TRICARE Outpatient Prospective Payment System (OPPS) Overview

TRICARE Outpatient Prospective Payment System (OPPS) Overview (Insert Date)

TRICARE OPPS: Policy Background • 10 U.S.C. 1079 (j)(2) and 1079(h): To the extent practicable, TRICARE adopts Medicare’s reimbursement for outpatient hospital services • Balanced Budget Act 1997: Required Medicare to establish a hospital prospective payment system so services within each group are comparable clinically and with respect to use of resources • TRICARE OPPS implementation date: Fall 2007

Overview What is OPPS? • OPPS is an Ambulatory Payment Classification (APC) system for covered hospital-based outpatient services; it establishes national payment rates standardized for geographic wage differences • Each procedure code that is a reimbursable service under OPPS is assigned an APC Find TRICARE APCs at www.tricare.mil/opps

Overview (continued) • An APC is a predetermined number assigned by Medicare or TRICARE • One or more CPT4/HCPCS codes may be grouped under a single APC • APCs are grouped based on: resource similarity, clinical homogeneity, provider concentration, and frequency of service • Medicare APCs have set payment amounts, representing the median hospital service costs relative to APC 0601 (Mid-level clinic visits); TRICARE uses Medicare APCs whenever possible • In the absence of a Medicare designation, TRICARE creates a TRICARE specific APC group and rate • TRICARE specific APC’s begin with the letter ‘T’

Providers • All hospitals participating in the Medicare program (some exclusions apply) • Hospital-based partial hospitalization programs subject to TRICARE authorization requirements under 32 CFR 199.6(b)(4)(xii): • Be TRICARE certified • Be licensed and fully operational for a period of six months (with a minimum patient census of at least 30 percent of bed capacity) and operate in substantial compliance with state and federal regulations • Currently JCAHO accredited under the current Accreditation Manual for Mental Health, Chemical Dependency, and Mental Retardation/Development Disabilities Services

Providers (continued) • Hospitals or distinct parts of hospitals that are excluded from the inpatient DRG to the extent that the hospital or distinct part furnishes outpatient services Note: All hospital outpatient departments will be subject to the OPPS unless specifically excluded by TRICARE.

Indian Health Services Certain Maryland hospitals Critical access hospitals Hospitals outside the 50 states, DC, Puerto Rico Cancer and children’s hospitals Freestanding ambulatory surgery centers (ASCs) Freestanding partial hospital program, psych, and substance abuse facilities Comprehensive outpatient rehabilitation facilities Home health agencies Hospice programs Community mental health centers (CMHC), CMHC PHPs Other corporate service providers Freestanding birthing centers VA hospitals Excluded Providers The following providers are excluded from OPPS:

Physician services Nurse practitioner/clinical nurse specialist services Physician assistant services Certified-nurse midwife Services of qualified psychologists Clinical social worker services Services of an anesthetist Screening and diagnostic mammography Influenza and pneumococcal pneumonia vaccine Clinical diagnostic laboratory services Take home surgical dressings Non-implantable DME, orthotics, prosthetics, and prosthetic devices and supplies (DMEPOS) Hospital outpatient services furnished to SNF inpatients as part of reassessment or care plan Services and procedures designated as requiring inpatient care Services excluded by statute (ambulance services, PT, OT, speech/language pathology) Ambulatory surgery procedures performed in freestanding ASCs Excluded Services The following services are excluded from OPPS:

Excluded Costs The following costs are excluded from OPPS: • Direct costs of medical education activities • Costs of approved nursing and skilled health education programs • Costs associated with interns and residents not in approved teaching programs • Costs of teaching physicians • Costs of anesthesia services for hospital outpatients provided by non-qualified anesthetists under hospital employment • Bad debts for uncollectible and coinsurance amounts • Organ transition costs • Corneal tissue acquisitions costs incurred by hospitals that are paid on a reasonable cost basis

TRICARE vs. Medicare Differences Between TRICARE and Medicare • TRICARE benefits and population do not always mirror Medicare • Maternity care • Preventive care • TRICARE beneficiary costs may differ • Outpatient deductibles • Cost-shares/copayments • Catastrophic cap

TRICARE vs. Medicare (continued) • TRICARE covered services and other differences differs • Observation stays • Partial Hospitalization Program (PHP) • Behavioral health • Preventive medicine • Inpatient procedures • Surgical discounting • Renal dialysis • Other editing differences

Observation Services Four conditions where TRICARE allows additional pay for observation stays: • Chest pain • Asthma • Congestive Heart Failure (CHF) • Maternity Criteria for observation stays include: • Documentation of specific ICD-9-CM code with one of the four medical conditions above • Observation time documentation • Hospital services provided before, during, or after the observation • Ongoing physician evaluation • Additional billing requirements

Observation Services (continued) Observation stays with diagnosis of chest pain, asthma, and congestive heart failure will be edited. The claim must be submitted with: • Appropriate DX code on the UB-04 claim form • Hours greater than or equal to 8 • HCPCS code G0378(used for all observation regardless of the reason or duration) • A primary ER visit, clinic visit, critical care visit, or HCPCS code G0379 can be billed (in place of the primary medical visit code) for direct admission to observation from a physician’s office • This visit or direct admission code must be billed for the same day or the day before, and be reported on the same claim the observation is billed

Observation Services (continued) Maternity observations will be edited based on: • The appropriate diagnosis code • Hours greater than or equal to 4 • HCPCS code G0378 • Maternity observation reimbursement is based on the same APC number and rate as Medicare’s observation payments

Partial Hospitalization Program (PHP) Partial Hospitalization Program (PHP) • Medicare does not cover half-day PHP • TRICARE reimbursement for PHP remains a half-day and full-day per diem rate • TRICARE created a special half-day APC • APC amount is a wage adjusted national rate • Freestanding PHP’s receive the current regional per diem rates • Valid authorization must be on file for each date of service

Partial Hospitalization Program (PHP) PHP claims must: • Include a principal diagnosis of behavioral health or substance abuse • Revenue code 912 and HCPCS code H0035 for half-day • Revenue code 913 and HCPCS code H0037 for full-day • Condition code 41 • The admitting or primary must be for a behavioral health diagnosis for PHP claims • PHP Claims that do not meet the above criteria undergo further prepayment review to make sure behavioral health procedures do not exceed the full-day partial hospitalization per diem amount Note: PHP claims submitted without the above criteria will be denied.

Partial Hospitalization Program (PHP) Mental Health Services (not PHP) • Non-PHP mental health claims are edited to ensure the sum of individual mental health APC rate on the same date of service does not exceed the full day partial hospitalization per diem Note: If the sum of the individual mental health services exceeds the full-day partial hospitalization per diem, a special daily mental health service payment APC will be assigned. The APC is equal to the full-day partial hospitalization amount. All other mental health services are bundled into the one-line APC.

Discounting of Surgical Procedures TRICARE applies surgical discounting to: • Any outpatient or professional surgical claim • OPPS and non-OPPS claims TRICARE’s previous surgical discounting: 100% - 50% - 25%: • Under OPPS, the 25 percent discountwill no longer be applied TRICARE now applies Medicare’s multiple surgery outpatient procedure discounting criteria: • 100 percent payment for the primary surgical procedure • 50 percent payment for subsequent procedures

Preventive Medicine TRICARE reimburses the following preventive care office visit codes, which are not reimbursed by Medicare: • 99381-99387 • 99391-99397

Inpatient Only Procedures • Medicare determines certain procedures to be “inpatient only” based on: • Nature of the procedure • Need for at least 24 hours of postoperative recovery time, or monitoring, before the patient can be safely discharged • Underlying physical condition of the patient • Because of population differences, such as age, the TRICARE inpatient only procedure list may differ from Medicare • For a list of inpatient only procedures, visit www.tricare.mil/opps

Debride abdominal wall (11005) Breast reconstruction (19361) Application of cranial tongs, caliper, or stereotactic frame (20660) Treat slipped epiphysis (27176) Repair of the tibia (27720) Surgical thoracoscopy (32664) Appendectomy (44950) Removal of gallbladder (47600) Removal of gallbladder (47605) Removal of fallopian tube (58700) Removal of ovary/tube(s) (58720) Revise fallopian tube(s) (58740) Inpatient Only Procedures (continued) Medicare inpatient only codes that TRICARE allows on an outpatient basis: This list is subject to change: check www.tricare.mil/opps for updates Note: For TRICARE-Medicare dual-eligible (TRICARE For Life), if Medicare denies the claim as inpatient only, TRICARE will also deny the claim.

Inpatient Only Procedures (continued) • Outpatient institutional claims for services with a code on the TRICARE inpatient-only list will pass through the Outpatient Code Editor (OCE) and automatically be denied • Referrals should not be generated for outpatient care for any procedures on the inpatient only list • Active Duty Service Member claims under the Supplemental Health Care Program (SHCP) are not excluded from deviating from the list • If an inpatient-only procedure code is submitted on a claim for an outpatient service, it will be denied, as will all other services on that date of service

Inpatient Only Procedures (continued) • TRICARE also reimburses an inpatient only procedure on an outpatient basis if the patient dies before admission. Inpatient procedures may be paid, following Medicare’s guidelines: • The outpatient claim should include the procedure code with status indicator ‘C’ to which a newly designated modifier (-CA) is attached. The patient status is 20 (deceased). • The payment amount for all services on the claim, with the same date of service, is based on a single APC rate assigned to the HCPCS code that is billed with the modifier CA. Separate payment is not allowed for other services furnished on the same day. • The OPPS Coding Group reviews procedures quarterly to determine if a procedure should be removed from the Inpatient Only List.

Renal Dialysis • TRICARE covers dialysis for conditions that warrant such treatment, for example: • Acute conditions, such as poisoning • Beneficiaries with a diagnosis of end-stage renal disease (ESRD) not yet eligible for Medicare • TRICARE reimburses dialysis services based on the APC rate assigned to the HCPCS • Medicare reimburses dialysis at a composite (daily) rate for ESRD

Other Coding/Editing • Emergency Room claim payment is made based on: • HCPCS codes billed • Dates of service edits • Condition Codes and Modifiers • Condition codes apply to the whole claim • Condition Code 41 = PHP • Condition Code G0 (Zero)= Multiple medical visits on the same day • Modifiers apply to the line • Modifier 27 = Multiple medical visits on the same day • Modifier 73/52 = Terminated procedure

Deductibles, Cost-shares, and Copayments • TRICARE deductibles, cost-shares and copayments apply based on plan option

Claims Adjudication Claims Adjudication System CLAIM OCE PRICER Claim Payment / Denial EOB / Remittance / Payment

Claims Adjudication (continued) • TRICARE Outpatient Code Editor (OCE) and TRICARE Pricer • TRICARE claims processors will integrate the 3M-developed/maintained TRICARE OCE and Pricer into their claims processing systems for claims adjudication • The TRICARE OPPS Pricer provides whole claim pricing using output from the TRICARE OCE • Implemented on a nationwide basis, including the TDEFIC, TRICARE For Life, and Puerto Rico contractors • The OCE assigns an APC code when appropriate • The OCE is updated on a quarterly basis

Reimbursement Methodology • Medicare APCs have set prospective-pre-payment amounts. These amounts represent the median hospital service costs relative to APC 0601 (Mid-level clinic visits). • APC OPPS rates are calculated by multiplying APC relative weight by the conversion factor. • Wage adjustment factors are used for labor-related costs.

Reimbursement Methodology (continued) • OPPS APC reimbursements are wage adjusted based on the hospital specific wage index (specific geographical location factor) • The basic calculation for a wage adjusted APC is: • Non Labor factor = 40% • Labor Factor = 60% • APC payment rate X 40% = A • Wage Adjusted APC = APC payment rate x 60% x Hospital Specific Wage Index + A • Deductibles, cost-shares, and copayments are subtracted based on beneficiary category • Unlike single DRGs, multiple APCs can be assigned to one outpatient record • Total payment is computed as the sum of the individual payments for each service

Outpatient Code Editor (OCE) • TRICARE uses the National Correct Coding Initiative (NCCI) edits for OPPS. Outpatient Code Editor (OCE) is used to identify possible coding errors. • NCCI edits are embedded in the coder • ClaimCheck® will not apply to these claims • Standard billing practices apply • Use CMS claim forms: UB-04 and new CMS-1500 BILLING REMINDERS • Do notsubmit a late charge bill for 13X bill types. • The OPPS reimbursement methodology is scheduled to be implemented for claims in the fall of 2007. The implementation date may be impacted by legislation or other policy changes. • Submit an adjustment bill with frequency 7 or 8 in the third position of the bill type. • Adjustments to OPPS claims are based on the from date.

Outpatient Code Editor (OCE) • Critical claim data: • Appropriate claim bill type • The ‘from’ and ‘through’ date of the claim • Ideally report all services performed on the same day on the same claim • Hospitals should report condition G0 on claims for multiple visits on the same day • Patient status • Revenue codes • Procedure codes (CPT4 or HCPCS) • Modifiers and condition codes • Line item date of service • Units of service • Principal diagnosis code

Outpatient Code Editor (continued) • Each procedure code (i.e., HCPCS/CPT) in the OCE has a TRICARE Status Indicator (T/SI) assigned • Each HCPCS/ CPT4 code Status Indicator (SI) facilitates determination of coverage/reimbursement • SI also helps determine policy rules, for example discounting of surgical procedures • TRICARE adopted many of Medicare’s SI’s; others were modified based on TRICARE program needs • A listing of APCs with Status Indicators and rates can be found at: www.tricare.mil/opps

OCE Status Indicators TRICARE Status Indicators (SI): A - Services reimbursed other than OPPS B - More appropriate code required for TRICARE OPPS C - Inpatient procedure E - Items or services that are not covered by TRICARE F - Corneal tissue acquisition; certain CRNA services and Hepatitis B vaccines G - Drug / biological pass-through H - Pass-through device categories, brachytherapy sources, and radiopharmaceutical agents allowed on a cost basis K - Non pass-through drugs and biologicals, blood, and blood products N - Packaged incidental service P - Partial hospitalization service

OCE Status Indicators (continued) TRICARE Status Indicators (continued): Q - Packaged services subject to separate payment based on criteria Note: HCPCS codes with status indicator ‘Q’ are either separately payable or packaged depending on the specific billing circumstances. OCE claims editing logic applies to codes assigned SI ‘Q’ to determine if the service will be packaged or separately payable. S - Significant procedure not subject to multiple procedure discounting T -Significant procedure subject to multiple procedure discounting V - Medical visit to clinic or emergency department W - InvalidHCPCS or invalid revenue code with blank HCPCS X - Ancillary service Z - Valid revenue code with blank HCPCS and no other SI assigned APCs with Status Indicators and rates found at: www.tricare.mil/opps

OCE Status Indicators (continued) Status Indicators where payment is made based on other than OPPS APC rates: • A - Services reimbursed other than OPPS - This SI may pay CMAC, DMEPOS, billed charges, or allowable cost. • F - Corneal tissue acquisition; certain CRNA services and Hepatitis B vaccines - This SI may pay CMAC, billed charges, or allowable cost. • H - Pass-through device categories, brachytherapy sources, and radiopharmaceutical agents allowed on a cost basis - This SI pays billed charges multiplied by the statewide cost to charge ratio. • N - Packaged incidental service - This SI will never have a paid dollar amount on a claim.

TRICARE OCE • All procedure codes have an SI assignment; not all procedure codes have an APC assignment • SI’s G, H, K, P, S, T, V, and X normally have APC assignments which may or may not have set payment rates • The SI of H has an APC group number, but no Medicare or TRICARE payment rate; payment is based on the device cost • Surgical cost sharing for outpatient surgery, performed in an OPPS facility, remains the same as it is today for all Ambulatory Surgical Center (ASC) procedures • Procedure codes with an SI of ‘H’ will not cost share but will have the applicable deductible applied to the claim

TRICARE OCE • Questionable Covered Services • Services that must have prepayment review or are conditionally reimbursed, such as those benefits only covered under the ECHO program. These reviews are conducted at the Prime Contractor discretion, or based on TRICARE policy limitations. • Non-Covered Services • Services that are not covered per TRICARE policy which includes the Government No Pay list. • Revenue Code/HCPCS Code Relationship • The HCPCS code billed on the line determines the payment for that line…NOT the revenue code. • Lines billed with revenue codes and no HCPCS codes will be packaged or, in some cases, denied.

Pricing Information TRICARE OPPS Pricer • After OCE edits the claim, the OPPS Pricer determines the method of payment for each procedure code • Data elements for line item pricing: • Units • Procedure codes (HCPCS and/or CPT-4 codes) • Modifiers and Condition Codes • APC Number • Status Indicator • Service Date • Primary Diagnosis Code • Other necessary OCE output • Provider information (CMS determines provider-based status) • Wage indexes • State-wide cost to charge ratios • Locality code • Hospital type Provider files with wage indexes can be found found at: www.tricare.mil/opps

Pricing Information (continued) • The TRICARE OPPS Pricer will contain APC and discounting information as well as the following TRICARE reimbursement files: • CMAC • State Prevailing (for every TRICARE Contract) • DMEPOS/PEN • Injectibles and immunizations • Birthing center rates • Pricing • OPPS claims are edited by the OCE on a line-by-line basis: payment is determined and made on a line-by-line basis • For example, a claim may be submitted and reimbursed as shown in the table Payment status by HCPCS code found at: www.tricare.mil/opps

Outlier Payments • Outlier Payments • OPPS adds additional dollars for: • Certain expensive procedures and services (as stated in Policy) • Certain packaged medical devices, drugs, and biologicals are eligible for special transitional pass-through • There are separate outlier APC payments • Outlier payments are calculated on a service-by-service basis • Each line, one line, or no lines may qualify for an outlier payment • Special APC groups exist for new technologies • New drugs, biologicals, and devices that do not have APCs are paid under TRICARE allowable charge methodology

Offsets • Offsets • Medicare may assign an offset amount to a device pass-through code (SI = H*) • Offset amounts are code specific and there is one offset amount for 2007 • Offset amounts are wage adjusted and are subtracted from the device cost that is billed on the claim • Device pass through payments are calculated for payment with an offset as follows: • Billed charges X CCR – Offset = Allowed Amount * Note: These codes are not cost-shared with the beneficiary because the cost can be very substantial. However, plan deductible amounts apply.

Government No Pay List • CPT/HCPCS codes that are contained on the Government No Pay List (GNPL) are all programmed within the OCE • List of GNLP is located at: www.tricare.mil/nogovernmentpay • Refer to this list prior to referring a patient for civilian health care so claim won’t deny Each procedure code (i.e., HCPCS/CPT) has been reviewed to determine coverage/non-coverage status • X - Excluded by Statute or Policy • U - Unproven or experimental • D - Code deleted • C - Now covered • Managed Care Support Contractors will not issue an authorization for care for a procedure included on this list • Appropriate appeal rights are applied by the regional contractors

Government No Pay List (continued) • Claims for services submitted with a code on the GNPL will pass through the OCE and will automatically be denied • Exceptions to the automatic denial of any of these codes are for services provided to an Active Duty Service Member under the Supplemental Health Care Program • Managed Care Support Contractors can still provide a bypass for procedures on the GNPL provided there is an MTF or MMSO Referral/Authorization entered for the care

Medical Review • The methodology of review for outpatient claims does not change under OPPS • The goals of medical review: • Identify inappropriate billing • Ensure that no payment is made for non-covered services • Medical records may be requested to ensure that payment is appropriate

Helpful Resources • TRCIARE OPPS Resources: www.tricare.mil/opps www.tricare.mil/nogovernmentpay • Centers for Medicare & Medicaid Services:www.cms.hhs.gov www.cms.hhs.gov/HospitalOutpatientPPS

TRICARE Outpatient Prospective Payment System (OPPS) Overview