the most-recent hospital-specific outpatient CCR.
Step Two: Add together total TRICARE payments, cost-shares, and
deductibles applied for all Ambulatory Payment Classifications (APCs),
as well as outlier payments and transitional pass-through payments for
drugs, biologicals and/or devices for those same claims paid during the
year as those in Step One. If the result of Step 2 is greater than Step
1, no payment is warranted because the hospital was reimbursed more
from OPPS than their costs. If the result of Step 2 (OPPS payments) is
less than Step 1 (hospital's costs), the hospital will be issued a
payment equal to 100% of the difference between the hospital's costs
and actual payments.
Adjustments may be made in subsequent years for claims not
processed to completion. The implementing instructions will contain the
full instructions for calculation and payment of hold-harmless
payments.
D. Transitions
We are finalizing as proposed, no transition period, as providers
will be held harmless. Generally transitions are performed when
providers may be exposed to payments that are below their costs;
however, through the annual adjustments, providers are assured that
they will receive reimbursements for their costs.
E. General Temporary Military Contingency Payment Adjustments (GTMCPA)
Under this system, at the discretion of the Director, DHA, CCHs may
be eligible for GTMCPAs that will ensure network adequacy during
military contingency operations, in accordance with the implementing
instructions issued by the Director, DHA. These GTMCPAs will be issued
in the same manner as those that are made currently under TRICARE's
OPPS.
The criteria for applying for the GTMCPA, which have been tailored
for CCHs, will include: (1) 10 percent or more of the hospital's
revenue is from TRICARE for care of ADSMs/ADDs; (2) having 10,000 or
more TRICARE visits that would fall under the OPPS payment system for
ADSMs/ADDs annually; and (3) being deemed as essential for TRICARE
operations. Hospitals that meet these criteria will be eligible to
receive up to 115 percent of the hospital's costs for OPPS services.
III. Regulatory Analyses for ASCs, Cancer, and Children's Hospitals
Executive Order 12866 and Executive Order 13563
A. Overall Impact
DoD has examined the impacts of this final rule as required by
Executive Orders 12866 (September 1993, Regulatory Planning and
Review), 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
Executive Orders 12866 and 13563 direct agencies to assess the
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). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated as a ``not significant''
regulatory action, and not economically significant, under section 3(f)
of Executive Order 12866. Accordingly, the rule has not been reviewed
by the Office of Management and Budget (OMB) under the requirements of
these Executive Orders.
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 not 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. For purposes of the RFA, hospitals are
considered to be small entities, either by being nonprofit
organizations or by meeting the Small Business Administration (SBA)
identification of a small business (having revenues of $41.5 million or
less in any one year). Likewise, the vast majority of ASCs are
considered small businesses according to the SBA's size standards of
having total revenues of $16.5 million or less in any one year. For
purposes of the RFA, we have determined that 70 percent of ASCs would
be considered small entities according to the SBA size standards. We
have also determined that 100 percent of CCHs would be considered small
entities under the RFA definition because they qualify as a nonprofit
organization or governmental jurisdiction, even though almost all have
revenues above the $41.5 million SBA size standard. Therefore, the
Assistant Secretary of Defense for Health Affairs certifies this final
rule would have a significant impact on a substantial number of small
entities. The Regulatory Flexibility Analysis is included in the
preamble of this rule.
[[Page 19854]]
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.
Currently, that threshold level is 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 adopting
Medicare's methodologies with which the ASCs and hospitals are already
familiar.
6. Executive Order 13132, ``Federalism''
This rule has been examined for its impact under Executive Order
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.
7. Executive Order 13175, ``Consultation and Coordination With Indian
Tribal Governments''
It has been determined that this rule does not have a substantial
effect on Indian tribal governments. This rule does not impose
substantial direct compliance costs on one or more Indian tribes,
preempt tribal law, or effect the distribution of power and
responsibilities between the federal government and Indian tribes.
B. Entities Included in and Excluded From the Proposed Reimbursement
Methodologies
The TRICARE ASC reimbursement system encompasses all ASCs that meet
Medicare's definition of an ASC with a Medicare agreement, and those
ASCs that due to the nature of the population they serve (i.e.,
pediatric patients) do not have a Medicare agreement but are otherwise
accredited by an accrediting body as approved by the Director, DHA. The
TRICARE OPPS reimbursement system encompasses all Medicare-classified
cancer and children's hospitals that are also authorized for TRICARE
except for hospitals in States that are paid by Medicare and TRICARE
under a waiver that exempts them from Medicare's or TRICARE's OPPS,
respectively. Currently, only Maryland hospitals operate under such a
waiver.
C. Analysis of the Impact of Policy Changes on Payment for ASCs and
CCHS, and Alternatives Considered
The alternatives that were considered, the changes that we are
proposing, and the reasons that we have chosen these options are
discussed below:
1. Alternatives Considered for the Reimbursement of ASCs
This final rule with comment period finalizes paying ASCs on the
basis of the Medicare ASC fee schedule, with no exceptions to the list
of procedures considered appropriate by Medicare to be performed in an
ASC. This approach was adopted because TRICARE is statutorily obligated
to pay like Medicare where practicable. Medicare covers approximately
3,400 procedures under the ASC payment system. The ASC list is
comprised of those surgical procedures that CMS has determined do not
pose a significant safety risk and are not expected to require an
overnight stay following the surgical procedure. We anticipate no
impact to access to care by adopting Medicare's approach.
We have also determined that no transition period is necessary.
First, as we have noted earlier, historically transitions are done to
protect providers from payments below their costs. However, in this
case, while revenues would decrease for some providers, some providers
may see increases in reimbursement, and a transition period would not
be beneficial for these providers. Second, because alternative
locations are available for these services (Hospital Outpatient
Departments), concerns regarding access to care are unfounded. Third,
TRICARE payments to ASCs will be equal to Medicare's. The Medicare
Payment Advisory Committee (MedPAC) is an independent congressional
agency which advises the U.S. Congress on issues affecting the Medicare
program. MedPAC's ``March 2022 Report To Congress: Medicare Payment
Policy'', indicates that available indicators of payment adequacy for
ASC services are generally positive. Fourth, the number of outpatient
surgeries performed in ASCs under TRICARE is very small in comparison
to Medicare and the industry. If TRICARE had the Medicare reimbursement
system in place during CY 2019, TRICARE would have spent approximately
$250 million on ASC services. In contrast, ASCs received over $5.2
billion in Medicare payments and beneficiaries' cost sharing in 2019.
In aggregate, the TRICARE ASC claims are a very small percentage of the
industry's claims, so the change to reimbursement in the aggregate, is
small. Finally, the 2022 MedPAC report determined that there was
sufficient access to ASCs by Medicare beneficiaries, as evidenced by
the continued growth and expansion of ASCs. Given that TRICARE ASC
rates will be equal to Medicare ASC rates, we do not anticipate access
problems for TRICARE beneficiaries.
2. Alternatives Considered for the Reimbursement of Cancer and
Children's Hospitals
Under the method discussed in this final rule, TRICARE's payments
to CCHs would decrease by approximately $35 million. Our analysis has
shown that the expected impact on specific hospitals vary widely. Of
the 35 CCHs with the highest allowed amounts in 2021, 14 hospitals
would have their payments reduced by more than 15 percent, and six
hospitals would have their payments increased by more than 15 percent.
The median hospital in this group of 35 CCHs would have had its TRICARE
reimbursement for the services covered by this rule reduced by two
percent had the rule been implemented in 2021.
It is practicable to adopt OPPS for these institutional providers,
with annual hold harmless provisions.
We are also finalizing as proposed, no transition period. CCHs will
receive, at a minimum, one hundred percent of their costs, or the OPPS
payment, whichever is higher. Historically, transitions are done to
protect providers from payments below their costs. However, in this
case, the providers will be held-harmless, so no transition is
necessary.
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--CIVILIAN HEALTH AND MEDICAL PROGRAM OF THE UNIFORMED
SERVICES (CHAMPUS)
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. Amend Sec. 199.2 in paragraph (b) by adding in alphabetical order
definitions
[[Page 19855]]
for ``Ambulatory Surgery Center (ASC)'', ``Cancer hospital'', and
``Children's hospital'' to read as follows:
Sec. 199.2 Definitions.
* * * * *
(b) * * *
Ambulatory Surgery Center (ASC). Any distinct entity that is
classified by the Centers for Medicare and Medicaid Services (CMS) as
an Ambulatory Surgical Center (ASC) under 42 CFR part 416 and meets the
applicable requirements established by Sec. 199.6(b)(4)(x). Any ASC
that would otherwise meet the CMS classification as an ASC but does not
have a participation agreement with Medicare due to the nature of the
patients they treat (e.g., pediatric) must meet the applicable
requirements established by Sec. 199.6(b)(4)(x) in order to be a
TRICARE authorized ASC. All ASCs must also enter into participation
agreements with TRICARE as required by Sec. 199.6(b)(4)(x) in order to
be an authorized TRICARE provider of ASC services. Additionally, ASCs
are prohibited from billing TRICARE beneficiaries for procedures that
are not included in Medicare's ASC list of procedures allowable for
facility fee payment in an ASC setting, unless the beneficiary agreed
in advance in writing to pay for the non-covered services, in
accordance with the ``hold harmless'' provision under Sec.
199.6(b)(4)(x)(B)(1)(ii) and (iii).
* * * * *
Cancer hospital. A specialty hospital that is classified by CMS as
a Cancer Hospital as specified in 42 CFR 412.23 and meets the
applicable requirements established by Sec. 199.6(b)(4)(i).
* * * * *
Children's hospital. A specialty hospital that is classified by CMS
as a Children's Hospital as specified in 42 CFR 412.23 and meets the
applicable requirements established by Sec. 199.6(b)(4)(i).
* * * * *
0
3. Amend Sec. 199.6 by revising paragraph (b)(4)(x)(B)(1) to read as
follows:
Sec. 199.6 TRICARE-authorized providers.
* * * * *
(b) * * *
(4) * * *
(x) * * *
(B) * * *
(1) Ambulatory surgical centers (ASC). ASCs must meet all criteria
for classification as an Ambulatory Surgical Center under 42 CFR part
416, as well as all of the requirements of this part, in order to be
considered an authorized ASC under the TRICARE program. Care provided
by an authorized TRICARE ASC may be cost-shared under the following
circumstances:
(i) A childbirth procedure provided by a CHAMPUS-approved ASC shall
not be cost-shared by CHAMPUS unless the surgical center is also a
CHAMPUS-approved birthing center institutional provider as established
by the birthing center provider certification requirement of this part,
and then reimbursement of covered maternity care and childbirth
services shall be subject to Sec. 199.14(e).
(ii) ASCs must demonstrate they have a valid participation
agreement with Medicare, except as provided under paragraph
(b)(4)(x)(B)(1)(i) of this section. In addition, in order to be
considered an authorized TRICARE provider, ASCs must accept the
requirements for a participating provider under paragraph (a)(13) of
this section and must also enter into a participation agreement with
TRICARE which includes a specific ``hold harmless'' provision under
which the facility will agree not to bill the patient for services not
on the Medicare ASC procedures list unless, the patient is advised in
writing that the non-listed procedure is not covered by TRICARE and the
patient agrees, in advance in writing, to be financially liable for the
non-covered procedure.
(iii) ASCs that do not have an agreement with Medicare due to the
nature of the patients they treat (e.g., pediatric patients) shall be
accredited by the Joint Commission, the Accreditation Association for
Ambulatory Health Care, Inc. (AAAHC), or such other accreditation as
authorized by the Director, DHA and published in the implementing
instructions. Additionally, these facilities must enter into
participation agreements with TRICARE, including the hold harmless
provisions under paragraph (b)(4)(x)(B)(1)(ii) of this section, and
accept the requirements for a participating provider under paragraph
(a)(13) of this section in order to be an authorized TRICARE provider.
* * * * *
0
4. Section 199.14 is amended by revising paragraphs (a)(6)(ii)(A),
(a)(6)(ii)(E) introductory text, and (a)(6)(ii)(E)(3), adding paragraph
(a)(6)(ii)(E)(4), and revising paragraph (d) to read as follows:
Sec. 199.14 Provider reimbursement methods.
(a) * * *
(6) * * *
(ii) * * *
(A) General. Outpatient services provided in hospitals subject to
Medicare OPPS as specified in 42 CFR 413.65 and 42 CFR 419.20, to
include cancer and children's hospitals, will be paid in accordance
with the provisions outlined in sections 1833t of the Social Security
Act and its implementing Medicare regulation (42 CFR part 419) subject
to exceptions as authorized by this paragraph (a)(6)(ii).
* * * * *
(E) Temporary transitional payment adjustments (TTPAs). Temporary
transitional payment adjustments will be in place for all hospitals,
both network and non-network, except for cancer and children's
hospitals, in order to buffer the initial decline in payments upon
implementation of TRICARE's OPPS.
* * * * *
(3) An additional general temporary military contingency payment
adjustment (GTMCPA) will also be available at the discretion of the
Director, or a designee, at any time after implementation to adopt,
modify and/or extend temporary adjustments to OPPS payments for TRICARE
network hospitals deemed essential for military readiness and
deployment in time of contingency operations. Any GTMCPAs to OPPS
payments shall be made only on the basis of a determination that it is
impracticable to support military readiness or contingency operations
by making OPPS payments in accordance with the same reimbursement rules
implemented by Medicare. For cancer and children's hospitals to qualify
for the GTMCPA, they must meet the criteria in paragraphs
(a)(6)(ii)(E)(3)(i) through (iii) of this section. Cancer and
children's hospitals that meet these criteria will be eligible to
receive up to 115 percent of the hospital's costs for OPPS services.
The criteria for adopting, modifying, and/or extending deviations and/
or adjustments to OPPS payments shall be issued through CHAMPUS
policies, instructions, procedures and guidelines as deemed appropriate
by the Director, or a designee. GTMCPAs may also be extended to non-
network hospitals on a case-by-case basis for specific procedures where
it is determined that the procedures cannot be obtained timely enough
from a network hospital. For such case-by-case extensions,
``Temporary'' might be less than three years at the discretion of the
Director, or designee. The GTMCPA qualification criteria for cancer and
children's hospitals follow:
(i) Have 10 percent or more of its revenue come from TRICARE for
care of ADSMs and ADDs;
[[Page 19856]]
(ii) Have 10,000 or more of its TRICARE visits paid under the OPPS
for ADSMs and ADDs annually; and
(iii) Be deemed as essential for TRICARE operations.
(4) For cancer and children's hospitals. There are no temporary
transitional payment adjustments in place. Reimbursement will be on the
basis of OPPS, however, payments shall be adjusted so that these
providers receive 100 percent of their costs. Adjustments shall be made
on an annual basis, and within 180 days of the end of the OPPS year
(OPPS Year is defined as April 1 through March 30) DHA will calculate
the hospital's costs, utilizing the hospital-specific outpatient cost-
to-charge ratio (CCR). The costs shall be calculated by multiplying the
hospital's billed charges for OPPS services by the CCR. If the
hospital's costs, as calculated by DHA, exceeded the payment that had
been made under OPPS, the hospital shall receive an annual payment
adjustment so that the hospital receives 100% of their costs.
* * * * *
(d) Payment of institutional facility costs for ambulatory surgery.
In general, TRICARE pays for institutional facility costs for
ambulatory surgery on the basis of prospectively determined amounts, as
provided in this paragraph, with the exception of ambulatory surgery
procedures performed in hospital outpatient departments or CAHs, which
are to be reimbursed in accordance with the provisions of paragraph
(a)(6)(ii) or (iii) of this section. Surgical services provided in
Ambulatory Surgery Centers (ASCs) as defined in Sec. 199.2(b) will be
paid in accordance with the provisions outlined in section 1833(t) of
the Social Security Act and its implementing Medicare regulation (42
CFR part 416). TRICARE will recognize, to the extent practicable, in
accordance with 10 U.S.C. 1079(i)(2), Medicare's ASC reimbursement
methodology to include specific coding requirements, prospectively
determined rates, discounts for multiple surgical procedures, the scope
of ASC services, covered surgical procedures, and the basis of payment
as described in 42 CFR part 416 with the exception that TRICARE will
implement no transitional payments. Payments to ASCs for covered
procedures and services will be based on the lesser of the billed
charge or the ASC payment rate. Payment for ambulatory surgery
procedures is limited to those procedures that are reimbursed by
Medicare in ASCs, with the exception of dental procedures that are
covered by the TRICARE program, as described in Sec. 199.4. In the
absence of a Medicare ASC fee schedule rate, the payment for a covered
dental procedure in ASCs will be based on the same rate under TRICARE's
OPPS.
* * * * *
Dated: March 23, 2023.
Aaron T. Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2023-06452 Filed 4-3-23; 8:45 am]
BILLING CODE 5001-06-P
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</html>Indexed from Federal Register on April 4, 2023.
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