Federal Register / Vol. 78, No. 153 / Thursday, August 8, 2013 / Rules and Regulations 48303 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Parts 71 

[Docket FAA No. FAA–2013–0147; Airspace 

Docket No. 13–AWP–1] 

Establishment of Class E Airspace; 

Tuba City, AZ 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule; correction. 

SUMMARY: This action corrects a final 

rule published in the Federal Register 

May 29, 2013 that establishes Class E en 

route airspace at the Tuba City VHF 

Omni-Directional Radio Range Tactical 

Air Navigational Aid (VORTAC), Tuba 

City, AZ. In that rule, an error was made 

in the legal description for Tuba City, 

identifying the region as ANM instead 

of AWP. 

DATES: Effective Date: 0901 UTC, August 

22, 2013. The Director of the Federal 

Register approves this incorporation by 

reference action under 1 CFR Part 51, 

subject to the annual revision of FAA 

Order 7400.9 and publication of 

conforming amendments. 

FOR FURTHER INFORMATION CONTACT: 

Eldon Taylor, Federal Aviation 

Administration, Operations Support 

Group, Western Service Center, 1601 

Lind Avenue SW., Renton, WA 98057; 

telephone (425) 203–4537. 

SUPPLEMENTARY INFORMATION: 

History 

The FAA published a final rule in the 

Federal Register establishing Class E en 

route airspace at the Tuba City 

VORTAC, Tuba City, AZ (78 FR 32086, 

May 29, 2013). In the regulatory text, the 

region identifier ANM was incorrect, 

and is now corrected to AWP. 

Correction to Final Rule 

Accordingly, pursuant to the 

authority delegated to me, the legal 

description as published in the Federal 

Register on May 29, 2013 (78 FR 32086), 

Airspace Docket No. 13–AWP–1, FR 

Doc. 2013–12623, is corrected as 

follows: 

§ 71.1 [Amended] 

■ On page 32087, column 1, line 4, 

remove ANM AZ E6 Tuba City, AZ 

[NEW], and insert AWP AZ E6 Tuba 

City, AZ [Corrected]. 

Issued in Seattle, Washington, on July 29, 

2013. 

Christopher Ramirez, 

Manager, Operations Support Group, Western 

Service Center. 

[FR Doc. 2013–18869 Filed 8–7–13; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF DEFENSE 

Office of the Secretary 

32 CFR Part 199 

[DOD–2010–HA–0072] 

RIN 0720–AB41 

TRICARE; Reimbursement of Sole 

Community Hospitals and Adjustment 

to Reimbursement of Critical Access 

Hospitals 

AGENCY: Office of the Secretary, 

Department of Defense (DoD). 

ACTION: Final rule. 

SUMMARY: This Final Rule implements 

for Sole Community Hospitals (SCHs) 

the statutory provision at title 10, 

United States Code (U.S.C.), section 

1079(j)(2) that TRICARE payment 

methods for institutional care be 

determined, to the extent practicable, in 

accordance with the same 

reimbursement rules as those that apply 

to payments to providers of services of 

the same type under Medicare. This 

Final Rule implements a reimbursement 

methodology similar to that applicable 

to Medicare beneficiaries for inpatient 

services provided by SCHs. It will be 

phased in over a several-year period. 

This Final Rule also provides for special 

reimbursement for labor/delivery and 

nursery services in SCHs and creates a 

possible General Temporary Military 

Contingency Payment Adjustment 

(GTMCPA) for inpatient services in 

SCHs and for Critical Access Hospitals 

(CAHs). 

DATES: This rule is effective October 7, 

2013. 

Applicability Date: The regulations 

setting forth the revised reimbursement 

system shall be applicable for all 

admissions to Sole Community 

Hospitals and Critical Access Hospitals 

commencing on or after the first day of 

the month which is at least 120 days 

from the date of publication of this rule 

in the Federal Register. 

FOR FURTHER INFORMATION CONTACT: Ann 

Fazzini, TRICARE Management Activity 

(TMA), Medical Benefits and 

Reimbursement Branch, telephone (303) 

676–3803. 

SUPPLEMENTARY INFORMATION: 

I. Executive Summary 

A. Purpose of the Final Rule 

The purpose of this Final Rule is to 

implement for SCHs the statutory 

requirement that TRICARE inpatient 

care ‘‘payments shall be determined to 

the extent practicable in accordance 

with the same reimbursement rules as 

apply to payments to providers of 

services of the same type under 

Medicare.’’ Medicare pays SCHs the 

greater of the amount under the general 

inpatient prospective payment system 

method based on diagnosis-related 

groups (DRGs) or an amount based on 

the hospital’s reported costs. TRICARE 

pays for most hospital care under a 

DRG-based prospective payment system 

similar to Medicare’s, but exempted 

SCHs from this system, instead paying 

them billed charges. Paying billed 

charges is fiscally imprudent and 

inconsistent with TRICARE’s governing 

statute. Paying SCHs under a method 

similar to Medicare’s is prudent, 

practicable, and harmonious with the 

statute. The Final Rule will transition 

over a several year period from the 

current billed charge method to the new 

method. The transition will be gradual 

to reduce the impact on the SCHs. 

Network SCHs will have payment 

reductions limited to 10 percent per 

year. Non-network SCHs will have 

reductions limited to 15 percent per 

year. 

The legal authority for this Final Rule 

is 10 U.S.C. 1079(j)(2). 

B. Summary of the Major Provisions of 

the Final Rule 

1. Ultimate Payment Method for SCHs 

Following the transition period, 

TRICARE will reimburse SCHs for 

inpatient care the higher of the DRGbased amount applicable to most 

hospitals or an amount approximating 

the SCH’s costs. The cost-based amount 

will be determined by applying the 

SCH’s most recent Medicare cost-tocharge ratio (CCR) to the SCH’s charges. 

Individual claims will be paid under 

this cost-based method, followed by a 

year-end review to determine whether 

in the aggregate the DRG-based method 

would have paid more. If so, TRICARE 

will pay the SCH the aggregate 

difference. 

2. Transition Period 

To protect SCHs from sudden 

significant reductions, the Final Rule 

will gradually transition from the base 

year of paying 100 percent of allowable 

charges (which is either the billed 

charge or, in the case of network 

hospitals, a voluntary discounted 

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48304 Federal Register / Vol. 78, No. 153 / Thursday, August 8, 2013 / Rules and Regulations 

charge) to paying the percentage equal 

to the Medicare CCR (generally in the 

range of 30 to 50 percent). The 

transition rules prevent a reduction of 

more than 10 percentage points per year 

for network hospitals or 15 percentage 

points per year for non-network 

hospitals. So, for example, in the case of 

a non-network hospital with a CCR of 40 

percent, payment in the first year would 

be 85 percent of the base year amount; 

70 percent in the second year, 55 

percent in the third year, and 40 percent 

in the fourth and subsequent years. In 

the case of a network hospital with a 

CCR of 40 percent that had agreed to a 

5 percent discount (i.e., the allowable 

amount was 95 percent of billed 

charges) in the base year, payment in 

the first year would be 85 percent of the 

base year amount, 75 percent in the 

second year, 65 percent in the third 

year, 55 percent in the fourth year, 45 

percent in the fifth year, and 40 percent 

in the sixth and subsequent years. 

During each year, the resulting aggregate 

payment amount would be compared to 

the aggregate amount that would have 

been provided under the DRG-based 

system, and if that would have been 

more, the difference will be paid. 

3. Special Payment Rule for Labor/ 

Delivery and Nursery Care 

In response to public comments, the 

Final Rule includes a special payment 

rule for labor/delivery and nursery care 

in SCHs. Based on an assessment that 

the Medicare CCR does not accurately 

reflect the cost to charge ratio for these 

services, following the transition period, 

rather than applying the Medicare CCR 

to charges to labor/delivery and nursery 

DRGs, TRICARE will apply 130 percent 

of the Medicare CCR. 

4. GTMCPA for SCHs and CAHs 

One of the purposes of the TRICARE 

program is to support military members 

and their families during periods of war 

or contingency operations, when 

military facility capability may be 

diverted or insufficient to meet military 

readiness priorities. To preserve the 

availability of SCHs during such 

periods, the Final Rule includes 

authority for a year-end discretionary, 

temporary adjustment that the TMA 

Director may approve in extraordinary 

economic circumstances for a network 

hospital that serves a disproportionate 

share of Active Duty Service members 

(ADSMs) and Active Duty dependents 

(ADDs). This same adjustment 

possibility is also made available to 

Critical Access Hospitals since they 

share some attributes of SCHs. 

TRICARE is in the process of 

developing policy and procedural 

instructions for exercising the 

discretionary authority under the 

qualifying criteria for the GTMCPAs for 

inpatient services provided in SCHs and 

CAHs. The policy and procedural 

instructions will be available within 3 to 

6 months following the applicability 

date of the new inpatient 

reimbursement methodology for SCHs. 

Hospitals will be able to request a 

GTMCPA approximately 14 months 

from the applicability date of the new 

reimbursement method as any GTMCPA 

will be based on twelve months of 

claims payment data under the new 

method. Once finalized, the policy and 

procedural instructions will be available 

in the TRICARE Reimbursement Manual 

at http://manuals.tricare.osd.mil. As 

with any discretionary authority 

exercised under the regulation, a 

determination approving or denying a 

GTMCPA for a hospital is not subject to 

the appeal and hearing procedures set 

forth in 32 CFR 199.10. Section 

199.14(a)(8) of this final rule has been 

revised to clarify this point. 

C. Costs and Benefits 

The economic impact of the Final 

Rule is to reduce DoD payments to 

SCHs, producing estimated DoD 

budgetary savings (cost avoidance) as 

follows: 

FY 2013: $36.5 million 

FY 2014: $80.2 million 

FY 2015: $130.3 million 

FY 2016: $186.1 million 

FY 2017: $243.1 million 

Total FY 2013–2017: $676.1 million 

II. Discussion of Final Rule 

A. Introduction and Background 

In the Federal Register of July 5, 2011 

(76 FR 39043), DoD published for public 

comment a Proposed Rule regarding an 

inpatient payment system for SCHs. 

Under 10 U.S.C. 1079(j)(2), the amount 

to be paid to hospitals, skilled nursing 

facilities, and other institutional 

providers under TRICARE, ‘‘shall be 

determined to the extent practicable in 

accordance with the same 

reimbursement rules as apply to 

payments to providers of services of the 

same type under Medicare.’’ Medicare 

reimburses SCHs for inpatient care the 

greatest of these aggregate amounts: 

(1) What the SCH would have been 

paid under the Medicare DRG method 

for all of that hospital’s Medicare 

discharges; or 

(2) The amount that would have been 

paid if the SCH were paid the average 

‘‘cost’’ per discharge at that hospital in 

Fiscal Year (FY) 1982, 1987, 1996, or 

2006 updated to the current year for all 

its Medicare discharges. 

TRICARE currently pays SCHs for 

inpatient care in one of two ways: 

(1) Network hospitals: Payment is an 

amount equal to billed charges less a 

negotiated discount. The discounted 

reimbursement is usually substantially 

greater than what would be paid using 

the DRG method, which TRICARE 

generally uses to reimburse hospitals for 

inpatient care; or 

(2) Non-network hospitals: Payment is 

equal to billed charges. 

TRICARE’s current method results in 

reimbursing SCHs substantially more 

than Medicare does for equivalent 

inpatient care. A change is needed to 

conform to the statute. 

Under 32 Code of Federal Regulations 

(CFR) 199.14(a)(1)(ii)(D)(6), SCHs are 

currently exempt from the TRICARE 

DRG-based payment system. Based on 

the above statutory mandate, TRICARE 

is adopting in this Final Rule an 

approach that approximates the Centers 

for Medicare and Medicaid Services’ 

(CMS) method for SCHs. 

B. SCH Reimbursement Methodology 

Establishing a TRICARE SCH 

inpatient reimbursement method 

exactly matching that of Medicare is not 

practicable. While TRICARE can 

calculate the aggregate DRG 

reimbursement for all TRICARE 

discharges by an SCH during a year, 

using the Medicare cost per discharge is 

not appropriate for TRICARE. 

Differences in the TRICARE and 

Medicare beneficiary case mix render 

the Medicare average cost per discharge 

not directly applicable for TRICARE 

purposes. 

In addition, basing SCH 

reimbursement on annual updates to a 

TRICARE base-year average cost per 

discharge could result in inappropriate 

payments to some SCHs. At many SCHs, 

the number of TRICARE discharges per 

year is very low. Approximately half of 

the SCHs had fewer than 20 TRICARE 

discharges annually. The TRICARE 

average cost per discharge in one year 

may not be a good predictor of the 

average cost per discharge in a future 

year due to significant change in the 

case mix that can occur between two 

small sets of patients. 

Alternatively, TRICARE could make 

payments equal to the SCH’s Medicare 

CCR multiplied by the hospital’s billed 

charges for inpatient services. For 

purposes of this rule, the Medicare CCR 

is the sum of Medicare’s operating and 

capital CCRs. This would avoid making 

payments unrelated to case mix and 

would be consistent with the Medicare 

principle of relating payments for SCHs 

to cost of services. This is the approach 

adopted in the Final Rule. 

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Federal Register / Vol. 78, No. 153 / Thursday, August 8, 2013 / Rules and Regulations 48305 

C. TRICARE’s SCH Phase-In Period 

In introducing its current SCH 

reimbursement method, Medicare used 

a 3-year phase-in period to provide the 

hospitals time for making business and 

clinical process adjustments. TRICARE 

will have a phase-in period with a 

maximum 15 percent per-year reduction 

from the starting point for non-network 

hospitals and a 10 percent-per-year 

reduction for network hospitals. This 

involves calculating a hospital’s ratio of 

allowed charges to billed charges for 

TRICARE discharges and reducing that 

by 15 percentage points each year for 

non-network hospitals and 10 

percentage points each year for network 

hospitals until it reaches the hospital’s 

Medicare CCR. For example, if a nonnetwork hospital has a TRICAREallowed to billed ratio of 100 percent, it 

would be paid 85 percent of billed 

charges in year 1, 70 percent in year 2, 

55 percent in year 3, and 40 percent in 

year 4. For a network hospital that had 

a TRICARE-allowed to billed ratio of 98 

percent, it would be paid 88 percent in 

year 1, 78 percent in year 2, 68 percent 

in year 3, and 58 percent in year 4. It 

should be noted that in no year could 

the TRICARE payment fall below costs, 

as measured by the Medicare CCR (most 

hospitals have costs equal to 30 to 50 

percent of billed charges). This 

transition method would approximately 

follow the CHAMPUS Maximum 

Allowable Charge physician payment 

system reform precedent and limit 

reductions to no more than 15 percent 

per year during the phase-in period. It 

also provides an incentive for hospitals 

to remain in the network by allowing a 

5 percentage point difference in 

payment reductions per year. Finally, it 

will buffer the revenue reductions 

experienced upon initial 

implementation of TRICARE’s SCH 

payment reform while allowing 

hospitals sufficient time to adjust and 

budget for these reductions. 

TRICARE will pay an SCH for 

inpatient services it provides during a 

year the greater of two aggregate 

amounts: (1) What the SCH would have 

been paid under the DRG method for all 

of that hospital’s TRICARE discharges; 

or (2) an amount equal to the SCH’s 

specific CCR multiplied by the 

hospital’s billed charges for inpatient 

TRICARE services. This will be 

accomplished through a year-end 

adjustment to the reimbursements 

provided during the year. 

D. New SCHs and SCHs Without 

Inpatient Claims 

TRICARE will pay a new SCH using 

the average Medicare CCR for all SCHs 

calculated in the most recent year until 

its Medicare CCR is available in the 

CMS Inpatient Provider Specific File 

(PSF). For SCHs that had no inpatient 

claims from TRICARE prior to 

implementation of the SCH payment 

reform but do have a claim, TRICARE 

will pay them based directly on their 

Medicare CCR. 

E. SCH GTMCPA 

In addition to the SCH phase-in 

period outlined above, a GTMCPA for 

inpatient services will be available for 

TRICARE network hospitals deemed 

essential for military readiness and 

support during contingency operations. 

The TMA Director, or designee, may 

approve an SCH GTMCPA for hospitals 

that serve a disproportionate share of 

ADSMs and ADDs. Specific procedures 

for requesting an SCH GTMCPA will be 

outlined in the TRICARE 

Reimbursement Manual. 

F. Essential Access Community 

Hospitals (EACH) 

The SCH reform encompasses all 

SCHs as defined by Medicare that have 

inpatient stays for TRICARE patients. It 

also include hospitals classified by CMS 

as EACHs because for payment 

purposes, CMS treats as an SCH any 

hospital that CMS designates as an 

EACH. In other words, EACHs are 

subject to the SCH reform in this final 

rule. There are two EACHs in existence: 

Via Christi Hospital in Pittsburg, 

Kansas; and Avera Queen of Peace 

Hospital in Mitchell SD. Both have 

submitted claims to TRICARE. 

G. CAH GTMCPA 

On August 31, 2009, we published in 

the Federal Register a Final Rule (74 FR 

44752), which implemented a 

reimbursement methodology similar to 

that furnished to Medicare beneficiaries 

for services provided by CAHs (i.e., 

reimbursing them 101 percent of 

reasonable costs). It was brought to our 

attention that there may be some CAHs 

that are deemed essential for military 

readiness and support during 

contingency operations. Consequently, 

the Proposed Rule published in the 

Federal Register of July 5, 2011 (76 FR 

39043), also proposed a CAH GTMCPA 

for TRICARE network hospitals deemed 

essential for military readiness and 

contingency operations. The TMA 

Director, or designee, may approve a 

CAH GTMCPA for hospitals that serve 

a disproportionate share of ADSMs and 

ADDs. Specific procedures for 

requesting a CAH GTMCPA will be 

outlined in the TRICARE 

Reimbursement Manual. 

III. Public Comments 

The TRICARE SCH Proposed Rule (76 

FR 39043) published on July 5, 2011, 

provided a 60-day public comment 

period. Following is a summary of the 

public comments and our responses. 

Comment: Several commenters stated 

that using the Medicare CCR is not 

appropriate because of differences in the 

type of services utilized by the 

TRICARE beneficiary population, as 

compared to the Medicare population, 

especially services related to labor/ 

delivery and newborn care. These 

commenters stated that use of the 

Medicare CCR is not directly applicable 

for TRICARE purposes and they 

recommended DoD use an adjusted 

Medicare CCR equal to the Medicare 

CCR multiplied by a factor of 1.464 to 

more accurately account for TRICARE 

costs. 

Response: Under the proposed 

transition period outlined in the 

Proposed Rule and adopted in this Final 

Rule, it will take an average of 4 to 6 

years for most network SCHs to reach 

their Medicare CCR reimbursement 

level. In response to these comments, 

we have considered whether we should 

modify our proposed approach of using 

the Medicare CCR for all services. We 

analyzed data from SCH cost centers 

utilized by TRICARE beneficiaries, 

including labor/delivery and nursery to 

calculate a CCR for TRICARE patients, 

referred to as the TRICARE-specific 

CCR. We found that the TRICAREspecific CCR was similar to the 

Medicare CCR at most SCHs. However, 

we also found that, in addition to 

TRICARE patients obviously using more 

maternity services than Medicare 

beneficiaries, the labor/delivery and 

nursery cost centers have higher CCRs 

than other cost centers. We found, on 

average, that the TRICARE-specific CCR 

for nursery and labor/delivery services 

was 30 percent higher than the 

Medicare CCR. As a result, this Final 

Rule includes an adjustment for 

inpatient nursery and labor/delivery 

services. This adjustment will start at 

the end of the transition period when 

each SCH reaches its Medicare CCR 

(approximately 4 to 6 years from 

implementation of this Final Rule). The 

adjustment will be 130 percent of the 

Medicare CCR, rather than the Medicare 

CCR, for care that groups to labor/ 

delivery and nursery DRGs. 

Comment: These same commenters 

recommended DoD modify its approach 

so that TRICARE payments will be equal 

to the highest of the SCH’s CCRs from 

four base years (1982, 1987, 1996, and 

2006) multiplied by the hospital’s billed 

charge for services. They further state 

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48306 Federal Register / Vol. 78, No. 153 / Thursday, August 8, 2013 / Rules and Regulations 

the CCR should be adjusted to reflect 

TRICARE costs, as described in the 

above comment. 

Response: Medicare does not use 

CCRs from these earlier years to pay 

SCHs. Instead, Medicare uses the cost 

per discharge from those years. Thus, 

using the highest CCR from these earlier 

years is not consistent with Medicare’s 

approach. The approach proposed in 

this rule uses the most recent CCR data 

for a specific hospital which is the best 

reflection of a hospital’s current costs 

relative to its billed charges, not the 

costs from 10–30 years ago. 

Comment: One commenter requested 

that TRICARE clarify that SCHs will 

need to file requests for capital cost 

reimbursement. 

Response: TRICARE’s payment for 

SCHs will be based on a CCR which is 

equal to the sum of the Medicare 

operating CCR and the Medicare capital 

CCR. Thus, TRICARE SCH 

reimbursement will include capital 

costs and SCHs will not need to request 

additional reimbursement for capital. 

Comment: One commenter proposed 

that TRICARE pay SCHs using the 

average Medicare cost per discharge (the 

highest cost per discharge from several 

specified base year cost reports) inflated 

forward using the same factor used to 

update TRICARE DRG payments. Due to 

differences between the TRICARE and 

Medicare case mixes, the commenter 

suggested that the Medicare cost per 

discharge value be adjusted by the ratio 

of the TRICARE standardized payment 

amount (the Adjusted Standardized 

Amount in the TRICARE Inpatient 

Prospective Payment System) to the 

Medicare standardized payment 

amount. 

Response: The TRICARE and 

Medicare Inpatient Prospective Payment 

Systems use different weights and the 

allowed amounts per discharge are quite 

different due to differences in the 

weights and case mix. Thus, this 

proposed method would not be 

appropriate. 

Comment: Two commenters 

recommended DoD limit its per-year 

reductions in payments to 5 percent for 

all SCHs rather than the 10 and 15 

percent proposed. Another commenter 

requested the per-year reductions in 

payments be limited to 5 percent for 

network and 10 percent for non-network 

SCHs. 

Response: Currently, SCHs receive 

TRICARE reimbursement for the most 

common services at more than twice the 

level of other acute hospitals. Under the 

transition period outlined in the 

Proposed Rule and adopted in the Final 

Rule, it will take an average of 4 to 6 

years for most network SCHs to reach 

their Medicare CCR reimbursement 

levels. A reduction in payment of 10 

percent for network SCHs and 15 

percent for non-network SCHs buffers 

the decrease in revenues that hospitals 

will be experiencing during 

implementation of the TRICARE SCH 

reimbursement methodology. The 

transition period will allow SCHs 

sufficient time to adjust and budget for 

these reductions. The proposed 

payment reductions provide an 

incentive for hospitals to remain in the 

network by allowing a 5 percent 

difference in payment reductions per 

year. Additionally, reducing the 

payment by 5 percent per year during 

the transition would increase the time it 

will take to comply with the statute that 

governs TRICARE. A 10 to 15 percent 

reduction in payment during the 

transition is reasonable. 

Comment: Several commenters 

recommended DoD incorporate into 

TRICARE reimbursement methodology 

the additional payment protections that 

Medicare affords SCHs, and asked that 

other general Medicare payment 

adjustments be incorporated, including 

the low-volume adjustment, geographic 

wage index reclassification, and 

disproportionate share hospital (DSH) 

payments. 

Response: When TRICARE calculates 

DRG payments, Medicare’s geographic 

wage index classification will be used. 

With respect to DSH payments, when 

DoD implemented the TRICARE DRG 

system in 1987, the supplementary 

information in the Final Rule stated that 

we would not implement the DSH 

adjustment. DoD decided not to 

implement the DSH adjustment because 

the TRICARE DRG system would pay 

hospitals adequately for TRICARE 

patients. This is also true for the SCH 

payment methodology adopted in this 

Final Rule. By creating an adjustment 

for labor/delivery and nursery services 

as well as a possible GTMCPA for 

hospitals that serve a disproportionate 

share of ADSMs and ADDs, hospitals 

are adequately compensated for care 

received by TRICARE beneficiaries. We 

believe that these specific adjustments 

designed to address the needs of the 

TRICARE beneficiaries negates the need 

for any additional adjustments. 

Comment: Several commenters 

recommended TRICARE develop an 

Medicare Dependent Hospital (MDH) 

payment methodology comparable to 

the SCH methodology because Medicare 

payments to MDHs track the 

methodology used to reimburse SCHs. 

Two of these commenters also 

recommended TRICARE recognize the 

MDH classification and adopt special 

payment provisions for MDHs. 

Response: Medicare identifies rural 

hospitals with less than 100 beds which 

have 60 percent or more of their 

admissions or inpatient days 

reimbursed by Medicare as MDHs. 

Under Medicare rules, a hospital cannot 

be both an SCH and an MDH. Under 

current TRICARE rules, MDHs are paid 

under the normal DRG payment 

method. The Proposed Rule for 

TRICARE reimbursement of SCHs did 

not propose a special payment method 

for MDHs. It is notable that having a 

high percentage of Medicare admissions 

or days does not mean the hospital has 

a high percentage of TRICARE 

admissions or days. Further, this SCH 

rule does not change the status-quo for 

TRICARE payments to MDH hospitals. 

Outside the scope of this rule making, 

TRICARE will analyze whether it is 

practicable and appropriate to make any 

changes in reimbursements to hospitals 

classified by Medicare as MDHs based 

on Medicare’s payment methodology for 

MDHs. 

Comment: One commenter requested 

that the rules for reimbursement remain 

unchanged. 

Response: The statutory provision at 

10 U.S.C. 1079(j)(2) mandates that 

TRICARE payment methods for 

institutional care be determined, to the 

extent practicable, in accordance with 

the same reimbursement rules as those 

that apply to payments to providers of 

services of the same type under 

Medicare. Based on this statutory 

requirement, TRICARE is adopting a 

method similar to Medicare’s payment 

system for reimbursement of SCH 

inpatient services. 

Comment: Several commenters are 

concerned the proposed payment 

methodology will result in significant 

cuts and compromise access to care. 

Response: TRICARE will make 

payments equal to the SCH’s specific 

Medicare CCR multiplied by the 

hospital’s billed charges for inpatient 

services. This is consistent with the 

Medicare principle of relating payments 

for SCHs to cost of services. Following 

the transition, SCHs with patients in 

delivery and newborn DRGs will receive 

payments for these patients based on the 

level of billed charges multiplied by a 

factor equal to 130 percent of the 

Medicare CCR. Those SCHs with a high 

proportion of ADSMs/ADDs admissions 

may be eligible to receive a GTMCPA. 

Additionally, the phase-in period will 

buffer the revenue reductions and will 

allow hospitals sufficient time to adjust 

and budget for this revised 

reimbursement methodology. Hospitals 

can also become network providers, for 

which the percentage per-year reduction 

of 10 percent is a more gradual stepmstockstill on DSK4VPTVN1PROD with RULES

Federal Register / Vol. 78, No. 153 / Thursday, August 8, 2013 / Rules and Regulations 48307 

down than the percentage per-year 

reduction of 15 percent for non-network 

hospitals. We believe these feature are 

quite adequate to assure reasonable 

reimbursement and protect access to 

care. 

Comment: One commenter states that 

TRICARE’s higher inpatient payments 

off-set losses on outpatient services 

provided to TRICARE. 

Response: The statutory provision at 

10 U.S.C. 1079(j)(2) mandates that 

TRICARE payment methods for 

institutional care be determined, to the 

extent practicable, in accordance with 

the same reimbursement rules as those 

that apply to payments to providers of 

services of the same type under 

Medicare. Based on this statutory 

requirement, TRICARE is adopting 

Medicare’s payment system for 

reimbursement of SCH inpatient 

services. In addition, TRICARE 

payments for hospital outpatient 

services are fully adequate. 

Comment: The above commenter 

further states the proposed cuts will 

likely result in a reduction in service 

line offerings. 

Response: We value the services 

offered by all hospitals and providers 

who treat TRICARE beneficiaries, 

including ADSMs, ADDs, Retirees, and 

our Wounded Warriors. The transition 

schedule in this Final Rule will reduce 

the effects of the transition going from 

a billed-charge reimbursement system to 

payments aligned with Medicare 

reimbursement levels. These provisions 

include a multi-year transition period 

and the possibility of a GTMCPA. Thus, 

we believe the final rule not only 

complies with our statutory mandate, 

but does so in a fair and reasonable 

manner to SCHs. 

IV. Regulatory Impact Analysis 

A. Overall Impact 

DoD has examined the impacts of this 

Final Rule as required by Executive 

Orders (E.O.s) 12866 (September 1993, 

Regulatory Planning and Review) and 

13563 (January 18, 2011, Improving 

Regulation and Regulatory Review), the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

the Unfunded Mandates Reform Act of 

1995 (Pub. L. 104–4), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

1. Executive Order 12866 and Executive 

Order 13563 

E.O.s 12866 and 13563 direct agencies 

to assess all costs and benefits of 

available regulatory alternatives and, if 

regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety effects, distributive impacts, 

and equity). E.O. 13563 emphasizes the 

importance of quantifying both costs 

and benefits, reducing costs, 

harmonizing rules, and promoting 

flexibility. A regulatory impact analysis 

(RIA) must be prepared for major rules 

with economically significant effects 

($100 million or more in any one year). 

We estimate that the effects of the 

SCH provisions that would be 

implemented by this rule would result 

in SCH revenue reductions exceeding 

$100 million in at least one year. We 

estimate the reduction in hospital 

revenues under the SCH reform for its 

first full year of implementation 

compared to expenditures in that same 

period without the proposed SCH 

changes, to be well below the $100 

million level because of the transition 

features of the Final Rule. However, 

after several years in the transition 

period, the amount of revenue 

reductions will reach the $100 million 

per year threshold. 

We estimate that this rulemaking is 

‘‘economically significant’’ as measured 

by the $100 million threshold and, 

hence, also a major rule under the 

Congressional Review Act. Accordingly, 

we have prepared a regulatory impact 

analysis that, to the best of our ability, 

presents the costs and benefits of the 

rulemaking. 

2. Congressional Review Act. 5 U.S.C. 

801 

Under the Congressional Review Act, 

a major rule may not take effect until at 

least 60 days after submission to 

Congress of a report regarding the rule. 

A major rule is one that would have an 

annual effect on the economy of $100 

million or more or have certain other 

impacts. This Final Rule is a major rule 

under the Congressional Review Act. 

3. Regulatory Flexibility Act (RFA) 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses if a rule has a significant 

impact on a substantial number of small 

entities. For purposes of the RFA, small 

entities include small businesses, 

nonprofit organizations, and small 

governmental jurisdictions. Most 

hospitals are considered to be small 

entities, either by being nonprofit 

organizations or by meeting the Small 

Business Administration (SBA) 

definition of a small business (having 

revenues of $34.5 million or less in any 

one year). For purposes of the RFA, we 

have determined that all SCHs would be 

considered small entities according to 

the SBA size standards. Individuals and 

States are not included in the definition 

of a small entity. Therefore, this Final 

Rule would have a significant impact on 

a substantial number of small entities. 

The Regulatory Impact Analysis, as well 

as the contents contained in the 

preamble, also serves as the Final 

Regulatory Flexibility Analysis. 

4. Unfunded Mandates 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 also 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any one year of $100 million in 1995 

dollars, updated annually for inflation. 

That threshold level is currently 

approximately $140 million. This Final 

Rule will not mandate any requirements 

for State, local, or tribal governments or 

the private sector. 

5. Paperwork Reduction Act 

This rule will not impose significant 

additional information collection 

requirements on the public under the 

Paperwork Reduction Act of 1995 (44 

U.S.C. 3502–3511). Existing information 

collection requirements of the TRICARE 

and Medicare programs will be utilized. 

We do not anticipate any increased 

costs to hospitals because of paperwork, 

billing, or software requirements since 

we are keeping TRICARE’s billing/ 

coding requirements (i.e., hospitals will 

be coding and filing claims in the same 

manner as they currently are with 

TRICARE). 

6. Executive Order 13132, ‘‘Federalism’’ 

This rule has been examined for its 

impact under E.O. 13132, and it does 

not contain policies that have 

federalism implications that would have 

substantial direct effects on the States, 

on the relationship between the national 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of Government. Therefore, 

consultation with State and local 

officials is not required. 

B. Hospitals Included In and Excluded 

From the SCH Reforms 

1. The SCH reform encompasses all 

SCHs as defined by Medicare that have 

inpatient stays for TRICARE patients. It 

also includes hospitals classified by 

CMS as Essential Access Community 

Hospitals (EACH) because for payment 

purposes, CMS treats as an SCH any 

hospital that CMS designates as an 

EACH. In other words, EACHs are 

subject to the SCH reform in this final 

rule. There are two EACHs in existence: 

Via Christi Hospital in Pittsburg, 

Kansas; and Avera Queen of Peace 

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48308 Federal Register / Vol. 78, No. 153 / Thursday, August 8, 2013 / Rules and Regulations 

Hospital in Mitchell SD. Both have 

submitted claims to TRICARE. Over a 

six month period, Via Christi hospital 

submitted about $309,000 in TRICARE 

inpatient claims and Avera Queen of 

Peach submitted about $270,000 in 

TRICARE inpatient claims. 

2. Hospitals that are paid by Medicare 

and TRICARE under a cost containment 

waiver are not included in the SCH 

Reform. 

C. Analysis of the Impact of Policy 

Changes on Payment Under SCH 

Reform Alternatives Considered 

Alternatives that we considered, the 

proposed changes that we will make, 

and the reasons that we have chosen 

each option are discussed below. 

1. Alternatives Considered for 

Addressing Reduction in SCH Payments 

Analysis of the effects of paying SCHs 

using the computation of either the 

greater of what the SCH would have 

been paid under the DRG method for all 

of that hospital’s TRICARE discharges or 

an amount equal to the SCH’s specific 

CCR multiplied by the hospital’s billed 

charges for the TRICARE services 

approach would reduce the TRICARE 

payments to these SCHs by an average 

of over 50 percent. This approach would 

pay each SCH the greater of two 

aggregate amounts: (1) The sum of the 

TRICARE-allowed amounts if all the 

TRICARE inpatient admissions over a 

12-month period were paid using the 

TRICARE DRG method; or (2) the 

TRICARE-allowed amounts if all the 

TRICARE inpatient admissions over a 

12-month period were paid using the 

CCR approach (in which the TRICAREallowed amount for each admission is 

equal to the billed charge for that 

admission multiplied by the hospital’s 

historical CCR). Table 3 provides our 

estimate of the impact of this approach 

without any transitions. 

Because the impact of moving from a 

charge-based reimbursement to a costbased reimbursement similar to 

Medicare’s would produce large 

reductions in the TRICARE-allowed 

amounts for all types of SCHs, we 

considered a phase-in of this approach 

over a 4-year period. Under this option, 

the CCR portion of the approach would 

be modified so that the hospital’s billed 

charge on each claim would not be 

multiplied by the hospital’s CCR until 

the fourth year (when the transition was 

complete). In the first 3 years, the billed 

charges for each claim would be 

multiplied by a ratio so that there was 

an equal reduction in the ratio used 

each year over the 4-year transition. For 

example, if the hospital were receiving 

100 percent of its billed charges prior to 

implementation of the SCH reform and 

it had a CCR of 0.32, then its billed 

charges would be multiplied by factors 

of 0.83, 0.66, and 0.49 in the first 3 years 

respectively so that each year the 

payment ratio declined by an equal 

amount (in this case by a factor of 0.17). 

In each year, the aggregate level of 

allowed amounts produced using the 

CCR approach at each SCH would be 

compared with the aggregate level of 

DRG-allowed amounts at the SCH, and 

the SCH would be paid the greater of the 

two aggregate amounts. This 4-year 

transition would allow hospitals to have 

a phased transition to the cost-based 

rates. Although this option would 

provide a multi-year period for SCHs to 

transition to the cost-based rates, we did 

not choose this option because it would 

still result in large reductions for some 

SCHs over a relatively short period. 

A second option we considered was 

to have a transition based on a reduction 

of 15 percentage points per year in the 

allowed amounts for each SCH. Under 

this option, the CCR portion in this 

approach would be modified. During 

the transition period, the billed charges 

on each claim at an SCH would be 

multiplied by a factor so that the ratio 

decreased by 15 percentage points each 

year from the level in the previous year. 

For example, if the SCH were receiving 

100 percent of its billed charges prior to 

SCH reform and it had a CCR of 0.32, 

then its billed charges would be 

multiplied by factors of 0.85, 0.70, 0.55, 

and 0.40 in the first 4 years respectively, 

so that each year the ratio declined by 

15 percentage points. In the fifth year, 

the ratio would be set at 0.32, the 

hospital’s CCR. (The actual number of 

years of transition will depend on the 

hospital’s CCR and could be more or 

less than the 4 years in this example as 

the ratio will never be less than the 

CCR.) In each year, the aggregate level 

of allowed amounts produced using the 

CCR approach at each SCH would be 

compared with the aggregate level of 

DRG-allowed amounts at the SCH and 

the SCH would be paid the greater of the 

two aggregate amounts. This type of 

transition ensures that there is a 

manageable reduction in the level of 

payments each year for each hospital. 

We selected this option for SCHs not in 

the TRICARE network. 

2. Alternatives Considered for SCHs in 

the TRICARE Network 

We were concerned there might be 

access problems at some hospitals with 

a high concentration of TRICARE 

patients if their payments were 

decreased significantly. In particular, 

we were concerned that some hospitals 

might leave the TRICARE network if 

payments were reduced too quickly. 

This was a particular concern because 

24 of the 25 SCHs with the highest 

levels of TRICARE-allowed amounts in 

the first 6 months of Calendar Year 2010 

were in the TRICARE network. Thus, 

the SCHs that would face the largest 

reductions in the level of TRICAREallowed amounts from TRICARE’s SCH 

reform would be network hospitals. 

An option we considered, and the one 

we adopt in this rule, is to provide a 10 

percent-per-year reduction in the 

allowed amounts for SCHs in the 

TRICARE network. This option would 

modify the CCR portion of the approach 

using the most recent adjudicated 

Medicare cost report. During the 

transition period, the billed charges on 

each claim at an SCH in the TRICARE 

network would be multiplied by a factor 

so that the ratio decreased by 10 

percentage points each year from a FY 

2012 base year (in contrast to 15 

percentage points for non-network 

hospitals). For example, if a TRICARE 

network SCH had allowed amounts 

equal to 92 percent of its billed charges 

prior to SCH reform, and it had a CCR 

of 0.35, then its billed charges would be 

multiplied by factors of 0.82, 0.72, 0.62, 

0.52, and 0.42 in the first 5 years, 

respectively, to calculate the allowed 

amounts. Under this approach, each 

year the ratio for network SCHs would 

decline by ten percentage points. In the 

sixth year, the ratio would be set at 0.35, 

the hospital’s CCR (assuming that the 

hospital’s CCR had remained at 0.35). In 

each year, the aggregate level of allowed 

amounts produced using the CCR 

approach at each SCH would be 

compared with the aggregate level of 

DRG-allowed amounts at the SCH, and 

the SCH would be paid the greater of the 

two aggregate amounts. This type of 

transition ensures that there is a 

manageable reduction in the level of 

payments each year for each hospital. 

We selected this option for SCHs in the 

TRICARE network. The impact 

assessment of implementation of SCH 

during the first year appears in Table 1. 

The estimates of reduction are based on 

TRICARE claims data. 

D. Effects on SCHs 

Table 1 shows the impact of revised 

SCH inpatient reimbursement during FY 

2013. Table 2 shows projected TRICARE 

reduction in reimbursement for the top 

20 SCHs. Table 3 shows the full amount 

of the reduction without phase-in and 

transitional payments. 

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Federal Register / Vol. 78, No. 153 / Thursday, August 8, 2013 / Rules and Regulations 48309 

TABLE 1—ESTIMATED IMPACT OF SCH REFORMS ON TRICARE-ALLOWED AMOUNTS AT SOLE COMMUNITY HOSPITALS

DURING THE FY 2013 FIRST YEAR OF PHASE-IN (WITH TRANSITION PAYMENTS) 

[Excludes any General Temporary Military Contingency Payment Adjustments] 

Estimated allowed under current 

policy 

($M) 

Allowed amounts under 

SCH reform 

($M) 

Reduction in allowed amounts 

($M) 

SCH reform allowed as percent of 

current policy allowed 

$365 $328 $37 90 

TABLE 2—IMPACT OF FIRST YEAR FOR TOP 20 SOLE COMMUNITY HOSPITALS

[Excludes any General Temporary Military Contingency Payment Adjustments] 

Hospital City State 

Reduction in 

FY 2013 

($M) 

Onslow Memorial Hospital ................................................................................ Jacksonville ......................................... FL 2.0 

Rapid City Regional Hospital ............................................................................ Rapid City ........................................... SD 1.6 

Cheyenne Regional Medical Center ................................................................. Cheyenne ............................................ WY 1.6 

Sierra Vista Regional Health Center ................................................................. Sierra Vista ......................................... AZ 1.5 

Beaufort County Memorial Hospital .................................................................. Beaufort ............................................... SC 1.8 

Carolina East Health System ............................................................................ New Bern ............................................ NC 1.6 

Benefis Health System ...................................................................................... Great Falls .......................................... MT 1.4 

Yuma Regional Medical Center ........................................................................ Yuma ................................................... AZ 1.6 

Trinity Medical Center ....................................................................................... Minot ................................................... ND 1.1 

Gerald Champion Hospital ................................................................................ Alamogordo ......................................... NM 0.7 

Phelps County Regional Medical Center .......................................................... Rolla .................................................... MO 0.7 

Altru Hospital ..................................................................................................... Grand Forks ........................................ ND 0.7 

Wayne Memorial Hospital ................................................................................. Goldsboro ............................................ NC 0.7 

Samaritan Medical Center ................................................................................ Watertown ........................................... NY 1.5 

Western Missouri Medical Center ..................................................................... Warrensburg ....................................... MO 0.6 

Fairbanks Memorial Hospital ............................................................................ Fairbanks ............................................ AK 0.6 

Lower Keys Medical Center .............................................................................. Key West ............................................. FL 0.6 

Matsu Regional Hospital ................................................................................... Palmer ................................................. AK 0.5 

Camden Medical Center ................................................................................... St. Marys ............................................. GA 0.5 

Flagstaff Medical Center ................................................................................... Flagstaff .............................................. AZ 0.7 

TABLE 3—ESTIMATED HYPOTHETICAL FY 2013 IMPACT OF COST-BASED REIMBURSEMENT ON TRICARE-ALLOWED

AMOUNTS AT SOLE COMMUNITY HOSPITALS WITHOUT TRANSITION PAYMENTS

[Excludes any General Temporary Military Contingency Payment Adjustments] 

Current policy 

($M) 

Cost-based reimbursement 

($M) 

Reduction in TRICARE-allowed 

amounts 

($M) 

Allowed amount under cost-based 

reimbursement as percent of 

current policy allowed 

$365 $157 $208 43 

List of Subjects in 32 CFR Part 199 

Claims, Dental health, Health care, 

Health insurance, Individuals with 

disabilities, Military personnel. 

Accordingly, 32 CFR Part 199 is 

amended as follows: 

PART 199—[AMENDED] 

■ 1. The authority citation for part 199 

continues to read as follows: 

Authority: 5 U.S.C. 301; 10 U.S.C. Chapter 

55. 

■ 2. Paragraph 199.2(b) is amended by 

adding definitions for ‘‘Essential Access 

Community Hospital (EACH)’’ and 

‘‘Sole community hospital (SCH)’’ in 

alphabetical order to read as follows: 

§ 199.2 Definitions. 

* * * * * 

(b) * * * 

Essential Access Community Hospital 

(EACH). A hospital that is designated by 

the Centers for Medicare and Medicaid 

Services (CMS) as an EACH and meets 

the applicable requirements established 

by § 199.14(a)(7)(vi). 

* * * * * 

Sole community hospital (SCH). A 

hospital that is designated by CMS as an 

SCH and meets the applicable 

requirements established by 

§ 199.6(b)(4)(xvii). 

* * * * * 

■ 3. Section 199.6 is amended by adding 

new paragraph (b)(4)(xvii) to read as 

follows: 

§ 199.6 TRICARE—authorized providers. 

* * * * * 

(b) * * * 

(4) * * * 

(xvii) Sole community hospitals 

(SCHs). SCHs must meet all the criteria 

for classification as an SCH under 42 

CFR 412.92, in order to be considered 

an SCH under the TRICARE program. 

* * * * * 

■ 4. Section 199.14 is amended by: 

a. Revising paragraph (a)(1)(ii)(D)(6), 

paragraph (a)(2)(viii)(D), paragraph 

(a)(3), the first sentence of paragraph 

(a)(4), and the introductory text of 

paragraph (a)(6); and 

b. Adding new paragraphs (a)(7) and 

(8). 

The revisions and additions read as 

follows: 

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48310 Federal Register / Vol. 78, No. 153 / Thursday, August 8, 2013 / Rules and Regulations 

§ 199.14 Provider reimbursement 

methods. 

(a) * * * 

(1) * * * 

(ii) * * * 

(D) * * * 

(6) Sole community hospitals (SCHs). 

Prior to implementation of the SCH 

reimbursement method described in 

paragraph (a)(7) of this section, any 

hospital that has qualified for special 

treatment under the Medicare 

prospective payment system as an SCH 

(see subpart G of 42 CFR part 412) and 

has not given up that classification is 

exempt from the CHAMPUS DRG-based 

payment system. 

* * * * * 

(2) * * * 

(viii) * * * 

(D) Sole community hospitals (SCHs). 

Prior to implementation of the SCH 

reimbursement method described in 

paragraph (a)(7) of this section, any 

hospital that has qualified for special 

treatment under the Medicare 

prospective payment system as an SCH 

and has not given up that classification 

is exempt. 

* * * * * 

(3) Reimbursement for inpatient 

services provided by a CAH. (i) For 

admissions on or after December 1, 

2009, inpatient services provided by a 

CAH, other than services provided in 

psychiatric and rehabilitation distinct 

part units, shall be reimbursed at 

allowable cost (i.e., 101 percent of 

reasonable cost) under procedures, 

guidelines and instructions issued by 

the TMA Director, or designee. This 

does not include any costs of physician 

services or other professional services 

provided to CAH inpatients. Inpatient 

services provided in psychiatric distinct 

part units would be subject to the 

CHAMPUS mental health payment 

system. Inpatient services provided in 

rehabilitation distinct part units would 

be subject to billed charges. 

(ii) The percentage amount stated in 

paragraph (a)(3)(i) of this section is 

subject to possible upward adjustment 

based on a inpatient GTMCPA for 

TRICARE network hospitals deemed 

essential for military readiness and 

support during contingency operations 

under paragraph (a)(8) of this section. 

(4) Billed charges and set rates. The 

allowable costs for authorized care in all 

hospitals not subject to the CHAMPUS 

DRG-based payment system, the 

CHAMPUS mental health per-diem 

system, the reasonable cost method for 

CAHs, or the reimbursement rules for 

SCHs shall be determined on the basis 

of billed charges or set rates. * * * 

* * * * * 

(6) Hospital outpatient services. This 

paragraph (a)(6) identifies and clarifies 

payment methods for certain outpatient 

services, including emergency services, 

provided by hospitals. 

* * * * * 

(7) Reimbursement for inpatient 

services provided by an SCH. (i) In 

accordance with 10 U.S.C. 1079(j)(2), 

TRICARE payment methods for 

institutional care shall be determined, to 

the extent practicable, in accordance 

with the same reimbursement rules as 

those that apply to payments to 

providers of services of the same type 

under Medicare. TRICARE’s SCH 

reimbursements approximate 

Medicare’s for SCHs. Inpatient services 

provided by an SCH, other than services 

provided in psychiatric and 

rehabilitation distinct part units, shall 

be reimbursed through a two-step 

process. 

(ii) The first step referred to in 

paragraph (a)(7)(i) of this section will be 

to calculate the TRICARE allowable cost 

by multiplying the applicable TRICARE 

percentage by the billed charge amount 

on each institutional inpatient claim. 

The applicable TRICARE percentage is 

the greater of: the SCH’s most recently 

available cost-to-charge ratio (CCR) from 

the Centers for Medicare and Medicaid 

Services’ (CMS’) inpatient Provider 

Specific File (after the ratio has been 

converted to a percentage), or the 

TRICARE allowed-to-billed ratio, 

defined as the ratio of the TRICARE 

allowed amounts (including discounts) 

to the amount of billed charges for 

TRICARE inpatient admissions at the 

SCH in FY 2012 (after it has been 

converted to a percentage). The 

TRICARE allowed-to-billed ratio in FY 

2012 shall be reduced as follows (after 

the ratio has been converted to a 

percentage): 

(A) In the first year of 

implementation, 10 percentage points 

for network SCHs and 15 percentage 

points for non-network SCHs. 

(B) In the second year of 

implementation, 20 percentage points 

for network SCHs and 30 percentage 

points for non-network SCHs. 

(C) In the third year of 

implementation, 30 percentage points 

for network SCHs and 45 percentage 

points for non-network SCHs. 

(D) In the fourth year of 

implementation, 40 percentage points 

for network SCHs and 60 percentage 

points for non-network SCHs. 

(E) In the fifth year of 

implementation, 50 percentage points 

for network SCHs and 75 percentage 

points for non-network SCHs. 

(F) In the sixth year of 

implementation, 60 percentage points 

for network SCHs and 90 percentage 

points for non-network SCHs. 

(G) In the seventh year of 

implementation, 70 percentage points 

for network SCHs and 100 percentage 

points for non-network SCHs. 

(H) In the eighth year of 

implementation, 80 percentage points 

for network SCHs and 100 percentage 

points for non-network SCHs. 

(I) In the ninth year of 

implementation, 90 percentage points 

for network SCHs and 100 percentage 

points for non-network SCHs. 

(J) In the tenth year of 

implementation, 100 percentage points 

for network SCHs and 100 percentage 

points for non-network SCHs. 

(iii) The second step referred to in 

paragraph (a)(7)(i) of this section is a 

year-end adjustment. The year-end 

adjustment will compare the aggregate 

allowable costs over a 12-month period 

under paragraph (a)(7)(ii) of this section 

to the aggregate amount that would have 

been allowed for the same care using the 

TRICARE DRG-method (under 

paragraph (a)(1) of this section). In the 

event that the DRG method amount is 

the greater, the year-end adjustment will 

be the amount by which it exceeds the 

aggregate allowable costs. In addition, 

the year-end adjustment also may 

incorporate a possible upward 

adjustment for inpatient services based 

on a GTMCPA for TRICARE network 

hospitals under paragraph (a)(8) of this 

section. 

(iv) At the end of an SCH’s transition 

period, when the SCH reaches its 

Medicare CCR, a special allowable cost 

shall be applicable for discharges that 

group to inpatient nursery and labor/ 

delivery DRGs. For these discharges, 

instead of using the percentage of the 

SCH’s Medicare cost-to-charge ratio (as 

described in paragraph (a)(7)(ii) of this 

section), the percentage will be 130 

percent of the Medicare CCR. 

(v) The SCH reimbursement 

provisions of paragraphs (a)(7)(i) 

through (iv) of this section do not apply 

to any costs of physician services or 

other professional services provided to 

SCH inpatients (which are subject to 

individual provider payment provisions 

of this section), inpatient services 

provided in psychiatric distinct part 

units (which are subject to the 

CHAMPUS mental health per-diem 

payment system), or inpatient services 

provided in rehabilitation distinct part 

units (which are reimbursed on the 

basis of billed charges or set rates). 

(vi) The SCH payment system under 

this paragraph (a)(7) applies to hospitals 

classified by CMS as Essential Access 

Community Hospitals (EACHs). 

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Federal Register / Vol. 78, No. 153 / Thursday, August 8, 2013 / Rules and Regulations 48311 

(vii) The SCH payment system under 

this paragraph (a)(7) does not apply to 

hospitals in States that are paid by 

Medicare and TRICARE under a cost 

containment waiver. 

(8) General temporary military 

contingency payment adjustment for 

SCHs and CAHs. (i) Payments under 

paragraph (a) of this section for 

inpatient services provided by SCHs 

and CAHs may be supplemented by a 

GTMCPA. This is a year-end 

discretionary, temporary adjustment 

that the TMA Director may approve 

based on all the following criteria: 

(A) The hospital serves a 

disproportionate share of ADSMs and 

ADDs; 

(B) The hospital is a TRICARE 

network hospital; 

(C) The hospital’s actual costs for 

inpatient services exceed TRICARE 

payments or other extraordinary 

economic circumstance exists; and, 

(D) Without the GTMCPA, DoD’s 

ability to meet military contingency 

mission requirements will be 

significantly compromised. 

(ii) Policy and procedural instructions 

implementing the GTMCPA will be 

issued as deemed appropriate by the 

Director, TMA, or a designee. As with 

other discretionary authority under this 

Part, a decision to allow or deny a 

GTMCPA to a hospital is not subject to 

the appeal and hearing procedures of 

§ 199.10. 

* * * * * 

Dated: July 29, 2013. 

Patricia L. Toppings, 

OSD Federal Register Liaison Officer, 

Department of Defense. 

[FR Doc. 2013–19154 Filed 8–7–13; 8:45 am] 

BILLING CODE 5001–06–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 100 

[Docket No. USCG–2013–0327] 

RIN 1625–AA08 

Special Local Regulations; Regattas 

and Marine Parades in the Captain of 

the Port Lake Michigan Zone 

AGENCY: Coast Guard, DHS. 

ACTION: Final rule. 

SUMMARY: The Coast Guard is amending 

special local regulations for annual 

regattas and marine parades in the 

Captain of the Port Lake Michigan Zone. 

This rule is intended to provide for the 

safety of life and property on navigable 

waters immediately prior to, during, and 

immediately after regattas or marine 

parades. This rule will establish 

restrictions upon, and control the 

movement of, vessels in a portion of the 

Captain of the Port Lake Michigan Zone. 

DATES: This final rule is effective 

September 9, 2013. 

ADDRESSES: Documents mentioned in 

this preamble are part of docket USCG– 

2013–0327. To view documents 

mentioned in this preamble as being 

available in the docket, go to http:// 

www.regulations.gov, type the docket 

number in the ‘‘SEARCH’’ box and click 

‘‘SEARCH.’’ Click on Open Docket 

Folder on the line associated with this 

rulemaking. You may also visit the 

Docket Management Facility in Room 

W12–140 on the ground floor of the 

Department of Transportation West 

Building, 1200 New Jersey Avenue SE., 

Washington, DC 20590, between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this rule, contact 

MST1 Joseph McCollum, Prevention 

Department, Coast Guard Sector Lake 

Michigan, Milwaukee, WI at (414) 747– 

7148 or by email at 

Joseph.P.McCollum@USCG.mil. If you 

have questions on viewing or submitting 

material to the docket, call Barbara 

Hairston, Program Manager, Docket 

Operations, telephone 202–366–9826. 

SUPPLEMENTARY INFORMATION: 

Table of Acronyms 

DHS Department of Homeland Security 

FR Federal Register 

NPRM Notice of Proposed Rulemaking 

TFR Temporary Final Rule 

A. Regulatory History and Information 

On April 6, 2007, the Coast Guard 

published an NPRM for the events that 

are listed within this regulation and 

made them available for public 

comment (72 FR 17062). No comments 

were received. The Coast Guard 

followed this NPRM with an Final Rule 

on September 27, 2007 (72 FR 54832). 

On June 14, 2013, in an effort to 

provide the public with the most 

accurate and up-to-date information 

regarding these same events, the Coast 

Guard published an NPRM entitled 

Regattas and Marine Parades in the 

COTP Lake Michigan Zone in the 

Federal Register (78 FR 35783). We did 

not receive any comments in response 

to the proposed rule. No public meeting 

was requested and none was held. 

B. Basis and Purpose 

This rule is intended to ensure safety 

of life and property on the navigable 

waters immediately prior to, during, and 

immediately after regattas or marine 

parades. This rule will establish 

restrictions upon, and control the 

movement of, vessels in a specified area 

of the Captain of the Port Lake Michigan 

zone. 

For each of these events, the Captain 

of the Port, Lake Michigan, has 

determined that the likely combination 

of a race involving a large number of 

competitors, spectators, and transiting 

water craft in a congested area of water 

presents significant safety risks. These 

risks include collisions among 

competitor and spectator vessels, injury 

to swimmers from transiting water craft, 

capsizing, and drowning. 

The authority for this regulation is 33 

U.S.C. 1233. 

C. Discussion of Comments, Changes, 

and the Final Rule 

The Coast Guard received no 

comments on this rule. No changes have 

been made. 

This rule will remove 1 event and 

amend 5 annual marine events listed in 

33 CFR Part 100. This rule will amend 

33 CFR Part 100 by making updates 

within the following sections: 

33 CFR 100.903, Harborfest Dragon 

Boat Race; South Haven, MI. The 

Harborfest Dragon Boat Race is an 

annual event involving an estimated 250 

participants maneuvering self-propelled 

vessels within a portion of the Black 

River in South Haven, MI. The organizer 

for this event submitted a 2013 

application showing a date that is 

different from what is currently codified 

within the CFR. For that reason the 

Coast Guard will amend 33 CFR 100.903 

to reflect an updated effective date for 

this event of Saturday and Sunday of 

the 4th weekend of June, from 6 a.m. 

until 7 p.m. 

33 CFR 100.904; Celebrate 

Americafest; Green Bay, WI. This event 

will be removed by this rule because it 

has been codified within 33 CFR 

165.929 Safety Zones; Annual events 

requiring safety zones in the Captain of 

the Port Lake Michigan zone. The Coast 

Guard determined from past experience 

that a safety zone best addresses the 

safety hazards associated with this 

event. 

33 CFR 100.905; Door County 

Triathlon; Door County, WI. The swim 

portion of the Door County Triathlon is 

expected to involve thousands of 

participants in the waters of Horseshoe 

Bay—a portion of Green Bay. As this 

event is currently listed, the effective 

date expired on July 23 and 24, 2011. 

The Coast Guard has spoken with the 

event organizer and confirmed that this 

Triathlon is expected to reoccur 

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