January 5, 2009

The AHA recently expressed ìdeep disappointmentî over a Department of Defense (DoD) regulation that will cut outpatient payments by $458 million to hospitals that care for patients under the militaryís Tricare program for uniformed service members and their families. The association said it is exploring legislative and administrative options to block or revise the rule, which takes effect Feb. 9. The DoD final rule, released Dec. 8, carries out a 2002 National Defense Authorization Act mandate to model Tricare payments for outpatient services on Medicareís outpatient prospective payment system (OPPS). With few exceptions, the rule adopted Medicareís ambulatory payment classification (APC) system and its APC payment amounts for reimbursement. ìGiven the current economic environment, this isnít the time to take nearly a half-billion dollars away from hospitals,î said Don May, the AHAís vice president for policy. He added that the cuts will make it ìmore challenging for hospitals to meet the needs of our returning soldiers and their families,î a concern raised by a bipartisan group of 57 senators in a Nov. 21 letter to DoD Secretary Robert Gates protesting the departmentís proposed Tricare rule. In an effort to ìbufferî the financial impact on providers, the DoD said it would phase-in the new outpatient payments system with temporary increases in payments for emergency department and clinic visits. Hospitals that participate in Tricare will receive higher transitional payments that will decline over a four-year period, while other hospitals will receive lower payments that will decline over a three-year period. Also, certain participating hospitals may receive additional temporary boosts in payment if they are deemed essential for military readiness and support during military operations. But May called the transition to OPPS ìwoefully inadequateî and said hospitals will see deeper payment cuts as the full brunt of the regulation takes effect. ìWe urge DoD to revise the rule, expand the transition period to the new payment system, offer other adjustments to cushion the financial blow on certain hospitals and conduct a detailed analysis of its impact on the field,î he said. In their November letter to DoD, the bipartisan group of senators expressed concern that the Tricare planís ìsudden and severe shifts in paymentsî could jeopardize providersí ability to care for Tricare patients. They called for a ìmeaningful transition periodî to the new payment system. The AHA said it will work with congressional critics of Tricareís outpatient payment policy to press for changes.