Master Table of Contents, page 1 Master Table of Contents, page 1. CHAPTER 16 Table of Contents, page 1 Section 1, pages 1 through 7

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2 CHANGE M MAY 24, 2018 REMOVE PAGE(S) INSERT PAGE(S) Master Table of Contents, page 1 Master Table of Contents, page 1 CHAPTER 16 Table of Contents, page 1 Section 1, pages 1 through 7 CHAPTER 17 Table of Contents, page 1 Section 1, pages 1 through 7 2

3 Revision: For Definitions, see the TRICARE Operations Manual (TOM), Appendix A. Foreword Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 - General - Beneficiary Liability - Operational Requirements - Double Coverage - Allowable Charges - Diagnosis Related Groups (DRGs) - Mental Health - Skilled Nursing Facilities (SNFs) - Ambulatory Surgery Centers (ASCs) Chapter 10 - Birthing Centers Chapter 11 - Hospice Chapter 12 - Home Health Care (HHC) Chapter 13 - Outpatient Prospective Payment System (OPPS)-Ambulatory Payment Classification (APC) Chapter 14 - Sole Community Hospitals (SCHs) Chapter 15 - Critical Access Hospitals (CAHs) Chapter 16 - Long-Term Care Hospitals (LTCHs) Chapter 17 - Inpatient Rehabilitation Facilities (IRFs) 1

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5 Chapter 16 Long-Term Care Hospitals (LTCHs) Revision: Section/Addendum Subject/Addendum Title 1 Long-Term Care Hospitals (LTCHs) Figure LTCH - Admission Examples 1

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7 Long-Term Care Hospitals (LTCHs) Chapter 16 Section 1 Long-Term Care Hospitals (LTCHs) Issue Date: May 24, 2018 Authority: 32 CFR (a)(9) Revision: 1.0 APPLICABILITY This policy is mandatory for the reimbursement of services provided either by network or nonnetwork providers. However, alternative network reimbursement methodologies are permitted when approved by the Defense Health Agency (DHA) and specifically included in the network provider agreement. 2.0 DESCRIPTION An LTCH is a hospital that is classified by the Centers for Medicare and Medicaid Services (CMS) as an LTCH and meets the applicable requirements established by 32 CFR 199.6(b)(4)(v). 3.0 ISSUE How are LTCHs to be reimbursed? 4.0 POLICY 4.1 Statutory Background Under Title 10, United States Code (USC), Section 1079(i)(2), the amount to be paid to hospitals, Skilled Nursing Facilities (SNFs), and other institutional providers under the TRICARE program, shall be determined to the extent practicable in accordance with the same reimbursement rules as apply to payments to providers of services of the same type under Medicare. Based on this statutory provision, TRICARE has adopted Medicare s LTCH Prospective Payment System (PPS) for reimbursement of LTCHs currently in effect for the Medicare program as required under Section 123 of Public Law (PL) (Balanced Budget Refinement Act (BBRA)), which provides for the establishment of a PPS for LTCHs described in Section 1886(d)(1)(B)(iv) of the Social Security Act (the Act). 4.2 Applicability and Scope of Coverage All LTCHs that meet the classification criteria for payment under the LTCH PPS under Title 42 CFR Part 412, subpart B, are considered authorized LTCHs under the TRICARE program. 1

8 4.3 Payment Method TRICARE Reimbursement Manual M, April 1, 2015 Chapter 16, Section 1 Long-Term Care Hospitals (LTCHs) For admissions prior to October 1, 2018, LTCHs shall be reimbursed based on billed charges or negotiated rates Payment in full. The payment made under the LTCH PPS represents payment in full (subject to applicable deductibles, cost shares, and copayments) for inpatient operating and capital costs associated with furnishing TRICARE covered services in an LTCH, but not certain pass-through costs (e.g., bad debts, direct medical education, and blood clotting factors) For new admissions for LTCHs whose cost reporting period begins on or after October 1, 2018, LTCHs shall be reimbursed: The standard LTCH PPS payment rate; or The lower site-neutral LTCH PPS payment rate based on the Medicare acute hospital Inpatient Prospective Payment System (IPPS) rates Standard LTCH PPS Payment Rates Contractors shall reimburse LTCHs for inpatient care using Medicare s LTCH PPS which classifies LTCH patients into distinct Diagnosis Related Groups (DRGs). The patient classification system groupings are called Medicare Severity-Long-Term Care-Diagnosis Related Groups (MS-LTC-DRGs), which are the same DRG groupings used under the Medicare acute hospital IPPS, but that have been weighted to reflect the resources required to treat the medically complex patients treated at LTCHs In order to receive the standard LTCH PPS payment rate, the discharge must have been immediately preceded by a Subsection (d) hospital discharge. Immediately preceded means that the LTCH admission occurred within one day of the Subsection (d) hospital discharge based on the admission date on the LTCH claim and the discharge date on the Subsection (d) hospital claim Contractors shall treat Military Treatment Facilities (MTFs)/Enhanced Multi-Service Markets (emsms) and Department of Veterans Affairs (VA) hospitals as Subsection (d) hospitals for the purposes of the LTCH admission and qualification for the LTCH-PPS payment. Specifically, for patients who may have used their VA benefit or received inpatient care at an MTF/eMSM that qualified as an immediately preceding stay, applicable criteria for the standard LTCH PPS payment rate are met The contractor shall determine if the LTCH admission was immediately preceded by a qualifying Subsection (d) hospital discharge Site-Neutral LTCH PPS Payment Rates Contractors shall reimburse LTCHs the site-neutral payment rate for patients who do not use prolonged mechanical ventilation (at least 96 hours) during their LTCH stay or who did not spend three or more days in the ICU during their prior acute care hospital stay Contractors shall reimburse LTCHs the site-neutral payment rate for patients with a principal diagnosis in the LTCH of a psychiatric diagnosis or rehabilitation as indicated by the grouping 2

9 Chapter 16, Section 1 Long-Term Care Hospitals (LTCHs) of the discharge into one of 15 psychiatric and rehabilitation MS-LTC-DRGs (876, 880, 881, 882, 883, 884, 885, 886, 887, 894, 895, 896, 897, 945, and 946) Contractors shall determine whether the TRICARE patient s LTCH stay meets the requirements for a standard or site-neutral payment TRICARE is adopting Medicare s adjustments for short-stay outliers, interrupted stay policy, the method of payment for preadmission services, and high-cost outlier payments TRICARE will also incorporate Medicare s LTCH Quality Reporting (QR) payment adjustments for TRICARE LTCHs that reflect Medicare s annual payment update for that facility. TRICARE is not establishing a separate reporting requirement for hospitals, but will utilize Medicare s payment adjustments resulting from their LTCH QR program TRICARE is not adopting the 25% threshold payment adjustment for hospitals determined by Medicare to receive the payment adjustment in that year. 4.4 Transition Period In the Final Rule (FR) published in the Federal Register on December 29, 2017, DHA created a multi-year transition period to buffer the impact from any potential decrease in revenue that hospitals may experience during the implementation of a revised LTCH inpatient payment system. This transition period provides LTCHs with sufficient time to adjust and budget for potential revenue reductions. The transition is as follows: For the first 12 months following implementation, the TRICARE LTCH PPS allowable cost will be 135% of Medicare LTCH PPS amounts For the second 12 months following implementation, the TRICARE LTCH PPS allowable cost will be 115% of the Medicare LTCH PPS amounts For the third 12 months following implementation, and subsequent years, the TRICARE LTCH PPS allowable cost will be 100% of the Medicare LTCH PPS amounts. FIGURE LTCH - ADMISSION EXAMPLES LTCH TRANSITION Year 1 Effective with discharges occurring in LTCHs cost reporting periods beginning on or after October 1, September 30, 2019 TRICARE PAYS: 135% of Medicare Payment Year 2 October 1, September 30, % of Medicare Payment Year 3 October 1, September 30, % of Medicare Payment Note: Medicare payment is either Full LTCH or Site-Neutral payment rate. 3

10 Chapter 16, Section 1 Long-Term Care Hospitals (LTCHs) CASE 1: PATIENT WITH ACUTE INTENSIVE CARE UNIT (ICU) STAY OF OVER THREE DAYS Cost Report Period: LTCH with Cost Reporting Period in Fiscal Year (FY) 2018 beginning January 1, 2019, following implementation of the TRICARE LTCH Rule. Patient: TRICARE Pays: Admitted on November 2, 2018 Billed Charges* Admitted on January 2, % of the Full LTCH Payment Rate Admitted on July 2, % of the Full LTCH Payment Rate Admitted on September 2, % of the Full LTCH Payment Rate Admitted on October 2, % of the Full LTCH Payment Rate *The LTCH receives billed charges for this admission because the LTCH's cost reporting period during FY18 begins January 1, CASE 2: PATIENT WITH NO ICU OR PROLONGED MECHANICAL VENTILATION Cost Report Period: LTCH with Cost Reporting Period in FY18 beginning January 1, 2019, following implementation of the TRICARE LTCH Rule. Patient: TRICARE Pays: Admitted on November 2, 2018 Billed Charges* Admitted on January 2, % of the Site-Neutral Payment Rate Admitted on July 2, % of the Site-Neutral Payment Rate Admitted on September 2, % of the Site-Neutral Payment Rate Admitted on October 2, % of the Site-Neutral Payment Rate * The LTCH receives billed charges for this admission because the LTCH's cost reporting period during FY18 begins January 1, CASE 3: PATIENT WITH ACUTE ICU STAY OF OVER THREE DAYS Cost Report Period: LTCH with Cost Reporting Period in FY18 beginning September 1, 2019, following implementation of the TRICARE LTCH Rule. Patient: TRICARE Pays: Admitted on November 2, 2018 Billed Charges* Admitted on January 2, 2019 Billed Charges* Admitted on July 2, 2019 Billed Charges* Admitted on September 2, % of the Full LTCH Payment Rate Admitted on October 2, % of the Full LTCH Payment Rate * The LTCH receives billed charges for this admission because the LTCH's cost reporting period during FY18 begins September 1,

11 Chapter 16, Section 1 Long-Term Care Hospitals (LTCHs) CASE 4: PATIENT WITH NO ICU OR PROLONGED MECHANICAL VENTILATION Cost Report Period: LTCH with Cost Reporting Period in FY18 beginning September 1, 2019, following implementation of the TRICARE LTCH Rule. Patient: TRICARE Pays: Admitted on November 2, 2018 Billed Charges* Admitted on January 2, 2019 Billed Charges* Admitted on July 2, 2019 Billed Charges* Admitted on September 2, % of the Site-Neutral Payment Rate Admitted on October 2, % of the Site-Neutral Payment Rate * The LTCH receives billed charges for this admission because the LTCH's cost reporting period during FY18 begins September 1, CASE 5: PATIENT WITH ACUTE ICU STAY OF OVER THREE DAYS Cost Reporting Period: LTCH with Cost Reporting Period in FY18 beginning October 1, Patient: TRICARE Pays: Admitted on November 2, % of the Full LTCH Payment Rate Admitted on January 2, % of the Full LTCH Payment Rate Admitted on July 2, % of the Full LTCH Payment Rate Admitted on September 2, % of the Full LTCH Payment Rate Admitted on October 2, % of the Full LTCH Payment Rate CASE 6: PATIENT WITH NO ICU OR PROLONGED MECHANICAL VENTILATION Cost Reporting Period: LTCH with Cost Reporting Period in FY18 beginning October 1, Patient: Admitted on November 2, 2018 Admitted on January 2, 2019 Admitted on July 2, 2019 Admitted on September 2, Preadmission Services LTCHs paid under the LTCH PPS are subject to a one-day payment window, where any outpatient services or non-physician services provided one calendar day prior to the LTCH admission are included in the LTCH-DRG payment. This is known as the one-day payment rule. The one-day payment rule only applies to services that are diagnostic and furnished in connection with the principle diagnosis. Any other services not meeting the diagnostic criteria, or services provided outside of the one-day window will be paid separately according to current TRICARE policy. 4.6 LTCH Data TRICARE Pays: 135% of the Site-Neutral Payment Rate 135% of the Site-Neutral Payment Rate 135% of the Site-Neutral Payment Rate 135% of the Site-Neutral Payment Rate Admitted on October 2, % of the Site-Neutral Payment Rate The MS-LTC-DRG rates and weights and the IPPS rates and weights are posted to the CMS website in August of each year. The contractor shall use the most current version of the files (to include any corrections made) for each fiscal year (October 1) update. 5

12 Chapter 16, Section 1 Long-Term Care Hospitals (LTCHs) The MS-LTC-DRG relative weights, wage index files and other related files are available at: index.html The IPPS relative weight, wage index files and other related files for processing Site-Neutral LTCH claims are available at: AcuteInpatientPPS/index.html The International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10- CM)/Procedure Coding System (PCS) MS-DRG Definitions Manual for the PPS Grouper is available at The LTCH Pricer is available at: Payment/PCPricer/LTCH.html The LTCH Medicare Provider ID numbers are available at: The LTCH cost reporting periods are available at: Fee-for-Service-Payment/ProspMedicareFeeSvcPmtGen/psf_text.html. 4.7 Billing and Coding Requirements The contractors shall use type of institution 73 for LTCHs The contractors shall use Pricing Rate Code (PRC) LT for Standard LTCH claims priced using the MS-LTC-DRG payment rates and PRC SN for LTCH claims priced using the site-neutral LTCH PPS payment rates. 4.8 Dual Eligible When the Medicare hospital day limit is exhausted for a TRICARE beneficiary, who is also eligible for Medicare (i.e., TRICARE for Life (TFL) beneficiaries), TRICARE is the primary payer. 5.0 EXCLUSIONS 5.1 The TRICARE LTCH PPS methodology does not apply to hospitals in states that are reimbursed by Medicare and TRICARE under a cost containment waiver that exempts them from Medicare s IPPS or the TRICARE DRG-based payment system. 5.2 Children s hospitals are excluded from the TRICARE LTCH PPS methodology. 5.3 VA hospitals are excluded from the TRICARE LTCH PPS methodology. 5.4 The TRICARE LTCH PPS methodology does not apply to any costs of physician services or other professional services provided to LTCH patients. 5.5 Custodial or domiciliary care is not coverable under the TRICARE program, even if rendered in an otherwise authorized LTCH. 6

13 6.0 EFFECTIVE DATE TRICARE Reimbursement Manual M, April 1, 2015 Chapter 16, Section 1 Long-Term Care Hospitals (LTCHs) Implementation of the TRICARE LTCH PPS methodology is effective for admissions on or after October 1, END - 7

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15 Chapter 17 Inpatient Rehabilitation Facilities (IRFs) Revision: Section/Addendum Subject/Addendum Title 1 Inpatient Rehabilitation Facilities (IRFs) 1

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17 Inpatient Rehabilitation Facilities (IRFs) Chapter 17 Section 1 Inpatient Rehabilitation Facilities (IRFs) Issue Date: May 24, 2018 Authority: 32 CFR (a)(10) Revision: 1.0 APPLICABILITY This policy is mandatory for the reimbursement of services provided either by network or nonnetwork providers. However, alternative network reimbursement methodologies are permitted when approved by the Defense Health Agency (DHA) and specifically included in the network provider agreement. 2.0 DESCRIPTION An IRF is a facility that is classified by the Centers for Medicare and Medicaid Services (CMS) as an IRF and meets the applicable requirements established by 32 CFR 199.6(b)(4)(xx). Inpatient rehabilitation hospitals and rehabilitation units of acute care hospitals or Critical Access Hospitals (CAHs) are collectively known as IRFs. 3.0 ISSUE 4.0 POLICY How are IRFs to be reimbursed? 4.1 Statutory Background Under Title 10, United States Code (USC), Section 1079(i)(2), the amount to be paid to hospitals, Skilled Nursing Facilities (SNFs), and other institutional providers under the TRICARE program, shall be determined to the extent practicable in accordance with the same reimbursement rules as apply to payments to providers of services of the same type under Medicare. Based on this statutory provision, DHA has adopted Medicare s Prospective Payment System (PPS) for reimbursement of IRFs currently in effect for the Medicare program as required under Section 4421 of the Balanced Budget Act (BBA) of 1997 (Public Law (PL) ) by creating Section 1886(j) of the Social Security Act (the Act). Section 1886(j) of the Act authorized the implementation of a per-discharge PPS for IRFs. The IRF PPS payment for each patient is based on information found in the IRF-Patient Assessment Instrument (PAI). The IRF- PAI contains patient clinical, demographic and other information about the patient, which classifies the patient into distinct groups based on clinical characteristic and expected resource needs. Separate payments are calculated for each group, including the application of case and facility-level adjustments. 1

18 Chapter 17, Section 1 Inpatient Rehabilitation Facilities (IRFs) 4.2 Applicability And Scope Of Coverage All IRFs that meet the classification criteria for payment under the IRF PPS under Title 42 CFR Part 412, subpart B, are considered authorized IRFs under the TRICARE program. 4.3 Payment On A Per Discharge Basis. Under the PPS, IRFs receive a pre-determined amount per discharge for inpatient services furnished to TRICARE beneficiaries Payment in full. The payment made under the IRF PPS represents payment in full (subject to applicable deductibles, cost-shares, and copayments) for inpatient operating and capital-related costs associated with furnishing TRICARE covered services in an IRF, but not for the cost of direct graduate medical education In addition to payments based on prospective payment rates, IRFs receive payments for the following: Bad debt expenses, as provided in 42 CFR (b)(2)(i) A payment amount per unit for blood clotting factor provided to TRICARE inpatients who have hemophilia. 4.4 Elements of the TRICARE IRF PPS Rates As required by the Act, the Federal rates reflect all costs of furnishing IRF services (routine, ancillary, and capital related) other than costs associated with operating approved education activities as defined in 42 CFR Parts and , bad debts, and other costs not covered under the PPS. Federal rates are adjusted to reflect: Patient case-mix, which is the relative resource intensity typically associated with each patient s clinical condition as identified through the patient assessment process: Cases are grouped into Rehabilitation Impairment Categories, according to the primary condition for which the patient was admitted to the IRF Cases are further grouped into case-mix groups (CMGs), which group similar cases according to their functional motor and cognitive scores and age Finally, cases are grouped into one of four tiers within each CMG, according to patients comorbidities (conditions that are secondary to the principal diagnosis or reason for the inpatient stay). Each tier adds a successively higher payment amount to the case depending on whether the costs of the comorbidity are significantly higher than other cases in the same CMG (low, medium, or high) Additional adjustments are made for interrupted stays, short stays of less than three days, short stay transfers, and high-cost outlier cases. 2

19 Chapter 17, Section 1 Inpatient Rehabilitation Facilities (IRFs) Facility Level Adjustment Factors: Rates are adjusted to reflect geographic differences in wage rates, using the hospital wage index Rates are further adjusted to account for a facility s proportion of low-income patients, teaching status, and rural area location Federal rates are updated annually: To reflect inflation in the cost of goods and services used to produce IRF services using a market basket index calculated for freestanding and hospital-based IRFs To reflect changes in local wage rates, using the hospital wage index Classification Criterion To be excluded from the TRICARE Diagnosis Related Group (DRG)-based payment system and instead be paid under the IRF PPS, an inpatient rehabilitation hospital or rehabilitation unit of an acute care hospital (or CAH) must meet the requirements for classification as an IRF stipulated in Subpart B of 42 CFR Part One criterion specified at 42 CFR (b) that Medicare uses for classifying a hospital or unit of a hospital as an IRF is that a minimum percentage of a facility s total inpatient population must require treatment in an IRF for one or more of 13 medical conditions listed in 42 CFR (b)(2). This minimum percentage is known as the compliance threshold, or the 60% rule. RICARE is adopting Medicare s 60% requirement for IRFs Patient Assessments Admission Orders At the time that each patient is admitted, the IRF shall have physician orders for the patient s care during the time the patient is hospitalized PAI Payment for services is contingent on the requirement that IRFs complete a PAI upon admission and discharge. IRFs shall use the CMS IRF-PAI as specified in 42 CFR that covers a time period that is in accordance with the assessment schedule in 42 CFR Comprehensive Assessments A clinician of the IRF shall perform a comprehensive, accurate, standardized, and reproducible assessment of each TRICARE inpatient as specified in 42 CFR (c) Coordination of the Collection of Patient Assessment Data A clinician of an IRF who has participated in performing the patient assessment shall accept 3

20 Chapter 17, Section 1 Inpatient Rehabilitation Facilities (IRFs) responsibility for the data as specified in 42 CFR Transmission of Patient Assessment Data The IRF shall encode, i.e., enter data items into the fields of the computerized patient assessment software program, and transmit the patient assessment data for each inpatient based on the data requirements in 42 CFR The IRF shall transmit the patient assessment data: Using the computerized version of the PAI available from CMS; or Using a computer program(s) that conforms to CMS standard electronic record layout, data specifications, and data dictionary, includes the required PAI data set, and meets CMS other specifications Data Collection Software The Inpatient Rehabilitation Validation and Entry System (jirven) was developed by CMS. jirven is a free Java-based software application which provides an option for IRFs to collect and maintain PAI information. Facilities are able to enter and subsequently export their data from the application for submission to the appropriate national data repository The IRF shall: Electronically encode all required data into the IRF-PAI software product. Generally, the software product includes patient classification programming called the Grouper software. The Grouper software uses specific IRF-PAI data elements to classify (or group) patients into distinct CMGs and account for the existence of any relevant comorbidities. The Grouper software produces a fivecharacter CMG number. The first character is an alphabetic character that indicates the comorbidity tier. The last 4 characters are numeric characters that represent the distinct CMG number. Free downloads of the jirven software product, including the Grouper software, are available on the CMS web site at Software.html Electronically transmit complete, accurate, and encoded data from the PAI for each TRICARE patient to the national data repository Once an IRF patient is discharged, the IRF submits a HIPAA compliant electronic claim, or a paper claim (UB-04) using the five-character CMG number assigned by the jirven Grouper software when submitting claims for processing Assessment Process for Interrupted Stays The IRF shall follow the assessment process for interrupted stays as specified in 42 CFR Reasonable and Necessary Criteria In order for an IRF claim to be considered reasonable and necessary, there must be a reasonable expectation that the patient meets all of the requirements in 42 CFR (3)(i) through 4

21 Chapter 17, Section 1 Inpatient Rehabilitation Facilities (IRFs) (iv) at the time of the patient s admission to the IRF Documentation. To document that each patient for whom the IRF seeks payment is reasonably expected to meet all of the requirements in paragraph at the time of admission, the patient s medical record at the IRF must contain the documentation outlined in 42 CFR (4)(i) through (iii) Interdisciplinary Team Approach To Care In order for an IRF claim to be considered reasonable and necessary, the patient must require an interdisciplinary team approach to care, as evidenced by documentation in the patient s medical record of weekly interdisciplinary team meetings that meet the requirements in 42 CFR (A) through (C). 4.5 Basis of Payment For admissions prior to October 1, 2018, IRFs shall be reimbursed based on billed charges or negotiated rates For admissions on or after October 1, 2018, inpatient services provided in IRFs shall be reimbursed in accordance with Medicare s IRF PPS as found in Title 42 CFR, Part 412, Subpart P. IRF PPS payments will be made on the basis of prospectively determined rates and applied on a per discharge basis To the extent practicable, in accordance with 10 USC 1079(i)(2), TRICARE will adopt Medicare s IRF PPS methodology, to include Medicare s relative weights, payment rates, adjustments for the 60% compliance threshold, and high cost-outlier payments TRICARE is adopting Medicare s IRF adjustments for interrupted stays, short stays of less than three days, short-stay transfers, teaching adjustments, rural adjustments, and the Low Income Payment (LIP) adjustment TRICARE is also adopting Medicare s IRF Quality Reporting Program (IRFQRP) payment adjustments for TRICARE-authorized IRFs that reflect Medicare s annual payment update for that facility. TRICARE is not establishing a separate reporting requirement for hospitals, but will utilize Medicare s payment adjustments resulting from their IRFQRP IRF PPS Pricer Software. CMS has developed an IRF Pricer Program that calculates the IRF payment rate. The Pricer software uses the CMG number, along with other specific claim data elements and provider-specific data, to adjust the IRF s prospective payment for interrupted stays, transfers, short stays, and deaths, and then applies the applicable adjustments to account for the IRF s wage index, percentage of low-income patients, rural location, outlier payments, and the teaching status adjustment CMS IRF PPS Pricer software is available for download at the bottom of the following web page: software.html. 5

22 4.6 QRP TRICARE Reimbursement Manual M, April 1, 2015 Chapter 17, Section 1 Inpatient Rehabilitation Facilities (IRFs) TRICARE will apply the same QRP reductions as Medicare. 4.7 Transition Period In the Final Rule (FR) published in the Federal Register on December 29, 2017, DHA created a multi-year transition period to buffer the impact from any potential decrease in revenue that rehabilitation facilities may experience during the implementation of a revised IRF inpatient payment system. This transition period provides IRFs with sufficient time to adjust and budget for potential revenue reductions. The transition is as follows: For the first 12 months following implementation, the TRICARE IRF PPS allowable cost will be 135% of Medicare IRF PPS amounts For the second 12 months following implementation, the TRICARE IRF PPS allowable cost will be 115% of the Medicare IRF PPS amounts For the third 12 months following implementation, and subsequent years, the TRICARE IRF PPS allowable cost will be 100% of the Medicare IRF PPS amounts. 4.8 General Temporary Military Contingency Payment Adjustment (GTMCPA) Payments The Director, DHA, or designee, may approve a GTMCPA payment based on all of the following criteria: The IRF serves a disproportionate share of Active Duty Service Members (ADSMs) and Active Duty Family Members (ADFMs), i.e., 10% or more of an IRF s total admissions are for ADSMs and ADFMs The IRF is a TRICARE network hospital The IRF s actual costs for inpatient services exceed TRICARE payments or other extraordinary economic circumstance exists; and Without the GTMCPA, the Department of Defense s (DoD s) ability to meet military contingency mission requirements will be significantly compromised. 4.9 Billing and Coding Requirements Once an IRF patient is discharged, the IRF shall submit a Healthcare Insurance Portability and Accountability Act (HIPAA) compliant electronic claim, or a paper claim (UB-04) using the fivecharacter CMG number when submitting claims for processing. In addition to all entries previously required on a claim, the following additional instructions must be followed to accurately price and pay a claim under the IRF PPS The IRF shall bill using Bill Type 11X along with Revenue Code Contractors shall process the claim using Type Of Institution 46 for IRFs. 6

23 Chapter 17, Section 1 Inpatient Rehabilitation Facilities (IRFs) The contractors shall use Pricing Rate Code (PRC) CI for CAH IRF reimbursement and RF for all other IRF reimbursement. 5.0 EXCLUSIONS 5.1 The TRICARE IRF PPS methodology does not apply to hospitals in States that are reimbursed by Medicare and TRICARE under a waiver that exempts them from Medicare s Inpatient Prospective Payment System (IPPS) or the TRICARE DRG-based payment system. 5.2 Children s hospitals are excluded from the TRICARE IRF PPS methodology. 5.3 Department of Veterans Affairs (VA) hospitals are excluded from the TRICARE IRF PPS methodology. 5.4 The IRF PPS reimbursement method does not apply to any costs of physician services or other professional services provided to IRF patients. 6.0 EFFECTIVE DATE Implementation of the IRF PPS reimbursement method for inpatient services is effective for admissions on or after October 1, END - 7

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