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Statement of Need: This final rule implements the TRICARE Hospital Outpatient Prospective Payment System (OPPS) as mandated under section 707 of the National Defense Authorization Act of Fiscal Year 2002 (NDAA-02), Pub. L. 107-107 (December 28, 2001), changing the statutory authorization in 10 U.S.C. 1079(j)(2) to provide that TRICARE payment methods for institutional care be determined, to the extent practicable, in accordance with the same reimbursement rules used by Medicare. Under the above Congressional mandate, TRICARE will be paying for hospital outpatient services in accordance with the provisions outlined in section 1833(t) of the Social Security Act and its implementing Medicare regulation (42 CFR § 419).

Summary of the Legal Basis: There is a statutory basis for this final rule: Section 707 of the National Defense Authorization Act of Fiscal Year 2002 (NDAA-02), Pub. L. 107-107.

Alternatives: This is a statutory change; consequently, no alternatives were considered.

Anticipated Costs and Benefits: Anticipated costs of implementation are $20 million. Anticipated cost-savings for first full year of implementation are $80 - $90 million.

Risks: Failure to publish this final rule would result in noncompliance with a statutory provision--the NDAA-02/Public Law 107-107.