TRICARE Manuals - Display Chap 1 Sect 42 (Change 4, Jun 20, 2024)

General

Chapter 1

Section 42

Temporary Reimbursement Changes In Response To The Coronavirus Disease 2019 (COVID-19) Pandemic

Issue Date: April 9, 2021

Authority:

Revision: C-4, June 20, 2024

1.0 DESCRIPTION

1.1 This policy provides information on temporary reimbursement changes in response to the COVID-19 pandemic.

1.2 The Assistant Secretary of Defense (Health Affairs) (ASD(HA)) issued an Interim Final Rule (IFR) with comment in the Federal Register on September 3, 2020, temporarily amending the TRICARE regulation to modify TRICARE’s reimbursement systems in order to ensure appropriate reimbursement of providers for the duration of the COVID-19 pandemic. This IFR included modification to TRICARE’s reimbursement systems consistent with similar changes made to Medicare reimbursement systems under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

1.3 The ASD(HA) issued a Final Rule in the Federal Register on June 1, 2022, finalizing certain temporary provisions of the IFRs published in 2020 in response to the COVID-19 pandemic. The Final Rule finalized without change: the temporary Diagnosis Related Group (DRG) adjustment for individuals diagnosed with coronavirus or COVID-19 (see paragraph 2.1), Long-Term Care Hospital (LTCH) reimbursement (see paragraph 2.2), and Skilled Nursing Facility (SNF) three-day prior hospital stay requirement (see paragraph 2.3).

2.0 POLICY

2.1 Temporary DRG Adjustment for Individuals Diagnosed with COVID-19

2.1.1 The contractor shall apply a 20% adjustment factor to increase the DRG relative weight that would otherwise be applied when determining Inpatient Prospective Payment System (IPPS) operating payments for discharges described below, effective for claims with an admission date occurring on or after January 27, 2020, through the end of the emergency period.

2.1.2 Section 3710 of the CARES Act directed the increase of the weighting factor of the assigned DRG by 20% for an individual diagnosed with COVID-19 discharged during the COVID-19 Public Health Emergency (PHE) period. The contractor shall identify discharges of an individual diagnosed with COVID-19 by the presence of the following International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) diagnosis codes:

• B97.29 (Other coronavirus as the cause of diseases classed elsewhere) for discharges occurring on or after January 27, 2020, and on or before March 31, 2020.

• U07.1 (2019-nCoVacute respiratory disease) for discharges occurring on or after April 1, 2020, through the duration of the COVID-19 public health emergency period.

2.1.3 The contractor shall ensure that for admissions occurring on or after September 1, 2020, claims are only eligible for the 20% adjustment factor if a positive COVID-19 laboratory test is documented in the patient’s medical record. The contractor shall instruct the provider to demonstrate positive tests using results consistent with Centers for Disease Control and Prevention (CDC) guidelines. The contractor shall instruct the provider to perform the tests either during or prior to the hospital admission.

2.1.4 The contractor may conduct a post-payment medical review to confirm the presence of a positive COVID-19 laboratory test, and, if no such test is contained in the medical record, the contractor shall recoup the additional payment resulting from the 20% adjustment factor.

2.1.5 The contractor shall multiply the current Medicare Severity (MS)-DRG relative weight for the discharge by a factor of 1.20 when calculating a hospital’s operating IPPS payment. Section 3710 of the CARES Act amended Section 1886(d)(4)(C) of the Social Security Act which generally governs IPPS operating payments. The contractor shall not adjust a hospital’s capital IPPS payment.

2.1.6 The contractor shall determine high cost outlier payments for IPPS discharges during the emergency period with a COVID-19 diagnosis code after applying the increased payment under Section 3710 of the CARES Act.

2.1.7 The contractor shall exclude all hospitals that are exempt from the IPPS DRG system, including hospitals in Maryland, from this policy.

2.2 LTCH Reimbursement

2.2.1 The contractor shall pay all LTCH cases admitted during the COVID-19 PHE period the LTCH PPS standard Federal rate, effective for claims with an admission date occurring on or after January 27, 2020, through the end of the emergency period. Section 3711(b)(2) of the CARES Act provides a waiver of the application of the site neutral payment rate under Section 1886(m)(6)(A)(i) of the Act for those LTCH admissions that are in response to the PHE and occur during the COVID-19 PHE period. For details on LTCH reimbursement, see Chapter 16, Section 1.

2.2.2 The contractor shall exclude all LTCHs that are exempt from the LTC-PPS MS-LTC-DRG system from this policy.

2.3 SNF Three-Day Prior Hospital Stay Requirement

The contractor shall waive the requirement for a qualifying hospital stay of three consecutive days or more, not including hospital discharge day, prior to SNF admission (see Chapter 8, Section 2) for the duration of the President’s national emergency for the COVID-19 outbreak.

2.4 New COVID-19 Treatments Add-On Payment (NCTAP) for DRGs

2.4.1 The contractor shall determine if a case is eligible for an NCTAP. To be eligible for an NCTAP, the contractor shall ensure cases meet the following three criteria:

• Use of a drug or biological product authorized to treat COVID-19 by the Centers for Medicare and Medicaid Services (CMS). The contractor shall identify from the claim the CMS eligible NCTAP and corresponding ICD-10 procedure codes from the CMS website: https://www.cms.gov/medicare/covid-19/new-covid-19-treatments-add-payment-nctap. The contractor shall use the unique ICD-10 procedure code to identify COVID-19 NCTAP technology usage. The NCTAP ICD-10 codes are assigned in Section “X” of the ICD-10-PCS classification and are often referred to as “Section X codes”.

• Eligible for the 20% DRG adjustment identified in paragraph 2.1. The contractor shall ensure the case is also eligible for the 20% DRG adjustment.

• Operating cost of the case exceeds the full DRG payment, including the DRG adjustment and any other adjustments under Section 3710 of the CARES Act. The contractor shall ensure the case exceeds the full DRG payment including the 20% DRG adjustment and any other applicable CARES act adjustments.

2.4.2 The contractor shall pay an add-on to the inpatient claim amount for eligible cases for COVID-19 inpatients that receive a designated COVID-19 treatment equal to the lesser of:

• Sixty-five percent (65%) of the operating outlier threshold for the claim; or

• Sixty-five percent (65%) of the amount by which the costs of the case exceed the standard DRG payment (including the adjustment to the relative weight under the CARES Act) for eligible cases.

2.4.3 Calculating 65% of the Operating Threshold for the Case

2.4.3.1 The contractor shall add the full DRG payment amount on the claim (including the 20% DRG adjustment) to the current TRICARE fixed loss threshold amount, to calculate the operating outlier threshold amount for the claim.

2.4.3.2 The contractor shall multiply the operating outlier threshold amount by a factor of 65%. The resulting figure is 65% of the Operating Threshold for the case.

2.4.4 Calculating 65% of the Difference Between the Full DRG Payment and the Cost of the Case

2.4.4.1 The contractor shall multiply the TRICARE inpatient operating Cost-to-Charge Ratio (CCR) for the calendar year in which the service treatment was provided by the billed charge amount on the claim. The TRICARE inpatient operating CCR is found at https://health.mil/drg within the ‘Changes to TRICARE Rate Variables’ link.

2.4.4.2 The contractor shall calculate the difference between the estimated cost of the case and the full DRG payment on the claim (including the 20% DRG adjustment). If this amount is less than the full DRG payment, then the claim is ineligible for any NCTAP.

2.4.4.3 If the cost of the case is higher than the full DRG payment amount (including the 20% DRG adjustment), then the difference is then multiplied by a factor of 65%.

2.4.5 NCTAP Add-On

2.4.5.1 The NCTAP payment is equal to the lesser of the amounts from paragraphs 2.4.3 and 2.4.4. The contractor shall reimburse the lesser of the calculated amounts from paragraphs 2.4.3 and 2.4.4 as the NCTAP add-on payment.

2.4.5.2 Example:

2.4.5.2.1 COVID-19 case with a full DRG payment of $20,000 including the 20% DRG adjustment and a billed charge of $100,000. The TRICARE fixed-loss threshold in CY 2021 was equal to $29,064. For this example, assume that the TRICARE inpatient operating CCR was 0.25.

2.4.5.2.2 First, calculate 65% of the operating threshold amount for the case. Add the full DRG payment of $20,000 to the CY 2021 TRICARE fixed-loss threshold amount ($29,064). The DRG payment added to the fixed loss threshold equals the operating threshold amount for the claim = $20,000 + $29,064 = $49,064. Then multiply the operating threshold amount by a factor of 65% to determine the potential add-on payment, $49,064 X 0.65 = $31,891.60.

2.4.5.2.3 Second, calculate 65% of the difference between the full DRG payment and the cost of the case. Multiply the billed charge amount of $100,000 by the CCR of 0.25, $100,000 x 0.25 = $25,000. Then the difference between the estimated cost of the case and the full DRG payment is calculated as $25,000 - $20,000 = $5,000. Finally, multiply the difference ($5,000) by a factor of 0.65 to calculate the potential add-on payment, $5,000 x 0.65 = $3,250.

2.4.5.2.4 Since the amount from paragraph 2.4.5.2.3 is lesser than the amount in paragraph 2.4.5.2.2, the NCTAP is $3,250.

2.4.5.2.5 In this example, the contractor shall pay the NCTAP of $3,250 on top of the full DRG payment, including any CARES Act adjustments such as the 20% increase in the DRG weight.

3.0 EFFECTIVE DATES

3.1 January 27, 2020, for the adjustment to DRG rates for individuals diagnosed with COVID-19.

3.2 January 27, 2020, for the adjustment to the reimbursement for LTCHs.

3.3 March 1, 2020, for the waiver of the SNF three-day prior hospital stay requirement.

3.4 January 12, 2023, for the NCTAP.

4.0 EXPIRATION

4.1 Under Section 319 of the Public Health Service (PHS) Act, a PHE declaration lasts until the Secretary of Health and Human Services (HHS) declares the PHE no longer exists, or upon the expiration of the 90-day period beginning on the date the Secretary declared a PHE exists, whichever occurs first. The Secretary may extend the PHE declaration for subsequent 90-day periods for as long as the PHE continues to exist, and may terminate the declaration whenever he determines the PHE has ceased to exist. The manual provisions related to adjustments to DRG reimbursement and LTCH reimbursement terminate upon expiration of the COVID-19 PHE declared by the Secretary of HHS.

4.2 For the waiver of the SNF three-day prior hospital stay requirement, these manual provisions terminate upon expiration of the President’s national emergency for the COVID-19 outbreak.

4.3 The manual provisions related to NCTAP reimbursement terminate on September 30, 2023.

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