(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]