ModifiedDHAPolicy C1S28

Reduction Of Payment For Noncompliance With Utilization Review Requirements

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This policy governs reductions in TRICARE provider payment when required preauthorization or preadmission authorization is not obtained. It applies to participating and nonparticipating providers, including network providers and participating Department of Veterans Affairs/Veterans Health Administration facilities.

Policy Summary

PayerDHA

PolicyReduction Of Payment For Noncompliance With Utilization Review Requirements

Policy CodePolicy C1S28

Change TypeModified

Effective DateOct 3, 2016

Next Review DateN/A

Key ActionObtain required preauthorization or preadmission authorization before providing services subject to utilization review requirements.

SourceLink

POLICY UPDATE CHANGES

Inpatient mental health and substance use disorder day limits were eliminated effective December 19, 2014.

All remaining mental health and substance use disorder quantitative treatment limitations were eliminated effective October 3, 2016.

10%Default payment reduction

8Care types subject to payment reduction

1 business dayPreauthorization decision timeframe

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ModifiedDHAPolicy C1S28

Reduction Of Payment For Noncompliance With Utilization Review Requirements

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Sign up for DHA Policy C1S28 alerts

Get alerted when Policy C1S28 changes without checking for updates manually.

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Policy Summary

PayerDHA

PolicyReduction Of Payment For Noncompliance With Utilization Review Requirements

Policy CodePolicy C1S28

Change TypeModified

Effective DateOct 3, 2016

Next Review DateN/A

Key ActionObtain required preauthorization or preadmission authorization before providing services subject to utilization review requirements.

SourceLink

POLICY UPDATE CHANGES

Inpatient mental health and substance use disorder day limits were eliminated effective December 19, 2014.

All remaining mental health and substance use disorder quantitative treatment limitations were eliminated effective October 3, 2016.

10%Default payment reduction

8Care types subject to payment reduction

1 business dayPreauthorization decision timeframe

Preauthorization validity

No patient billingPatient billing for provider noncompliance

Payment Reduction Criteria and Exceptions

Care Subject to Payment Reduction

Payment reduction applies when required preauthorization or preadmission authorization is not obtained for the following care.

CARE SUBJECT TO REDUCTION

All non-emergency mental health admissions to hospitals.
Admissions for psychiatric residential treatment for children; inpatient or residential Substance Use Disorder (SUD) detoxification and rehabilitation; and psychiatric partial hospitalization, including Partial Hospitalization Program (PHP) care before June 13, 2017. These services cannot be considered emergency care.
Psychoanalysis, which cannot be considered an emergency service.
Adjunctive dental care.
Organ and stem cell transplants.
Skilled Nursing Facility (SNF) care received in the United States and U.S. territories for TRICARE dual-eligible beneficiaries once TRICARE is the primary payer.
Infusion drug therapy delivered in the home.
Additional procedures and services prescribed by the contractors, except when the beneficiary has other health insurance (OHI) as provided in the TRICARE Policy Manual.

Provider Applicability

The policy applies to participating and nonparticipating providers, subject to the applicable provider agreement and reimbursement rules.

PROVIDER APPLICABILITY

Applies to participating providers, including network providers and participating Department of Veterans Affairs (DVA)/Veterans Health Administration (VHA) facilities.
Applies to nonparticipating providers.
For admissions to a hospital, inpatient or residential SUD rehabilitation facility, Residential Treatment Center (RTC), PHP care before June 13, 2017, or an applicable SNF, a network-provider reduction applies to institutional charges and associated professional charges of the attending or admitting provider.
Services of other providers are subject to the reduction specified in the network provider agreement, but the reduction may not be less than 10%.

Reduction Calculation Methodology

The reduction is applied to the otherwise allowable payment and is limited to the portion of care provided without the required authorization.

CALCULATION PRINCIPLES

For a provider's failure to obtain required preauthorization, reduce payment by 10% of the amount otherwise allowable, unless an applicable network provider contract specifies a greater reduction or denial.
Determine the amount otherwise allowable under the applicable reimbursement methodology before applying the payment reduction.
Apply the reduction only to the days, services, sessions, or reimbursement amount associated with care provided without prospective authorization.
Calculate the reduction consistently with the DRG, non-DRG, per-service, and authorization-timing rules in this section.

Payment Reduction for Failure to Obtain Preauthorization

Failure to obtain authorization results in a reduction based on provider status, contract terms, reimbursement method, and the point at which authorization was obtained.

FAILURE TO OBTAIN PREAUTHORIZATION

If required preauthorization or preadmission authorization was not obtained, apply the payment reduction to the affected care, subject to the emergency and waiver exceptions.
For non-network providers, apply a 10% reduction to the amount otherwise allowable for the services requiring preauthorization.
For network providers, apply the contractual reduction or denial, but not less than a 10% reduction.
For admissions reimbursed under a DRG-based payment system, apply the reduction to the percentage of total reimbursement equal to the number of days provided without preauthorization divided by the total length of stay.

Reduction by Reimbursement Method and Authorization Timing

The reimbursement method and authorization timing determine which amounts, days, or services are subject to reduction.

REIMBURSEMENT METHOD AND TIMING

For DRG-reimbursed facilities, calculate the affected percentage as days of care provided without preauthorization divided by total admission length of stay, then apply that percentage to total reimbursement.
For non-DRG facilities or units, reduce payment only for the unauthorized days of care.
For per-service reimbursement, reduce payment only for services or sessions provided before the contractor received the authorization request.
When the authorization request was made before admission but was not received by the contractor until after admission, count reduction days from the admission date through the day before the contractor received the request.

OHI and Beneficiary Cost-Share Treatment

Payment reduction is sequenced before deductible, beneficiary cost-share, and OHI, but the beneficiary remains responsible for applicable cost-share.

OHI AND COST-SHARE RULES

When OHI provides primary coverage, certain services are not subject to payment reduction, including additional procedures and services prescribed by contractors when the beneficiary has OHI as described in the TRICARE Policy Manual.
Calculate the payment reduction using the otherwise allowable amount before applying the deductible, beneficiary cost-share, or OHI.
The beneficiary must still pay the normal cost-share for days or services for which payment is reduced.
Calculate the beneficiary cost-share under normal rules before taking the payment reduction.
The amount applied or credited toward the deductible may not exceed the amount for which the beneficiary remains liable after the Government payment.

Emergency and Waiver Exceptions

Do not apply a payment reduction to bona fide emergency care. A limited waiver may be available when the provider could not reasonably have known the patient's TRICARE eligibility.

EXCEPTIONS

BONA FIDE EMERGENCY
- The admission or service is a bona fide emergency.
- Payment reduction is not applied to the emergency admission or service, including authorization required for continuation of services connected with the bona fide emergency.
- The contractor with jurisdiction may review the emergency determination at the provider's request.
LIMITED WAIVER
- The provider could not have known that the patient was a TRICARE beneficiary, such as when a Uniformed Service makes a retroactive eligibility determination or the patient does not disclose eligibility to the provider.

Beneficiary Protection and Appeal Treatment

The provider, not the beneficiary, bears the payment reduction. Review and appeal rights depend on the type of determination.

BENEFICIARY PROTECTION AND REVIEW RIGHTS

The patient or the patient's family may not be billed for the amount of the payment reduction caused by the provider's noncompliance with preauthorization requirements.
The days or services for which the provider's payment is reduced are approved days or services and are not subject to appeal.
A denial of a waiver request and clerical or calculation errors related to the payment reduction are not appealable, but may be submitted to the contractor for administrative review upon request.
An adverse determination regarding an alleged emergency admission or service is appealable when it results in a payment reduction, under the normal appeal procedures.

Reduction Amounts and Authorization Timing

Default payment reduction

Default reduction10% of the amount otherwise allowable

TriggerFailure to obtain a required preauthorization or preadmission authorization

ScopeApplies to payment for care subject to the policy’s utilization review requirements

Network provider contract floor

Minimum reductionNot less than 10%

Contract termsThe reduction follows the network provider’s contract with the contractor

Possible greater consequence

Authorization, Documentation, and Billing Responsibilities

Prior Authorization

Obtain Required Authorization

Obtain the required preauthorization or preadmission authorization before furnishing applicable care. Failure to obtain authorization may result in a reduction of the provider's payment.

Denial Risk

Noncompliance Risks Payment Reduction

If a provider fails to obtain required preauthorization or preadmission authorization, payment is reduced by 10% of the amount otherwise allowable. For network providers, the applicable managed-care contract may impose a reduction greater than 10% or a denial when the provider agreed to those terms.

The reduction applies under the Point of Service (POS) option.
The reduction applies to participating and nonparticipating providers.

Key Authorization and Coverage Terms

Preauthorization request receipt and made date

Receipt dateThe date on which the contractor receives the request to authorize the medical necessity and appropriateness of care within its jurisdiction

Mailed requestThe postmark date determines the date the request was made

No postmarkA request without a postmark is deemed made on the date received by the contractor

Bona fide emergency admission or service

DefinitionAn admission or service that meets bona fide emergency criteria

Payment treatmentPayment reductions do not apply to bona fide emergency admissions or services

Policy Summary

PayerDHA

PolicyReduction Of Payment For Noncompliance With Utilization Review Requirements

Policy CodePolicy C1S28

Change TypeModified

Effective DateOct 3, 2016

Next Review DateN/A

Key ActionObtain required preauthorization or preadmission authorization before providing services subject to utilization review requirements.

SourceLink

On This Page

The payment reduction also applies under the Point of Service (POS) option.

For non-network providers, the reduction is 10% of the amount otherwise allowable for services for which preauthorization should have been obtained but was not obtained.

For network providers, the reduction follows the provider's contract with the respective contractor and may exceed 10%, or result in denial, when the network provider has agreed to that treatment; the reduction may not be less than 10%.

For non-DRG facilities or units, including RTCs and mental health per diem hospitals, apply the reduction only to days of care provided without preauthorization.

For care paid on a per-service basis, including outpatient adjunctive dental care, apply the reduction only to the amount relating to services provided without prospective authorization.

A preauthorization request may be made in person, by telephone, fax, or mail. The contractor's receipt date is the business day the request is received for medical-necessity and appropriateness review; for mailed requests, the postmark determines the date made, and an unpostmarked request is deemed made on the receipt date.

The contractor issues a preauthorization decision within one business day of receiving the provider's request, followed by written confirmation when initial notice is verbal.

A preauthorization is valid for the period and type of care stated, generally 30 calendar days. If care is not obtained within the specified period, a new request is required. For organ and stem cell transplants, authorization remains effective while the beneficiary meets the applicable transplant criteria or until the approved transplant occurs.

When the authorization request was made after admission, count reduction days from the admission date through the day before the contractor approved the request.

The same timing rule applies to alleged emergency care later determined not to meet emergency criteria.

The contractor applies the same standard used under the Waiver of Liability provisions to determine whether the provider could have been expected to know the preauthorization requirements.

The contractor's initial determination on the emergency review must state the review decision and is appealable.

If a payment reduction is revised after claims processing, claim processors follow existing procedures for resulting payment adjustments.

The contract may specify a reduction greater than 10% or a denial

DRG unauthorized-care proportion

Reduction rangeBetween 0% and 100% of total reimbursement

CalculationUnauthorized days of care divided by the total length of stay

Applies toAdmissions reimbursed under the DRG-based payment system

Non-DRG reduction scope

Reduction scopeOnly days of care provided without preauthorization

Facility typeNon-DRG facilities or units, including residential treatment centers and mental health per diem hospitals

Excluded daysDays provided with the required preauthorization are not included in the reduction

Per-service reduction scope

Reduction scopeOnly the amount relating to services provided without prospective authorization

Payment methodCare paid on a per-service basis

Example identifiedOutpatient adjunctive dental care

Non-network provider reduction

Reduction10% of the amount otherwise allowable

Provider typeNon-network providers

Applicable servicesServices for which preauthorization should have been obtained but was not obtained

Network provider minimum reduction

Minimum reductionNot less than 10%

Amount subject to reductionThe provider contract amount

Provider typeNetwork providers

DRG reduction basis

Reduction basisThe percentage of total reimbursement equal to days without preauthorization divided by total length of stay

Percentage range0% to 100%

Payment systemDRG-based reimbursement

Non-DRG reduction basis

Reduction basisOnly the days of care provided without preauthorization

Applicable settingNon-DRG facilities or units

Included examplesResidential treatment centers and mental health per diem hospitals

Per-service reduction basis

Reduction basisOnly the amount attributable to services provided without prospective authorization

Applicable payment methodPer-service payment

Timing focusServices provided before prospective authorization are subject to the reduction

Contractor preauthorization decision

Decision timeframeWithin one business day after receipt of the provider request

Decision issuerThe contractor

Written confirmationA written confirmation follows when the initial notice is verbal

General preauthorization validity

General validity30 calendar days

Authorization contentThe preauthorization states the number of days and type of care for which it is valid

Renewal requirementA new preauthorization request is required if services are not obtained within the specified period

Prior Authorization

Services Subject to Authorization

Payment-reduction rules apply when required authorization is not obtained for identified services, including non-emergency mental health admissions, psychiatric residential treatment, inpatient or residential substance use disorder detoxification and rehabilitation, psychiatric partial hospitalization, psychoanalysis, adjunctive dental care, organ and stem cell transplants, applicable skilled nursing facility care, home infusion drug therapy, and additional contractor-prescribed procedures and services.

Psychiatric residential treatment for children and inpatient/residential SUD detoxification and rehabilitation cannot be considered emergency care.
Psychoanalysis cannot be considered an emergency service.
Certain services may be excluded when the beneficiary has other primary insurance.

Billing Rule

Apply Reduction by Provider and Payment Method

The reduction applies to participating providers—including network providers and participating DVA/VHA facilities—and to nonparticipating providers. The amount and affected charges depend on provider status and the reimbursement method.

For network providers, the contractual reduction applies but may not be less than 10%; for non-network providers, the reduction is 10% of the otherwise allowable amount.
For applicable hospital, SUDRF, RTC, PHP, or SNF admissions, network reductions apply to institutional charges and associated attending or admitting professional charges; other providers are governed by their network agreements, subject to the 10% minimum.
For DRG reimbursement, apply the reduction to the percentage of total reimbursement equal to unauthorized days divided by total length of stay.
For non-DRG facilities or units, apply the reduction only to unauthorized days; for per-service care, apply it only to services provided without prospective authorization.

Prior Authorization

Preauthorize Applicable Admissions and Services

Request preauthorization before applicable admissions or services, including non-emergency mental health hospital admissions; psychiatric residential treatment for children; inpatient or residential SUD detoxification and rehabilitation; psychiatric partial hospitalization; psychoanalysis; adjunctive dental care; organ and stem cell transplants; applicable SNF care for TRICARE dual-eligible beneficiaries when TRICARE is primary; home infusion drug therapy; and contractor-prescribed procedures and services.

The listed psychiatric residential, SUD, and psychoanalysis services are not treated as emergencies for this requirement.
Services subject to an applicable other-insurance exception are not subject to the reduction.

Denial Risk

Risk Applies to All Provider Statuses

Failure to obtain required authorization can reduce payment for both participating and nonparticipating providers. Network-provider reductions follow the applicable contractor agreement but cannot be less than 10%; non-network providers are subject to a 10% reduction of the otherwise allowable amount.

Payment reduction also applies under the POS option.

Unsupported block type: documentation

Unsupported block type: billing_rule

Unsupported block type: documentation

Prior Authorization

Maintain Authorization Validity

Verify the approved authorization period and the authorized type of care before services are furnished. The authorization states the number of approved days and/or type of care and is generally valid for 30 calendar days; obtain a new authorization if services are not provided within the specified period.

Organ and stem cell transplant authorization remains effective while the beneficiary continues to meet the applicable transplant criteria or until the approved transplant occurs.
Confirm that the planned care remains within the approved period and scope.

Note

Identify Emergency Exceptions

Do not apply a payment reduction to a bona fide emergency admission or service, including authorization required for continuation of services related to a bona fide emergency admission. The contractor with medical-review jurisdiction reviews the emergency determination when requested and issues an appealable initial determination.

Psychoanalysis and psychiatric residential treatment for children or inpatient/residential SUD detoxification and rehabilitation cannot be considered emergencies under this policy.

Note

Waiver Limited to Unknown TRICARE Eligibility

Request a waiver of the payment reduction only when the provider could not have known that the patient was a TRICARE beneficiary, such as a retroactive eligibility determination or the patient's failure to disclose eligibility.

The waiver is limited to the provider's inability to know the patient's TRICARE eligibility.
Whether the provider could reasonably have been expected to know the authorization requirements is evaluated under the Waiver of Liability provisions.

Billing Rule

Do Not Transfer the Reduction to the Patient

Do not bill the patient or the patient's family for the amount of a payment reduction caused by the provider's failure to comply with preauthorization requirements.

The beneficiary may still owe the normal cost-share for affected approved days or services; calculate normal cost-share before applying the provider payment reduction.

Psychoanalysis and admissions for psychiatric residential treatment for children or inpatient/residential SUD detoxification and rehabilitation cannot be considered emergencies under this policy

Other Health Insurance (OHI)

DefinitionOther health insurance that provides primary coverage for the beneficiary

Payment-reduction treatmentCertain services are not subject to payment reduction when OHI is primary

Related exceptionAdditional procedures and services prescribed by contractors are excepted when the beneficiary has other insurance as provided in the TRICARE Policy Manual