TRICARE Manuals - Display Chap 1 Addendum E (Change 83, Aug 20, 2024)

General

Chapter 1

Addendum E

Controls for Excessive Charges For Professional Services, And Durable Medical Equipment, Prosthetics, Orthotics, And Supplies/Parenteral And Enteral Nutrition (DMEPOS/PEN) Services Without Established Rates

Revision: C-80, July 18, 2024

1.0 APPLICABILITY

1.1 This policy is mandatory for reimbursement of certain services and items billed with Current Procedural Terminology (CPT) or Healthcare Common Procedure Coding System (HCPCS) codes that do not have pricing established under the TRICARE fee schedule or contractor state prevailing rates. These codes include, but are not limited to, those categorized as unlisted, miscellaneous, not otherwise classified, as well as new codes, or codes that fail to meet TRICARE’s minimum data threshold of eight or more claims to establish a state prevailing rate.

1.2 Payment thresholds established under this guidance will only be used until a TRICARE fee schedule or state prevailing rate has been established.

1.3 The policy applies to either network or non-network providers. However, alternative network reimbursement methodologies are permitted when approved by the Defense Health Agency (DHA) and specifically included in the network provider agreement.

2.0 POLICY

This policy provides guidelines for determining appropriate reimbursement for certain services prior to establishment of fee schedule rates, thus, preventing reimbursement “substantially in excess of customary or reasonable charges” (a form of abuse identified in the TRICARE regulation at 32 CFR 199.9).

3.0 Guidelines

3.1 DMEPOS and PEN items. For DMEPOS and PEN items without a fee schedule or state prevailing rate, the contractor shall set a payment threshold using the following methodology:

3.1.1 The fee schedule or state prevailing rate for a comparable code or similar item. The contractor shall ensure that the comparable code selected is based on the following criteria:

• Similarity of function.

• Similarity of design and structure (nature of technology).

• Similarity of purpose and features (materials used).

3.1.2 If a comparable item is not available, the contractor shall use the supplier’s price list (SPL) amount.

3.1.2.1 The SPL amount provided by the supplier or provider will be the price in effect at the time the item or supply was furnished to the beneficiary.

3.1.2.2 The contractor shall deflate the SPL amount (or catalogue or Internet price) to 1987 levels using the Medicare published deflation factor. The contractor shall then reinflate the price to current levels using Medicare’s DMEPOS update factors. DHA will provide the Total Factor Update by calendar year that already includes the required deflation and reinflation factors by DMEPOS/PEN category on the DHA rates website.

3.1.3 In the absence of a comparable code or SPL amount, billed charges may be applied.

Note: Contractors shall ensure billed charges are not abusive in accordance with 32 CFR 199.9, and represent customary and reasonable charges.

3.2 For all other professional services without a fee schedule or state prevailing rate (excluding DMEPOS, PEN) the contractor shall ensure that the comparable code selected is based on the following criteria:

• Similar time and effort required.

• Similar complexity of skills required.

• Similar office overhead expenses such as support staff, routine supplies, with special attention to any high cost supplies/device included in code.

3.2.1 In the absence of a fee schedule or contractor state prevailing rate for a comparable code, billed charges may be applied.

Note: Contractors shall ensure billed charges are not abusive in accordance with 32 CFR 199.9, and represent customary and reasonable charges.

4.0 Billing And Payment

4.1 For DMEPOS/PEN items and professional services billed without a TRICARE fee schedule or state prevailing rate, the contractor shall ensure that the following information is included on the claim submission:

• Narrative Description of the service or item;

• A comparable procedure code;

• The supplier’s price list amount for DME and supply codes (as applicable);

• National Drug Code (NDC)#, dosage units, and method of administration for drug codes (as applicable).

4.2 In addition, the contractor may request additional documentation or justification to support the use of procedure codes categorized as unlisted, miscellaneous, or not otherwise classified.

4.2.1 This may include clinical notes, test results, or other relevant documentation to help the contractor determine the appropriateness of a comparable code or determine the medical necessity and appropriateness of the service or procedure.

4.2.2 This could also include a detailed explanation of the service or procedure, including the purpose, duration, and any materials or equipment used (as applicable).

4.3 Payment shall be made at the lower of the billed charge or the established threshold. See paragraph 5.0 for exceptions.

5.0 Exceptions

5.1 Contractors have discretion to exempt any service or supply, including procedure codes from the guidelines set forth in this section on a claim-by-claim basis. There may be instances where the contractor concludes that a provider cannot reasonably produce documentation to show the SPL amount or due to administrative costs, access to care issues, or significant burden on either the DHA, the contractor, or provider.

5.2 Contractors have discretion to exempt a service or item on a claim-by-claim basis and allow payment above the threshold, up to the billed amount, for the following reasons:

• Lack of a comparable code for other professional services not identified as drugs, biologicals, ambulance, DMEPOS and PEN;

• Extra percentage is warranted for extra time, effort, or work than the comparison procedure code for services not identified as drugs, biologicals, ambulance, DMEPOS and PEN, and this is documented in the medical record; or

• The contractor concludes after thorough analysis that a provider cannot reasonably produce documentation to show the supplier price list and reliable commercial pricing information is unavailable for a DMEPOS and PEN item.

5.3 There may be instances where a blanket exception would be applicable for an entire procedure code or a type of claim will need to be exempt from this policy due to administrative costs, access to care issues, or significant burden on the DHA, contractors, or providers. The contractors may submit blanket exceptions to the DHA via their Contracting Officer (CO) for approval. DHA will maintain a listing of all approved blanket exceptions and compare the exceptions list with the contractor’s lists at least annually. For example, the TRICARE contractor may request exempting certain claims that do not exceed $15.00 when the cost of claims handling is $30.00 since submitting or processing a reconsideration request would not be cost-efficient for either DHA, contractors, or providers.

6.0 Exclusions

6.1 Institutional or facility charges are not subject to the provisions of this policy.

6.2 Charges for services that are provided overseas. However, claims for services or items provided in the Continental United States (CONUS), Alaska, Hawaii, Puerto Rico, the Virgin Islands, American Samoa, the Northern Mariana Islands, and Guam are subject to the guidelines in this section.

6.3 Claims with OHI.

Note: While these services and claims listed in paragraph 6.0 are excluded from this policy, contractors shall continue to ensure that where payment is made on the basis of billed charges, those charges meet the requirements of 32 CFR 199.9 and represent reasonable and customary amounts.

7.0 Effective Date

This policy is effective June 13, 2022.

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DHA Address: 7700 Arlington Boulevard | Suite 5101 | Falls Church, VA | 22042-5101

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