Proposed Rule: TRICARE: Outpatient Hospital Prospective Payment System (OPPS)

Federal Register / Vol. 73, No.
63 / Tuesday, April 1, 2008 / Proposed Rules 17271
DEPARTMENT OF DEFENSE of Medicare’s cost-based payment Subsequent to publication of the

methodology with a prospective proposed rule, the Medicare, Medicaid,
Office of the Secretary payment system (PPS). Medicare and State Child Health Insurance
[DOD–2007–HA–0048; RIN 0720–AB19] implemented OPPS for services Program (SCHIP) Balanced Budget
furnished on or after August 1, 2000, Refinement Act of 1999 (BBRA 1999)
32 CFR Part 199 with temporary transitional provisions (Pub. L. 106–133) enacted on November
to buffer the financial impact of the new 29, 1999, made major changes that
TRICARE; Outpatient Hospital prospective payment system (e.g., affected the proposed Medicare OPPS.
Prospective Payment System (OPPS) incorporating transitional pass-through The following BBRA 1999 provisions
adjustments and proportional were implemented in a final rule (65 FR
AGENCY: Office of the Secretary, DoD. reductions in beneficiary cost-sharing to 18434) published on April 7, 2000.
ACTION: Proposed rule. lessen potential payment reductions • Made adjustments for covered
experienced under the new OPPS). services whose costs exceed a given
SUMMARY: This proposed rule
Congress likewise established threshold (i.e., an outlier payment).
implements a prospective payment • Established transitional pass-
system for hospital outpatient services enabling legislation under section 707 of
the National Defense Authorization Act through payments for certain medical
similar to that furnished to Medicare devices, drugs, and biologicals.
beneficiaries, as set forth in section of Fiscal Year 2002 (NDAA–02), Public
Law 107–107 (December 28, 2001) • Placed limitations on judicial
1833(t) of the Social Security Act. The review for determining outlier payments
rule also recognizes applicable statutory changing the statutory authorization [in
10 U.S.C. 1079(j)(2)] that TRICARE and the determination of additional
requirements and changes arising from payments for certain medical devices,
Medicare’s continuing experience with payment methods for institutional care
shall be determined, to the extent drugs, and biologicals.
this system including certain related • Included as covered outpatient
provisions of the Medicare Prescription practicable, in accordance with the
same reimbursement rules used by services implantable prosthetics and
Drug, Improvement, and Modernization durable medical equipment and
Act of 2003. The Department is Medicare. Similarly, under 10 U.S.C.
1079(h), the amount to be paid to health diagnostic x-ray, laboratory, and other
publishing this rule to implement an tests associated with those implantable
existing statutory requirement for care professional and other non-
institutional health care providers items.
adoption of Medicare payment methods • Limited the variation of costs of
for institutional care which will ‘‘shall be equal to an amount
services within each payment
ultimately provide incentives for determined to be appropriate, to the
classification group.
hospitals to furnish outpatient services extent practicable, in accordance with • Required at least annual review of
in an efficient and effective manner. the same reimbursement rules used by the groups, relative payment weights,
Medicare’’. Based on these statutory and the wage and other adjustments to
DATES: Written comments received at
mandates, TRICARE is adopting take into account changes in medical
the address indicated below by June 2, Medicare’s prospective payment system
2008 will be accepted. practice, the addition of new services,
for reimbursement of hospital outpatient new cost data, and other relevant
ADDRESSES: You may submit comments, services currently in effect for the
identified by docket number and or information or factors.
Medicare program as required under the • Established transitional corridors
Regulatory Information Number (RIN) Balanced Budget Act of 1997 (BBA
number and title, by either of the that would limit payment reductions
1997), (Pub. L. 105–33) which added under the hospital outpatient PPS.
following methods: section 1833(t) of the Social Security • Established hold harmless
• Federal eRulemaking Portal: http:// Act providing comprehensive provisions for rural and cancer
www.regulations.gov. Follow the provisions for establishment of a hospitals.
instructions for submitting comments. Medicare hospital OPPS. The Act • Provided that the coinsurance
• Mail: Federal Docket Management required development of a classification amount for a procedure performed in a
System Office, 1160 Defense Pentagon, system for covered outpatient services year could not exceed the hospital
Washington, DC 20301–1160. that consisted of groups arranged so that inpatient deductible for the year.
Instructions: All submissions received the services within each group were Section 1833(t) of the Social Security
must include the agency name and comparable clinically and with respect Act was subsequently amended by the
docket number or RIN for this Federal to the use of resources. The Act also Medicare, Medicaid, and SCHIP
Register document. The general policy described the method for determining Benefits Improvement and Protection
for comments and other submissions the Medicare payment amount and Act (BIPA) of 2000 (Pub. L. 106–554)
from members of the public is to make beneficiary coinsurance amount for and the Medicare Prescription Drug,
these submissions available for public services covered under the outpatient Improvement, and Modernization Act
viewing on the Internet at http:// PPS. This included the formula for (MMA) of 2003 (Pub. L. 108–173)
regulations.gov as they are received calculating the conversion factor and making additional changes in the OPPS.
without change, including any personal data requirements for establishing As a prelude to implementation of the
identifiers or contact information. relative payment weights. OPPS, Congress enacted the Omnibus
FOR FURTHER INFORMATION CONTACT: Centers for Medicare & Medicaid Budget Reconciliation Act of 1986
David E. Bennett, TRICARE Services (CMS) published a proposed (OBRA) (Pub. L. 99–509) which paved
Management Activity, Medical Benefits, rule in the Federal Register on the way for development of a PPS for
mstockstill on PROD1PC66 with PROPOSALS
and Reimbursement Systems, telephone September 8, 1998 (63 FR 47552) setting hospital outpatient services by
(303) 676–3494. forth the proposed PPS for hospital prohibiting payment for non-physician
SUPPLEMENTARY INFORMATION: outpatient services. On June 30, 1999, a services furnished to hospital patients
correction notice was published (64 FR (inpatients and outpatients), unless the
I. Introduction and Background 35258) to correct a number of technical services were furnished either directly
The OPPS evolved out of and typographical errors contained in or under arrangement with the hospital,
Congressional mandates for replacement the September 8, 1998 proposed rule. except for services of physician
VerDate Aug<31>2005 16:36 Mar 31, 2008 Jkt 214001 PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 E:\FR\FM\01APP1.SGM 01APP1
17272 Federal Register / Vol. 73, No. 63 / Tuesday, April 1, 2008 / Proposed Rules
assistants, nurse practitioners and deviations required to accommodate the Like Medicare’s OCE, the TRICARE-
clinical nurse specialists. Exceptions uniqueness of the TRICARE program. specific OCE will be updated on a
were also made for clinical diagnostic These deviations have been designed to quarterly basis incorporating, to the
procedures, the payment of which may accommodate existing TRICARE benefit extent practicable, all Medicare
only be made to the person or entity that structure and claims processing changes/updates (i.e., those changes
performed, or supervised the procedures/systems implemented under initiated through rulemaking and
performance of, the test; and for the TRICARE Next Generation Contracts transmittals/program memoranda).
exceptionally intensive hospital (T–NEX), while at the same time Periodic updating of the TRICARE-
outpatient services provided to Skilled eliminating any undue financial burden specific OCE will ensure consistency
Nursing Facility (SNF) residents that lie to TRICARE Prime, Extra, and Standard and accuracy of claims processing and
well beyond the scope of the care that beneficiary populations. Following is a payment under the OPPS.
SNFs would ordinarily furnish, and brief discussion of each of these Æ Deductible and Cost-Sharing—
thus beyond the ordinary scope of the deviations: Medicare’s OPPS coinsurance was
SNF care plan. Consolidated billing Æ Outpatient Code Editor (OCE)—The initially frozen at 20 percent of the
facilitated the payment of services Medicare Outpatient Code Editor with national median charge for the services
included within the scope of each APC program edits data to help identify within each APC (wage adjusted for the
ambulatory payment classification possible errors in coding and assigns provider’s geographic area) or 20
(APC). The OBRA also mandated Ambulatory Payment Classification percent of the APC payment rate,
hospitals to report claims for services numbers based on HCPCS codes for whichever was greater (i.e., the
under the Healthcare Common payment under the OPPS. The OPPS coinsurance for an APC could not fall
Procedure Coding System (HCPCS) APC is an outpatient equivalent of the below 20 percent of the APC payment
which enabled the identification of inpatient Diagnosis Related Group rate). This was designed so that, as the
specific procedures and services used in (DRG)-based PPS. Like the inpatient total payment to the provider increased
the development of outpatient PPS system based on DRGs, each APC has a each year based on market basket
rates. pre-established prospective payment updates, the present or frozen
Ongoing changes and refinement to amount associated with it. However, coinsurance amount would become a
the OPPS have been accomplished unlike the inpatient system that assigns smaller portion of the total payment
through annual proposed and final a patient to a single DRG, multiple APCs until the coinsurance represented 20
rulemaking, along with interim can be assigned to one outpatient claim.
percent of the total. Once the
transmittals and program memoranda coinsurance became 20 percent of the
If a patient has multiple outpatient
taking into consideration changes in payment amount, annual updates would
services during a single visit, the total
medical practice, addition of new be applied to the coinsurance so that it
payment for the visit is computed as the
services, new cost data, and other would continue to account for 20
sum of the individual payments for each
relevant information and factors. percent of the total charge. Wage
service. Medicare provides updated
TRICARE will recognize to the extent adjusted coinsurance amounts were
versions of the OCE, along with
practicable all applicable statutory further limited by the Medicare
installation and user manuals, to its
requirements and changes arising from inpatient deductible. Subsequent
fiscal intermediaries on a quarterly
Medicare’s continuing experience with legislation has accelerated the reduction
basis. The updated OCE reflects all new
this prospective payment system, of beneficiary copayment amounts by
including changes to the amounts and coding and editing changes during that imposing prescribed percentage
factors used to determine the payment quarter. limitations off of the APC payment rate.
rates for hospital outpatient services It was found upon initial testing of the For example, for all services paid under
paid under the prospective payment OCE that it could not be used in its the OPPS in CY 2005, the national
system [e.g., annual recalibration present form given the fact that the unadjusted copayment amount cannot
(updating) of group weights and extensive editing embedded in its exceed 45 percent of the APC rate.
conversion factors and adjustments for software program was specific to Accelerated reductions were imposed
area wage differences (wage index Medicare’s benefit structure and specifically for those APC groups for
updates)]. The agency will adopt all of internal claims processing requirements. which coinsurance represented a
Medicare’s CY 2008 OPPS changes As a result, the Agency has developed relatively high proportion of the total
published in the Federal Register on a TRICARE-specific OCE which will payment.
November 27, 2007, (72 FR 66580); e.g., better accommodate the benefit A program payment percentage is
extending the current packaging to structure and claims processing systems calculated for each APC by subtracting
include guidance services, image currently in place under the T–NEX the unadjusted national coinsurance
processing services, intraoperative contracts. This modified software amount for the APC from the unadjusted
services, imaging supervision and package will edit claims data for errors payment rate and dividing the result by
interpretation services, diagnostic and indicate actions to be taken and the unadjusted payment rate. The
radiopharmaceuticals, contrast agents, reasons why the actions are necessary. payment rate for each APC group is the
and observation services; and reduction This expanded functionality will basis for determining the total payment
of payments in cases where a hospital facilitate the linkage between the action (subject to wage-index adjustment) that
receives a substantial partial credit from being taken, the reasons for the action, a hospital will receive from the
the manufacturer toward the cost of a and the information on the claim that beneficiary and the Medicare program.
replacement device implanted in a caused the action. The edits will be Since imposition of Medicare’s
procedure. specific for TRICARE, ensuring unadjusted national coinsurance

While TRICARE intends to remain as compliance with current claims amounts would have an adverse
true as possible to Medicare’s basic processing criteria. The OCE will also financial impact on TRICARE
OPPS methodology (i.e., adoption and assign an APC number for each service beneficiaries (i.e., imposition of
updating of the Medicare data elements covered under the OPPS and return significantly higher cost-sharing for
used to calculate the prospective information to be used as input to the Prime beneficiaries), the Agency has
payment amounts), there will be some TRICARE PRICER program. opted to use the following hospital
Federal Register / Vol. 73, No. 63 / Tuesday, April 1, 2008 / Proposed Rules 17273
outpatient deductible and cost-sharing/ and Standard TRICARE programs for

copayments currently being applied in hospital outpatient services:
Tables 1 and 2 below for Prime, Extra,
TABLE 1.—HOSPITAL OUTPATIENT DEDUCTIBLES
Active duty family members
TRICARE Retirees, their family members
programs & survivors
E1–E4 E5 & above
Prime ....................... None ..................................................... None ..................................................... None.

Extra ........................ $50 per Individual ................................. $150 per Individual ............................... $150 per Individual.
$100 Maximum per family .................... $300 Maximum per family .................... $300 Maximum per family.
Standard .................. $50 per Individual ................................. $150 per Individual ............................... $150 per Individual.
$100 Maximum per family .................... $300 Maximum per family .................... $300 Maximum per family.
TABLE 2.—HOSPITAL OUTPATIENT COPAYMENTS/COST-SHARING

TRICARE prime program
TRICARE extra TRICARE standard
Type of service Active duty family member Retirees, their family program program
members & survivors
E1–E4 E5 & above
Hospital Outpatient $0 copayment per $0 copayment per $12 copayment per Active Duty Family Active Duty Family
Departments: Clinic visit. visit. visit. Members: Cost- Members: Cost-
visits; therapy visits; share—15% of fee share—20% of the
treatment rooms, etc. negotiated by con- allowable charge.
tractor Retirees, Their Family
Emergency Services: $0 copayment per $0 copayment per $30 copayment per Retirees, Their Family Members & Sur-
Emergency and ur- visit. visit. emergency room Members & Sur- vivors: Cost-
gently needed care visit. vivors: Cost- share—25% of the
obtained in hospital share—20% of the allowable charge.
emergency room fee negotiated by
the contractor
Ambulatory Surgery $0 copayment per $0 copayment per $25 copayment ADFMs: Cost-share— ADFMs: Cost-share—
(same day): Hos- visit. visit. No separate copay- $25 $25.
pital-based ambula- ment/cost-share for Retirees, Their Family Retirees, Their Family
tory surgical center. separately billed Members & Sur- Members & Sur-
professional vivors: Cost- vivors: Lesser of
charges. share—20% of the 25% of group rate
institutional fee ne- or 25% of billed
gotiated by the charge.
Birthing Centers Pre- $0 copayment per $0 copayment per $25 copayment contractor.
natal care, out- visit. visit.
patient delivery, and
postnatal care pro-
vided in hospital-
based birthing cen-
ter
Partial Hospitalization $0 copayment per $0 copayment per 40 per diem charge ADFMs: $20 per diem ADFMs: $20 per diem
Programs (PHPs): visit. visit. No separate copay- charge charge.
Mental health serv- ment/cost-share for Retirees, Their Family Retirees, Their Family
ices provided in au- separately billed Members & Sur- Members & Sur-
thorized hospital- professional vivors: Cost- vivors: Cost-
based PHP. charges share—20% of the share—25% of the
TRICARE allowed TRICARE allowed
amount amount.
Æ Hold-Harmless Protection—Since hospitals, children’s hospitals and rural transitional corridor provisions of the
the inception of the Medicare OPPS, hospitals having 100 or fewer beds statute (section 1833(t)(7) of the Social
providers have been eligible to receive which were held harmless under this Security Act). The authority for making
additional transitional outpatient provision and paid the full amount of transitional corridor payments under
payments (TOPs) if the payments they the decrease in payment under the section 1833(t)(7)(D)(i) of the Act, as
received under the OPPS were less than OPPS. Since transitional corridor amended by section 411 Public Law
the payments they could have received payments were intended to be 108–173, expired for rural hospitals
for the same services under the payment temporary payments to ease the having 100 or fewer beds, and sole
system in effect before the OPPS. Prior provider’s transition from a prior cost- community hospitals (SCHs) located in
to January 1, 2004, most hospitals that based payment system to a prospective rural areas as of December 31, 2005.
realized lower payments under OPPS payments system, they were terminated However, subsequent legislation
received transitional corridor payments as of January 1, 2004, with the exception (Section 5105 of Pub. L. 109–171)
based on a percent of the decreased of cancer and children’s hospitals which reinstituted the hold-harmless
payments, with the exception of cancer were held harmless permanently under transitional outpatient payments (TOPs)
for covered OPD services furnished on continue to reimburse cancer and between the two programs is the
or after January 1, 2006, and before children’s hospitals on a fee-for-services continuation of reimbursement of half-
January 1, 2009, for rural hospitals basis using billed charges and CMAC day PHPs (≥ to 3 hrs. but < 6 hrs.) under
having 100 or fewer beds that are not rates; i.e., they will be excluded TRICARE which are currently not
SCHs. This provision provided an altogether from the OPPS. recognized for payment under the
increased payment for such hospitals for Adoption of the Medicare OPPS has Medicare OPPS (i.e., Medicare has not
outpatient services if the OPPS payment also highlighted other policy established a separate APC for half-day
they received was less than the pre-BBA considerations which must be addressed PHPs which can be used for
payment amount (i.e., the amount that in order to accommodate preexisting reimbursement under the TRICARE
was received prior to implementation of authorization criteria and OPPS). This deviation from the
OPPS) that they would have received for reimbursement systems. Following are Medicare PHP required the
the same covered service. When the these identified policy considerations establishment of an additional APC, the
OPPS payment is less than the payment and prescribed resolutions: per diem of which was set at 75 percent
the provider would have received prior Æ Partial Hospitalization Programs of the unadjusted full-day PHP APC
to OPPS implementation, the amount of (PHP)—Currently, TRICARE coverage amount (i.e., 75 percent of the APC 0033
payment is increased by 90 percent of extends to both full- and half-day amount of $234.73, equaling $176.05 for
the amount of that difference for CY psychiatric partial hospitalization CY 2007). This will ensure continued
2007, and by 85 percent of the amount services furnished by TRICARE- coverage of a well established mental
of the difference for CY 2008. The authorized partial psychiatric health treatment modality (half-day
amount of payment under section hospitalization programs and authorized PHP) which has been in place under
1833(t)(13)(B) of the Act, as amended by mental health providers for the active TRICARE for over a decade. The above-
section 411 of Public Law 108–73, also treatment of a mental disorder. Each established per diems reflect the
provided a payment increase for rural psychiatric partial hospitalization structure and scheduling of PHPs, and
SCHs of 7.1 percent for all services and program must be either a distinct part of the composition of the PHP APC
procedures paid under the OPPS, an otherwise authorized institutional consists of the cost of all services
excluding drugs, biologicals, provider or a freestanding program provided each day. Although there is a
brachytherapy seeds and services paid certified pursuant to TRICARE requirement that each PHP day include
under pass-through payments effective certification standards; i.e., the facility a psychotherapy service, there is no
January 1, 2006, if justified by a study must be accredited by the Joint specification regarding the specific mix
of the difference in costs for rural SCHs, Commission on Accreditation of of other services furnished within the
which include Medicare essential access Healthcare Organizations (JCAHO) day.
under the current edition of the The TRICARE criteria under which
community hospitals or EACHs.
Accreditation Manual for Mental PHP services may be rendered are
While the Agency adopted the hold- Health, Chemical Dependency, and different than Medicare’s—both with
harmless TOPs for rural hospitals Mental Retardation/Developmental regard to the need for PHP services and
having 100 or fewer beds and SCHs, it Disabilities Services and meet all other facility requirements. Currently,
opted to totally exempt cancer and requirements as prescribed under 32 Medicare OPPS partial hospitalization
children’s hospitals from the OPPS in CFR 199.6(b)(4)(xii)(A) through (D). services may be provided to patients in
lieu of imposing the hold-harmless These authorized and participating lieu of inpatient psychiatric care in
provision, given the administrative partial hospitalization programs are hospital outpatient departments or
complexity of capturing the data paid a percentage off of the average Medicare-certified community mental
required for payment of monthly inpatient per diem amount per case to health centers (CMHCs). The Agency
interim TOP amounts. TOPs would both high- and low-volume psychiatric has opted to retain the existing mental
require a comparison of what would hospitals. Full-day partial health review criteria under 32 CFR
have been paid [i.e., billed charges and hospitalization programs (minimum of 6 199.4(b)(10) in order to ensure the
CHAMPUS Maximum Allowable Charge hours) receive 40 percent of the average continued level and quality of mental
(CMAC) amounts] prior to inpatient per diem, while partial health care afforded under the basic
implementation of the OPPS for hospital hospitalization programs with less than program. Following are the TRICARE
outpatient services to those amounts 6 hours (with a minimum of three review criteria for determining the
actually paid under the OPPS for the hours) will be paid a per diem of 75 medical necessity of psychiatric partial
same services. A TOP would be allowed percent of the rate for full-day partial hospitalization services:
in addition to the OPPS amount if hospitalization programs. • The patient is suffering significant
payment to a cancer or children’s Although the prescribed payment impairment from a mental disorder (as
hospital was lower than the amount that methodology for PHP under OPPS is defined in § 199.2) which interferes
would have been paid prior to similar to that currently being used (i.e., with age appropriate functioning.
implementation of the OPPS. Since payment under a per diem recognizing • The patient is unable to maintain
transitional corridor payments were the provider’s overhead costs and himself or herself in the community,
specifically designed to supplement the support staff), there are subtle with appropriate support, at a sufficient
losses experienced under the OPPS (i.e., differences in that OPPS’ all-inclusive level of functioning to permit an
to pay for services at the full amount per diems represent actual median costs adequate course of therapy exclusively
that would have been allowed prior to of furnishing a day of partial on an outpatient basis (but is able, with
implementation of the OPPS), and most, hospitalization while per diems under appropriate support, to maintain a basic
if not all, outpatient services paid at a the existing TRICARE system as level of functioning to permit partial
billed or CMAC would exceed the OPPS prescribed under 32 CFR hospitalization services and presents no
amount, the program cannot justify the 199.14(a)(2)(ix) are extrapolated from substantial imminent risk of harm to self
administrative burden/expense of inpatient costs based on the intensity of or others).
maintaining the hold-harmless the program (i.e., dependent on whether • The patient is in need of crisis
provisions for cancer and children’s it is classified as a full- or half-day stabilization, treatment of partially
hospitals. As a result, TRICARE will program). Another notable difference stabilized mental health disorders, or
services as a transition from an inpatient the patient’s home. Ambulatory surgery provisions under the TRICARE
program. procedures (both provided in hospital- freestanding ambulatory surgery benefit.
• The admission into the partial based and freestanding ambulatory The eleventh payment tier/group was
hospitalization program is based on the surgery centers) are subject to their own added to the ASC reimbursement
development of an individualized unique copayment/cost-sharing system as of November 1, 1998, for
diagnosis and treatment plan expected provisions under the current TRICARE extracorporeal shock wave lithotripsy,
to be effective for the patient and permit ambulatory surgery benefit. with a rate established off of the
treatment at a less intensive level. With implementation of the OPPS, inpatient Diagnostic Related Group
Based on existing mental health hospital-based ambulatory surgery (DRG) 323 which is currently $3,289.
review criteria under 32 CFR procedures will no longer be reimbursed Æ Birthing Centers—As described in
199.4(b)(10) and certification under the original eleven tier payment 32 CFR 199.6(b)(4)(xi), a birthing center
requirements prescribed under 32 CFR system, but will instead be paid on a is a freestanding or institution-affiliated
199.6(b)(4)(xii)(A), including rate-per-service basis that varies outpatient maternity care program
accreditation by the JCAHO, under the according to the APC group to which which principally provides a planned
current edition of the Accreditation the surgical procedure is assigned. The course of outpatient prenatal care and
Manual for Mental Health, Chemical relative weight of the APC group will outpatient childbirth services limited to
Dependency, and Mental Retardation/ represent the median hospital cost of low-risk pregnancies. These all-
Developmental Disabilities Services, not the services included in the APC inclusive maternity and childbirth
all hospital-based PHPs will be assured relative to the median cost of services services are currently being reimbursed
of receiving payment under the OPPS included in APC 0606, Level 3 Clinic in accordance with 32 CFR 199.14(e) at
unless they meet the above prescribed Visit. The prospective payment rate for the lower of the TRICARE established
certification requirements and enter into each APC will be calculated by all-inclusive rate or the billed charge.
a participation agreement with multiplying the APC’s relative weight The all-inclusive rate includes
TRICARE. CMHC PHPs have been by a nationally established conversion laboratory studies, prenatal
excluded from payment under the factor and adjusting it for geographic management, labor management,
TRICARE OPPS since CMHCs are not wage differences. The APC payment delivery, post-partum management,
recognized as authorized providers will be subject to the deductible and newborn care, birth assistant, certified
under the TRICARE program. cost-sharing/copayment amounts nurse-midwife professional services,
While the authorization standards currently being applied under Prime, physician professional services, and the
under 32 CFR 199.6(b)(4)(xii)(A) Extra, and Standard TRICARE programs use of the facility to the extent that they
through (D) will be retained/applied for for hospital outpatient services. Denial are usually associated with a normal
both hospital-based and freestanding of Medicare inpatient procedures will pregnancy and childbirth. Since
PHPs currently recognized under the also be adhered to under the OPPS (i.e., institutional-affiliated maternity centers
Program, including the requirement for denial of inpatient surgical procedures will continue to be reimbursed under
a written participation agreement with performed in a hospital outpatient the TRICARE maximum allowable
TRICARE, freestanding PHPs will be setting) except for those inpatient birthing center all-inclusive rate
exempt from OPPS and will continue to procedures, which upon medical methodology as prescribed under 32
be reimbursed under the old TRICARE review, could be safely and efficaciously CFR 199.14(e), payment will be equal to
PHP per diem system as prescribed rendered in an outpatient setting due to the sum of the Class 3 CMAC for total
under 32 CFR 199.14(a)(2)(ix), subject to TRICARE’s younger, healthier obstetrical care for a normal pregnancy
their own unique mental health beneficiary population. Exceptions to and delivery (CPT code 59400) and the
copayment/cost-sharing provisions. Medicare’s inpatient surgical procedure TMA supplied non-professional
Æ Ambulatory Surgery Procedures— listing were based in major part to component amount, which includes
Currently, ambulatory surgery standardized utilization management both the technical and professional
procedures provided in both review criteria, (i.e., Interqual and components of tests usually associated
freestanding ambulatory surgery centers Milliman), used by TRICARE Managed with a normal pregnancy and childbirth.
(ASCs) and hospital outpatient Care Support Contractors’ medical As a result, hospital-based birthing
departments or emergency rooms are review staff. TRICARE-specific APCs centers will continue to be reimbursed
paid using prospectively determined will be developed for these designated the same as freestanding birthing
rates established on a cost basis and inpatient procedures based on median centers except that updating of the
divided into eleven groups as prescribed costs from the most recent 12 months of hospital-based all inclusive rate,
under 32 CFR 199.14(d). These payment claims history. OPPS reimbursement consisting of the CMAC for procedure
groups are further adjusted for area will also be extended for an inpatient code 59400 (Birthing Center, all-
labor costs based on Metropolitan procedure performed to resuscitate or inclusive charge, complete) and the
Statistical Areas (MSAs). The payment stabilize a patient with an emergent, state specific non-professional
rates established under this system life-threatening condition who dies component, will lag two months behind
apply only to facility charges for before being admitted as a patient, the freestanding birthing center all-
ambulatory surgery (e.g., standard which in this case, will be paid under inclusive update; i.e., the freestanding
overhead amounts that include, but are a new technology APC. birthing center all-inclusive rate
not limited to, nursing and technician Freestanding ASCs will be exempt components will usually be updated on
services, use of the facility and supplies from OPPS and will continue to be paid February 1 of each year to coincide with
and equipment directly related to the under the existing eleven tier payment the annual CMAC file update, followed
surgical procedure) and do not include system. ASC procedures will be placed by the hospital-based birthing center all-
such items as physician’s fees, into one of ten groups by their median inclusive rate component updates on
laboratory, X-rays or diagnostic per procedure cost, starting with $0 to April 1 of the same year.
procedures (other than those directly $299 for Group 1, and ending with Æ Observation Stays—Observation
related to the performance of the $1,000 to $1,299 for Group 9 and $1,300 Services are those services furnished on
surgical procedure), prosthetics and and above for Group 10, subject to their a hospital’s premises, including the use
durable medical equipment for use in own unique copayment/cost-sharing of a bed and periodic monitoring by a
hospital’s staff, which are reasonable qualify for payment under the state’s must be integrated into a unified
and necessary to evaluate an cost containment waiver, and hospitals retrieval system (or cross reference) of
outpatient’s condition or to determine located outside one of the 50 states, the the main hospital and there must be full
the need for a possible admission to the District of Columbia and Puerto Rico access to all services provided at the
hospital as an inpatient. Under and specialty care providers which main hospital for patients treated in the
Medicare, prior to CY 2008, a hospital include: (1) Cancer and children’s outpatient facility requiring further care.
may receive separate APC payments for hospitals; (2) freestanding ASCs; (3) • Financial integration. The financial
observation services for patients having freestanding Partial Hospitalization operation of the outpatient facility must
diagnoses of chest pain, asthma, or Programs (PHPs); (4) freestanding be fully integrated within the financial
congestive heart failure, when billed in psychiatric and Substance Use Disorder system of the main hospital, as
conjunction with an evaluation and Rehabilitation Facilities (SUDRFs); (5) evidenced by shared income and
management visit for a minimum of 8 Comprehensive Outpatient expenses between the main hospital and
hours. Since these qualifying diagnoses Rehabilitation Facilities (CORFs); (6) outpatient facility.
would greatly restrict separate payment Home Health Agencies (HHAs); (7) • Public awareness. The outpatient
of observation stays currently being hospice programs; (8) other corporate department, remote location hospital, or
reimbursed based solely on medical services providers (e.g., freestanding a satellite facility is held out to the
necessity, they are being expanded to cardiac catheterization centers, public and other payers as part of the
accommodate the special needs of freestanding sleep diagnostic centers, main provider. When patients enter the
unique TRICARE beneficiary and freestanding hyperbaric oxygen outpatient facility they are aware that
populations (e.g., separate payment for treatment centers); (9) freestanding they are entering the main provider and
maternity observations stays). Separate birthing centers; (10) VA hospitals; and are billed accordingly.
payment of maternity observation stays (11) freestanding ESRD centers. Due to Having clear criteria for provider-
required the modification of the existing their inability to meet the more stringent based status is important because this
conditional criteria for separate requirements imposed for hospital- designation can result in additional
payment of observation stays associated based and freestanding PHPs under the TRICARE payments for services at the
with pain, asthma or congestive heart Program, CMHCs have also been provider-based facility (i.e., the
failure. Under the TRICARE OPPS, excluded from payment under OPPS for incorporation of additional facility costs
additional hospital services (e.g., partial hospitalization program (PHP) for covered outpatient services/
separate emergency room visit or clinic services since they are not recognized as procedures). TRICARE will accept the
visit) will not be required on a claim authorized providers under the providers’ determination on whether
with a maternity diagnosis in order to TRICARE program. they meet the regulatory criteria for
receive separate payment for an An outpatient department, remote provider-based status for purposes of
observation stay. The minimum time location hospital, satellite facility, or seeking reimbursement under the
requirements have also been reduced other provider-based entity must also be TRICARE OPPS.
from 8 to 4 hours to ensure maximum either created by, or acquired by, a main III. Application of Ambulatory Payment
coverage of medically necessary provider (hospital qualifying for Classification (APC) Model
maternity observation stays. payment under OPPS) for the purpose of
Æ End-State Renal Disease (ESRD) furnishing health care services of the Payment for services under the OPPS
Dialysis Services—In accordance with same type as those furnished by the is based on grouping outpatient services
sections 1881(b)(2) and (b)(7) of the main provider under the name, into APC groups in accordance with
Social Security Act, a facility that ownership, and financial administrative provisions outlined in section 1833(t) of
furnishes dialysis services to Medicare control of the main provider, in the Social Security Act and its
patients with ESRD is paid a accordance with the following implementing regulation 42 CFR Part
prospectively determined rate for each requirements under 42 CFR § 413.65 419. This grouping is accommodated
dialysis treatment furnished. The rate is (Medicare Regulation) in order to through the reporting of HCPCS codes
a composite that includes all costs qualify for payment under the OPPS: and descriptors that are used to group
associated with furnishing dialysis • Licensure—The outpatient homogenous services (both clinically
services except for the costs of department, remote location hospital, or and in terms of resource consumption)
physician services and certain the satellite facility and the main into their respective APC groups.
laboratory tests and drugs that are billed hospital are operated under the same During the development of the
separately. CMS has exercised the license, except in areas where the State hospital OPPS it was recognized that
authority granted under section requires a separate license for the certain hospital outpatient services were
1833(t)(1)(B)(i) to exclude from the department of the provider. being paid based on fee schedules or
outpatient PPS those services for • Clinical integration—Professional other prospectively determined rates
patients with ESRD that are paid under staff of the outpatient department, that were being applied across other
the ESRD composite rate. Since remote location hospital or satellite ambulatory care settings. As a result, the
TRICARE does not have a comparable facility are monitored by, and have following services were excluded from
composite rate in effect for payment of clinical privileges at the main hospital. the OPPS in order to achieve
ESRD services, they will be reimbursed The medical director of the outpatient consistency of payment across different
under TRICARE’s OPPS. facility must also maintain a reporting service delivery sites: (1) Physician
relationship with the chief medical services; (2) nurse practitioner and
II. Treatment Settings Subject to officer at the main hospital that has the clinical nurse specialist services; (3)
Outpatient Prospective Payment System
same frequency, intensity and level of physician assistant services; (4) certified
The outpatient prospective payment accountability that exists in the nurse-midwife services; (5) services of a
system is applicable to any hospital relationship between other qualified psychologist; (6) clinical social
participating in the Medicare program departmental medical directors and the worker services, except under half- and
except for Critical Access Hospitals chief medical officer of the main full-day partial hospitalization programs
(CAHs), Indian Health Service hospitals, hospital. Medical records for patients in which the services are included
certain hospitals in Maryland that treated in the facility or organization within the per diem payment amount;
(7) services of an anesthetist; (8) difficult to establish reliable payment IV. Packaging and Special Payment
screening and diagnostic rates for low-volume groups, HCPCS Provisions Under OPPS
mammographies; (9) clinical diagnostic codes are assigned to an APC that is The prospective payment system
services; (10) non-implantable DME, most similar in terms of resource use establishes a national payment rate,
orthotics, prosthetics, and prosthetic and clinical coherence. standardized for geographic wage
devices and supplies; (11) hospital • Minimal Opportunities for differences, that includes operating and
outpatient services furnished to SNF capital-related costs that are directly
Upcoding and Code Fragmentation—
inpatients as part of their related and integral to performing a
The APC system is intended to
comprehensive care plan; (12) physical procedure or furnishing a service on an
discourage using a code in a higher
therapy; (13) speech-language outpatient basis, which has ultimately
pathology; (14) occupational therapy; paying group to define the care. That is,
putting two related codes such as the resulted in the establishment of distinct
(15) influenza and pneumococcal groups of surgical, diagnostic, and
pneumonia vaccines; (16) take-home codes for excising a lesion for 1.1 cm
and one of 1.0 cm, in different APC partial hospitalization services, as well
surgical dressings; (17) services and as medical visits. No separate payment
procedures designated as requiring groups may create an incentive to
exaggerate the size of the lesions in is made for packaged services, because
inpatient care; and (18) ambulance the cost of these items is included in the
services. These services will continue to order to justify the incrementally higher
payment. APC groups based on subtle APC payment for the service of which
be reimbursed under the current CMAC they are an integral part. These costs
fee schedule or other TRICARE- distinctions would be susceptible to this
kind of coding. Therefore, APC groups include, but are not limited to: (1) Use
recognized allowable charge
were kept as broad and inclusive as of operating suite; (2) use of procedure
methodology (e.g., statewide
possible without sacrificing resource or room or treatment room; (3) use of
prevailings).
The remaining outpatient procedures clinical homogeneity. recovery room or area; (4) use of an
which were not being paid under observation bed; (5) anesthesia, along
These procedures, along with their with supplies and equipment for
current fee schedules or other specific HCPCS coding and descriptors,
prospectively determined rates were administering and monitoring
were used to identify and group services anesthesia or sedation; (6) certain drugs,
grouped under an APC based on the within each established APC group.
following criteria: biologicals, and other pharmaceuticals;
They included: (1) Surgical procedures (7) medical and surgical supplies; (8)
• Resource Homogeneity—The
amount and type of facility resources (including hospital-based ASC surgical dressings; (9) devices used for
(for example, operating room, medical procedures currently being paid under external reduction of fractures and
supplies, and equipment) that are used the eleven tier ASC payment dislocations; (10) intraocular lenses
to furnish or perform the individual methodology); (2) radiology, including (IOLs); (11) capital related costs; (12)
procedures or services within each APC radiation therapy; (3) clinic visits; (4) costs incurred to procure donor tissue
group should be homogeneous. That is, emergency department visits; (5) other than corneal tissue; (13) incidental
the resources used are relatively diagnostic services and other diagnostic services such as venipuncture; (14)
constant across all procedures or tests; (6) partial hospitalization for the implantable items used in connection
services even though resources used mentally ill; (7) surgical pathology; (8) with diagnostic laboratory tests, and
may vary somewhat among individual cancer therapy; (9) implantable medical other diagnostics; and (15) implantable
patients. items (e.g., prosthetic implants, prosthetic devices (other than dental)
• Clinical Homogeneity—The implantable DME and implantable items which replace all or part of an internal
definition of each APC should be used in performing diagnostic x-rays body organ (including colostomy bags
‘‘clinically meaningful.’’ That is, the and laboratory tests); (10) specific and supplies directly related to
procedures or services included within hospital outpatient services furnished to colostomy care), including replacement
the APC group relate generally to a a beneficiary who is admitted to a SNF, of these devices.
common organ system or etiology, have but in which case the services are Payments for packaged services under
the same degree of extensiveness, and beyond the scope of SNF the OPPS are bundled into the payment
utilize the same method of treatment. comprehensive care plans; (11) certain providers receive for separately payable
• Provider Concentration—The preventive services, such as colorectal services provided on the same day and
degree of provider concentration cancer screening; (12) acute dialysis are identified by the status indicator (SI)
associated with the individual services (e.g., dialysis for poisoning); and (13) ‘‘N’’ (unconditionally packaged) or SI
that comprise the APC is considered. If ESRD services. These hospital ‘‘Q’’ (conditionally packaged). Hospitals
a particular service is offered only in a outpatient procedures will be paid on a include charges for packaged services
limited number of hospitals, then the rate-per-service basis that varies on their claims, and the costs associated
impact of payment for the services is according to the APC group to which with these packaged services are
concentrated in a subset of hospitals. bundled into the costs for separately
they are assigned.
Therefore, it is important to have an payable procedures in calculating their
accurate payment level for services with In accordance with section 1833(t)(2) payment rates. The following criteria are
a high degree of provider concentration. of the Social Security Act, services and used in determining whether
Conversely, the accuracy of payment items within an APC group cannot be procedures should be packaged: (1)
levels for services that are routinely considered comparable with respect to Whether the service is normally
offered by most hospitals does not bias the use of resources in the APC group provided separately or in conjunction
the payment system against any subset if the highest median cost is more than with other services; (2) how likely it is
of hospitals. 2 times the lowest median cost for an for the costs of the packaged code to be
• Frequency of Service—Unless there item or service within the same group appropriately mapped to the separately
is a high degree of provider (referred to a the ‘‘2 times rule’’). payable codes with which it was
concentration, creating separate APC Exceptions may be granted in unusual performed; (3) whether the APC
groups for services that are infrequently cases, such as low-volume items and payment to which the services were
performed is avoided. Since it is services. packaged will offset the hospital’s actual
costs; and (4) whether the expected cost establishes the use of average sales price data. The preadmission-related services
of the service is relatively low. (ASP) methodology (i.e., 106 percent of associated with intravenous immune
Special logic has also been the ASP which is the rate equivalent to globulin (IVIG) will continue to be paid
programmed into the OCE which will the payment that would be received in under a New Technology APC with a
have the OPPS PRICER automatically a physician office setting) as the basis rate of $75. Also, payment for blood
assign payment for a special packaged for payment for drugs and biologicals clotting factors in the outpatient setting
service reported on a claim if there were described in section 1842(o)(1)(C) of the will be set at 106 percent of the ASP,
no other services separately payable Act. Section 1883(t)(6)(D)(i) also states if plus the updated furnishing fee of $0.15.
under the OPPS claim for the same date. a drug or biological is covered under a The temporary policy of paying
A new status indicator ‘‘Q’’ will be competitive acquisition contract under radiopharmaceuticals at charges
assigned to these special packaged section 1847B of the Act, the payment reduced to costs is also being extended
codes to indicate that they are usually rate is equal to the average price for the for one additional year since it is still
packaged, except for special drug or biologicals for all competitive considered the best proxy for
circumstances when they are separately acquisition areas. Thus, drugs and radiopharmaceutical acquisition and
payable. biologicals with pass-through status in overhead costs. However, separate
Based on the above packaging criteria, CY 2007 will receive payment payment will only apply to those
it was determined that certain other consistent with the provision of section radiopharmaceuticals with per-day costs
expensive items and services which 1842(o) of the Act, at a rate that is greater than $55.
were otherwise considered an integral equivalent to the payment they would Æ Payment for Nonpass-Through
part of another procedure should not be receive in a physician office setting (106 Drugs, Biologicals, and
packaged within that procedure’s APC percent of the ASP) or the rate that Radiopharmaceuticals With HCPCS
payment rate, since the resulting would be paid under the competitive Codes, But Without OPPS Claims Data.
payment would not offset the costs of acquisitions program, while pass- For CY 2007, hospitals will receive
those items and services. This could through radiopharmaceuticals will be payment for nonpass-through
have a potentially negative impact, paid the hospital’s charge for the radiopharmaceuticals without hospital
thereby jeopardizing access to these radiopharmaceutical adjusted to the cost claims data that have been assigned
items and services in a hospital using the hospital’s overall cost-to- HCPCS codes as of January 1, 2007, at
outpatient setting. As a result, the costs charge ratio (CCR). the hospital’s charge for the
associated with these items and services Æ Packaging and Payment for Drugs, radiopharmaceutical adjusted to cost
were not packaged within the APC of Biologicals and Radiopharmaceuticals using the hospital’s overall cost-to-
the primary procedure with which they Without Pass-Through Status. Drugs, charge ratio, which will be the same
were normally associated. Instead, biologicals, and radiopharmaceuticals methodology used in the payment for
separate APCs were developed for that do not have pass-through status are pass-through radiopharmaceuticals. For
payment of these items and services paid in one of two ways: either new drugs without pass-through status
under the following payment packaged into the APC payment rate for or hospitals claims data, payment will
provisions: the procedure or treatment with which be made at the lesser of the ASP or
Æ Transitional Pass-Through for the products are usually furnished, or competitive acquisition contract price
Additional Costs of Drugs, Biologicals, separately based on a packaging (Part B CAP). In rare instances where a
and Radiopharmaceuticals. Although threshold which has been set at $55 for drug does not have a Part B drug CAP
the costs of drugs, biologicals and CY 2007. Therefore, for CY 2007 and rate or data available for use for ASP
pharmaceuticals are generally packaged beyond, drugs, biologicals and methodology, payment will be made at
into the APC payment rate for the radiopharmaceuticals that are not new 95 percent of the product’s most recent
primary procedure or treatment with and do not have pass-through status will AWP. Established drugs without
which the drugs are usually furnished, be packaged if their calculated per-day hospital claims data that have been
there are special temporary additional cost is less than $55 for CY 2007 or less classified as separately payable in CY
payments or ‘‘transitional pass-through than the updated threshold (i.e., the 2007 will be paid per the ASP-based
payments’’ available under section packaging threshold inflated annually methodology at a rate of 106 percent of
1833(t)(6) of the Social Security Act for by the Producer Price Index (PPI) for the ASP.
at least two years, but not more than prescription drugs), with the exception New drugs, biologicals and devices
three years for the following drugs and of 5HT3 antiemetics which will which qualify for separate payment
biologicals: (1) Current orphan drugs, as continue to be paid separately under OPPS, but have not yet been
designated under section 526 of the regardless of their calculated per-day assigned to a transitional APC (i.e.,
Federal Food, Drugs, and Cosmetics Act; cost. assigned to a temporary APC for
(2) current drugs and biological agents Section 1833(t)(14) of the Act requires separate payment of an expensive drug
used for treatment of cancer; (3) current special classification of certain or device) will be reimbursed under the
radiopharmaceutical drugs and separately payable drugs, biologicals TRICARE standard allowable charge
biological products; and (4) new drugs and radiopharmaceuticals and mandates methodology. This allowable charge
and biologic agents in instances where payment under section payment will continue until a
the item was not being paid as a 1833(t)(14)(A)(iii) of the Act for transitional APC has been assigned (i.e.,
hospital outpatient service as of specified covered outpatient drugs in until CMS has had the opportunity to
December 31, 1996, and where the cost CY 2006 and subsequent years to be assign the new drug, biological or
of the item is ‘‘not insignificant’’ in equal to the average acquisition cost for device to a temporary APC for separate
relation to the hospital OPPS payment the drug subject to any adjustment for payment).
amount. overhead costs, which for CY 2007 is a Æ Drug Administration Coding and
Section 1833(t)(6)(D)(i) of the Social combined rate of 106 percent of the Payment. For CY 2007, hospitals will be
Security Act sets the payment rate for ASP. Separately payable drugs and expected to report the full set of CPT
pass-through eligible drugs as amounts biologicals without ASP-based data will drug administration codes in a manner
determined under section 1842(o) of the be paid at their mean cost calculated consistent with their descriptors, CPT
Act. Section 1847A of the Act from Medicare CY 2005 hospital claims instructions and correct coding
principles. They will no longer be able special prescribed conditions; (2) have the estimated portion of each APC
to report the alphanumeric HCPCS been approved/cleared for use by the payment rate that could reasonably be
codes (C8950, C8951, C8952, C8954, Food and Drug Administration (FDA); attributed to the cost of the associated
and C8955) that were recognized prior (3) are determined to be reasonable and devices that are eligible for pass-through
to January 1, 2007. These newly necessary for the diagnosis or treatment payments. Offsets are calculated by
recognized CPT codes will be assigned of an illness or injury or to improve the comparing the median APC cost without
to six new drug administration APCs, functioning of a malformed body part; device packaging to the median APC
with payment rates based on median (4) are an integral and subordinated part cost (including device packaging),
costs for the APCs as calculated from of the procedure performed; (5) are used developed from claims with device
Medicare’s CY 2005 claims data. for one patient only (except for codes, to determine the percentage of
Æ Payment for Blood and Blood reprocessed single-use devices meeting median APC costs attributable to the
Products. Since Medicare’s FDA’s most recent regulatory criteria on associated pass-through device. These
implementation of the OPPS in August single-use devices); (6) are surgically percentages are then applied to the APC
1, 2000, separate payments have been implanted or inserted via a natural or payment amounts in order to determine
made for blood and blood products surgically created orifice on incision the applicable amounts to be deducted
through APCs rather than packaging and remain with the patient after the from the pass-through payments, known
them into the procedures with which patient is released from the hospital as the ‘‘offset’’ amounts. Offset amounts
they were administered. Hospital outpatient department; (7) are not are only applied when it can be
payment for the costs of blood and equipment, instruments, apparatus, determined that an APC contained cost
blood products, as well as the costs of implements, or such items for which is actually associated with the device.
collecting, processing, and storing blood depreciation and financing expenses are Currently, there is only one transitional
products, are made through the OPPS recovered as depreciable assets; (8) are pass-through payment offset in effect for
payments for specific blood product not materials and supplies such as device category C1820 (generator,
APCs. For CY 2007, these blood product sutures, clips or customized surgical neurostimulator (implantable), with
payments will be based on the kits furnished incidental to a service or rechargeable battery and charging
unadjusted, simulated median costs for procedure; (9) are not material such as system) with an amount of $8,668.94,
blood and blood products that are biologicals or synthetics that are used to which represents 77.65 percent of the
derived from CY 2005 Medicare claims replace human skin; (10) no existing or CY 2007 payment rate for APC 0222.
data, with the exception of the seven previously existing device category is Two new device categories have been
products for which there will be a appropriated for the device; (11) established for pass-through payment
payment adjustment to smooth their associated cost is not insignificant in starting in 2007: (1) L8690—auditory
transition to full claims-based payments relation to the APC payment for the osseointegrated device, external sound
in the future. service in which the innovative medical processor, replacement; and (2) C1821—
Æ Other Procedure or Service Costs equipment is packaged; and (12) it has interspinous process distraction device
Not Packaged in APC Payment. Costs been demonstrated that utilization of (implantable). The offset amounts for
for casting, splinting and strapping the device provides substantial clinical both of these new device categories
services, immunosuppressive drugs for improvement for beneficiaries compared were set to $0 for CY 2007, since there
patients following organ transplant, and with currently available treatments, were no identifiable device-related costs
certain other high-cost drugs that are including procedures utilizing devices associated with their procedure APCs
infrequently administered are not in existing or previously existing device (i.e., APC 0256 for L8690 and APC 0050
packaged into the costs of the primary categories. for C1821). The pass-through status of
procedures with which they are The duration of transitional pass- this rechargeable neurostimulator
normally associated. Instead, new APC through payments for devices is for at device (C1820) is scheduled to expire on
groups have been created for these items least two, but not more than three years. January 1, 2008.
and services, which will allow separate This period begins with the first date on Æ Payment When Devices are
payment. which a transitional pass-through Replaced Without Cost or Where Credit
Æ Corneal Tissue Acquisition Costs. payment is made for any medical device for a Replacement Device is Furnished
Corneal tissue acquisition costs will not that is described by the new medical to the Hospital. Payments will be
be packaged with the APC payment for category. The costs of the devices will reduced for selected APCs in cases in
corneal transplant surgical procedures. be packaged into the costs of the which an implanted device is replaced
Instead, separate payment will be made procedures with which they are without cost to the hospital or with full
based on the hospital’s reasonable costs normally billed once they are no longer credit for the removed device in
incurred to acquire corneal tissue. eligible for pass-through payment. accordance with 42 CFR 419.45. The
Corneal acquisition costs must be Device pass-through payments (those amount of the reduction to the APC rate
submitted using HCPCS code V2785 procedures designated with a SI ‘‘H’’) will be calculated in the same manner
(Processing, Preserving and are calculated by applying the statewide as the offset amount that would be
Transporting Corneal Tissue), indicating cost-to-charge ratio (CCR), which is applied if the implanted device assigned
the actual cost of the acquisition rather based on the geographical CBSA (2 digit to the APC had pass-through status as
than the hospital’s charge on the bill. = rural, 5 digit = urban), to the hospital’s defined under 42 CFR 419.66. OPPS
Æ Transitional Pass-Through charges on the claims and subtracting payments would be contingent on
Payment for Devices. Transitional any appropriate pass-through offset. The section 1833(t)(2)(E) of the Social
payments will only apply to new and offset adjustment only applies when a Security Act, which permits equitable
innovative medical devices meeting the pass-through device is billed in addition adjustments to the OPPS payments
following criteria: (1) Were not to the primary procedure with which it contingent on meeting all of the
recognized for payment as a hospital is normally associated. following criteria: (1) All procedures
outpatient service prior to 1997 (i.e., Provisions are also in place in assigned to the selected APCs must
payment was not being made as of accordance with 1833(t)(6)(D)(ii) of the require implantable devices that would
December 31, 1996) or treated as Social Security Act for reducing be reported if device replacement
meeting the time constraints under transitional pass-through payments by procedures were performed; (2) the
required devices must be surgically TABLE 3.—DEVICES FOR WHICH THE TABLE 3.—DEVICES FOR WHICH THE
inserted or implanted devices that FB MODIFIER MUST BE REPORTED FB MODIFIER MUST BE REPORTED
remain in the patient’s body after the WITH THE PROCEDURE WHEN FUR- WITH THE PROCEDURE WHEN FUR-
conclusion of the procedures, at least NISHED WITHOUT COST OR AT FULL NISHED WITHOUT COST OR AT FULL
temporarily; and (3) the offset percent
for the APC (i.e., the median cost of the
CREDIT FOR A REPLACEMENT DE- CREDIT FOR A REPLACEMENT DE-
APC without device costs divided by the VICE VICE—Continued
median cost of the APC with device
Device Description Device Description
costs) must be significant—significant
offset percent is defined as exceeding 40 C1721 .. AICD, dual chamber. C1891 .. Infusion pump, non-prog, perm.
percent. C1722 .. AICD, single chamber. C1895 .. Lead, AICD, endo dual coil.
The presence of the modifier ‘‘FB’’ C1764 .. Event recorder, cardiac. C1896 .. Lead, AICD, non sing/dual
[‘‘Item Provided Without Cost to C1767 .. Generator, neurostim, imp. C1897 .. Lead, neurostim, test kit.
Provider, Supplier, or Practitioner or C1771 .. Rep dev, urinary, w/sling. C1898 .. Lead, pmkr, other than trans.
Credit Received for Replacement C1772 .. Infusion pump, programmable.
C1899 .. Lead, pmkr/ACID combination.
(examples include, but are not limited C1776 .. Joint device (implantable).
C1777 .. Lead, AICD, endo single coil. C1900 .. Lead coronary venous.
to: devices covered under warranty, C2619 .. Pmkr, dual, non rate-resp.
replaced due to defect, or provided as C1778 .. Lead, neurostimulator.
C1779 .. Lead, pmkr, transvenous VDD. C2620 .. Pmkr, single, non rate-resp.
free samples)’’] would trigger the C2621 .. Pmkr, other than sing/dual.
C1785 .. Pmkr, dual, rate-resp.
adjustment in payment if the procedure C1786 .. Pmkr, single, rate-resp. C2622 .. Prosthesis, penile, non-inf.
code to which the modifier ‘‘FB’’ was C1813 .. Prostheses, penile, inflatab. C2626 .. Infusion pump, non-prog, temp.
amended appeared in Table 3 and was C1815 .. Pros, urinary sph, imp. C2631 .. Rep dev, urinary, w/o sling.
also assigned to one of the APCs listed C1820 .. Generator, neuro, rechg bat sys. L8614 ... Cochlear device/system.
in Table 4 below. C1882 .. AICD, other than sing/dual.
TABLE 4.—ADJUSTMENTS TO APCS IN CASES OF DEVICES REPORTED WITHOUT COST OR FOR WHICH FULL CREDIT IS
RECEIVED
CY 2007
APC SI APC group title offset amt.
(percent)
0039 ......... S .............. Level I Implantation of Neurostimulator ....................................................................................................... 78.85

0040 ......... S .............. Percutaneous Implantation of Neurostimulator Electrodes, Excluding Cranial Nerve ................................ 54.06
0061 ......... S .............. Laminectomy or Incision for Implantation of Neurostimulator Electrodes, Excluded .................................. 60.06
0089 ......... T .............. Insertion/Replacement of Permanent Pacemaker and Electrodes ............................................................. 77.11
0090 ......... T .............. Insertion/Replacement of Pacemaker Pulse Generator .............................................................................. 74.74
0106 ......... T .............. Insertion/Replacement/Repair of Pacemaker and/or Electrodes ................................................................ 41.88
0107 ......... T .............. Insertion of Cardioverter-Defibrillator ........................................................................................................... 90.44
0108 ......... T .............. Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads .............................................................. 77.75
0222 ......... T .............. Implantation of Neurological Device ............................................................................................................ 77.65
0225 ......... S .............. Implantation of Neurostimulator Electrodes, Cranial ................................................................................... 79.04
0227 ......... T .............. Implantation of Drug Infusion Devices ........................................................................................................ 80.27
0229 ......... T .............. Transcatheter Placement of Intravascular Shunts ...................................................................................... 46.17
0259 ......... T .............. Level IV ENT Procedures ............................................................................................................................ 84.61
0315 ......... T .............. Level II Implantation of Neurostimulator ...................................................................................................... 76.03
0385 ......... S .............. Level I Prosthetic Urological Procedures .................................................................................................... 83.19
0386 ......... S .............. Level II Prosthetic Urological Procedures ................................................................................................... 61.16
0418 ......... T .............. Insertion of Left Ventricular Pacing Elect. ................................................................................................... 87.32
0654 ......... T .............. Insertion/Replacement of a Permanent Dual Chamber Pacemaker ........................................................... 77.35
0655 ......... T .............. Insertion/Replacement/Conversion of a Permanent Dual Chamber Pacemaker ........................................ 76.59
0680 ......... S .............. Insertion of Patient Activated Event Recorders .......................................................................................... 76.40
0681 ......... T .............. Knee Arthroplasty ........................................................................................................................................ 73.37
If the device code (i.e., one of the difference between its usual charge for reduction would be taken from the
codes in Table 3 above) is assigned to the device being replaced and the credit adjusted amount.
one of the APCs listed in Table 4 above, for the replacement device. Multiple Æ Coding and Payment of Emergency
the unadjusted payment rate for the procedure reductions would also Department Visits. The following five
procedure APC will be reduced by an continue to apply even after the APC Type B emergency department G-codes
amount equal to the percent in Table 4 payment adjustment to remove payment have been established for emergency
times the unadjusted payment rate. The for the device cost, because there would
actual adjustments can be viewed on the departments meeting the definition of a
still be the expected efficiencies in dedicated emergency department (DED)
following CMS Web site: http:// performing the procedure if it was under the Emergency Medical
www.cms.hhs.gov/
provided in the same operative session Treatment and Labor Act (EMTALA)
HospitalOutpatientPPS/
In cases in which the device is being as another surgical procedure. Similarly, regulations in 42 CFR 489.24, but which
replaced without cost, the hospital will if the procedure was interrupted before are not Type A emergency departments
report a token device charge. However, administration of anesthesia (i.e., there (i.e., they may meet the DED definition
if the device is being inserted as an was a modifier 52 or 73 on the same line but are not available 24 hours a day, 7
upgrade, the hospital will report the as the procedure), a 50 percent days a week).
TABLE 5.—CY 2007 FINAL HCPCS CODES TO BE USED TO REPORT EMERGENCY DEPARTMENT VISITS PROVIDED IN
TYPE B EMERGENCY DEPARTMENTS
HCPCS code Short descriptor Long descriptor
G0380 ..................... Level 1 hosp. Level 1 hospital emergency department visit provided in a Type B emergency department. (The ED
type B visit. must meet at least one of the following requirements: (1) It is licensed by the State in which it is lo-
cated under applicable State law as an emergency room or emergency department; (2) It is held out
to the public (by name, posted signs, advertising, or other means) as a place that provides care for
emergency medical conditions on an urgent basis without requiring a previously scheduled appoint-
ment; or (3) During the calendar year immediately preceding the calendar year in which a determina-
tion under this section is being made, based on a representative sample of patient visits that oc-
curred during that calendar year, it provides at least one-third of all of its outpatient visits for the
treatment of emergency medical conditions on an urgent basis without requiring a previously sched-
uled appointment.).
uled appointment.).
uled appointment.).
uled appointment.).
uled appointment.).
The use of these G-codes, along with public (by name, posted signs, activation, the hospital will bill with
the following redefinition of a Type A advertising, or other means) as a place either CPT 99291 or 99292, receiving
emergency department, will serve as a that provides care for emergency payment for APC 0617 with a median
vehicle to capture median cost and medical conditions on an urgent basis cost of $402.67. However, if trauma
resource differences among visits to without requiring a previously activation occurs, the hospital would be
Type A emergency departments, Type B scheduled appointment. allowed to bill one unit of G-code
emergency departments and clinics: A new G-code (G0390—Trauma (G0390), reported with revenue code
Type A Emergency Department—A response team activation associated 68x on the same date of service, thereby
type A emergency department is a with hospital critical care services) was receiving $491.66 under APC 0618.
hospital-based facility or department also created (effective January 1, 2007) Hospitals will continue to bill CPT
that must be open 24 hours a day, 7 to be used in addition to CPT codes codes for both clinic and Type A
days a week and meet at least one of the 99291 and 99292 to address the Emergency department visits until
following requirements: (1) It is licensed meaningful cost difference between national guidelines have been
by the State in which it is located under critical care when billed with and established.
applicable State laws as an emergency without trauma activation. If critical The above CPT E/M codes and other
department; or (2) It is held out to the care is provided without trauma HCPCS codes currently assigned to the
clinic visit APCs have been mapped in clinic visits; five for emergency care services, based on median costs
Table 6 to eleven new APCs; five for department visits; and one for critical and clinical consideration.
TABLE 6.—ASSIGNMENT OF CPT E/M CODES AND OTHER HCPCS CODES TO NEW VISIT APCS FOR CY 2007
CY 2007 APC title CY 2007 APC HCPCS Short descriptor
Level 1 Hospital Clinic Visits ........................................... 0604 92012 Eye exam, established pat.
........................ 99201 Office/outpatient visit, new (Level 1).
........................ 99211 Office/outpatient visit, est (Level 1).
........................ G0101 CA screen; pelvic/breast exam.
........................ G0245 Initial foot exam pt lops.
........................ G0241 Office consultation (Level 1).
........................ G0271 Confirmatory consultation (Level 1).
........................ G0264 Assmt otr CHF, CP, asthma.
Level 2 Hospital Clinic Visits ........................................... 0605 92002 Eye exam, new patient.
........................ 92014 Eye exam and treatment.
........................ 99243 Office consultation (Level 3).
........................ 99273 Confirmatory consultation (Level 3).
........................ 99431 Initial care, normal newborn.
........................ G0246 Follow-up eval of foot pt lop.
........................ G0344 Initial preventive exam.
Level 3 Hospital Clinic Visits ........................................... 0606 92004 Eye exam, new patient.
Level 4 Hospital Clinic Visits ........................................... 0607 99204 Confirmatory consultation (Level 1).
Level 5 Hospital Clinic Visits ........................................... 0608 99205 Office/outpatient visit, new (Level 5).
........................ G0175 OPPS service, sched team conf.
Level 1 Type A Emergency Visits ................................... 0609 99281 Emergency department visit.
Critical Care .................................................................... 0617 99291 Critical care, first hour.
Æ Inpatient Only Procedures. The following the Medicare inpatient listing procedure designated under OPPS by
inpatient list on TMA’s OPPS Web site fairly closely, there may be occasions status indicator ‘‘C’’, furnished on the
at http://www.tricare.mil/opps specifies where, upon medical review, it is found same date, would be bundled into a
those services that are only paid when that a particular inpatient procedure can single payment under APC 0375
provided in an inpatient setting because be provided safely in an outpatient (Ancillary Outpatient Services the
of the nature of the procedure, the need setting due to TRICARE’s younger, Patient Expires) whose CY 2007 median
for at least 20 hours of postoperative healthier beneficiary population. These cost is $3,539.
recovery time or monitoring before the procedures will be removed from the Æ Partial Hospitalization Services.
patient can be safely discharged, or the TRICARE inpatient listing and will be Partial hospitalization services are those
underlying physical condition of the assigned to either an existing or new services furnished by TRICARE-
patient. The following criteria will be APC group based on their median costs. authorized partial hospitalization
used when reviewing procedures to If a patient was not admitted as an programs and authorized mental health
determine whether or not they should inpatient, and the procedure designated providers for the active treatment of a
be moved from the inpatient list and as an inpatient-only procedure (by mental disorder. All services must
assigned to an APC group for payment OPPS payment status indicator ‘‘C’’) follow a medical model and patient care
under OPPS: (1) The simplest procedure was performed to resuscitate or stabilize must be under the general direction of
described by the code may be performed a patient with an emergency, life- a licensed psychiatrist employed by the
in most outpatient departments; (2) the threatening condition and the patient partial hospitalization program to
procedure is related to codes that have dies before being admitted as an ensure medication and physical needs
already been removed from the inpatient, the hospital would bill for of all the patients are considered. The
inpatient list; (3) the procedure is being payment under the OPPS for the OPPS established per diem payment for
performed in numerous hospitals on an services that were furnished on that date both half- and full-day partial
outpatient basis; and (4) the procedure and included modifier—‘‘CA’’ on the hospitalization represents the hospital’s
can be appropriately and safely line with the HCPCS code for the costs for overhead, support staff and the
performed in an ASC. While it is inpatient procedure. Payment for all services of clinical social workers
anticipated that TRICARE will be services other than the inpatient (CSWs) and occupational therapists
(OTs). For Substance Use Disorder set of specific, clinically appropriate directly admitted into a hospital
Rehabilitation Facilities (SUDRFs), the services that include short-term outpatient department for observation
cost of alcohol and addiction counselor treatment, assessment, and reassessment care that does not qualify for separate
services would also be included in the before a decision can be made regarding payment under APC 0039, or under
PHP per diem. However, the OPPS does whether patients will require further T0002. In order to receive separate
not include the cost of services for treatment as hospital inpatients, or if payment for a direct admission into
physicians, clinical psychologists, and they are able to be discharged from the observation (APC 0604), the claim must
psychiatric nurse practitioners (NPs), hospital. The determination of whether show: 1) Both HCPCS codes G0378
which will continue to be billed or not observation services are (Hourly Observation) and G0379 (Direct
separately for covered mental health separately payable under APC 0339
Admit to Observation) with the same
services. In order to receive payment (observation) has been shifted from the
date of service; 2) that there are no
under OPPS, the hospital must use hospital billing department to the OPPS
specific HCPCS and revenue codes and claims processing logic using two services with status indictor ‘‘T’’ or ‘‘V’’
report partial hospitalization services HCPCS codes (i.e., G0378—Hospital (clinic or emergency department visit)
under bill type 13X, along with observation services per hour, and or critical care (APC 0620) provided on
condition code 41 on the UB–04 (HCFA G0379—Direct admission of patient for the same day of service as HCPCS code
1450 claim form). The claim must also hospital observation care). These G0379; and 3) that the observation care
include a mental health diagnosis and HCPCS codes will be assigned status does not qualify for separate payment
an authorization on file for each day of indicator ‘‘Q’’ (package service subject under APC 0339.
service, along with a designated H-code to separate payment based on criteria) If the period of observation spans
(i.e., either H0035 for half-day PHP or that will trigger the OCE logic during more than one calendar day, hospitals
H0037 for full-day PHP) and its the processing of the claim to determine should include all of the hours for the
accompanying revenue code, prior to if the observation service or direct entire period of observation on a single
assigning a half-or full-day partial admission service is packaged with the line and enter as the date of service for
hospitalization APC. Specific therapy other separately payable hospital that line the date the patient is admitted
codes (e.g., coding for family, group and services provided, or if a separate APC
to observation. Also, if there are
individual psychotherapy) will be payment for observation services or
multiple maternity observation stays on
reported in addition to the designated direct admission to observation is
the same day without condition code G0
partial hospitalization codes H0035 and appropriate. Following are the criteria
H0037 and will be packaged into a that must be met in order to receive or 27 to indicate that the visits were
single PHP code for the same date of separate payment under APC 0039: (1) distinct and independent of each other,
service, with the exception of The beneficiary must have one of four the first listed observation stay will be
electroconvulsive therapy (ECT). Claims medical conditions—congestive heart paid and the rest will be denied.
that do not meet the above criteria (e.g., failure, chest pain, asthma, or Æ Payment for Brachytherapy
claims filed without condition code 41, maternity—as documented by specific Sources. In accordance with section
appropriate H-coding—H0035 or H0037, ICD–9-CM diagnosis codes; (2) the 1833(t)(2)(H) of the Social Security Act,
and/or revenue code) will undergo number of units reported with HCPCS brachytherapy sources are being paid
further payment review to ensure that code G0378 must be equal to or exceed separately under their own service
outpatient mental health procedures do 8 hours for observation stays with groups (APCs) reflecting the number,
not exceed the full-day partial diagnoses of chest pain, asthma or isotope, and radioactive intensity of the
hospitalization per diem amount; i.e., congestive heart failure and a minimum devices of brachytherapy furnished,
the sum of the individual mental health of 4 hours for maternity observation including separate groups for
APC amounts on any particular day services; (3) an emergency department palladium-103 and iodine-125 devices.
does not exceed the full-day partial visit, clinic visit, critical care visit, or The payment for devices of
hospitalization per diem amount. The direct admission to observation services
brachytherapy based on hospitals’
half-day PHP per diem (APC T0001) using HCPCS code G037 must be
charges, adjusted to costs as prescribed
will be priced at 75 percent of the full- provided on the same day as, or the day
day APC (0033) amount of $233.37 for before the observation except for under section 1833(t)(16)(C) of the
CY 2007. Free-standing psychiatric maternity observation stays; (4) ongoing Social Security Act, has been extended
partial hospitalization services will physician evaluation must be provided. under the Tax Relief and Health Care
continue to be reimbursed the all- The FY 2007 median cost for the Act of 2006 to January 1, 2008. As a
inclusive PHP per diem rates as observation APC 0339 is $442.81. result, brachytherapy sources will
established under 32 CFR Direct admissions to observation will continue to be assigned to status
199.14(a)(2)(ix), subject to their own continue to be paid at a rate equal to indicator ‘‘H’’ and will not be eligible
unique mental health copayment/cost- that of a Level 1 Clinic Visit (APC 0604) for outlier payments in CY 2007. The
sharing provisions. with a CY 2007 median cost of $50.37 codes for the CY 2007 separately paid
Æ Separate Payment for Observation when a beneficiary is seen by a sources, long descriptors and APCs are
Stays. Observation care is a well-defined physician in the community and then is listed in Table 7 below:
TABLE 7.—SEPARATELY PAID BRACHYTHERAPY SOURCES WITH LONG DESCRIPTORS AND ASSIGNED APCS
CPT/ Long descriptor SI APC
HCPCS
A9527 ...... Iodine 1–125, sodium iodide solution, therapeutic, per millicurie ................................................................. H ............ 2632
C1716 ...... Brachytherapy source, Gold 198, per source ............................................................................................... H ............ 1716
C1717 ...... Brachytherapy source, High Dose Rate Iridium 192, per source ................................................................. H ............ 1717
C1718 ...... Brachytherapy source, Iodine 125, per source ............................................................................................. H ............ 1718
C1719 ...... Brachytherapy source, Non-High Dose Rate Iridium 192, per source ......................................................... H ............ 1719
C1720 ...... Brachytherapy source, Palladium 103, per source ....................................................................................... H ............ 1720
TABLE 7.—SEPARATELY PAID BRACHYTHERAPY SOURCES WITH LONG DESCRIPTORS AND ASSIGNED APCS—Continued
CPT/ Long descriptor SI APC
HCPCS
C2616 ...... Brachytherapy source, Yttrium-90, per source ............................................................................................. H ............ 2616
C2632 ...... (See note below) ........................................................................................................................................... D ............ ....................
C2633 ...... Brachytherapy source, Cesium-131, per source ........................................................................................... H ............ 2633
C2634 ...... Brachytherapy source, High Activity, Iodine-125, greater than 1.01 mCi (NIST), per source ..................... H ............ 2634
C2635 ...... Brachytherapy source, High Activity, Palladium-103, greater than 2.2 mCi (NIST), per source ................. H ............ 2635
C2636 ...... Brachytherapy linear source, Palladium-103, per 1 MM ............................................................................... H ............ 2636
C2637 ...... Brachytherapy source, Ytterbium-169, per source ....................................................................................... H ............ 2637
Note: C2632 has been deleted and replaced by A9527, effective January 1, 2007.
Æ APC for Vaginal Hysterectomy. beginning with a ‘‘T’’) for those services already found it necessary to develop
When billing for vaginal hysterectomies, that are unique to the TRICARE two new TRICARE specific APCs, one
hospitals must use procedure 58260, beneficiary population (e.g., those for maternity observation stays (T0002)
which will be assigned to APC 0202. TRICARE specific APCs for half-day and the other for a half-day partial
Æ New Technology APCs. A process partial hospitalization program (PHP) hospitalization program (T0001) to
has also been developed that will services and maternity observation accommodate its unique benefit
recognize new technologies that do not stays). structure and beneficiary population.
otherwise meet the definition of current There may also be subtle differences in
V. OPPS Reimbursement Methodology
orphan drugs, or current cancer therapy the inpatient-only procedure listings
drugs and biologicals and Æ General Overview. Under the being maintained by the two programs
brachytherapy, or current TRICARE OPPS, hospital outpatient since some of the Medicare inpatient-
radiopharmaceutical drugs and services are paid on a rate-per-services only procedures may be determined by
biological products, and which are basis that varies according to the APC TRICARE, upon medical review, to be
considered a covered benefit under group to which the service is assigned. safe for administration in an outpatient
TRICARE. In contrast to the other APC The APC classification system is setting due to its younger, healthier
groups, the new technology APC groups composed of groups of services that are population. This may require the
do not take into account clinical aspects comparable clinically and with respect development of additional APC groups,
of the services they are to contain, but to the use of resources. Level 1 (CPT) along with nationally established
only their costs. This process, along and Level II HCPCS codes and payment amounts based on their
with transitional pass-throughs, will descriptors are used to identify and median costs from the previous year’s
provide additional payment for a group the services within each APC. claims history.
significant share of new technologies. Costs associated with items or services The payment rate for each APC is
New items and services will be assigned that are directly related and integral to calculated by multiplying the APC’s
to new technology APCs when it is performing a procedure or furnishing a relative weight by the conversions
determined that they cannot service have been packaged into each factor. Weights are derived based on
appropriately be placed into existing procedure or service within an APC median hospital costs for services/
APC groups. The new technology APC group with the exception of: (1) New procedures assigned to the hospital
groups have established payment rates temporary technology APCs for certain outpatient APC groups. Billed charges
based on the midpoint of ranges of approved services that are structured for items integral to performing the
possible costs providing a mechanism based on cost rather than clinical major procedure or visit, which include
for initiating payment at an appropriate homogeneity; and (2) separate APCs for packaged HCPCS codes (i.e., codes with
level within a relatively short certain medical devices, drugs, SI = ‘‘N’’) and revenue codes appearing
timeframe. The cost bands for New biologicals, radiopharmaceuticals and on the same claim, are converted to
Technology APCs range from: $0 to $50, devices of brachytherapy under costs by multiplying each revenue
in increments of $10; $50 to $100, in transitional pass-through provisions. center charge by the appropriate
increments of $50; $100 to $2,000, in TRICARE is adopting Medicare’s hospital-specific CCR. Centers for
increments of $100; and $2,000 to classification system, along with its Medicare and Medicaid Services (CMS)
$6,000, in increments of $500. These nationally established APC payment currently use a four-tiered hierarchy of
increments which are in two parallel amounts as prescribed in section 1833(t) cost center CCRs to match a cost center
sets of New Technology APCs—one of the Social Security Act and in its to every possible revenue code
with status indictor ‘‘S’’ and the other accompanying Medicare regulation (42 appearing in the outpatient claims, with
with ‘‘T’’—allow assignment to the same CFR part 419) for reimbursement of the top tier being the most common cost
APC group procedures that are hospital outpatient services, to the center and the lowest tier being the
appropriately subject to a multiple extent practicable, in accordance with default CCR. If a hospital’s cost center
procedure payment reduction (T) with 10 U.S.C. 1079(j)(2), with the realization CCR was deleted by trimming, another
those that should not be discounted (S). that there will be subtle differences cost center CCR in the revenue
Æ Coding Requirement for occurring between the TRICARE and hierarchy can be applied. If no other
Reimbursement Under TRICARE OPPS. Medicare OPPS methodologies based on department CCR can be applied to the
To receive TRICARE reimbursement differences in the age and general health revenue code on the claim, CMS uses
under OPPS, providers must follow, and of the populations they serve (i.e., it can the hospital’s overall CCR for the
contractors shall enforce, all Medicare be assumed that the TRICARE revenue code.
specific coding requirements. TRICARE population is younger and healthier The costs of the above services/
Management Activity (TMA) will than the population being served by procedures are then standardized for
develop specific APCs (those APCs Medicare). For example, TRICARE has geographic wage variations by dividing
the labor-related portion of the the most frequently provided services. conversion factor for CY 2007 of
operating and capital costs (currently The relative payment weights were $61.468.
estimated at 60 percent on the average further adjusted by 1.364598352 for The national unadjusted APC
for each billed item) by the hospital budget neutrality, based on a payment rates that were calculated by
inpatient prospective payment system comparison of aggregate payments using multiplying the CY 2007 scaled weight
(IPPS) wage index. The standardized CY 2006 relative weights to aggregate for each APC by the final CY 2007
labor-related cost and the nonlabor- payments using the CY 2007 final conversion factor apply to all the
related cost component for each billed relative weights. services that are classified within the
item are summed to derive the total APC group. These national rates (i.e.,
The other component used in
standardized cost for each separately the unadjusted national rates for both
payable HCPCS code. Extreme costs establishing national APC payment APCs and the HCPCS to which OPPS
outside three standard deviations from amounts is the conversion factor, payment was assigned) are listed on
the geometric mean will be eliminated updated on an annual basis in TMA’s OPPS Web site at http://
prior to calculating the median cost for accordance with section www.tricare.mil/opps.
each separately payable HCPCS code. 1833(t)(3)(C)(iv) of the Social Security Æ Determination of Payment. A
The median costs of these procedures Act, which provides for CY 2007 an payment status indicator (SI) is
will then be mapped to their assigned updated amount equal to the hospital provided for every code in the HCPCS
APCs, and the median costs of those inpatient market basket percentage to identify how the service or procedure
assigned procedures will be used in increase applicable to hospital described by the code would be paid
establishing the overall APC median discharges under section under the hospital outpatient
cost. 1886(b)(3)(B)(iii) of the Act. The market prospective payment system (OPPS);
The relative payment weights are basket increase update factor of 3.4 i.e., it indicates if a service represented
calculated for each APC by dividing the percent for CY 2007, along with the by a HCPCS code is payable under the
median cost of each APC by the median required wage index budget neutrality OPPS or another payment system, and
cost for APC 0606 (Level 3 Clinic Visit), adjustment of approximately also which particular OPPS payment
which is $83.88 for CY 2007, as a 0.999331979, the adjustment of 0.04 policies apply. One, and only one, SI is
reconfiguration of the visit APCs. APC percent for the difference in the pass- assigned to each APC and to each
0606 was chosen in order to maintain through set-aside, and the adjustment HCPCS code. Following are the CY 2007
consistency in using a median for for the rural payment adjustment for payment status indicators, along with a
calculating unscaled weights rural SCHs (including EACHs) of description of the particular services
representing the median cost of some of 0.999975941, resulted in a standard each indicator identifies.
TABLE 8.—CY 2007 PAYMENT STATUS INDICATORS FOR HOSPITAL OPPS

Indicator Description OPPS payment status
A .......... Services paid under some payment method other than OPPS Not paid under OPPS. Paid by contractors under a fee schedule
(e.g., payment for non-implantable prosthetic and orthotic de- or payment system other than OPPS.
vices, DME, ambulance services, and individual professional
services).
B .......... More appropriate code required for TRICARE OPPS .................... Not paid under OPPS.
C .......... Inpatient procedures ........................................................................ Not paid under OPPS. Admit patient. Bill as inpatient.
E .......... Items or services not covered by TRICARE ................................... Not paid under OPPS.
F ........... Acquisition of corneal tissue, certain CRNA services, and Hepa- Not paid under OPPS. Paid on allowable charge basis.
titis B vaccines.
G .......... Pass-through drugs and biologicals ................................................ Paid separate APCs under OPPS.
H .......... (1) Pass-through device categories ................................................ (1) Separate cost-based pass-through payment; not subject to
cost-share/co-payment.
(2) Brachytherapy sources .............................................................. (2) Separate cost-based non-pass-through payment.

(3) Radiopharmaceutical agents ..................................................... (3) Separate cost-based non-pass-through payment.
K .......... Non-pass-through drugs and biologicals and blood and blood Paid separate APCs under OPPS.
products.
N .......... Packaged incidental items and services ......................................... Packaged into the primary procedure APC payment amount to
which the incidental item or service is normally associated.
P .......... Partial hospitalization ...................................................................... Per diem APC payments for both half-day and full-day partial
hospitalization programs.
Q .......... Services either separately payable or packaged ............................ Paid under OPPS; services either packaged or separately pay-
able depending on the specific circumstances of the HCPCS
billing. OCE logic will be applied in determining if the services
will be packaged or separately payable.
S .......... Significant procedures allowed under the OPPS for which multiple Paid under OPPS; separate APC payment.
procedure reduction does not apply.
T ........... Surgical services allowed under OPPS with multiple procedure Paid under OPPS; separate APC payment.
payment reduction.
V .......... Medical visits (including clinic or emergency department visits) .... Paid under OPPS; separate APC payment.
W ......... Invalid HCPCS or invalid revenue code with blank HCPCS .......... Not paid under OPPS.
X .......... Ancillary services ............................................................................. Paid under OPPS; separate APC payment.
Z ........... Valid revenue code with blank HCPCS and no other SI assigned Not paid under OPPS.
TB ........ Reimbursement not allowed for CPT/HCPCS code submitted ...... Not paid under OPPS.
Æ Adjustments for Specific Hospital payment rate based on the eligibility under OPPS. No outlier payments will
Payment. The hospital DRG wage status of the beneficiary at the time be calculated for line item services with
adjustment factor will be used to adjust outpatient services were rendered (i.e., SIs ‘‘G,’’ ‘‘H,’’ ‘‘K,’’ and ‘‘N,’’ with the
the portion of the payment rate that is those deductibles and cost-sharing/ exception of blood and blood products.
attributable to labor-related costs for copayment amounts applicable to
For CY 2007, the outlier threshold is
relative differences in labor and labor- Prime, Extra, and Standard beneficiary
met when the cost of furnishing a
related costs across geographic regions, categories). TRICARE will retain its
with the exception of APCs with SIs current hospital outpatient deductibles, service or procedure exceeds 1.75 times
‘‘K’’ and ‘‘G’’ because of the inseparable, cost-sharing/copayment amounts (refer the APC payment amount and exceeds
subordinate status of the outpatient to Tables 1 and 2 above) and the APC payment rate plus the $1,825
department within the overall hospital catastrophic loss protection under the fixed-dollar threshold. The fixed-dollar
setting. The OPPS will also adhere to OPPS. The ASC cost-sharing provision threshold was added to better target
the same wage index changes as the (i.e., assessment of a single copayment outliers to those high cost and complex
TRICARE-DRG based payment system, for both the professional and facility procedures where a very costly service
except the effective date for changes charge for a Prime beneficiary) will be could present a hospital with significant
will be January 1 of each year instead adopted as long as it is administratively financial loss. If a provider meets both
of October 1. This way only one wage feasible. This will not apply to Extra of these conditions (i.e., the multiple
index file will have to be maintained for and Standard beneficiaries since their threshold and the fixed-dollar
both the OPPS and DRG-based payment cost-sharing is based on a percentage of threshold), the outlier payment is
systems. Following are the steps taken the total allowed amount. calculated at 50 percent of the amount
in achieving this adjustment for APCs in Æ Additional APC Payment by which the cost of furnishing the
which multiple procedure discounting Adjustments. OPPS payment amounts service exceeds 1.75 times the APC
is not applied: are discounted when more than one payment rate. The hospital would
Step 1. Calculate 60 percent (labor- surgical procedure (SI= T) is performed
receive the normal APC payment rate
related portion) of the national during a single operative session. Under
along with the additional outlier
unadjusted payment rate. these circumstances, TRICARE will
Step 2. Determine the wage index area reimburse the full payment and the amount. For example, suppose a
in which the hospital is located and beneficiary will pay the full cost-share/ hospital charges $26,000 for a procedure
identify the wage index that applies to copayment for the procedure having the for which the APC adjusted amount is
the specified hospital. The wage index highest payment rate, while the $3,000 and the overall facility CCR is
values assigned to each hospital area remaining surgical procedure payments 0.30. The estimated cost to the hospital
reflect the new geographic statistical will be reduced by 50 percent, along is $7,800 (0.30 × $26,000). In order to
areas as a result of revised OMB with the beneficiary associated cost- determine whether the procedure is
standards (urban and rural) to which share/copayment to reflect the savings eligible for outlier payment, it first must
hospitals are assigned for FY 2007 associated with having to prepare the be determined whether the cost for the
under the IPPS. patient only once and the incremental service exceeds both the APC multiple
Step 3. Adjust the wage index of costs associated with anesthesia, outlier cost threshold of $5,250 (1.75 ×
hospitals located in certain qualifying operating and recovery room use, and $3,000) and the fixed-dollar threshold of
counties that have a relatively high other services required for the second $4,825 ($3,000 + $1,825). Since the
percentage of hospital employees who and subsequent procedures. A 50 estimated cost to the hospital ($7,800)
reside in the county, but who work in percent discount will also be applied to exceeds both threshold amounts, the
a different county with a higher wage the OPPS payment amounts and hospital would be eligible for 50 percent
index. beneficiary copayments/cost-shares for of the difference, which in this case
Step 4. Multiply the applicable wage procedures terminated before anesthesia would be $1,275 ($7,800—$5,250/2).
index determined under Steps 2 and 3 is induced, as identified by modifiers
by the amount determined in Step 1 that ¥73 (Discounted Outpatient Procedure Æ Payment Hierarchy for Non-OPPS
represents the labor-related portion of Prior to Anesthesia Administration) and Procedures. If the outpatient procedure
the national unadjusted payment rate. ¥52 (Reduced Services). Full payment is not assigned an APC payment amount
Step 5. Calculate 40 percent (the will be received for a procedure that is (i.e., is not assigned SI ‘‘G,’’ ‘‘H,’’ ‘‘K,’’
nonlabor-related portion) of the national started but discontinued after the ‘‘P,’’ ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’), but may be
unadjusted payment rate and add the induction of anesthesia as reported by reimbursed under an existing TRICARE
amount to the resulting product in step modifier ¥74 (Discounted Procedure). fee schedule or other prospectively
4. The result is the wage index adjusted In this case, payment would recognize determined rate (i.e., procedures
payment rate for the relevant wage the costs incurred by the hospital to assigned to SI ‘‘A’’), the following
index area in which the hospital is prepare the patient for surgery and the hierarchy will be used in pricing the
located. resources expended in the operating procedure. The PRICER will first look to
Step 6. If the provider is a Sole room and recovery room of the hospital. see if there is an appropriate CMAC
Community Hospital (SCH), multiply Discounting will also be applied to available for pricing. If a CMAC cannot
the wage adjusted payment rate by 1.071 conditional, inherent, and independent be found, it will then look to the
to calculate the total payment. This bilateral procedures.
Durable Medical Equipment Claims:
adjustment will apply to all services and An additional payment is provided
procedures paid under the OPPS (i.e., for outpatient services for which a Prosthetics, Orthotics, and Supplies
(DMEPOS) fee schedule for pricing. If a
SIs ‘‘P,’’ ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ and ‘‘X’’), hospital’s charges, adjusted to cost,
excluding drugs, biologicals and exceed the sum of the wage adjusted DMEPOS fee schedule rate is not
services paid subject to pass-through APC rate plus a fixed dollar threshold available for pricing, it will turn to
payment (i.e., SIs ‘‘G,’’ ‘‘H,’’ and ‘‘K’’). and a fixed multiple of the wage statewide prevailings. If a statewide
Applicable deductibles and/or cost- adjusted APC rate. Only line item prevailing cannot be found, the PRICER
sharing/copayment amounts will be services with SIs ‘‘P,’’ ‘‘S,’’ ‘‘T’’, ‘‘V,’’ or will reimburse the procedure at the
subtracted from the wage adjusted APC ‘‘X’’ will be eligible for outlier payment billed charge.
VI. Military Readiness/Contingency hospitals most vulnerable to and make available for public comment,
Options for Payment Under OPPS implementation of OPPS. a regulatory flexibility analysis when
In recognition of the Department’s The second option involves authority the agency issues a regulation which
requirement to support military for the Director, TRICARE Management would have a significant impact on a
readiness and contingency operations, Activity, or a designee, under provisions substantial number of small entities.
and in response to recent congressional of this rule to adopt, modify, and/or This is not a major rule under 5 U.S.C.
concerns regarding same, the agency has extend temporary adjustments to OPPS 801 since the projected reduction in
developed two options for payments for TRICARE network TRICARE payments to affected hospitals
implementation of OPPS. The first hospitals deemed essential for military would be below the $100 million
option involves a three-year transitional readiness and support during threshold. The estimates of reduction
implementation of payment adjustments contingency operations. Upon a are based on historical TRICARE costs
that may be utilized to limit the decline determination by the TMA Director, or and an assessment of potential users
in payments under OPPS for TRICARE designee, at any time following times average benefit costs per person
network hospitals that are in close implementation that it is impracticable for implementation of the new
proximity to military bases and treat a to support military readiness or prospective payment system. Following
disproportionate share of military contingency operations by making OPPS is a projected government impact
family members and/or hospitals that payments in accordance with the same analysis, reflecting an overall cost
provide essential network specialty reimbursement rules implemented by savings of $81.0 million dollars for the
care. These temporary payment Medicare, a temporary deviation may be first 12 months of implementation based
adjustments would target TRICARE granted. This will ensure the availability on 2006 TRICARE claims data. This rule
network hospitals that are most of adequate civilian healthcare also
vulnerable to OPPS revenue reductions resources necessary to meet all ongoing
and that are essential for continued military readiness and contingencies. IMPACT ASSESSMENT OF
military readiness and support of The criteria for adopting, modifying IMPLEMENTATION OF OPPS
contingency operations. and/or extending temporary [$Millions—first 12 months]
This adjustment would increase adjustments to OPPS payments under
payment for primary care and this authority shall be issued through Projected Cost Savings Based
emergency room visits to hospital TRICARE policies, instructions, On Current Data ................... $231.0
outpatient departments (HOPDs) over a procedures and guidelines as deemed Offsets to Cost Savings:
appropriate by the Director, TRICARE Application of Existing Cost-
3-year transitional period. Primary care Sharing .............................. (12.0)
and emergency room visits to HOPDs Management Activity, or a designee, for
Reduction/Rebalancing of
are categorized into 10 APC categories those network hospitals essential for Discounts ........................... (72.0)
(APC codes 604–609 and 613–616) continued military readiness and Transitional Adjustments .......... (44.0)
which represent over 600,000 hospital deployment in a time of contingency Military Contingency Adjust-
visits annually. On average, about one operations. ments .................................... (8.0)
quarter of the revenues from TRICARE Effects of OHI ........................... (14.0)
VII. Regulatory Procedures
for HOPD services are for these 10
Executive Order 12866, ‘‘Regulatory Net Cost Savings* ............. 81.0
codes, representing the biggest payment
reduction under OPPS. Under this Planning and Review’’
does not require a regulatory flexibility
transitional payment adjustment, the Section 801 of title 5, United States analysis, as the significant policy action
APC payment levels for network Code (U.S.C.), and Executive Order was taken by Congress and the rule
hospitals for the 5 clinical visit APCs (E.O.) 12866 requires certain regulatory merely puts it into effect. The policy of
would be set at 130 percent of the assessments and procedures for any the Regulatory Flexibility Act that
Medicare APC level, while the 5 major rule or significant regulatory agencies adequately evaluate all
emergency room (ER) visit APCs would action, defined as one that would result potential options for an action does not
be increased by 150 percent in the first in an annual effect of $100 million or apply when Congress has already
year of OPPS implementation. In the more on the national economy or which dictated the action. In addition, it has
second year, the APC payment levels would have other substantial impacts. It been certified that this proposed rule
would be set at 120 percent of the has been certified that this rule is not an will not significantly affect a substantial
Medicare APC level for clinic visits and economically significant rule, however, number of small entities.
at 130 percent for ER APCs. In the third it is a regulatory action which has been
year, the APC visit amounts would be reviewed by the Office of Management Public Law 96–511, ‘‘Paperwork
set at 110 and 120 percent, respectively, and Budget as required under the Reduction Act’’ (44 U.S.C. Chapter 35)
and in the fourth year, the TRICARE and provisions of E.O. 12866. This rule will not impose significant
Medicare payment levels for the 10 APC additional information collection
visit codes would be identical. Two sets Section 202, Public Law 104–4,
requirements on the public under the
of adjustment factors (i.e., one for clinic ‘‘Unfunded Mandates Reform Act’’
Paperwork Reduction Act of 1995 (44
visits and the other for ER visits) are It has been certified that his rule does U.S.C. 3501–3511). Existing information
being used since revenue cuts for ER not contain a Federal mandate that may collection requirements of the TRICARE
visits are generally greater than those result in the expenditure by State, local and Medicare programs will be utilized.
associated with clinic visits. and tribal governments, in aggregate, or
Executive Order 13132, ‘‘Federalism’’
Transitional payment adjustments for by the private sector, of $100 million or

these 10 visit codes would buffer the more in any one year. This proposed rule has been
initial revenue reductions which will be examined for its impact under E.O.
experienced upon implementation of Public Law 96–354, ‘‘Regulatory 13132 and it does not contain policies
TRICARE’s OPPS, providing hospitals Flexibility Act’’ (5 U.S.C. 601) that have federalism implications that
with sufficient time to adjust and budget The Regulatory Flexibility Act (RFA) would have substantial direct effects on
for potential revenue reductions for requires each Federal agency prepare, the States, on the relationship between
the national government and the States, 4. Section 199.14 is amended by methodology to include specific coding
or on the distribution of power and revising paragraphs (a)(2)(ix)(A); requirements, ambulatory payment
responsibilities among the various redesignating paragraphs (a)(5)(i) classifications (APCs), nationally
levels of government; therefore, through (a)(5)(xii) as (a)(5)(i)(A) through established APC amounts and
consultation with State and local (a)(5)(i)(L); adding new paragraphs associated adjustments (e.g.,
officials is not required. (a)(5)(i) introductory text and (a)(5)(ii); discounting for multiple surgery
and revising paragraph (d)(1) to read as procedures, wage adjustments for
List of Subjects in 32 CFR Part 199 follows: variations in labor-related costs across
Claims, Dental health, Health care, geographical regions and outlier
Health insurance, Individuals with § 199.14 Provider reimbursement
methods.
calculations). During the transition to
disabilities, Military personnel. OPPS, temporary deviations from
Accordingly, 32 CFR part 199 is (a) * * *
(2) * * * Medicare’s statutory and/or regulatory
proposed to be amended as follows: (ix) * * * requirements and future changes arising
(A) In general. Psychiatric and from its continuing experience with
PART 199—[AMENDED] OPPS may be granted for any TRICARE
substance use disorder rehabilitation
1. The authority citation for part 199 partial hospitalization services network hospital by the Director,
continues to read as follows: authorized by § 199.4(b)(10) and (e)(4) TRICARE Management Activity (TMA),
and provided by institutional providers or a designee, to accommodate
Authority: 5 U.S.C. 301; 10 U.S.C. Chapter
55. authorized under § 199.6(b)(4)(xii) and CHAMPUS’ unique benefit structure
(b)(4)(xiv) are reimbursed on the basis of and beneficiary population. In addition,
2. Section 199.2(b) is amended by the Director, TMA, or a designee, may
prospectively determined, all-inclusive
adding definitions for Ambulatory at any time after implementation adopt,
per diem rates pursuant to the
Payment Classifications (APCs) and provisions of paragraph (a)(2)(ix)(C) of modify and/or extend temporary
TRICARE Outpatient Prospective this section, with the exception of adjustments to OPPS payments for
Payment System (OPPS) and placing hospital-based psychiatric and TRICARE network hospitals deemed
them in alphabetical order to read as substance use disorder rehabilitation essential for military readiness and
follows: partial hospitalization services which deployment in time of contingency
§ 199.2 Definitions. are reimbursed in accordance with operations. Any temporary adjustment
provisions of paragraph (a)(5)(ii) of this to OPPS payments shall be made only
* * * * *
(b) * * * section. The per diem payment amount on the basis of a determination that it is
Ambulatory Payment Classifications must be accepted as payment in full for impracticable to support military
(APCs). Payment of services under the all institutional services provided, readiness or contingency operations by
TRICARE OPPS is based on grouping including board, routine nursing making OPPS payments in accordance
outpatient procedures and services into service, ancillary services (includes with the same reimbursement rules
ambulatory payment classification music, dance, occupational and other implemented by Medicare. The criteria
groups based on clinical and resource such therapies), psychological testing for adopting, modifying, and/or
homogeneity, provider concentration, and assessment, overhead and any other extending deviations and/or
frequency of service and minimal services for which the customary adjustments to OPPS payments shall be
opportunities for upcoding and code practice among similar providers is issued through TRICARE policies,
fragmentation. Nationally established included as part of the institutional instructions, procedures and guidelines
rates for each APC are calculated by charges. as deemed appropriate by the Director,
multiplying the APC’s relative weight * * * * * TMA, or a designee.
derived from median costs for (5) * * * * * * * *
procedures assigned to the APC group, (i) Outpatient Services Not Subject to (d) * * *
scaled to the median cost of the APC Hospital Outpatient Prospective (1) In general. CHAMPUS pays
group representing the most frequently Payment System (OPPS). The following institutional facility costs for
provided services, by the conversion are payment methods for outpatient ambulatory surgery on the basis of
factor. services that are either provided in an prospectively determined amounts, as
TRICARE Outpatient Prospective OPPS exempt hospital or paid outside provided in this paragraph, with the
Payment System (OPPS). OPPS is a the OPPS payment methodology under exception of ambulatory surgery
hospital outpatient prospective payment existing fee schedules or other procedures performed in hospital
system, based on nationally established prospectively determined rates in a outpatient departments, which are to be
APC payment amounts and hospital subject to OPPS reimbursed in accordance with the
standardized for geographic wage reimbursement. provisions of paragraph (a)(5)(ii) of this
differences that includes operating and * * * * * section. This payment method is similar
capital-related costs that are directly (ii) Outpatient Services Subject to to that used by the Medicare program
related and integral to performing a OPPS. Outpatient services provided in for ambulatory surgery. This paragraph
procedure or furnishing a service in a hospitals subject to Medicare OPPS as applies to payment for freestanding
hospital outpatient department. specified in 42 CFR 413.65 and 42 CFR ambulatory surgical centers. It does not
419.20 will be paid in accordance with apply to professional services. A list of
* * * * *
the provisions outlined in sections ambulatory surgery procedures subject
§ 199.4 [Amended] 1833(t) of the Social Security Act and its to the payment method set forth in the
3. Section 199.4 is proposed to be implementing Medicare regulation (42 paragraph shall be published
amended by removing paragraph CFR Part 419). Under the above periodically by the Director, TRICARE
(c)(3)(i)(C)(1) and redesignating governing provisions, CHAMPUS will Management Activity (TMA). Payment
paragraphs (c)(3)(i)(C)(2) and recognize to the extent practicable, in to freestanding ambulatory surgery
(c)(3)(i)(C)(3) as (c)(3)(i)(C)(1) and accordance with 10 U.S.C. 1079(j)(2), centers is limited to these procedures.
(c)(3)(i)(C)(2). Medicare’s OPPS reimbursement * * * * *
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Proposed Rule: TRICARE: Outpatient Hospital Prospective Payment System (OPPS)

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Proposed Rule: TRICARE: Outpatient Hospital Prospective Payment System (OPPS)

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Federal Register / Vol. 73, No.

63 / Tuesday, April 1, 2008 / Proposed Rules 17271

DEPARTMENT OF DEFENSE of Medicare’s cost-based payment Subsequent to publication of the

procedure. specific for TRICARE, ensuring unadjusted national coinsurance

outpatient deductible and cost-sharing/ and Standard TRICARE programs for

Prime ....................... None ..................................................... None ..................................................... None.

TABLE 2.—HOSPITAL OUTPATIENT COPAYMENTS/COST-SHARING

0039 ......... S .............. Level I Implantation of Neurostimulator ....................................................................................................... 78.85

TABLE 8.—CY 2007 PAYMENT STATUS INDICATORS FOR HOSPITAL OPPS

(2) Brachytherapy sources .............................................................. (2) Separate cost-based non-pass-through payment.

Transitional payment adjustments for by the private sector, of $100 million or

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