Back to Top Skip to main content

Health.mil: the official website of the Military Health System (MHS) and the Defense Health Agency (DHA)

Utility Navigation Links

TRICARE Reimbursement Manual 6010.61-M, April 1, 2015
Outpatient Prospective Payment System (OPPS)-Ambulatory Payment Classification (APC)
Chapter 13
Section 3
Prospective Payment Methodology
Issue Date:  July 27, 2005
Authority:  10 USC 1079(h) and (i)(2)
Copyright:  HCPCS Level I/CPT only © 2006 American Medical Association (or such other date of publication of CPT). All Rights Reserved.
Revision:  C-21, May 30, 2018
1.0  APPLICABILITY
This policy is mandatory for the reimbursement of services provided either by 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  ISSUE
To describe the payment methodology for hospital outpatient services.
3.0  POLICY
3.1  Basic Methodology for Determining Prospective Payment Rates for Outpatient Services
3.1.1  Setting of Payment Rates
The prospective payment rate for each Ambulatory Payment Classification (APC) is calculated by multiplying the APC’s relative weight by the conversion factor. Medicare establishes the relative APC weights; these are updated on a quarterly basis. See the Medicare Claims Processing Manual, Chapter 4, Section 10.3 for a description of APC weights.
3.1.1.1  Revenue center changes that contain items integral to performing the procedure or visit are used to calculate the per-procedure or per-visit costs. Medicare publishes a list of packaged revenue codes every year within the Centers for Medicare and Medicaid Services (CMS) Outpatient Prospective Payment System (OPPS) Final Rule. These rules are available here: https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/HospitalOPPS.html.
3.1.1.1.1  Some instructions have been issued that require that specific revenue codes be billed with certain Healthcare Common Procedure Coding System (HCPCS) codes, such as specific revenue codes that must be used when billing for devices that qualify for pass-through payments.
Note:  If the revenue code is not listed, refer to the TRICARE Systems Manual (TSM), Chapter 2, Addendum N, for reporting requirements.
3.1.1.1.2  Where specific instructions have not been issued, contractors should advise hospitals to report charges under the revenue code that would result in the charges being assigned to the same cost center to which the cost of those services were assigned in the cost report.
Example:  Operating room, treatment room, recovery, observation, medical and surgical supplies, pharmacy, anesthesia, casts and splints, and donor tissue, bone, and organ charges were used in calculating surgical procedure costs. The charges for items such as medical and surgical supplies, drugs and observation were used in estimating medical visit costs.
3.1.1.2  Costs are standardized for geographic wage variation by dividing the labor-related portion of the operating and capital costs for each billed item by the current hospital Inpatient Prospective Payment System (IPPS) wage index. Sixty percent (60%) is used to represent the estimated portion of costs attributable, on average, to labor.
3.1.1.3  Standardized labor related cost and the nonlabor-related cost component for each billed item are summed to derive the total standardized cost for each procedure or medical visit.
3.1.1.4  Each procedure or visit cost is mapped to its assigned APC.
3.1.1.5  The median cost is calculated for each APC.
3.1.1.6  Relative payment rates are established by CMS, are utilized by DHA, and are listed on DHA’s OPPS web site at http://www.health.mil/rates. See the Medicare Claims Processing Manual, Chapter 4, Section 10.3 for more information on how the rates are derived.
3.1.1.7  These relative payment weights may be further adjusted for budget neutrality based on a comparison of aggregate payments using previous and current Calendar Year (CY) weights.
3.1.2  Conversion Factor Update
3.1.2.1  The conversion factor is updated annually by the hospital inpatient market basket percentage increase applicable to hospital discharges.
3.1.2.2  The conversion factor is also subject to adjustments for wage index budget neutrality, differences in estimated pass-through payments, and outlier payments. The conversion factor is published in the annual CMS OPPS Final Rule.
3.1.3  Payment Status Indicators (SIs)
A payment SI is provided for every code in the HCPCS to identify how the service or procedure described by the code would be paid under the hospital OPPS; i.e., it indicates if a service represented by a HCPCS code is payable under the OPPS or another payment system, and also which particular OPPS payment policies apply. One, and only one, SI is assigned to each APC and to each HCPCS code. Each HCPCS code that is assigned to an APC has the same SI as the APC to which it is assigned. The following are the payment SIs and descriptions of the particular services each indicator identifies:
3.1.3.1  A to indicate services that are paid under some payment method other than OPPS, such as the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) fee schedule, CHAMPUS Maximum Allowable Charge (CMAC) reimbursement methodology for physicians, or State prevailings.
3.1.3.2  B to indicate more appropriate code required for DHA OPPS.
3.1.3.3  C to indicate inpatient services that are not paid under the OPPS.
3.1.3.4  E to indicate items or services are not covered under the TRICARE Program for items as services provided from May 1, 2009, through December 31, 2016.
3.1.3.5  E1 to indicate items or services that are not covered under the TRICARE Program for items or services provided on or after January 1, 2017.
3.1.3.6  F to indicate acquisition of corneal tissue, which is paid on an allowable charge basis (i.e., paid based on the CMAC reimbursement system or statewide prevailings) and certain Certified Registered Nurse Anesthetist (CRNA) services and hepatitis B vaccines that are paid on an allowable charge basis.
3.1.3.7  G to indicate drug/biological pass-through that are paid in separate APCs under the OPPS.
3.1.3.8  H to indicate pass-through device categories allowed on a cost basis.
3.1.3.9  J1 to indicate Hospital Outpatient Department (HOPD) services paid through a comprehensive APC.
3.1.3.10  J2 to indicate HOPD services that may be paid through a comprehensive APC.
3.1.3.11  K to indicate non-pass-through drugs and non-implantable biologicals, including therapeutic radiopharmaceuticals that are paid in separate APCs under the OPPS.
3.1.3.12  N to indicate services that are incidental, with payment packaged into another service or APC group.
3.1.3.13  P to indicate services that are paid only in Partial Hospitalization Programs (PHPs).
3.1.3.14  Q to indicate packaged services subject to separate payment under OPPS.
3.1.3.15  Q1 to indicate packaged APC payment if billed on the same date of service as a HCPCS code assigned SI of S, T, V, and X1. In all other circumstances, payment is made through a separate APC payment.
3.1.3.16  Q2 to indicate APC payment if billed on the same date of service as a HCPCS code assigned SI of T. In all other circumstances, payment is made through a separate APC payment.
3.1.3.17  Q3 to indicate composite APC payment based on OPPS composite specific payment criteria. Payment is packaged into single payment for specific combinations of service. In all circumstances, payment is made through a separate APC payment for those services.
3.1.3.18  Q4 to indicate conditionally packaged laboratory services.
Note:  HCPCS codes with SI of Q are either separately payable or packaged depending on the specific circumstances of their billing. Outpatient Code Editor (OCE) claims processing logic will be applied to codes assigned SI of Q in order to determine if the service will be packaged or separately payable.
3.1.3.19  R to indicate separate APC payment for blood and blood products.
3.1.3.20  S to indicate significant procedures for which payment is allowed under the hospital OPPS, but to which the multiple procedure reduction does not apply.
3.1.3.21  T to indicate surgical services for which payment is allowed under the hospital OPPS. Services with this payment indicator are the only services to which the multiple procedure payment reduction applies.
3.1.3.22  U to indicate separate APC payment for brachytherapy sources.
3.1.3.23  V to indicate medical visits (including clinic or Emergency Department (ED) visits) for which payment is allowed under the hospital OPPS.
3.1.3.24  W to indicate invalid HCPCS or invalid revenue code with blank HCPCS.
3.1.3.25  X2 to indicate an ancillary service for which payment is allowed under the hospital OPPS.
3.1.3.26  Z to indicate valid revenue code with blank HCPCS and no other SI assigned.
3.1.3.27  TB to indicate TRICARE reimbursement not allowed for Current Procedural Terminology (CPT)/HCPCS code submitted.
Note:  The system payment logic looks to the SIs attached to the HCPCS codes and APCs for direction in the processing of the claim. A SI, as well as an APC, must be assigned so that payment can be made for the service identified by the new code. The SIs identified for each HCPCS code and each APC and listed on DHA’s OPPS web site at http://www.health.mil/rates.
3.1.4  Calculating DHA Payment Amount
3.1.4.1  The national APC payment rate that is calculated for each APC group is the basis for determining the total payment (subject to wage-index adjustment) the hospital will receive from the beneficiary and the TRICARE program. (Refer to DHA’s OPPS web site at http://www.health.mil/rates for national APC payment rates.)
3.1.4.2  The DHA payment amount takes into account the wage index adjustment and beneficiary deductible and cost-share/copayment amounts.
3.1.4.3  The DHA payment amount calculated for an APC group applies to all the services that are classified within that APC group.
3.1.4.4  The DHA payment amount for a specific service classified within an APC group under the OPPS is calculated as follows:
3.1.4.4.1  Apply the appropriate wage index adjustment to the national payment rate that is set annually for each APC group. (Refer to the OPPS Provider File with Wage Indexes on DHA’s OPPS home page at http://www.health.mil/rates for annual Diagnosis Related Group (DRG) wage indexes used in the payment of hospital outpatient claims, effective January 1 of each year.)
3.1.4.4.2  Multiply the wage-adjusted APC payment rate by the OPPS rural adjustment (1.071) if the provider is a Sole Community Hospital (SCH) in a rural area with 100 or more beds. Effective January 1, 2010, the OPPS rural adjustment will apply to all SCHs in rural areas.
3.1.4.4.3  Determine any outlier amounts and add them to the sum of either paragraph 3.1.4.4.1 or 3.1.4.4.2.
3.1.4.4.4  Subtract from the adjusted APC payment rate the amount of any applicable deductible and/or cost-sharing/copayment amounts based on the eligibility status of the beneficiary at the time the outpatient services were rendered (i.e., those deductibles and cost-sharing/copayment amounts applicable to the appropriate beneficiary categories). Refer to Chapter 2 for applicable deductible and/or cost-sharing/copayment amounts.
3.1.4.5  Examples of payments under OPPS based on eligibility status of beneficiary at the time the services were rendered are below. Deductibles, cost-shares and copayments examples are based on dates of service prior to January 1, 2018. See Chapter 2 for deductibles, copayments, and cost-shares for dates of service on or after January 1, 2018:
Example 1:  
Assume that the wage-adjusted rate for an APC is $400; the beneficiary receiving the services is an Active Duty Family Member (ADFM) enrolled under Prime, and as such, is not subject to any deductibles or copayments.
•  Adjusted APC payment rate: $400.
•  Subtract any applicable deductible: $400 - $0 = $400
•  Subtract the Prime ADFM copayment from the adjusted APC payment rate less deductible to calculate the final payment amount.
$400 - $0 = $400 final payment
•  TRICARE would pay 100% of the adjusted APC payment rate for ADFMs enrolled in Prime.
Example 2:  
Assume that the wage-adjusted rate for an APC is $400 and the beneficiary receiving the outpatient services is a Prime retiree family member subject to a $12 copayment. Deductibles are not applied under the Prime program.
•  Adjusted APC payment rate: $400.
•  Subtract any applicable deductible: $400 - $0 = $400
•  Subtract the Prime retiree family member copayment from the adjusted APC payment rate less deductible to calculate the final TRICARE payment amount.
$400 - $12 = $388 final payment
•  In this case, the beneficiary pays zero ($0) deductible and a $12 copayment, and the program pays $388 (i.e., the difference between the adjusted APC payment rate and the Prime retiree family member copayment).
Example 3:  
This example illustrates a case in which both an outpatient deductible and cost-share are applied. Assume that the wage-adjusted payment rate for an APC is $400 and the beneficiary receiving the outpatient services is a standard ADFM subject to an individual $50 deductible (active duty sponsor is an E-3) and 20% cost-share.
•  Adjusted APC payment rate: $400.
•  Subtract any applicable deductible: $400 - $50 = $350
•  Subtract the standard ADFM cost-share (i.e., 20% of the allowable charge) from the adjusted APC payment rate less deductible to calculate the final TRICARE payment amount.
$350 x 0.20 = $70 cost-share
$350 - $70 = $280 TRICARE final payment
•  In this case, the beneficiary pays a deductible of $50 and a $70 cost-share, and the program pays $280, for total payment to the hospital of $400.
3.1.5  Adjustments to APC Payment Amounts
3.1.5.1  Adjustment for Area Wage Differences
3.1.5.1.1  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 labor-related costs across geographical regions with the exception of APCs with SIs of G, H, K, R, and U. The hospital DRG wage index will be used given the inseparable, subordinate status of the outpatient department within the hospital.
3.1.5.1.2  The OPPS will use the same wage index changes as the TRICARE DRG-based payment system, except the effective date for the changes will be January 1 of each year instead of October 1 (refer to the OPPS Provider File with Wage Indexes on DHA’s OPPS home page at http://www.health.mil/rates.
3.1.5.1.3  The General, and non-network Temporary Military Contingency Payment Adjustments (TMCPAs) are not wage-adjusted.
3.1.5.1.4  Sixty percent (60%) of the hospital’s outpatient department costs are recognized as labor-related costs that would be standardized for geographic wage differences. This is a reasonable estimate of outpatient costs attributable to labor, as it fell between the hospital DRG operating cost labor factor of 71.1% and the Ambulatory Surgery Center (ASC) labor factor of 34.45%, and is close to the labor-related costs under the inpatient DRG payment system attributed directly to wages, salaries and employee benefits (61.4%).
3.1.5.1.5  Steps in Applying Wage Adjustments under OPPS
3.1.5.1.5.1  Calculate 60% (the labor-related portion) of the national unadjusted payment rate that represents the portion of costs attributable, on average, to labor.
3.1.5.1.5.2  Determine the wage index in which the hospital is located and identify the wage index level that applies to the specific hospital.
3.1.5.1.5.3  Multiply the applicable wage index determined under paragraph 3.1.5.1.5.2 by the amount under paragraph 3.1.5.1.5.1 that represents the labor-related portion of the national unadjusted payment rate.
3.1.5.1.5.4  Calculate 40% (the nonlabor-related portion) of the national unadjusted payment rate and add that amount to the resulting product in paragraph 3.1.5.1.5.3. The result is the wage index adjusted payment rate for the relevant wage index area.
3.1.5.1.5.5  If a provider is a SCH in a rural area, or is treated as being in a rural area, multiply the wage-adjusted payment rate by 1.071 to calculate the total payment before applying the deductible and copayment/cost-sharing amounts.
3.1.5.1.5.6  Applicable deductible and copayment/cost-sharing amounts would then be subtracted from the wage-adjusted APC payment rate, and the remainder would be the TRICARE payment amount for the services or procedure. Deductibles, cost-shares and copayments examples are based on dates of service prior to January 1, 2018. See Chapter 2 for deductibles, copayments, and cost-shares for dates of service on or after January 1, 2018:
Example:  A surgical procedure with an APC payment rate of $300 is performed in the outpatient department of a hospital located in Heartland, USA. The cost-sharing amount for the standard ADFM is $60.80 (i.e., 20% of the wage-adjusted APC amount for the procedure). The hospital inpatient DRG wage index value for hospitals located in Heartland, USA, is 1.0234. The labor-related portion of the payment rate is $180 ($300 x 60%), and the nonlabor-related portion of the payment rate is $120 ($300 x 40%). It is assumed that the beneficiary deductible has been met.
Units billed x APC x 60% (labor portion) x wage index (hospital specific) + APC x 40% (nonlabor portion) = adjusted payment rate.
•  Wage-Adjusted Payment Rate (rounded to nearest cent):
= ($180 x 1.0234) = $184.21 + $120 = $304.21
•  Cost-share for standard ADFM (rounded to nearest cent):
= ($304.21 x 0.20) = $60.84
•  Subtract the standard ADFM cost-share from the wage-adjusted rate to get the final TRICARE payment:
= ($304.21 - $60.84) = $243.37
3.1.5.2  Discounting of Surgical and Terminating Procedures
3.1.5.2.1  OPPS payment amounts are discounted when more than one procedure is performed during a single operative session or when a surgical procedure is terminated prior to completion. Refer to Chapter 1, Section 16 for additional guidelines on discounting of surgical procedures.
3.1.5.2.1.1  Line items with a SI of T are subject to multiple procedure discounting unless modifiers 76, 77, 78, and/or 79 are present.
3.1.5.2.1.2  When more than one procedure with payment SI of T is performed during a single operative session, TRICARE will reimburse the full payment and the beneficiary will pay the cost-share/copayment for the procedure having the highest payment rate.
3.1.5.2.1.3  Fifty percent (50%) of the usual PPS payment amount and beneficiary copayment/cost-share amount would be paid for all other procedures performed during the same operative session to reflect the savings associated with having to prepare the patient only once and the incremental costs associated with anesthesia, operating and recovery room use, and other services required for the second and subsequent procedures.
•  The reduced payment would apply only to the surgical procedure with the lower payment rate.
•  The reduced payment for multiple procedures would apply to both the beneficiary copayment/cost-share and the TRICARE payment.
3.1.5.2.2  Hospitals are required to use modifiers on bills to indicate procedures that are terminated before completion.
3.1.5.2.2.1  Fifty percent (50%) of the usual OPPS payment amount and beneficiary copayment/cost-share will be paid for a procedure terminated before anesthesia is induced.
•  Modifier -73 (Discontinued Outpatient Procedure Prior to Anesthesia Administration) would identify a procedure that is terminated after the patient has been prepared for surgery, including sedation when provided, and taken to the room where the procedure is to be performed, but before anesthesia is induced (for example, local, regional block(s), or general anesthesia).
•  Modifier -52 (Reduced Services) would be used to indicate a procedure that did not require anesthesia, but was terminated after the patient had been prepared for the procedure, including sedation when provided, and taken to the room where the procedure is to be performed.
3.1.5.2.2.2  Full payment will be received for a procedure that was started but discontinued after the induction of anesthesia, or after the procedure was started.
•  Modifier -74 (Discontinued Procedure) would be used to indicate that a surgical procedure was started but discontinued after the induction of anesthesia (for example, local, regional block, or general anesthesia), or after the procedure was started (incision made, intubation begun, scope inserted) due to extenuating circumstances or circumstances that threatened the well-being of the patient.
•  This payment would recognize the costs incurred by the hospital to prepare the patient for surgery and the resources expended in the operating room and recovery room of the hospital.
3.1.5.3  Discounting for Bilateral Procedures
3.1.5.3.1  Following are the different categories/classifications of bilateral procedure:
3.1.5.3.1.1  Conditional bilateral (i.e., procedure is considered bilateral if the modifier 50 is present).
3.1.5.3.1.2  Inherent bilateral (i.e., procedure in and of itself is bilateral).
3.1.5.3.1.3  Independent bilateral (i.e., procedure is considered bilateral if the modifier 50 is present, but full payment should be made for each procedure (e.g., certain radiological procedures)).
3.1.5.3.2  Terminated bilateral procedures or terminated procedures with units greater than one should not occur, and for type T procedures, have the discounting factor set so as to result in the equivalent of a single procedure. Line items with terminated bilateral procedures or terminated procedure with units greater than one are denied.
3.1.5.3.3  For non-type T procedures there is no multiple procedure discounting and no bilateral procedure discounting with modifier 50 performed. Line items with SI other than T are subject to terminated procedure discounting when modifier 52 or 73 is present. Modifier 52 or 73 on a non-type T procedure line will result in a 50% discount being applied to that line.
3.1.5.3.4  The discounting factor for bilateral procedures is the same as the discounting factor for multiple type T procedures.
3.1.5.3.5  Inherent bilateral procedures will be treated as a non-bilateral procedure since the bilateralism of the procedure is encompassed in the code.
3.1.5.3.6  Following are the different discount formulas that can be applied to a line item:
Figure 13.3-1  Discounting Formulas For Bilateral Procedures
Discounting Formula Number
Formulas
Where:
D = discounting fraction (currently 0.5)
U = number of units
T = terminated procedure discount (currently 0.5)
1
1.0
2
(1.0 + D (U - 1))/U
3
T/U
4
(1 + D)/U
5
D
8
2.0
9
2D/U
3.1.5.3.7  Figure 13.3-2 summarizes the application of above discounting formulas:
Figure 13.3-2  Application of Discounting Formulas
Discounting Formula Number
Type T Procedure
Non-type T Procedure
Payment Amount
Modifier 52 or 73
Modifier 50**
Conditional Or Independent Bilateral
Inherent
Or
Non-Bilateral
Conditional Or Independent Bilateral
Inherent
Or
Non-Bilateral
For the purpose of determining which APC has the highest payment amount, the terminated procedure discount (T) any applicable offset, will be applied prior to selecting the T procedure with the highest payment amount. If both offset and terminated procedure discount apply, the offset will be applied first before the terminated procedure discount.
* If not terminated, non-type T Conditional bilateral procedures with modifier 50 will be assigned discount formula #8. Non-type T Independent bilateral procedures with modifier 50 will be assigned to formula #8.
** If modifier 50 is present on a independent or conditional bilateral line that has a composite APC or a separately paid STVX/T-packaged procedure, the modifier is ignored in assigning the discount formula.
Highest
No
No
2
2
1
1
Highest
Yes
No
3
3
3
3
Highest
No
Yes
4
2
8*
1
Highest
Yes
Yes
3
3
3
3
Not Highest
No
No
5
5
1
1
Not Highest
Yes
No
3
3
3
3
Not Highest
No
Yes
9
5
8*
1
Not Highest
Yes
Yes
3
3
3
3
Note:  For the purpose of determining which APC has the highest payment amount, the terminated procedure discount (T) will be applied prior to selecting the type T procedure with the highest payment amount.
3.1.5.3.8  In those instances where more than one bilateral procedure and they are medically necessary and appropriate, hospitals are advised to report the procedure with a modifier -76 (repeat procedure or service by same physician) in order for the claim to process correctly.
3.1.5.4  Multiple discounting will not be applied to the following CPT codes for venipuncture, fetal monitoring and collection of blood specimens: 36400 - 36416, 36591, 36592, 59020, 59025, and 59050-59051.
3.1.5.5  Outlier Payments
An additional payment is provided for outpatient services for which a hospital’s charges, adjusted to cost, exceed the sum of the wage-adjusted APC rate plus a fixed dollar threshold and a fixed multiple of the wage-adjusted APC rate. Only line item services with SIs of J1, J2, P, R, S, T, V, or X3 will be eligible for outlier payment under OPPS. No outlier payments will be calculated for line item services with SIs of G, H, K, N, and U, with the exception of blood and blood products.
3.1.5.5.1  Outlier payments will be calculated on a service-by-service basis. Calculating outliers on a service-by-service basis was found to be the most appropriate way to calculate outliers for outpatient services. Outliers on a bill basis requires both the aggregation of costs and the aggregation of OPPS payments, thereby introducing some degree of offset among services; that is, the aggregation of low cost services and high cost services on a bill may result in no outlier payment being made. While service-based outliers are somewhat more complex to administer, under this method, outlier payments will be more appropriately directed to those specific services for which a hospital incurs significantly increased costs.
3.1.5.5.2  Outlier payments are intended to ensure beneficiary access to services by having the TRICARE program share the financial loss incurred by a provider associated with individual, extraordinarily expensive cases.
3.1.5.5.3  Outlier thresholds are established on a CY basis which requires that a hospital’s cost for a service exceed the wage-adjusted APC payment rate for that service by a specified multiple of the wage-adjusted APC payment rate and the sum of the wage-adjusted APC rate plus a fixed dollar threshold ($1,800 for CY 2009) in order to receive an additional outlier payment. When the cost of a hospital outpatient service exceeds both of these thresholds a predetermined percentage of the amount by which the cost of furnishing the services exceeds the multiple APC threshold will be paid as an outlier.
3.1.5.5.4  Outlier payments are not subject to cost-sharing.
3.1.5.5.5  TTPAs and TMCPAs shall not be included in cost outlier calculations.
3.1.5.5.6  Example of outlier payment calculation.
Example:  Following are the steps involved in determining if services on a claim qualify for outlier payments using the appropriate CY multiple and fixed dollar thresholds.
Step 1:  Identify all APCs on the claim.
Step 2:  Determine the ratio of each wage-adjusted APC payment to the total payment of the claim (assume for this example a wage index of 1.0000).
CPT Code
SI
APC
Service
Wage-Adjusted APC Payment Rate
Ratio Of APC To Total Payment
99285
V
0616
Level 5 Emergency Visit
$315.51
0.5107157
70481
S
0283
CT scan with contrast material
$277.48
0.4491566
93041
S
0099
Electrocardiogram
$24.79
0.0401275
Step 3:  Identify billed charges of packaged items that need to be allocated to an APC.
Revenue Code
OPPS Service or Supply
Total Charges
0250
Pharmacy
$3,435.50
0270
Medical Supplies
$4,255.80
0350
CT scan
$3,957.00
0450
Emergency Room
$2,986.00
0730
Electrocardiogram
$336.00
Step 4:  Allocate the billed charges of the packaged items identified in Step 3 to their respective wage-adjusted APCs based on their percentages to total payment calculated in Step 2.
APC
Ratio Allocation
OPPS Service
250
(Pharmacy)
270
(Medical Supplies)
0616
0.5107157
Level 5 Emergency Visit
$1,754.56
$2,173.50
0283
0.4491566
CT scan with contrast material
$1,543.08
$1,911.52
0099
0.0401275
Electrocardiogram
$137.36
$170.77
Step 5:  Calculate the total charges for each OPPS service (APC) and reduce them to costs by applying the statewide Cost-To-Charge (CCR). Statewide CCRs are based on the geographical Core Based Statistical Area (CBSA) (two digit = rural, five digit = urban). Assume that the outpatient CCR is 31.4%.
APC
OPPS Service
Total Charges
Total Charges Reduced To Costs (CCR = 0.3140)
0616
Level 5 Emergency Visit
$6,914.06
$2,170.01
0283
CT scan with contrast material
$7,411.60
$2,327.24
0099
Electrocardiogram
$644.63
$202.41
Step 6:  Apply the cost test to each wage-adjusted APC service or procedure to determine if it qualifies for an outlier payment. If the cost of a service (wage-adjusted APC) exceeds both the APC multiplier threshold (1.75 times the wage-adjusted APC payment rate) and the fixed dollar threshold (wage-adjusted APC rate plus $1,800), multiply the costs in excess of the wage-adjusted APC multiplier by 50% to get the additional outlier payment.
APC
Wage-Adjusted APC Rate
Costs
Fixed Dollar Threshold (Wage-Adjusted APC Rate + $1,800)
Multiplier Threshold
(1.75 x Wage Index APC Rate)
Costs in Excess Of Multiplier Threshold
Outlier Payment Costs Of Wage-Adjusted APC - (1.75 x Wage-Adjusted APC Rate) x 0.50
* Does not qualify for outlier payment since the APC’s costs did not exceed the fixed dollar threshold (APC Rate + $1,800).
0616
$315.51
$2,170.01
$2,115.51
$552.14
$1,618.87
$808.43
0283
$277.48
$2,327.24
$2,077.48
$485.59
$1,841.65
$920.83
0099
$24.79
$202.41
$1,824.79
$43.38
$159.03
-0-*
The total outlier payment on the claim was: $1,746.50.
3.1.5.6  Rural SCH payments will be increased by 7.1%. This adjustment will apply to all services and procedures paid under the OPPS (SIs of J1, J2, P, S, T, V, and X4), excluding drugs, biologicals and services paid under the pass-through payment policy (SIs of G and H).
3.1.5.6.1  The adjustment amount will not be reestablished on an annual basis, but may be reviewed in the future, and if appropriate, may be revised.
3.1.5.6.2  The adjustment is budget neutral and will be applied before calculating outliers and copayments/cost-sharing.
3.1.5.7  Temporary Military Contingency Payment Adjustments (TMCPAs)
Under the authority of the last paragraph of 32 CFR 199.14(a)(6)(ii), the following OPPS adjustments are authorized.
3.1.5.7.1  General TMCPA (GTMCPA) Payments
The Director, DHA, or designee at any time after OPPS implementation, has the authority to adopt, modify and/or extend temporary adjustments for TRICARE network hospitals located within Military Treatment Facility (MTF)/Enhanced Multi-Service Market (eMSM) Prime Service Areas (PSAs) and deemed essential for military readiness and support during contingency operations. The Director, DHA, may approve a GTMCPA payment for hospitals that serve a disproportionate share of Service members and Active Duty Dependents (ADDs). In order for a hospital to be considered for a GTMCPA payment, the hospital’s outpatient revenue received for services provided to TRICARE Service members and ADDs must have been at least 10% of the hospital’s total outpatient revenue received during the previous OPPS year (May 1 through April 30) or the number of OPPS visits by Service members and ADDs during that same 12-month period must have been at least 50,000. Billed charges will not be used as the basis for determining a hospital’s eligibility for a GTMCPA. If the hospital serves a disproportionate share of TRICARE Service members and ADDs, and is essential for network adequacy, the hospital may qualify for a discretionary GTMCPA payment that results in a Payment-to-Cost Ratio (PCR) not to exceed 1.3. The process for GTMCPA payments is as follows:
The number of OPPS visits by Service members and ADDs during the previous OPPS year; i.e., May 1 through April 30.
The Director, TRICARE Regional Offices (DTROs) shall request DHA Medical Benefits and Reimbursement Section (MB&RS) run a query of claims history to determine if the network hospital qualifies for a GTMCPA, i.e., the hospital’s payment-to-cost ratio is less than 1.3 for care provided to Service members and ADDs during the previous OPPS year (May 1 through April 30).
3.1.5.7.1.1  The hospital may submit a request for a discretionary GTMCPA payment to their Contractor. The request must be made to the contractor within 12 months of the end of the OPPS year (May 1 through April 30) for which the hospital is requesting a GTMCPA payment. For example, a hospital must submit a request for a GTMCPA payment for the OPPS year ending April 30, 2016, on or before April 30, 2017. Late submissions or requests for extensions will not be considered. Hospitals will be given a grace period of six months from [the effective date of this change], ending [six months from the effective date], to submit GTMCPA payment requests for OPPS years ending on or before April 30, 2016. The hospital’s request for a GTMCPA payment shall include the following data requirements for the previous OPPS year:
3.1.5.7.1.1.1  The hospital’s outpatient revenue from Service member and ADD OPPS visits. Hospitals shall not include revenue by: non-ADFM or non-Service member beneficiaries (i.e., retiree or retiree dependents); TRICARE For Life (TFL) beneficiaries; overseas beneficiaries; or beneficiaries with Other Health Insurance (OHI). Additionally, only revenue received from OPPS claims shall be reported; revenue from physician fees, non-OPPS clinic visits, or other non-OPPS claims should not be included. Uniformed Services Family Health Plan (USFHP) HOPD Service member and ADD revenue may be included in the hospital’s submission if the visits were paid utilizing OPPS, but shall be separately identified by the hospital.
3.1.5.7.1.1.2  The hospital’s total outpatient revenue (TRICARE and non-TRICARE) derived from all other third party payers and private pay.
3.1.5.7.1.1.3  The hospital’s estimation of the percent of outpatient revenue derived from Service member plus ADD OPPS visits (paragraph 3.1.5.7.1.1 divided by paragraph 3.1.5.7.1.2).
3.1.5.7.1.1.4  The number of OPPS visits by Service members and ADDs. Hospitals shall not include visits by: non-ADFM or non-Service member beneficiaries (i.e., retiree or retiree dependents); TFL beneficiaries; overseas beneficiaries; or beneficiaries with OHI. Only OPPS visits should be reported. Non-OPPS visits, inpatient admissions, or other encounters shall not be included in the number of visits. USFHP HOPD Service member and ADD visits may be included in the hospital’s submission if the visits were paid utilizing OPPS, but shall be separately identified by the hospital.
3.1.5.7.1.1.5  Hospital-specific Medicare outpatient CCR based on the hospital’s most recent cost reporting period. The hospital shall provide both the CCR and the dates of the most recent cost reporting period.
3.1.5.7.1.2  The contractor shall perform a thorough evaluation of the hospital’s request in paragraph 3.1.5.7.1.1. This evaluation shall consist of the following:
3.1.5.7.1.2.1  The contractor shall evaluate the hospital’s package for completeness. The contractor shall verify the hospital has provided all components required in paragraph 3.1.5.7.1.1.
3.1.5.7.1.2.2  The contractor shall perform a validation that the hospital meets the disproportionate share criteria:
3.1.5.7.1.2.2.1  If the hospital’s submission shows that 10% or greater of the hospital’s total outpatient revenue is from Service member/ADD OPPS revenue in the prior OPPS year, the contractor shall independently calculate the hospital’s outpatient revenue from Service member and ADD visits, utilizing the contractor’s claims data systems, and dividing this result by the total outpatient revenue reported by the hospital in paragraph 3.1.5.7.1.2. The contractor shall compare this result to the hospital’s estimation of outpatient revenue derived from Service member and ADD visits in paragraph 3.1.5.7.1.2. The contractor shall work with the hospital to resolve discrepancies in the reported data prior to submission of the request to DHA if the hospital’s data show that they qualify, but the contractor’s claims data show that they do not.
3.1.5.7.1.2.2.2  If the hospital’s submission shows that there were 50,000 or greater ADD/Service member OPPS visits in the prior OPPS year, the contractor shall independently calculate the number of ADD/Service member OPPS visits in the prior OPPS year, utilizing the contractor’s claims data systems. The contractor shall compare this result to the hospital’s reported number of visits in paragraph 3.1.5.7.1.4. The contractor shall work with the hospital to resolve discrepancies in the reported data prior to submission of the request to DHA if the hospital’s data show that they qualify, but the contractor’s claims data show that they do not.
3.1.5.7.1.2.2.3  The contractor shall perform an evaluation to determine whether the hospital is essential for continued network adequacy. The contractor shall report the following data elements, as well as provide a brief narrative with supporting rationale, describing why the hospital is essential for continued network adequacy and why a GTMCPA payment is necessary to maintain this continued network adequacy:
•  Number of available primary care and specialist providers in the network locality;
•  Availability (including reassignment) of military providers in the locations or nearby;
•  Appropriate mix of primary care and specialists needed to satisfy demand and meet appropriate patient access standards (appointment/waiting time, travel distance, etc.);
•  Efforts that have been made to create an adequate network, and;
•  Other cost effective alternatives and other relevant factors.
3.1.5.7.1.3  If the contractor’s independent analysis shows that: (1) the hospital met either, or both, of the disproportionate share criteria; and (2) the hospital is essential for continued network adequacy, the contractor shall submit all documentation in paragraphs 3.1.5.7.1.1 and 3.1.5.7.1.2 to the DTRO. If the hospital fails to meet the disproportionate share criteria or is not essential for continued network adequacy, the contractor shall notify the DTRO of their findings, but will not submit the full request for a GTMCPA payment to the DTRO unless specifically requested by the DTRO.
3.1.5.7.1.4  The DTRO shall perform a thorough review and analysis of the hospital’s submission and the contractor’s review, utilizing any DHA data the DTRO deems necessary, to determine if the hospital qualifies for a GTMCPA payment. If the hospital qualifies, the GTMCPA payment will be set, utilizing DHA data, so the hospital’s PCR for TRICARE OPPS services does not exceed a ratio of 1.3. The DTRO has the discretion to recommend any payment amount between $0 and the amount that does not exceed a PCR of 1.3. A hospital shall not be approved for a GTMCPA if the payment would result in the hospital’s PCR exceeding 1.3 for TRICARE OPPS services. The DTRO shall forward their recommendation for approval of the GTMCPA payment amount, to the Director, DHA. Disapprovals by the DTRO will not be forwarded to the Director, DHA, for review and approval. The PCR shall be calculated as follows:
3.1.5.7.1.4.1  Step 1. Determine actual TRICARE OPPS payments, excluding OHI and USFHP claims. Only those line items with OPPS payments, and identified with a valid OPPS SI on the claim, will be considered. OPPS SIs of A, B, C, E, E1, F, W, Z, or TB, will be excluded from the calculations. These SIs mean that the item was paid outside of OPPS utilizing an alternative reimbursement system, or was not recognized or covered, and therefore was not eligible to be considered in the calculation of an OPPS GTMCPA payment. The OPPS GTMCPA payment is specific to the OPPS reimbursement system and there is no authority to include non-OPPS paid amounts in the PCR calculation. Claims for beneficiaries with OHI, claims for beneficiaries with USFHP, claims for ineligible beneficiaries, duplicate claims, and denied claims shall not be included in the calculation.
3.1.5.7.1.4.2  Step 2. Determine the hospital’s costs, by identifying the billed charges for all non-OHI, non-USFHP HOPD and Emergency Room (ER) charges that have an OPPS SI on the claim, except those with an OPPS SI of A, B, C, E, E1, F, W, Z, or TB. These SIs mean that the item was paid outside of OPPS utilizing an alternative reimbursement system, or was not recognized or covered, and therefore was not eligible to be considered in the calculation of an OPPS GTMCPA payment. There is no authority to include non-OPPS amounts in the PCR calculation. Claims for beneficiaries with OHI, claims for beneficiaries with USFHP, claims for ineligible beneficiaries, duplicate claims, and denied claims shall not be included in the calculation.
3.1.5.7.1.4.3  Step 3. Divide Step 1 by Step 2.
3.1.5.7.1.4.4  Step 4. If the amount in Step 3 is lower than 1.3 the hospital may receive a GTMCPA payment so that total TRICARE OPPS payments are equal to or less than 130% of their costs. The percentage used is at the discretion of the Director, DHA.
3.1.5.7.1.5  TRICARE OPPS payments to the qualifying hospital will be increased by the Director, DHA, or designee, at his/her discretion by way of an additional GTMCPA payment after the end of the OPPS year (May 1 through April 30). Subsequent adjustments to the GTMCPA payment will be issued to the qualifying hospital for the prior OPPS year, when requested by the hospital, to ensure that claims that were not paid to completion the previous year are adjusted. These adjustments are separate from the applicable GTMCPA payment approved for the current OPPS year.
3.1.5.7.1.6  Upon approval by the Director, DHA, the DTRO shall notify the Contracting Officer who shall send a letter to the contractor notifying them of the GTMCPA payment approval.
3.1.5.7.1.7  The contractor shall process the GTMCPA payments per the instructions in Section G of their contracts under Invoice and Payment Non-Underwritten - Non-TEDs, Demonstrations. No GTMCPA payments will be sent out without approval from DHA-Aurora, Contract Resource Managment (CRM), Budget.
3.1.5.7.1.8  DHA shall send an approval to the contractor to issue GTMCPA payments out of the non-financially underwritten bank account based on fund availability.
3.1.5.7.1.9  GTMCPA payments will be reviewed and approved on an annual basis; i.e., they will have to be evaluated on a yearly basis by the DTRO in order to determine if the hospital continues to serve a disproportionate share of Service members and ADDs and whether there are any other special circumstances significantly affecting military contingency capabilities.
3.1.5.7.1.10  The Director, DHA, or designee is the final approval authority for GTMCPA payments. A decision by the Director, DHA, or designee to approve, reject, adopt, modify, or extend GTMCPA payments is not subject to the appeal and hearing procedures in 32 CFR 199.10.
3.1.5.7.1.11  DHA, upon request, will provide the detailed claims data used to calculate the hospital’s PCR and maximum GTMCPA payment, if any, to the requesting hospital through the contractor.
3.1.5.7.1.12  GTMCPAs may be extended to OPPS facilities that have changed their status during the OPPS GTMCPA year. If an OPPS network facility changes their status during the OPPS year, and the facility was and remained a network facility that is essential for military readiness, contingency operations, and network adequacy and the facility served a disproportionate share of Service members and ADDs during the period of the year it was subject to OPPS reimbursement, then a pro-rated OPPS GTMCPA may be authorized. Any OPPS adjustment will only apply to OPPS payments.
3.1.5.7.2  Non-Network TMCPAs
TMCPAs may also be extended to non-network hospitals on a case-by-case basis for specific procedures where it is determined that the procedures cannot be obtained timely enough from a network hospital. This determination will be based on the contractor’s and TRO’s evaluation of network adequacy data related to the specific procedures for which the TMCPA is being requested as outlined under paragraph 3.1.5.7.1.3. Non-network TMCPAs will be adjusted on a claim-by-claim basis. The associated costs would be underwritten or non-underwritten following the applicable financing rules of the contract.
3.1.5.7.3  Application of Cost-Sharing
3.1.5.7.3.1  Transitional and GTMCPAs are not subject to cost-sharing.
3.1.5.7.3.2  Non-network TMCPAs shall be subject to cost-sharing since they are applied on a claim-by-claim basis.
3.1.5.7.4  Reimbursement of Transitional, General, and Non-Network TMCPA costs shall be paid as pass-through costs. The contractor does not financially underwrite these costs.
3.2  Transitional Pass-Through for Innovative Medical Devices, Drugs, and Biologicals
3.2.1  Items Subject to Transitional Pass-Through Payments
3.2.1.1  Current Orphan Drugs
A drug or biological that is used for a rare disease or condition with respect to which the drug or biological has been designated under section 526 of the Federal Food, Drug, and Cosmetic Act if payment for the drug or biological as an outpatient hospital service was being made on the first date that the OPPS was implemented.
Note:  Orphan drugs will be paid separately at the Average Sales Price (ASP) + 6%, which represents a combined payment for acquisition and overhead costs associated with furnishing these products. Orphan drugs will no longer be paid based on the use of drugs because all orphan drugs, both single-indication and multi-indication, will be paid under the same methodology. The TRICARE contractors will not be required to calculate orphan drug payments.
3.2.1.2  Current Cancer Therapy Drugs, Biologicals, and Brachytherapy
These items are drugs or biologicals that are used in cancer therapy, including (but not limited to) chemotherapeutic agents, antiemetics, hematopoietic growth factors, colony stimulating factors, biological response modifiers, biphosphonates, and a device of brachytherapy if payment for the drug or biological as an outpatient hospital service was being made on the first date that the OPPS was implemented.
3.2.1.3  Current Radiopharmaceutical Drugs and Biological Products
A radiopharmaceutical drug or biological product used in diagnostic, monitoring, and therapeutic nuclear medicine procedures if payment for the drug or biological as an outpatient hospital service was being made on the first date that the OPPS was implemented.
3.2.1.4  New Medical Devices, Drugs, and Biologicals
New medical devices, drugs, and biologic agents, will be subject to transitional pass-through payment in instances where the item was not being paid for as a hospital outpatient service as of December 31, 1996, and where the cost of the item is “not insignificant” in relation to the hospital OPPS payment amount.
3.2.2  Items eligible for transitional pass-through payments are generally coded under a Level II HCPCS code with an alpha prefix of C.
•  Pass-through device categories are identified by SI of H
•  Pass-through drugs and biological agents are identified by SI of G
3.2.3  Reduction of Transitional Pass-Through Payments for Diagnostic Radiopharmaceuticals to Offset Costs Packaged Into APC Groups
3.2.3.1  All non-pass-through diagnostic radiopharmaceuticals are packaged.
3.2.3.2  For OPPS pass-through purposes, radiopharmaceuticals are considered to be “drugs” where the transitional pass-through for the drugs and biologicals is the difference between the amount paid ASP + 4% or the Part B drug CAP rate and the otherwise applicable OPPS payment amount of ASP + 6%.
3.2.3.3  New pass-through diagnostic radiopharmaceuticals with no ASP information or CAP rate will be paid at ASP + 6%, while those without ASP information will be paid based on Wholesale Acquisition Cost (WAC) or, if WAC is not available, based on 95% of the product’s most recently published Average Wholesale Price (AWP).
3.2.3.4  Offset Calculations
3.2.3.4.1  An established methodology will be employed to estimate the portion of each APC payment rate that could reasonably be attributed to the cost of an associated device eligible for pass-through payment (the APC device offset).
3.2.3.4.2  New pass-through device categories will be evaluated individually to determine if there are device costs packaged into the associated procedural APC payment rate - suggesting that a device offset amount would be appropriate.
3.2.3.4.3  The offset will cease to apply when the diagnostic radiopharmaceutical expires from pass-through status.
3.2.4  Transitional Pass-Through Device Categories
3.2.4.1  Excluded Medical Devices
Equipment, instruments, apparatuses, implements or items that are generally used for diagnostic or therapeutic purposes that are not implanted or incorporated into a body part, and that are used on more than one patient (that is, are reusable), are excluded from pass-through payment. This material is generally considered to be a part of hospital overhead costs reflected in the APC payments.
3.2.4.2  Included Medical Devices
The following implantable items may be considered for the transitional pass-through payments:
•  Prosthetic implants (other than dental) that replace all or part of an internal body organ.
•  Implantable items used in performing diagnostic x-rays, diagnostic laboratory tests, and other diagnostic tests.
Note:  Any Durable Equipment (DE), orthotics, and prosthetic devices for which transitional pass-through payment does not apply will be paid under the DMEPOS fee schedule when the hospital is acting as the supplier (paid outside the PPS).
3.2.4.3  Pass-Through Payment Criteria for Devices
Pass-through payments will be made for new or innovative medical devices Medicare establishes the list of devices eligible for pass-through payments at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
3.2.4.4  Duration of Transitional Pass-Through Payments
3.2.4.4.1  The duration of transitional pass-through payments for devices is for at least two, but not more than three years. This period begins with the first date on which a transitional pass-through payment is made for any medical device that is described by the category.
3.2.4.4.2  The costs of devices no longer eligible for pass-through payments will be packaged into the costs of the procedures with which they are normally billed.
3.2.5  General Coding and Billing Instructions and Explanations
3.2.5.1  Devices implanted, removed, and implanted again, not associated with failure (applies to transitional pass-through devices only):
•  In instances where the physician is required to implant another device because the first device fractured, the hospitals may bill for both devices - the device that resulted in fracture and the one that was implanted into the patient.
•  It is realized that there may be instances where an implant is tried but later removed due to the device’s inability to achieve the necessary surgical result or due to inappropriate size selection of the device by the physician (e.g., physician implants an anchor to bone and the anchor breaks because the bone is too hard or must be replaced with a larger anchor to achieve a desirable result). In such instances, separate reimbursement will be provided for both devices. This situation does not extend to devices that result in failure or are found to be defective. For failed or defective devices, hospitals are advised to contact the vendor/manufacturer.
Note:  This applies to transitional pass-through devices only and not to devices packaged into an APC.
3.2.5.2  Kits. Manufacturers frequently package a number of individual items used in a particular procedure in a kit. Generally, to avoid complicating the category list unnecessarily and to avoid the possibility of double coding, codes for such kits have not been established. However, hospitals are free to purchase and use such kits.
3.2.5.2.1  If the kits contain individual items that separately qualify for transitional pass-through payment, these items may be separately billed using applicable codes. Hospitals may not bill for transitional pass-through payments for supplies that may be contained in kits.
3.2.5.2.2  HCPCS codes that describe devices without pass-through status and that are packaged in kits with other items used in a particular procedure, hospitals may consider all kit costs in their line-item charge for the associated device/device category HCPCS code that is assigned SI of N for packaged payment (i.e., hospitals may report the total charge for the whole kit with the associated device/device category HCPCS code. Payment for device/device category HCPCS codes without pass-through status is packaged into payment for the procedures in which they are used, and these codes are assigned SI of N. In the case of a device kit, should a hospital choose to report the device charge alone under a device/device category HCPCS code with SI of N, the hospital should report charges for other items that may be included in the kit on a separate line on the claim.
3.2.5.3  Multiple Units. Hospitals must bill for multiple units of items that qualify for transitional pass-through payments, when such items are used with a single procedure, by entering the number of units used on the bill.
3.2.5.4  Reprocessed Devices. Hospitals may bill for transitional pass-through payments only for those devices that are “single use.” Reprocessed devices may be considered “single use” if they are reprocessed in compliance with the enforcement guidance of the FDA relating to the reprocessing of devices applicable at the time the service is delivered.
3.2.6  Reduction of Transitional Pass-Through Payments to Offset Costs Packaged into APC Groups
3.2.6.1  Each new device category will be reviewed on a case-by-case basis to determine whether device costs associated with the new category were packaged into the existing APC structure.
3.2.6.2  If it is determined that, for any new device category, no device costs associated with the new category were packaged into existing APCs, the offset amount for the new category would be set to $0 for CY 2008.
3.2.7  Calculation of Transitional Pass-Through Payment for a Pass-Through Device
3.2.7.1  Device pass-through payment is calculated by applying the statewide CCR to the hospital’s charges on the claim and subtracting any appropriate pass-through offset. Statewide CCRs are based on the geographical CBSA (two digit = rural, five digit = urban).
3.2.7.2  The following are two examples of the device pass-through calculations, one incorporating a device offset amount applicable to CY 2003 and the other only applying the CCR (offsets set to $0 for CY 2005). Deductibles, cost-shares and copayments examples are based on dates of service prior to January 1, 2018. See Chapter 2 for deductibles, copayments, and cost-shares for dates of service on or after January 1, 2018:
3.2.7.3  The offset adjustment is applied only when a pass-through device is billed in addition to the APC.
Example 1:  
Transitional Pass-Through Payment Calculation with Offset
Device: (C1884 - Embolization Protective System)
Device cost = Hospital charge converted to cost = $1,200.00
Associated procedure: CPT code 92982 (APC0083)
Payment rate = $3,289.42
Coinsurance amount = $657.88 (Standard ADFM who has met his/her yearly deductible)
Total offset amount to be applied for each APC that contains device costs = $802.06
Note:  The total offset from the device amount is wage-index adjusted and the multiple procedure discount factor is adjusted before it is subtracted from the device cost. (Refer to paragraph 3.2.7.4 for detailed application of discounting factors to offset amounts.) This example assumes a wage index of 1.0000.
Device cost adjusted by total offset amount: $1,200 - $802.06 = $397.94
TRICARE program payment (before wage index adjustment) for APC 0083:
$3,289.42 - $657.88 = $2,631.54
TRICARE payment for pass-through device HCPCS code C1884 = $397.94
Beneficiary cost-share liability for APC 0083 = $657.88
Total amount received by provider for APC 0083 and pass-through device HCPCS code C1884:
$2,631.54
TRICARE program payment for CPT code 92982 when used with device code HCPCS C1884
657.88
Beneficiary coinsurance amount for CPT code 92982
+ 397.94
Transitional pass-through payment for device
$3,687.36
Total amount received by the provider
Example 2:  
Transitional Pass-Through Payment Calculation without Offset
Device: (C1884 - Embolization Protective System)
Device cost = Hospital charge converted to cost = $1,500.00
Associated procedure: CPT code 92982 (APC0083)
Payment rate = $3,289.42
Coinsurance amount = $657.88 (standard ADFM who has met his/her yearly deductible)
Total offset amount to be applied for each APC that contains device costs = $0.
Note:  The total offset from the device amount is wage-index adjusted and the multiple procedure discount factor is adjusted before it is subtracted from the device cost. (Refer to paragraph 3.2.7.4 for detailed application of discounting factors to offset amounts.) This example assumes a wage index of 1.0000.
Device cost adjusted by total offset amount: $1,500 - $0 = $1,500
TRICARE program payment (before wage index adjustment) for APC 0083:
$3,289.42 - $657.88 = $2,631.54
TRICARE payment for pass-through device HCPCS code C1884 = $1,500
Beneficiary cost-share liability for APC 0083 = $657.88
Total amount received by provider for APC 0083 and pass-through device HCPCS code C1884:
$2,631.54
TRICARE program payment for CPT code 92982 when used with device code HCPCS code C1884
657.88
Beneficiary coinsurance amount for CPT code 92982
+1,500.00
Transitional pass-through payment for device
$4,789.42
Total amount received by the provider
Note:  Transitional payments for devices (SI of H) are not subject to beneficiary cost-sharing/copayments.
3.2.7.4  Steps involved in applying multiple discounting factors to offset amounts prior to subtracting from the device cost.
Step 1:  For each APC with an offset multiply the offset by the discount percent (whether it is 50%, 75%, 100%, or 200%) and the units of service.
(Offset x Discount Rate x Units of Service)
Step 2:  Sum the products of Step 1.
Step 3:  Wage adjust the sum of the products calculated in Step 2.
(Step 2 Amount x Labor % x Wage Index) + Step 2 Amount x Nonlabor %)
Step 4:  If the units of service from the procedures with offsets are greater than the device units of service, then Step 3 is adjusted by device units divided by procedure offset units.
[(Step 2 Amount x Labor % x Wage Index) + (Step 2 Amount x Nonlabor %) x (Device Units ÷ Offset Procedure Units)]
otherwise
(Step 2 Amount x Labor % x Wage Index) Step 2 Amount x Non-Labor %)
Example:  If there are two procedures with offsets but only one device, then the final offset is reduced by 50%.
Step 5:  If there is only one line item with a device, then the amount calculated in Step 4 is subtracted from the line item charge adjusted to cost.
[Step 4 Amount - (Line Item Charge x State CCR)]
Example:  If there are multiple devices, then the amount from Step 4 is allocated to the line items with devices based on their charges.
(Line Item Device Charge ÷ Sum of Device Charges)
3.3  Drugs, Biologicals, and Radiopharmaceuticals Without Pass-Through Status
3.3.1  Radiopharmaceuticals, drugs, and biologicals which do not have pass-through status, are paid in one of three ways:
•  Packaged payment, or
•  Separate payment (individual APCs), or
•  Allowable charge.
3.3.2  The cost of drugs and radiopharmaceuticals are generally packaged into the APC payment rate for the procedure or treatment with which the products are usually furnished:
•  Hospitals do not receive separate payment for packaged items and supplies; and
•  Hospitals may not bill beneficiaries separately for any such packaged items and supplies whose costs are recognized and paid for within the national OPPS payment rate for the associated procedure or services.
3.3.3  Although diagnostic and therapeutic radiopharmaceutical agents are not classified as drugs or biologicals, separate payment has been established for them under the same packaging threshold policy that is applied to drugs and biologicals; i.e., the same adjustments will be applied to the median costs for radiopharmaceuticals that will apply to non-pass-through, separately paid drugs and biologicals.
3.4  Criteria for Packaging Payment for Drugs, Biologicals and Radiopharmaceuticals
3.4.1  Generally, the cost of drugs and radiopharmaceuticals are packaged into the APC payment rate for the procedure or treatment with which the products are usually furnished. However, packaging for certain drugs and radiopharmaceuticals, especially those that are particularly expensive or rarely used, might result in insufficient payments to hospitals, which could adversely affect beneficiary access to medically necessary services.
3.4.2  Payments for drugs and radiopharmaceuticals are packaged into the APCs with which they are billed if the median cost per day for the drug or radiopharmaceutical is less than threshold defined by CMS ($95 for CY 2015, $100 for CY 2016), and published in the CMS OPPS annual Final Rule. Separate APC payment is established for drugs and radiopharmaceuticals for which the median cost per day exceeds this threshold ($95 for CY 2015, $100 for CY 2016).
3.4.3  All non-pass-through diagnostic radiopharmaceuticals and contrast agents, regardless of their per day costs for are packaged.
3.4.4  Payment For Drugs, Biologicals, And Radiopharmaceuticals Without Pass-Through Status That Are Not Packaged
3.4.4.1  “Specified Covered Outpatient Drugs” Classification
3.4.4.1.1  Special classification (i.e., “specified covered outpatient drug”) is required for certain separately payable radiopharmaceutical agents and drugs or biologicals for which there are specifically mandated payments.
3.4.4.1.2  The following drugs and biologicals are designated exceptions to the “specified covered outpatient drugs” definition (i.e., not included within the designated category classification):
•  A drug or biological for which payment was first made on or after January 1, 2003, under the transitional pass-through payment provision.
•  A drug or biological for which a temporary HCPCS code has been assigned.
•  Orphan drugs.
3.4.4.2  Payment of Specified Outpatient Drugs, Biological, and Radiopharmaceuticals
3.4.4.2.1  Specified outpatient drugs and biologicals will be paid a combined rate of the ASP + 4% which is reflective of the present hospital acquisition and overhead costs for separately payable drugs and biologicals under the OPPS. In the absence of ASP data, the WAC will be used for the product to establish the initial payment rate. If the WAC is also unavailable, then payment will be calculated at 95% of the most recent AWP.
3.4.4.2.2  Since there is no ASP data for separately payable specified radiopharmaceuticals, reimbursement will be based on charges converted to costs.
•  Therapeutic radiopharmaceuticals must have a mean per day cost of more than the threshold established by Medicare in the CMS OPPS annual Final Rule ($95 for CY 2015, $100 for CY 2016) in order to be paid separately.
•  Diagnostic radiopharmaceuticals and contrast agents are packaged regardless of per day cost since they are ancillary and supportive of the therapeutic procedures in which they are used.
3.4.4.3  Designated SI
The HCPCS codes for the above three categories of “specified covered outpatient drugs” are designated with the SI of K - non-pass-through drugs, biologicals, and radiopharmaceuticals paid under the hospital OPPS (APC Rate). Refer to DHA’s OPPS web site at http://www.health.mil/rates for APC payment amounts of separately payable drugs, biologicals and radiopharmaceuticals.
3.4.5  Payment for New Drugs and Biologicals With HCPCS Codes and Without Pass-Through Application and Reference AWP or Hospital Claims Data
3.4.5.1  New drugs and biologicals with HCPCS codes, but which do not have pass-through status and are without OPPS hospital claims data, will be paid at ASP + 4% consistent with its final payment methodology for other separately payable non-pass-through drugs and biologicals.
3.4.5.2  Payment for all new non-pass-through diagnostic radiopharmaceuticals will be packaged.
3.4.5.3  In the absence of ASP data, the WAC will be used for the product to establish the initial payment rate for new non-pass-through drugs and biologicals with HCPCS codes, but which are without OPPS claims data. If the WAC is also unavailable, payment will be made at 95% of the product’s most recent AWP.
3.4.5.4  SI K will be assigned to HCPCS codes for new drugs and biologicals for which pass-through application has not been received.
3.4.5.5  In order to determine the packaging status of these items for CY 2008 an estimate of the per day cost of each of these items was calculated by multiplying the payment rate for each product based on ASP + 4%, by a estimated average number of units of each product that would typically be furnished to a patient during one administration in the hospital outpatient setting. Items for which the estimated per day cost is less than or equal to the threshold established by Medicare in the CMS OPPS annual Final Rule ($95 for CY 2015, $100 for CY 2016) will be packaged. For drugs currently covered under the CAP the payment rates calculated under that program that were in effect as of April 1, 2008 will be used for purposes of packaging decisions.
3.4.6  Drugs and Biologicals Not Eligible for Pass-Through Status and Receiving Separate Non-Pass-Through Payment
3.4.6.1  Payment will be based on median costs derived from CY claims data for drugs and biologicals that have been:
•  Separately paid since implementation of the OPPS under Medicare, but were not eligible for pass-through status; and
•  Historically packaged with the procedures with which they were billed, even though their median cost per day was above the packaging threshold ($95 for CY 2015, $100 for CY 2016).
3.4.6.2  Payment based on median costs should be adequate for hospitals since these products are generally older or low-cost items.
3.4.7  Payment for New Drugs, Biologicals, and Radiopharmaceuticals Before HCPCS Codes Are Assigned
3.4.7.1  The following payment methodology will enable hospitals to begin billing for drugs and biologicals that are newly approved by the FDA and for which a HCPCS code has not yet been assigned by the National HCPCS Alpha-Numeric Workgroup that could qualify them for pass-through payment under the OPPS:
•  Hospitals should be instructed to bill for a drug or biological that is newly approved by the FDA by reporting the National Drug Code (NDC) for the product along with a new HCPCS code C9399, “Unclassified Drug or Biological.”
•  When HCPCS code C9399 appears on the claim, the OCE suspends the claim for manual pricing by the contractor.
•  The new drug, biological and/or radiopharmaceutical will be priced at 95% of its AWP from a schedule of allowable charges based on the AWP, and process the claim for payment.
•  The above approach enables hospitals to bill and receive payment for a new drug, biological or radiopharmaceutical concurrent with it’s approval by the FDA.
3.4.7.2  Hospitals will discontinue billing C9399 and the NDC upon implementation of a HCPCS code, SI, and appropriate payment amount with the next quarterly OPPS update.
3.4.8  Package payment for any biological without pass-through status that is surgically inserted or implanted (through a surgical incision or a natural orifice) into the payment for the associated surgical procedure.
3.4.8.1  As a result, HCPCS codes C9352 and C9353 are packaged and assigned SI of N.
3.4.8.2  Any new biologicals without pass-through status that are surgically inserted or implanted will be packaged.
3.4.9  Drugs And Non-Implantable Biologicals With Expiring Pass-Through Status
3.4.9.1  CY 2009 payment methodology of packaged or separate payment based on their estimated per day costs, in comparison with the CY 2009 drug packaging threshold.
3.4.9.2  Packaged drugs and biologicals are assigned SI of N and drugs and biologicals that continue to be separately paid as non-pass-through products are assigned SI of K.
3.5  Drug Administration Coding and Payment
3.5.1  HCPCS Level I drug administration codes, APC and SI assignments can be found at http://www.health.mil/rates.
3.5.2  Drugs for which the median cost per day is greater than the threshold established by Medicare in the CMS OPPS annual Final Rule ($95 for CY 2015, $100 for CY 2016) are paid separately and are not packaged into the payment for the drug administration. Separate payment for drugs with a median cost in excess of the packaging threshold ($95 for CY 2015, $100 for CY 2016) will result in more equitable payment for both the drugs and their administration.
3.6  Coding and Payment Policies for Drugs and Supplies
3.6.1  Drug Coding
3.6.1.1  Drugs for which separate payment is allowed are designated by SI of K and must be reported using the appropriate HCPCS code.
3.6.1.2  Drugs that are reported without a HCPCS code will be packaged under the revenue center code, under OPPS: 250, 251, 252, 254, 255, 257, 258, 259, 631, 632, or 633.
3.6.1.3  Drugs billed using revenue code 636 (“Drugs requiring detailed coding”) require use of the appropriate HCPCS code, or they will be denied.
3.6.1.4  Reporting charges of packaged drugs is critical because packaged drug costs are used for calculating outlier payments and hospital costs for the procedure and service with which the drugs are used in the course of the annual OPPS updates.
3.6.2  Payment for the Unused Portion of a Drug
3.6.2.1  Once a drug is reconstituted in the hospital’s pharmacy, it may have a limited shelf life. Since an individual patient may receive less than the fully reconstituted amount, hospitals are encouraged to schedule patients in such a way that the hospital can use the drug most efficiently. However, if the hospital must discard the remainder of a vial after administering part of it to a TRICARE patient, the provider may bill for the amount of the drug discarded, along with the amount administered.
3.6.2.2  In the event that a drug is ordered and reconstituted by the hospital’s pharmacy, but not administered to the patient, payment will be made under OPPS.
Example 1:  Drug X is available only in a 100-unit size. A hospital schedules three patients to receive drug X on the same day within the designated shelf life of the product. An appropriate hospital staff member administers 30 units to each patient. The remaining 10 units are billed to OPPS on the account of the last patient. Therefore, 30 units are billed on behalf of the first patient seen, and 30 units are billed on behalf of the second patient seen. Forty units are billed on behalf of the last patient seen because the hospital had to discard 10 units at that point.
Example 2:  An appropriate hospital staff member must administer 30 units of drug X to a patient, and it is not practical to schedule another patient for the same drug. For example, the hospital has only one patient who requires drug X, or the hospital sees the patient for the first time and does not know the patient’s condition. The hospital bills for 100 units on behalf of the patient, and OPPS pays for 100 units.
3.6.2.3  Coding for Supplies
3.6.2.3.1  Supplies that are an integral component of a procedure or treatment are not reported with a HCPCS code.
3.6.2.3.2  Charges for such supplies are typically reflected either in the charges on the line for the HCPCS for the procedure, or on another line with a revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in the cost report.
3.6.2.3.3  Hospitals should report drugs that are treated as supplies because they are an integral part of a procedure or treatment under the revenue code associated with the cost center under which the hospital accumulates the costs for the drugs.
3.6.3  Recognition of Multiple HCPCS Codes for Drugs
3.6.3.1  Prior to January 1, 2008, the OPPS generally recognized only the lowest available administrative dose of a drug if multiple HCPCS codes existed for the drug; for the remainder of the doses, the OPPS assigned a SI B indicating that another code existed for OPPS purposes. For example, if drug X has two HCPCS codes, one for a 1 ml dose and another for a 5 ml dose, the OPPS would assign a payable SI to the 1 ml dose and SI B to the 5 ml dose.
3.6.3.2  Hospitals then were required to bill the appropriate number of units for the 1 ml dose in order to receive payment under OPPS.
3.6.3.3  Beginning January 1, 2008, the OPPS has recognized each HCPCS code for a Part B drug, regardless of the units identified in the drug descriptor.
3.6.3.4  Hospitals may choose to report multiple HCPCS codes for a single drug, or to continue billing the HCPCS code with the lowest dosage descriptor available.
3.6.4  Correct Reporting of Drugs and Biologicals When Used As Implantable Devices
3.6.4.1  When billing for biologicals where the HCPCS code describes a product that is solely surgically implanted or inserted, whether the HCPCS code is identified as having pass-through status or not, hospitals are to report the appropriated HCPCS code for the product.
3.6.4.2  Separate payment will be made for an implanted biological when it has pass-through status.
3.6.4.3  If the implantable device does not have pass-through status it will be packaged into the payment for the associated procedure.
3.6.5  Correct Reporting of Units for Drugs
3.6.5.1  Units of drugs administered to patients should be accurately reported in terms of the dosage specified in the full HCPCS code descriptor. That is, units should be reported in multiples of the units included in the HCPCS descriptor.
3.6.5.2  For example, if the description for the drug code is 6 mg, and 6 mg of the drug was administered to the patients, the units bill should be one. If the description for the drug code is 50 mg, but 200 mg of the drug was administered, the units billed should be four.
3.6.5.3  Hospitals should not bill the units based on the way the drug is packaged, stored or stocked. That is, if the HCPCS descriptor for the drug code specifies 1 mg and a 10 mg vial of the drug was administered to the patient, bill 10 units even though only one vial was administered.
3.7  Orphan Drugs
3.7.1  Continue to use the following criteria for identifying single indication orphan drugs that are used solely for orphan conditions:
•  The drug is designated as an orphan drug by the FDA and approved by the FDA for treatment of only one or more orphan condition(s).
•  The current United States Pharmacopoeia Drug Information (USPDI) shows that the drug has neither an approved use nor an off-label use for other than the orphan condition(s).
3.7.2  Twelve single indication orphan drugs have currently been identified as having met these criteria.
3.7.3  Payment Methodology
3.7.3.1  Pay all 12 single indication orphan drugs at the rate of 88% of AWP or 106% of the ASP, whichever is higher.
3.7.3.2  However, for drugs where 106% of ASP would exceed 95% of AWP, payment would be capped at 95% of AWP, which is the upper limit allowed for sole source specified covered outpatient drugs.
3.8  Vaccines
3.8.1  Hospitals will be paid for influenza, pneumococcal pneumonia and hepatitis B vaccines based on allowable charge methodology; i.e., will be paid the CMAC rate for these vaccines.
3.8.2  Separately payable vaccines other than influenza, pneumococcal pneumonia and hepatitis B will be paid under their own APC.
3.9  Payment Policy for Radiopharmaceuticals
Separately paid radiopharmaceuticals are classified as “specified covered outpatient drugs” subject to the following packaging and payment provisions:
3.9.1  The threshold for the establishment of separate APCs for radiopharmaceuticals is determined by Medicare and published in the CMS OPPS annual Final Rule ($95 for CY 2015, $100 for CY 2016).
3.9.2  A radiopharmaceutical that is covered and furnished as part of covered outpatient department services for which a HCPCS code has not been assigned will be reimbursed an amount equal to 95% of its AWP.
3.9.3  Radiopharmaceuticals will be excluded from receiving outlier payments.
3.9.4  Applications will be accepted for pass-through status; however, in the event the manufacturer seeking pass-through status for a radiopharmaceutical does not submit data in accordance with the requirements specified for new drugs and biologicals, payment will be set for the new radiopharmaceutical as a “specified covered outpatient drug.”
3.10  Blood and Blood Products
3.10.1  Since the OPPS was first implemented, separate payment has been made for blood and blood products in APCs rather than packaging them into payment for the procedures with which they were administered. The APCs for these products are intended to recover the costs of the products. SI R was created to denote blood and blood products.
3.10.2  The OPPS provider also should report charges for processing and storage services on a separate line using Revenue Code 0390 (General Classification), 0392 (Blood Processing/Storage), or 0399 (Blood Processing/Storage; Other Blood Storage and Processing), along with appropriate blood HCPCS code, the number of units transfused, and the Line Item Date Of Service (LIDOS).
3.10.3  Administrative costs for the processing and storage specific to the transfused blood product are included in the APC payment, which is based on hospitals’ charges.
3.10.4  Payment for the collection, processing, and storage of autologous blood, as described by CPT code 86890 and used in transfusion, is made through APC 347 (Level III Transfusion Laboratory Procedures).
3.10.5  Payment rates for blood and blood products will be determined based on median costs.
3.10.6  Blood clotting factors are paid at ASP + 4%, plus an additional payment for the furnishing fee that is also a part of the payment for blood clotting factors furnished in physician’s offices.
3.11  Adjustment to Payment in Cases of Devices Replaced with Partial Credit for the Replaced Device
3.11.1  Hospitals will be required to append the modifier FC to the HCPCS code for the procedure in which the device was inserted on claims when the device that was replaced with partial credit under warranty, recall, or field action is one of the devices in Figure 13.3-3. Hospitals should not append the modifier to the HCPCS procedure code if the device is not listed in Figure 13.3-3.
3.11.2  Claims containing the FC modifier will not be accepted unless the modifier is on a procedure code with SI S, T, V, or X5.
3.11.3  If the APC to which the procedure is assigned is one of the APCs listed in Figure 13.3-4, the Pricer will reduce the unadjusted payment rate for the procedure by an amount equal to the percent in Figure 13.3-4 for partial credit device replacement (i.e., 50% of the device offset when both a device code listed in Figure 13.3-3 is present on the claim and the procedure code maps to an APC listed in Figure 13.3-4) multiplied by the unadjusted payment rate.
3.11.4  The partial credit adjustment will occur before wage adjustment and before the assessment to determine if the reductions for multiple procedures (signified by the presence of more than on procedure on the claim with a SI of T), discontinued service (signified by modifier 73) or reduced service (signified by modifier 52) apply.
3.12  Payment When Devices Are Replaced Without Cost or Where Credit for a Replacement Device is Furnished to the Hospital
3.12.1  Payments will be reduced for selected APCs in cases in which an implanted device is replaced without cost to the hospital or with full credit for the removed device. The amount of the reduction to the APC rate will be calculated in the same manner as the offset amount that would be applied if the implanted device assigned to the APC has pass-through status.
3.12.2  This permits equitable adjustments to the OPPS payments contingent on meeting all of the following criteria:
3.12.2.1  All procedures assigned to the selected APCs must require implantable devices that would be reported if device replacement procedures are performed;
3.12.2.2  The required devices must be surgically inserted or implanted devices that remain in the patient’s body after the conclusion of the procedures, at least temporarily; and
3.12.2.3  The offset percent for the APC (i.e., the median cost of the APC without device costs divided by the median cost of the APC with device costs) must be significant--significant offset percent is defined as exceeding 40%.
3.12.3  The presence of the modifier FB [“Item Provided Without Cost to Provider, Supplier, or Practitioner or Credit Received for Replacement (examples include, but are not limited to devices covered under warranty, replaced due to defect, or provided as free samples)”] would trigger the adjustment in payment if the procedure code to which modifier FB was amended appeared in Figure 13.3-3 and was also assigned to one of the APCs listed in Figure 13.3-4. OPPS payments for implantation procedures to which the FB modifier is appended are reduced to 100% of the device offset for no-cost/full credit cases.
Figure 13.3-3  Devices For Which The FB Modifier Must Be Reported With The Procedure When Furnished Without Cost Or At Full Credit For A Replacement Device
Device HCPCS Code
Descriptor
C1721
AICD, dual chamber
C1722
AICS, single chamber
C1728
Cath, brachytx seed adm
C1764
Event recorder, cardiac
C1767
Generator, neurostim, imp
C1771
Rep Dev urinary, w/sling
C1772
Infusion pump, programmable
C1776
Joint device (implantable)
C1777
Lead, AICD, endo single coil
C1778
Lead neurostimulator
C1779
Lead, pmkr, transvenous VDD
C1785
Pmkr, dual rate-resp
C1786
Pmkr, single rate-resp
C1789
Prosthesis, breast, imp
C1813
Prostheses, penile, inflatab
C1815
Pros, urinary sph, imp
C1820
Generator, neuro, rechg bat sys
C1882
AICD, other than sing/dual
C1891
Infusion pump, non-prog, perm
C1895
Lead, AICD, endo dual coil
C1896
Lead, AICD, non sing/dual
C1897
Lead, neurostim, test kit
C1898
Lead, pmkr, other than trans
C1899
Lead, pmkr/AICD combination
C1900
Lead coronary venous
C2619
Pmkr, dual, non rate-resp
C2620
Pmkr, single, non rate-resp
C2621
Pmkr, other than sing/dual
C2622
Pmkr, other than sing/dual
C2626
Infusion pump, non-prog, temp
C2631
Rep dev, urinary, w/o sling
L8600
Implant breast silicone/eq
L8614
Cochlear device/system
L8685
Implt nrostm pls gen sng rec
L8686
Implt nrostm pls gen sng non
L8687
Implt nrostm pls gen dua rec
L8688
Implt nrostm pls gen dua non
L8690
Aud osseo dev, int/ext comp
Figure 13.3-4  Adjustments To APCs In Cases Of Devices Reported Without Cost Or For Which Full Credit Is Received For CY 2009
APC
SI
APC Group Title
Device Offset Percentage For No-Cost/Full Credit Case
Device Offset Percentage For Partial Credit Case
0039
S
Level I Implantation of Neurostimulator
84
42
0040
S
Percutaneous Implantation of Neurostimulator Electrodes, Excluding Cranial Nerve
57
29
0061
S
Laminectomy, Laparoscopy, or Incision for Implantation of Neurostimulator Electrodes, Excluded
62
31
0089
T
Insertion/Replacement of Permanent Pacemaker and Electrodes
72
36
0090
T
Insertion/Replacement of Pacemaker Pulse Generator
74
37
0106
T
Insertion/Replacement/Repair of Pacemaker Leads and/or Electrodes
43
21
0107
T
Insertion of Cardioverter-Defibrillator
89
45
0108
T
Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads
89
44
0222
T
Level II Implantation of Neurological Device
85
42
0225
S
Implantation of Neurostimulator Electrodes, Cranial
62
31
0227
T
Implantation of Drug Infusion Devices
82
41
0229
T
Transcatheter Placement of Intravascular Shunts
84
42
0259
T
Level IV ENT Procedures
88
44
0315
T
Level III Implantation of Neurostimulator
59
29
0385
S
Level I Prosthetic Urological Procedures
69
34
0386
S
Level II Prosthetic Urological Procedures
71
36
0418
T
Insertion of Left Ventricular Pacing Elect
59
29
0425
T
Level II Arthroplasty or Implantation with Prosthesis
46
23
0648
T
Level IV Breast Surgery
77
38
0654
T
Insertion/Replacement of a Permanent Dual Chamber Pacemaker
76
38
0655
T
Insertion/Replacement/Conversion of a Permanent Dual Chamber Pacemaker
71
36
0680
S
Insertion of Patient Activated Event Recorders
71
35
0681
T
Knee Arthroplasty
71
36
3.12.4  If the APC to which the device code (i.e., one of the codes in Figure 13.3-3) is assigned is on the APCs listed in Figure 13.3-4, the unadjusted payment rate for the procedure APC will be reduced by an amount equal to the percent in Figure 13.3-4 times the unadjusted payment rate.
3.12.5  In cases in which the device is being replaced without cost, the hospital will report a token device charge. However, if the device is being inserted as an upgrade, the hospital will report the difference between its usual charge for the device being replaced and the credit for the replacement device.
3.12.6  Multiple procedure reductions would also continue to apply even after the APC payment adjustment to remove payment for the device cost, because there would still be the expected efficiencies in performing the procedure if it was provided in the same operative session as another surgical procedure. Similarly, if the procedure was interrupted before administration of anesthesia (i.e., there was modifier 52 or 73 on the same line as the procedure), a 50% reduction would be taken from the adjusted amount.
3.13  Policies Affecting Payment of New Technology Services
3.13.1  A process was developed that recognizes new technologies that do not otherwise meet the definition of current orphan drugs, or current cancer therapy drugs and biologicals and brachytherapy, or current radiopharmaceutical drugs and biologicals products. This process, along with transitional pass-throughs, provides additional payment for a significant share of new technologies.
3.13.2  Special APC groups were created to accommodate payment for new technology services. In contrast to the other APC groups, the new technology APC groups did not take into account clinical aspects of the services they were to contain, but only their costs.
3.13.3  The SI of K is used to denote the APCs for drugs, biologicals and pharmaceuticals that are paid separately from, and in addition to, the procedure or treatment with which they are associated, yet are not eligible for transitional pass-through payment.
3.13.4  New items and services will be assigned to these new technology APCs when it is determined that they cannot appropriately be placed into existing APC groups. The new technology APC groups provide a mechanism for initiating payment at an appropriate level within a relatively short time frame.
3.13.5  As in the case of items qualifying for the transitional pass-through payment, placement in a new technology APC will be temporary. After information is gained about actual hospital costs incurred to furnish a new technology service, it will be moved to a clinically-related APC group with comparable resource costs.
3.13.6  If a new technology service cannot be moved to an existing APC because it is dissimilar clinically and with respect to resource costs from all other APCs, a separate APC will be created for such services.
3.13.7  Movement from a new technology APC to a clinically-related APC will occur as part of the annual update of APC groups.
3.13.8  The new technology APC groups have established payment rates for the APC groups based on the midpoint of ranges of possible costs; for example, the payment amount for a new technology group reflecting a range of costs from $300 to $500 would be set at $400. The cost range for the groups reflects current cost distributions, and TRICARE reserves the right to modify the ranges as it gains experience under the OPPS.
3.13.9  There are two parallel series of technology APCs covering a range of costs from less than $50 to $6,000.
3.13.9.1  The two parallel sets of technology APCs are used to distinguish between those new technology services designated with a SI of S and those designated as T. These APCs allow assignment to the same APC group procedures that are appropriately subject to a multiple procedure payment reduction (T) with those that should not be discounted (S).
3.13.9.2  Each set of technology APC groups have identical group titles and payment rates, but a different SI.
3.13.9.3  The new series of APC numbers allow for the narrowing of the cost bands and flexibility in creating additional bands as future needs may dictate. Following are the narrowed incremental cost bands for the two series of new technology APCs:
•  From $0 to $50 in increments of $10.
•  From $50 to $100 in a single $50 increment.
•  From $100 through $2,000 in intervals of $100.
•  From $2,000 through $6,000 in intervals of $500.
3.13.10  Beneficiary cost-sharing/copayment amounts for items and services in the new technology APC groups are dependent on the eligibility status of the beneficiary at the time the outpatient services were rendered. (Refer to Chapter 2, for applicable deductible cost-sharing/copayment amounts for outpatient hospital services.)
3.13.11  Process and Criteria for Assignment to a New Technology APC Group
New technology APCs are established by CMS. TRICARE may only reimburse new technology APCs when they meet all other conditions of coverage under the TRICARE program. See http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
3.14  Coding And Payment Of ED Visits
3.14.1  CPT defines an ED as “an organized hospital based facility for the provision of unscheduled episodic services to patients who present for immediate medical attention. The facility must be available 24 hours a day.”
3.14.2  Sections 1866(a)(1)(I), 1866(a)(1)(N), and 1867 of the Act impose specific obligations on Medicare-participating hospitals that offer emergency services. These obligations concern individuals who come to a hospital’s Dedicated Emergency Department (DED) and request examination or treatment for medical conditions, and apply to all of these individuals, regardless of whether or not they are beneficiaries of any program under the Act. Section 1867(h) of the Act specifically phohibits a delay in providing required screening or stabilization services in order to inquire about the individual’s payment method or insurance status.
3.14.3  These provisions are frequently referred to as the Emergency Medical Treatment and Labor Act (EMTALA). The EMTALA regulations define DED as any department or facility of the hospital, regardless of whether it is located on or off the main campus, that meets at least one of the following requirements:
3.14.3.1  It is licensed by the State in which it is located under applicable State law as an ER or ED;
3.14.3.2  It is held out to the public (by name, posted signs, advertising, or other means) as a place that provides care for emergency medical conditions on an urgent basis without requiring a previously scheduled appointment; or
3.14.3.3  During the calendar year immediately preceding the calendar year in which a determination under the regulations is being made, based on a representative sample of patient visits that occurred during the calendar year, it provides at least one-third of all of its outpatient visits for the treatment of emergency medical conditions on an urgent basis without requiring previously scheduled appointment.
3.14.4  There are some departments or facilities of hospitals that met the definition of a dedicated ED under the EMTALA regulations, but did not meet the more restrictive CPT definition of ED. For example, a hospital department or facility that met the definition of a DED might not have been available 24 hours a day, seven days a week.
3.14.5  To determine whether visits to EDs of facilities (referred to as Type B ED) that incur EMTALA obligations, but do not meet the more prescriptive expectations that are consistent with the CPT definition of an ED (referred to as Type A ED) have different resource costs than visits to either clinics or Type A EDs, five G codes were developed for use by hospitals to report visits to all entities that meet the definition of a DED under the EMTALA regulations, but that are not Type A EDs. These codes are called “Type B ED visit codes.” EDs meeting the definition of a DED under the EMTALA regulations, but which are not Type A EDs (i.e., they may meet the DED definition but are not available 24 hours a day, seven days a week).
3.14.6  Hospitals report Type A ED visits using CPT codes 99281-99285 and Type B ED visits using G0380-G0384.
3.14.7  A new HCPCS G code (G0390 - Trauma response team activation associated with hospital critical care services) was also created (effective January 1, 2007) to be used in addition to CPT codes 99291 and 99292 to address the meaningful cost difference between critical care when billed with and without trauma activation.
•  If critical care is provided without trauma activation, the hospital will bill with either CPT codes 99291 or 99292, receiving payment for APC 0617.
•  However if trauma activation occurs, the hospital would be called to bill one unit of HCPCS G code (G0390), report with revenue code 68x on the same date of service, thereby receiving payment for APC 0618.
3.15  OPPS PRICER
3.15.1  Common PRICER software will be provided to the contractor that includes the following data sources:
•  National APC amounts
•  Payment status by HCPCS code
•  Multiple surgical procedure discounts
•  Fixed dollar threshold
•  Multiplier threshold
•  Device offsets
•  Other payment systems pricing files (CMAC, DMEPOS, and statewide prevailings)
3.15.2  The following data elements will be extracted and forwarded to the outpatient PRICER for line item pricing.
•  Units;
•  HCPCS/Modifiers;
•  APC;
•  Status payment indicator;
•  Line item date of service;
•  Primary diagnosis code; and
•  Other necessary OCE output.
3.15.3  The following data elements will be passed into the PRICER by the contractors:
•  Wage indexes (same as DRG wage indexes);
•  Statewide CCRs as provided in the CMS Final Rule and listed on DHA’s OPPS web site at http://www.health.mil/rates;
•  Locality Code: Based on CBSA - two digit = rural and five digit = urban;
•  Hospital Type: Rural SCH = 1 and All Others = 0
3.15.4  The outpatient PRICER will return the line item APC and cost outlier pricing information used in final payment calculation. This information will be reflected in the provider remittance notice and beneficiary EOB with exception for an electronic 835 transaction. Paper EOB and remits will reflect APCs at the line level and will also include indication of outlier payments and pricing information for those services reimbursed under other than OPPS methodology’s, e.g., CMAC (SI of A) when applicable.
3.15.5  If a claim has more than one service with a SI of T or a SI of S within the coding range of 10000 - 69999, and any lines with SI of T or a SI within the coding range of 10000 - 69999 have less than $1.01 as charges, charges for all T lines will be summed and the charges will then be divided up proportionately to the payment rates for each T line (refer to Figure 13.3-5). The new charge amount will be used in place of the submitted charge amount in the line item outlier calculator.
Figure 13.3-5  Proportional Payment For “T” Line Items
SI
Charges
Payment Rate
New Charges Amount
Note:  Because total charges here are $20,000 and the first SI of T gets $6,000 of the $10,000 total payment, the new charge for that line is $6,000/$10,000 x $20,000 = $12,000.
T
$19,999
$6,000
$12,000
T
$1
$3,000
$6,000
T
$0
$1,000
$2,000
Total
$20,000
$10,000
$20,000
3.16  TRICARE Specific Procedures/Services
3.16.1  TRICARE specific APCs have been assigned for certain procedures covered by TRICARE but excluded by Medicare.
3.16.2  Other procedures that are normally covered under TRICARE but not under Medicare will be assigned SI of A (i.e., services that are paid under some payment method other than OPPS) until they can be placed into existing or new APC groups.
3.17  Validation Reviews
OPPS claims are not subject to validation review.
3.18  Hospital-Based Birthing Centers
Hospital-based birthing centers will be reimbursed the same as freestanding birthing centers except the all inclusive rate consisting of the CMAC for CPT code 59400 and the state specific non-professional component, will lag two months (i.e., April 1 instead of February 1). See Chapter 10, for information on freestanding birthing centers.
4.0  Effective Date
May 1, 2009.
- END -
1)
Effective January 1, 2015, SI of X is no longer recognized.
2)
Effective January 1, 2015, SI of X is no longer recognized.
3)
Effective January 1, 2015, SI of X is no longer recognized.
4)
Effective January 1, 2015, SI of X is no longer recognized.
5)
Effective January 1, 2015, SI of X is no longer recognized.

Utility Navigation Links

DoD Seal

tricare.mil is the offical website of the Defense Health Agency (DHA) a component of the Military Health System

TRICARE is a registered trademark of the Department of Defense (DoD), DHA. All rights reserved.

CPT only © 2006 American Medical Association (or such other date of publication of CPT). All Rights Reserved.

If you have a question regarding TRICARE benefits, please go to the TRICARE Contact Us page page.
If you need help with technical/operational issues, please go to the TRICARE Manuals Online Help Resources page.

The appearance of hyperlinks to external websites does not constitute endorsement by the DHA of these websites or the information, products or services contained therein. For other than authorized government activities, the DHA does not exercise any editorial control over the information you may find at other locations. Such links are provided consistent with the stated purpose of this DoD website.

v4.5.7082.22297

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

Some documents are presented in Portable Document Format (PDF). A PDF reader is required for viewing. Download a PDF Reader or learn more about PDFs.