(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]