4.1 Statutory
Background
10 USC
Sections 1079, 1086, and 1097 authorize the Department of Defense
(DoD) to enter into contracts to administer health benefits for
TRICARE beneficiaries. 10 USC 1079 (h) and (i) require TRICARE to
reimburse both individual health care providers and institutional
providers in accordance with Medicare reimbursement methodologies
to the extent practicable. The TRICARE regulation at
32 CFR 199.14(j)(4) allows the
Director,
DHA
, within
program requirements established by law and regulation, and with
the approval of the Assistance Secretary of Defense (Health Affairs)
(ASD(HA)), to establish an alternative method of
reimbursement
for individual health care professionals
or other non-institutional health care providers “designed
to produce reasonable control over health care costs and to ensure
a high level of acceptance
” of the
TRICARE reimbursement, as long as the alternative methods do not
result in reimbursement greater than the TRICARE allowable charge
method. In addition,
32 CFR 199.14(m) allows the Director
to
reimburse both professional/non-institutional and
institutional providers an amount below the amount usually paid
for their services established by the regulation, under a discount
program approved by the Director when the provider has agreed to
accept the lower amount.
Any other proposed
APM which is inconsistent with current program requirements established
by law and regulation may only be approved by the ASD(HA) through
rule-making or exercise of demonstration authority.4.2 Applicability
and Scope of Coverage
The
contractor may propose APMs
involving any of the TRICARE
providers in its network in
alignment with an APM Framework developed by the Health Care Payment
Learning and Action Network (HCPLAN) and consistent with the requirements
below and the law, including those authorities cited above. Such
contractor proposed APMs shall be separate and distinguishable from
any APMs established by DHA in the TRICARE Reimbursement
Manual (TRM)/TRICARE Policy Manual (TPM) (e.g., capitation of low-value
care). Beneficiaries
under an APM shall receive all rights and benefits associated with
their enrollment (e.g., applicable deductibles, cost shares, co-pays
and provider access).
4.3 The contractor’s APMs with
network providers should focus on achieving the following goals:
• Improved quality of care.
• Improved patient outcomes.
• Improved beneficiary satisfaction.
• Reduced cost.
• Reduced use of low-value care
or increased use of high value care.
• Empowerment of beneficiaries
to make healthy choices.
4.3.1 The
contractor
’s proposed APMs
shall
be cost-neutral
, at a minimum. The
total cost of care in an APM is considered the maximum allowable
charges, not including any applied network discounts. In other words,
the Government cost of care for services delivered by providers
under any APM may not
exceed the
Government cost of care
that otherwise would have
resulted from delivery of
the same services if the providers in the APM model had
been paid under standard reimbursement methodologies, e.g., at 100%
of CHAMPUS Maximum Allowable Charge (CMAC) or Medicare Severity-Diagnosis
Related Group (MS-DRG) rates)
, less any beneficiary
deductible/co-pay. In general, there are two levels at which the
CMAC may be calculated:
• Individual claims
level - The maximum allowable charge for the particular service.
• APM model level
- The maximum allowable charges all of the services associated with
the model.
If the contractor
proposes to assess an APM’s cost neutrality at the APM model level,
then the contractor’s determination
of “what would have been paid” shall be
calculated at a model-based level (across all the providers and
beneficiaries included in the model) and the methodology for demonstrating
cost-neutrality may account for: 1) the difference in aggregate
amounts paid to providers under the APM model relative to TRICARE
maximum allowables, and 2) any utilization savings actually achieved
due to the APM model. The determination of what would have been
paid under TRICARE maximum allowables, including any analysis of
actual utilization savings, shall be calculated retrospectively
by the contractor using a methodology the contractor submits in
advance for review and approval. The
contractor’s analysis shall be conducted by an actuary qualified
to issue a Statement of Actuarial Opinion, National Association
of Insurance Commissioners (NAIC) Health Annual Statement.
4.3.2 When
measuring the percent of network expenditures covered by APMs in
order to assess progress in meeting the APM goals outlined in the
referenced contract, the contractor may take credit for all existing
APM arrangements, regardless of whether they were initiated by the
contractor or the Government.
4.3.3 The
Government will exclude fully capitated (HCPLAN Category 4) APM
payments from its calculation of the network discount guarantee
described of the referenced contract.
4.3.4 The
contractor shall submit evidence of APM payments to providers (or
discount adjustments - see paragraph 4.5)
and any negative APM incentives collected from providers to DHA
on non-TRICARE Encounter Data (TED) vouchers. Examples of such payments
include Category 2 APM payments, Category 3 gain-sharing payments or
loss-sharing collections, and fully capitated payments under Category
4. Reimbursement by the Government of net APM payments is subject
to the policy stated above that the sum of fee-for-service payments
associated with the APM model, plus the net APM payments at the
model level, shall not exceed the total cost of care that would have
resulted had the Government paid for the care included in the APM
model under TRICARE’s standard reimbursement methodologies.
4.3.5 The
Government will not consider APM payments (or discount adjustments)
submitted on non-TED vouchers when reporting or measuring contractor
discounts for purposes of administering the network discount guarantee
under Section H of the contract. For example, if a contractor negotiates
a 4% discount from the CMAC for claims submitted by a provider,
but that provider also ends up earning an APM bonus payment or a
discount adjustment equal to 3% of CMAC for some or all of those
claims, for purposes of the Section H network discount guarantee,
the contractor would be credited with a 4% discount, not 1% for
such claims -- subject to the other provisions of Section H such
as the limit on credit for discounts on professional services and
the exclusion (from the network discount guarantee calculation)
of TED records for services for which the contractor or provider
has taken full risk under a capitation arrangement.
4.6
APMs Requiring
Approval and APM Proposal Approval Process
4.6.1 APMs
other than those described in paragraph 4.5 may
not be executed without specific Government approval.4.6.1.1 Category
2 - APM Model Framework. The
contractor use a method of calculating cost neutrality where the
contractor could disperse APM payments in a manner that resulted
in some providers receiving payments for services (including any
bonuses or incentive payments) that exceed the otherwise applicable TRICARE
maximum allowable rates, so long as these payments are balanced
by payments to providers that are less than the TRICARE maximum
allowable rates. This payment framework may only be applied in the
case of individual and other non-institutional providers.Example 2: Payment
(APM Model Framework). The contractor
may negotiate reimbursement agreements as it deems appropriate with
the individual and other non-institutional network providers who
will be participating in the APM model. The contractor may then
sum all the dollars associated with the discounts from the services
of all participating providers (thus ensuring that the total payout
to providers for health care services did not exceed the CMAC rates
at the model level) and pay bonuses or incentives out of the total
dollars associated with APM model to providers who satisfy predetermined
criteria -- meeting reporting requirements, quality standards. Under
this approach, the combined value of the reimbursement(s) to a particular
provider for health care service(s) rendered and any bonus or incentive
payment(s) paid to that provider could exceed the maximum amount
the provider otherwise could have been paid for the service(s) under
the applicable standard TRICARE reimbursement methodologies.
4.6.1.2 The
government will treat contractor proposed HCPLAN Category 3A and
3B APMs as either pilots or demonstration projects. A “pilot” is
a project that does not include any elements that conflict with
or require exceptions to a requirement or limitation set forth in
statute or the TRICARE regulation. Therefore, for example, the Government
will treat a contractor proposed Category 3A APM that is structured
to operate within the framework of network discount agreements with
providers as described in paragraph 4.5 and
does not require for implementation the approval of an exception
to any statutory or regulatory limitation, as a pilot project. Generally speaking,
the DHA Director may implement a pilot project without higher-level
approval. Conversely, a “demonstration” is a project that includes
elements which conflict with one or more requirements or limitations
set forth in statute or regulation and which therefore must be implemented
under the authority of 10 USC Section 1092. Further, 32 CFR 199.1(o)(3) defines “demonstration
project” as “a project of limited duration designed to test a different
method for the finance, deliver or administration of health care
activities.” The DHA may implement a demonstration only after it
has been approved by the ASD(HA), cleared by the Office of Management
and Budget (OMB), and published in the Federal
Register. For example, the Government
will treat a contractor proposed Category 3 APM that proposes shared
savings from utilization that could potentially exceed the amount
of total network discounts as a demonstration.
4.6.1.3 The
government will consider all contractor proposed HCPLAN Category
4A, 4B, and 4C APMs as potential demonstration projects.
4.6.2 The
contractor shall submit all Category 3 and 4 APMs for approval using
the following process:4.6.2.1 The contractor
shall provide to the DHA draft APM proposals for preliminary review.
4.6.2.2 The
DHA will provide to the contractor an initial disposition, questions,
and comments to draft APM proposals.
4.6.2.3 The
contractor shall submit to the DHA final APM proposals.
4.6.2.4 The
DHA will notify the contractor of approval or disapproval.
4.6.2.5 An APM undergoing
a pilot or demonstration project may not be expanded to other providers without
additional DHA approval or regulatory change.
4.7 APM Proposal Guidelines
The contractor shall, for any
APM proposal, include the following information to ensure an effective
and comprehensive approval process.
4.7.1 Identify
the category and sub-category from the HC-PLAN framework and provide
an overview of how this APM supports the APM goals outlined in
paragraph 4.3.
4.7.2 Identify
the target provider and beneficiary population for this APM.
4.7.3 Identify
the current and/or expected expenses paid to providers for these
services.
4.7.4 Document the
attribution methods for each APM.
4.7.5 Describe
how the cost of the APM is calculated at the population level including
the cost of care, any special APM payments to providers or other
non-TED applicable costs (if applicable).
4.7.6 Describe
how the costs associated with this APM will be tracked, including
for purposes of the contractor reporting the total percentage of health
care dollars paid under APMs.
4.7.7 Identify the three-year
targeted savings following implementation of the APM.
4.7.8 Identify the
performance measure used to trigger payment to providers.
4.7.9 Specify
how the contractor will measure quality of care, patient outcomes,
beneficiary satisfaction, reduced cost, reduced use of low-value
care or increase use of high-value care
and
empowerment of beneficiaries to make healthy choices
consistent with
the requirements outlined in
paragraph 5.0.
4.7.10 Indicate
how the contractor will demonstrate/measure
the APMs
cost neutrality, i.e., that the payments to providers measures either
at the claim/payment level or at the model level,
including the cost of care and any special APM payments to providers
or amounts collected from providers, did not exceed the aggregate
cost of care that would have been incurred
if the
providers participating in the APM were paid the maximum allowable
amount under
standard reimbursement
methodologies (see
paragraph 4.3.1)
.
4.8 APM
Reporting
4.8.1 The contractor shall establish
and implement APM reporting processes that address the reporting
in
the APM Performance Measurement
and Reporting requirements in
paragraph 5.0, and DHA’s Monitoring, Oversight
and Validation of Reporting detailed in
paragraph 6.0. The contractor’s
detailed methodology for calculating and reporting the overall percentage
of network expenditures that are covered by APMs shall be submitted
for DHA’s review and approval prior to the contractor’s formal measurement
of the APM percentage achieved each year. The methodology shall
include details specific to each type of APM in effect during the contract
year (regardless of whether the APM was initiated by the contractor
or the
Government), as well as how the
contractor will ensure that any claims falling under more than one
APM model will not be double-counted when calculating the overall
APM-covered percentage of network expenditures. Examples of methodological issues
to be addressed include attribution, timing, and claims inclusion/exclusion
criteria.
4.8.2 For
each type of APM implemented, the contractor shall also submit for
DHA’s review and approval the contractor’s methodology for demonstrating/measuring
that the cost of the APM at the model level, including the cost
of care and any special APM payments to providers or amounts collected
from providers, did not exceed the aggregate cost that would have
been paid under applicable TRICARE maximum allowable charges. After
each option period, the contractor shall then submit its analysis
and findings demonstrating whether each APM model resulted in a
net aggregate cost no greater than what would have been paid if
the APM providers had been reimbursed at TRICARE’s maximum allowable
charges (see
paragraph 4.3).