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This rule finalizes the provisions of the interim final rule (88 FR 1992) that added freestanding End-Stage Renal Disease (ESRD) facilities as TRICARE-authorized institutional providers and established reimbursement methodologies for such facilities.  These ESRD provisions are adopted as final without substantive change.  This rule also removed expired regulatory text related to Medicare’s New COVID-19 Treatments Add-on Payment (NCTAP), which was implemented on a temporary basis in the interim final rule and expired at the conclusion of the COVID 19 public health emergency.  This removal is administrative in nature and ensures the regulations reflects current policy.

Statement of Need:

The modifications to paragraphs 199.6(b)(4)(xxi) and 199.14(a)(1)(iii)(E)( 7 ) establish freestanding End Stage Renal Disease (ESRD) facilities as a category of TRICARE-authorized institutional provider and modify TRICARE reimbursement of freestanding ESRD facilities. These provisions will improve TRICARE beneficiary access to medically necessary dialysis and other ESRD services and supplies. These provisions also support the requirement that TRICARE reimburse like Medicare, and will help ensure access to dialysis care in freestanding ESRD facilities rather than hospital outpatient departments.

Summary of the Legal Basis:

This rule is issued under 10 U.S.C. 1073 (a)(2) giving authority and responsibility to the Secretary of Defense to administer the TRICARE program.

Alternatives:

(1) No action

(2) The second alternative the Department of Defense considered was to adopt Medicare’s ESRD reimbursement methodology, the ESRD Prospective Payment System (PPS), in total. While this would have been completely consistent with the statutory provision to pay institutional providers using the same reimbursement methodology as Medicare, this alternative is not preferred because there is still a relatively low volume of TRICARE beneficiaries who receive dialysis services from freestanding ESRDs and who are not enrolled to Medicare. The cost of implementing the full ESRD PPS system is estimated to be at least $600,000.00 in start-up costs, plus ongoing administrative costs, to ensure all adjustments were made for each claim, plus additional special pricing software or algorithms. In contrast, we estimate that the option provided in this IFR can be implemented relatively quickly (within six months of publication), and for approximately $300,000.00 in start-up costs with lower ongoing administrative costs. Further, the flat rate will provide the ESRD facilities with predictability with regard to TRICARE payments and will reduce uncertainty and specialized coding or case-mix documentation requirements that may be required by the ESRD PPS, reducing the administrative burden on the provider.

To summarize, adopting the ESRD PPS was considered, but was deemed impracticable and overly burdensome to both the Government and providers due to the relative low volume of claims that will be priced and paid by TRICARE as primary under this system.

Anticipated Costs and Benefits:

The ESRD provisions are expected to result in $5M in incremental annual health care costs.

Risks:

None . This rule will promote the efficient functioning of the economy and markets by modifying the regulations to better reimburse health care providers for particularly as strain on the health care economy is being felt due to reductions in higher cost elective procedures.