May 2, 2016

May 02, 2016

Modified TRICARE Reimbursement: Federal Government Releases Proposed Rule

On Thursday, February 14, 2013, the U.S. Department of Defense (“DoD”) released a proposed rule that reforms the method with which hospital inpatient claims are reimbursed under TRICARE/CHAMPUS (“TRICARE”). The proposed rule aims to make TRICARE reimbursement consistent with Medicare’s and other payers’ methods of pricing inpatient claims.

Unless a hospital is exempt by regulation, all hospitals are subject to TRICARE’s DRG-based payment system. Currently, TRICARE reimburses for inpatient claims using the DRG rates and weights in effect on the date of admission. The proposed rule modifies TRICARE reimbursement by using the DRG rates and weights in effect on the beneficiary’s date of discharge.

DoD expects the proposed rule to have the most direct impact on claims that span Fiscal Years (FY) because the DRG rates and weights are updated every FY using the previous year’s TRICARE claims data. For example, if a patient is admitted on September 27, 2013, (FY 2013) and is discharged on October 6, 2013, (FY 2014) reimbursement is calculated using rates and weights in effect on September 27, 2013, (FY 2013), rather than those in effect on October 6, 2013, (FY 2014).

The proposed rule provides more consistency to healthcare providers regarding reimbursement by modifying the way TRICARE calculates payments for inpatient hospital claims to a method widely considered the industry standard.     

Interested parties may submit comments to DoD regarding the proposed rule until April 15, 2013.

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About this Author

Patrick Cannon, equity formation Attorney, von Briesen, growth strategy lawyer, manufacturing law, mergers acquisitions legal counsel

Patrick Cannon is a member of the Business and Health Law Sections. His practice focuses on helping businesses with all aspects of their corporate and business needs including entity formation and continued growth strategy, mergers and acquisitions, and commercial contract negotiation and drafting, among others. Patrick has experience representing businesses in a variety of industries including health care, manufacturing, professional services, supply chain and distribution, and technology.

In addition to his business practice, Patrick advises...