Briefing: DoD/VA Inpatient Resource Sharing Date: 21 Mar 2007 Time: 1400 - 1450

1. Briefing: DoD/VA Inpatient Resource Sharing Date: 21 Mar 2007 Time: 1400 - 1450

2. Objectives • Understand history of DoD and VA sharing • Understand the current DoD and VA sharing governance structure for developing and implementing policy, program guidance, and management for VA/DoD Health Care Resource Sharing • Understand new Billing Guidance for inpatient care provided under VA/DoD Health Care Resource Sharing Agreements • Understand where to find, and how to use the Modified TRICARE DRG Payment Calculator to calculate payment due for hospitalization • Understand coming changes in policy and program guidance for VA/DoD Health Care Resource Sharing

3. Brief History of DoD/VA Sharing • Federal Health Resource Sharing Legislation (1980 – 1981) • Encouraged interagency sharing and creativity in development of agreements • Veterans Administration and Department of Defense Health Resources Sharing and Emergency Operations Act • Public Law 97-174 (1983) • Encouraged continuation and expansion of resource sharing • Resulted in 1983 Memorandum of Understanding (MOU) between DoD and VA on sharing which says the rate will take into account local conditions and actual costs • National Defense Authorization Act (NDAA) of 2003 • Title 38, Section 8111 and Title 10, Section 1104 • Established Joint Executive Council for governance • Encouraged DoD and VA joint strategic planning • Mandated standardized reimbursement rates for DoD/VA sharing • DoD Instruction 6010.23, 12 Sep 2005 • Department of Defense and Department of Veterans Affairs Health Care Resource Sharing Program

4. SECRETARY DEPARTMENT OF DEFENSE SECRETARY DEPARTMENT OF VETERANS AFFAIRS VA/DoD (JEC) JOINT EXECUTIVE COUNCIL HEALTH EXECUTIVE COUNCIL (HEC) VBA / VHA Seamless Transition BENEFITS EXECUTIVE COUNCIL (BEC) Contingency Response Workgroup Information Management Information Technology Workgroup Benefits & Services Workgroup Joint Facility Utilization and Resource Sharing Workgroup Deployment Health Workgroup Cooperative Physical Exam Workgroup Evidence-Based Clinical Practice Guidelines Workgroup Medical Education & Training Workgroup Info System / Info Tech Workgroup Financial Management Workgroup Medical Materiel Management Workgroup FMWG develops payment guidance Mental Health Workgroup Patient Safety Workgroup Graduate Medical Education Workgroup Pharmacy Workgroup Joint Executive Council Structure

5. Overarching Goals for DoD/VA Sharing • Goal 1 – Leadership Commitment and Accountability • Goal 2 – High Quality Health Care • Goal 3 – Seamless Coordination of Benefits • Goal 4 – Integrated Information Sharing • Goal 5 – Efficiency of Operations • Goal 6 – Joint Medical Contingency/Readiness Capabilities

6. General Principles for DoD/VA Reimbursement • Methodology will be agreed to by both Departments • Not the same as billing DoD Third Party Collections (TPC) program • Not using Interagency Rates (there are a few exceptions) • Provide flexibility to take into account local conditions and actual costs • Actual cost is defined as direct, incremental cost • Does not equal MEPRs cost, which is a fully loaded cost • Both departments have been criticized in the past by GAO for not using incremental costs • Funds will be credited to the providing facility

7. General Principles for DoD/VA Reimbursement • Per NDAA - 2003, rates will be standardized and waivers are allowed • 2003 DoD/VA Memorandum of Agreement (MOA) – established basic agreement to use price-based methodology of discounted (CHAMPUS Maximum Allowable Charge (CMAC) and TRICARE DRG-based rates • 2003 MOA states that there will be no additional reimbursement to cover costs of Graduate Medical Education (GME) in direct sharing agreements (includes both direct and indirect GME ) • Joint Ventures may adjust the discount rate depending on local sharing arrangements • Joint Venture rates can be lower than the standard rates, but not higher • Standardized methodology is used for care direct sharing agreements only and does not apply for care provided by VA facilities when they are acting as TRICARE network providers

8. Focus on New Inpatient Billing Guidance • Policy guidance developed by Financial Management Work Group and coordinated with DoD and VA • Guidance document signed August 29, 2006 • Requires Modified TRICARE DRG Payment Calculators to implement • Implementation guidance and the FY 2007 payment calculators now available on UBO Web site at: http://www.tricare.mil/ocfo/mcfs/ubo/index.cfm

9. Application of General PrinciplesNew Inpatient Billing Guidance • DoD/VA Policy Guidance • Use CHAMPUS Maximum Allowable Charge rates, less a 10 percent discount, for institutional and professional charges • Apply to nearly all clinical services and specialties • Spinal Cord Injury (SCI), Traumatic Brain Injury (TBI), and Blind Rehab cases will not fall under this methodology • Apply to all inpatient sharing agreements, including joint ventures • Allow for additional payment for cases which involve outlier days (i.e., Long-Stay cases) • Do not bill for costs associated with Graduate Medical Education or Capital Expense Equipment • Apply to existing and new DoD/VA Sharing Agreements • Incorporate new methodology into new agreements and renewal or renegotiation of existing agreements • Must be implemented by one year from date of agreement

10. Implementation for Inpatient Billing • Use Diagnosis Related Groups (DRG) payment approach for Institutional (hospitalization) portion of inpatient care • Use Modified TRICARE DRG Payment Calculator to calculate amount to be billed • Use Healthcare Common Procedure Coding System (HCPCS) for Non-Institutional (professional and other services) not included in DRG-based payment

11. Implementation in the VA and DoD • VA expects to incorporate this billing approach into their current information systems • DoD will proceed initially with manual billing, and incorporate this billing approach into its Chargemaster-Based Billing System (CMBB)

12. Implementation for Institutional Services • Use Diagnosis Related Groups (DRG) payment approach for Institutional (hospitalization) portion of inpatient care • Use Modified TRICARE DRG Payment Calculator to calculate amount to be billed • Modified TRICARE DRG Payment Calculator and associated billing guidance will be posted on the UBO web site

13. Coded Inpatient Case Modified TRICARE DRG Payment Calculator Billable Amount For Institutional Care (10% VA/DoD discount applied) • DRG Number • Length of Stay • (LOS) • Disposition Status • Code • Area Wage Index Number • (Look-up table with Calculator) Use in your Current VA/DoD Sharing Agreement Billing Process Data Sources and Flows

14. Modified TRICARE DRG Payment Calculator • Inputs • DRG • Length of Stay (LOS) • Disposition Status (Code) • Area Wage Index Number • VA/DoD Resource Sharing Policy parameters • Output • Amount to be billed, with 10% discount already calculated

15. Modified TRICARE DRG Payment Calculator • VA/DoD Resource Sharing Policy parameters • Use TRICARE/CHAMPUS approach to Institutional payment by Diagnosis Related Groups (DRGs) • Use a partial per diem marginal cost factor for cases with very long length of stay

16. Modified TRICARE DRG Calculator Worksheet Look-up Table of Area Wage Index Numbers By Zip Code Modified TRICARE DRG Payment Calculator

17. Modified TRICARE DRG Calculator Portion Payment Details Portion (For Info Only) Modified TRICARE DRG Payment Calculator

18. Payment Calculation Portion of the Calculator Case- specific inputs Hospital- specific input Case- specific output Modified TRICARE DRG Payment CalculatorOverview of Inputs & Output

19. Payment Calculation Portion of the Calculator VA/DoD Resource Sharing Policy Information Case-specific output Modified TRICARE DRG Payment CalculatorOverview of Inputs & Output

20. Modified TRICARE DRGPayment Calculator • Case-specific inputs • Diagnosis Related Group (DRG) Number • Length of Stay (LOS) • Disposition Status (Code)

21. Payment Calculation Portion of the Calculator Case- specific inputs Modified TRICARE DRG Payment Calculator Case-specific Inputs

22. Payment Calculation Portion of the Calculator DRG Description Populated Automatically Modified TRICARE DRG Payment Calculator Population of DRG Description

23. Modified TRICARE DRG Payment Calculator • Hospital-specific input is the Area Wage-Index number • Applied for the physical location (i.e., zip code) of the hospital which treats the patient • Adjusts the Labor portion of the payment amount to the level of local wages for the hospital location • Is a constant number for each fiscal year for a given hospital • A Zip_2_Wage look-up table is provided as part of the Modified TRICARE DRG Payment Calculator workbook

24. Table of Area Wage Index Numbers By Zip Code Modified TRICARE DRG Payment Calculator (Zip_2_Wage Look-up Table)

25. Area Wage Index Look-up Table By Zip Code Modified TRICARE DRG Payment Calculator (Zip_2_Wage Look-up Table)

26. Area Wage Index Number Zip Code Of Treating Hospital Modified TRICARE DRG Payment Calculator (Zip_2_Wage Look-Up Table)

27. Modified TRICARE DRG Payment Calculator • Hospital-specific input • Area Wage Index Number • Look-up in Zip_2_Wage Look-up Table, if necessary, based on zip code of treating hospital

28. Payment Calculation Portion of the Calculator Hospital- specific input Modified TRICARE DRG Payment CalculatorHospital-specific Input

29. Modified TRICARE DRG Payment CalculatorPayment Policy Information • Payment policy summary • National Adjusted Standardized Amount (ASA) is a constant for each fiscal year • ASA split between Labor and Non-Labor adjusted based on Area Wage Index • VA/DoD Resource Sharing Discount = 10% • Long-Stay marginal cost factor = 33% of calculated per diem amount

30. VA/DoD Resource Sharing Policy Information Payment Calculation Portion of the Calculator Modified TRICARE DRG Payment CalculatorReading the Payment Policy Information

31. Modified TRICARE DRG Payment Calculator • Amount to be billed is automatically calculated using the following: • VA/DoD Resource Sharing policy information • Case-specific inputs, and • Hospital-specific input

32. Payment Calculation Portion of the Calculator Case-specific output Modified TRICARE DRG Payment CalculatorReading the Billable Amount

33. Modified TRICARE DRG Payment CalculatorPayment Details • The calculator provides details of the payment calculations as they apply to inpatient case types • Statistical Inlier DRG • Short-Stay • Long-Stay • Transfer • For information only; not used in billing

34. Payment Details Portion of the Calculator (Not used in billing process. Provided as information only) Details of Information Used in Payment calculations Modified TRICARE DRG Payment Calculator

35. Summary – Inpatient Resource Sharing • New guidance related to billing for inpatient care under VA/DoD Health Care Resource Sharing Agreements was published in August 2006 • Standard methodology used by both VA and DoD hospitals in billing for inpatient care • Modified TRICARE DRG Payment Calculator used to calculate billable amount for hospitalization portion of care • Required materials are available on the UBO web site

36. Future Billing Issues/Changes • Financial Management Work Group is currently revising the outpatient billing guidance • Federal facilities methodology will be developed drawing on experience gained at the North Chicago location

37. Summary • DoD/VA Health Care Resource Sharing has a long and important history • Recent major changes include establishment of the Joint Executive Council and an emphasis on joint strategic planning • New VA/DoD policy memorandum describes Inpatient Billing Guidelines for inpatient care provided under VA/DoD Health Care Resource Sharing agreements • Modified TRICARE DRG Payment Calculators will be used calculate of amount to be billed for Institutional component of service • FY2006 and FY2007 calculators and billing guidance documents now available on the UBO web site • Future changes coming as programs continue to evolve • Revision of outpatient billing guidance • Federal facilities methodology

38. Q&A • Questions? • Please continue to use the MHS Helpdesk, the TMA UBO Helpdesk, and/or contact us directly: (703) 575-5385 or at ubo.helpdesk@altarum.org • Please remember the TMA UBO website, it has a lot of information available • Please continue to report code/rate/mapping issues: fix now and/or take into consideration for next rate update

39. Quiz • What is the name of the combined DoD and VA organization through which the agencies’ Health Care Resource Sharing programs are managed? • What is the basis for payment of inpatient Institutional care under the new VA/DoD Inpatient Billing • Guidelines for care provided under VA/DoD Health Care Resource Sharing Agreements? • How will users find the correct Area Wage Index Number to use in the payment calculator? • Where are the payment calculators and implementation guidance be posted?

40. Contact Information • Ms. Connie McDonald, DoD/VA Sharing • Phone: (703) 681-1724 • E-mail: Connie.McDonald@ha.osd.mil • Mr. Russ Coleman, UBO Support Team Contractor • Phone: (210) 832-3020 • E-mail: Russ.Coleman@altarum.org

41. VA/DoD Inpatient Resource Sharing Disposition Status Codes Used in Modified TRICARE DRG Payment Calculator 01= Home, self-care 02= Short term hospital 03= Skilled Nursing Facility (SNF) 04= Intermediate Care Facility (ICF) 05= Other facility 06= Home Health Service 07= Left Against Medical Advice (AMA) 20= Died 30= Still a Patient 50= Hospice-Home 51= Hospice-Medical Facility 61= Swing Bed 62= Rehab Facility/Rehab Unit 63= Long Term Care Hospital 65= Psychiatric Hospital or Unit 66= Discharge/Transfer to Critical Access Hospital (CAH) 71= OP Services - Other Facility 72= OP Services - This Facility