Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); Hospital Payments for Ambulatory Care

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DoD 6010.8-R]

RIN 0720-AA20

Civilian Health and Medical Program of the Uniformed Services

(CHAMPUS); Hospital Payments for Ambulatory Care

AGENCY: Office of the Secretary, DoD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule establishes a new payment method for

ambulatory care (other than ambulatory surgery) provided by hospitals

to CHAMPUS beneficiaries, under which payment amounts would be based on

the cost of the service rather than on the billed charge, as at

present. In general, the effect of this change would be to reduce

reimbursement amounts for ambulatory services provided by hospitals.

DATES: Written comments must be received on or before March 21, 1994.

ADDRESSES: Office of the Civilian Health and Medical Program of the

Uniformed Services (OCHAMPUS), Office of Program Development, Aurora,

CO 80045-6900. For copies of the Federal Register containing this

proposed rule, contact the Superintendent of Documents, U.S. Government

Printing Office, Washington, DC 20402, (202) 783-3238.

FOR FURTHER INFORMATION CONTACT:

Steve Lillie, 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 CHAMPUS

contractor.

SUPPLEMENTARY INFORMATION:

I. Introduction

This proposed rule introduces a new payment method, based on

facility costs, for ambulatory care (other than ambulatory surgery)

provided by hospitals.

II. Provisions of Proposed Rule Concerning the Ambulatory Care Payment

Method

CHAMPUS recently established a new payment method for ambulatory

surgery performed by hospitals and freestanding ambulatory surgery

centers. Prior to adoption of this new payment method, institutional

charges for ambulatory surgery were based on billed charges of the

facility. Payments to hospitals for ambulatory care other than

ambulatory surgery continue to be made based on billed charges.

Consistent with the established CHAMPUS policy, authorized by section

1079(j)(2) of title 10, United States Code, of adopting payment methods

based on cost reimbursement, rather than payment of billed charges, we

now propose a new payment method for this category of care based on

facility costs. This payment method would apply to emergency room care,

outpatient clinics, and other ambulatory care provided by the hospital,

but it excludes all care covered by the recently established ambulatory

surgery payment method.

The proposed rule would determine facility costs based on the

billed charges for a service, multiplied by the ambulatory care cost-

to-charge ratio for hospitals nationally and adjusted for certain

special hospital characteristics. The special characteristics will be

determined based on identifying any statistically significant

differences in ambulatory care cost-to-charge ratios among hospitals

based on these characteristics. The characteristics that will be

considered are: The classification of the hospital as large urban,

other urban, or rural in the DRG-based payment system; teaching

hospital; state; and children's hospital. We invite comments on whether

any other special characteristics should be considered. Comments in

this regard would be most helpful if they include specific data

supporting the suggestion.

The proposed rule also prohibits a hospital from submitting billed

charges for an ambulatory care service in excess of the actual charge

made for the service to the general public and applies a 25% payment

reduction for such excessive billings.

III. 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.

This proposed rule imposes no additional information collection

requirements on the public under the Paperwork Reduction Act of 1980

(44 U.S.C. 3501-3511).

This is a proposed rule. Public comments are invited. All comments

will be considered. A discussion of the major issues revised 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

Claims, Handicapped, Health insurance, 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. 1097, 1086.

2. Section 199.14 is proposed to be amended by revising the

introductory text of paragraph (a)(3), by redesignating paragraph

(a)(4) as paragraph (a)(5), and by adding a new paragraph (a)(4), as

follows:

Sec. 199.14 Provider reimbursement methods.

(a) Hospitals.

* * * * *

(3) Billed charges and set rates. The allowable costs for

authorized care in all hospitals for care not subject to the CHAMPUS

DRG-based payment system, the CHAMPUS mental health per diem payment

system, the CHAMPUS ambulatory surgery payment method, or the CHAMPUS

ambulatory care payment method shall be determined on the basis of

billed charges or set rates. Under this procedure the allowable costs

may not exceed the lower of:

* * * * *

(4) Ambulatory care payment method. (i) Applicability. The

ambulatory care payment method determines allowable costs in connection

with all institutional charges from hospitals for outpatient care other

than ambulatory surgery covered by the ambulatory surgery payment

method.

(ii) Determination of allowable costs. Allowable costs are

determined by multiplying the hospital's billed charges by the cost-to-

charge ratio for hospital-based ambulatory care, as determined by the

Director, OCHAMPUS based on Medicare cost reports filed by hospitals

nationally, with adjustments for special hospital characteristics.

(iii) Adjustments for special hospital characteristics. For certain

special hospital characteristics, the Director, OCHAMPUS will determine

if there are statistically significant differences in ambulatory care

cost-to-charge ratios based on certain hospital characteristics. To the

extent that there are such differences, payment adjustments will be

made to assure that the payment amounts reasonably reflect the special

characteristics involved. The special characteristics that will be

considered for such adjustments are: Large urban, small urban, and

rural hospitals (as those categories are recognized in the CHAMPUS DRG-

based payment system); teaching hospitals; state; and children's

hospitals.

(iv) Prohibition against excessive charges. The billed charge for a

service covered by the ambulatory care payment method may not exceed

the actual charge for such service made to the general public. In any

case in which the Director, OCHAMPUS determines that the billed charge

exceeds such actual charge for such service made to the general public,

the payment amount determined under the ambulatory care payment method

shall consider the billed charge to be the actual charge for such

service made to the general public, and, as an incentive for proper

billing, the resulting payment amount shall be reduced by 25 percent.

* * * * *

Dated: January 7, 1994.

L.M. Bynum,

Alternate OSD Federal Register Liaison Officer, Department of Defense.

[FR Doc. 94-715 Filed 1-19-94; 8:45 am]

BILLING CODE 5000-04-M