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This rule proposes to update current regulations in order to expand the Department of Defense’s authority to compute reasonable charges for inpatient and ambulatory (outpatient) institutional resources and also for pharmaceuticals, durable medical equipment (DME), supplies, immunizations, injections or other medications administered or furnished by DoD military treatment facilities (MTFs) under their three existing healthcare cost recovery programs--Third Party Collections, Medical Services Accounts, and Medical Affirmative Claims. Specifically, the rule would update the reasonable charges methodologies for inpatient and ambulatory institutional billing to allow for the use of Itemized Resource Utilization (IRU) based rates--developed from the cost to provide inpatient and ambulatory institutional health care resources and/or publically available charge data sources--in addition to current bundled prospective reimbursement approaches of diagnostic-related group (DRG), ambulatory payment classification (APC), ambulatory surgery center (ASC), and ambulatory procedure visit (APV) based rates. It would also revise the reasonable charges methodology for pharmaceuticals, DME, supplies, immunizations, injections or medication administered to allow for their calculation using either Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) prevailing rates or IRU based rates--developed from the cost to provide these health care items and resources and/or publically available charge data sources--regardless of whether CHAMPUS prevailing rates are available. These additional IRU methodologies--authorized by 10 U.S.C. 1095(f) and 1097b(b) and endorsed by section 1079b, would implement an itemized rate and reasonable charges structure that: improves collections and operation of DoD’s healthcare cost recovery programs by ensuring MTFs receive appropriate reimbursement for institutional healthcare resources as well as for pharmaceuticals, DME, supplies, immunizations, injections, or medication provided or administered; is more consistent with civilian health insurance industry practice; and allows the Military Health System (MHS) to accommodate new value-based provider reimbursement methodologies (e.g., pay for performance, bundled payments, shared savings/accountable care organizations) emerging from ongoing healthcare reform initiatives, including the Patient Protection and Affordable Care Act (PPACA), Public Law 111-148, 42 U.S.C. 18001 et seq. (2010). The proposed rule would also replace "hospital" with "institutional" throughout most of the regulation to align it with civilian health insurance industry terminology and better promote identification and separate billing of institutional and professional services as required by 32 CFR 220.8(b).