§ 17.275 CHAMPVA determined allowable amount calculation. CHAMPVA calculates the allowable amount in the following ways, for the following covered services and supplies: ( a ) *Inpatient hospital services (non-mental health).* Unless exempt or subject to a methodology under paragraph (b) or (c) of this section, inpatient hospital services provided in the 50 states, the District of Columbia, and Puerto Rico are subject to the CHAMPVA Diagnosis Related Group (DRG)-based reimbursement methodology. Under the CHAMPVA DRG-based payment system, hospitals are paid a predetermined amount per discharge for inpatient hospital services, which will not exceed the billed amount. Certain inpatient services will be reimbursed under the CHAMPVA Cost-to-Charge (CTC) reimbursement methodology.
( b ) *Inpatient hospital services (mental health).* The CHAMPVA inpatient mental health per diem reimbursement methodology is used to calculate reimbursement for inpatient mental health hospital care in specialty psychiatric hospitals and psychiatric units of general acute hospitals that are exempt from the CHAMPVA DRG-based payment system. The per diem rate is calculated by multiplying the daily rate by the number of days (length of stay). The daily rate is updated each fiscal year for both high volume hospitals (25 or more discharges per fiscal year) and low volume hospitals (fewer than 25 discharges per fiscal year).
( c ) *Other inpatient hospital services.* ( 1 ) The CHAMPVA CTC reimbursement methodology is used to calculate reimbursement for inpatient care furnished by hospitals or facilities that are exempt from either of the methodologies in paragraph (a) or (b) of this section. Such hospitals or facilities will be paid at the CHAMPVA CTC ratio times the billed charges that are customary and not in excess of rates or fees the hospital or facility charges the general public for similar services in a community.
( 2 ) The following hospitals and services are subject to the CHAMPVA CTC payment methodology: ( i ) Any hospital that qualifies as a cancer hospital under Medicare standards and has elected to be exempt from the Centers for Medicare & Medicaid Services (CMS) prospective payment system.
( ii ) Christian Science sanatoriums.
( iii ) Critical Access Hospitals.
( iv ) Any hospital outside the 50 states, the District of Columbia, or Puerto Rico.
( v ) Hospitals within hospitals.
( vi ) Long-term care hospitals.
( vii ) Non-Medicare participating hospitals.
( viii ) Non-VA Federal Health Care Facilities (*e.g.,* military treatment facilities, Indian Health Service).
( ix ) Rehabilitation hospitals.
( x ) Hospital or hospital-based services subject to state waiver in any state that has implemented a separate DRG-based payment system or similar payment system in order to control costs.
( xi ) Hospitals and services as determined by the Secretary of Veterans Affairs.
( d ) *Outpatient hospital services.* The CHAMPVA outpatient prospective payment system (OPPS) is used to calculate the allowable amount for outpatient services provided in hospitals subject to Medicare OPPS. This will include the utilization of TRICARE's reimbursement methodology to include specific coding requirements, ambulatory payment classifications (APCs), nationally established APC amounts, and associated adjustments.
( e ) *Outpatient and inpatient non-hospital services.* Payments to individual authorized non-VA providers (not hospitals) for CHAMPVA-covered medical services and supplies provided on an outpatient or inpatient basis, including but not limited to, anesthesia services, laboratory services, and other professional fees associated with individual authorized non-VA providers, are reimbursed based on the lesser of: ( 1 ) The CHAMPVA Maximum Allowable Charge;
( 2 ) The prevailing amount, which is the amount equal to the maximum reasonable amount allowed providers for a specific procedure in a specific locality; or,
( 3 ) The billed amount.
( f ) *Pharmacy services and supplies.* The CHAMPVA pharmacy services and supplies payment methodology is based on specific CHAMPVA pharmacy points of service, which dictate the amounts paid by VA. VA pays: ( 1 ) For services and supplies obtained from a retail in-network pharmacy, the lesser of the billed amount or the contracted rate; or
( 2 ) For supplies obtained from a retail out-of-network pharmacy, the lesser of the billed amount plus a dispensing fee or the average wholesale price plus a dispensing fee.
( g ) *Skilled Nursing Facility (SNF) care.* The CHAMPVA SNF reimbursement methodology is based on the CMS prospective payment system for SNFs under 42 CFR part 413, subpart J.
( h ) *Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).* The CHAMPVA DMEPOS reimbursement methodology is based on the same amounts established under the CMS DMEPOS fee schedule under 42 CFR part 414, subpart D. The CHAMPVA determined allowable amount for DMEPOS is the amount in effect in the specific geographic location at the time CHAMPVA-covered medical services and supplies are provided to a CHAMPVA beneficiary.
( i ) *Ambulance services.* CHAMPVA adopts Medicare's Ambulance Fee Schedule (AFS) for ambulance services, with the exception of services furnished by a Critical Access Hospital (CAH). Ambulance services are paid based on the lesser of the Medicare AFS or the billed amount. Ambulance services provided by a CAH are paid on the same bases as the CTC method under paragraph (c) of this section.
( j ) *Hospice care.* CHAMPVA hospice reimbursement methodology uses Medicare per diem hospice rates.
( k ) *Home health care (intermittent or part-time).* CHAMPVA home health care reimbursement methodology, based on Medicare's home health prospective payment system, uses a fixed case-mix and wage-adjusted episode payment amount to act as payment in full for costs associated with furnishing home health services with exceptions allowing for additional payment to be established.
( l ) *Ambulatory surgery.* The CHAMPVA reimbursement methodology for facility charges associated with procedures performed in a freestanding ambulatory surgery center is based on a prospectively determined amount, similar to that used by TRICARE. These facility charges do not include physician fees, anesthesiologist fees, or fees of other authorized non-VA providers; such independent professional fees must be submitted separately from facility fees and are calculated under the methodology in paragraph (e) of this section.
( m ) *CHAMPVA-covered medical services and supplies provided outside the United States.* VA shall determine the appropriate reimbursement method(s) for CHAMPVA-covered medical services and supplies provided by authorized non-VA providers outside the United States.
( n ) *Sole Community Hospitals.* The CHAMPVA reimbursement methodology for inpatient services provided in a Sole Community Hospital (SCH) will be the greater of: the allowable amount determined by multiplying the billed charges by the SCH's most recently available cost-to-charge ratio from the CMS Inpatient Provider Specific File or the DRG reimbursement rate.
[87 FR 41602, July 13, 2022]