Diagnosis-related group (DRG) reimbursement is a reimbursement system for inpatient charges from facilities. This system assigns payment levels to each DRG based on the average cost of treating all TRICARE beneficiaries in a given DRG. The TRICARE DRG-based payment system is modeled on the Medicare inpatient prospective payment system (PPS). Cases are classified into the appropriate DRG by a grouper program.

The grouper used for the TRICARE DRG-based payment system is the same as the Medicare grouper with some modifications, such as neonate DRGs. Refer to the TRICARE Reimbursement Manual for detailed information.

DRG Calculator

For the DRG calculator, go to the TRICARE/CHAMPUS DRG-Based Payment System web page and follow the online prompts.

You can locate the indirect medical education (IDME) factor (for teaching hospitals only) and wage index information using the Wage Indexes and IDME Factors File that are also available on the DRG Web page. If a hospital is not listed in the Wage Indexes and IDME Factors File, use the ZIP to Wage Index File to obtain the wage index for that area by ZIP code.

Capital and Direct Medical Education Cost Reimbursement

Facilities may request capital and direct medical education cost reimbursement. Capital items, such as property, structures, and equipment, usually cost more than $500 and can depreciate under tax laws. Direct medical education is defined as formally organized or planned programs of study in which providers engage to enhance the quality of care at an institution.

All initial requests for reimbursement under capital and direct medical education costs must be submitted to Humana Military/PGBA on or before the last day of the 12th month following the close of the hospital’s cost-reporting period. The request shall cover the one-year period corresponding to the hospital’s Medicare cost-reporting period. This applies to hospitals (except children’s hospitals) subject to the TRICARE DRG-based system.

The submission must include a statement certifying that any changes, if applicable, were made as a result of a review, audit, or appeal of the provider’s Medicare cost report. The change(s) must be reported to Humana/PGBA within 30 days of the date the hospital is notified of the change. In addition, an officer or administrator of the provider must certify all cost reports.