1 New Inpatient Billing Guidance For Inpatient Services Provided Under VA/DoD Health Care Resource Sharing Agreements Presented by the UBO Support Team Dial in: Conf code: #

2 Objectives 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 how to look-up Area Wage Index Number for a hospital (an input to the payment calculator)

3 Background VA/DoD Health Care Resource Sharing Policy Guidance VA/DoD 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 VA/DoD Sharing Agreements

4 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

5 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)

6 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

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

8 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

9 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

10 Modified TRICARE DRG Payment Calculator (an MS Excel Workbook) Look-up Table of Area Wage Index Numbers By Zip Code Modified TRICARE DRG Calculator Worksheet

11 Modified TRICARE DRG Payment Calculator (an MS Excel Workbook) Payment Details Portion (For Info Only) Modified TRICARE DRG Calculator Portion

12 Modified TRICARE DRG Payment Calculator Overview of Inputs & Output Case- specific inputs Payment Calculation Portion of the Calculator Hospital- specific input Case- specific output

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

14 Modified TRICARE DRG Payment Calculator Case-specific inputs –Diagnosis Related Group (DRG) Number –Length of Stay (LOS) –Disposition Status (Code)

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

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

17 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

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

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

20 Modified TRICARE DRG Payment Calculator Using the Zip_2_Wage Index Look-Up Table Area Wage Index Number Zip Code Of Treating Hospital

21 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

22 Modified TRICARE DRG Payment Calculator Hospital-specific Input Payment Calculation Portion of the Calculator Hospital- specific input

23 Modified TRICARE DRG Payment Calculator Payment 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

24 Modified TRICARE DRG Payment Calculator Reading the Billable Amount Payment Calculation Portion of the Calculator VA/DoD Resource Sharing Policy Information

25 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

26 Modified TRICARE DRG Payment Calculator Reading the Billable Amount Payment Calculation Portion of the Calculator Case-specific output

27 Modified TRICARE DRG Payment Calculator Payment 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

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

29 Summary 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 calculate of amount to be billed for Institutional component of service –FY2006 version completed; FY2007 version in development Calculators and billing guidance will be posted on the UBO web site

30 Quiz Questions 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 will the payment calculators and implementation guidance be posted?

31 Questions? Please continue to use the MHS Helpdesk, the TMA UBO Helpdesk, and/or contact us directly: (703) or at 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

32 VA/DoD Inpatient Billing Guidance Back-Up Materials

33 Modified TRICARE DRG Payment Calculator Disposition Status Codes 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