(a) General.
(1) Purpose.
The purpose
of this section is to establish rules and procedures for the CHAMPUS
Quality and Utilization Review Peer Review Organization program.
(2) Applicability
of program.
All
claims submitted for health services under CHAMPUS are subject to review
for quality of care and appropriate utilization. The Director, OCHAMPUS
shall establish generally accepted standards, norms and criteria
as are necessary for this program of utilization and quality review.
These standards, norms and criteria shall include, but not be limited
to, need for inpatient admission or inpatient or outpatient service,
length of inpatient stay, intensity of care, appropriateness of
treatment, and level of institutional care required. The Director,
OCHAMPUS may issue implementing instructions, procedures and guidelines
for retrospective, concurrent and prospective review.
(3) Contractor implementation.
The CHAMPUS
Quality and Utilization Review Peer Review Organization program
may be implemented through contracts administered by the Director, OCHAMPUS.
These contractors may include contractors that have exclusive functions
in the area of utilization and quality review, fiscal intermediary
contractors (which perform these functions along with a broad range
of administrative services), and managed care contractors (which
perform a range of functions concerning management of the delivery
and financing of health care services under CHAMPUS). Regardless
of the contractors involved, utilization and quality review activities
follow the same standards, rules and procedures set forth in this
section, unless otherwise specifically provided in this section
or elsewhere in this part.
(4) Medical
issues affected.
The CHAMPUS Quality and Utilization Review
Peer Review Organization program is distinguishable in purpose and
impact from other activities relating to the administration and
management of CHAMPUS in that the Peer Review Organization program
is concerned primarily with medical judgments regarding the quality
and appropriateness of health care services. Issues regarding such
matters as benefit limitations are similar, but, if not determined
on the basis of medical judgments, are governed by CHAMPUS rules
and procedures other than those provided in this section. (See,
for example, Sec. 199.7 regarding claims submission, review and
payment.) Based on this purpose, a major attribute of the Peer Review
Organization program is that medical judgments are made by (directly
or pursuant to guidelines and subject to direct review) reviewers
who are peers of the health care providers providing the services
under review.
(5) Provider responsibilities.
Because of the dominance of
medical judgments in the quality and utilization review program,
principal responsibility for complying with program rules and procedures rests
with health care providers. For this reason, there are limitations,
set forth in this section and in Sec. 199.4(h), on the extent to
which beneficiaries may be held financially liable for health care
services not provided in conformity with rules and procedures of
the quality and utilization review program concerning medical necessity
of care.
(6) Medicare rules used as model.
The CHAMPUS
Quality and Utilization Review Peer Review Organization program,
based on specific statutory authority, follows many of the quality
and utilization review requirements and procedures in effect for
the Medicare Peer Review Organization program, subject to adaptations
appropriate for the CHAMPUS program. In recognition of the similarity
of purpose and design between the Medicare and CHAMPUS PRO programs,
and to avoid unnecessary duplication of effort, the CHAMPUS Quality
and Utilization Review Peer Review Organization program will have
special procedures applicable to supplies and services furnished
to Medicare-eligible CHAMPUS beneficiaries. These procedures will
enable CHAMPUS normally to rely upon Medicare determinations of
medical necessity and appropriateness in the processing of CHAMPUS
claims as a second payer to Medicare. As a general rule, only in
cases involving Medicare-eligible CHAMPUS beneficiaries where Medicare
payment for services and supplies is denied for reasons other than medical
necessity and appropriateness will the CHAMPUS claim be subject
to review for quality of care and appropriate utilization under
the CHAMPUS PRO program. TRICARE will continue to perform a medical
necessity and appropriateness review for quality of care and appropriate
utilization under the CHAMPUS PRO program where required by statute.
(b) Objectives and
general requirements of review system--
(1) In general.
Broadly, the program of quality
and utilization review has as its objective to review the quality,
completeness and adequacy of care provided, as well as its necessity,
appropriateness and reasonableness.
(2) Payment exclusion
for services provided contrary to utilization and quality standards.
(i) In
any case in which health care services are provided in a manner
determined to be contrary to quality or necessity standards established
under the quality and utilization review program, payment may be wholly
or partially excluded.
(ii) In any case in
which payment is excluded pursuant to paragraph (b)(2)(i) of this
section, the patient (or the patient’s family) may not be billed
for the excluded services.
(iii) Limited exceptions
and other special provisions pertaining to the requirements established
in paragraphs (b)(2)(i) and (ii) of this section, are set forth
in Sec. 199.4(h).
(3) Review of services covered by DRG-based payment
system.
Application
of these objectives in the context of hospital services covered
by the DRG-based payment system also includes a validation of diagnosis
and procedural information that determines CHAMPUS reimbursement,
and a review of the necessity and appropriateness of care for which
payment is sought on an outlier basis.
(4) Preauthorization
and other utilization review procedures--
(i) In general.
all health care services for which
payment is sought under TRICARE are subject to review for appropriateness
of utilization as determined by the Director, TRICARE Management
Activity, or a designee.
(A) The procedures
for this review may be prospective (before the care is provided),
concurrent (while the care is in process), or retrospective (after
the care has been provided). Regardless of the procedures of this
utilization review, the same generally accepted standards, norms
and criteria for evaluating the medical necessity, appropriateness
and reasonableness of the care involved shall apply. The Director,
TRICARE Management Activity, or a designee, shall establish procedures
for conducting reviews, including types of health care services
for which preauthorization or concurrent review shall be required.
Preauthorization or concurrent review may be required for categories
of health care services. Except where required by law, the categories
of health care services for which preauthorization or concurrent
review is required may vary in different geographical locations
or for different types of providers.
(B) For healthcare
services provided under TRICARE contracts entered into by the Department
of Defense after October 30, 2000, medical necessity preauthorization
will not be required for referrals for specialty consultation appointment
services requested by primary care providers or specialty providers when
referring TRICARE Prime beneficiaries for specialty consultation
appointment services within the TRICARE contractor’s network. However,
the lack of medical necessity preauthorization requirements for
consultative appointment services does not mean that non-emergent
admissions or invasive diagnostic or therapeutic procedures which
in and of themselves constitute categories of health care services
related to, but beyond the level of the consultation appointment
service, are not subject to medical necessity prior authorization.
In fact many such health care services may continue to require medical
necessity prior authorization as determined by the Director, TRICARE
Management Activity, or a designee. TRICARE Prime beneficiaries
are also required to obtain preauthorization before seeking health
care services from a non-network provider.
(ii) Preauthorization
procedures.
With
respect to categories of health care (inpatient or outpatient) for
which preauthorization is required, the following procedures shall
apply:
(A) The requirement
for preauthorization shall be widely publicized to beneficiaries
and providers.
(B) All requests for
preauthorization shall be responded to in writing. Notification
of approval or denial shall be sent to the beneficiary. Approvals
shall specify the health care services and supplies approved and
identify any special limits or further requirements applicable to
the particular case.
(C) An approved preauthorization
shall state the number of days, appropriate for the type of care involved,
for which it is valid. In general, preauthorizations will be valid
for 30 days. If the services or supplies are not obtained within
the number of days specified, a new preauthorization request is required.
For organ and stem cell transplants, the preauthorization shall
remain in effect as long as the beneficiary continues to meet the
specific transplant criteria set forth in the TRICARE/CHAMPUS Policy Manual,
or until the approved transplant occurs.
(D) For
healthcare services provided under TRICARE contracts entered into
by the Department of Defense after October 30, 2000, medical necessity
preauthorization for specialty consultation appointment services
within the TRICARE contractor’s network will not be required. However,
the Director, TRICARE Management Activity, or designee, may continue
to require or waive medical necessity prior (or pre) authorization
for other categories of other health care services based on best business
practice.
(iii) Payment
reduction for noncompliance with required utilization review procedures.
(A) Paragraph (b)(4)(iii)
of this section applies to any case in which:
(1) A provider was required to obtain preauthorization
or continued stay (in connection with required concurrent review
procedures) approval.
(2) The provider
failed to obtain the necessary approval; and
(3) The health care services have not been
disallowed on the basis of necessity, appropriateness or reasonableness.
In such a case, reimbursement will be reduced,
unless such reduction is waived based on special circumstances.
(B) In
a case described in paragraph (b)(4)(iii)(A) of this section, reimbursement
will be reduced, unless such reduction is waived based on special
circumstances. The amount of this reduction shall be at least ten
percent of the amount otherwise allowable for services for which
preauthorization (including preauthorization for continued stays
in connection with concurrent review requirements) approval should
have been obtained, but was not obtained.
(C) The
payment reduction set forth in paragraph (b)(4)(iii)(B) of this
section may be waived by the Director, OCHAMPUS when the provider
could not reasonably have been expected to know of the preauthorization
requirement or some other special circumstance justifies the waiver.
(D) Services
for which payment is disallowed under paragraph (b)(4)(iii) of this
section may not be billed to the patient (or the patient’s family).
(c)
Hospital
cooperation.
All
hospitals which participate in CHAMPUS and submit CHAMPUS claims
are required to provide all information necessary for CHAMPUS to
properly process the claims. In order for CHAMPUS to be assured
that services for which claims are submitted meet quality of care standards,
hospitals are required to provide the Peer Review Organization (PRO)
responsible for quality review with all the information, within
timeframes to be established by OCHAMPUS, necessary to perform the
review functions required by this paragraph. Additionally, all participating
hospitals shall provide CHAMPUS beneficiaries, upon admission, with
information about the admission and quality review system including
their appeal rights. A hospital which does not cooperate in this
activity shall be subject to termination as a CHAMPUS-authorized
provider.
(1) Documentation that
the beneficiary has received the required information about the
CHAMPUS PRO program must be maintained in the same manner as is
the notice required for the Medicare program by 42 CFR 466.78(b).
(2) The
physician acknowledgment required for Medicare under 42 CFR 412.46
is also required for CHAMPUS as a condition for payment and may
be satisfied by the same statement as required for Medicare, with
substitution or addition of “CHAMPUS” when the word “Medicare” is
used.
(3) Participating hospitals must execute a memorandum
of understanding with the PRO providing appropriate procedures for
implementation of the PRO program.
(4) Participating hospitals
may not charge a CHAMPUS beneficiary for inpatient hospital services excluded
on the basis of Sec. 199.4(g)(1) (not medically necessary), Sec.
199.4(g)(3) (inappropriate level), or Sec. 199.4(g)(7) (custodial
care) unless all of the conditions established by 42 CFR 412.42(c) with
respect to Medicare beneficiaries have been met with respect to
the CHAMPUS beneficiary. In such cases in which the patient requests
a PRO review while the patient is still an inpatient in the hospital,
the hospital shall provide to the PRO the records required for the
review by the close of business of the day the patient requests
review, if such request was made before noon. If the hospital fails
to provide the records by the close of business, that day and any
subsequent working day during which the hospital continues to fail
to provide the records shall not be counted for purposes of the
two-day period of 42 CFR 412.42(c)(3)(ii).
(d) Areas of review--
(1) Admissions.
The following
areas shall be subject to review to determine whether inpatient
care was medically appropriate and necessary, was delivered in the
most appropriate setting and met acceptable standards of quality.
This review may include preadmission or prepayment review when appropriate.
(i) Transfers
of CHAMPUS beneficiaries from a hospital or hospital unit subject
to the CHAMPUS DRG-based payment system to another hospital or hospital
unit.
(ii) CHAMPUS admissions to a hospital or hospital
unit subject to the CHAMPUS DRG-based payment system which occur
within a certain period (specified by OCHAMPUS) of discharge from
a hospital or hospital unit subject to the CHAMPUS DRG-based payment
system.
(iii) A random sample
of other CHAMPUS admissions for each hospital subject to the CHAMPUS
DRG-based payment system.
(iv) CHAMPUS admissions
in any DRGs which have been specifically identified by OCHAMPUS
for review or which are under review for any other reason.
(2) DRG validation.
The review organization
responsible for quality of care reviews shall be responsible for
ensuring that the diagnostic and procedural information reported
by hospitals on CHAMPUS claims which is used by the fiscal intermediary
to assign claims to DRGs is correct and matches the information
contained in the medical records. In order to accomplish this, the
following review activities shall be done.
(i) Perform
DRG validation reviews of each case under review.
(ii) Review
of claim adjustments submitted by hospitals which result in the
assignment of a higher weighted DRG.
(iii) Review for physician’s
acknowledgement of annual receipt of the penalty statement as contained in
the Medicare regulation at 42 CFR 412.46.
(iv) Review
of a sample of claims for each hospital reimbursed under the CHAMPUS
DRG-based payment system. Sample size shall be determined based
upon the volume of claims submitted.
(3) Outlier review.
Claims which
qualify for additional payment as a long-stay outlier or as a cost-outlier
shall be subject to review to ensure that the additional days or
costs were medically necessary and appropriate and met all other
requirements for CHAMPUS coverage. In addition, claims which qualify
as short-stay outliers shall be reviewed to ensure that the admission
was medically necessary and appropriate and that the discharge was
not premature.
(4) Procedure review.
Claims for procedures identified
by OCHAMPUS as subject to a pattern of abuse shall be the subject
of intensified quality assurance review.
(5) Other review.
Any other cases
or types of cases identified by OCHAMPUS shall be subject to focused
review.
(e) Actions as a result
of review--
(1) Findings
related to individual claims.
If it is determined, based upon information
obtained during reviews, that a hospital has misrepresented admission,
discharge, or billing information, or is found to have quality of
care defects, or has taken an action that results in the unnecessary
admissions of an individual entitled to benefits, unnecessary multiple
admission of an individual, or other inappropriate medical or other
practices with respect to beneficiaries or billing for services
furnished to beneficiaries, the PRO, in conjunction with the fiscal
intermediary, shall, as appropriate:
(i) Deny
payment for or recoup (in whole or in part) any amount claimed or
paid for the inpatient hospital and professional services related
to such determination.
(ii) Require the hospital
to take other corrective action necessary to prevent or correct
the inappropriate practice.
(iii) Advise the provider
and beneficiary of appeal rights, as required by Sec. 199.10 of
this part.
(iv) Notify OCHAMPUS
of all such actions.
(2) Findings related to a pattern of inappropriate
practices.
In
all cases where a pattern of inappropriate admissions and billing
practices that have the effect of circumventing the CHAMPUS DRG-based
payment system is identified, OCHAMPUS shall be notified of the
hospital and practice involved.
(3) Revision
of coding relating to DRG validation.
The following provisions apply
in connection with the DRG validation process set forth in paragraph
(d)(2) of this section.
(i) If the diagnostic
and procedural information in the patient’s medical record is found
to be inconsistent with the hospital’s coding or DRG assignment,
the hospital’s coding on the CHAMPUS claim will be appropriately
changed and payments recalculated on the basis of the appropriate
DRG assignment.
(ii) If the information
stipulated under paragraph (d)(2) of this section is found not to
be correct, the PRO will change the coding and assign the appropriate
DRG on the basis of the changed coding.
(f) Special procedures
in connection with certain types of health care services or certain
types of review activities--
(1) In general.
Many provisions of this section
are directed to the context of services covered by the CHAMPUS DRG-based
payment system. This section, however, is also applicable to other
services. In addition, many provisions of this section relate to
the context of peer review activities performed by Peer Review Organizations
whose sole functions for CHAMPUS relate to the Quality and Utilization
Review Peer Review Organization program. However, it also applies
to review activities conducted by contractors who have responsibilities
broader than those related to the quality and utilization review
program. Paragraph (f) of this section authorizes certain special procedures
that will apply in connection with such services and such review
activities.
(2) Services not covered by the DRG-based payment
system.
In
implementing the quality and utilization review program in the context
of services not covered by the DRG-based payment system, the Director,
OCHAMPUS may establish procedures, appropriate to the types of services
being reviewed, substantively comparable to services covered by
the DRG-based payment system regarding obligations of providers
to cooperate in the quality and utilization review program, authority
to require appropriate corrective actions and other procedures.
The Director, OCHAMPUS may also establish such special, substantively
comparable procedures in connection with review of health care services
which, although covered by the DRG-based payment method, are also
affected by some other special circumstances concerning payment
method, nature of care, or other potential utilization or quality issue.
(3) Peer
review activities by contractors also performing other administration
or management functions--
(i) Sole-function
PRO versus multi-function PRO.
In all cases, peer review
activities under the Quality and Utilization Review Peer Review
Organization program are carried out by physicians and other qualified
health care professionals, usually under contract with OCHAMPUS.
In some cases, the Peer Review Organization contractor’s only functions
are pursuant to the quality and utilization review program. In paragraph
(f)(3) of this section, this type of contractor is referred to as
a “sole function PRO.” In other cases, the Peer Review Organization
contractor is also performing other functions in connection with
the administration and management of CHAMPUS. In paragraph (f)(3)
of this section, this type of contractor is referred to as a “multi-function
PRO.” As an example of the latter type, managed care contractors
may perform a wide range of functions regarding management of the delivery
and financing of health care services under CHAMPUS, including but
not limited to functions under the Quality and Utilization Review
Peer Review Organization program.
(ii) Special rules
and procedures.
With respect to multi-function PROs, the Director,
OCHAMPUS may establish special procedures to assure the independence
of the Quality and Utilization Review Peer Review Organization program
and otherwise advance the objectives of the program. These special rules
and procedures include, but are not limited to, the following:
(A) A
reconsidered determination that would be final in cases involving
sole-function PROs under paragraph (i)(2) of this section will not
be final in connection with multi-function PROs. Rather, in such cases
(other than any case which is appealable under paragraph (i)(3)
of this section), an opportunity for a second reconsideration shall
be provided. The second reconsideration will be provided by OCHAMPUS
or another contractor independent of the multi-function PRO that
performed the review. The second reconsideration may not be further
appealed by the provider.
(B) Procedures established
by paragraphs (g) through (m) of this section shall not apply to
any action of a multi-function PRO (or employee or other person
or entity affiliated with the PRO) carried out in performance of
functions other than functions under this section.
(g)
Procedures
regarding initial determinations.
The CHAMPUS PROs shall establish
and follow procedures for initial determinations that are substantively
the same or comparable to the procedures applicable to Medicare
under 42 CFR 466.83 to 466.104. In addition, these procedures shall
provide that a PRO’s determination that an admission is medically
necessary is not a guarantee of payment by CHAMPUS; normal CHAMPUS
benefit and procedural coverage requirements must also be applied.
(h)
Procedures
regarding reconsiderations.
The CHAMPUS PROs shall establish and follow procedures
for reconsiderations that are substantively the same or comparable
to the procedures applicable to reconsiderations under Medicare
pursuant to 42 CFR 473.15 to 473.34, except that the time limit
for requesting reconsideration (see 42 CFR 473.20(a)(1)) shall be
90 days. A PRO reconsidered determination is final and binding upon
all parties to the reconsideration except to the extent of any further
appeal pursuant to paragraph (i) of this section.
(i)
Appeals
and hearings.
(1) Beneficiaries may appeal a PRO reconsideration
determination of OCHAMPUS and obtain a hearing on such appeal to
the extent allowed and under the procedures set forth in Sec. 199.10(d).
(2) Except
as provided in paragraph (i)(3), a PRO reconsidered determination
may not be further appealed by a provider.
(3) A
provider may appeal a PRO reconsideration determination to OCHAMPUS
and obtain a hearing on such appeal to the extent allowed under
the procedures set forth in Sec. 199.10(d) if it is a determination
pursuant to Sec. 199.4(h) that the provider knew or could reasonably
have been expected to know that the services were excludable.
(4) For
purposes of the hearing process, a PRO reconsidered determination
shall be considered as the procedural equivalent of a formal review
determination under Sec. 199.10, unless revised at the initiative
of the Director, OCHAMPUS prior to a hearing on the appeal, in which
case the revised determination shall be considered as the procedural
equivalent of a formal review determination under Sec. 199.10.
(5) The
provisions of Sec. 199.10(e) concerning final action shall apply
to hearings cases.
(j)
Acquisition,
protection and disclosure of peer review information.
The provisions
of 42 CFR part 476, except Sec. 476.108, shall be applicable to
the CHAMPUS PRO program as they are to the Medicare PRO program.
(k) Limited immunity
from liability for participants in PRO program.
The provisions of section 1157
of the Social Security Act (42 U.S.C. 1320c-6) are applicable to
the CHAMPUS PRO program in the same manner as they apply to the
Medicare PRO program. Section 1102(g) of title 10, United States Code
also applies to the CHAMPUS PRO program.
(l)
Additional
provision regarding confidentiality of records--
(1) General rule.
The provisions of 10 U.S.C.
1102 regarding the confidentiality of medical quality assurance
records shall apply to the activities of the CHAMPUS PRO program
as they do to the activities of the external civilian PRO program that
reviews medical care provided in military hospitals.
(2) Specific applications.
(i) Records
concerning PRO deliberations are generally nondisclosable quality
assurance records under 10 U.S.C. 1102.
(ii) Initial
denial determinations by PROs pursuant to paragraph (g) of this
section (concerning medical necessity determinations, DRG validation
actions, etc.) and subsequent decisions regarding those determinations
are not nondisclosable quality assurance records under 10 U.S.C.
1102.
(iii) Information the subject of mandatory PRO disclosure
under 42 CFR part 476 is not a nondisclosable quality assurance
record under 10 U.S.C. 1102.
(m)
Obligations,
sanctions and procedures.
(1) The provisions
of 42 CFR 1004.1-1004.80 shall apply to the CHAMPUS PRO program
as they do the Medicare PRO program, except that the functions specified
in those sections for the Office of Inspector General of the Department
of Health and Human Services shall be the responsibility of OCHAMPUS.
(2) The
provisions of 42 U.S.C. section 1395ww(f)(2) concerning circumvention
by any hospital of the applicable payment methods for inpatient
services shall apply to CHAMPUS payment methods as they do to Medicare
payment methods.
(3) The
Director, or a designee, of CHAMPUS shall determine whether to impose
a sanction pursuant to paragraphs (m)(1) and (m)(2) of this section.
Providers may appeal adverse sanctions decisions under the procedures
set forth in Sec. 199.10(d).
(n) Authority to integrate
CHAMPUS PRO and military medical treatment facility utilization review
activities.
(1) In the case of a military medical treatment
facility (MTF) that has established utilization review requirements
similar to those under the CHAMPUS PRO program, the contractor carrying
out this function may, at the request of the MTF, utilize procedures
comparable to the CHAMPUS PRO program procedures to render determinations
or recommendations with respect to utilization review requirements.
(2) In
any case in which such a contractor has comparable responsibility
and authority regarding utilization review in both an MTF (or MTFs)
and CHAMPUS, determinations as to medical necessity in connection
with services from an MTF or CHAMPUS-authorized provider may be
consolidated.
(3) In any case in
which an MTF reserves authority to separate an MTF determination
on medical necessity from a CHAMPUS PRO program determination on
medical necessity, the MTF determination is not binding on CHAMPUS.
[55 FR 625, Jan 8, 1990, as amended at 58
FR 58961, Nov 5, 1993; 60 FR 52095, Oct 5, 1995; 63 FR 48447, Sep
10, 1998; 66 FR 40608, Aug 3, 2001; 67 FR 42721, Jun 25, 2002; 68
FR 23033, Apr 30, 2003; 68 FR 32363, May 30, 2003; 68 FR 44881,
Jul 31, 2003; 70 FR 19266, Apr 13, 2005; 81 FR 61098, Sep 2, 2016]