TRICARE Reimbursem*nt Manual 6010.64-M, April 2021
Outpatient Prospective Payment System (OPPS)-Ambulatory Payment Classification (APC)
Chapter 13
Section 3
ProspectivePayment Methodology
Issue Date:July 27, 2005
Authority:10 USC 1079(h) and (i)(2)
Copyright:HCPCS Level I/CPT only © 2006American Medical Association (or such other date of publicationof CPT). All Rights Reserved.
Revision:
1.0APPLICABILITY
This policy is mandatory forthe reimbursem*nt of services provided either by network or non-networkproviders. However, alternative network reimbursem*nt methodologiesare permitted when approved by the Defense Health Agency (DHA) andspecifically included in the network provider agreement.
2.0ISSUE
To describe the payment methodologyfor hospital outpatient services.
3.0POLICY
3.1BasicMethodology for Determining Prospective Payment Rates for OutpatientServices
3.1.1Setting of Payment Rates
The prospective payment ratefor each Ambulatory Payment Classification (APC) is calculated bymultiplying the APC’s relative weight by the conversion factor.Medicare establishes the relative APC weights; these are updatedon a quarterly basis. See the Medicare Claims Processing Manual(CPM), Chapter 4, Section 10.3 for a description of APC weights.
3.1.1.1Revenue center changes thatcontain items integral to performing the procedure or visit areused to calculate the per-procedure or per-visit costs. Medicarepublishes a list of packaged revenue codes every year within theCenters for Medicare and Medicaid Services (CMS) Outpatient ProspectivePayment System (OPPS) Final Rule. These rules are available here: https://www.cms.gov/research-statistics-data-and-systems/files-for-order/limiteddatasets/HospitalOPPS.html.
3.1.1.1.1Some instructions have beenissued that require that specific revenue codes be billed with certain HealthcareCommon Procedure Coding System (HCPCS) codes, such as specific revenuecodes that must be used when billing for devices that qualify forpass-through payments.
Note:If the revenue code is notlisted, refer to the TRICARE Systems Manual (TSM), Chapter 2, Addendum N, for reporting requirements.
3.1.1.1.2The contractor shall, wherespecific instructions have not been issued, advise hospitals toreport charges under the revenue code that would result in the chargesbeing assigned to the same cost center to which the cost of thoseservices were assigned in the cost report.
Example:Operating room, treatment room,recovery, observation, medical and surgical supplies, pharmacy, anesthesia,casts and splints, and donor tissue, bone, and organ charges wereused in calculating surgical procedure costs. The charges for itemssuch as medical and surgical supplies, drugs and observation wereused in estimating medical visit costs.
3.1.1.2Costs are standardized forgeographic wage variation by dividing the labor-related portionof the operating and capital costs for each billed item by the currenthospital Inpatient Prospective Payment System (IPPS) wage index.Sixty percent (60%) is used to represent the estimated portion ofcosts attributable, on average, to labor.
3.1.1.3Standardized labor relatedcost and the nonlabor-related cost component for each billed itemare summed to derive the total standardized cost for each procedureor medical visit.
3.1.1.4Each procedure or visit costis mapped to its assigned APC.
3.1.1.5The median cost is calculatedfor each APC.
3.1.1.6Relative payment rates areestablished by CMS, are utilized by DHA, and are listed on DHA’sOPPS website at http://www.health.mil/rates.See the Medicare CPM, Chapter 4, Section 10.3 for more informationon how the rates are derived.
3.1.1.7These relative payment weightsmay be further adjusted for budget neutrality based on a comparisonof aggregate payments using previous and current Calendar Year (CY)weights.
3.1.2ConversionFactor Update
3.1.2.1The conversion factor is updatedannually by the hospital inpatient market basket percentage increaseapplicable to hospital discharges.
3.1.2.2The conversion factor is alsosubject to adjustments for wage index budget neutrality, differencesin estimated pass-through payments, and outlier payments. The conversionfactor is published in the annual CMS OPPS Final Rule.
3.1.3Payment Status Indicators (SIs)
A payment SI is provided forevery code in the HCPCS to identify how the service or proceduredescribed by the code would be paid under the hospital OPPS; i.e.,it indicates if a service represented by a HCPCS code is payable underthe OPPS or another payment system, and also which particular OPPSpayment policies apply. One, and only one, SI is assigned to eachAPC and to each HCPCS code. Each HCPCS code that is assigned toan APC has the same SI as the APC to which it is assigned. The followingare the payment SIs and descriptions of the particular services eachindicator identifies:
3.1.3.1A to indicateservices that are paid under some payment method other than OPPS,such as the Durable Medical Equipment, Prosthetics, Orthotics, andSupplies (DMEPOS) fee schedule, CHAMPUS Maximum Allowable Charge(CMAC) reimbursem*nt methodology for physicians, or State prevailings.
3.1.3.2B to indicatemore appropriate code required for DHA OPPS.
3.1.3.3C to indicateinpatient services that are not paid under the OPPS.
3.1.3.4E to indicateitems or services are not covered under the TRICARE Program foritems as services provided from May 1, 2009, through December 31,2016.
3.1.3.5E1 to indicateitems or services that are not covered under the TRICARE Programfor items or services provided on or after January 1, 2017.
3.1.3.6F to indicateacquisition of corneal tissue, which is paid on an allowable chargebasis (i.e., paid based on the CMAC reimbursem*nt system or statewideprevailings) and certain Certified Registered Nurse Anesthetist (CRNA)services and hepatitis B vaccines that are paid on an allowablecharge basis.
3.1.3.7G to indicatedrug/biological pass-through that are paid in separate APCs underthe OPPS.
3.1.3.8H to indicatepass-through device categories allowed on a cost basis.
3.1.3.9J1 to indicateHospital Outpatient Department (HOPD) services paid through a comprehensiveAPC.
3.1.3.10J2 toindicate HOPD services that may be paid through a comprehensiveAPC.
3.1.3.11K to indicatenon-pass-through drugs and non-implantable biologicals, includingtherapeutic radiopharmaceuticals that are paid in separate APCsunder the OPPS.
3.1.3.12N to indicateservices that are incidental, with payment packaged into anotherservice or APC group.
3.1.3.13P to indicateservices that are paid only in Partial Hospitalization Programs(PHPs).
3.1.3.14Q to indicatepackaged services subject to separate payment under OPPS.
3.1.3.15Q1 to indicatepackaged APC payment if billed on the same date of service as aHCPCS code assigned SI of S, T, V,and X1.In all other circ*mstances, payment is made through a separate APCpayment.
3.1.3.16Q2 to indicateAPC payment if billed on the same date of service as a HCPCS codeassigned SI of T. In all other circ*mstances, paymentis made through a separate APC payment.
3.1.3.17Q3 to indicatecomposite APC payment based on OPPS composite specific payment criteria.Payment is packaged into single payment for specific combinationsof service. In all circ*mstances, payment is made through a separateAPC payment for those services.
3.1.3.18Q4 to indicateconditionally packaged laboratory services.
Note:HCPCS codes with SI of Q areeither separately payable or packaged depending on the specific circ*mstancesof their billing. Outpatient Code Editor (OCE) claims processinglogic will be applied to codes assigned SI of Q inorder to determine if the service will be packaged or separatelypayable.
3.1.3.19R to indicateseparate APC payment for blood and blood products.
3.1.3.20S to indicatesignificant procedures for which payment is allowed under the hospitalOPPS, but to which the multiple procedure reduction does not apply.
3.1.3.21T to indicatesurgical services for which payment is allowed under the hospitalOPPS. Services with this payment indicator are the only servicesto which the multiple procedure payment reduction applies.
3.1.3.22U to indicateseparate APC payment for brachytherapy sources.
3.1.3.23V to indicatemedical visits (including clinic or Emergency Department (ED) visits)for which payment is allowed under the hospital OPPS.
3.1.3.24W to indicateinvalid HCPCS or invalid revenue code with blank HCPCS.
3.1.3.25X2 toindicate an ancillary service for which payment is allowed underthe hospital OPPS.
3.1.3.26Z to indicatevalid revenue code with blank HCPCS and no other SI assigned.
3.1.3.27TB to indicateTRICARE reimbursem*nt not allowed for Current Procedural Terminology(CPT)/HCPCS code submitted.
Note:The system payment logic looksto the SIs attached to the HCPCS codes and APCs for direction inthe processing of the claim. A SI, as well as an APC, must be assignedso that payment can be made for the service identified by the newcode. The SIs identified for each HCPCS code and each APC and listedon DHA’s OPPS website at http://www.health.mil/rates.
3.1.4Calculating DHA Payment Amount
3.1.4.1The national APC payment ratethat is calculated for each APC group is the basis for determiningthe total payment (subject to wage-index adjustment) the hospitalwill receive from the beneficiary and the TRICARE program. (Referto DHA’s OPPS website at http://www.health.mil/rates fornational APC payment rates.)
3.1.4.2The DHA payment amount takesinto account the wage index adjustment and beneficiary deductible andcost-share/copayment amounts.
3.1.4.3The DHA payment amount calculatedfor an APC group applies to all the services that are classified withinthat APC group.
3.1.4.4The DHA payment amount fora specific service classified within an APC group under the OPPSis calculated as follows:
3.1.4.4.1Applythe appropriate wage index adjustment to the national payment ratethat is set annually for each APC group. (Refer to the OPPS ProviderFile with Wage Indexes on DHA’s OPPS home page at http://www.health.mil/rates forannual Diagnosis Related Group (DRG) wage indexes used in the paymentof hospital outpatient claims, effective January 1 of each year.)
3.1.4.4.2Multiplythe wage-adjusted APC payment rate by the OPPS rural adjustment(1.071) if the provider is a Sole Community Hospital (SCH) in arural area with 100 or more beds. Effective January 1, 2010, theOPPS rural adjustment will apply to all SCHs in rural areas.
3.1.4.4.3Determine any outlier amountsand add them to the sum of either paragraphs 3.1.4.4.1 or 3.1.4.4.2.
3.1.4.4.4Subtract from the adjustedAPC payment rate the amount of any applicable deductible and/or cost-sharing/copaymentamounts based on the eligibility status of the beneficiary at thetime the outpatient services were rendered (i.e., those deductiblesand cost-sharing/copayment amounts applicable to the appropriate beneficiarycategories). Refer to Chapter 2 for applicabledeductible and/or cost-sharing/copayment amounts.
3.1.4.5Examples of payments underOPPS based on eligibility status of beneficiary at the time theservices were rendered are below. Deductibles, cost-shares and copaymentsexamples are based on dates of service prior to January 1, 2018.See Chapter 2 for deductibles,copayments, and cost-shares for dates of service on or after January 1,2018:
| Example 1: | Assume that the wage-adjustedrate for an APC is $400; the beneficiary receiving the servicesis an Active Duty Family Member (ADFM) enrolled under TRICARE Prime,and as such, is not subject to any deductibles or copayments. |
| •Adjusted APC payment rate:$400. •Subtract any applicable deductible:$400 - $0 = $400 •Subtract the TRICARE PrimeADFM copayment from the adjusted APC payment rate less deductibleto calculate the final payment amount. | |
| $400 - $0 = $400 final payment | |
| •TRICARE would pay 100% of theadjusted APC payment rate for ADFMs enrolled in TRICARE Prime. | |
| Example 2: | Assume that the wage-adjustedrate for an APC is $400 and the beneficiary receiving the outpatient servicesis a TRICARE Prime retiree family member subject to a $12 copayment.Deductibles are not applied under the TRICARE Prime program. |
| •Adjusted APC payment rate:$400. •Subtract any applicable deductible:$400 - $0 = $400 | |
| $400 - $12 = $388 final payment | |
| •Subtract the TRICARE Primeretiree family member copayment from the adjusted APC payment rateless deductible to calculate the final TRICARE payment amount. •In this case, the beneficiarypays zero ($0) deductible and a $12 copayment, and the program pays$388 (i.e., the difference between the adjusted APC payment rateand the TRICARE Prime retiree family member copayment). | |
| Example 3: | This example illustrates acase in which both an outpatient deductible and cost-share are applied. Assumethat the wage-adjusted payment rate for an APC is $400 and the beneficiaryreceiving the outpatient services is a standard ADFM subject toan individual $50 deductible (active duty sponsor is an E-3) and20% cost-share. |
| •Adjusted APC payment rate:$400. •Subtract any applicable deductible:$400 - $50 = $350 •Subtract the standard ADFMcost-share (i.e., 20% of the allowable charge) from the adjustedAPC payment rate less deductible to calculate the final TRICAREpayment amount. | |
| $350 x 0.20 = $70 cost-share | |
| $350 - $70 = $280 TRICARE finalpayment | |
| •In this case, the beneficiarypays a deductible of $50 and a $70 cost-share, and the program pays $280,for total payment to the hospital of $400. | |
3.1.5Adjustmentsto APC Payment Amounts
3.1.5.1Adjustment for Area Wage Differences
3.1.5.1.1A wage adjustment factor willbe used to adjust the portion of the payment rate that is attributable tolabor-related costs for relative differences in labor and labor-relatedcosts across geographical regions with the exception of APCs withSIs of G, H, K, R,and U. The hospital DRG wage index will be used giventhe inseparable, subordinate status of the outpatient departmentwithin the hospital.
3.1.5.1.2The OPPS will use the samewage index changes as the TRICARE DRG-based payment system, exceptthe effective date for the changes will be January 1 of each yearinstead of October 1 (refer to the OPPS Provider File with WageIndexes on DHA’s OPPS home page at http://www.health.mil/rates.
3.1.5.1.3The General and non-networkTemporary Military Contingency Payment Adjustments (TMCPAs) are notwage-adjusted.
3.1.5.1.4Sixty percent (60%) of thehospital’s outpatient department costs are recognized as labor-related coststhat would be standardized for geographic wage differences. Thisis a reasonable estimate of outpatient costs attributable to labor,as it fell between the hospital DRG operating cost labor factorof 71.1% and the Ambulatory Surgery Center (ASC) labor factor of34.45%, and is close to the labor-related costs under the inpatientDRG payment system attributed directly to wages, salaries and employeebenefits (61.4%).
3.1.5.1.5Stepsin Applying Wage Adjustments under OPPS
3.1.5.1.5.1Calculate60% (the labor-related portion) of the national unadjusted paymentrate that represents the portion of costs attributable, on average,to labor.
3.1.5.1.5.2Determinethe wage index in which the hospital is located and identify thewage index level that applies to the specific hospital.
3.1.5.1.5.3Multiplythe applicable wage index determined under paragraph 3.1.5.1.5.2 by theamount under paragraph 3.1.5.1.5.1 that represents thelabor-related portion of the national unadjusted payment rate.
3.1.5.1.5.4Calculate40% (the nonlabor-related portion) of the national unadjusted paymentrate and add that amount to the resulting product in paragraph 3.1.5.1.5.3. The result is the wageindex adjusted payment rate for the relevant wage index area.
3.1.5.1.5.5If a provider is a SCH in arural area, or is treated as being in a rural area, multiply thewage-adjusted payment rate by 1.071 to calculate the total paymentbefore applying the deductible and copayment/cost-sharing amounts.
3.1.5.1.5.6Applicable deductible and copayment/cost-sharingamounts would then be subtracted from the wage-adjusted APC paymentrate, and the remainder would be the TRICARE payment amount forthe services or procedure. Deductibles, cost-shares and copaymentsexamples are based on dates of service prior to January 1, 2018.See Chapter 2 for deductibles,copayments, and cost-shares for dates of service on or after January1, 2018:
| Example: | A surgical procedure with anAPC payment rate of $300 is performed in the outpatient departmentof a hospital located in Heartland, USA. The cost-sharing amountfor the standard ADFM is $60.80 (i.e., 20% of the wage-adjustedAPC amount for the procedure). The hospital inpatient DRG wage indexvalue for hospitals located in Heartland, USA, is 1.0234. The labor-relatedportion of the payment rate is $180 ($300 x 60%), and the nonlabor-relatedportion of the payment rate is $120 ($300 x 40%). It is assumedthat the beneficiary deductible has been met. |
| Units billed x APC x 60% (laborportion) x wage index (hospital specific) + APC x 40% (nonlabor portion)= adjusted payment rate. | |
| •Wage-Adjusted Payment Rate(rounded to nearest cent) | |
| = ($180 x 1.0234) = $184.21+ $120 = $304.21 | |
| •Cost-share for standard ADFM(rounded to nearest cent): | |
| = ($304.21 x 0.20) = $60.84 | |
| •Subtract the standard ADFMcost-share from the wage-adjusted rate to get the final TRICARE payment: | |
| = ($304.21 - $60.84) = $243.37. | |
3.1.5.2Discountingof Surgical and Terminating Procedures
3.1.5.2.1OPPS payment amounts are discountedwhen more than one procedure is performed during a single operativesession or when a surgical procedure is terminated prior to completion.Refer to Chapter 1, Section 16 for additional guidelineson discounting of surgical procedures.
3.1.5.2.1.1Line items with a SI of T aresubject to multiple procedure discounting unless modifiers 76, 77, 78,and/or 79 are present.
3.1.5.2.1.2When more than one procedurewith payment SI of T is performed during a single operative session,TRICARE will reimburse the full payment and the beneficiary willpay the cost-share/copayment for the procedure having the highestpayment rate.
3.1.5.2.1.3Fifty percent (50%) of theusual OPPS payment amount and beneficiary copayment/cost-share amountwould be paid for all other procedures performed during the sameoperative session to reflect the savings associated with havingto prepare the patient only once and the incremental costs associatedwith anesthesia, operating and recovery room use, and other servicesrequired for the second and subsequent procedures.
•The reduced payment would applyonly to the surgical procedure with the lower payment rate.
•The reduced payment for multipleprocedures would apply to both the beneficiary copayment/cost-shareand the TRICARE payment.
3.1.5.2.2Hospitals are required to usemodifiers on bills to indicate procedures that are terminated before completion.
3.1.5.2.2.1Fifty percent (50%) of theusual OPPS payment amount and beneficiary copayment/cost-share willbe paid for a procedure terminated before anesthesia is induced.
•Modifier -73 (DiscontinuedOutpatient Procedure Prior to Anesthesia Administration) would identifya procedure that is terminated after the patient has been preparedfor surgery, including sedation when provided, and taken to theroom where the procedure is to be performed, but before anesthesiais induced (for example, local, regional block(s), or general anesthesia).
•Modifier -52 (ReducedServices) would be used to indicate a procedure that did not requireanesthesia, but was terminated after the patient had been preparedfor the procedure, including sedation when provided, and taken tothe room where the procedure is to be performed.
3.1.5.2.2.2Full payment will be receivedfor a procedure that was started but discontinued after the inductionof anesthesia, or after the procedure was started.
•Modifier -74 (DiscontinuedProcedure) would be used to indicate that a surgical procedure wasstarted but discontinued after the induction of anesthesia (forexample, local, regional block, or general anesthesia), or afterthe procedure was started (incision made, intubation begun, scopeinserted) due to extenuating circ*mstances or circ*mstances thatthreatened the well-being of the patient.
•This payment would recognizethe costs incurred by the hospital to prepare the patient for surgeryand the resources expended in the operating room and recovery roomof the hospital.
3.1.5.3Discountingfor Bilateral Procedures
3.1.5.3.1Following are the differentcategories/classifications of bilateral procedure:
3.1.5.3.1.1Conditional bilateral (i.e.,procedure is considered bilateral if the modifier 50 ispresent).
3.1.5.3.1.2Inherent bilateral (i.e., procedurein and of itself is bilateral).
3.1.5.3.1.3Independent bilateral (i.e.,procedure is considered bilateral if the modifier 50 ispresent, but full payment should be made for each procedure (e.g.,certain radiological procedures)).
3.1.5.3.2Terminated bilateral proceduresor terminated procedures with units greater than one should not occur,and for type T procedures, have the discounting factorset so as to result in the equivalent of a single procedure. Lineitems with terminated bilateral procedures or terminated procedurewith units greater than one are denied.
3.1.5.3.3For non-type T proceduresthere is no multiple procedure discounting and no bilateral procedure discountingwith modifier 50 performed. Line items with SI otherthan T are subject to terminated procedure discountingwhen modifier 52 or 73 is present. Modifier 52 or 73 ona non-type T procedure line will result in a 50% discount beingapplied to that line.
3.1.5.3.4The discounting factor forbilateral procedures is the same as the discounting factor for multiple type T procedures.
3.1.5.3.5Inherent bilateral procedureswill be treated as a non-bilateral procedure since the bilateralismof the procedure is encompassed in the code.
3.1.5.3.6Followingare the different discount formulas that can be applied to a lineitem:
| Discounting Formula Number | Formulas |
|---|---|
| Where: | D = discounting fraction(currently 0.5) U = number of units T = terminated procedurediscount (currently 0.5) |
| 1 | 1.0 |
| 2 | (1.0 + D (U - 1))/U |
| 3 | T/U |
| 4 | (1 + D)/U |
| 5 | D |
| 8 | 2.0 |
| 9 | 2D |
3.1.5.3.7Figure 13.3-2 summarizesthe application of above discounting formulas:
| Discounting Formula Number | ||||||
|---|---|---|---|---|---|---|
| Type T Procedure | Non-type T Procedure | |||||
| PaymentAmount | Modifier 52 or 73 | Modifier50** | Conditional Or IndependentBilateral | Inherent or Non-Bilateral | Conditional Or IndependentBilateral | Inherent or Non-Bilateral |
| For the purpose of determiningwhich APC has the highest payment amount, the terminated procedurediscount (T) any applicable offset, will be appliedprior to selecting the T procedure with the highestpayment amount. If both offset and terminated procedure discount apply,the offset will be applied first before the terminated procedurediscount. * If not terminated, non-type T Conditionalbilateral procedures with modifier 50 will be assigneddiscount formula #8. Non-type T Independent bilateralprocedures with modifier 50 will be assigned to formula#8. ** If modifier 50 ispresent on a independent or conditional bilateral line that hasa composite APC or a separately paid STVX/T-packaged procedure,the modifier is ignored in assigning the discount formula. | ||||||
| Highest | No | No | 2 | 2 | 1 | 1 |
| Highest | Yes | No | 3 | 3 | 3 | 3 |
| Highest | No | Yes | 4 | 2 | 8* | 1 |
| Highest | Yes | Yes | 3 | 3 | 3 | 3 |
| Not Highest | No | No | 5 | 5 | 1 | 1 |
| Not Highest | Yes | No | 3 | 3 | 3 | 3 |
| Not Highest | No | Yes | 9 | 5 | 8* | 1 |
| Not Highest | Yes | Yes | 3 | 3 | 3 | 3 |
Note:For the purpose of determiningwhich APC has the highest payment amount, the terminated procedure discount(T) will be applied prior to selecting the type T procedurewith the highest payment amount.
3.1.5.3.8In those instances where morethan one bilateral procedure and they are medically necessary and appropriate,hospitals are advised to report the procedure with a modifier -76 (repeatprocedure or service by same physician) in order for the claim toprocess correctly.
3.1.5.4Multiple discounting will notbe applied to the following CPT codes for venipuncture, fetal monitoringand collection of blood specimens: 36400 - 36416, 36591, 36592,59020, 59025, and 59050-59051.
3.1.5.5OutlierPayments
An additionalpayment is provided for outpatient services for which a hospital’scharges, adjusted to cost, exceed the sum of the wage-adjusted APCrate plus a fixed dollar threshold and a fixed multiple of the wage-adjustedAPC rate. Only line item services with SIs of J1, J2, P, R, S, T, V,or X3 willbe eligible for outlier payment under OPPS. No outlier paymentswill be calculated for line item services with SIs of G, H, K, N,and U, with the exception of blood and blood products.
3.1.5.5.1Outlier payments will be calculatedon a service-by-service basis. Calculating outliers on a service-by-servicebasis was found to be the most appropriate way to calculate outliersfor outpatient services. Outliers on a bill basis requires boththe aggregation of costs and the aggregation of OPPS payments, therebyintroducing some degree of offset among services; that is, the aggregationof low cost services and high cost services on a bill may resultin no outlier payment being made. While service-based outliers aresomewhat more complex to administer, under this method, outlierpayments will be more appropriately directed to those specific servicesfor which a hospital incurs significantly increased costs.
3.1.5.5.2Outlier payments are intendedto ensure beneficiary access to services by having the TRICARE programshare the financial loss incurred by a provider associated withindividual, extraordinarily expensive cases.
3.1.5.5.3Outlier thresholds are establishedon a CY basis which requires that a hospital’s cost for a service exceedthe wage-adjusted APC payment rate for that service by a specifiedmultiple of the wage-adjusted APC payment rate and the sum of thewage-adjusted APC rate plus a fixed dollar threshold ($1,800 forCY 2009) in order to receive an additional outlier payment. Whenthe cost of a hospital outpatient service exceeds both of these thresholdsa predetermined percentage of the amount by which the cost of furnishingthe services exceeds the multiple APC threshold will be paid asan outlier.
3.1.5.5.4Outlier payments are not subjectto cost-sharing.
3.1.5.5.5Temporary Transitional PaymentAdjustments (TTPAs) and TMCPAs shall not be included in cost outliercalculations.
3.1.5.5.6Example of outlier paymentcalculation.
Example:Followingare the steps involved in determining if services on a claim qualifyfor outlier payments using the appropriate CY multiple and fixeddollar thresholds.
Step 1:Identifyall APCs on the claim.
Step 2:Determinethe ratio of each wage-adjusted APC payment to the total paymentof the claim (assume for this example a wage index of 1.0000).
| CPT Code | SI | APC | Service | Wage-Adjusted APC Payment Rate | Ratio Of APC To Total Payment |
|---|---|---|---|---|---|
| 99285 | V | 0616 | Level 5 Emergency Visit | $315.51 | 0.5107157 |
| 70481 | S | 0283 | CT scan with contrast material | $277.48 | 0.4491566 |
| 93041 | S | 0099 | Electrocardiogram | $24.79 | 0.0401275 |
Step 3:Identifybilled charges of packaged items that need to be allocated to anAPC.
| Revenue Code | OPPS Service or Supply | Total Charges |
|---|---|---|
| 0250 | Pharmacy | $3,435.50 |
| 0270 | Medical Supplies | $4,255.80 |
| 0350 | CT scan | $3,957.00 |
| 0450 | Emergency Room | $2,986.00 |
| 0730 | Electrocardiogram | $336.00 |
Step 4:Allocatethe billed charges of the packaged items identified in Step 3 totheir respective wage-adjusted APCs based on their percentages tototal payment calculated in Step 2.
| APC | RatioAllocation | OPPS Service | 250 (Pharmacy) | 270 (Medical Supplies) |
|---|---|---|---|---|
| 0616 | 0.5107157 | Level 5 Emergency Visit | $1,754.56 | $2,173.50 |
| 0283 | 0.4491566 | CT scan with contrast material | $1,543.08 | $1,911.52 |
| 0099 | 0.0401275 | Electrocardiogram | $137.36 | $170.77 |
Step 5:Calculatethe total charges for each OPPS service (APC) and reduce them tocosts by applying the statewide Cost-To-Charge (CCR). StatewideCCRs are based on the geographical Core Based Statistical Area (CBSA)(two digit = rural, five digit = urban). Assume that the outpatientCCR is 31.4%.
| APC | OPPS Service | Total Charges | Total Charges Reduced To Costs(CCR = 0.3140) |
|---|---|---|---|
| 0616 | Level 5 Emergency Visit | $6,914.06 | $2,170.01 |
| 0283 | CT scan with contrast material | $7,411.60 | $2,327.24 |
| 0099 | Electrocardiogram | $644.63 | $202.41 |
Step 6:Applythe cost test to each wage-adjusted APC service or procedure todetermine if it qualifies for an outlier payment. If the cost ofa service (wage-adjusted APC) exceeds both the APC multiplier threshold(1.75 times the wage-adjusted APC payment rate) and the fixed dollarthreshold (wage-adjusted APC rate plus $1,800), multiply the costsin excess of the wage-adjusted APC multiplier by 50% to get theadditional outlier payment.
| APC | Wage-Adjusted APCRate | Costs | FixedDollar Threshold (Wage-Adjusted APC Rate + $1,800) | Multiplier Threshold (1.75x Wage Index APC Rate) | Costsin Excess Of Multiplier Threshold | Outlier Payment Costs Of Wage-AdjustedAPC - (1.75 x Wage-Adjusted APC Rate) x 0.50 |
|---|---|---|---|---|---|---|
| * Does not qualify for outlierpayment since the APC’s costs did not exceed the fixed dollar threshold(APC Rate + $1,800). | ||||||
| 0616 | $315.51 | $2,170.01 | $2,115.51 | $552.14 | $1,618.87 | $808.43 |
| 0283 | $277.48 | $2,327.24 | $2,077.48 | $485.59 | $1,841.65 | $920.83 |
| 0099 | $24.79 | $202.41 | $1,824.79 | $43.38 | $159.03 | -0-* |
The total outlier payment onthe claim was: $1,746.50.
3.1.5.6Rural SCH payments will beincreased by 7.1%. This adjustment will apply to all services and procedurespaid under the OPPS (SIs of J1, J2, P, S, T, V,and X4),excluding drugs, biologicals and services paid under the pass-throughpayment policy (SIs of G and H).
3.1.5.6.1The adjustment amount willnot be reestablished on an annual basis, but may be reviewed inthe future, and if appropriate, may be revised.
3.1.5.6.2The adjustment is budget neutraland will be applied before calculating outliers and copayments/cost-sharing.
3.1.5.7TMCPAs
Under the authority of thelast paragraph of 32 CFR 199.14(a)(6)(ii), the following OPPSadjustments are authorized.
3.1.5.7.1GeneralTemporary Military Contingency Payment Adjustment (GTMCPA) Payments
The Director, DHA, or designeeat any time after OPPS implementation, has the authority to adopt,modify, and/or extend temporary adjustments for TRICARE networkhospitals located within Market/Military Medical Treatment Facility(MTF) Prime Service Areas (PSAs) and deemed essential for militaryreadiness and support during contingency operations. The Director,DHA, may approve a GTMCPA payment for hospitals that serve a disproportionateshare of Service members and Active Duty Dependents (ADDs). In orderfor a hospital to be considered for a GTMCPA payment, the hospital’soutpatient revenue received for services provided to TRICARE Servicemembers and ADDs must have been at least 10% of the hospital’s totaloutpatient revenue received during the previous OPPS year (May 1through April 30) or the number of OPPS visits by Service membersand ADDs during that same 12-month period must have been at least50,000. Billed charges will not be used as the basis for determininga hospital’s eligibility for a GTMCPA. If the hospital serves adisproportionate share of TRICARE Service members and ADDs, andis essential for network adequacy, the hospital may qualify fora discretionary GTMCPA payment that results in a Payment-to-CostRatio (PCR) not to exceed 1.3. The process for GTMCPA payments isas follows:
•The number of OPPS visits byService members and ADDs during the previous OPPS year; i.e., May1 through April 30.
•The Government Designated Authority(GDA) shall request DHA Medical Benefits and Reimbursem*nt Section (MB&RS)run a query of claims history to determine if the network hospitalqualifies for a GTMCPA, i.e., the hospital’s payment-to-cost ratiois less than 1.3 for care provided to Service members and ADDs duringthe previous OPPS year (May 1 through April 30).
3.1.5.7.1.1Thehospital may submit a request for a discretionary GTMCPA paymentto their Contractor. The request must be made to the contractorwithin 12 months of the end of the OPPS year (May 1 through April30) for which the hospital is requesting a GTMCPA payment. For example,a hospital must submit a request for a GTMCPA payment for the OPPSyear ending April 30, 2016, on or before April 30, 2017. Late submissionsor requests for extensions will not be considered. Hospitals willbe given a grace period of six months from [the effective date of thischange], ending [six months from the effective date], to submitGTMCPA payment requests for OPPS years ending on or before April30, 2016. The hospital’s request for a GTMCPA payment shall includethe following data requirements for the previous OPPS year:
3.1.5.7.1.1.1The hospital’s outpatient revenuefrom Service member and ADD OPPS visits. Hospitals shall not includerevenue by: non-ADFM or non-Service member beneficiaries (i.e.,retiree or retiree dependents); TRICARE For Life (TFL) beneficiaries;overseas beneficiaries; or beneficiaries with Other Health Insurance(OHI). Additionally, only revenue received from OPPS claims shallbe reported; revenue from physician fees, non-OPPS clinic visits,or other non-OPPS claims should not be included. Uniformed ServicesFamily Health Plan (USFHP) HOPD Service member and ADD revenue maybe included in the hospital’s submission if the visits were paid utilizingOPPS, but shall be separately identified by the hospital.
3.1.5.7.1.1.2The hospital’s total outpatientrevenue (TRICARE and non-TRICARE) derived from all other third partypayers and private pay.
3.1.5.7.1.1.3The hospital’s estimation ofthe percent of outpatient revenue derived from Service member plusADD OPPS visits (paragraph 3.1.5.7.1.1 divided by paragraph 3.1.5.7.1.2).
3.1.5.7.1.1.4The number of OPPS visits byService members and ADDs. Hospitals shall not include visits by: non-ADFMor non-Service member beneficiaries (i.e., retiree or retiree dependents);TFL beneficiaries; overseas beneficiaries; or beneficiaries withOHI. Only OPPS visits should be reported. Non-OPPS visits, inpatientadmissions, or other encounters shall not be included in the numberof visits. USFHP HOPD Service member and ADD visits may be includedin the hospital’s submission if the visits were paid utilizing OPPS,but shall be separately identified by the hospital.
3.1.5.7.1.1.5Hospital-specific Medicareoutpatient CCR based on the hospital’s most recent cost reporting period.The hospital shall provide both the CCR and the dates of the mostrecent cost reporting period.
3.1.5.7.1.2Thecontractor shall perform a thorough evaluation of the hospital’srequest in paragraph 3.1.5.7.1.1. This evaluation shallconsist of the following:
3.1.5.7.1.2.1The contractor shall evaluatethe hospital’s package for completeness and verify the hospital hasprovided all components required in paragraph 3.1.5.7.1.1.
3.1.5.7.1.2.2The contractor shall performa validation that the hospital meets the disproportionate share criteria:
3.1.5.7.1.2.2.1The contractor shall independentlycalculate the hospital’s outpatient revenue from Service memberand ADD visits, utilizing the contractor’s claims data systems,and dividing this result by the total outpatient revenue reportedby the hospital in paragraph 3.1.5.7.1.2, if the hospital’s submissionshows that 10% or greater of the hospital’s total outpatient revenueis from Service member/ADD OPPS revenue in the prior OPPS year.
3.1.5.7.1.2.2.1.1The contractor shall comparethis result to the hospital’s estimation of outpatient revenue derivedfrom Service member and ADD visits in paragraph 3.1.5.7.1.2.
3.1.5.7.1.2.2.1.2The contractor shall work withthe hospital to resolve discrepancies in the reported data priorto submission of the request to DHA if the hospital’s data showthat they qualify, but the contractor’s claims data show that theydo not.
3.1.5.7.1.2.2.2The contractor shall independentlycalculate the number of ADD/Service member OPPS visits in the priorOPPS year, utilizing the contractor’s claims data systems, if thehospital’s submission shows that there were 50,000 or greater ADD/Servicemember OPPS visits in the prior OPPS year.
3.1.5.7.1.2.2.2.1The contractor shall comparethis result to the hospital’s reported number of visits in paragraph 3.1.5.7.1.4.
3.1.5.7.1.2.2.2.2The contractor shall work withthe hospital to resolve discrepancies in the reported data priorto submission of the request to DHA if the hospital’s data showthat they qualify, but the contractor’s claims data show that theydo not.
3.1.5.7.1.2.2.3The contractor shall performan evaluation to determine whether the hospital is essential for continuednetwork adequacy. The contractor shall report the following dataelements, as well as provide a brief narrative with supporting rationale,describing why the hospital is essential for continued network adequacyand why a GTMCPA payment is necessary to maintain this continuednetwork adequacy:
•Number of available primarycare and specialist providers in the network locality;
•Availability (including reassignment)of military providers in the locations or nearby;
•Appropriate mix of primarycare and specialists needed to satisfy demand and meet appropriatepatient access standards (e.g., appointment/waiting time, traveldistance);
•Efforts that have been madeto create an adequate network, and;
•Other cost effective alternativesand other relevant factors.
3.1.5.7.1.3Thecontractor shall submit all documentation in paragraphs 3.1.5.7.1.1 and 3.1.5.7.1.2 tothe GDA, if the contractor’s independent analysis shows that:
•The hospital met either, orboth, of the disproportionate share criteria; and
•The hospital is essential forcontinued network adequacy.
3.1.5.7.1.4The contractor shall notifythe GDA of their findings, if the hospital fails to meet the disproportionateshare criteria or is not essential for continued network adequacy,but will not submit the full request for a GTMCPA payment to theGDA unless specifically requested by the GDA.
3.1.5.7.1.5TheGDA shall perform a thorough review and analysis of the hospital’ssubmission and the contractor’s review, utilizing any DHA data deemednecessary, to determine if the hospital qualifies for a GTMCPA payment.If the hospital qualifies, the GTMCPA payment will be set, utilizingDHA data, so the hospital’s PCR for TRICARE OPPS services does notexceed a ratio of 1.3. The GDA has the discretion to recommend anypayment amount between $0 and the amount that does not exceed aPCR of 1.3. A hospital shall not be approved for a GTMCPA if thepayment would result in the hospital’s PCR exceeding 1.3 for TRICAREOPPS services. The GDA shall forward their recommendation for approvalof the GTMCPA payment amount, to the Director, DHA. Disapprovals bythe GDA will not be forwarded to the Director, DHA for review andapproval. The PCR shall be calculated as follows:
3.1.5.7.1.5.1Step 1. Determine actual TRICAREOPPS payments, excluding OHI and USFHP claims. Only those line itemswith OPPS payments, and identified with a valid OPPS SI on the claim,will be considered. OPPS SIs of A, B, C, E, E1, F, W, Z,or TB, will be excluded from the calculations. TheseSIs mean that the item was paid outside of OPPS utilizing an alternativereimbursem*nt system, or was not recognized or covered, and thereforewas not eligible to be considered in the calculation of an OPPSGTMCPA payment. The OPPS GTMCPA payment is specific to the OPPSreimbursem*nt system and there is no authority to include non-OPPSpaid amounts in the PCR calculation. Claims for beneficiaries withOHI, claims for beneficiaries with USFHP, claims for ineligiblebeneficiaries, duplicate claims, and denied claims shall not beincluded in the calculation.
3.1.5.7.1.5.2Step 2. Determine the hospital’scosts, by identifying the billed charges for all non-OHI, non-USFHPHOPD and Emergency Room (ER) charges that have an OPPS SI on theclaim, except those with an OPPS SI of A, B, C, E, E1, F, W, Z,or TB. These SIs mean that the item was paid outsideof OPPS utilizing an alternative reimbursem*nt system, or was notrecognized or covered, and therefore was not eligible to be consideredin the calculation of an OPPS GTMCPA payment. There is no authorityto include non-OPPS amounts in the PCR calculation. Claims for beneficiarieswith OHI, claims for beneficiaries with USFHP, claims for ineligiblebeneficiaries, duplicate claims, and denied claims shall not beincluded in the calculation.
3.1.5.7.1.5.3Step 3. Divide Step 1 by Step2.
3.1.5.7.1.5.4Step 4. If the amount in Step3 is lower than 1.3 the hospital may receive a GTMCPA payment so thattotal TRICARE OPPS payments are equal to or less than 130% of theircosts. The percentage used is at the discretion of the Director,DHA.
3.1.5.7.1.6TRICARE OPPS payments to thequalifying hospital will be increased by the Director, DHA, or designeeat his or her discretion by way of an additional GTMCPA paymentafter the end of the OPPS year (May 1 through April 30). Subsequentadjustments to the GTMCPA payment will be issued to the qualifyinghospital for the prior OPPS year, when requested by the hospital,to ensure that claims that were not paid to completion the previousyear are adjusted. These adjustments are separate from the applicableGTMCPA payment approved for the current OPPS year.
3.1.5.7.1.7Upon approval of the GTMCPApayment request by the Director, DHA, the GDA will notify the ContractingOfficer (CO) who will send a letter to the contractor notifyingthem of the GTMCPA payment approval.
3.1.5.7.1.8The contractor shall processthe GTMCPA payments per the instructions in Section G of their contractsunder Invoice and Payment Non-Underwritten - Non-TEDs, Demonstrations.No GTMCPA payments will be sent out without approval from DHA, ContractResource Managment (CRM).
3.1.5.7.1.9DHA shall send an approvalto the contractor to issue GTMCPA payments out of the non-financiallyunderwritten bank account based on fund availability.
3.1.5.7.1.10GTMCPA payments will be reviewedand approved on an annual basis; i.e., they will have to be evaluatedon a yearly basis by the GDA in order to determine if the hospitalcontinues to serve a disproportionate share of Service members andADDs and whether there are any other special circ*mstances significantlyaffecting military contingency capabilities.
3.1.5.7.1.11The Director, DHA (or designee)is the final approval authority for GTMCPA payments. A decision bythe Director, DHA, or designee to approve, reject, adopt, modify,or extend GTMCPA payments is not subject to the appeal and hearingprocedures in 32 CFR 199.10.
3.1.5.7.1.12DHA, upon request, will providethe detailed claims data used to calculate the hospital’s PCR and maximumGTMCPA payment, if any, to the requesting hospital through the contractor.
3.1.5.7.1.13GTMCPAs may be extended toOPPS facilities that have changed their status during the OPPS GTMCPAyear. If an OPPS network facility changes their status during theOPPS year, and the facility was and remained a network facilitythat is essential for military readiness, contingency operations,and network adequacy and the facility served a disproportionateshare of Service members and ADDs during the period of the yearit was subject to OPPS reimbursem*nt, then a pro-rated OPPS GTMCPAmay be authorized. Any OPPS adjustment will only apply to OPPS payments.
3.1.5.7.2Non-Network TMCPAs
TMCPAs may also be extendedto non-network hospitals on a case-by-case basis for specific procedureswhere it is determined that the procedures cannot be obtained timelyenough from a network hospital. This determination will be basedon the contractor’s and GDA’s evaluation of network adequacy datarelated to the specific procedures for which the TMCPA is beingrequested as outlined under paragraph 3.1.5.7.1.3. Non-network TMCPAswill be adjusted on a claim-by-claim basis. The associated costswould be underwritten or non-underwritten following the applicablefinancing rules of the contract.
3.1.5.7.3Applicationof Cost-Sharing
3.1.5.7.3.1Transitional and GTMCPAs arenot subject to cost-sharing.
3.1.5.7.3.2Non-network TMCPAs shall besubject to cost-sharing since they are applied on a claim-by-claim basis.
3.1.5.7.4Reimbursem*nt of Transitional,General, and Non-Network TMCPA costs shall be paid as pass-throughcosts. The contractor does not financially underwrite these costs.
3.2Transitional Pass-Through forInnovative Medical Devices, Drugs, and Biologicals
3.2.1ItemsSubject to Transitional Pass-Through Payments
3.2.1.1CurrentOrphan Drugs
A drugor biological that is used for a rare disease or condition withrespect to which the drug or biological has been designated undersection 526 of the Federal Food, Drug, and Cosmetic Act if paymentfor the drug or biological as an outpatient hospital service wasbeing made on the first date that the OPPS was implemented.
Note:Orphan drugs will be paid separatelyat the Average Sales Price (ASP) + 6%, which represents a combined paymentfor acquisition and overhead costs associated with furnishing theseproducts. Orphan drugs will no longer be paid based on the use ofdrugs because all orphan drugs, both single-indication and multi-indication, willbe paid under the same methodology. The TRICARE contractors willnot be required to calculate orphan drug payments.
3.2.1.2Current Cancer Therapy Drugs,Biologicals, and Brachytherapy
These items are drugs or biologicalsthat are used in cancer therapy, including (but not limited to) chemotherapeuticagents, antiemetics, hematopoietic growth factors, colony stimulatingfactors, biological response modifiers, biphosphonates, and a deviceof brachytherapy if payment for the drug or biological as an outpatienthospital service was being made on the first date that the OPPSwas implemented.
3.2.1.3CurrentRadiopharmaceutical Drugs and Biological Products
A radiopharmaceutical drugor biological product used in diagnostic, monitoring, and therapeuticnuclear medicine procedures if payment for the drug or biologicalas an outpatient hospital service was being made on the first datethat the OPPS was implemented.
3.2.1.4NewMedical Devices, Drugs, and Biologicals
New medical devices, drugs,and biologic agents, will be subject to transitional pass-throughpayment in instances where the item was not being paid for as ahospital outpatient service as of December 31, 1996, and where thecost of the item is “not insignificant” in relation to the hospitalOPPS payment amount.
3.2.2Itemseligible for transitional pass-through payments are generally codedunder a Level II HCPCS code with an alpha prefix of C.
•Pass-through device categoriesare identified by SI of H
•Pass-through drugs and biologicalagents are identified by SI of G
3.2.3Reduction of Transitional Pass-ThroughPayments for Diagnostic Radiopharmaceuticals to Offset Costs PackagedInto APC Groups
3.2.3.1All non-pass-through diagnosticradiopharmaceuticals are packaged.
3.2.3.2For OPPS pass-through purposes,radiopharmaceuticals are considered to be “drugs” where the transitionalpass-through for the drugs and biologicals is the difference betweenthe amount paid ASP + 4% or the Part B drug CAP rate and the otherwiseapplicable OPPS payment amount of ASP + 6%.
3.2.3.3New pass-through diagnosticradiopharmaceuticals with no ASP information or CAP rate will bepaid at ASP + 6%, while those without ASP information will be paidbased on Wholesale Acquisition Cost (WAC) or, if WAC is not available,based on 95% of the product’s most recently published Average WholesalePrice (AWP).
3.2.3.4Offset Calculations
3.2.3.4.1An established methodologywill be employed to estimate the portion of each APC payment rate thatcould reasonably be attributed to the cost of an associated deviceeligible for pass-through payment (the APC device offset).
3.2.3.4.2New pass-through device categorieswill be evaluated individually to determine if there are device costspackaged into the associated procedural APC payment rate - suggestingthat a device offset amount would be appropriate.
3.2.3.4.3The offset will cease to applywhen the diagnostic radiopharmaceutical expires from pass-through status.
3.2.4Transitional Pass-Through DeviceCategories
3.2.4.1Excluded Medical Devices
Equipment, instruments, apparatuses,implements or items that are generally used for diagnostic or therapeutic purposesthat are not implanted or incorporated into a body part, and thatare used on more than one patient (that is, are reusable), are excludedfrom pass-through payment. This material is generally consideredto be a part of hospital overhead costs reflected in the APC payments.
3.2.4.2Included Medical Devices
The following implantable itemsmay be considered for the transitional pass-through payments:
•Prosthetic implants (otherthan dental) that replace all or part of an internal body organ.
•Implantable items used in performingdiagnostic x-rays, diagnostic laboratory tests, and other diagnostictests.
Note:Any Durable Equipment (DE),orthotics, and prosthetic devices for which transitional pass-through paymentdoes not apply will be paid under the DMEPOS fee schedule when thehospital is acting as the supplier (paid outside the PPS).
3.2.4.3Pass-Through Payment Criteriafor Devices
Pass-throughpayments will be made for new or innovative medical devices Medicareestablishes the list of devices eligible for pass-through paymentsat http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.
3.2.4.4Duration of Transitional Pass-ThroughPayments
3.2.4.4.1The duration of transitionalpass-through payments for devices is for at least two, but not more thanthree years. This period begins with the first date on which a transitionalpass-through payment is made for any medical device that is describedby the category.
3.2.4.4.2The costs of devices no longereligible for pass-through payments will be packaged into the costs ofthe procedures with which they are normally billed.
3.2.5General Coding and BillingInstructions and Explanations
3.2.5.1Devices implanted, removed,and implanted again, not associated with failure (applies to transitional pass-throughdevices only):
•In instances where the physicianis required to implant another device because the first device fractured,the hospitals may bill for both devices - the device that resultedin fracture and the one that was implanted into the patient.
•It is realized that there maybe instances where an implant is tried but later removed due tothe device’s inability to achieve the necessary surgical resultor due to inappropriate size selection of the device by the physician(e.g., physician implants an anchor to bone and the anchor breaksbecause the bone is too hard or must be replaced with a larger anchorto achieve a desirable result). In such instances, separate reimbursem*nt willbe provided for both devices. This situation does not extend todevices that result in failure or are found to be defective. Forfailed or defective devices, hospitals are advised to contact thevendor/manufacturer.
Note:This applies to transitionalpass-through devices only and not to devices packaged into an APC.
3.2.5.2Kits. Manufacturers frequentlypackage a number of individual items used in a particular procedurein a kit. Generally, to avoid complicating the category list unnecessarilyand to avoid the possibility of double coding, codes for such kitshave not been established. However, hospitals are free to purchaseand use such kits.
3.2.5.2.1If the kits contain individualitems that separately qualify for transitional pass-through payment, theseitems may be separately billed using applicable codes. Hospitalsmay not bill for transitional pass-through payments for suppliesthat may be contained in kits.
3.2.5.2.2HCPCS codes that describe deviceswithout pass-through status and that are packaged in kits with otheritems used in a particular procedure, hospitals may consider allkit costs in their line-item charge for the associated device/devicecategory HCPCS code that is assigned SI of N for packagedpayment (i.e., hospitals may report the total charge for the wholekit with the associated device/device category HCPCS code. Paymentfor device/device category HCPCS codes without pass-through statusis packaged into payment for the procedures in which they are used,and these codes are assigned SI of N. In the case ofa device kit, should a hospital choose to report the device chargealone under a device/device category HCPCS code with SI of N,the hospital should report charges for other items that may be includedin the kit on a separate line on the claim.
3.2.5.3Multiple Units. Hospitals mustbill for multiple units of items that qualify for transitional pass-through payments,when such items are used with a single procedure, by entering thenumber of units used on the bill.
3.2.5.4Reprocessed Devices. Hospitalsmay bill for transitional pass-through payments only for those devicesthat are “single use.” Reprocessed devices may be considered “singleuse” if they are reprocessed in compliance with the enforcementguidance of the FDA relating to the reprocessing of devices applicableat the time the service is delivered.
3.2.6Reduction of Transitional Pass-ThroughPayments to Offset Costs Packaged into APC Groups
3.2.6.1Each new device category willbe reviewed on a case-by-case basis to determine whether device costsassociated with the new category were packaged into the existingAPC structure.
3.2.6.2If it is determined that, forany new device category, no device costs associated with the new categorywere packaged into existing APCs, the offset amount for the newcategory would be set to $0 for CY 2008.
3.2.7Calculation of TransitionalPass-Through Payment for a Pass-Through Device
3.2.7.1Device pass-through paymentis calculated by applying the statewide CCR to the hospital’s charges onthe claim and subtracting any appropriate pass-through offset. StatewideCCRs are based on the geographical CBSA (two digit = rural, fivedigit = urban).
3.2.7.2The following are two examplesof the device pass-through calculations, one incorporating a device offsetamount applicable to CY 2003 and the other only applying the CCR(offsets set to $0 for CY 2005). Deductibles, cost-shares and copaymentsexamples are based on dates of service prior to January 1, 2018.See Chapter 2 for deductibles,copayments, and cost-shares for dates of service on or after January1, 2018:
3.2.7.3The offset adjustment is appliedonly when a pass-through device is billed in addition to the APC.
| Example 1: | Transitional Pass-Through PaymentCalculation with Offset | ||
| Device: (C1884 - EmbolizationProtective System) | |||
| Device cost = Hospital chargeconverted to cost = $1,200.00 | |||
| Associated procedure: CPT code92982 (APC0083) | |||
| Payment rate = $3,289.42 | |||
| Coinsurance amount = $657.88(Standard ADFM who has met his or her yearly deductible) | |||
| Total offset amount to be appliedfor each APC that contains device costs = $802.06 | |||
| Note:The total offset from the deviceamount is wage-index adjusted and the multiple procedure discount factoris adjusted before it is subtracted from the device cost. (Referto paragraph 3.2.7.4 for detailed applicationof discounting factors to offset amounts.) This example assumesa wage index of 1.0000. | |||
| Device cost adjusted by totaloffset amount: $1,200 - $802.06 = $397.94 | |||
| TRICARE program payment (beforewage index adjustment) for APC 0083: | |||
| $3,289.42 - $657.88 = $2,631.54 | |||
| TRICARE payment for pass-throughdevice HCPCS code C1884 = $397.94 | |||
| Beneficiary cost-share liabilityfor APC 0083 = $657.88 | |||
| Total amount received by providerfor APC 0083 and pass-through device HCPCS code C1884: | |||
| $2,631.54 | TRICARE program payment forCPT code 92982 when used with device code HCPCS C1884 | ||
| 657.88 | Beneficiary coinsurance amountfor CPT code 92982 | ||
| + 397.94 | Transitional pass-through paymentfor device | ||
| $3,687.36 | Total amount received by theprovider | ||
| Example 2: | Transitional Pass-Through PaymentCalculation without Offset | ||
| Device: (C1884 - EmbolizationProtective System) | |||
| Device cost = Hospital chargeconverted to cost = $1,500.00 | |||
| Associated procedure: CPT code92982 (APC0083) | |||
| Payment rate = $3,289.42 | |||
| Coinsurance amount = $657.88(standard ADFM who has met his or her yearly deductible) | |||
| Total offset amount to be appliedfor each APC that contains device costs = $0. | |||
| Note:The total offset from the deviceamount is wage-index adjusted and the multiple procedure discount factoris adjusted before it is subtracted from the device cost. (Referto paragraph 3.2.7.4 for detailed applicationof discounting factors to offset amounts.) This example assumesa wage index of 1.0000. | |||
| Device cost adjusted by totaloffset amount: $1,500 - $0 = $1,500 | |||
| TRICARE program payment (beforewage index adjustment) for APC 0083: | |||
| $3,289.42 - $657.88 = $2,631.54 | |||
| TRICARE payment for pass-throughdevice HCPCS code C1884 = $1,500 | |||
| Beneficiary cost-share liabilityfor APC 0083 = $657.88 | |||
| Total amount received by providerfor APC 0083 and pass-through device HCPCS code C1884: | |||
| $2,631.54 | TRICARE program payment forCPT code 92982 when used with device code HCPCS code C1884 | ||
| 657.88 | Beneficiary coinsurance amountfor CPT code 92982 | ||
| +1,500.00 | Transitional pass-through paymentfor device | ||
| $4,789.42 | Total amount received by theprovider | ||
| Note:Transitional payments for devices(SI of H) are not subject to beneficiary cost-sharing/copayments. | |||
3.2.7.4Stepsinvolved in applying multiple discounting factors to offset amountsprior to subtracting from the device cost.
| Step 1: | For each APC with an offsetmultiply the offset by the discount percent (whether it is 50%,75%, 100%, or 200%) and the units of service. |
| (Offset x Discount Rate x Unitsof Service) | |
| Step 2: | Sum the products of Step 1. |
| Step 3: | Wage adjust the sum of theproducts calculated in Step 2. |
| (Step 2 Amount x Labor % xWage Index) + Step 2 Amount x Nonlabor %) | |
| Step 4: | If the units of service fromthe procedures with offsets are greater than the device units ofservice, then Step 3 is adjusted by device units divided by procedureoffset units. |
| [(Step 2 Amount x Labor % xWage Index) + (Step 2 Amount x Nonlabor %) x (Device Units ÷ Offset ProcedureUnits)] | |
| otherwise | |
| (Step 2 Amount x Labor % xWage Index) Step 2 Amount x Non-Labor %) | |
| Example: | If there are two procedureswith offsets but only one device, then the final offset is reducedby 50%. |
| Step 5: | If there is only one line itemwith a device, then the amount calculated in Step 4 is subtractedfrom the line item charge adjusted to cost. |
| [Step 4 Amount - (Line ItemCharge x State CCR)] | |
| Example: | If there are multiple devices,then the amount from Step 4 is allocated to the line items withdevices based on their charges. |
| (Line Item Device Charge ÷Sum of Device Charges) |
3.3Drugs,Biologicals, and Radiopharmaceuticals without Pass-Through Status
3.3.1Radiopharmaceuticals, drugs,and biologicals which do not have pass-through status, are paidin one of three ways:
•Packaged payment, or
•Separate payment (individualAPCs), or
•Allowable charge.
3.3.2The cost of drugs and radiopharmaceuticalsare generally packaged into the APC payment rate for the procedureor treatment with which the products are usually furnished:
•Hospitals do not receive separatepayment for packaged items and supplies; and
•Hospitals may not bill beneficiariesseparately for any such packaged items and supplies whose costsare recognized and paid for within the national OPPS payment ratefor the associated procedure or services.
3.3.3Although diagnostic and therapeuticradiopharmaceutical agents are not classified as drugs or biologicals,separate payment has been established for them under the same packagingthreshold policy that is applied to drugs and biologicals; i.e.,the same adjustments will be applied to the median costs for radiopharmaceuticalsthat will apply to non-pass-through, separately paid drugs and biologicals.
3.4Criteria for Packaging Paymentfor Drugs, Biologicals and Radiopharmaceuticals
3.4.1Generally,the cost of drugs and radiopharmaceuticals are packaged into theAPC payment rate for the procedure or treatment with which the productsare usually furnished. However, packaging for certain drugs and radiopharmaceuticals,especially those that are particularly expensive or rarely used,might result in insufficient payments to hospitals, which couldadversely affect beneficiary access to medically necessary services.
3.4.2Payments for drugs and radiopharmaceuticalsare packaged into the APCs with which they are billed if the mediancost per day for the drug or radiopharmaceutical is less than thresholddefined by CMS ($95 for CY 2015, $100 for CY 2016), and publishedin the CMS OPPS annual Final Rule. Separate APC payment is establishedfor drugs and radiopharmaceuticals for which the median cost perday exceeds this threshold ($95 for CY 2015, $100 for CY 2016).
3.4.3All non-pass-through diagnosticradiopharmaceuticals and contrast agents, regardless of their perday costs for are packaged.
3.4.4PaymentFor Drugs, Biologicals, And Radiopharmaceuticals Without Pass-ThroughStatus That Are Not Packaged
3.4.4.1“SpecifiedCovered Outpatient Drugs” Classification
3.4.4.1.1Special classification (i.e.,“specified covered outpatient drug”) is required for certain separately payableradiopharmaceutical agents and drugs or biologicals for which thereare specifically mandated payments.
3.4.4.1.2The following drugs and biologicalsare designated exceptions to the “specified covered outpatient drugs”definition (i.e., not included within the designated category classification):
•A drug or biological for whichpayment was first made on or after January 1, 2003, under the transitionalpass-through payment provision.
•A drug or biological for whicha temporary HCPCS code has been assigned.
•Orphan drugs.
3.4.4.2Payment of Specified OutpatientDrugs, Biological, and Radiopharmaceuticals
3.4.4.2.1Specified outpatient drugsand biologicals will be paid a combined rate of the ASP + 4% whichis reflective of the present hospital acquisition and overhead costsfor separately payable drugs and biologicals under the OPPS. Inthe absence of ASP data, the WAC will be used for the product toestablish the initial payment rate. If the WAC is also unavailable,then payment will be calculated at 95% of the most recent AWP.
3.4.4.2.2Since there is no ASP datafor separately payable specified radiopharmaceuticals, reimbursem*nt willbe based on charges converted to costs.
•Therapeutic radiopharmaceuticalsmust have a mean per day cost of more than the threshold establishedby Medicare in the CMS OPPS annual Final Rule ($95 for CY 2015,$100 for CY 2016) in order to be paid separately.
•Diagnostic radiopharmaceuticalsand contrast agents are packaged regardless of per day cost sincethey are ancillary and supportive of the therapeutic proceduresin which they are used.
3.4.4.3Designated SI
The HCPCS codes for the abovethree categories of “specified covered outpatient drugs” are designatedwith the SI of K - non-pass-through drugs, biologicals,and radiopharmaceuticals paid under the hospital OPPS (APC Rate). Referto DHA’s OPPS website at http://www.health.mil/rates forAPC payment amounts of separately payable drugs, biologicals andradiopharmaceuticals.
3.4.5Paymentfor New Drugs and Biologicals With HCPCS Codes and Without Pass-Through Applicationand Reference AWP or Hospital Claims Data
3.4.5.1New drugs and biologicals withHCPCS codes, but which do not have pass-through status and are withoutOPPS hospital claims data, will be paid at ASP + 4% consistent withits final payment methodology for other separately payable non-pass-throughdrugs and biologicals.
3.4.5.2Payment for all new non-pass-throughdiagnostic radiopharmaceuticals will be packaged.
3.4.5.3In the absence of ASP data,the WAC will be used for the product to establish the initial paymentrate for new non-pass-through drugs and biologicals with HCPCS codes,but which are without OPPS claims data. If the WAC is also unavailable,payment will be made at 95% of the product’s most recent AWP.
3.4.5.4SI K will be assignedto HCPCS codes for new drugs and biologicals for which pass-through applicationhas not been received.
3.4.5.5In order to determine the packagingstatus of these items for CY 2008 an estimate of the per day cost ofeach of these items was calculated by multiplying the payment ratefor each product based on ASP + 4%, by a estimated average numberof units of each product that would typically be furnished to apatient during one administration in the hospital outpatient setting.Items for which the estimated per day cost is less than or equalto the threshold established by Medicare in the CMS OPPS annualFinal Rule ($95 for CY 2015, $100 for CY 2016) will be packaged.For drugs currently covered under the CAP the payment rates calculatedunder that program that were in effect as of April 1, 2008 willbe used for purposes of packaging decisions.
3.4.6Drugs and Biologicals Not Eligiblefor Pass-Through Status and Receiving Separate Non-Pass-ThroughPayment
3.4.6.1Payment will be based on mediancosts derived from CY claims data for drugs and biologicals that havebeen:
•Separately paid since implementationof the OPPS under Medicare, but were not eligible for pass-through status;and
•Historically packaged withthe procedures with which they were billed, even though their mediancost per day was above the packaging threshold ($95 for CY 2015,$100 for CY 2016).
3.4.6.2Payment based on median costsshould be adequate for hospitals since these products are generally olderor low-cost items.
3.4.7Paymentfor New Drugs, Biologicals, and Radiopharmaceuticals Before HCPCSCodes Are Assigned
3.4.7.1The following payment methodologywill enable hospitals to begin billing for drugs and biologicals thatare newly approved by the FDA and for which a HCPCS code has notyet been assigned by the National HCPCS Alpha-Numeric Workgroupthat could qualify them for pass-through payment under the OPPS:
•Hospitals should be instructedto bill for a drug or biological that is newly approved by the FDAby reporting the National Drug Code (NDC) for the product alongwith a new HCPCS code C9399, “Unclassified Drug or Biological.”
•When HCPCS code C9399 appearson the claim, the OCE suspends the claim for manual pricing by the contractor.
•The new drug, biological and/orradiopharmaceutical will be priced at 95% of its AWP from a scheduleof allowable charges based on the AWP, and process the claim forpayment.
•The above approach enableshospitals to bill and receive payment for a new drug, biologicalor radiopharmaceutical concurrent with it’s approval by the FDA.
3.4.7.2Hospitals will discontinuebilling C9399 and the NDC upon implementation of a HCPCS code, SI,and appropriate payment amount with the next quarterly OPPS update.
3.4.8Package payment for any biologicalwithout pass-through status that is surgically inserted or implanted(through a surgical incision or a natural orifice) into the paymentfor the associated surgical procedure.
3.4.8.1As a result, HCPCS codes C9352and C9353 are packaged and assigned SI of N.
3.4.8.2Any new biologicals withoutpass-through status that are surgically inserted or implanted willbe packaged.
3.4.9DrugsAnd Non-Implantable Biologicals With Expiring Pass-Through Status
3.4.9.1CY 2009 payment methodologyof packaged or separate payment based on their estimated per day costs,in comparison with the CY 2009 drug packaging threshold.
3.4.9.2Packaged drugs and biologicalsare assigned SI of N and drugs and biologicals thatcontinue to be separately paid as non-pass-through products areassigned SI of K.
3.5Drug Administration Codingand Payment
3.5.1HCPCS Level I drug administrationcodes, APC and SI assignments can be found at http://www.health.mil/rates.
3.5.2Drugs for which the mediancost per day is greater than the threshold established by Medicarein the CMS OPPS annual Final Rule ($95 for CY 2015, $100 for CY2016) are paid separately and are not packaged into the paymentfor the drug administration. Separate payment for drugs with a mediancost in excess of the packaging threshold ($95 for CY 2015, $100for CY 2016) will result in more equitable payment for both thedrugs and their administration.
3.6Codingand Payment Policies for Drugs and Supplies
3.6.1DrugCoding
3.6.1.1Drugs for which separate paymentis allowed are designated by SI of K and must be reportedusing the appropriate HCPCS code.
3.6.1.2Drugs that are reported withouta HCPCS code will be packaged under the revenue center code, underOPPS: 250, 251, 252, 254, 255, 257, 258, 259, 631, 632, or 633.
3.6.1.3Drugs billed using revenuecode 636 (“Drugs requiring detailed coding”) require use of the appropriateHCPCS code, or they will be denied.
3.6.1.4Reporting charges of packageddrugs is critical because packaged drug costs are used for calculating outlierpayments and hospital costs for the procedure and service with whichthe drugs are used in the course of the annual OPPS updates.
3.6.2Payment for the Unused Portionof a Drug
3.6.2.1Once a drug is reconstitutedin the hospital’s pharmacy, it may have a limited shelf life. Sincean individual patient may receive less than the fully reconstitutedamount, hospitals are encouraged to schedule patients in such away that the hospital can use the drug most efficiently. However,if the hospital must discard the remainder of a vial after administeringpart of it to a TRICARE patient, the provider may bill for the amountof the drug discarded, along with the amount administered.
3.6.2.2In the event that a drug isordered and reconstituted by the hospital’s pharmacy, but not administeredto the patient, payment will be made under OPPS.
Example 1:Drug X is available only ina 100-unit size. A hospital schedules three patients to receivedrug X on the same day within the designated shelf life of the product.An appropriate hospital staff member administers 30 units to eachpatient. The remaining 10 units are billed to OPPS on the accountof the last patient. Therefore, 30 units are billed on behalf ofthe first patient seen, and 30 units are billed on behalf of thesecond patient seen. Forty units are billed on behalf of the lastpatient seen because the hospital had to discard 10 units at thatpoint.
Example 2:An appropriatehospital staff member must administer 30 units of drug X to a patient,and it is not practical to schedule another patient for the samedrug. For example, the hospital has only one patient who requiresdrug X, or the hospital sees the patient for the first time anddoes not know the patient’s condition. The hospital bills for 100units on behalf of the patient, and OPPS pays for 100 units.
3.6.2.3Coding for Supplies
3.6.2.3.1Supplies that are an integralcomponent of a procedure or treatment are not reported with a HCPCScode.
3.6.2.3.2Charges for such supplies aretypically reflected either in the charges on the line for the HCPCSfor the procedure, or on another line with a revenue code that willresult in the charges being assigned to the same cost center towhich the cost of those services are assigned in the cost report.
3.6.2.3.3Hospitals should report drugsthat are treated as supplies because they are an integral part ofa procedure or treatment under the revenue code associated withthe cost center under which the hospital accumulates the costs forthe drugs.
3.6.3Recognitionof Multiple HCPCS Codes for Drugs
3.6.3.1Prior to January 1, 2008, theOPPS generally recognized only the lowest available administrativedose of a drug if multiple HCPCS codes existed for the drug; forthe remainder of the doses, the OPPS assigned a SI B indicatingthat another code existed for OPPS purposes. For example, if drugX has two HCPCS codes, one for a 1 ml dose and another for a 5 mldose, the OPPS would assign a payable SI to the 1 ml dose and SI B tothe 5 ml dose.
3.6.3.2Hospitals then were requiredto bill the appropriate number of units for the 1 ml dose in orderto receive payment under OPPS.
3.6.3.3Beginning January 1, 2008,the OPPS has recognized each HCPCS code for a Part B drug, regardlessof the units identified in the drug descriptor.
3.6.3.4Hospitals may choose to reportmultiple HCPCS codes for a single drug, or to continue billing the HCPCScode with the lowest dosage descriptor available.
3.6.4Correct Reporting of Drugsand Biologicals When Used As Implantable Devices
3.6.4.1When billing for biologicalswhere the HCPCS code describes a product that is solely surgically implantedor inserted, whether the HCPCS code is identified as having pass-throughstatus or not, hospitals are to report the appropriated HCPCS codefor the product.
3.6.4.2Separate payment will be madefor an implanted biological when it has pass-through status.
3.6.4.3Ifthe implantable device does not have pass-through status it willbe packaged into the payment for the associated procedure.
3.6.5Correct Reporting of Unitsfor Drugs
3.6.5.1Units of drugs administeredto patients should be accurately reported in terms of the dosage specifiedin the full HCPCS code descriptor. That is, units should be reportedin multiples of the units included in the HCPCS descriptor.
3.6.5.2For example, if the descriptionfor the drug code is 6 mg, and 6 mg of the drug was administeredto the patients, the units bill should be one. If the descriptionfor the drug code is 50 mg, but 200 mg of the drug was administered,the units billed should be four.
3.6.5.3Hospitals should not bill theunits based on the way the drug is packaged, stored or stocked.That is, if the HCPCS descriptor for the drug code specifies 1 mgand a 10 mg vial of the drug was administered to the patient, bill10 units even though only one vial was administered.
3.7Orphan Drugs
3.7.1Continueto use the following criteria for identifying single indicationorphan drugs that are used solely for orphan conditions:
•The drug is designated as anorphan drug by the FDA and approved by the FDA for treatment ofonly one or more orphan condition(s).
•The current United States PharmacopoeiaDrug Information (USPDI) shows that the drug has neither an approveduse nor an off-label use for other than the orphan condition(s).
3.7.2Twelve single indication orphandrugs have currently been identified as having met these criteria.
3.7.3Payment Methodology
3.7.3.1Pay all 12 single indicationorphan drugs at the rate of 88% of AWP or 106% of the ASP, whicheveris higher.
3.7.3.2However, for drugs where 106%of ASP would exceed 95% of AWP, payment would be capped at 95% ofAWP, which is the upper limit allowed for sole source specifiedcovered outpatient drugs.
3.8Vaccines
3.8.1Hospitals will be paid forinfluenza, pneumococcal pneumonia and hepatitis B vaccines basedon allowable charge methodology; i.e., will be paid the CMAC ratefor these vaccines.
3.8.2Separatelypayable vaccines other than influenza, pneumococcal pneumonia andhepatitis B will be paid under their own APC.
3.9Payment Policy for Radiopharmaceuticals
Separately paid radiopharmaceuticalsare classified as “specified covered outpatient drugs” subject tothe following packaging and payment provisions:
3.9.1The threshold for the establishmentof separate APCs for radiopharmaceuticals is determined by Medicareand published in the CMS OPPS annual Final Rule ($95 for CY 2015,$100 for CY 2016).
3.9.2A radiopharmaceuticalthat is covered and furnished as part of covered outpatient departmentservices for which a HCPCS code has not been assigned will be reimbursedan amount equal to 95% of its AWP.
3.9.3Radiopharmaceuticalswill be excluded from receiving outlier payments.
3.9.4Applications will be acceptedfor pass-through status; however, in the event the manufacturerseeking pass-through status for a radiopharmaceutical does not submitdata in accordance with the requirements specified for new drugsand biologicals, payment will be set for the new radiopharmaceuticalas a “specified covered outpatient drug.”
3.10Blood and Blood Products
3.10.1Since the OPPS was first implemented,separate payment has been made for blood and blood products in APCsrather than packaging them into payment for the procedures withwhich they were administered. The APCs for these products are intendedto recover the costs of the products. SI R was created to denoteblood and blood products.
3.10.2The OPPS provider also shouldreport charges for processing and storage services on a separateline using Revenue Code 0390 (General Classification), 0392 (BloodProcessing/Storage), or 0399 (Blood Processing/Storage; Other BloodStorage and Processing), along with appropriate blood HCPCS code,the number of units transfused, and the Line Item Date Of Service(LIDOS).
3.10.3Administrative costs for theprocessing and storage specific to the transfused blood productare included in the APC payment, which is based on hospitals’ charges.
3.10.4Payment for the collection,processing, and storage of autologous blood, as described by CPTcode 86890 and used in transfusion, is made through APC 347 (LevelIII Transfusion Laboratory Procedures).
3.10.5Payment rates for blood andblood products will be determined based on median costs.
3.10.6Blood clotting factors arepaid at ASP + 4%, plus an additional payment for the furnishingfee that is also a part of the payment for blood clotting factorsfurnished in physician’s offices.
3.11Adjustmentto Payment in Cases of Devices Replaced with Partial Credit forthe Replaced Device
3.11.1Hospitals will be requiredto append the modifier FC to the HCPCS code for theprocedure in which the device was inserted on claims when the devicethat was replaced with partial credit under warranty, recall, orfield action is one of the devices in Figure 13.3-3. Hospitals shouldnot append the modifier to the HCPCS code if the device is not listedin Figure 13.3-3.
3.11.2Claims containing the FC modifierwill not be accepted unless the modifier is on a procedure codewith SI S, T, V, or X5.
3.11.3If the APC to which the procedureis assigned is one of the APCs listed in Figure 13.3-4, the Pricer will reducethe unadjusted payment rate for the procedure by an amount equalto the percent in Figure 13.3-4 for partial credit device replacement(i.e., 50% of the device offset when both a device code listed in Figure 13.3-3 is presenton the claim and the procedure code maps to an APC listed in Figure 13.3-4)multiplied by the unadjusted payment rate.
3.11.4The partial credit adjustmentwill occur before wage adjustment and before the assessment to determineif the reductions for multiple procedures (signified by the presenceof more than on procedure on the claim with a SI of T),discontinued service (signified by modifier 73) orreduced service (signified by modifier 52) apply.
3.12Payment When Devices Are ReplacedWithout Cost or Where Credit for a Replacement Device is Furnishedto the Hospital
3.12.1Payments will be reduced forselected APCs in cases in which an implanted device is replacedwithout cost to the hospital or with full credit for the removeddevice. The amount of the reduction to the APC rate will be calculatedin the same manner as the offset amount that would be applied ifthe implanted device assigned to the APC has pass-through status.
3.12.2This permits equitable adjustmentsto the OPPS payments contingent on meeting all of the following criteria:
3.12.2.1All procedures assigned tothe selected APCs must require implantable devices that would be reportedif device replacement procedures are performed;
3.12.2.2The required devices must besurgically inserted or implanted devices that remain in the patient’s bodyafter the conclusion of the procedures, at least temporarily; and
3.12.2.3The offset percent for theAPC (i.e., the median cost of the APC without device costs dividedby the median cost of the APC with device costs) must be significant--significantoffset percent is defined as exceeding 40%.
3.12.3The presence of the modifier FB [“ItemProvided Without Cost to Provider, Supplier, or Practitioner or CreditReceived for Replacement (examples include, but are not limitedto devices covered under warranty, replaced due to defect, or providedas free samples)”] would trigger the adjustment in payment if theprocedure code to which modifier FB was amended appearedin Figure 13.3-3 andwas also assigned to one of the APCs listed in Figure 13.3-4. OPPS paymentsfor implantation procedures to which the FB modifieris appended are reduced to 100% of the device offset for no-cost/fullcredit cases.
| Device HCPCS Code | Descriptor |
|---|---|
| C1721 | AICD, dual chamber |
| C1722 | AICS, single chamber |
| C1728 | Cath, brachytx seed adm |
| C1764 | Event recorder, cardiac |
| C1767 | Generator, neurostim, imp |
| C1771 | Rep Dev urinary, w/sling |
| C1772 | Infusion pump, programmable |
| C1776 | Joint device (implantable) |
| C1777 | Lead, AICD, endo single coil |
| C1778 | Lead neurostimulator |
| C1779 | Lead, pmkr, transvenous VDD |
| C1785 | Pmkr, dual rate-resp |
| C1786 | Pmkr, single rate-resp |
| C1789 | Prosthesis, breast, imp |
| C1813 | Prostheses, penile, inflatab |
| C1815 | Pros, urinary sph, imp |
| C1820 | Generator, neuro, rechg batsys |
| C1882 | AICD, other than sing/dual |
| C1891 | Infusion pump, non-prog, perm |
| C1895 | Lead, AICD, endo dual coil |
| C1896 | Lead, AICD, non sing/dual |
| C1897 | Lead, neurostim, test kit |
| C1898 | Lead, pmkr, other than trans |
| C1899 | Lead, pmkr/AICD combination |
| C1900 | Lead coronary venous |
| C2619 | Pmkr, dual, non rate-resp |
| C2620 | Pmkr, single, non rate-resp |
| C2621 | Pmkr, other than sing/dual |
| C2622 | Pmkr, other than sing/dual |
| C2626 | Infusion pump, non-prog, temp |
| C2631 | Rep dev, urinary, w/o sling |
| L8600 | Implant breast silicone/eq |
| L8614 | Cochlear device/system |
| L8685 | Implt nrostm pls gen sng rec |
| L8686 | Implt nrostm pls gen sng non |
| L8687 | Implt nrostm pls gen dua rec |
| L8688 | Implt nrostm pls gen dua non |
| L8690 | Aud osseo dev, int/ext comp |
| APC | SI | APC GroupTitle | DeviceOffset Percentage For No-Cost/Full Credit Case | DeviceOffset Percentage For Partial Credit Case |
|---|---|---|---|---|
| 0039 | S | Level I Implantation of Neurostimulator | 84 | 42 |
| 0040 | S | Percutaneous Implantation ofNeurostimulator Electrodes, Excluding Cranial Nerve | 57 | 29 |
| 0061 | S | Laminectomy, Laparoscopy, orIncision for Implantation of Neurostimulator Electrodes, Excluded | 62 | 31 |
| 0089 | T | Insertion/Replacement of PermanentPacemaker and Electrodes | 72 | 36 |
| 0090 | T | Insertion/Replacement of PacemakerPulse Generator | 74 | 37 |
| 0106 | T | Insertion/Replacement/Repairof Pacemaker Leads and/or Electrodes | 43 | 21 |
| 0107 | T | Insertion of Cardioverter-Defibrillator | 89 | 45 |
| 0108 | T | Insertion/Replacement/Repairof Cardioverter-Defibrillator Leads | 89 | 44 |
| 0222 | T | Level II Implantation of NeurologicalDevice | 85 | 42 |
| 0225 | S | Implantation of NeurostimulatorElectrodes, Cranial | 62 | 31 |
| 0227 | T | Implantation of Drug InfusionDevices | 82 | 41 |
| 0229 | T | Transcatheter Placement ofIntravascular Shunts | 84 | 42 |
| 0259 | T | Level IV ENT Procedures | 88 | 44 |
| 0315 | T | Level III Implantation of Neurostimulator | 59 | 29 |
| 0385 | S | Level I Prosthetic UrologicalProcedures | 69 | 34 |
| 0386 | S | Level II Prosthetic UrologicalProcedures | 71 | 36 |
| 0418 | T | Insertion of Left VentricularPacing Elect | 59 | 29 |
| 0425 | T | Level II Arthroplasty or Implantationwith Prosthesis | 46 | 23 |
| 0648 | T | Level IV Breast Surgery | 77 | 38 |
| 0654 | T | Insertion/Replacement of aPermanent Dual Chamber Pacemaker | 76 | 38 |
| 0655 | T | Insertion/Replacement/Conversionof a Permanent Dual Chamber Pacemaker | 71 | 36 |
| 0680 | S | Insertion of Patient ActivatedEvent Recorders | 71 | 35 |
| 0681 | T | Knee Arthroplasty | 71 | 36 |
3.12.4If the APC to which the devicecode (i.e., one of the codes in Figure 13.3-3) is assigned is on the APCs listedin Figure 13.3-4,the unadjusted payment rate for the procedure APC will be reducedby an amount equal to the percent in Figure 13.3-4 times the unadjustedpayment rate.
3.12.5In cases in which the deviceis being replaced without cost, the hospital will report a tokendevice charge. However, if the device is being inserted as an upgrade,the hospital will report the difference between its usual chargefor the device being replaced and the credit for the replacementdevice.
3.12.6Multiple procedure reductionswould also continue to apply even after the APC payment adjustmentto remove payment for the device cost, because there would stillbe the expected efficiencies in performing the procedure if it wasprovided in the same operative session as another surgical procedure.Similarly, if the procedure was interrupted before administrationof anesthesia (i.e., there was modifier 52 or 73 onthe same line as the procedure), a 50% reduction would be takenfrom the adjusted amount.
3.13PoliciesAffecting Payment of New Technology Services
3.13.1A process was developed thatrecognizes new technologies that do not otherwise meet the definition ofcurrent orphan drugs, or current cancer therapy drugs and biologicalsand brachytherapy, or current radiopharmaceutical drugs and biologicalsproducts. This process, along with transitional pass-throughs, provides additionalpayment for a significant share of new technologies.
3.13.2Special APC groups were createdto accommodate payment for new technology services. In contrastto the other APC groups, the new technology APC groups did not takeinto account clinical aspects of the services they were to contain,but only their costs.
3.13.3The SI of K isused to denote the APCs for drugs, biologicals and pharmaceuticalsthat are paid separately from, and in addition to, the procedureor treatment with which they are associated, yet are not eligible fortransitional pass-through payment.
3.13.4New items and services willbe assigned to these new technology APCs when it is determined thatthey cannot appropriately be placed into existing APC groups. Thenew technology APC groups provide a mechanism for initiating paymentat an appropriate level within a relatively short time frame.
3.13.5As in the case of items qualifyingfor the transitional pass-through payment, placement in a new technologyAPC will be temporary. After information is gained about actualhospital costs incurred to furnish a new technology service, itwill be moved to a clinically-related APC group with comparableresource costs.
3.13.6If a new technology servicecannot be moved to an existing APC because it is dissimilar clinicallyand with respect to resource costs from all other APCs, a separateAPC will be created for such services.
3.13.7Movement from a new technologyAPC to a clinically-related APC will occur as part of the annual updateof APC groups.
3.13.8The new technology APC groupshave established payment rates for the APC groups based on the midpointof ranges of possible costs; for example, the payment amount fora new technology group reflecting a range of costs from $300 to$500 would be set at $400. The cost range for the groups reflectscurrent cost distributions, and TRICARE reserves the right to modifythe ranges as it gains experience under the OPPS.
3.13.9There are two parallel seriesof technology APCs covering a range of costs from less than $50to $6,000.
3.13.9.1The two parallel sets of technologyAPCs are used to distinguish between those new technology servicesdesignated with a SI of S and those designated as T.These APCs allow assignment to the same APC group procedures thatare appropriately subject to a multiple procedure payment reduction(T) with those that should not be discounted (S).
3.13.9.2Each set of technology APCgroups have identical group titles and payment rates, but a differentSI.
3.13.9.3The new series of APC numbersallow for the narrowing of the cost bands and flexibility in creating additionalbands as future needs may dictate. Following are the narrowed incrementalcost bands for the two series of new technology APCs:
•From $0 to $50 in incrementsof $10.
•From $50 to $100 in a single$50 increment.
•From $100 through $2,000 inintervals of $100.
•From $2,000 through $6,000in intervals of $500.
3.13.10Beneficiary cost-sharing/copaymentamounts for items and services in the new technology APC groups aredependent on the eligibility status of the beneficiary at the timethe outpatient services were rendered. (Refer to Chapter2, for applicable deductible cost-sharing/copayment amountsfor outpatient hospital services.)
3.13.11Processand Criteria for Assignment to a New Technology APC Group
New technology APCs are establishedby CMS. TRICARE may only reimburse new technology APCs when theymeet all other conditions of coverage under the TRICARE program.See http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.
3.14Coding And Payment Of ED Visits
3.14.1CPT defines an ED as “an organizedhospital based facility for the provision of unscheduled episodic servicesto patients who present for immediate medical attention. The facilitymust be available 24 hours a day.”
3.14.2Sections 1866(a)(1)(I), 1866(a)(1)(N),and 1867 of the Act impose specific obligations on Medicare-participatinghospitals that offer emergency services. These obligations concernindividuals who come to a hospital’s Dedicated Emergency Department(DED) and request examination or treatment for medical conditions, andapply to all of these individuals, regardless of whether or notthey are beneficiaries of any program under the Act. Section 1867(h)of the Act specifically phohibits a delay in providing requiredscreening or stabilization services in order to inquire about theindividual’s payment method or insurance status.
3.14.3These provisions are frequentlyreferred to as the Emergency Medical Treatment and Labor Act (EMTALA).The EMTALA regulations define DED as any department or facilityof the hospital, regardless of whether it is located on or off themain campus, that meets at least one of the following requirements:
3.14.3.1It is licensed by the Statein which it is located under applicable State law as an ER or ED;
3.14.3.2It is held out to the public(by name, posted signs, advertising, or other means) as a placethat provides care for emergency medical conditions on an urgentbasis without requiring a previously scheduled appointment; or
3.14.3.3During the CY immediately precedingthe CY in which a determination under the regulations is being made,based on a representative sample of patient visits that occurredduring the CY, it provides at least one-third of all of its outpatientvisits for the treatment of emergency medical conditions on an urgentbasis without requiring previously scheduled appointment.
3.14.4There are some departmentsor facilities of hospitals that met the definition of a dedicatedED under the EMTALA regulations, but did not meet the more restrictiveCPT definition of ED. For example, a hospital department or facilitythat met the definition of a DED might not have been available 24hours a day, seven days a week.
3.14.5To determine whether visitsto EDs of facilities (referred to as Type B ED) thatincur EMTALA obligations, but do not meet the more prescriptiveexpectations that are consistent with the CPT definition of an ED(referred to as Type A ED) have different resourcecosts than visits to either clinics or Type A EDs,five G codes were developed for use by hospitals toreport visits to all entities that meet the definition of a DEDunder the EMTALA regulations, but that are not Type A EDs.These codes are called “Type B ED visit codes.” EDsmeeting the definition of a DED under the EMTALA regulations, butwhich are not Type A EDs (i.e., they may meet the DEDdefinition but are not available 24 hours a day, seven days a week).
3.14.6Hospitals report Type A EDvisits using CPT codes 99281-99285 and Type B ED visits using G0380-G0384.
3.14.7A new HCPCS G code(G0390 - Trauma response team activation associated with hospitalcritical care services) was also created (effective January 1, 2007)to be used in addition to CPT codes 99291 and 99292 to address themeaningful cost difference between critical care when billed withand without trauma activation.
•If critical care is providedwithout trauma activation, the hospital will bill with either CPTcodes 99291 or 99292, receiving payment for APC 0617.
•However if trauma activationoccurs, the hospital would be called to bill one unit of HCPCS G code(G0390), report with revenue code 68x on the same date of service,thereby receiving payment for APC 0618.
3.15OPPS PRICER
3.15.1Common PRICER software willbe provided to the contractor that includes the following data sources:
•National APC amounts
•Payment status by HCPCS code
•Multiple surgical procedurediscounts
•Fixed dollar threshold
•Multiplier threshold
•Device offsets
•Other payment systems pricingfiles (CMAC, DMEPOS, and statewide prevailings)
3.15.2The following data elementswill be extracted and forwarded to the outpatient PRICER for lineitem pricing.
•Units;
•HCPCS/modifiers;
•APC;
•Status payment indicator;
•Line item date of service;
•Primary diagnosis code; and
•Other necessary OCE output.
3.15.3The following data elementswill be passed into the PRICER by the contractors:
•Wage indexes (same as DRG wageindexes);
•Statewide CCRs as providedin the CMS Final Rule and listed on DHA’s OPPS website at http://www.health.mil/rates;
•Locality Code: Based on CBSA- two digit = rural and five digit = urban;
•Hospital Type: Rural SCH =1 and All Others = 0
3.15.4The outpatient PRICER willreturn the line item APC and cost outlier pricing information usedin final payment calculation. This information will be reflectedin the provider remittance notice and beneficiary Explanation ofBenefits (EOB) with exception for an electronic 835 transaction.Paper EOB and remits will reflect APCs at the line level and willalso include indication of outlier payments and pricing informationfor those services reimbursed under other than OPPS methodology’s,e.g., CMAC (SI of A) when applicable.
3.15.5If a claim has more than oneservice with a SI of T or a SI of S withinthe coding range of 10000 - 69999, and any lines with SI of T ora SI within the coding range of 10000 - 69999 have less than $1.01as charges, charges for all T lines will be summedand the charges will then be divided up proportionately to the paymentrates for each T line (refer to Figure 13.3-5). The new chargeamount will be used in place of the submitted charge amount in the lineitem outlier calculator.
| SI | Charges | Payment Rate | New Charges Amount |
|---|---|---|---|
| Note:Becausetotal charges here are $20,000 and the first SI of T gets $6,000of the $10,000 total payment, the new charge for that line is $6,000/$10,000x $20,000 = $12,000. | |||
| T | $19,999 | $6,000 | $12,000 |
| T | $1 | $3,000 | $6,000 |
| T | $0 | $1,000 | $2,000 |
| Total | $20,000 | $10,000 | $20,000 |
3.16TRICARESpecific Procedures/Services
3.16.1TRICARE specific APCs havebeen assigned for certain procedures covered by TRICARE but excludedby Medicare.
3.16.2Other procedures that are normallycovered under TRICARE but not under Medicare will be assigned SI of A (i.e.,services that are paid under some payment method other than OPPS)until they can be placed into existing or new APC groups.
3.17Validation Reviews
OPPS claims are not subjectto validation review.
3.18Hospital-BasedBirthing Centers
Hospital-basedbirthing centers will be reimbursed the same as freestanding birthingcenters except the all inclusive rate consisting of the CMAC forCPT code 59400 and the state specific non-professional component,will lag two months (i.e., April 1 instead of February 1). See Chapter10, for information on freestanding birthing centers.
4.0Effective Date
May 1, 2009.
- END -
1)
Effective January 1, 2015,SI of X is no longer recognized.
2)
EffectiveJanuary 1, 2015, SI of X is no longer recognized.
3)
EffectiveJanuary 1, 2015, SI of X is no longer recognized.
4)
EffectiveJanuary 1, 2015, SI of X is no longer recognized.
5)
EffectiveJanuary 1, 2015, SI of X is no longer recognized.
