3.0 POLICY
3.1 Statutory
Background
3.1.1 Under 10 United States Code
(USC) 1079(i)(2), the amount to be paid to hospitals, Skilled Nursing
Facilities (SNFs), and other institutional providers under CHAMPUS
shall, by regulation, be established “to the extent practicable
in accordance with the same reimbursement rules as apply to payments
to providers of services of the same type under Medicare.” Similarly,
under 10 USC 1079(h), the amount to be paid to health care professionals
and other non-institutional health care providers “shall be equal
to an amount determined to be appropriate, to the extent practicable,
in accordance with the same reimbursement rules used by Medicare.”
Based on these statutory provisions, CHAMPUS adopted Medicare’s
Prospective Payment System (PPS) for reimbursement of hospital outpatient services
currently in effect for the Medicare program as required under the
Balanced Budget Act (BBA) of 1997 (Public Law 105-33), which provided
comprehensive provisions for establishment of a hospital Outpatient
Prospective Payment System (OPPS).
3.1.2 Centers
for Medicare and Medicaid Services (CMS) published a proposed rule
in the Federal Register (FR) on September 8, 1998 (63
FR 47552) setting forth the proposed PPS for hospital outpatient
services. On June 30, 1999, a correction notice was published (64
FR 35258) to correct a number of technical and typographical errors
contained in the September 8, 1998 Proposed Rule.
3.1.3 Subsequent to publication of
the proposed rule, the Balanced Budget Refinement Act (BBRA) of
1999, enacted on November 29, 1999, made major changes that affected
the proposed OPPS. The following BBRA 1999 provisions were implemented
in a Final Rule (65 FR 18434) published on April 7, 2000:
3.1.3.1 Made adjustments for covered
services whose costs exceeded a given threshold (i.e., an outlier
payment).
3.1.3.2 Established transitional pass-through
payments for certain medical devices, drugs, and biologicals.
3.1.3.3 Placed limitations on judicial
review for determining outlier payments and the determination of
additional payments for certain medical devices, drugs, and biologicals.
3.1.3.4 Included as covered outpatient
services implantable prosthetics and Durable Medical Equipment (DME)
and diagnostic x-ray, laboratory, and other tests associated with
those implantable items.
3.1.3.5 Limited the variation of costs
of services within each payment classification group by providing
that the highest median cost for an item or service within the group
cannot be more than two times greater than the lowest median cost
for an item or service within the group (referred to as the “two
times rule”). An exception to this requirement may be made in unusual
cases, such as low volume items and services, but may not be made
in the case of a drug or biological that has been designated as
an orphan drug under Section 526 of the Federal Food, Drug and Cosmetic
Act.
3.1.3.6 Required at least annual review
of the groups, relative payment weights, and the wage and other
adjustments to take into account changes in medical practice, the
addition of new services, new cost data, and other relevant information
or factors.
3.1.3.7 Established transitional corridors
that would limit payment reductions under the hospital OPPS.
3.1.3.8 Established hold harmless provisions
for rural and cancer hospitals.
3.2 Participation Requirement
In order to be an authorized
provider under the TRICARE OPPS, an institutional provider must
be a participating provider for all claims in accordance with
32 CFR 199.6(a)(8).
3.3 Unbundling Provisions
As a prelude to implementation
of the OPPS, Omnibus Budget Reconciliation Act (OBRA) of 1996 prohibited
payment for nonphysician services furnished to hospital patients
(inpatients and outpatients), unless the services were furnished
either directly or under arrangement with the hospital except for
services of Physician Assistants (PAs), Nurse Practitioners (NPs),
and Clinical Nurse Specialists (CNSs). This facilitated the payment
of services included within the scope of each Ambulatory Payment Classification
(APC). The Act provided for the imposition of civil money penalties
not to exceed $2,000, and a possible exclusion from participation
in Medicare, Medicaid and other federal health care programs for
any person who knowingly and willfully presents, or causes to be
presented, a bill or request for payment for a hospital outpatient
service that violates the requirement for billing subject to the
following exceptions:
3.3.1 Payment
for clinical diagnostic lab may be made only to the person or entity
that performed or supervised the performance of the test. In the
case of a clinical diagnostic laboratory test that is provided under
arrangement made by a hospital or Critical Access Hospital (CAH),
payment is made to the hospital. The hospital is not responsible
for billing for the diagnostic test if a hospital patient leaves
the hospital and goes elsewhere to obtain the diagnostic test.
3.4 Applicability and Scope of
Coverage
Following
are the providers and services for which TRICARE will make payment
under the OPPS.
3.4.1 Provider Categories
3.4.1.1 Providers Included In OPPS
3.4.1.1.1 All hospitals participating
in the Medicare program, except for those excluded under
paragraph 3.4.1.2.
3.4.1.1.2 Hospital-based PHPs do not
require separate TRICARE authorization. Authorization of a hospital
by TRICARE is sufficient for its PHP to be an authorized TRICARE
provider.
3.4.1.1.3 Hospitals or distinct parts
of hospitals that are excluded from the inpatient Diagnosis Related
Groups (DRG) to the extent that the hospital or distinct part furnishes
outpatient services.
Note: All Hospital Outpatient Departments
(HOPDs) will be subject to the OPPS unless specifically excluded
under this chapter. The marketing contractor shall have responsibility
for educating providers to bill under the OPPS even if they are
not a Medicare participating/certified provider (i.e., not subject to
the DRG inpatient reimbursement system).
3.4.1.1.4 Small
Rural and Sole Community Hospitals (SCHs) in Rural Areas
TRICARE delayed implementation
of its OPPS for small rural hospitals with 100 or fewer beds and
rural SCHs with 100 or fewer beds until January 1, 2010.
3.4.1.2
Providers
Excluded From OPPS
3.4.1.2.1 Outpatient services provided
by hospitals of the Indian Health Service (IHS) will continue to
be paid under separately established rates.
3.4.1.2.2 Certain hospitals that qualify
for payment under the state’s cost containment waiver, e.g., Maryland.
3.4.1.2.4 Hospitals located outside one
of the 50 United States (U.S.), the District of Columbia, and Puerto
Rico.
3.4.1.2.5 Specialty
care providers to include:
• Cancer and children’s hospitals
• Freestanding Ambulatory Surgery
Centers (ASCs)
• Freestanding PHPs and Intensive
Outpatient Programs ((IOPs) that offer psych and substance use treatments,
Substance Use Disorder Rehabilitation Facilities (SUDRFs), and freestanding
Opioid Treatment Programs (OTPs)
• Comprehensive Outpatient Rehabilitation
Facilities (CORFs)
• Home Health Agencies (HHAs)
• Hospice programs
• Community Mental Health Centers
(CMHCs)
• Other corporate services providers
(e.g., Freestanding Cardiac Catheterization, Sleep Disorder Diagnostic
Centers, and Freestanding Hyperbaric Oxygen Treatment Centers).
Note: Antigens, splints, casts and
hepatitis B vaccines furnished outside the patient’s plan of care in
CORFs, HHAs and hospice programs will continue to receive reimbursement
under current TRICARE allowable charge methodology.
• Freestanding Birthing Centers
• Department of Veterans Affairs
(DVA)/Veterans Health Administration (VHA) Hospitals
• Freestanding End Stage Renal
Disease (ESRD) Facilities
• SNFs
• Psychiatric Residential Treatment
Centers (RTCs)
3.4.2 Scope of Services
3.4.2.1 Services excluded under the
hospital OPPS and paid under the CHAMPUS Maximum Allowable Charge
(CMAC) or other TRICARE recognized allowable charge methodology.
3.4.2.1.1 Physician services.
3.4.2.1.2 Nurse Practitioner (NP) and
Clinical Nurse Specialist (CNS) services.
3.4.2.1.3 Physician Assistant (PA) services.
3.4.2.1.4 Certified Nurse-Midwife (CNM)
services.
3.4.2.1.5 Services of qualified psychologists.
3.4.2.1.6 Clinical Social Worker (CSW)
services.
3.4.2.1.7 Services of an anesthetist.
3.4.2.1.8 Screening and diagnostic mammographies.
3.4.2.1.9 Influenza and pneumococcal
pneumonia vaccines.
Note: Hospitals, HHAs, and hospices
will continue to receive CMAC payments for influenza and pneumococcal
pneumonia vaccines due to considerable fluctuations in their availability
and cost.
3.4.2.1.10 Clinical diagnostic laboratory
services. Effective January 1, 2014, most laboratory tests will
be packaged under OPPS. See
Section 4, paragraph 3.6.
3.4.2.1.11 Take home surgical dressings.
3.4.2.1.12 Non-implantable DME, prosthetics
(prosthetic devices), orthotics, and supplies (DMEPOS) paid under
the DMEPOS fee schedule when the hospital is acting as a supplier
of these items.
• An item such as crutches or
a walker that is given to the patient to take home, but that may
also be used while the patient is at the hospital, would be paid
for under the hospital OPPS.
• Payment may not be made for
items furnished by a supplier of medical equipment and supplies unless
the supplier obtains a supplier number. However, since there is
no reason to split a claim for DME payment under TRICARE, a separate
supplier number will not be required for a hospital to receive reimbursement
for DME.
3.4.2.1.13 Hospital outpatient services
furnished to SNF inpatients as part of their resident assessment
or comprehensive care plan that are furnished by the hospital “under
arrangements” but billable only by the SNF.
3.4.2.1.14 Services and procedures designated
as requiring inpatient care.
3.4.2.1.15 Services excluded by statute
(excluded from the definition of “covered Outpatient Department
(OPD) Services”):
• Ambulance services
• Physical Therapy (PT)
• Occupational Therapy (OT)
• Speech-Language Pathology (SLP)
Note: The above services are subject
to the CMAC or other TRICARE recognized reimbursement methodology
(e.g., statewide prevailings).
3.4.2.1.16 Ambulatory surgery procedures
performed in freestanding ASCs will continue to be reimbursed under
the per diem system established in
Chapter 9, Section 1.
3.4.2.2 Costs excluded under the hospital
OPPS:
3.4.2.2.1 Direct cost of medical education
activities.
3.4.2.2.2 Costs of approved nursing and
allied health education programs.
3.4.2.2.3 Costs associated with interns
and residents not in approved teaching programs.
3.4.2.2.4 Costs of teaching physicians.
3.4.2.2.5 Costs of anesthesia services
furnished to hospital outpatients by qualified non-physician anesthetists
(Certified Registered Nurse Anesthetists (CRNAs) and Anesthesiologist
Assistants (AAs)) employed by the hospital or obtained under arrangements,
for hospitals.
3.4.2.2.6 Bad debts for uncollectible
and coinsurance amounts.
3.4.2.2.7 Organ acquisition costs.
3.4.2.2.8 Corneal tissue acquisition
costs incurred by hospitals that are paid on a reasonable cost basis.
3.4.2.2.9 Autologous stem cell processing
and harvesting procedures.
3.4.2.3 Services included in payment
under the OPPS (not an all-inclusive list).
3.4.2.3.1 Hospital-based PHPs (psych
and Substance Use Disorder SUD) which are paid a per diem OPPS,
and for dates of service on or after October 3, 2016, Intensive
Outpatient Programs (IOPs). Partial hospitalization is a distinct
and organized intensive psychiatric outpatient day treatment program,
designed to provide patients who have profound and disabling mental
health and SUD conditions with an individualized, coordinated, comprehensive,
and multidisciplinary treatment program. IOP is a comprehensive
and complementary schedule of recognized treatment approaches that
may include day, evening, night, and weekend services consisting
of individual and group counseling or therapy, and family counseling
or therapy as clinically indicated for children and adolescents,
or adults aged 18 and over, and may include case management to link
patients and their families with community-based support systems.
3.4.2.3.2 OTPs are organized, ambulatory,
addiction treatment services for patients with an opioid use disorder.
Hospital-based Methadone OTPs shall be reimbursed a weekly all-inclusive
per diem rate, including the cost of the drug and related services
(i.e., the costs related to the initial intake/assessment, drug
dispensing and screening, and integrated psychosocial and medical
treatment and support services). The bundled weekly per diem payments
shall be accepted as payment in full, subject to the outpatient
cost-sharing provisions under
32 CFR 199.4(f).
When providing other medications which are more likely to be prescribed
and administered in an Office-Based Opioid Treatment (OBOT) setting,
but which are still available for treatment of SUDs in an outpatient
treatment program setting, OTPs shall be reimbursed on a fee-for-service
basis (i.e., separate payments will be allowed for both the medication
and accompanying support services), subject to the outpatient cost-sharing
provisions under
32 CFR 199.4(f).
3.4.2.3.3 All hospital outpatient services,
except those that are identified as excluded. The following are
services that are included in OPPS:
3.4.2.3.3.1 Surgical procedures.
Note: All hospital based ASC claims
that are submitted to be paid under OPPS must be submitted with
a Type Of Bill (TOB) 13X. If a claim is submitted to be paid with
TOB 83X the claim will be denied.
3.4.2.3.3.2 Radiology, including radiation
therapy.
3.4.2.3.3.3 Clinic visits.
3.4.2.3.3.4 Emergency Department (ED) visits.
3.4.2.3.3.5 Diagnostic services and other
diagnostic tests.
3.4.2.3.3.6 Surgical pathology.
3.4.2.3.3.7 Cancer chemotherapy.
3.4.2.3.3.8 Implantable medical items.
• Prosthetic implants (other
than dental) that replace all or part of an internal body organ
(including colostomy bags and supplies directly related to colostomy
care and including replacement of these devices);
• Implantable DME (e.g., pacemakers,
defibrillators, drug pumps, and neurostimulators);
• Implantable items used in performing
diagnostic x-rays, diagnostic laboratory tests, and other diagnostic
tests.
Note: Because implantable items are
now packaged into the APC payment rate for the service or procedure
with which they are associated, certain items may be candidates
for the transitional pass-through payment.
3.4.2.3.3.9 Specific hospital outpatient
services furnished to a beneficiary who is admitted to a Medicare-participating
SNF for those services that are beyond the scope of SNF comprehensive
care plans. See
Chapter 8, Section 1, paragraph 4.2.14.5.10 for
outpatient services provided to SNF patients.
3.4.2.3.3.10 Certain preventive services
furnished to healthy persons, such as colorectal cancer screening.
3.4.2.3.3.11 Acute dialysis (e.g., dialysis
for poisoning).
3.4.2.3.3.12 ESRD Services. Since TRICARE
does not have an ESRD composite rate, ESRD services are included
in TRICARE’s OPPS.
3.4.2.3.3.13 Acquisition costs for allogenic
stem cell transportation.
3.4.2.3.3.14 Autologous stem cell processing
and harvesting procedures.
3.5 Description of APC Groups
3.5.1 Group services identified by
Healthcare Common Procedure Coding System (HCPCS) codes and descriptors
within APC groups are the basis for setting payment rates under
the hospital OPPS.
3.5.2 The APC
system establishes groups of covered services so that the services
within each group are comparable clinically and with respect to
the use of resources. The fundamental criteria for grouping procedures/services
are: resource homogeneity; clinical homogeneity; provider concentration;
and frequency of service. See the TRICARE OPPS Final Rule for descriptions
(73 FR 74945).
3.6 Basic
Reimbursement Methodology
3.6.1 Under
the OPPS, hospital outpatient services are paid on a rate-per-service
basis that varies according to the APC group to which the service
is assigned.
3.6.2 The APC classification system
is composed of groups of services that are comparable clinically
and with respect to the use of resources. Level I and Level II HCPCS
codes and descriptors are used to identify and group the services
within each APC. Costs associated with items or services that are
directly related and integral to performing a procedure or furnishing
a service have been packaged into each procedure or service within
an APC group with the exception of:
• New temporary technology APCs
for certain approved services that are structured based on cost rather
than clinical homogeneity.
• Separate APCs for certain medical
devices, drugs, biologicals, radiopharmaceuticals and devices of brachytherapy
under transitional pass-through provisions.
3.6.3 Each APC weight represents
the median hospital cost of the services included in the APC relative
to the median hospital cost of services included in the hospital
clinic visits APC. APC weights are scaled to the hospital clinic
visits APC because it is one of the most frequently performed services
in the outpatient setting.
3.6.4 The items
and services within an APC group cannot be considered comparable
with respect to the use of resources if the highest median cost
for an item or service in the group is more than two times greater
than the lowest median cost for an item or service within the same
group. However, exceptions may be made to the two times rule “in
unusual cases, such as low volume items and services.”
3.6.5 The prospective payment rate
for each APC is calculated by multiplying the APC’s relative weight
by the conversion factor.
3.6.6 A wage
adjustment factor will be used to adjust the portion of the payment
rate that is attributable to labor-related costs for relative differences
in labor and non-labor-related costs across geographical regions.
3.6.7 Applicable deductible and/or
cost-sharing/copayment amounts will be subtracted from the adjusted
APC payment rate based on the eligibility status of the beneficiary
at the time outpatient services were rendered (e.g., Prime or Select).
See
Chapter 2.
Note: The ASC cost-sharing provision
(i.e., assessment of a single copayment for both the professional
and facility charge for a Prime or Select enrollee) will be adopted
as long as it is administratively feasible. For beneficiary categories
where cost-sharing is based on a percentage of the maximum allowable
amount, the ASC cost-sharing provision does not apply. The copayment
is based on site of service, except for venipuncture and fetal monitoring.
Reference
Chapter 2, Section 1, paragraphs 1.2.4.5 and
1.2.4.7.
3.6.9 Composite APCs provide a single
payment for a comprehensive diagnostic and/or treatment service
defined as a service typically reported with multiple HCPCS codes.
See
Section 2 for additional information.
3.6.10 Comprehensive APCs provide
a single payment for a primary service, and payment for all adjunctive
services reported on the same claim are packaged into the payment
for the primary service. See
Section 2 for
additional information.
3.7 Outpatient
Code Editor (OCE)
3.7.1 The OCE with APC program edits
patient data to help identify possible errors in coding and assigns
APC numbers based on HCPCS codes for payment under the OPPS. The
OPPS is an outpatient equivalent of the inpatient, DRG-based PPS.
Like the inpatient system based on DRGs, each APC has a pre-established
prospective payment amount associated with it. However, unlike the
inpatient system that assigns a patient to a single DRG, multiple
APCs can be assigned to one outpatient record. If a patient has
multiple outpatient services during a single visit, the total payment
for the visit is computed as the sum of the individual payments
for each service. Updated versions of the OCE and data files, along
with installation and user manuals, will be delivered electronically
to the contractors. The contractors will be required to replace
the existing OCE with the updated OCE within 21 calendar days of
receipt. See
Addendum A, for quarterly review/update process.
3.7.2 The OCE incorporates the National
Correct Coding Initiatives (NCCI) edits used by the CMS. Claims
reimbursed under the OPPS methodology are exempt from the claims
auditing software referenced in
Chapter 1, Section 3.
3.7.3 Under certain circumstances
(e.g., active duty claims), the contractor may override claims that
are normally not payable.
3.7.4 CMS has
agreed to the use of 900 series numbers (900-999) within the OCE
for TRICARE specific edits.
3.8 PRICER
Program
3.8.1 The APC PRICER will be straightforward
in that the site-of-service wage index will be used to wage adjust
the payment rate for the particular APC HCPCS Level I and II code
(e.g., a HCPCS code with a designated Status Indicator (SI) of
J1,
S,
T,
V,
or
X)
reported off of the hospital outpatient claim. The PRICER will also
apply discounting for multiple surgical procedures performed during
a single operative session and outlier payments for extraordinarily
expensive cases. DHA will provide the contractor’s with a common
TRICARE PRICER and will provide quarterly updates. The contractors
shall replace the existing PRICER with the updated PRICER within
21 days of receipt.
Note: Claims received with service
dates on or after the OPPS quarterly effective dates (i.e., January
1, April 1, July 1, and October 1 of each calendar year) but prior
to 21 days from receipt of either the OPPS OCE or PRICER update
cartridge may be considered excluded claims as defined by the TRICARE
Operations Manual (TOM),
Chapter 1, Section 3, paragraph 1.4.2.
3.8.2 The contractors shall provide
3M with those pricing files to maintain and update the TRICARE OPPS
Pricer within five weeks prior to the quarterly update. For example,
statewide prevailings for services that do not have a CMAC and state
specific non-professional component birthing center rates. Appropriate
deductible, cost-sharing/copayment amounts and catastrophic caps
limitations will be applied outside the PRICER based on the eligibility
status of the TRICARE beneficiary at the time the outpatient services
were rendered.
3.10 Provider-Based Status for Payment
Under OPPS
The CMS
will retain sole responsibility for determining provider-based status
under the OPPS.
3.11 Implementing
Instructions
Since
this issuance only deals with a general overview of the OPPS reimbursement
methodology, the following cross-reference is provided to facilitate
access to specific implementing instructions within Chapter 13:
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Implementing Instructions/Services
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Policies
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General Overview
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Billing and Coding of Services
under APC Groups
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Reimbursement Methodology
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Claims Submission and Processing
Requirements
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Medical Review Under the Hospital
OPPS
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Addenda
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Development Schedule for TRICARE
OCE/APC - Quarterly Update
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OPPS OCE Notification Process
for Quarterly Updates
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Approval Of OPPS - OCE/APC
And NGPL Quarterly Update Process
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3.12 OPPS
Data Elements Available On DHA’s Web Site