61058 Federal Register / Vol. 62, No. 220 / Friday, November 14, 1997 / Proposed Rules

(xiv) Pawnee Tribe of Oklahoma.

(xv) Ponca Tribe of Oklahoma.

(xvi) Tonkawa Tribe of Oklahoma.

(xvii) Wichita and Affiliated Tribes of

Oklahoma.

(12) For the following tribes located in

the former Indian Territory (Oklahoma):

(i) Chickasaw Nation.

(ii) Choctaw Nation.

(iii) Thlopthlocco Tribal Town.

(iv) Seminole Nation.

(v) Eastern Shawnee Tribe.

(vi) Miami Tribe.

(vii) Modoc Tribe.

(viii) Ottawa Tribe.

(ix) Peoria Tribe.

(x) Quapaw Tribe.

(xi) Wyandotte Tribe.

(xii) Seneca-Cayuga Tribe.

(xiii) Osage Tribe.

Dated: October 29, 1997.

Ada E. Deer,

Assistant Secretary—Indian Affairs.

[FR Doc. 97–29938 Filed 11–13–97; 8:45 am]

BILLING CODE 4310–02–P

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN–0720–AA37

Civilian Health and Medical Program of

the Uniformed Services (CHAMPUS);

TRICARE Program; Reimbursement

AGENCY: Office of the Secretary, DoD.

ACTION: Proposed rule.

SUMMARY: This rule proposes to revise

certain requirements and procedures for

reimbursement under the TRICARE

program, the purpose of which is to

implement a comprehensive managed

health care delivery system composed of

military medical treatment facilities and

CHAMPUS. Issues addressed in this

proposed rule include: implementation

of changes made to the Medicare

Prospective Payment System (PPS) upon

which the CHAMPUS DRG-based

payment system is modeled and

required by law to follow wherever

practicable, along with changes to make

our DRG-based payment system operate

better; extension of the balance billing

limitations currently in place for

individual and professional providers to

non-institutional, non-professional

providers; adjusting the CHAMPUS

maximum allowable charge (CMAC) rate

in the small number of cases where the

CMAC rate is less than the Medicare

rate; and implementing the governmentwide debarment rule where any

provider excluded or suspended form

CHAMPUS shall be excluded from all

other programs and activities involving

Federal financial assistance, such as

Medicare or Medicaid, and adding

violations of our balance billing or

claims filing requirements to the list of

provider actions considered violations

of the TRICARE/CHAMPUS program.

DATES: Comments must be received on

or before January 13, 1998.

ADDRESSES: Tricare Support Office

(TSO), Program Development Branch,

Aurora, CO 80045–6900.

FOR FURTHER INFORMATION CONTACT:

Kathleen Larkin, Office of the Assistant

Secretary of Defense (Health Affairs),

telephone (703) 695–3350.

Questions regarding payment of

specific claims under the CHAMPUS

allowable charge method should be

addressed to the appropriate TRICARE/

CHAMPUS contractor.

SUPPLEMENTARY INFORMATION:

I. Proposed Changes Regarding The

Champus DRG-Based Payment System

The final rule published on

September 1, 1987, (52 FR 32992) set

forth the basic procedures used under

the CHAMPUS DRG-based payment

system. This was subsequently amended

by final rules published on August 31,

1988 (53 FR 33461), October 21, 1988

(53 FR 41331), December 16, 1988 (53

FR 50515), May 30, 1990 (55 FR 21863),

and October 22, 1990 (55 FR 42560).

This rule proposes to amend 32 CFR 199

to conform to changes made to the

Medicare Prospective Payment System

(PPS) upon which the CHAMPUS DRGbased payment system is modeled and

required by law to follow whenever

practicable. In addition, the rule

proposes to: eliminate the requirement

for the physician attestation form and

change the requirement for physician

acknowledgment statements; clarify

authorized payment reductions by

managed care support contractors for

noncompliance with required

utilization review procedures and; limit

the ambulatory surgery group payment

rate to the amount that would be

allowed if the services were provided on

an inpatient basis.

A. Heart and Liver Transplants

When we first implemented the

CHAMPUS DRG-based payment system

in 1987, we exempted all services

related to heart and liver

transplantation. Although both of these

types of transplants are subject to the

Medicare PPS, we initially exempted

them because at that time we had

limited experience and claims data for

them. We believed these limitations

could significantly skew the relative

weights we would calculate for such

transplants.

Since 1987 we have continued to

collect data on these services. From the

beginning, heart transplants were

grouped to DRG 103 and exempted. For

Fiscal Year 1991 the Health Care

Financing Administration (HCFA)

created DRG 480 for liver transplants,

but we continued to exempt them.

In our notice of updated rates and

weights for Fiscal Year 1991, which was

published on November 5, 1990 (55 FR

46545), we noted that we intended to

consider including both heart and liver

transplants in our DRG system in the

future, and we invited any comments in

that regard. We received none.

Since we have enough claims data to

calculate accurate weights for these

transplants, we are proposing to end the

DRG exemption for all CHAMPUS

covered solid organ transplants for

which there is an assigned DRG and

enough data to calculate the DRG

weight. Just as Medicare does, we will

continue to exempt acquisition costs for

all CHAMPUS covered solid organ

transplants.

B. Payment Requests for Capital and

Direct Medical Education Costs

Initially we required that hospitals

submit their request for payment of

capital and direct medical education

costs within three months of the end of

the hospital’s Medicare cost-reporting

period. However, some hospitals

encountered difficulties in meeting this

deadline, because HCFA implemented

changes which resulted in extensions to

the filing deadline. Therefore, we often

did not enforce our deadline, and as of

October 1988 we eliminated the

requirement entirely.

We eliminated the requirement

because we believed hospitals would

submit their requests at the earliest

possible time anyway. Also, we believed

there would be no adverse impact on

TRICARE/CHAMPUS. Neither of these

has proven to be correct. We continually

receive these requests well after the end

of the Medicare cost-reporting period—

in some cases several years later. As a

result, it is necessary for our contractors

to retain claims data in their systems

indefinitely, so that they can verify the

reported amounts when the requests are

submitted. This is proving to be a very

burdensome and costly requirement for

our contractors.

On June 27, 1995, HCFA published a

final rule (60 FR 33137) extending the

time frame providers have to file cost

reports from no later than 3 months after

the close of the period covered by the

report to no later than 5 months after the

close of that period. The rule also
Federal Register / Vol. 62, No. 220 / Friday, November 14, 1997 / Proposed Rules 61059

changed the regulations for granting

extensions to providers. Under the new

regulation, an extension may be granted

by the intermediary only when a

provider’s operations were significantly

adversely affected due to extraordinary

circumstances over which the provider

had no control, such as flood or fire. We

are proposing to adopt these same

requirements for submitting requests for

payment of capital and direct medical

education costs with TRICARE/

CHAMPUS.

Currently, TRICARE/CHAMPUS has

no deadline, other than the six year

statute of limitations, for submitting

payment requests for Medicare costreporting periods. In order to allow up

to close out our data for these periods,

we are proposing that any capital and

direct medical education payment

requests that fall within the six year

statute of limitations and the effective

date of this change must be submitted

to the appropriate TRICARE/CHAMPUS

contractor no later than 5 months after

the effective date of this change.

In addition, since capital and direct

medical education costs are included in

the national children’s hospital

differential, we are proposing to

eliminate the clause allowing children’s

hospitals to request reimbursement of

capital and direct medical education

costs as an alternative to being paid the

national differential.

C. Indirect Medical Education

Adjustment Factor

An indirect medical education (IDME)

adjustment factor is calculated for all

hospitals which have teaching programs

approved under the Medicare

regulation. This factor is calculated

using a formula developed by HCFA

(see our previous final rules for a

discussion of the application of this

formula to CHAMPUS), and is based on

the number of interns and residents and

the number of beds in the hospital. Each

DRG-based payment is increased by this

factor for that hopsital.

Initially, the number of residents and

interns for each hospital was derived

from the most recently available audited

HCFA cost report, and the number of

beds was derived from the American

Hospital Association Annual Survey of

Hospitals. The factors have been

updated annually based on data

submitted by hospitals on the annual

request for payment of capital and direct

medical education costs.

While this updating procedure

ensures that hospitals’ factors are as

current as possible, it is dependent

upon the hospitals’ submission of

requests for payment of capital and

direct medical education costs. Since

the crucial components (number of

interns, residents and beds) can change

from year to year, and since many

hospitals do not submit requests for

payment of capital and direct medical

education costs, we believe it is

necessary to establish an alternative

updating method.

We are proposing to use the Medicare

adjustment factor for any hospital for

which a CHAMPUS-specific factor has

not been calculated based on the

hospital’s request for payment of capital

and direct education costs. We will

update the factors using the Medicare

amounts as of October 1 of each year

when we routinely update the DRG rates

and weights. Any hospital which has

not submitted a capital and direct

medical education payment request to

CHAMPUS since the previous October

1, will be assigned the most recent

Medicare adjustment factor.

HCFA uses a slightly different

formula than that used by CHAMPUS,

and we are aware that this will result in

a different adjustment factor than would

otherwise be used. Nevertheless, we

believe this is justified. When the

Medicare factor is used, the difference is

likely to be small. In addition,

CHAMPUS accounts for a very small

portion of most hospital’s claims, and

those hospitals which do not request

payment of capital and direct medical

education costs probably have few, if

any, CHAMPUS admissions. Therefore,

the financial impact of using the

Medicare factor will be negligible. Yet it

will ensure that the factors are kept

current, so that factors which are no

longer representative of a hospital’s

teaching program are not used

indefinitely. And, of course, hospitals

can ensure that a CHAMPUS-specific

factor is used simply by submitting a

request for payment of capital and direct

medical education costs.

For hospitals which have indirect

medical education factors for

CHAMPUS but are not subject to the

Medicare PPS, we will eliminate the

factor if a CHAMPUS-specific factor

cannot be calculated based on a current

request from the hospital for payment of

capital and direct medical education

costs. The factor will be eliminated as

of October 1 if no capital and direct

medical education payment request has

been received since the previous

October 1.

In any case where a hospital submits

a capital and direct medical education

payment request after the Medicare

factor has been implemented (or the

factor has been eliminated for hospitals

not subject to the Medicare PPS,

including children’s hospitals), the

CHAMPUS-specific factor will become

effective in accordance with existing

requirements. In no case will the

CHAMPUS-specific factor be effective

retroactively.

For children’s hospitals which have

indirect medical education factors for

CHAMPUS, the factor will be

eliminated as of October 1 of each year

if during the past year, the hospital did

not provide the contractor with updated

information on the number of its

interns, residents and beds. Since

amounts for capital and direct medical

education are included in the national

children’s hospital differential,

children’s hospitals are not required to

submit capital and direct medical

education payment requests. Because of

this, the contractor is not able to update

the CHAMPUS-specific factor unless

requested by the children’s hospital.

For Fiscal Year 1998, HCFA revised

its indirect medical education

adjustment formula to gradually reduce

the current level of IDME adjustment

over the next several years. Since the

IDME formula used by CHAMPUS does

not include disproportionate share

hospitals (DSHs), the variables in the

formula are different from Medicare’s

however, the percentage reductions that

will be applied to Medicare’s formula

are being adopted by CHAMPUS.

D. Long Stay Outliers

For Fiscal Year 1998, HCFA

eliminated payment for day outliers,

referred to as long stay outliers under

CHAMPUS. CHAMPUS also eliminated

long stay outliers for all cases except

children’s hospitals and neonates for

Fiscal Year 1998. We are proposing to

eliminate the long stay outliers for

children’s hospitals and neonates for

Fiscal Year 1999.

For Fiscal Year 1993, HCFA changed

the payment procedures for day outlier

per diems under the PPS. Prior to this

change, the day outlier per diem was

calculated using the DRGs geometric

mean length of stay and a marginal

payment factor of 60 percent. For

discharges occurring on or after October

1, 1992, HCFA revised the day outlier

payment policy to reflect that the per

diem payment would be calculated

using the arithmetic mean and a

marginal payment factor of 55 percent.

This meant that the per diem day outlier

payment under the PPS for operating

costs would be determined by dividing

the standard DRG payment by the

arithmetic mean length of stay for that

DRG, and multiplying the result by 55

percent. The change in the payment

policy for day outliers provided better

protection against costly cases for

hospitals, while maintaining a more

appropriate level of payment for cases
61060 Federal Register / Vol. 62, No. 220 / Friday, November 14, 1997 / Proposed Rules

with extraordinarily long lengths of stay

that were not also extraordinarily costly.

CHAMPUS did not adopt the PPS per

diem day outlier changes at that time

because it required a regulatory change

and there was a moratorium on

publication of rules. Over the years,

HCFA has reduced the marginal

payment factor for day outliers from 55

percent to 47 percent to 44 percent, to

33 percent, to the point of eliminating

payment of day outliers, effective with

discharges occurring after September 30,

1997. CHAMPUS adopted the day

outlier marginal payment factor of 47

percent for Fiscal Year 1995, 44 percent

for Fiscal Year 1996, and 33 percent for

Fiscal Year 1997, but has not adopted

the arithmetic mean to calculate the per

diem payment. As a result, CHAMPUS

has been paying more than Medicare on

claims qualifying for long-stay day

outliers. Although we eliminated the

long stay outliers for all cases except

children’s hospitals and neonates for

Fiscal Year 1998, and are proposing to

eliminate the long stay outliers for them

in Fiscal Year 1999, we are still

proposing to adopt the arithmetic mean

to calculate the per diem, in order to be

consistent with the Medicare PPS in

calculating payments for transfer cases.

E. Cost Outliers

Beginning in Fiscal Year 1998, HCFA

adopted a requirement that in

determining the additional payment for

IME (referred to as IDME under

CHAMPUS), the IME adjustment factor

will only be applied to the base DRG

payment. In addition, the fixed loss cost

outlier threshold is based on the sum of

the DRG payment plus IME plus a fixed

dollar amount. CHAMPUS adopted this

requirement in Fiscal Year 1998 for all

cases except children’s hospitals and

neonates. We are proposing to adopt

this same requirement for children’s

hospitals and neonates Fiscal Year in

1999.

F. Payment for Transfer Cases

Beginning in Fiscal Year 1996, HCFA

adopted a graduated per diem payment

methodology for transfer cases. As of

October 1, 1996, CHAMPUS adopted

this payment methodology; however, we

elected not to offset these additional

payments with reductions in outlier

payments. Using this payment

methodology, CHAMPUS will pay

transferring hospitals twice the per diem

amount for the first day of any transfer

stay plus the per diem amount for each

of the remaining days before transfer, up

to the full DRG amount. For neonatal

cases, other than normal newborns, the

transferring hospital will be paid twice

the per diem amount for the first day of

any transfer stay plus 125 percent of the

per diem rate for all remaining days

before transfer, up to the full DRG

amount. This proposed change will

allow hospitals to be compensated more

appropriately for the treatment they

furnish to patients before transfer.

Transferring hospitals will continue to

be paid in full for discharges classified

into DRG 456 (burns, transferred to

another acute care facility or DRG 601

(neonate, transferred less or equal to 4

days old).

G. Elimination of Separate Adjusted

Standardized Amounts for Rural Areas

Beginning in Fiscal Year 1995,

HCFA’s average standardized amounts

for hospitals located in ‘‘rural’’ areas

were required to be equal to the average

standardized amount for hospitals

located in ‘‘other urban’’ areas. Based on

this, separate national average

standardized amounts for ‘‘other urban’’

and ‘‘rural’’ areas no longer existed. As

of Fiscal Year 1995, CHAMPUS no

longer differentiated between ‘‘other

urban’’ and ‘‘rural’’ areas. The adjusted

standardized amounts for ‘‘other urban’’

and ‘‘rural’’ areas are now listed as

‘‘other’’ areas.

H. Payment for Blood Clotting Factor

For Fiscal Year 1994, HCFA reinstated

payments for the cost of administering

blood clotting factor to beneficiaries

who have hemophilia through

discharges occurring before October 1,

1994. CHAMPUS also reinstated

payments for the cost of administering

blood clotting factor through discharges

occurring before October 1, 1994. For

Fiscal Year 1998, HCFA again reinstated

payments for the cost of administering

blood clotting factor. CHAMPUS also

reinstated payments for discharges

occurring on or after October 1, 1997.

I. Effect of Change of Ownership on

Exclusion of Long-Term Care Hospitals

Beginning in Fiscal Year 1996, HCFA

adopted new requirements for certain

long-term care hospitals excluded from

the PPS. The requirements specify that

if a hospital undergoes a change of

ownership at the start of a cost reporting

period or at any time within the

preceding 6 months, the hospital may be

excluded from the prospective payment

system as a long-term care hospital for

a cost reporting period if, for the 6

months immediately preceding the start

of the period (including time before the

change of ownership), the hospital has

the required average length of stay,

continuously operated as a hospital, and

continuously participated as a hospital

in Medicare. CHAMPUS also adopted

these new requirements beginning in

Fiscal Year 1996.

J. Empty and Low-Volume DRGs

Currently, 32 CFR 199.14 (a)(1)(iii)(B)

specifies that the Medicare weight shall

be used for any DRG with less than 10

occurrences in the CHAMPUS database.

Since the CHAMPUS weights are used

by military treatment facilities and by

an increasingly large number of state

Medicaid programs, the direct

substitution of the Medicare weight for

the CHAMPUS weight, causes

inconsistencies. These inconsistencies

may pose more of a problem for other

payors than it does for CHAMPUS,

particularly if they have more cases in

the DRG categories where the

substitutions have occurred. Because of

these inconsistencies, we are proposing

that the Director, TSO, or designee, has

the authority to consider alternative

methods for estimating CHAMPUS

weights in these low-volume DGR

categories.

K. Hospitals Within Hospitals

For Fiscal Year 1998, HCFA

established additional criteria for

excluding from the PPS, long-term care

hospitals that occupy space in the same

building or on the same campus as

another hospital, sometimes called

‘‘hospitals within hospitals.’’ The

additional criteria extends the hospital

within hospital criteria to excluded

hospitals other than long-term care

hospitals. CHAMPUS also adopted these

requirements beginning in Fiscal Year

1998.

II. Proposed Changes Regarding

Elimination of Physician Attestation

Requirement

On September 1, 1995, Medicare

eliminated the requirement for the

physician attestation form that requires

doctors to certify the accuracy of all

diagnoses and procedures before

submitting claims for payment. In

addition, instead of requiring a

physician to sign an acknowledgment

statement every year, Medicare changed

its regulations to require a physician

need only sign the acknowledgment

statement upon receiving admitting

privileges at a hospital. CHAMPUS

adopted these requirements effective the

same date.

III. Proposed Changes Regarding

Clarification of Payment Reduction for

Noncompliance with Required

Utilization Review Procedures

To cover those situations where

network providers have agreements

with the managed care contractors for

denial of payments for the provider’s
Federal Register / Vol. 62, No. 220 / Friday, November 14, 1997 / Proposed Rules 61061

failure to obtain the required

preauthorization, we are proposing to

add the words ‘‘at least’’ before the

words ‘‘ten percent’’. By adding the

words ‘‘at least’’, the managed care

support contractor is authorized to

apply reductions in payments in

accordance with the network provider’s

contract.

IV. Clarification Regarding List of

Ambulatory Surgery Procedures

On October 1, 1993, we published a

final rule (58 FR 51227) which included

prospective payment procedures for

ambulatory surgery. These procedures

were modeled on the Medicare

methodology. In that rule, we stated that

‘‘A list of ambulatory surgery

procedures will appear as Attachment 2

(to be published later) to this preamble.’’

We subsequently published the list of

procedures on October 15, 1993, (58 FR

53411).

The list of procedures published on

October 15, 1993, was not made part of

the Code of Federal Regulations (CFR) at

that time, and it was not, and continues

not to be, our intention that it be part

of the CFR. However, the final rule did

not make this clear. The list of

procedures to be ‘‘published

periodically by the Director,

OCHAMPUS,’’ as cited in section 199.14

paragraph (d)(1), is contained in the

TRICARE/CHAMPUS Policy Manual.

V. Proposed Changes Regarding Limits

On Ambulatory Surgery Group

Payment Rates

Effective November 1, 1994,

CHAMPUS identified a number of

procedures which can be performed

safely and effectively as ambulatory

surgery and established prospective

payment procedures for reimbursing

these services. Ambulatory surgery often

is less disruptive to the patient’s life

than an inpatient stay. It also provides

a less expensive alternative to an

inpatient stay, since the patient does not

require a hospital room and all the costs

associated with it. As a result, TSO

wants to encourage the use of

ambulatory surgery whenever it is

reasonable, but we do not believe it ever

should be more expensive than an

inpatient stay. Therefore, we are adding

a provision that gives discretion to the

Director, TSO, to limit the ambulatory

surgery group payment rate to the

amount that would be allowed if the

services were provided on an inpatient

basis. To calculate the allowable

inpatient amount we will multiply the

applicable DRG relative weight times

the national large urban adjusted

standardized amount (ASA). We will

use the large urban ASA rather than the

‘‘other area’’ ASA because it is higher

and will not economically disadvantage

any provider, and we expect that most

ambulatory surgery centers are located

in large urban areas.

VI. Proposed Changes Regarding

Balance Billing

Section 731 of the National Defense

Authorization Act for Fiscal Year 1996,

revised 10 U.S.C. 1079(h) which

provides the statutory basis for limits on

balance billing of CHAMPUS

beneficiaries established in section

199.14(h)(1)(i)(D). Section 731 extends

the balance billing limit authority to

non-institutional, non-professional

providers, such as clinical laboratories

and ambulance companies.

This paragraph explains that noninstitutional, non-professional providers

will be limited in the amount they may

bill a TRICARE/CHAMPUS-eligible

beneficiary an actual charge in excess of

the allowable amount. This provides

financial protection for our beneficiaries

by preventing excessively high billing

by providers by establishing the balance

billing limit to these new categories of

providers as the same percentage as that

used for TRICARE/CHAMPUS

professional providers: 115 percent of

the allowable charge. In order to provide

flexibility to continue CHAMPUS

benefits in special circumstances in

which a beneficiary may feel strongly

about using a particular provider,

notwithstanding high fees, the proposed

rule states that the limitation may be

waived on a case-by-case basis.

VII. Proposed Changes Regarding

CMAC Rates

CHAMPUS policy, based on

Congressional enactment, is to set

CHAMPUS Maximum Allowable Charge

(CMAC) rates comparable to Medicare

rates. For almost all procedure codes,

the CMAC rate has been reduced to

equal the Medicare rate or is in the

process of being phased down to that

level. For a very small number of

procedures, for unusual reasons or

idiosyncrasies of the data used for

calculations, however, the CMAC rate is

less than the Medicare rate. We propose

to establish a special rule for these cases

to permit an increase in the CMAC up

to the Medicare rate. This is based on

the authority of 10 U.S.C. 1079(h)(4),

which allows for exceptions to the

normal statutory payment limitation if

DoD determines it necessary to assure

that beneficiaries have adequate access

to health care services. Because the

Medicare rates are products of a system

that reflects careful governmental

judgments of factors suggesting fair

payment rates, we propose to adopt

these rates as indicators of payment

levels associated with adequate access.

In addition, under the applicable

Appropriations Act general provision,

DoD may increase CMAC rates that are

lower than Medicare rates by reference

to appropriate economic index data

similar to that used by Medicare. We

have heretofore utilized only the

Medicare Economic Index in this

connection, but we propose to adopt an

additional Medicare indicator of

economic factors, namely the data used

for the Medicare fees determination, to

adjust the rates in these special cases.

This is set forth in the proposed new

section 199.14(h)(1)(iii)(D).

VIII. Proposed Changes Regarding

Government-Wide Effect Of Exclusion

Or Suspension From Champus

Section 2455 of the Federal

Acquisition Streamlining Act of 1994,

Pub. L. 103–355, October 13, 1994, and

Executive Order 12549, ‘‘Debarment and

Suspension from Federal Financial and

Nonfinancial Assistance Programs,’’

February 18, 1986, require that any

entity debarred, suspended, or

otherwise excluded under any program

or activity involving Federal financial

assistance shall also be debarred,

suspended, or otherwise excluded from

all other programs and activities

involving Federal financial assistance.

We are restating this requirement in the

context specific to CHAMPUS through a

proposed addition to section 199.9. The

proposed addition provides that any

health care provider excluded or

suspended from CHAMPUS shall, as a

general rule, also be debarred,

suspended, or otherwise excluded from

all other programs and activities

involving the Federal financial

assistance. Among these other such

programs are Medicare and Medicaid.

Other regulations related to this

authority are 32 CFR Part 25 (DoD rules)

and 45 CFR Part 76 (HHS rules).

In conjunction with implementation

of this government-wide debarment

rule, we are strengthening the linkage

between CHAMPUS and these other

programs on the important issues of

submittal of claims and balance billing

by providers. Current regulations

generally require providers to file claims

on behalf of beneficiaries and to limit

balance billing to 15% greater than the

CHAMPUS Maximum Allowable Charge

(CMAC). These regulations also provide

that violations are grounds for exclusion

or suspension from CHAMPUS. We are

proposing to reinforce these compliance

provisions by adding violations of these

requirements to the list of provider

actions that are considered abuse of the

program for purposes of termination,
61062 Federal Register / Vol. 62, No. 220 / Friday, November 14, 1997 / Proposed Rules

suspension and other administrative

remedies.

A principal effect of these proposed

revisions is that any provider who fails

to file CHAMPUS claims or exceeds the

balance billing limits risks not only

exclusion or suspension from

CHAMPUS, but also exclusion or

suspension from Medicare, Medicaid,

and other Federal programs.

IX. Regulatory Procedures

Executive Order 12866 requires

certain regulatory assessments for any

‘‘significant regulatory action,’’ defined

as one which would result in an annual

effect on the economy of $100 million

or more, or have other substantial

impacts.

The Regulatory Flexibility Act (RFA)

requires that each Federal agency

prepare, and make available for public

comment, a regulatory flexibility

analysis when the agency issues a

regulation which would have a

significant impact on a substantial

number of small entities.

This is not a significant regulatory

action under the provisions of Executive

Order 12866, and it would not have a

significant impact on a substantial

number of small entities.

Pursuant to the Paperwork Reduction

Act of 1995, the reporting provisions of

this proposed rule have been submitted

to OMB for review under 3507(d) of the

Act.

In compliance with Section

3506(c)(2)(A) of the Paperwork

Reduction Act of 1995, the Office of the

Assistant Secretary of Defense (Health

Affairs) announces the proposed public

information collection and seeks public

comment on the provisions thereof.

Comments are invited on: (1) whether

the proposed collection of information

is necessary for the proper performance

of the functions of the agency, including

whether the information shall have any

practical utility; (2) the accuracy of the

agency’s estimated burden of the

proposed information collection; (3)

ways to enhance the quality, utility, and

clarity of the information to be

collected; and (4) ways to minimize the

burden of the information collection on

respondents, including through the use

of automated collection techniques or

other forms of information technology.

The collection of information allows

TRICARE to collect the information

necessary to properly reimburse

institutional providers based on

diagnosis-related groups (DRGs) for

their share of these costs. The collection

of this information is authorized by 32

CFR 199.14(a)(1)(G)(1) and (2). The

CHAMPUS DRG-based payment system

is modeled on the Medicare Prospective

Payment System (PPS) and was

implemented on October 1, 1987.

Affected Public: Individuals; Business

or Other For Profit.

Annual Burden Hours: 5,532.

Number of Respondents: 5,400.

Responses Per Respondent: 1.

Average Burden Per Response: 5

minutes for physicians, 1 hour for

institutions.

Frequency: On occasion.

Respondents are institutional

providers and admitting physicians.

Institutional providers are requesting

reimbursement for allowed capital and

direct medical education costs from the

TRICARE/CHAMPUS contractor. The

information can be submitted in any

form, most likely in the form of a letter.

The contractor will calculate the

TRICARE/CHAMPUS share of capital

and direct medical education costs and

make a lump-sum payment to the

hospital.

Physicians sign a physician

acknowledgement, maintained by the

institution, at the time the physician is

granted admitting privileges. This

acknowledgement indicates the

physician understands the importance

of a correct medical record, and

misrepresentation may be subject to

penalties.

Comments on these requirements

should be submitted to the Office of

Information and Regulatory Affairs,

OMB, 725 17th Street, N.W.,

Washington, DC 20503, marked

‘‘Attention Desk Officer for Department

of Defense, Health Affairs.’’ Copies

should be sent to the Office of the

Assistant Secretary of Defense (Health

Affairs), 1200 Pentagon, Washington,

DC 20301–1200, Attention: Kathleen

Larkin. When the Department of

Defense promulgates the Final Rule, the

Department will respond to comments

by OMB or the public regarding the

information collection provisions of the

rule.

The is a proposed rule. Public

comments are invited. All comments

will be considered. A discussion of the

major issues raised by public comments

will be included with issuance of the

final rule, anticipated approximately 60

days after the end of the comment

period.

List of Subjects in 32 CFR Part 199

Administrative practice and

procedure, Claims, Fraud, Health care,

Health insurance, individuals with

disabilities, Military personnel.

Accordingly, 32 CFR Part 199 is

proposed to be 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. Section 199.9 is proposed to be

amended by adding new paragraph (m)

to read as follows:

§ 199.9 Administrative remedies for fraud,

abuse, and conflict of interest.

* * * * *

(m) Government-wide effect of

exclusion or suspension from

CHAMPUS. As provided by section

2455 of the Federal Acquisition

Streamlining Act of 1994, Pub. L. 103–

355, October 13, 1994, and Executive

Order 12549, ‘‘Debarment and

Suspension from Federal Financial and

Nonfinancial Assistance Programs,’’

February 18, 1986, any health care

provider excluded or suspended from

CHAMPUS under this section shall, as

a general rule, also be debarred,

suspended, or otherwise excluded from

all other programs and activities

involving Federal financial assistance.

Among the other programs for which

this debarment, suspension, or

exclusion shall operate are the Medicare

and Medicaid programs. This

debarment, suspension, or termination

requirement is subject to limited

exceptions in the regulations governing

the respective Federal programs

affected.

Note: Other regulations related to this

government-wide exclusion or suspension

authority are 32 CFR part 25 and 45 CFR part

76.

3. Section 199.14 is proposed to be

amended by revising the first sentence

of (a)(1) introductory text, and

paragraphs (a)(1)(i)(C)(6)(iv), (a)(1)(ii)(C)

(2), (3), (4) and (10) first sentence,

(a)(1)(ii)(D)(4), redesignating paragraphs

(a)(1)(ii)(D)(5) through (a)(1)(ii)(D)(8) as

(a)(1)(ii)(D)(6) through (a)(1)(ii)(D)(9),

revising (a)(1)(iii)(a)(3), (a)(1)(iii)(B),

(a)(1)(iii)(D) (1), (2) and (5),

(a)(1)(iii)(E)(1)(i) (A) and (B),

(a)(1)(iii)(E)(1)(ii) (A) and (B),

(a)(1)(iii)(G)(3) introductory text,

(d)(3)(iv), and (h) introductory text, and

by adding new paragraphs

(a)(1)(ii)(D)(5), (a)(1)(iii)(E)(3) (i), (ii),

(iii), (iv), and (v), and (h)(1)(iii)(D), to

read as follows:

§ 199.14 Provider reimbursement

methods.

* * * * *

(a) * * *

(1) CHAMPUS Diagnosis Related

Group (DRG)-based payment system.

Under the CHAMPUS DRG-based

payment system, payment for the
Federal Register / Vol. 62, No. 220 / Friday, November 14, 1997 / Proposed Rules 61063

operating costs of inpatient hospital

service furnished by hospitals subject to

the system is made on the basis of

prospectively-determined rates and

applies on a per discharge basis using

DRGs. * * *

(i) * * *

(C) * * *

(6) * * *

(iv) Payment to a hospital transferring

an inpatient to another hospital. If a

hospital subject to the CHAMPUS DRGbased payment system transfers an

inpatient to another such hospital, the

transferring hospital shall be paid a per

diem rate (except that in neonatal cases,

other than normal newborns, the

hospital will be paid at 125 percent of

that per diem rate), as determined under

instructions issued by TSO, for each day

of the patient’s stay in that hospital, not

to exceed the DRG-based payment that

would have been paid if the patient had

been discharged to another setting. For

admissions occurring on or after

October 1, 1995, the transferring

hospital shall be paid twice the per

diem rate for the first day of any transfer

stay, and the per diem amount for each

subsequent day up to the limit

described in this paragraph.

* * * * *

(ii) * * *

(C) * * *

(2) All services related to solid organ

acquisition for CHAMPUS covered

transplants by CHAMPUS-authorized

transplantation centers.

(3) All services related to heart and

liver transplantation for admissions

prior to October 1, 1998, which would

otherwise be paid under DRG 103 and

480, respectively.

(4) All services related to CHAMPUS

covered solid organ transplantations for

which there is no DRG assignment.

* * * * *

(10) For admissions occurring on or

after October 1, 1990, and before

October 1, 1994, and for discharges

occurring on or after October 1, 1997,

the costs of blood clotting factor for

hemophilia patients. * * *

(D) * * *

(4) Long-term hospitals. A long-term

hospital which is exempt from the

Medicare prospective payment system is

also exempt from the CHAMPUS DRGbased payment system. In order for a

long-term hospital which does not

participate in Medicare to be exempt

from the CHAMPUS DRG-based

payment system, it must meet the same

criteria (as determined by the Director,

TSO, or a designee) as required for

exemption from the Medicare

Prospective Payment System as

contained in § 412.23 of title 42 CFR.

(5) Hospitals within hospitals. A

hospital within a hospital which is

exempt from the Medicare prospective

payment system is also exempt from the

CHAMPUS DRG-based payment system.

In order for a hospital within a hospital

which does not participate in Medicare

to be exempt from the CHAMPUS DRGbased payment system, it must meet the

same criteria (as determined by the

Director, TSO, or a designee) as required

for exemption from the Medicare

Prospective Payment System as

contained in § 412.22 and the criteria for

one or more of the excluded hospital

classifications described in § 412.23 of

Title 42 CFR.

* * * * *

(iii) * * *

(A) * * *

(3) Indirect medical education

standardization. The charges shall be

standardized for the cost effects of

indirect medical educational factors. If

the Medicare adjustment factor was

used in calculating a teaching hospital’s

indirect medical education adjustment

factor, the Medicare factor shall be used

when standardizing the charges.

* * * * *

(B) Empty and low-volume DRGs. For

any DRG with less than ten (10)

occurrences in the CHAMPUS database,

the Director, TSO, or designee, has the

authority to consider alternative

methods for estimating CHAMPUS

weights in these low-volume DRG

categories.

* * * * *

(D) * * *

(1) Differentiate large urban and other

area charges. All charges in the database

shall be sorted into large urban and

other area groups (using the same

definitions for these categories used in

the Medicare program).

(2) Indirect medical education

standardization. The charges shall be

standardized for the cost effects of

indirect medical education factors. If the

Medicare adjustment factor was used in

calculating a teaching hospital’s indirect

medical education adjustment factor,

the Medicare factor shall be used when

standardizing the charges.

* * * * *

(5) Preliminary base year

standardized amount. A preliminary

base year standardized amount shall be

calculated by summing all costs in the

database applicable to the large urban or

other area group and dividing by the

total number of discharges in the

respective group.

* * * * *

(E) * * *

(1) * * *

(i) * * *

(A) Short-stay outliers. Any discharge

with a length-of-stay (LOS) less than

1.94 standard deviations from the DRG’s

arithmetic LOS shall be classified as a

short-stay outlier. Short-stay outliers

shall be reimbursed at 200 percent of

the per diem rate for the DRG for each

covered day of the hospital stay, not to

exceed the DRG amount. The per diem

rate shall equal the DRG amount

divided by the arithmetic mean lengthof stay for the DRG.

(B) Long-stay outliers. Any discharge

(except for neonatal services and

services in children’s hospitals) which

has a length-of-stay (LOS) exceeding a

threshold established in accordance

with the criteria used for the Medicare

Prospective Payment System as

contained in 42 CFR 412.82 shall be

classified as a long-stay outlier. Any

discharge for neonatal services or for

services in a children’s hospital which

has a LOS exceeding the lesser of 1.94

standard deviations or 17 days from the

DRG’s arithmetic mean LOS also shall

be classified as a long-stay outlier. Longstay outliers shall be reimbursed the

DRG-based amount plus a percentage (as

established for the Medicare Prospective

Payment System) of the per diem rate

for the DRG for each covered day of care

beyond the long-stay outlier threshold.

The per diem rate shall equal the DRG

amount divided by the arithmetic mean

LOS for the DRG. For admissions on or

after October 1, 1997, the long stay

outlier has been eliminated for all cases

except children’s hospitals and

neonates. For admissions on or after

October 1, 1998, the long stay outlier

has been eliminated for children’s

hospitals and neonates.

(ii) * * *

(A) Cost outliers except those in

children’s hospitals or for neonatal

services. Any discharge which has

standardized costs that exceed a

threshold established in accordance

with the criteria used for the Medicare

Prospective Payment System as

contained in 42 CFR 412.84 shall

qualify as a cost outlier. The

standardized costs shall be calculated

by multiplying the total charges by the

factor described in

§ 199.14(a)(1)(iii)(D)(4) and adjusting

this amount for indirect medical

education costs. Cost outliers shall be

reimbursed the DRG-based amount plus

a percentage (as established for the

Medicare Prospective Payment System)

of all costs exceeding the threshold.

Effective with admissions occurring on

or after October 1, 1997, the

standardized costs are no longer

adjusted for indirect medical education

costs.
61064 Federal Register / Vol. 62, No. 220 / Friday, November 14, 1997 / Proposed Rules

(B) Cost outliers in children’s

hospitals and for neonatal services. Any

discharge for services in a children’s

hospital or for neonatal services which

has standardized costs that exceed a

threshold of the greater of two times the

DRG-based amount or $13,800 shall

qualify as a cost outlier. The

standardized costs shall be calculated

by multiplying the total charges by the

factor described in

§ 199.14(a)(1)(iii)(D)(4) (adjusted to

include average capital and direct

medical education costs) and adjusting

this amount for indirect medical

education costs. Cost outliers for

services in children’s hospitals and for

neonatal services shall be reimbursed

the DRG-based amount plus a

percentage (as established for the

Medicare Prospective Payment System)

of all costs exceeding the threshold.

Effective with admissions occurring on

or after October 1, 1998, the cost outlier

thresholds for children’s hospitals and

neonatal services are the same as other

hospitals and the standardized costs are

no longer adjusted for indirect medical

education costs.

* * * * *

(3) * * *

(i) The indirect medical education

adjustment factor is calculated for all

hospitals which have teaching programs

approved under the Medicare

regulation. The factor is based on the

number of interns, residents and beds in

the hospital. Each DRG-based payment

is increased by this factor for that

hospital. The factors are updated yearly

based on data submitted by hospitals on

the annual request for payment of

capital and direct medical education

costs.

(ii) To ensure the indirect medical

education factors are as current as

possible, the Medicare adjustment factor

will be used for any hospital for which

a CHAMPUS-specific factor has not

been calculated based on the hospital’s

request for payment of capital and direct

medical education costs. The factors

will be updated using the Medicare

amounts as of October 1 of each year;

the same time the DRG rates and

weights are updated. Any hospital

which has not submitted a capital and

direct medical education payment

request to CHAMPUS since the previous

October 1, will be assigned the most

recent Medicare adjustment factor.

(iii) For hospitals which have indirect

medical education factors for

CHAMPUS but are not subject to the

Medicare prospective payment system,

the indirect medical education

adjustment factor will be eliminated if

a CHAMPUS-specific factor cannot be

calculated based on a current request

from the hospital for payment of capital

and direct medical education costs. The

factor will be eliminated as of October

1 if no capital and direct medical

education payment request has been

received since the previous October 1.

(iv) For children’s hospitals which

have indirect medical education factors

for CHAMPUS, the factor will be

eliminated as of October 1 of each year

if during the past year, the hospital did

not provide the contractor with updated

information on the number of interns,

residents and beds. Since amounts for

capital and direct medical education are

included in the national children’s

hospital differential, children’s

hospitals are not required to submit

capital and direct medical education

payment requests. Because of this, the

contractor is not able to update the

CHAMPUS-specific factor unless

requested by the children’s hospital.

(v) In any case where a hospital

submits a capital and direct medical

education payment request after the

Medicare factor has been implemented

(or the factor has been eliminated for

hospitals not subject to the Medicare

prospective payment system, including

children’s hospitals), the CHAMPUS

specific factor will become effective in

accordance with existing requirements.

In no case will the CHMPUS-specific

factor be effective retroactively.

* * * * *

(G) * * *

(3) Information necessary for payment

of capital and direct medical education

costs. All hospitals subject to the

CHAMPUS DRG-based payment system,

except for children’s hospitals, may be

reimbursed for allowed capital and

direct medical education costs by

submitting a request to the CHAMPUS

contractor. Such request shall be filed

with CHAMPUS on or before the last

day of the fifth month following the

close of the hospitals’ cost reporting

period, and shall cover the one-year

period corresponding to the hospital’s

Medicare cost-reporting period. The first

such request may cover a period of less

than a full year—from the effective date

of the CHAMPUS DRG-based payment

system to the end of the hospital’s

Medicare cost-reporting period. All

costs reported to the CHAMPUS

contractor must correspond to the costs

reported on the hospital’s Medicare cost

report. An extension of the due date for

filing the request may only be granted

if an extension has been granted by

HCFA due to a provider’s operations

being significantly adversely affected

due to extraordinary circumstances over

which the provider has no control, such

as flood or fire. (If these costs change as

a result of a subsequent audit by

Medicare, the revised costs are to be

reported to the hospital’s CHAMPUS

contractor within 30 days of the date the

hospital is notified of the change.) The

request must be signed by the hospital

official responsible for verifying the

amounts and shall contain the following

information.

* * * * *

(d) * * *

(3) * * *

(iv) Step 4: standard payment amount

per group. The standard payment

amount per group will be the volume

weighted median per procedure cost for

the procedures in that group. For cases

in which the standard payment amount

per group exceeds the CHAMPUSdetermined inpatient allowable amount,

the Director, TSO, or his designee, may

make adjustments.

* * * * *

(h) Reimbursement of individual

health care professionals and other noninstitutional, non-professional

providers. The CHAMPUS-determined

reasonable charge (the amount allowed

by CHAMPUS) for the service of an

individual health care professional or

other non-institutional, nonprofessional provider (even if employed

by or under contract to an institutional

provider) shall be determined by one of

the following methodologies, that is,

whichever is in effect in the specific

geographic location at the time covered

services and supplies are provided to a

CHAMPUS beneficiary.

(1) * * *

(iii) * * *

(D) Special rule for cases in which the

national CMAC is less than the

Medicare rate. In any case in which the

national CMAC calculated in

accordance with paragraphs (h)(1) (i)

through (iii) of this section is less than

the Medicare rate, the Director, TSO,

may determine that the use of the

Medicare Economic Index under

paragraph (h)(1)(iii)(B) of this section

will result in a CMAC rate below the

level necessary to assure that

beneficiaries will retain adequate access

to health care services. Upon making

such a determination, the Director, TSO,

may increase the national CMAC to a

level not greater than the Medicare rate.

* * * * *

4. Section 199.15 is proposed to be

amended by revising paragraphs

(b)(4)(iii)(B), (c)(2), (d)(2)(iii) and (e)(3)

(i) and (ii), to read as follows:

§ 199.15 Quality and utilization review peer

review organization program.

* * * * *
Federal Register / Vol. 62, No. 220 / Friday, November 14, 1997 / Proposed Rules 61065

(b) * * *

(4) * * *

(iii) * * *

(B) In a case described in paragraph

(b)(4)(iii)(A) of this section,

reimbursement will be reduced, unless

such reduction is waived based on

special circumstances. The amount of

this reduction shall be at least ten

percent of the amount otherwise

allowable for services for which

preauthorization (including

preauthorization for continued stays in

connection with concurrent review

requirements) approval should have

been obtained, but was not obtained.

* * * * *

(c) * * *

(2) The physician acknowledgment

required for Medicare under 42 CFR

412.46 is also required for CHAMPUS as

a condition for payment and may be

satisfied by the same statement as

required for Medicare, with substitution

or addition of ‘‘CHAMPUS’’ when the

word ‘‘Medicare’’ is used.

* * * * *

(d) * * *

(2) * * *

(iii) Review for physician’s

acknowledgment of annual receipt of

the penalty statement as contained in

the Medicare regulation at 42 CFR

412.46.

* * * * *

(e) * * *

(3) * * *

(i) If the diagnostic and procedural

information in the patient’s medical

record is found to be inconsistent with

the hospital’s coding or DRG

assignment, the hospital’s coding on the

CHAMPUS claim will be appropriately

changed and payments recalculated on

the basis of the appropriate DRG

assignment.

(ii) If the information stipulated under

paragraph (d)(2) of this section is found

not to be correct, the PRO will change

the coding and assign the appropriate

DRG on the basis of the changed coding.

* * * * *

Dated: November 7, 1997.

L.M. Bynum,

Alternate OSD Federal Register Liaison

Officer, Department of Defense.

[FR Doc. 97–29975 Filed 11–13–97; 8:45 am]

BILLING CODE 5000–04–M

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Parts 60 and 63

[FRL–5921–1]

Hazardous Waste Combustors;

Continuous Emissions Monitoring

Systems; Proposed Rule—Notice of

Data Availability

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Notice of data availability.

SUMMARY: This announcement is a

notice of advanced availability of a test

report pertaining to the proposed

requirement for Particulate Matter (PM)

Continuous Emissions Monitoring

Systems (CEMS) for hazardous waste

combustors: ‘‘Draft Particulate Matter

Continuous Emissions Monitoring

Systems Demonstration’’, dated October

1997. The report documents PM CEMS

demonstration tests conducted between

September 1996 and May 1997 at the

DuPont, Inc. Experimental Station OnSite Incinerator, in Wilmington,

Delaware. Included in the report are the

testing scheme, raw data, and

discussion of results. Appendices to the

report include: Method 5I—

Determination of Low Level Particulate

Matter Emissions from Stationary

Sources; Revised Draft Performance

Specification 11—Specifications and

Test Procedures for PM CEMS in

Stationary Sources; and Appendix F to

40 CFR Part 60, Quality Assurance

Requirements for PM CEMS used for

Compliance Determination.

FOR FURTHER INFORMATION CONTACT: To

obtain the October 1997, Draft PM

CEMS Demonstration test report, call

the RCRA Hotline at 1–800–424–9346 or

TDD 1–800–553–7672 (hearing

impaired). Callers within the

Washington Metropolitan Area must

dial 703–412–9810 or TDD 703–412–

3323 (hearing impaired). The RCRA

Hotline is open Monday–Friday, 9:00

a.m. to 6:00 p.m., Eastern Time.

SUPPLEMENTARY INFORMATION: On April

19, 1996, EPA proposed the Revised

Standards for Hazardous Waste

Combustors (i.e., incinerators, cement

and lightweight aggregate kilns that

burn hazardous waste). The revised

standards would limit emissions of PM

at these facilities and address the

application of PM CEMS for compliance

monitoring. See 61 FR 17358. On March

21, 1997, EPA published a Notice of

Data Availability (NODA) that further

examined the issues concerning PM

CEMS as compliance instruments. See

62 FR 13776. EPA published an

additional NODA on May 2, 1997, to

inform the public of: (1) Significant

changes the Agency is considering on

aspects of the proposal based on public

comments and new information; and (2)

the Agency’s own re-evaluation of

MACT standard-setting approaches

based on new data and public

comments.

The proposed rule would require that

PM CEMS be used to document

compliance with the proposed PM

standards. To be effective for

compliance monitoring, the Agency

determined that commercially available

PM CEMS must meet certain

performance specifications. The results

of the demonstration tests assist in the

development of these PM CEMS

performance specifications.

EPA plans to follow today’s NODA

with a second NODA which will discuss

issues pertaining to the demonstration

test report and PM CEMS

implementation considerations. The

second NODA will provide the

opportunity to comment on the report

and the issues.

Dated: November 5, 1997.

David Bussard,

Acting Director, Office of Solid Waste.

[FR Doc. 97–30019 Filed 11–13–97; 8:45 am]

BILLING CODE 6560–50–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 76

[CS Docket No. 95–184; MM Docket No. 92–

260; FCC 97–376]

Inside Wiring

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule.

SUMMARY: The Commission has adopted

a Report and Order and Second Further

Notice of Proposed Rulemaking which

addresses rules and policies concerning

cable inside wiring. The Report and

Order segment of this decision may be

found elsewhere in this issue of the

Federal Register. The Second Further

Notice of Proposed Rulemaking

(‘‘Second Further Notice’’) segment

seeks comment on proposed

amendments to the Commission’s

regulations relating to exclusive service

contracts, application of cable inside

wiring rules to all multichannel video

programming distributors (‘‘MVPDs’’),

signal leakage reporting requirements,

and simultaneous use of home run

wiring. This action was necessary

because exclusive service contracts and