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Public and Private Hospitals Transition to DRG TAR-Free Process

October 5, 2016

District/municipal public hospitals* (DMPHs) and private hospitals are transitioning to a process free of a Treatment Authorization Request (TAR) for most inpatient fee-for-service Medi-Cal admissions. DMPHs and private hospitals are expected to transition to the diagnosis-related group (DRG) TAR-free process.

* DMPHs are referred to as “non-designated public hospitals” or “NDPHs” in the Medi-Cal Superior Systems Waiver Comprehensive Renewal, effective from October 1, 2015, through September 30, 2017.

Hospital staff should review the transition schedule below and determine which timeframe works best for their facility.

Rollout Phases for Hospitals Transitioning to TAR-Free Status

Rollout Phase Signed Participation Agreement Received By DHCS No Later Than Electronic Medical Record Access for DHCS Must Be Available by TAR-Free Effective Date
Phase 1 --- --- February 1, 2016
Phase 2 --- --- October 1, 2016
Phase 3 September 15, 2016 October 1, 2016 January 1, 2017
Phase 4 November 15, 2016 December 1, 2016 March 1, 2017
Phase 5 January 15, 2017 February 1, 2017 May 1, 2017
Phase 6 March 15, 2017 April 1, 2017 July 1, 2017
Phase 7 May 15, 2017 June 1, 2017 September 1, 2017
Phase 8 July 15, 2017 August 1, 2017 November 1, 2017

In Phase 1, nine volunteer pilot hospitals transitioned in February 2016. The second phase of hospitals will transition in October 2016.

To make the transition, hospitals must meet the following criteria:

  • Utilize an evidence-based standardized medical review criteria, such as MCG or InterQual, for acute inpatient hospital stays
  • Provide the Department of Health Care Services (DHCS) with electronic access to medical, utilization reviews/decisions and the evidence-based standardized medical reviews

In the DRG TAR-free process, hospitals will no longer submit TARs for most acute inpatient admissions. Instead, they would utilize evidence-based standardized medical review criteria to perform utilization reviews for these fee-for-service acute inpatient stays. DHCS will provide monitoring and oversight post-payment through a statistically valid sample of cases.

The TAR-free process will apply to inpatient admissions excluding administrative days, rehabilitation days and restricted aid codes (except delivery, sick baby admissions and California Children’s Services [CCS] stays requiring Service Authorization Requests [SARs]) for fee-for-service Medi-Cal beneficiaries. DHCS estimates 85 percent of the current TAR volume for acute inpatient admissions paid through DRG payment methodology will be converted to TAR-free through this process.

For a beneficiary receiving hospice general inpatient care for a hospice-related condition that requires admission to a private or DMPH hospital, the hospice provider still needs to submit a TAR for hospice general inpatient care for daily review when a beneficiary has care provided while in the TAR-free hospital.

After the hospital staff has reviewed the transition schedule and chosen an implementation timeframe, they should indicate their choice in an email to DRGTARFree@dhcs.ca.gov. This mailbox is also where hospital staff may request and return the DRG TAR-free provider participation agreement.

Upon receipt and approval by DHCS of the signed participation agreement, hospitals will be placed into the applicable rollout phase. For example, if DHCS receives a signed provider participation agreement on November 5, 2016, the hospital will be placed in Phase 4, with a TAR-free effective date of March 1, 2017.

For additional information on transitioning to the TAR-free process, providers can visit the TAR-Free Process page of the DHCS website.