[Federal Register Volume 59, Number 124 (Wednesday, June 29, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-15700] [[Page Unknown]] [Federal Register: June 29, 1994] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF DEFENSE Office of the Secretary 32 CFR Part 199 RIN-0720-AA23 Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); Mental Health Services AGENCY: Office of the Secretary, DoD. ACTION: Proposed Rule. ----------------------------------------------------------------------- SUMMARY: This proposed rule is to reform CHAMPUS quality of care standards and reimbursement methods for inpatient mental health services. The rule would update existing standards for residential treatment centers (RTCs) and establish new standards for approval as CHAMPUS-authorized providers for substance abuse rehabilitation facilities and partial hospitalization programs; implement recommendations of the Comptroller General of the United States that DoD establish cost-based reimbursement methods for psychiatric hospitals and, residential treatment facilities; adopt another Comptroller General recommendation that DoD reverse the current incentive for the use of inpatient mental health care; and eliminate payments to residential treatment centers for days in which the patient is on a leave of absence. DATES: Written comments must be received on or before August 29, 1994. ADDRESSES: Office of the Civilian Health and Medical Program of the Uniformed Services (OCHAMPUS), Office of Program Development; Aurora, Colorado 80045-6900. FOR FURTHER INFORMATION CONTACT: CFR Deborah Kamin, NC, USN, Office of the Assistant Secretary of Defense (Health Affairs), (703) 697-8975. Questions regarding payment of specific claims should be addressed to the appropriate CHAMPUS contractor. SUPPLEMENTARY INFORMATION: I. Introduction Quality assurance and cost effectiveness of mental health care services under CHAMPUS continue to be major reform issues for the Defense Department and Congress. In recent years, a series of DoD initiatives, legislative and regulatory actions, and Congressional hearings has spotlighted both progress made and the need for more improvement. Two recent Comptroller General Reports are indicative of the importance of these issues and the need for reform. The first of these, ``Defense Health Care: Additional Improvements Needed in CHAMPUS's Mental Health Program,'' GAO/HRD-93-34, May 1993, stated that, although DoD has taken actions to improve the program, ``several problems persist.'' The Report (hereafter referred to as ``GAO Report #1'') elaborated: For example, reviews of medical records have identified numerous instances of poor medical record documentation, potentially inappropriate admissions, excessive hospital stays, and poor-quality care. Also, inspections of RTCs [Residential Treatment Centers] continue to reveal significant health and safety problems, and corrective actions often take many months. Moreover, DoD * * * pays considerably higher rates for comparable services than do other public programs. GAO Report #1, p. 2. The Report referenced the General Accounting Office's 1991 Congressional testimony regarding CHAMPUS mental health care and inspections of residential treatment facilities conducted for DoD since then: Inspections conducted since our 1991 testimony have identified some of the same problems we described then: unlicensed and unqualified staff, inappropriate use of seclusion and medication, inadequate staff-to-patient ratios, and inadequate documentation of treatment. GAO Report #1, p. 5. The principal conclusions of this Report were: (1) ``standards, which include termination for noncompliance, should be specified and termination proceedings, time frames, and reinspection provisions * * * should be adopted;'' and (2) because ``DoD reimburses psychiatric hospitals and RTCs at higher rates than do other government payers, it should modify its payment system to more closely resemble other programs such as Medicare.'' GAO Report #1, p. 9. A second recent Comptroller General Report, ``Psychiatric Fraud and Abuse: Increased Scrutiny of Hospital Stays is Needed to Lessen Federal Health Program Vulnerability,'' GAO/HRD-93-92, September 1993, also called for improvements in the CHAMPUS mental health program. The Report (hereafter referred to as GAO Report #2) said: Investigations to date have revealed that federal health programs have been subject to fraudulent and abusive psychiatric hospital practices, but apparently to a lesser extent than private insurers. * * * Some federal control weaknesses do exist which have resulted in unnecessary hospital admissions, excessive stays, and sometimes inadequate quality of care. * * * DoD has also identified numerous instances of quality problems and unnecessary hospital admissions. GAO Report #2, pp. 9-10. These two recent Comptroller General Reports, as well as a substantial body of other documentation, highlight the need for a very active quality assurance program. As discussed further below, two primary issues are presented. First, there is a need for clear, specific standards for psychiatric facilities on staff qualifications, clinical practices, and all other aspects directly impacting the quality of care. These standards are needed for residential treatment facilities, substance abuse rehabilitation facilities, and partial hospitalization programs. These standards will help bring those facilities, a minority in the industry, that are unwilling or unable to comply with necessary requirements, up to an appropriate standard of care. The second key issue is reimbursement rates. As documented by the Comptroller General, CHAMPUS needs to discontinue payment rates based on historical billed charges and establish payment rates based on the actual costs of providing the services. Payment methodologies used by Medicare provide the appropriate model, with provisions to assure that rates are based on costs for a broad range of patients, not just the elderly. This proposed rule seeks public comment on our plan to adopt reforms on these two primary issues. The rule would put in place as part of the CHAMPUS regulation comprehensive quality of care certification standards for residential treatment facilities, substance abuse rehabilitation facilities, and partial hospitalization programs. It would also phase in gradually a cost-based reimbursement system for psychiatric hospitals and residential treatment facilities. In addition, the rule includes proposals on several other issues, addressed below. II. Provisions of Proposed Rule To Reform Certification Standards For Mental Health Care Facilities The Comptroller General's call for stronger management by CHAMPUS to assure quality of care in the mental health programs was based partially on a review of serious abuses on the part of some providers. The GAO presented audit findings identifying program weaknesses. As one of four states which account for more than half of CHAMPUS mental health hospital costs, Texas surfaced in recent audits as number one in CHAMPUS mental health expenditures. Of particular concern are practices described during 1991 hearings conducted before the Texas state senate and summarized in GAO report #2. In over 80 hours of testimony, 175 witnesses--some beneficiaries of federal programs--brought forth allegations which included exorbitant charges for care never rendered; Kickbacks for patient referrals; restraint of voluntary patients against their will; discharge of patients upon exhaustion of benefits, regardless of their condition; and isolation of family from patients including withholding of visitation and mail/telephone privileges. While privately insured patients are the most common target of unethical practices, increasing benefit limits and payment controls by private third party payers may place federal programs at increased risk for fraudulent practices. GAO auditors point out that, because CHAMPUS reimburses mental health at rates higher than other federal programs, it may be particularly vulnerable to the minority of unethical providers seeking additional revenue sources. Other abuses among some mental health providers were also documented in recent Congressional hearings. The House Select Committee on Children, Youth and Families, chaired by Representative Patricia Schroeder, conducted hearings on the U.S. mental health system in April 1992. The hearing was entitled, ``The Profits of Misery: How Inpatient Psychiatric Treatment Bilks the System and Betrays Our Trust.'' Witnesses testifying before the committee cited numerous abuses in the mental health industry which included treatment up to the point of benefit exhaustion regardless of health status, manipulative advertising campaigns, placement of ``volunteers'' in school counseling offices for the purpose of recruiting patients, and billing for physician services actually provided by other health workers. The GAO, represented by David Baine, Director of Federal Health Care Delivery issues, testified to disturbing results obtained by a CHAMPUS contractor, Health Management Strategies International (HMSI), during focused and quarterly reviews of mental health facilities. In a substantial number of cases reviewed, medical records failed to document medical necessity for an admission and two-thirds of cases reviewed did not meet critical quality-of-care criteria or lacked evidence to make such a determination. In focused reviews, unnecessary admissions ranged from 26 to 91 percent of cases sampled. In his testimony before the committee, Dr. Melvin Sabshin, Medical Director of the American Psychiatric Association, expressed concern over inappropriate and abusive psychiatric practices and committed the APA to ``strengthening laws to protect psychiatric hospital patients.'' Additionally, Dr. Sabshin cited recent adoption of APA guidelines governing the hospitalization of minors. These guidelines will serve to ``protect children against needless hospitalization and deprivation of liberty, and to enable medical decisions to be made in response to clinical needs and in accordance with sound psychiatric judgment.'' Echoing concern over breaches in professional ethics, Dr. Richard Cohen, President of the American Academy of Child and Adolescent Psychiatry, provided a policy statement for the record which identified as unethical any mental health program offering financial reward in exchange for admissions, programs allowing admission decisions by other than qualified psychiatrists, and ``misleading, guilt-provoking, or unduly alarming advertising to promote self-referrals and admissions.'' Individual providers, professional associations, other members of the mental health community and beneficiaries testified to an array of problems in quality of care and utilization management. Numerous calls were made to strengthen existing legislation, improve professional standards and provide closer monitoring to ensure appropriate and cost effective treatment. Based on information provided to the Committee, Chairwoman Schroeder stated: Clearly this business of treating minds--particularly this big business of treating young minds has not policed itself, and has no incentive to put a stop to the kinds of fraudulent and unethical practices that are going on. This leads me to conclude that Federal and State oversight must be increased. Hearing, p. 2. In recent years, the Department has worked to strengthen oversight and monitoring of mental health programs, particularly with respect to treatment of children and adolescents. Through the contract with HMSI, and other efforts, CHAMPUS has paid much more attention to care in RTCs. In April of 1992, Health Management Strategies International (HMSI) expressed specific concerns about several of the CHAMPUS- authorized residential treatment centers. Numerous quality of care issues surfaced during on-site facility visits to residential treatment centers where CHAMPUS beneficiaries were receiving care. Here are several examples: --Unqualified staff were providing individual, group and family therapy. For example, group therapy was being conducted by child care workers with high school diplomas. --Patient treatment was not being directed by qualified psychiatrists. At one facility, psychiatry residents were acting as facility medical directors. In some facilities, one psychiatrist may be responsible for as many as 90 children and their families, seriously limiting professional time available for individual attention. --Several facilities failed to individualize treatment plans. At one facility all treatment plans were the same, regardless of history, needs or problems. Similarly, some facilities were discovered to focus on one type of treatment to the exclusion of all other approaches. This was true regardless of whether or not patients responded to this type of treatment. --In several facilities, registered nurses were not available on a full-time basis. For example, at one facility children were ordering their own medications ``as needed'' and medications were dispensed-- without further evaluation--by untrained child care workers. In one instance a child who developed tardive dyskinesia (a motion disorder resulting from medication) was described by a child care worker as having a ``nervous tic.'' --There was evidence of excessive use of restraints and seclusion as methods of behavioral management. Examples include placing children as young as three or four in restraint and seclusion; secluding neurologically impaired children because of screaming or inability to follow directions; and locking children who cannot write in seclusion because they failed to write essays about their behavior. In one facility, seclusion was used 146 times in one month. The practice of zipping children into so-called ``body bags'' was employed by several facilities. Use of a body bag, which leaves an opening only for the head, carries risk of overheating to the point of lethal hyperthermia. One facility policy governing this practice did not require physician evaluation of the patient for 72 to 96 hours after the event. --Many facilities did not offer the required range of services. For example, since unskilled child care workers were supervising play, activity therapy was not being used as treatment. Also, a number of facilities failed to incorporate basic life skills with other treatment. Many children facing independent living after discharge were not able to negotiate activities such as making telephone calls, making change, planning meals, and riding a bus. --Certain RTCs employed unnecessary strip searches and other intrusive acts. Searches involve adult authority figures forcing children between the ages of four and 18 to remove all clothing and submit to cavity searches. Cavity searches involve finger probes to the mouth, vagina, and rectum. Some facilities were requiring such searches whenever the patient returned from a pass or having a visitor. In many cases, children subjected to such searches were victims of abuse and, for some, these methods of search re-enact the original trauma. These HMSI case findings pointed out shortcomings in practices in some RTCs that can be addressed through improved standards. Although standards for residential treatment centers exist, they have evolved over time from attempts to address individual issues with incremental change. Further, existing CHAMPUS standards for residential treatment centers were written as supplements to standards employed to the Joint Commission on Accreditation of Hospital Organization (JCAHO). In recent years, the JCAHO has moved toward a more general set of facility standards, with less specific reference to unique requirements of medical specialties. The result has been that CHAMPUS standards--which were not intended to stand alone--do not address the full spectrum of requirements and expectations for mental health facilities and providers. Orginally drafted in the late 1970s, CHAMPUS standards for RTCs have undergone multiple revisions to ensure they reflect currently accepted clinical practice. This rule will incorporate revisions necessary to update existing standards. With shorter lengths of stay in acute care facilities, mental health patients are reaching residential treatment centers at earlier--and less stable--stages of treatment. Similar to trends in other medical specialties, the growing intensity of illness among inpatients has dictated a need for higher standards of care and increasing levels of professional supervision and treatment. Current CHAMPUS standards for RTCs must be updated to reflect more clearly professional skill levels and intervention strategies employed in today's mental health environment. Based on a clear record of problems among some institutional mental health providers and the shortcomings of current standards, DoD has developed a comprehensive, unified set of standards for residential treatment centers, partial hospitalization programs and substance use disorder rehabilitation facilities. This rule would update existing standards to reflect current mental health practices, account for policy shifts in the JCAHO, and communicate clearly CHAMPUS policy with regard to quality and scope of care provided to its beneficiaries. The proposed standards will work to prevent recurrence of abuses such as those discussed by defining more completely and specifically quality indicators which will be used to judge care rendered in these facilities. Among areas addressed by the standards are: --Qualifications and authority of medical director. Proposed standards require the medical director of any RTC have completed an approved residency in psychiatry and have at least five years experience in treating children and adolescents. In addition to oversight of all clinical care provided, standards for RTCs, substance abuse rehabilitation facilities and partial hospitalization programs outline specific requirements for medical director participation in program development, peer review, medical staff supervision, quality monitoring and improvement and coordination with the governing body. --Adequate staffing with qualified professionals. Proposed standards require written staffing plans. Specific information is provided concerning requirements for staffing levels and professional qualifications 24 hours per day, seven days per week (or, in the case of partial hospitalization programs, during all hours of operation). Standards require that all clinical care provided under clinical supervision is the responsibility of a licensed or certified mental health professional. Additionally, there must be evidence to show that ultimate authority for medical management of care is vested in a physician. --Patient rights and limitations on use of seclusion and restraint. Standards require provisions for protection of all individual patient rights, including civil rights, provided for under federal law and the laws of the state where the residential treatment center is located. Specific requirements address privacy, personal freedoms, contact with families and environmental safety. Detailed guidelines for use, supervision and medical monitoring of behavior management--including use of seclusion and restraint--are also provided. --Implementation of individualized treatment plans addressing each patient's needs. Responsibility for development, supervision, implementation and assessment of written, individualized and interdisciplinary treatment plans is assigned to a psychiatrist or doctoral level clinical psychologist. Treatment goals must be communicated to the family, must undergo regular review and must include specific, measurable and observable criteria for discharge. --Comprehensive evaluation system to guide an ongoing quality improvement program. Proposed standards provide detailed expectations with respect to evaluation systems by which quality, efficiency, appropriateness and effectiveness of care, treatments, and services are provided. The evaluation system must involve all disciplines, services, and programs of the facility, including administrative and support staff activities. Responsibility for development and implementation of quality assurance and quality improvement programs rests with the medical director and must support overall facility philosophical assumptions and values. Proposed standards are designed to foster interdisciplinary communication and patient protection through involvement and oversight of the Governing Body, Chief Executive Officer, Medical Director, and Professional Staff with respect to administrative, utilization review, and clinical activities. Based on DoD experience, on-site review of residential treatment centers, and testimony obtained during Congressional hearings, DoD has strengthened standards for substance abuse treatment programs in a manner similar to residential treatment centers. For partial hospitalization, proposed standards occur as part of implementation of this new benefit, which became effective September 29, 1993. This proposed rule incorporates basic requirements governing CHAMPUS approval of facilities providing mental health services as residential treatment centers, as partial hospitalization providers, and substance use disorder rehabilitation facilities. More detailed definition of these basis standards will be issued under the authority of this regulation. It should be noted that only the requirements included in the final regulation will, by themselves, have the force and effect of law. Additional detail in the more lengthy standards are extensions of the regulation. They do not independently have the force and effect of law. Rather, they establish the agency's interpretations of regulation and will serve as guidelines for compliance with the regulatory requirements. The complete proposed standards are available to the public from the office of CHAMPUS. These more lengthy standards will be finalized coincident with the issuance of the final regulation. CHAMPUS must have some means of differentiating among RTCs, Substance Use Disorder Rehabilitation Facilities, and Partial Hospitalization Programs in order to select and certify only those facilities capable of fully meeting the needs of its beneficiaries. III. Provisions of Proposed Rule To Reform Payment Methods For Mental Health Care Facilities The proposed rule closely follows the Comptroller General's recommendations regarding payment reform for mental health care facilities. The Comptroller General's findings regarding current CHAMPUS payment rates are especially noteworthy. According to the Report: ``Our work indicates that DoD pays psychiatric facilities considerably more than other government programs do for comparable services.'' GAO Report #1, p. 6. The Comptroller General very accurately summarized the background of the current CHAMPUS payment methods for psychiatric hospitals and RTCs: Although the current CHAMPUS system of per diem reimbursements has helped limit program cost increases for inpatient mental health, the per diem rates were based on providers' billed charges, not their costs. The rates were based on billing data from a period when providers' charges were not subject to controls and had just increased significantly. Before 1989 when no upper limit on rates existed, hospitals and RTCs essentially set their own CHAMPUS payment rates. Before the per diem calculations, hospitals and RTC rates increased significantly. For example, average daily charges per CHAMPUS inpatient day rose by 17 percent from fiscal years 1987 to 1988. One RTC boosted its daily charges from an average of $331 in fiscal year 1987 to $531 in June 1988--a 60% increase. GAO Report #1, pp 6-7. Because CHAMPUS payments are based on historical billed charges, they substantially exceed the facilities' actual costs and Medicare reimbursement rates. Based on an analysis of payments to a number of high CHAMPUS volume psychiatric hospitals, the Comptroller General concluded: ``The hospitals made large profits, on average, on CHAMPUS patients.'' GAO Report #1, p. 7. More specifically, based on fiscal year 1990 payments.: Subtracting their average daily costs from the CHAMPUS per diem rates revealed an average daily profit on CHAMPUS patients of about $99, or about 22% above the average cost per inpatient day. In contrast, the average profit margin per day for other patients and payers was about $66 or 14% above the average daily costs. Id. The degree to which CHAMPUS currently overpays facilities is even more dramatically shown in comparison with Medicare rates. According to the Comptroller General: On average, the hospitals were paid 39 percent more per day for CHAMPUS patients than for Medicare patients.'' Id. In the aggregate CHAMPUS paid an average of $170 per day more than the Medicare-allowed daily costs, ``and this was more than 15 times larger than the average Medicare-allowed profit.'' Id. A similar pattern emerges on payment rates for RTCs. Using fiscal year 1991 data, the Comptroller General compared CHAMPUS payments to state-authorized daily rates for a number of RTCs in Florida and Virginia, and found that the average daily CHAMPUS rate was 36 percent more than the average state rate. RTC cost data were available for three RTCs in Texas, the state with the highest total CHAMPUS RTC costs. These data showed ``an average profit margin of 27 percent.'' Id., p. 8. The Comptroller General also stated that the index factor used to annually update CHAMPUS RTC per diems, the consumer price index for urban medical services (CPI-U), results in excessive increases. The GAO Report says the hospital market basket index factor that CHAMPUS and Medicare use for hospital payments ``would be more appropriate than the CPI-U because it reflects increases in the amounts hospitals pay for goods and services'' rather than ``increases in charges by health practitioners and facilities.'' Id. The problem of excessive payments also involves drug and alcohol abuse rehabilitation facilities, which continue to be paid by CHAMPUS billed charges. According to the Comptroller General: These facilities set their own fees and can increase them freely--without controls over their charges. Some of these facilities are paid more on a daily basis than are psychiatric hospitals. Id. Based on these findings, the Comptroller General recommended that the Secretary of Defense: Establish a system of reimbursing psychiatric facilities, RTCs, and specialized treatment facilities based on a cost-based system similar to Medicare, adjusted appropriately for differences in beneficiary demographics, rather than the present per diem or billed charges system. Id., p. 10. This proposed rule would do that. It is based on the legal authority of 10 U.S.C. section 1079(j)(2), which calls on CHAMPUS generally to adopt reimbursement rules similar to Medicare's for health care facilities. For facilities except from the Medicare Prospective Payment System Medicare pays on the basis of the facility's allowable costs, as reflected on a Medicare cost report. Under the proposed rule, CHAMPUS payments to specialty psychiatric hospitals and units and residential treatment facilities would gradually transition from the present system of per diem rates based on historical billed charges to a new system of per diem rates based on facility costs. Where possible, Medicare cost reports for the most current period will be used to calculate base year costs. For inpatient mental health hospital care in specialty psychiatric hospitals and units, two sets of per diem rates will be established. One set of per diems applies to hospitals and units that have a relatively higher number of CHAMPUS discharges (at least 50). For these hospitals and units, the system uses hospital-specific per diem rates based on the hospital's average Medicare inpatient operating cost, including pass through cost, per day. Hospital-specific per diem rates would be subject to a cap, set at two standard deviations above the mean per diem for all higher volume hospitals. The other set of per diems applies to hospitals and units with a relatively lower number of CHAMPUS discharges. For these hospitals and units, the system uses a national per diem, based on the average Medicare inpatient operating cost per day, including pass through costs, for all patients in all CHAMPUS lower volume hospitals and units which file Medicare cost reports, adjusted for local area wage differences and facility/type teaching status. Costs will be determined from the Medicare cost reports filed by those hospitals for a recent base year, updated to the year for which the payment rate will be used. With respect to RTC's, the proposed rule would establish a similar payment structure. For RTCs that have a relatively higher number of CHAMPUS discharges (again, 50 or more per year), RTC-specific per diem rates would be established based on the RTC's average allowable cost per day, subject to a cap comparable to that set for psychiatric hospitals. For RTCs with a relatively lower number of CHAMPUS discharges, the system uses a national per diem adjusted for area wages. Costs will be based on the cost per day for all patients in all CHAMPUS lower volume RTCs in the nation which file cost reports (or an appropriate sample of such facilities). If data from cost reports are insufficient to establish a national rate, an alternative method will be available, based on RTC charges, adjusted by the cost-to-charge applicable to free-standing, non-teaching psychiatric hospitals. Beginning in fiscal year 1995, per diem rates for both psychiatric hospitals and RTCs would undergo transition from charge-based to cost- based rates. For psychiatric hospitals, the transition will occur over three years. For RTCs, to provide time for collection of cost reports, the transition will occur over four years. For psychiatric hospitals, during the transition years, in the cost-based per diem is less than the fiscal year 1994 per diem, OCHAMPUS will pay a blended rate calculated to phase in the cost-based rate by fiscal year 1997. For fiscal year 1995, the blended rate will be two-thirds of the 1994 per diem plus one-third of the cost-based rate. For fiscal year 1996, the blended rate will be one-third of the 1994 per diem plus two-thirds of the cost-based rate. Beginning in fiscal year 1995, if the cost-based per diem exceeds the 1994 per diem rate, the cost based per diem will be used. We are aware that most RTCs do not currently file Medicare cost reports. For this reason, the Director, OCHAMPUS will establish an alternative method for obtaining the facility cost information necessary to calculate the per diem payment rates. State Medicaid cost reports are a probable source of the information, as may be other independently audited cost data. As a fall back, RTCs that have no administratively easy way to provide cost information may be excused from any such requirement and receive the national per diem rate. To allow time for the collection of cost data, cost-based rates will not be fully implemented until fiscal year 1998. Blended rates will be used in fiscal years 1996 and 1997. Fiscal year 1994 rates will be continued in fiscal year 1995. For both hospitals and RTCs, per day costs for individual facilities and regions will be calculated every three years. In the interim years, the per diem rates will be updated by the Medicare update factor for hospitals exempt from the Medicare Prospective Payment System. Importantly, the mechanism for calculation of actual costs for the facility will assure each hospital and RTC with substantial CHAMPUS business that all allowable costs will be recognized. This includes all increased costs the facility might incur in order to comply with the revised quality of care certification standards. If the facility must invest more resources in its clinical program in order to assure that it has qualified personnel, adequate staffing, an intensive therapeutic program, appropriate clinical interventions, and consistently good quality of care, those costs will be acknowledged in the CHAMPUS payment rate. Thus, although our proposed reforms may both push up facility costs and bring down reimbursement rates, our effort to tie payments to actual facility costs assures that we keep faith with the justifications for both actions. With respect to substance use disorder rehabilitation facilities, the proposed rule would include services provided by these facilities under the CHAMPUS DRG-based payment system. Currently, most substance use disorder rehabilitation services reimbursed by CHAMPUS are provided by facilities covered by the CHAMPUS DRG system or mental health per diem system. Only a small portion are provided by facilities that continue to be paid on the basis of billed charges. Under Medicare, these facilities are covered by the Medicare Prospective Payment System. Based on these factors, we believe inclusion of services provided by substance use disorder rehabilitation facilities should be included with the similar services already covered by the CHAMPUS DRG- based payment system. Partial hospitalization for substance use disorder rehabilitation will be reimbursed in the same manner as psychiatric partial hospitalization programs. The proposed payment system changes appear at the proposed revisions to section 1994.14. IV. Other Provisions of Proposed Rule A. Therapeutic leave of absence days. Currently, DoD pays RTCs for days a patient is away from the facility on an approved therapeutic leave of absence. The payment amount is 100% of the normal per diem for the first three days and 75% for additional days. It is our view that current rates are not justified by any costs to the facility. In addition, we are aware of no other public payer that pays for leave days. Therefore, the proposed rule would eliminate payment for days in which patients are on leave from the residential treatment center. Because the proposed rates are cost-based, facility costs associated with therapeutic leave should be captured in cost reports and reflected in the CHAMPUS reimbursement rates. We believe the proposed rates are adequate to cover the facility's overhead costs associated with reserving space for the patient's return. This change applies only to RTCs; in psychiatric hospitals, substance use disorder rehabilitation facilities and partial hospitalization programs, leave days are not reimbursed by CHAMPUS. B. Reversing incentive for inpatient care. Another of the recommendations of the Comptroller General was to ``reverse the financial incentives to use inpatient care by introducing larger copayments for CHAMPUS inpatient care.'' GAO Report #1, p. 10. This recommendation was based on the Comptroller General's conclusion that there is a ``bias toward patients receiving inpatient rather than outpatient care'' because inpatient care is less expensive for dependents of active duty members than outpatient care. Id., p. 8-9. These beneficiaries currently pay $9.30 per day or $25 per admission, whichever is greater, for inpatient care. For outpatient care, dependents of active duty members pay a $150 deductible (subject to a $300 family limit) and 20 percent of the allowable payment for individual professional services. Consequently, as a general matter, there is a financial incentive for beneficiaries to seek services on an inpatient, rather than an outpatient, basis. Under 10 U.S.C. section 1079(i)(2), DoD has authority to establish mental health copayment requirements different from those for other CHAMPUS services. The proposed rule would establish a per day copayment of $20 for dependents of active duty beneficiaries. This is based on the fact that an outpatient mental health visit is generally approximately $100, meaning that the copayment would be $20. Thus, an inpatient day would have a roughly equal beneficiary copayment as an outpatient visit (excluding the deductible). We believe this proposal addresses the Comptroller General's recommendation, without impairing access to care or imposing hardship on beneficiaries. (With respect to avoidance of hardship, we note that the catastrophic cap for active duty dependents is $1000 per family per year.) C. Equalization of alcoholism and drug abuse benefit provisions. The frequent coexistence of alcohol and other chemical dependency or abuse suggests existing differences in benefit structures for treatment of alcohol and drug abuse should be eliminated. This rule proposes to include treatment for both alcohol and drug dependency/ abuse under a broad benefit package designed to include treatment of all substance use disorders. V. Rulemaking Procedures We are soliciting public comments on this proposed rule. We will address these comments in connection with the final rule, which will be issued in fiscal year 1994. Regarding other regulatory procedures, Executive Order 12866 requires certain regulatory assessments for any significant regulatory action, defined as one which would result in an annual effect on the nation's economy of $100 million or more or have other substantial impacts. Section 605(b) of the Regulatory Flexibility Act requires that each federal agency prepare, and make available for public comment, a regulatory flexibility analysis when the agency issues a regulation which would have a significant impact on a substantial number of small entities. This proposed rule is a significant regulatory action as determined by the Office of Management and Budget. Also, we certify that this proposed rule will not significantly affect a large number of small entities within the meaning of the Regulatory Flexibility Act. For the most part, this proposed rule would implement revised quality assurance standards and cost based reimbursement methods for mental health care facilities. This proposed rule does not impose new information collection requirements. The authority to require facility cost information currently exists in CFR 199.6(b)(4)(x)(B)(3)(v)(bb). List of Subjects in 32 CFR Part 199 Claims, Handicapped, Health insurance, and Military personnel. Accordingly, 32 CFR Part 199 is proposed to be amended as follows: PART 199--[AMENDED] 1. The authority citation for Part 199 continues to read as follows: Authority: 5 U.S.C. 301; 10 U.S.C. 1079, 1086. 2. Section 199.4 is proposed to be amended by revising the heading of paragraph (e)(4), paragraph (e)(4) introductory text, (e)(4)(i), (e)(4)(ii), and the introductory text of paragraph (f)(2)(ii), by adding new paragraphs (e)(4) (v) and (vi), and (f)(2)(ii)(D), as follows: Sec. 199.4 Basic program benefits. * * * * * (e) * * * (4) Treatment of substance use disorders. Emergency and inpatient hospital care for complications of alcohol and drug abuse or dependency and detoxification are covered as for any other medical condition. Specific coverage for the treatment of substance use disorders includes detoxification, rehabilitation, and outpatient care provided in authorized substance use disorder rehabilitation facilities. (i) Emergency and inpatient hospital services. Emergency and inpatient hospital services are covered when medically necessary for the active medical treatment of the acute phases of substance abuse withdrawal (detoxification), for stabilization, and for treatment of medical complications of substance use disorders. Emergency and inpatient hospital services are considered medically necessary only when the patient's condition is such that the personnel and facilities of a hospital are required. Stays provided for substance use disorder rehabilitation in a hospital-based rehabilitation facility are covered, subject to the provisions of paragraph (e)(4)(ii) of this section. Inpatient hospital services also are subject to the provisions regarding the limit on inpatient mental health services. (ii) Authorized substance use disorder treatment. Only those services provided by CHAMPUS-authorized institutional providers are covered. Such a provider must be either an authorized hospital, or an organized substance use disorder treatment program in an authorized free-standing or hospital-based substance use disorder rehabilitation facility. Covered services consist of any or all of the services listed below. A qualified mental health provider (physicians, clinical psychologists, clinical social workers, psychiatric nurse specialists) (see paragraph (c)(3)(ix) of this section) shall prescribe the particular level of treatment. Each CHAMPUS beneficiary is entitled to three substance use disorder treatment benefit periods in his or her lifetime, unless this limit is waived pursuant to paragraph (e)(4)(v) of this section. (A benefit period begins with the first date of covered treatment and ends 365 days later, regardless of the total services actually used within the benefit period. Unused benefits cannot be carried over to subsequent benefit periods. Emergency and inpatient hospital services (as described in paragraph (e)(4)(i) of this section) do not constitute substance abuse treatment for purposes of establishing the beginning of a benefit period.) (A) Rehabilitative care. Rehabilitative care in an authorized hospital or substance use disorder rehabilitative facility, whether free-standing or hospital-based, is covered on either a residential or partial care (day or night program) basis. Coverage during a single benefit period is limited to no more than one inpatient stay (exclusive of stays classified in DRG 433) in hospitals subject to CHAMPUS DRG- based payment system or 21 days in a DRG-exempt facility for rehabilitation care, unless the limit is waived pursuant to paragraph (e)(4)(v) of this section. If the patient is medically in need of chemical detoxification, but does not require the personnel or facilities of a general hospital setting, detoxification services are covered in addition to the rehabilitative care, but in a DRG-exempt facility detoxification services are limited to 7 days, unless the limit is waived pursuant to paragraph (e)(4)(v) of this section. The medical necessity for the detoxification must be documented. Any detoxification services provided by the substance use disorder rehabilitation facility must be under general medical supervision. (B) Outpatient care. Outpatient treatment provided by an approved substance use disorder rehabilitation facility, whether free-standing or hospital-based, is covered for up to 60 visits in a benefit period, unless the limit is waived pursuant to paragraph (e)(4)(v) of this section. (C) Family therapy. Family therapy provided by an approved substance use disorder rehabilitation facility, whether free-standing or hospital-based, is covered for up to 15 visits in a benefit period, unless the limit is waived pursuant to paragraph (e)(4)(v) of this section. * * * * * (v) Confidentiality. Release of any patient identifying information, including that required to adjudicate a claim, must comply with the provisions of section 544 of the Public Health Service Act, as amended, (42 U.S.C. 290dd-3), which governs the release of medical and other information from the records of patients undergoing treatment of substance abuse. If the patient refuses to authorize the release of medical records which are, in the opinion of the Director, OCHAMPUS, or a designee, necessary to determine benefits on a claim for treatment of substance abuse the claim will be denied. (vi) Waiver of benefit limits. The specific benefit limits set forth in paragraph (e)(4)(ii) of this section may be waived by the Director, OCHAMPUS in special cases based on a determination that all of the following criteria are met: (A) Active treatment has taken place during the period of the benefit limit and substantial progress has been made according to the plan of treatment. (B) Further progress has been delayed due to the complexity of the illness. (C) Specific evidence has been presented to explain the factors that interfered with further treatment progress during the period of the benefit limit. (D) The waiver request includes specific time frames and a specific plan of treatment which will complete the course of treatment. * * * * * (f) * * * (2) * * * (ii) Inpatient cost-sharing. Except in the case of mental health services (see paragraph (f)(2)(ii)(D) of this section), dependents of active duty members of the Uniformed Services or their sponsors are responsible for the payment of the first $25 of the allowable institutional costs incurred with each covered inpatient admission to a hospital or other authorized institutional provider (refer to section 199.6), or the amount the beneficiary or sponsor would have been charged had the inpatient care been provided in a Uniformed Service hospital, whichever is greater. * * * * * (D) Inpatient cost-sharing for mental health services. The inpatient cost-sharing for mental health services is $20 per day for each day of the inpatient admission. This $20 per day cost sharing amount applies to admissions to any hospital for mental health services, any residential treatment facility, any substance abuse rehabilitation facility, and any partial hospitalization program providing mental health services. 3. Section 199.6 is proposed to be amended by revising paragraphs (b)(4)(vii) and (b)(4)(xii), by removing paragraph (b)(4)(x)(B)(3), and by adding a new paragraph (b)(4)(xiii) to read as follows: Sec. 199.6 Authorized providers. * * * * * (b) * * * (4) * * * (vii) Residential treatment centers. This paragraph (b)(4)(vii) establishes standards and requirements for residential treatment centers (RTCs). (A) Organization and administration. (1) Definition. A Residential Treatment Center (RTC) is a facility or a distinct part of a facility that provides to beneficiaries under 21 years of age a medically supervised, interdisciplinary program of mental health treatment. An RTC is appropriate for patients whose predominant symptom presentation is essentially stabilized, although not resolved, and who have persistent dysfunction in major life areas. The extent and pervasiveness of the patient's problems require a protected and highly structured therapeutic environment. Residential treatment is differentiated from: (i) Acute psychiatric care, which requires medical treatment and 24-hour availability of a full range of diagnostic and therapeutic services to establish and implement an effective plan of care which will reverse life-threatening and/or severely incapacitating symptoms; (ii) Partial hospitalization, which provides a less than 24-hour- per-day, seven-day-per-week for patients who continue to exhibit psychiatric problems but can function with support in some of the major life areas; (iii) A group home, which is a professionally directed living arrangement with the availability of psychiatric consultation and treatment for patients with significant family dysfunction and/or chronic but stable psychiatric disturbances; (iv) Therapeutic school, which is an educational program supplemented by psychological and psychiatric services; (v) Facilities that treat patients with a primary diagnosis of chemical abuse or dependence; and (vi) Facilities providing care for patients with a primary diagnosis of mental retardation or developmental disability. (2) Eligibility. (i) Every RTC must be certified pursuant to CHAMPUS certification standards. Such standards shall incorporate the basic standards set forth in paragraphs (b)(4)(vii) (A) through (D) of this section, and shall include such additional elaborative criteria and standards as the Director, OCHAMPUS determines are necessary to implement the basic standards. (ii) To be eligible for CHAMPUS certification, the facility is required to be licensed and fully operational for six months (with a minimum average daily census of 30 percent of total bed capacity) and operate in substantial compliance with state and federal regulations. (iii) The facility is currently accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) under the current edition of the Manual for Mental Health, Chemical Dependency, and Mental Retardation/Developmental Disabilities Services which is available from JCAHO, P.O. Box 75751, Chicago, IL 60675. (iv) The facility has a written participation agreement with OCHAMPUS. The RTC is not a CHAMPUS-authorized provider and CHAMPUS benefits are not paid for services provided until the date upon which a participation agreement is signed by the Director, OCHAMPUS. (3) Governing body. (i) The RTC shall have a governing body which is responsible for the policies, bylaws, and activities of the facility. If the RTC is owned by a partnership or single owner, the partners or single owner are regarded as the governing body. The facility will provide an up-to- date list of names, addresses, telephone numbers and titles of the members of the governing body. (ii) The governing body ensures appropriate and adequate services for all patients and overseas continuing development and improvement of care. Where business relationships exist between the governing body and facility, appropriate conflict-of-interest policies are in place. (iii) Board members are fully informed about facility services and the governing body conducts annual review of its performance in meeting purposes, responsibilities, goals and objectives. (4) Chief executive officer. The chief executive officer, appointed by and subject to the direction of the governing body, shall possess a master's degree in business administration, public health, hospital administration, nursing, social work, or psychology, or meet similar educational requirements as prescribed by the Director, OCHAMPUS or a designee. The CEO shall have five years' administrative experience in the field of mental health and shall assume overall administrative responsibility for the operation of the facility according to governing body policies. (5) Medical director. The medical director, appointed by the governing body, shall be licensed to practice medicine in the state where the residential treatment center is located and shall possess requisite education and experience, including graduation from an accredited school of medicine or osteopathy, an approved residency in psychiatry and a minimum of five years clinical experience in the treatment of children and adolescents. The Medical Director shall be responsible for the planning, development, implementation, and monitoring of all clinical activities. (6) Medical or professional staff organization. The governing body shall establish a medical or professional staff organization to assure effective implementation of clinical privileging, professional conduct rules, and other activities directly affecting patient care. (7) Personnel policies and records. The RTC shall maintain written personnel policies, updated job descriptions and personnel records to assure the selection of qualified personnel and successful job performance of those personnel. (8) Staff development. The facility shall provide appropriate training and development programs for administrative, professional support, and direct care staff. (9) Fiscal accountability. The RTC shall assure fiscal accountability to applicable government authorities and patients. (10) Designated teaching facilities. Students, residents, interns or fellows providing direct clinical care are under the supervision of a qualified staff member approved by an accredited university. The teaching program is approved by the Director, OCHAMPUS. (11) Emergency reports and records. The facility notifies OCHAMPUS of any serious occurrence involving CHAMPUS beneficiaries. (B) Treatment services. (1) Staff composition. (i) The RTC shall follow written plans which assure that medical and clinical patient needs will be appropriately addressed 24 hours a day, seven days a week by a sufficient number of fully qualified (including license, registration or certification requirements for independent practice, educational attainment, and professional experience) health care professionals and support staff in the respective disciplines. Clinicians providing individual, group, and family therapy meet CHAMPUS requirements as qualified mental health providers and operate within the scope of their licenses. The ultimate authority for medical management of care is vested in a physician. (ii) The center shall ensure that patient care needs will be appropriately addressed during all hours of operation by a sufficient number of fully qualified (including license, registration or certification requirements for independent practice, educational attainment, and professional experience) health care professionals and support staff in the respective disciplines. The ultimate authority for medical management of care is vested in a physician. (2) Staff qualifications. Within the scope of its programs and services, the facility has a sufficient number of professional, administrative and support staff to address the medical and clinical needs of patients and to coordinate services provided. RTCs that employ master's or doctoral level staff who are not qualified mental health providers have a supervision program to oversee and monitor their activities related to the provision of clinical care. (3) Patient rights. (i) The RTC shall provide adequate protection for all patient rights, including rights provided by law, privacy, personnel rights, safety, confidentiality, informed consent, grievances, and personal dignity. (ii) The facility has a written policy regarding patient abuse and neglect. (iii) Facility marketing and advertising meets professional standards. (4) Behavioral management. The RTC shall adhere to a comprehensive, written plan of behavioral management, developed by the medical director and the medical or professional staff and approved by the governing body, including strictly limited procedures to assure that the restraint or seclusion are used only in extraordinary circumstances, as determined by a psychiatrist, are carefully monitored, and are fully documented. Only trained and clinically privileged RNs or qualified mental health professionals may implement seclusion and restraint procedures in an emergency situation. (5) Admission process. The RTC shall maintain written policies and procedures to assure that prior to an admission, a determination is made by a psychiatrist or doctoral level clinical psychologist, and approved pursuant to CHAMPUS pre-authorization requirements, that the admission is medically and/or psychologically necessary and the program is appropriate to meet the patient's needs. (6) Assessment. The professional staff of the RTC shall provide a current multidisciplinary assessment which includes, but is not limited to physical, psychological, developmental, family, educational, social, spiritual and skills assessment of each patient admitted. Unless otherwise specified, all required clinical assessments are completed within 14 days of admission. (7) Clinical formulation. The psychiatrist or doctoral level psychologist shall be responsible for the clinical formulation which incorporates significant findings from each of the multidisciplinary assessments and provides the basis for development of an interdisciplinary treatment planning. (8) Treatment planning. The psychiatrist or doctoral level clinical psychologist with admitting privileges shall be responsible for the development, supervision, implementation, and assessment of a written, individualized, interdisciplinary plan of treatment, which shall be completed within 10 days of admission and shall include individual, measurable, and observable goals for incremental progress and discharge. A preliminary treatment plan is completed within 24 hours of admission and includes at least a physician's admission note and orders. The master treatment plan is reviewed and revised at least every 30 days, or when major changes occur in treatment. (9) Discharge and transition planning. The RTC shall maintain a transition planning process to address adequately the anticipated needs of the patient prior to the time of discharge. The planning involves determining necessary modifications in the treatment plan, facilitating the termination of treatment, and identifying resources to maintain therapeutic stability following discharge. (10) Clinical documentation. Clinical records shall be maintained on each patient to plan care and treatment and provide ongoing evaluation of the patient's progress. All care is documented and each clinical record contains at least the following: demographic data, consent forms, pertinent legal documents, all treatment plans and patient assessments, consultation and laboratory reports, physician orders, progress notes, and a discharge summary. Clinical records are maintained and controlled by an appropriately qualified records administrator. These requirements are in addition to other records requirements of this Part, and documentation requirements of the Joint Commission on Accreditation of Healthcare Organizations. (11) Progress notes. RTC's shall document the course of treatment for patients and families using progress notes which provide information to review, analyze, and modify the treatment plans. Progress notes are legible contemporaneous, sequential, signed and dated and adhere to applicable provisions of the Manual for Mental Health, Chemical Dependency, and Mental Retardation/Developmental Disabilities Services and requirements set forth in section 199.7(b)(3). (12) Therapeutic services. (i) Individual, group, and family psychotherapy are provided to all patients, consistent with each patient's treatment plan, by qualified mental health providers. (ii) A range of therapeutic activities, directed and staffed by qualified personnel, are offered to help patients meet the goals of the treatment plan. (iii) Therapeutic educational services are provided or arranged that are appropriate to the patients educational and therapeutic needs. (13) Ancillary services. A full range of ancillary services is provided. Emergency services include policies and procedures for handling emergencies with qualified personnel and written agreements with each facility providing the service. Other ancillary services include physical health, pharmacy and dietary services. (C) Standards for physical plant and environment. (1) Physical environment. The buildings and grounds of the RTC shall be maintained so as to avoid health and safety hazards, be supportive of the services provided to patients, and promote patient comfort, dignity, privacy, personal hygiene, and personal safety. (2) Physical plant safety. The RTC shall be of permanent construction and maintained in a manner that protects the lives and ensures the physical safety of patients, staff, and visitors, including conformity with all applicable building, fire, health, and safety codes. (3) Disaster planning. The RTC shall maintain and rehearse written plans for taking care of casualties and handling other consequences arising from internal and external disasters. (D) Standards for evaluation system. (1) Quality assessment and improvement. The RTC shall develop and implement a comprehensive quality assurance and quality improvement program that monitors the quality, efficiency, appropriateness, and effectiveness of the care, treatments, and services it provides for patients and their families, primarily utilizing explicit clinical indicators to evaluate all functions of the RTC and contribute to an ongoing process of program improvement. The medical director is responsible for developing and implementing quality assessment and improvement activities throughout the facility. (2) Utilization review. The RTC shall implement a utilization review process, pursuant to a written plan approved by the professional staff, the administration, and the governing body, that assesses the appropriateness of admissions, continued stay, and timeliness of discharge as part of an effort to provide quality patient care in a cost-effective manner. Findings of the utilization review process are used as a basis for revising the plan of operation, including a review of staff qualifications and staff composition. (3) Patient records review. The RTC shall implement a process, including monthly reviews of a representative sample of patient records, to determine the completeness and accuracy of the patient records and the timeliness and pertinence of record entries, particularly with regard to regular recording of progress/non-progress in treatment plan. (4) Drug utilization review. The RTC shall implement a comprehensive process for the monitoring and evaluating of the prophylactic, therapeutic, and empiric use of drugs to assure that medications are provided appropriately, safely, and effectively. (5) Risk management. The RTC shall implement a comprehensive risk management program, fully coordinated with other aspects of the quality assurance and quality improvement program, to prevent and control risks to patients and staff and costs associated with clinical aspects of patient care and safety. (6) Infection control. The RTC shall implement a comprehensive system for the surveillance, prevention, control, and reporting of infections acquired or brought into the facility. (7) Safety. The RTC shall implement an effective program to assure a safe environment for patients, staff, and visitors, including an incident report system, a continuous safety surveillance system, and an active multidisciplinary safety committee. (8) Facility evaluation. The RTC annually evaluates accomplishment of the goals and objectives of each clinical program and service of the RTC and reports findings and recommendations to the governing body. (E) Participation agreement requirements. In addition to other requirements set forth in paragraph (b)(4)(vii), of this section in order for the services of an RTC to be authorized, the RTC shall have entered into a Participation Agreement with OCHAMPUS. The period of a participation agreement shall be specified in the agreement, and will generally be for not more than five years. Participation agreement entered into prior to October 1, 1994, must be renewed not later than April 1, 1995. In addition to review of a facility's application and supporting documentation, an on-site inspection by OCHAMPUS authorized personnel may be required prior to signing a Participation Agreement. Retroactive approval is not given. In addition, the Participation Agreement shall include provisions that the RTC shall, at a minimum: (1) Reader residential treatment center inpatient services to eligible CHAMPUS beneficiaries in need of such services, in accordance with the participation agreement and CHAMPUS regulation; (2) Accept payment for its services based upon the methodology provides in section 199.14 (f) or such other method as determined by the Director, OCHAMPUS; (3) Accept the CHAMPUS all-inclusive per diem rate as payment in full and collect from the CHAMPUS beneficiary or the family of the CHAMPUS beneficiary only those amounts that represent the beneficiary's liability, as defined in section 199.4, and charges for services and supplies that are not a benefit of CHAMPUS; (4) Make all reasonable efforts acceptable to the Director, OCHAMPUS, to collect those amounts, which represent the beneficiary's liability, as defined in section 199.4; (5) Comply with the provisions of section 199.8, and submit claims first to all health insurance coverage to which the beneficiary is entitled that is primary to CHAMPUS; (6) Submit claims for services provided to CHAMPUS beneficiaries at least every 30 days (except to the extent a delay is necessitated by efforts to first collect from other health insurance). If claims are not submitted at least every 30 days, the RTC agrees not to bill the beneficiary or the beneficiary's family for any amounts disallowed by CHAMPUS; (7) Certify that: (i) It is and will remain in compliance with the provisions of paragraph (b)(4)(vii) of this section establishing standards for Residential Treatment Centers; (ii) It has conducted a self assessment of the facility's compliance with the CHAMPUS Standards for Residential Treatment Centers Serving Children and Adolescents with Mental Disorders, as issued by the Director, OCHAMPUS and notified the Director, OCHAMPUS of any matter regarding which the facility is not in compliance with such standards; and (iii) It will maintain compliance with the CHAMPUS Standards for Residential Treatment Centers Serving Children and Adolescents with Mental Disorders, as issued by the Director, OCHAMPUS, except for any such standards regarding which the facility notifies the Director, OCHAMPUS that it is not in compliance. (8) Designate an individual who will act as liaison for CHAMPUS inquiries. The RTC shall inform OCHAMPUS in writing of the designated individual; (9) Furnish OCHAMPUS, as requested by OCHAMPUS, with cost data certified by an independent accounting firm or other agency as authorized by the Director, OCHAMPUS; (10) Comply with all requirements of this section applicable to institutional providers generally concerning preauthorization, concurrent care review, claims processing, beneficiary liability, double coverage, utilization and quality review and other matters; (11) Grant the Director, OCHAMPUS, or designee, the right to conduct quality assurance audits or accounting audits with full access to patients and records (including records relating to patients who are not CHAMPUS beneficiaries) to determine the quality and cost- effectiveness of care rendered. The audits may be conducted on a scheduled or unscheduled (unannounced) basis. This right to audit/ review includes, but is not limited to: (i) Examination of fiscal and all other records of the RTC which would confirm compliance with the participation agreement and designation as an authorized CHAMPUS RTC provider; (ii) Conducting such audits of RTC records including clinical, financial, and census records, as may be necessary to determine the nature of the services being provided, and the basis for charges and claims against the United States for services provided CHAMPUS beneficiaries; (iii) Examining reports of evaluations and inspections conducted by federal, state and local government, and private agencies and organizations; (iv) Conducting on-site inspections of the facilities of the RTC and interviewing employees, members of the staff, contractors, board members, volunteers, and patients, as required; (v) Audits conducted by the United States General Accounting Office. (F) Other requirements applicable to RTCs. (1) Even though an RTC may qualify as a CHAMPUS-authorized provider and may have entered into a participation agreement with CHAMPUS, payment by CHAMPUS for particular services provided is contingent upon the RTC also meeting all conditions set forth in section 199.4 especially all requirements of paragraph (b)(4) of that section. (2) The RTC shall provide inpatient services to CHAMPUS beneficiaries in the same manner it provides inpatient services to all other patients. The RTC may not discriminate against CHAMPUS beneficiaries in any manner, including admission practices, placement in special or separate wings or rooms, or provisions of special or limited treatment. (3) The RTC shall assure that all certifications and information provided to the Director, OCHAMPUS incident to the process of obtaining and retaining authorized provider status is accurate and that it has no material errors or omissions. In the case of any misrepresentations, whether by inaccurate information being provided or material facts withheld, authorized status will be denied or terminated, and the RTC will be eligible for consideration for authorized provider status for a two year period. * * * * * (xii) Psychiatric partial hospitalization programs. Paragraph (b)(4)(xii) of this section establishes standards and requirements for psychiatric partial hospitalization programs. (A) Organization and administration. (1) Definition. Partial hospitalization is defined as a time- limited, ambulatory, active treatment program that offers therapeutically intensive, coordinated, and structured clinical services within a stable therapeutic milieu. Partial hospitalization programs serve patients who exhibit psychiatric symptoms, disturbances of conduct, and decompensating conditions affecting mental health. (2) Eligibility. (i) Every inpatient rehabilitation center and partial hospitalization center for the treatment of substance use disorders must be certified pursuant to CHAMPUS certification standards. Such standards shall incorporate the basic standards set forth in paragraphs (b)(4) (xii) (A) through (D) of this section, and shall include such additional elaborative criteria and standards as the Director, OCHAMPUS determines are necessary to implement the basic standards. Each psychiatric partial hospitalization program must be either a distinct part of an otherwise authorized institutional provider or a freestanding program. (ii) To be eligible for CHAMPUS certification, the facility is required to be licensed and fully operational for a period of at least six months (with a minimum patient census of at least 30 percent of bed capacity) and operate in substantial compliance with state and federal regulations. (iii) The facility is currently accredited by the Joint Commission on Accreditation of Healthcare Organizations under the Accreditation Manual for Mental Health, Chemical Dependency, and Mental Retardation/ Developmental Disabilities Services. (iv) The facility has a written participations agreement with OCHAMPUS. The PHP is not a CHAMPUS-authorized provider and CHAMPUS benefits are not paid for services provided until the date upon which a participation agreement is signed by the Director, OCHAMPUS. Partial hospitalization is capable of providing an interdisciplinary program of medical and therapeutic services a minimum of three hours per day, five days per week, and may include full- or half-day, evening, and weekend treatment programs. (3) Governing body. (i) The PHP shall have a governing body which is responsible for the policies, bylaws, and activities of the facilities. If the PHP is owned by a partnership or single owner, the partners or single owner are regarded as the governing body. The facility will provide an up-to- date list of names, addresses, telephone numbers, and titles of the members of the governing body. (ii) The governing body ensures appropriate and adequate services for all patients and oversees continuing development and improvement of care. Where business relationships exist between the governing body and facility, appropriate conflict-of-interest policies are in place. (iii) Board members are fully informed about facility services and the governing body conducts annual review of its performance in meeting purposes, responsibilities, goals and objectives. (4) Chief executive officer. The chief Executive officer, appointed by and subject to the direction of the governing body, shall possess a master's degree in business administration, public health, hospital administration, nursing, social work, or psychology, or meet similar educational requirements as prescribed by the Director, OCHAMPUS or a designee. The CEO shall have five years' administrative experience in the field of mental health and shall assume overall administrative responsiblity for the operation of the facility according to governing body policies. (5) Medical director. The Medical Director, appointed by the governing body, shall be licensed to practice medicine in the state where the PHP is located and shall possess requisite education and experience, including graduation from an accredited school of medicine or osteopathy, an approved residency in psychiatry and a minimum of five years clinical experience in treating mental disorders specific to the ages and disabilities of the patients served. The Medical Director shall be responsible for the planning, development, implementation, and monitoring of all clinical activities. (6) Medical or professional staff organization. The governing body shall establish a medical or professional staff organization to assure effective implementation of clinical privileging, professional conduct rules, and other activities directly affecting patient care. (7) Personnel policies and records. The PHP shall maintain written personnel policies, updated job descriptions, personnel records to assure the selection of qualified personnel and successful job performance of those personnel. (8) Staff development. The facility shall provide appropriate training and development programs for administrative, professional support, and direct care staff. (9) Fiscal accountability. The PHP shall assure fiscal accountability to applicable government authorities and patients. (10) Designated teaching facilities. Students, residents, interns, or fellows providing direct clinical care are under the supervision of a qualified staff member approved by an accredited university. The teaching program is approved by the Director, OCHAMPUS. (11) Emergency reports and records. The facility notifies OCHAMPUS of any serious occurrence involving CHAMPUS beneficiaries. (B) Treatment services. (1) Staff composition. (i) The PHP shall ensure that patient care needs will be appropriately addressed during all hours of operation by a sufficient number of qualified health care professionals. Clinicians providing individual, group, and family therapy meet CHAMPUS requirements as qualified mental health providers, and operate within the scope of their licenses. The ultimate authority for managing care is vested in a psychiatrist or licensed doctor level psychologist with admitting privileges. (ii) The center shall establish and follow written plans to assure adequate staff coverage during all hours of operation, including on- call physician availability 24 hours per day, seven days per week to respond to medical and psychiatric problems, and other professional staff coverage during all service hours. (2) Staff qualifications. The PHP will have a sufficient number of qualified (including license, registration or certification requirements for independent practice, educational attainment, and professional experience) mental health providers, administrative, and support staff to address patients' clinical needs and to coordinate the services provided. All mental health services must be provided by a CHAMPUS-authorized mental health provider. [Exception: PHPs which employ individuals with master's or doctoral level degrees in a mental health discipline who do not meet the licensure, certification and experience requirements for a qualified mental health provider but are actively working toward licensure or certification, may provide services within the all-inclusive per diem rate, provided that the individual must work under the clinical supervision of a fully qualified mental health provider employed by the PHP.] All other program services shall be provided by trained, licensed staff. (3) Patient rights. (i) The PHP shall provide adequate protection for all patient rights, including rights provided by law, privacy, personal rights, safety, confidentiality, informed consent, grievances, and personal dignity. (ii) The facility has a written policy regarding patient abuse and neglect. (iii) Facility marketing and advertising meets professional standards. (4) Behavioral management. The PHP shall adhere to a comprehensive, written plan of behavior management, developed by the medical director and the medical or professional staff and approved by the governing body, including strictly limited procedures to assure that restraint or seclusion are used only in extraordinary circumstances, as determined by a psychiatrist, are carefully monitored, and are fully documented. Only trained and clinically privileged RNs or qualified mental health professionals may implement seclusion and restraint procedures in an emergency situation. (5) Admission process. The PHP shall maintain written policies and procedures to ensure that prior to an admission, a determination is made by a psychiatrist, and approved pursuant to CHAMPUS pre- authorization requirements, that the admission is medically and/or psychologically necessary and the program is appropriate to meet the patient's needs. (6) Assessments. The professional staff of the PHP shall provide complete, current and timely assessments of all patients in the PHP. Assessments include, but are not limited to, physical health, psychological health, physiological, biological, and cognitive processes, development, family history, social history, educational or vocational history, environmental factors, and skills. (7) Clinical formulation. A qualified mental health provider of the PHP will complete a clinical formulation on all patients. The clinical formulation will be reviewed and approved by the responsible physician or doctoral level licensed clinical psychologist and will incorporate significant findings from each of the multidisciplinary assessments. It will provide the basis for development of a multidisciplinary treatment plan. (8) Treatment planning. A PHP psychiatrist or doctoral level psychologist with admitting privileges shall be responsible for the development, supervision, implementation, and assessment of a written, individualized, interdisciplinary plan of treatment, which shall be completed by the fifth day following admission to a full-day PHP, or by the seventh day following admission to a half-day PHP, and shall include measurable and observable goals for incremental progress and discharge. The treatment plan shall undergo review at least every two weeks, or when major changes occur in treatment. (9) Discharge and transition planning. The PHP shall develop an individualized transition plan which addresses anticipated needs of the patient at discharge. The transition plan involves determining necessary modifications in the treatment plan, facilitating the termination of treatment, and identifying resources for maintaining therapeutic stability following discharge. (10) Clinical documentation. Clinical records shall be maintained on each patient to plan care and treatment and provide ongoing evaluation of the patient's progress. All care is documented and each clinical record contains at least the following: demographic data, consent forms, pertinent legal documents, all treatment plans and patient assessments, consultation and laboratory reports, physician orders, progress notes, and a discharge summary. All documentation will adhere to applicable provisions of the JCAHO and requirements set forth in section 199.7(b)(3). An appropriately qualified records administrator or technician will supervise and maintain the quality of the records. These requirements are in addition to other records requirements of this Part, and documentation requirements of the Joint Commission on Accreditation of Health Care Organizations. (11) Progress notes. PHPs shall document the course of treatment for patients and families using progress notes which provide information to review, analyze, and modify the treatment plans. Progress notes are legible contemporaneous, sequential, signed and dated and adhere to applicable provisions of the Manual for Mental Health, Chemical Dependency, and Mental Retardation/Developmental Disabilities Services and requirements set forth in section 199.7(b)(3). (12) Therapeutic services. (i) Individual, group, and family therapy are provided to all patients, consistent with each patient's treatment plan by qualified mental health providers. (ii) A range of therapeutic activities, directed and staffed by qualified personnel, are offered to help patients meet the goals of the treatment plan. (iii) Educational services are provided or arranged that are appropriate to the patient's needs. (13) Ancillary services. A full range of ancillary services are provided. Emergency services include policies and procedures for handling emergencies with qualified personnel and written agreements with each facility providing these services. Other ancillary services include physical health, pharmacy and dietary services. (C) Standards and physical plant and environment. (1) Physical environment. The buildings and grounds of the PHP shall be maintained so as to avoid health and safety hazards, be supportive of the services provided to patients, and promote patient comfort, dignity, privacy, personal hygiene, and personal safety. (2) Physical plant safety. The PHP shall be of permanent construction and maintained in a manner that protects the lives and ensures the physical safety of patients, staff, and visitors, including conformity with all applicable building, fire, health, and safety codes. (3) Disaster planning. The PHP shall maintain and rehearse written plans for taking care of casualties and handling other consequences arising from internal and external disasters. (D) Standards for evaluation system. (1) Quality assessment and improvement. The PHP shall develop and implement a comprehensive quality assurance and quality improvement program that monitors the quality, efficiency, appropriateness, and effectiveness of care, treatments, and services the PHP provides for patients and their families. Explicit clinical indicators shall be used to evaluate all functions of the PHP and contribute to an ongoing process of program improvement. The medical director is responsible for developing and implementing quality assessment and improvement activities throughout the facility. (2) Utilization review. The PHP shall implement a utilization review process, pursuant to a written plan approved by the professional staff, the administration and the governing body, that assesses distribution of services, clinical necessity of treatment, appropriateness of admission, continued stay, and timeliness of discharge, as part of an overall effort to provide quality patient care in a cost-effective manner. Findings of the utilization review process are used as a basis for revising the plan of operation, including a review of staff qualifications and staff composition. (3) Patient records. The PHP shall implement a process, including regular monthly reviews of a representative sample of patient records, to determine completeness, accuracy, timeliness of entries, appropriate signatures, and pertinence of clinical entries. Conclusions, recommendations, actions taken, and the results of actions are monitored and reported. (4) Drug utilization review. The PHP shall implement a comprehensive process for the monitoring and evaluating of the prophylactic, therapeutic, and empiric use of drugs to assure that medications are provided appropriately, safely, and effectively. (5) Risk management. The PHP shall implement a comprehensive risk management program, fully coordinated with other aspects of the quality assurance and quality improvement program, to prevent and control risks to patients and staff, and to minimize costs associated with clinical aspects of patient care and safety. (6) Infection control. The PHP shall implement a comprehensive system for the surveillance, prevention, control, and reporting of infections acquired or brought into the facility. (7) Safety. The PHP shall implement an effective program to assure a safe environment for patients, staff, and visitors, including an incident reporting system, disaster training and safety education, a continuous safety surveillance system, and an active multidisciplinary safety committee. (8) Facility evaluation. The PHP annually evaluates accomplishment of the goals and objectives of each clinical program component or facility service of the PHP and reports findings and recommendations to the governing body. (E) Participation agreement requirements. In addition to other requirements set forth in paragraph (b)(4)(xii) of this section, in order for the services of a PHP to be authorized, the PHP shall have entered into a Participation Agreement with OCHAMPUS. The period of a Participation Agreement shall be specified in the agreement, and will generally be for not more than five years. The PHP shall not be considered to be a CHAMPUS authorized provider and CHAMPUS payments shall not be made for services provided by the PHP until the date the participation agreement is signed by the Director, OCHAMPUS. In addition to review of a facility's application and supporting documentation, an on-site inspection by OCHAMPUS authorized personnel may be required prior to signing a participation agreement. The Participation Agreement shall include at least the following requirements: (1) Render partial hospitalization program services to eligible CHAMPUS beneficiaries in need of such services, in accordance with the participation agreement and CHAMPUS regulation. (2) Accept payment for its services based upon the methodology provided in section 199.14, or such other method as determined by the Director, OCHAMPUS; (3) Accept the CHAMPUS all-inclusive per diem rate as payment in full and collect from the CHAMPUS beneficiary or the family of the CHAMPUS beneficiary only those amounts that represent the beneficiary's liability, as defined in section 199.4, and charges for services and supplies that are not a benefit of CHAMPUS; (4) Make all reasonable efforts acceptable to the Director, OCHAMPUS, to collect those amounts, which represent the beneficiary's liability, as defined in 199.4; (5) Comply with the provisions of section 199.8, and submit claims first to all health insurance coverage to which the beneficiary is entitled that is primary to CHAMPUS; (6) Submit claims for services provided to CHAMPUS beneficiaries at least every 30 days (except to the extent a delay is necessitated by efforts to first collect from other health insurance). If claims are not submitted at least every 30 days, the PHP agrees not to bill the beneficiary or the beneficiary's family for any amounts disallowed by CHAMPUS; (7) Certify that: (i) It is and will remain in compliance with the provisions of paragraph (b)(4)(xii) of this section establishing standards for psychiatric partial hospitalization programs; (ii) It has conducted a self assessment of the facility's compliance with the CHAMPUS Standards for Psychiatric Partial Hospitalization Programs, as issued by the Director, OCHAMPUS, and notified the Director, OCHAMPUS of any matter regarding which the facility is not in compliance with such standards; and (iii) It will maintain compliance with the CHAMPUS Standards for Psychiatric Partial Hospitalization Programs, as issued by the Director, OCHAMPUS, except for any such standards regarding which the facility notifies the Director, OCHAMPUS that it is not in compliance. (8) Designate an individual who will act as liaison for CHAMPUS inquiries. The PHP shall inform OCHAMPUS in writing of the designated individual; (9) Furnish OCHAMPUS with cost data, as requested by OCHAMPUS, certified by an independent accounting firm or other agency as authorized by the Director, OCHAMPUS; (10) Comply with all requirements of this section applicable to institutional providers generally concerning preauthorization, concurrent care review, claims processing, beneficiary liability, double coverage, utilization and quality review and other matters; (11) Grant the Director, OCHAMPUS, or designee, the right to conduct quality assurance audits or accounting audits with full access to patients and records (including records relating to patients who are not CHAMPUS beneficiaries) to determine the quality and cost- effectiveness of care rendered. The audits may be conducted on a scheduled or unscheduled (unannounced) basis. This right to audit/ review includes, but is not limited to: (i) Examination of fiscal and all other records of the PHP which would confirm compliance with the participation agreement and designation as an authorized CHAMPUS PHP provider; (ii) Conducting such audits of PHP records including clinical, financial, and census records, as may be necessary to determine the nature of the services being provided, and the basis for charges and claims against the United States for services provided CHAMPUS beneficiaries; (iii) Examining reports of evaluations and inspections conducted by federal, state and local government, and private agencies and organizations; (iv) Conducting on-site inspections of the facilities of the PHP and interviewing employees, members of the staff, contractors, board members, volunteers, and patients, as required. (v) Audits conducted by the United States General Accounting Office. (F) Other requirements applicable to PHPs. (1) Even though a PHP may qualify as a CHAMPUS-authorized provider and may have entered into a participation agreement with CHAMPUS, payment by CHAMPUS for particular services provided is contingent upon the PHP also meeting all conditions set forth in section 199.4 of this part. (2) the PHP shall provide inpatient services to CHAMPUS beneficiaries in the same manner it provides inpatient services to all other patients. The PHP may not discriminate against CHAMPUS beneficiaries in any manner, including admission practices, placement in special or separate wings or rooms, or provisions of special or limited treatment. (3) the PHP shall assure that all certifications and information provided to the Director, OCHAMPUS incident to the process of obtaining and retaining authorized provider status is accurate and that is has no material errors or omissions. In the case of any misrepresentations, whether by inaccurate information being provided or material facts withheld, authorized provider status will be denied or terminated, and the PHP will be ineligible for consideration for authorized provider status for a two year period. (xiii) Substance are disorder rehabilitation facilities. Paragraph (b)(4)(xiii) of this section establishes standards and requirements for substance use disorder rehabilitation facilities. This includes both inpatient rehabilitation centers for the treatment of substance use disorders and partial hospitalization centers for the treatment of substance use disorders. (A) Organization and administration. (1) Definition of inpatient rehabilitation center. (i) An inpatient rehabilitation center is a facility, or distinct part of a facility, that provides medically monitored, interdisciplinary addiction-focused treatment to beneficiaries who have psychoactive substance use disorders. Qualified health care professionals provide 24-hour, seven-day-per-week, medically monitored assessment, treatment, and evaluation. An inpatient rehabilitation center is appropriate for patients whose addition-related symptoms, or concomitant physical and emotional/behavioral problems reflect persistent dysfunction in several major life areas. Inpatient rehabilitation is differentiated from: (A) Acute psychoactive substance use treatment and from treatment of acute biomedical/emotional/behavioral problems; which problems are either life-threatening and/or severely incapacitating and often occur within the context of a discrete episode of addition-related biomedical or psychiatric dysfunction; (B) A partial hospitalization center, which serves patients who exhibit emotional/behavioral dysfunction but who can function in the community for defined periods of time with support in one or more of the major life areas; (C) A group home, sober-living environment, halfway house, or three-quarter way house; (D) Therapeutic schools, which are educational programs supplemented by addiction-focused services; (E) Facilities that treat patients with primary psychiatric diagnoses other than psychoactive substance use or dependence; and (F) Facilities that care for patients with the primary diagnosis of mental retardation or developmental disability. (2) Definition of partial hospitalization center for the treatment of substance use disorders. A partial hospitalization center for the treatment of substance use disorders is an addiction-focused service that provides active treatment to adolescents between the ages of 13 and 18 or adults aged 18 and over. Partial hospitalization is a generic term for day, evening, or weekend programs that treat patients with psychoactive substance use disorders according to a comprehensive, individualized, integrated schedule of care. A partial hospitalization center is organized, interdisciplinary, and medically monitored. Partial hospitalization is appropriate for those whose addiction- related symptoms or concomitant physical and emotional/behavioral problems can be managed outside the hospital environment for defined periods of time with support in one or more of the major life areas. (3) Eligibility. (i) Every inpatient rehabilitation center and partial hospitalization center for the treatment of substance use disorders must be certified pursuant to CHAMPUS certification standards. Such standards shall incorporate the basic standards set forth in paragraphs (b)(4)(xiii)(A) through (D) of this section, and shall include such additional elaborative criteria and standards as the Director, OCHAMPUS determines are necessary to implement the basic standards. (ii) To be eligible for CHAMPUS certification, the facility is required to be licensed and fully operational (with a minimum patient census of the less of: six patients or 30 percent of bed capacity) for a period of at least six months and operate in substantial compliance with state and federal regulations. (iii) The facility is currently accredited by the Joint Commission on Accreditation of Healthcare Organizations under the Accreditation Manual for Mental Health, Chemical Dependency, and Mental Retardation/ Developmental Disabilities Services, or by the Commission on Accreditation of Rehabilitation Facilities as an alcoholism and other drug dependency rehabilitation program under the Standards Manual for Organizations Serving People with Disabilities, or other designated standards approved by the Director, OCHAMPUS. (iv) The facility has a written participation agreement with OCHAMPUS. The facility is not considered a CHAMPUS-authorized provider, and CHAMPUS benefits are not paid for services provided until the date upon which a participation agreement is signed by the Director, OCHAMPUS. (4) Governing body. (i) The center shall have a governing body which is responsible for the policies, bylaws, and activities of the facility. If the center is owned by a partnership or single owner, the partners or single owner are regarded as the governing body. The facility will provide an up-to- date list of names, addresses, telephone numbers and titles of the members of the governing body. (ii) The governing body ensures appropriate and adequate services for all patients and oversees continuing development and improvement of care. Where business relationships exist between the governing body and facility, appropriate conflict-of-interest policies are in place. (iii) Board members are fully informed about facility services and the governing body conducts annual reviews of its performance in meeting purposes, responsibilities, goals and objectives. (5) Chief executive officer. The chief executive officer, appointed by and subject to the direction of the governing body, shall possess a master's degree in business administration, public health, hospital administration, nursing, social work, or psychology, or meet similar educational requirements as prescribed by the Director, OCHAMPUS or a designee. The CEO shall have five years administrative experience requisite education and experience and shall assume overall administrative responsibility for the operation of the facility according to governing body policies. (6) Medical director. The medical director, appointed by the governing body, shall be licensed to practice medicine in the state where the center is located and shall possess requisite education including graduation from an accredited school of medicine or osteopathy. The medical director shall satisfy at least one of the following requirements: certification by the American Society of Addiction Medicine; one year or 1,000 hours of experience in the treatment of psychoactive substance use disorders; or is a psychiatrist with experience in the treatment of substance use disorders. The medical director shall be responsible for the planning, development, implementation, and monitoring of all clinical activities. (7) Medical or professional staff organization. The governing body shall establish a medical or professional staff organization to assure effective implementation of clinical privileging, professional conduct rules, and other activities directly affecting patient care. (8) Personnel policies and records. The center shall maintain written personnel policies, updated job descriptions, personnel records to assure the selection of qualified personnel and successful job performance of those personnel. (9) Staff development. The facility shall provide appropriate training and development programs for administrative, support, and direct care staff. (10) Fiscal accountability. The center shall assure fiscal accountability to applicable government authorities and patients. (11) Designated teaching facilities. Students, residents, interns, or fellows providing direct clinical care are under the supervision of a qualified staff member approved by an accredited university. The teaching program is approved by the Director, OCHAMPUS. (12) Emergency reports and records. The facility notifies OCHAMPUS of any serious occurrence involving CHAMPUS beneficiaries. (B) Treatment services. (1) Staff composition. (i) The center shall ensure that patient care needs will be appropriately addressed during all hours of operation by a sufficient number of fully qualified (including license, registration or certification requirements for independent practice, educational attainment, and professional experience) health care professionals and support staff in the respective disciplines. Clinicians providing individual, group and private therapy meet CHAMPUS requirements as qualified mental health providers and operate within the scope of their licenses. The ultimate authority for medical management of care is vested in a physician. (ii) The center shall establish and follow written plans to assure adequate staff coverage during all hours of operation of the center, including physician availability and other professional staff coverage 24 hours per day, seven days per week for an inpatient rehabilitation center and during all service hours for a partial hospitalization center. (2) Staff qualification. Within the scope of its programs and services, the facility has a sufficient number of professional, administrative, and support staff to address the medical and clinical needs of patients and to coordinate the services provided. Facilities that employ master's or doctoral level staff who are not qualified health care providers have a supervision program to oversee and monitor their activities related to the provision of clinical care. (3) Patient rights. (i) The center shall provide adequate protection for all patient rights, safety, confidentiality, informed consent, grievances, and personal dignity. (ii) The facility has a written policy regarding patient abuse and neglect. (iii) Facility marketing and advertising meets professional standards. (4) Behavioral management. When a center uses a behavioral management program, the center shall adhere to a comprehensive, written plan of behavioral management, developed by the medical director and the medical or professional staff and approved by the governing body, which shall be based on positive reinforcement methods and may not permit the use of restraint or seclusion. (5) Admission process. The center shall maintain written policies and procedures to assure that each admission is approved pursuant to CHAMPUS pre-authorization requirements, medically necessary, and based on a determination that the center's program is appropriate to the patient's needs. (6) Assessment. The professional staff of the center shall provide a complete, multidisciplinary assessment of each patient's medical history, physical health, nursing needs, alcohol and drug history, emotional and behavioral factors, age-appropriate social circumstances, psychological condition, education status, and skills. (7) Clinical formulation. A qualified health care professional shall be responsible for a clinical formulation, providing the basis for an interdisciplinary treatment plan. (8) Treatment planning. The qualified health care professional shall be responsible for the development, supervision, implementation, and assessment of a written, individualized, and interdisciplinary plan of treatment, which shall be completed within ten days of admission to an inpatient rehabilitation center or by the fifth day following admission to full day partial hospitalization center, and by the seventh day of treatment for half day partial hospitalization and shall include individual, measurable, and observable goals for incremental progress towards the treatment plan objectives and goals and discharge. A preliminary treatment plan is completed within 24 hours of admission and includes at least a physician's admission note and orders. The master treatment plan is regularly reviewed for effectiveness and revised when major changes occur in treatment. (9) Discharge and transition planning. The center shall maintain a transition planning process to address adequately the anticipated needs of the patient prior to the time of discharge. (10) Clinical records. Complete individual patient clinical records shall be maintained, documenting all treatment plans, patient care, and patient assessments, and adhering to applicable provisions of the JCAHO Manual for Mental Health, Chemical Dependency, and Mental Retardation/ Development Disabilities Services, and the requirements set forth in section 199.7(b)(3). Clinical records are maintained and controlled by an appropriately qualified records administrator or technician. (11) Progress notes. Timely and complete progress notes shall be maintained to document the course of treatment for the patient and family. (12) Therapeutic services. (i) Individual, group, and family psychotherapy and addiction counseling services are provided to all patients, consistent with each patient's treatment plan by qualified mental health providers. (ii) A range of therapeutic activities, directed and staffed by qualified personnel, are offered to help patients meet the goals of the treatment plan. (iii) Therapeutic educational services are provided or arranged that are appropriate to the patient's educational and therapeutic needs. (13) Ancillary services. A full range of ancillary services is provided. Emergency services include policies and procedures for handling emergencies with qualified personnel and written agreements with each facility providing the service. Other ancillary services include physical health, pharmacy and dietary services. (C) Standards for physical plant and environment. (1) Physical environment. The buildings and grounds of the center shall be maintained so as to avoid health and safety hazards, be supportive of the services provided to patients, and promote patient comfort, dignity, privacy, personal hygiene, and personal safety. (2) Physical plant safety. The center shall be maintained in a manner that protects the lives and ensures the physical safety of patients, staff, and visitors, including conformity with all applicable building, fire, health, and safety codes. (3) Disaster planning. The center shall maintain and rehearse written plans for taking care of casualties and handling other consequences arising from internal or external disasters. (D) Standards for evaluation system. (1) Quality assessment and improvement. The center shall develop and implement a comprehensive quality assurance and quality improvement program that monitors the quality, efficiency, appropriateness, and effectiveness of the care, treatments, and services it provides for patients and their families, utilizing clinical indicators of effectiveness to contribute to an ongoing process of program improvement. The medical director is responsible for developing and implementing quality assessment and improvement activities throughout the facility. (2) Utilization review. The center shall implement a utilization review process, pursuant to a written plan approved by the professional staff, the administration, and the governing body, that assesses the appropriateness of admissions, continued stay, and timeliness of discharge as part of an effort to provide quality patient care in a cost-effective manner. Findings of the utilization review process are used as a basis for reviewing the plan of operation, including a review of staff qualifications and staff composition. (3) Patient records review. The center shall implement a process, including monthly reviews of a representative sample of patient records, to determine the completeness and accuracy of the patient records and the timeliness and pertinence of record entities, particularly with regard to regular recording of progress/non-progress in treatment plan. (4) Drug utilization review. An inpatient rehabilitation center and, when applicable, a partial hospitalization center, shall implement a comprehensive process for the monitoring and evaluating of the prophylactic, therapeutic, and empiric use of drugs to assure that medications are provided appropriately, safely, and effectively. (5) Risk management. The center shall implement a comprehensive risk management program, fully coordinated with other aspects of the quality assurance and quality improvement program, to prevent and control risks to patients and staff and costs associated with clinical aspects of patient care and safety. (6) Infection control. The center shall implement a comprehensive system for the surveillance, prevention, control, and reporting of infections acquired or brought into the facility. (7) Safety. The center shall implement an effective program to assure a safe environment for patients, staff, and visitors. (8) Facility evaluation. The center annually evaluates accomplishment of the goals and objectives of each clinical program and service of the RTC and reports findings and recommendations to the governing body. (E) Participation agreement requirements. In addition to other requirements set forth in paragraph (b)(4)(xiii) of this section, in order for the services of an inpatient rehabilitation center or partial hospitalization center for the treatment of substance abuse disorders to be authorized, the center shall have entered into a Participation Agreement with OCHAMPUS. The period of a Participation Agreement shall be specified in the agreement, and will generally be for not more than five years. The center shall not be considered to be a CHAMPUS authorized provider and CHAMPUS payments shall not be made for services provided by the center until the date the participation agreement is signed by the Director, OCHAMPUS. In addition to review of facility's application and supporting documentation, an on-site visit by OCHAMPUS representatives may be part of the authorization process. In addition, such a Participation Agreement may not be signed until an SUDRF has been licensed and operational for at least six months. The Participation Agreement shall include at least the following requirements: (1) Render applicable services to eligible CHAMPUS beneficiaries in need of such services, in accordance with the participation agreement and CHAMPUS regulation; (2) Accept payment for its services based upon the methodology provided in section 199.14, or such other method as determined by the Director, OCHAMPUS; (3) Accept the CHAMPUS-determined rate as payment in full and collect from the CHAMPUS beneficiary or the family of the CHAMPUS beneficiary only those amounts that represent the beneficiary's liability, as defined in section 199.4, and charges for services and supplies that are not a benefit of CHAMPUS; (4) Make all reasonable efforts acceptable to the Director, OCHAMPUS, to collect those amounts which represent the beneficiary's liability, as defined in section 199.4; (5) Comply with the provisions of section 199.8, and submit claims first to all health insurance coverage to which the beneficiary is entitled that is primary to CHAMPUS; (6) Furnish OCHAMPUS with cost data, as requested by OCHAMPUS, certified to by an independent accounting firm or other agency as authorized by the Director, OCHAMPUS; (7) Certify that: (i) It is and will remain in compliance with the provisions of paragraph (b)(4)(xiii) of the section establishing standards for substance use disorder rehabilitation facilities; (ii) It has conducted a self assessment of the facility's compliance with the CHAMPUS Standards for Substance Use Disorder Rehabilitation Facilities, as issued by the Director, OCHAMPUS, and notified the Director, OCHAMPUS of any matter regarding which the facility is not in compliance with such standards; and (iii) It will maintain compliance with the CHAMPUS Standards for Substance Use Disorder Rehabilitation Facilities, as issued by the Director, OCHAMPUS, except for any such standards regarding which the facility notifies the Director, OCHAMPUS that it is not in compliance. (8) Grant the Director, OCHAMPUS, or designee, the right to conduct quality assurance audits or accounting audits with full access to patients and records (including records relating to patients who are not CHAMPUS beneficiaries) to determine the quality and cost effectiveness of care rendered. The audits may be conducted on a scheduled or unscheduled (unannounced) basis. This right to audit/ review include, but is not limited to: (i) Examination of fiscal and all other records of the center which would confirm compliance with the participation agreement and designation as an authorized CHAMPUS provider; (ii) Conducting such audits of center records including clinical, financial, and census records, as may be necessary to determine the nature of the services being provided, and the basis for charges and claims against the United States for services provided CHAMPUS beneficiaries; (iii) Examining reports of evaluations and inspection conducted by federal, state and local government, and private agencies and organizations; (iv) Conducting on-site inspections of the facilities of the center and interviewing employees, members of the staff, contractors, board members, volunteers, and patients, as required. (v) Audits conducted by the United States General Accounting Office. (F) Other requirements applicable to substance disorders rehabilitation facilities. (1) Even though a center may qualify as a CHAMPUS-authorized provider and may have entered into a participation agreement with CHAMPUS, payment by CHAMPUS for particular services provided is contingent upon the center also meeting all conditions set forth in section 199.4. (2) The center shall provide inpatient services to CHAMPUS beneficiaries in the same manner it provides services to all other patients. The center may not discriminate against CHAMPUS beneficiaries in any manner, including admission practices, placement in special or separate wings or rooms, or provisions of special or limited treatment. (3) The substance use disorder facility shall assure that all certifications and information provided to the Director, OCHAMPUS incident to the process of obtaining and retaining authorized provider status is accurate and that it has no material errors or omissions. In the case of any misrepresentations, whether by inaccurate information being provided or material facts withheld, authorized provider status will be denied or terminated, and the facility will be ineligible for consideration for authorized provider status for a two year period. * * * * * 4. Section 199.14 is proposed to be amended by revising the introductory text of paragraph (a)(2), paragraphs (a)(2)(ii), (a)(2)(iii), (a)(2)(iv), (a)(2)(v), the heading of (a)(2)(ix), paragraphs (a)(2)(ix)(A), (a)(2)(ix)(C), the introductory text of paragraph (f), paragraphs (f)(1), (f)(2), (f)(3), and (f)(5), by redesignating paragraph (f)(4) as (f)(7), and by adding a heading for the newly designated paragraph (f)(7), and by adding new paragraphs (a)(1)(ii)(F), (f)(4), and (f)(6), as follows: Sec. 199.14 Provider reimbursement methods. * * * * * (a) * * * (1) * * * (ii) * * * (F) Substance Use Disorder Rehabilitation facilities. Substance use disorder rehabilitation facilities, authorized under section 199.6(b)(4)(xiii), are subject to the DRG-based payment system. * * * * * (2) CHAMPUS mental health per diem payment system. The CHAMPUS mental health per diem payment system shall be used to reimburse for inpatient mental health hospital care in specialty psychiatric hospitals and units. Payment is made on the basis of prospectively determined rates and paid on a per diem basis. The system uses two sets of per diems. One set of per diems applies to hospitals and units that have a relatively higher number of CHAMPUS discharges. For these hospitals and units, the system uses hospital-specific per diem rates, calculated pursuant to paragraph (a)(2)(ii) of this section. The other set of per diems applies to hospitals and units with a relatively lower number of CHAMPUS discharges. For these hospitals and units, the system uses a national per diem rate, calculated pursuant to paragraph (a)(2)(iii) of this section, and adjusted for area wage rates. Beginning in fiscal year 1995, these two sets of rates will undergo transitions from charge-based to cost-based. This transition process, which will occur over a three-year period, is set forth in paragraph (a)(2)(iv) of this section. Costs will be determined by reference to average per day Medicare inpatient operating costs, including pass through costs, as reported on Medicare cost reports. For high volume hospitals and units, a hospital-specific per day cost will be determined. For low volume hospitals, a national average per day cost will be determined based on available Medicare cost reports for four separate types of facilities: distinct part unit teaching facilities; distinct part unit non-teaching facilities; free-standing teaching hospitals; and free-standing non-teaching hospitals. During the transition years, if the cost based per diem is less than the fiscal year 1994 per diem, OCHAMPUS will pay a blended rate, calculated to phase in the cost-based rate by fiscal year 1997. Beginning in fiscal year 1995, if the cost based per diem exceeds the 1994 per diem rate, the cost based per diem will be used. * * * * * (ii) Hospital-specific cost-based per diems for higher volume hospitals and units. The per diem amount for each higher volume hospital and unit will be the average Medicare inpatient operating cost, including pass through costs per day, in that hospital or specialty unit, as reported in the hospital's Medicare cost report for a recent base year, updated to the year for which the payment rate will be used. However, the per diem shall not be higher than two standard deviations above the mean per diem for all high volume facilities. (iii) National cost-based per diem for lower volume hospitals and units. This paragraph (a)(2)(iii) describes the per diem payment amount for hospitals with lower volume of CHAMPUS discharges. (A) Per diem amount. Hospitals and units with a lower volume of CHAMPUS patients are paid on the basis of a national per diem amount. The national per diem amount is calculated based on the average Medicare inpatient operating cost, including pass through costs, per day for all patients in all CHAMPUS lower volume hospitals and units which file Medicare cost reports, as determined from the Medicare cost reports filed by those hospitals for a recent base year, updated to the year for which the payment rate will be used. (B) Adjustments to national per diem. Two adjustments shall be made to the per diem rate. (1) Area wage index. The same area wages indexes used for the CHAMPUS DRG-based payment system (see paragraph (a)(1)(iii)(E)(2) of this section) shall be applied to the wage portion of the national per diem rate for each day of the admission. The wage portion shall be the same as that used for the CHAMPUS DRG-based payment system. (2) Facility type/teaching status. An adjustment to the per diem rate will be made to reflect the type of facility and the presence or absence of a teaching program. Separate per diem rates will be calculated for each of the following four types of facilities: distinct part unit teaching facilities; distinct part unite non-teaching facilities; free-standing teaching hospitals; and free-standing non- teaching hospitals. (iv) Transition from charge-based rates to cost-based rates. Beginning in fiscal year 1995, there is a transition from charge-based per diem rates to cost-based per diem rates under the CHAMPUS mental health per diem payment system. (A) Fiscal year 1997 rate. In fiscal year 1997, each facility's per diem rate (whether hospital-specific or based on the national rate) shall be the cost-based rate calculated pursuant to paragraph (a)(2) (ii) or (iii) of this section, whichever is applicable. (B) Transition rule. For fiscal years 1995 and 1996, each facility's per diem rate (whether hospital-specific or based on the national rate) shall be the cost-based rate calculated pursuant to paragraphs (a)(2) (ii) or (iii) of this section, whichever is applicable, if it exceeds the fiscal year 1994 rate, or the blended rate calculated pursuant to paragraph (a)(2)(iv)(c) of this section if it does not. (C) Blended rate. For fiscal years 1995 and 1996, each facility's per diem rate (whether hospital-specific or based on the national rate) shall, if the cost-based rate calculated pursuant to paragraphs (a)(2) (ii) or (iii) of this section, whichever is applicable, is less than the facility's 1994 rate, be a blended rate calculated as follows: (1) For fiscal year 1995, the sum of two-thirds of the facility's fiscal year 1994 rate plus one third of the facility's cost-based rate; and (2) For fiscal year 1996, the sum of one third of the facility's 1994 rate plus two-thirds of the facility's cost-based rate. (D) Special rule for new hospitals. For any hospital or unit that was not in operation as a CHAMPUS-authorized provider in fiscal year 1994, the cost-based per diem rate shall be that calculated pursuant to paragraph (a)(2)(iii) of this section until rebasing. (v) Administration of per diem payment system. This paragraph contains several provisions pertinent to the administration of the CHAMPUS mental health per diem payment system. (A) Identification of higher volume hospitals. A hospital or unit is considered a higher volume hospital for purposes of a hospital- specific per diem rate if it had 50 or more annual discharges of CHAMPUS patients during fiscal year 1994 or a subsequent period that serves as a base year for purposes of rebasing under paragraph (a)(2)(v)(D) of this section. All other hospitals and units are considered lower volume hospitals for purposes of establishing a per diem rate. (B) Cost reports. Information from cost reports needed for determinations required by paragraph (a)(2) of this section will, as a general rule, be obtained by the Director, OCHAMPUS from the Health Care Financing Administration. For hospitals that do not file a Medicare cost report, the Director, OCHAMPUS may provide an alternative method for reporting independently audited costs. In the case of any hospital or unit for which the Director, OCHAMPUS is unable to determine hospital-specific costs because the hospital has not filed a Medicare cost report or provided appropriate alternative cost information, the cost-based per diem rate for this hospital will be based on the national rate (as provided in paragraph (a)(2)(iii) of this section). (C) Based year and update factor. The base year used for calculating hospital-specific and national per day costs will be established by the Director, OCHAMPUS based on the most current available Medicare cost reports. The update factor used to calculate cost based payment rates from base year per day costs will be the applicable Medicare update factor for hospitals and units exempt from the Medicare prospective payment system. (D) Rebasing. Under the cost-based per diem system, the Director, OCHAMPUS will recalculate base year cost-based per diem rates every third year after initially calculated. * * * * * (ix) Per diem payment for psychiatric and substance use disorder rehabilitation partial hospitalization services. (A) In general. Psychiatric and substance use disorder rehabilitation partial hospitalization services authorized by Sec. 199.4(b)(10) and (e)(4) and provided by institutional providers authorized under Sec. 199.6(b)(4)(xii) and (b)(4)(xiii), are reimbursed on the basis of prospectively determined, all-inclusive per diem rates. The per diem payment amount must be accepted as payment in full for all institutional services provided, including board, routine nursing services, ancillary services (includes art, music, dance, occupational and other such therapies), psychological testing and assessments, overhead and any other services for which the customary practice among similar providers is included as part of the institutional charges. * * * * * (C) Per diem rate. For any full day partial hospitalization program (minimum of 6 hours), the maximum per diem payment amount is 40 percent of the average inpatient per diem amount per case established under the CHAMPUS mental health per diem reimbursement system for both high and low volume psychiatric hospitals and units (as defined in section 199.14(a)(2)) for the fiscal year. A partial hospitalization program of less than 6 hours (with a minimum of three hours) will be paid a per diem rate of 75 percent of the rate for a full-day program. * * * * * (f) Reimbursement of Residential Treatment Centers. The CHAMPUS rate is the per diem rate that CHAMPUS will authorize for all mental health services rendered to a patient and the patient's family as part of the total treatment plan submitted by a CHAMPUS-approved RTC, and approved by the Director, OCHAMPUS, or designee. The per diem rates for RTCs are all-inclusive rates for all institutional and professional services incident to the provision of inpatient services. No separate billings or payments for ancillary or professional services are allowed. (1) In general. Payment to RTCs is made on the basis of prospectively determined rates and paid on a per diem basis. The system uses two sets of per diems. One set of per diems applies to RTCs that have a relatively higher number of CHAMPUS discharges. For these RTCs, the system uses RTC-specific per diem rates, calculated pursuant to paragraph (f)(2) of this section. The other set of per diems applies to RTCs with a relatively lower number of CHAMPUS discharges. For these RTCs, the system uses a national per diem rate, calculated pursuant to paragraph (f)(3) of this section, adjusted for area wages. Beginning in fiscal year 1995, per diem rates will undergo transitions from charge- based to cost-based. This transition process, which will occur over a four-year period, is set forth in paragraph (f)(4) of this section. Costs will be determined by reference to average allowable costs per day as reported on cost reports filed with OCHAMPUS. For high volume RTCs, an RTC-specific per day cost will be determined. For low volume RTCs, a national average per day cost will be determined. During the first year of the transition--fiscal year 1995--fiscal year 1994 payment rates will be continued. For the subsequent three years, if the cost based per diem is less than the fiscal year 1995 per diem, OCHAMPUS will pay a blended rate, calculated to 'phase in the cost- based rate by fiscal year 1998. Beginning in fiscal year 1996, if the cost-based per diem exceeds the 1995 per diem rate, the cost-based per diem will be used. (2) RTC-specific cost-based per diems for higher volume RTCs. The per diem amount for each higher volume RTC will be the allowable cost per day for all inpatients in that RTC, as reported in the RTC's cost report for a recent base year, updated to the year for which the payment rate will be used. However, the per diem shall not be higher than two standard deviations above the mean per diem for all high volume RTCs. (3) National cost-based per diems for lower volume RTCs. This paragraph describes the per diem payment amounts for RTCs with a lower volume of CHAMPUS discharges. (i) Per diem amount. RTCs with a lower volume of CHAMPUS patients are paid on the basis of a national per diem amount. The national per diem amount is calculated based on the cost per day for all patients in all CHAMPUS lower volume RTCs in the nation which file cost reports (or an appropriate sample of such facilities). (A) Determination of RTC costs. The national average cost per day for lower volume RTCs is determined from the cost reports filed by those RTCs for a recent base year, updated to the year for which the payment rates will be used. (B) Alternative method for determining RTC costs. In the event that the Director, OCHAMPUS determines that there are insufficient data from RTC cost reports on which to base a reliable calculation of the cost per day for all patients in all CHAMPUS lower volume RTCs in the nation (or an appropriate sample of such patients), the Director may use an alternative method for calculating a national per diem amount. The alternative method will be the average charge per day for all CHAMPUS patients in all RTCs, other than higher volume RTCs for which adequate RTC-specific cost data are available to the Director, OCHAMPUS, adjusted by the cost-to-charge ratio of all free-standing, non-teaching psychiatric hospitals covered by paragraph (a)(2) of this section, updated to the year for which the payment rates will be used. A national rate calculated based on this alternative method may not be the basis for the determination of a national rate for the next subsequent year unless the Director, OCHAMPUS determines that sufficient data from RTC cost reports continue to be unavailable. (ii) Area wage index adjustment to national per diem. The same area wage indexes used for the CHAMPUS DRG-based payment system (see paragraph (a)(1)(iii)(E)(2) of this section) shall be applied to the wage portion of the national per diem rate for each day of the admission. The wage portion shall be the same as that used for the CHAMPUS DRG-based payment system. (4) Transition from charge-based rates to cost-based rates. Beginning in fiscal year 1995, there is a transition from charge-based per diem rates to cost-based per diem rates under the RTC per diem payment system. (i) Fiscal year 1998 rate. In fiscal year 1998, each RTC's per diem rate (whether hospital-specific or based on the national rate) shall be the cost-based rate calculated pursuant to paragraph (f) (2) or (3) of this section, whichever is applicable. (ii) Transition rule for fiscal year 1995. Each RTC's per diem payment rate for fiscal year 1994 shall be continued for fiscal year 1995. (iii) Transition rule for fiscal years 1996 and 1997. For fiscal years 1996 and 1997, each RTC's per diem rate (whether hospital specific or based on the national rate) shall be the cost-based rate calculated pursuant to paragraphs (f) (2) or (3) of this section, whichever is applicable, if it exceeds the fiscal year 1994 rate, or the blended rate calculated pursuant to paragraph (f)(4)(iv) of this section if it does not. (iv) Blended rate. For fiscal years 1996 and 1997, each RTC's per diem rate (whether hospital specific or based on the national rate) shall, if the cost-based rate calculated pursuant to paragraphs (f) (2) or (3) of this section, whichever is applicable, is less than the facility's 1995 rate, be a blended rate calculated as follows: (A) For fiscal year 1996, the sum of two-thirds of the RTC's fiscal year 1995 rate plus one-third of the RTC's cost-based rate; and (B) For fiscal year 1997, the sum of one third of the RTC's 1995 rate plus two-thirds of the RTC's cost-based rate. (v) Special rule for new RTCs. For any RTC that was not in operation as a CHAMPUS-authorized provider in fiscal year 1994, the cost-based per diem rate shall be that calculated pursuant to paragraph (f)(3) of this section until rebasing. (5) Administration of RTC per diem payment system. This paragraph contains several provisions pertinent to the administration of the CHAMPUS RTC per diem payment system. (i) Higher volume RTCs. An RTC is considered a higher volume RTC for purposes of a RTC-specific per diem rate if it had 50 or more annual discharges of CHAMPUS patients during the base period used for calculation of the per diem rates. All other RTCs are considered lower volume RTCs for purposes of establishing a per diem rate. (ii) Cost reports. Cost reports needed for determinations required by paragraphs (f)(2) and (f)(3) of this section will be provided by each RTC to the Director, OCHAMPUS, who will provide a method for reporting costs. The method established by the Director, OCHAMPUS will require submission by the RTC of a copy of the RTC's state Medicaid cost report, if the RTC filed one, or of alternative, independently audited cost information. In any case in which the Director, OCHAMPUS is unable to determine RTC-specific costs because the RTC has not provided appropriate cost information, the cost-based per diem rate for that RTC will be based on the national rate (as provided in paragraph (f)(3) of this section). (iii) Base year and update factor. The base year used for calculating RTC-specific and national per day costs will be established by the Director, OCHAMPUS based on the most current available cost report data. The update factor used to calculate cost based payment rates from base year per day costs will be the applicable Medicare update factor for hospitals and units exempt from the Medicare prospective payment system. (iv) Rebasing. Under the cost-based per diem system, the Director, OCHAMPUS will recalculate base year cost-based per diem rates every third year after initially calculated. (6) Therapeutic absences. CHAMPUS will not pay for days in which the patient is absent on leave from the RTC. The RTC must identify these days when claiming reimbursement. CHAMPUS will not count a patient's leave of absence as a discharge in determining whether the facility is a higher volume RTC for purposes of paragraph (f)(5) of this section. (7) Education costs. * * * * * * * * June 23, 1994. L. M. Bynum, Alternate OSD Federal Register Liaison Officer, Department of Defense. [FR Doc. 94-15700 Filed 6-28-94; 8:45 am] BILLING CODE 5000-04-M