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section in the Continental United updates to these classification feaStates and available military guide- tures. lines. In addition, all provisions of 10 (2) Each discharge shall be assigned U.S.C. 1076a shall remain in effect.
to only one DRG regardless of the num
ber of conditions treated or services (53 FR 2020, Jan. 26, 1988, as amended at 55 FR 43342, Nov. 16, 1990; 60 FR 55451, Nov. 1,
furnished during the patient's stay. 1995; 62 FR 39941, July 25, 1997; 64 FR 38576,
(C) Basis of payment-1) Hospital billJuly 19, 1999)
ing. Under the CHAMPUS DRG-based
payment system, hospitals are required $ 199.14 Provider reimbursement to submit claims (including itemized methods.
charges) in accordance with $199.7(b). (a) Hospitals. The CHAMPUS-deter- The CHAMPUS fiscal intermediary will mined allowable cost for reimburse- assign the appropriate DRG to the ment of a hospital shall be determined claim based on the information conon the basis of one of the following tained in the claim. Any request from methodologies.
a hospital for reclassification of a (1) CHAMPUS Diagnosis Related Group claim to a higher weighted DRG must (DRG)-based payment system. Under the be submitted, within 60 days from the CHAMPUS DRG-based payment sys- date of the initial payment, in a mantem, payment for the operating costs ner prescribed by the Director, of inpatient hospital services furnished OCHAMPUS. by hospitals subject to the system is (2) Payment on a per discharge basis. made on the basis of prospectively-de- Under the CHAMPUS DRG-based paytermined rates and applied on a per dis- ment system, hospitals are paid a precharge basis using DRGs. Payments determined amount per discharge for under this system will include a dif- inpatient hospital services furnished to ferentiation for urban (using large CHAMPUS beneficiaries. urban and other urban areas) and rural (3) Claims priced as of date of admishospitals and an adjustment for area sion. Except for interim claims subwage differences and indirect medical mitted for qualifying outlier cases, all education costs. Additional payments claims reimbursed under the will be made for capital costs, direct CHAMPUS DRG-based payment system medical education costs, and outlier are to be priced as of the date of admiscases.
sion, regardless of when the claim is (i) General-(A) DRGs used. The submitted. CHAMPUS DRG-based payment system (4) Payment in full. The DRG-based will use the same DRGs used in the amount paid for inpatient hospital most recently available grouper for the services is the total CHAMPUS pay. Medicare Prospective Payment Sys- ment for the inpatient operating costs tem, except as necessary to recognize (as described in paragraph (a)(1)(i)(C)(5) distinct characteristics of CHAMPUS of this section) incurred in furnishing beneficiaries and as described in in- services covered by the CHAMPUS. The structions issued by the Director, full prospective payment amount is OCHAMPUS.
payable for each stay during which (B) Assignment of discharges to DRGs. there is at least one covered day of
(1) The classification of a particular care, except as provided in paragraph discharge shall be based on the pa- (a)(1)(iii)(E)(1)(i)(A) of this section. tient's age, sex, principal diagnosis (5) Inpatient operating costs. The (that is, the diagnosis established, CHAMPUS DRG-based payment system after study, to be chiefly responsible provides a payment amount for inpafor causing the patient's admission to tient operating costs, including: the hospital), secondary diagnoses, pro- (i) Operating costs for routine servcedures performed and discharge sta- ices, such as the costs of room, board, tus. In addition, for neonatal cases and routine nursing services; (other than normal newborns) the clas- (ii) Operating costs for ancillary serv: sification shall also account for birth- ices, such as hospital radiology and weight, surgery and the presence of laboratory services (other than physimultiple, major and other neonatal cians' services) furnished to hospital problems, and shall incorporate annual inpatients;
(iii) Special care unit operating costs; and
(iv) Malpractice insurance costs related to services furnished to inpatients.
(6) Discharges and transfers.
(i) Discharges. A hospital inpatient is discharged when:
(A) The patient is formally released from the hospital (release of the patient to another hospital as described in paragraph (a)(1)(i)(C)(6)(ii) of this section, or a leave of absence from the hospital, will not be recognized as a discharge for the purpose of determining payment under the CHAMPUS DRG-based payment system);
(B) The patient dies in the hospital;
(C) The patient is transferred from the care of a hospital included under the CHAMPUS DRG-based payment system to a hospital or unit that is excluded from the prospective payment system.
(ii) Transfers. Except as provided under paragraph (a)(1)(1)(C)6)(i) of this section, a discharge of a hospital inpatient is not counted for purposes of the CHAMPUS DRG-based payment system when the patient is transferred:
(A) From one inpatient area or unit of the hospital to another area or unit of the same hospital;
(B) From the care of a hospital included under the CHAMPUS DRGbased payment system to the care of another hospital paid under this system;
(C) From the care of a hospital included under the CHAMPUS DRGbased payment system to the care of another hospital that is excluded from the CHAMPUS DRG-based payment system because of participation in a statewide cost control program which is exempt from the CHAMPUS DRGbased payment system under paragraph (a)(1)(ii)(A) of this section; or
(D) From the care of a hospital included under the CHAMPUS DRGbased payment system to the care of a uniformed services treatment facility.
(iii) Payment in full to the discharging hospital. The hospital discharging an inpatient shall be paid in full under the CHAMPUS DRG-based payment system.
(iv) Payment to a hospital transferring an inpatient to another hospital. If a hospital subject to the CHAMPUS DRGbased payment system transfers an inpatient to another such hospital, the transferring hospital shall be paid a per diem rate (except that in neonatal cases, other than normal newborns, the hospital will be paid at 125 percent of that per diem rate), as determined under instructions issued by TSO, for each day of the patient's stay in that hospital, not to exceed the DRG-based payment that would have been paid if the patient had been discharged to another setting. For admissions occurring on or after October 1, 1995, the transferring hospital shall be paid twice the per diem rate for the first day of any transfer stay, and the per diem amount for each subsequent day, up to the limit described in this paragraph.
(v) Additional payments to transferring hospitals. A transferring hospital may qualify for an additional payment for extraordinary cases that meet the criteria for long-stay or cost outliers. (D) DRG
system updates. The CHAMPUS DRG-based payment system is modeled on the Medicare Prospective Payment System (PPS) and uses annually updated items and numbers from the Medicare PPS as provided for in this part and in instructions issued by the Director, OCHAMPUS. The effective date of these items and numbers shall correspond to that under the Medicare PPS except where distinctions are made in this part.
(ii) Applicability of the DRG system.
(A) Areas affected. The CHAMPUS DRG-based payment system shall apply to hospitals' services in the fifty states, the District of Columbia, and Puerto Rico, except that any state which has implemented a separate DRG-based payment system or similar payment system in order to control costs and is exempt from the Medicare Prospective Payment System may be exempt from the CHAMPUS DRG-based payment system if it requests exemption in writing, and provided payment under such system does not exceed payment which would otherwise be made under the CHAMPUS DRG-based payment system.
(B) Services subject to the DRG-based blood clotting factor furnished to a payment system. All normally covered CHAMPUS inpatient who is hemoinpatient hospital services furnished to philiac in accordance with the amounts CHAMPUS beneficiaries by hospitals established under the Medicare Proare subject to the CHAMPUS DRG- spective Payment System (42 CFR based payment system.
412.115). (C) Services exempt from the DRG-based (D) Hospitals subject to the CHAMPUS payment system. The following hospital DRG-based payment system. All hosservices, even when provided in a hos- pitals within the fifty states, the Dispital subject to the CHAMPUS DRG- trict of Columbia, and Puerto Rico based payment system, are exempt which are certified to provide services from the CHAMPUS DRG-based pay- to CHAMPUS beneficiaries are subject ment system. The services in para- to the DRG-based payment system exgraphs (a)(1)(ii)(C)(1) through cept for the following hospitals or hos(a)(1)(ii)(C)(4) and (a)(1)(ii)(C)(7) pital units which are exempt. through (a)(1)(ii)(C)(9) of this section (1) Psychiatric hospitals. A psychiatric shall be reimbursed under the proce- hospital which is exempt from the dures in paragraph (a)(3) of this sec- Medicare Prospective Payment System tion, and the services in paragraphs is also exempt from the CHAMPUS (a)(1)(ii)(C)(5) and (a)(1)(ii)(C)(6) of this DRG-based payment system. In order section shall be reimbursed under the for a psychiatric hospital which does procedures in paragraph (g) of this sec- not participate in Medicare to be extion.
empt from the CHAMPUS DRG-based (1) Services provided by hospitals ex- payment system, it must meet the empt from the DRG-based payment same criteria (as determined by the Disystem.
rector, OCHAMPUS, or a designee) as (2) All services related to solid organ required for exemption from the Mediacquisition for CHAMPUS covered care Prospective Payment System as transplants by CHAMPUS-authorized contained in 42 CFR 412.23. transplantation centers.
(2) Rehabilitation hospitals. A rehabili(3) All services related to heart and tation hospital which is exempt from liver transplantation for admissions the Medicare Prospective Payment prior to October 1, 1998, which would System is also exempt from the otherwise be paid under DRG 103 and CHAMPUS DRG-based payment sys480, respectively.
tem. In order for a rehabilitation hos(4) All services related to CHAMPUS pital which does not participate in covered solid organ transplantations Medicare to be exempt from the for which there is no DRG assignment. CHAMPUS DRG-based payment sys
(5) All professional services provided tem, it must meet the same criteria (as by hospital-based physicians.
determined by the Director, (6) All services provided by nurse an- OCHAMPUS, or a designee) as required esthetists.
for exemption from the Medicare Pro(7) All services related to discharges spective Payment System as contained involving pediatric bone marrow trans- in 42 CFR 412.23. plants (patient under 18 at admission). (3) Psychiatric and rehabilitation units
(8) All services related to discharges (distinct parts). A psychiatric or rehainvolving children who have been de- bilitation unit which is exempt from termined to be HIV seropositive (pa- the Medicare prospective payment systient under 18 at admission).
tem is also exempt from the CHAMPUS (9) All services related to discharges DRG-based payment system. In order involving pediatric cystic fibrosis (pa- for a distinct unit which does not partient under 18 at admission).
ticipate in Medicare to be exempt from (10) For admissions occurring on or the CHAMPUS DRG-based payment after October 1, 1990, and before Octo- system, it must meet the same criteria ber 1, 1994, and for discharges occurring (as determined
the Director, on or after October 1, 1997, the costs of OCHAMPUS, or a designee) as required blood clotting factor for hemophilia in- for exemption from the Medicare Propatients. An additional payment shall spective Payment System as contained be made to a hospital for each unit of in 42 CFR 412.23.
(4) Long-term hospitals. A long-term hospital which is exempt from the Medicare prospective payment system is also exempt from the CHAMPUS DRG-based payment system. In order for a long-term hospital which does not participate in Medicare to be exempt from the CHAMPUS DRG-based payment system, it must meet the same criteria (as determined by the Director, TSO, or a designee) as required for exemption from the Medicare Prospective Payment System contained in $ 412.23 of Title 42 CFR.
(5) Hospitals within hospitals. A hospital within a hospital which is exempt from the Medicare prospective payment system is also exempt from the CHAMPUS DRG-based payment system. In order for a hospital within a hospital which does not participate in Medicare to be exempt from the CHAMPUS DRG-based payment system, it must meet the same criteria (as determined by the Director, TSO, or a designee) as required for exemption from the Medicare Prospective Payment System as contained in 42 CFR 412.22 and the criteria for one or more of the excluded hospital classifications described in 8412.23 of Title 42 CFR.
(6) Sole community hospitals. Any hospital which has qualified for special treatment under the Medicare prospective payment system as a sole community hospital and has not given up that classification is exempt from the CHAMPUS DRG-based payment system. (See subpart G of 42 CFR part 412.)
(7) Christian Science sanitoriums. All Christian Science sanitoriums (as defined in paragraph (b)(4)(viii) of $199.6) are exempt from the CHAMPUS DRGbased payment system.
(8) Cancer hospitals. Any hospital which qualifies as a cancer hospital under the Medicare standards and has elected to be exempt from the Medicare prospective payment system is exempt from the CHAMPUS DRG-based payment system. (See 42 CFR 412.94.)
(9) Hospitals outside the 50 states, the District of Columbia, and Puerto Rico. A hospital is excluded from the CHAMPUS DRG-based payment system if it is not located in one of the fifty States, the District of Colubmia, or Puerto Rico.
(E) Hospitals which do not participate in Medicare. It is not required that a hospital be a Medicare-participating provider in order to be an authorized CHAMPUS provider. However, any hospital which is subject to the CHAMPUS DRG-based payment system and which otherwise meets CHAMPUS requirements but which is not a Medicare-participating provider (having completed a form HCFA-1514, Hospital Request for Certification in the Medicare/Medicaid Program and a form HCFA-1561, Health Insurance Benefit Agreement) must complete a participation agreement with OCHAMPUS. By completing the participation agreement, the hospital agrees to participate all CHAMPUS inpatient claims and to accept the CHAMPUS-determined allowable amount as payment in full for these claims. Any hospital which does not participate in Medicare and does not complete a participation agreement with OCHAMPUS will not be authorized to provide services to CHAMPUS beneficiaries.
(F) Substance Use Disorder Rehabilitation facilities. With admissions on after July 1, 1995, substance use disorder rehabilitation facilities, authorized under $199.6(b)(4)(xiv), are subject to the DRG-based payment system. (iii) Determination
payment amounts. The actual payment for an individual claim under the CHAMPUS DRG-based payment system is calculated by multiplying the appropriate adjusted standardized amount (adjusted to account for area wage differences using the wage indexes used in the Medicare program) by a weighting factor specific to each DRG.
(A) Calculation of DRG weights.
(1) Grouping of charges. All discharge records in the database shall be grouped by DRG.
(2) Remove DRGs 469 and 470. Records from DRGs 469 and 470 shall be removed from the database.
(3) Indirect medical education standardization. To standardize the charges for the cost effects of indirect medical education factors, each teaching hospital's charges will be divided by 1.0 plus the following ratio on a hospital-specific basis:
(4) Wage level standardization. To (C) Updating DRG weights.
The standardize the charge records for area CHAMPUS DRG weights shall be upwage differences, each charge record dated or adjusted as follows: will be divided into labor-related and (1) DRG weights shall be recalculated nonlabor-related portions, and the annually using CHAMPUS charge data labor-related portion shall be divided and the methodology described in paraby the most recently available Medi- graph (a)(1)(iii)(A) of this section. care wage index for the area. The (2) When a new DRG is created, labor-related and nonlabor-related por
CHAMPUS will, if practical, calculate tions will then be added together.
a weight for it using an appropriate (5) Elimination of statistical outliers.
charge sample (if available) and the All unusually high or low charges shall
methodology described in paragraph be removed from the database.
(a)(1)(iii)(A) of this section. (6) Calculation of DRG average charge.
(3) In the case of any other change After the standardization for indirect
under Medicare to an existing DRG
weight (such as in connection with medical education, and area wage dif
technology changes), CHAMPUS shall ferences, an average charge for each
adjust its weight for that DRG in a DRG shall be computed by summing
manner comparable to the change charges in a DRG and dividing that
made by Medicare. sum by the number of records in the
(D) Calculation of the adjusted standDRG.
ardized amounts. The following proce(7) Calculation of national average
dures shall be followed in calculating charge per discharge. A national average
the CHAMPUS adjusted standardized charge per discharge shall be cal
amounts. culated by summing all charges and di
(1) Differentiate large urban and viding that sum by the total number of
other area charges. All charges in the records from all DRG categories.
database shall be sorted into large (8) DRG relative weights. DRG relative urban and other area groups (using the weights shall be calculated for each
same definitions for these categories DRG category by dividing each DRG used in the Medicare program. The folaverage charge by the national average lowing procedures will be applied to charge.
each group. (B) Empty and low-volume DRGs. For (2) Indirect medical education standardany DRG with less than ten (10) occur- ization. To standardize the charges for rences in the CHAMPUS database, the the cost effects of indirect medical eduDirector, TSO, or designee, has the au- cation factors, each teaching hospital's thority to consider alternative meth- charges will be divided by 1.0 plus the ods for estimating CHAMPUS weights following ratio on a hospital-specific in these low-volume DRG categories. basis:
number of interns + residents 1.43 x 1.0+
number of beds
.5795 - 1.0
(3) Wage level standardization. To standardize the charge records for area wage differnces, each charge record will be divided into labor-related and nonlabor-related portions, and the
labor-related portion shall be divided by the most recently available Medicare wage index for the area. The labor-related and nonlabor-related portions will then be added together.