[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8113]


[[Page Unknown]]

[Federal Register: April 6, 1994]


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DEPARTMENT OF DEFENSE
32 CFR Part 199

[DoD 6010.8-R]
RIN 0720-AA24

 

Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); Continued Health Care Benefit Program

AGENCY: Office of the Secretary, DoD.

ACTION: Interim rule.

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SUMMARY: This rule establishes a Continued Health Care Benefit Program 
(CHCBP) for certain DoD health care beneficiaries who lose eligibility 
for health care in the Military Health Services System (MHSS). It 
provides for use of the CHAMPUS benefit structure and CHAMPUS rules and 
procedures for the CHCBP and seeks public comments on our plan to 
implement the Continued Health Care Benefit Program.

DATES: This rule is effective October 1, 1994. Written comments must be 
received on or before June 6, 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: Mr. Gunther J. Zimmerman, Office of 
the Assistant Secretary of Defense (Health Affairs), (703) 695-3331.

SUPPLEMENTARY INFORMATION:

I. Overview of the Proposed Rule

    Implementation of the Continued Health Care Benefit Program (CHCBP) 
was directed by Congress in section 4408 of the National Defense 
Authorization Act for Fiscal Year 1993, Public Law 102-484, which 
amended title 10, United States Code, by adding section 1078a. This law 
directed the implementation of a program of temporary continued health 
benefits coverage for certain former beneficiaries of DoD, comparable 
to the health benefits provided for former civilian employees of the 
Federal government.
    Congress also directed the program start by October 1, 1994, and 
replace the conversion health care programs authorized in section 1086a 
and 1145(b) of title 10. Conversion health care is provided via a 
Department of Defense (DoD) contract with Mutual of Omaha and is 
scheduled to end September 30, 1994.
    The status directs that the benefits offered by the CHCBP must be 
comparable to those offered to former civilian employees of the Federal 
government. As is the case for those employees, the costs will be borne 
by the beneficiary who will pay the entire premium charge. 
Additionally, the DoD is permitted to charge up to an additional ten 
percent of the premium charge to cover administrative expenses.
    Under section 4408(b), eligibility to enroll in the CHCBP includes 
members of the uniformed services who are discharged or released 
(voluntarily or involuntarily as long as not under adverse conditions) 
and their dependents; certain unremarried former spouses of a member or 
former member; and emancipated children.
    Health care coverage in the CHCBP is for a specific time period, 
which varies by the category of beneficiary. Coverage periods are as 
follows: Former uniformed services members and their dependents--up to 
18 months; unremarried former spouses--up to 36 months; emancipated 
children (age 21 if not in college or up to age 23 if in college)--up 
to 36 months. Eligible beneficiaries generally will have 60 days to 
elect coverage after they are notified of their opportunity to enroll.
    The Department of Defense considered three alternatives to 
implement this program: first, integration of the program within the 
Federal Employee Health Benefit Program (FEHBP) health care plans under 
arrangement with the Office of Personnel Management (OPM); second, 
competitive procurement of a private insurer to administer this 
program; and lastly, continued CHAMPUS-type coverage, paid for by the 
beneficiary, with a third party administrator collecting the premiums 
and performing eligibility and verification functions. The first option 
was rejected based on the difficulties of making the transition from a 
DoD administered benefit to an OPM program. The second option was not 
selected based on the likelihood that an acquisition process involving 
a beneficiary group of such unpredictable size and characteristics 
would not result in a vendor willing to underwrite this program. 
Contractors would be wary that health care costs would exceed the 
capped premium. Thus, we propose to offer this program directly through 
the established mechanisms of CHAMPUS.
    Under this approach, beneficiaries will continue to make use of 
existing CHAMPUS rules and administrative structures to receive their 
medical care and have medical claims paid. This feature will allow 
enrollees to make use of discounts and reduced copayments and provider 
arrangements already part of CHAMPUS in some locations. As previously 
noted, a third party administrator (TPA) will act as a central agent 
for the program. The functions of this TPA will be to: receive 
applications for enrollment of beneficiaries; verify eligibility and 
approve enrollment; notify the Defense Enrollment and Eligibility 
Reporting Systems (DEERS) of enrollment; collect premiums; and provide 
administrative services. CHCBP eligibles will obtain information 
concerning the program and the application process and other TPA 
functions at their local base transition office or through the nearest 
military treatment facility's (MTF) Health Benefits Advisory (HBA).
    It is expected that premium rates for this program will be 
comparable to the premium rates of a mid-range Health Maintenance 
Organization (HMO) offered in the FEHBP. The Department of Defense has 
contracted with a private sector actuarial firm to help develop premium 
rates. It is anticipated these rates will include individual and family 
premiums, but will not be age/sex adjusted. (Similar to FEHBP premium 
schedules). Premium rates for fiscal year 1995 are currently being 
calculated, however, it is expected that these quarterly rates will be 
in the range of $250 self and $625 for family.

II. Rulemaking 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 economy of $100 million or more, or 
have other substantial impacts.
    The Regulatory Flexibility Act (RFA) 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 is not a significant regulatory action under the provisions of 
Executive Order 12866, and it would not have a significant impact on a 
substantial number of small entities.
    The proposed rule will impose additional information collection 
requirements on the public under the Paperwork Reduction Act of 1980 
(44 USC 3501-3511), because beneficiaries will be required to enroll. 
Request for approval and review has been submitted.
    This is a proposed rule. Public comments are invited. All comments 
will be considered. A discussion of the major issues received by public 
comments will be included with issuance of the final rule, anticipated 
approximately 60 days after the end of the comment period.

List of Subjects in 32 CFR Part 199

    Claims, Handicapped, Health insurance, Military personnel.

    Accordingly, 32 CFR Part 199 is amended as follows:

PART 199--[AMENDED]

    1. The authority citation for Part 199 continues to read as 
follows:

    Authority: 10 U.S.C. Chapter 55, 5 U.S.C. 301.

    2. A new Sec. 199.20 is added to read as follows:


Sec. 199.20  Continued Health Care Benefit Program (CHCBP).

    (a) Purpose. The CHCBP is a premium based temporary health care 
coverage program that will be available to qualified beneficiaries (set 
forth in paragraph (d)(1) of this section). Medical coverage under this 
program will mirror the benefits offered via the basic CHAMPUS program. 
Premium costs for this coverage are payable by enrollees to a Third 
Party Administrator. The CHCBP is not part of the CHAMPUS program. 
However, as set forth in this section, it functions under most of the 
rules and procedures of CHAMPUS. Because the purpose of the CHCBP is to 
provide a continuation health care benefit for DoD beneficiaries losing 
eligibility, it will be administered so that it appears, to the maximum 
extent possible, to be part of CHAMPUS.
    (b) General provisions. Except for any provisions the Director, 
OCHAMPUS may have, the general provisions of section 199.1 shall apply 
to the Continued Health Care Benefit Program as they do to CHAMPUS.
    (c) Definitions. Except as may be specifically provided in this 
section, to the extent terms defined in section 199.2 are relevant to 
the administration of the Continued Health Care Benefit Program, the 
definitions contained in that section shall apply to the CHCBP as they 
do to CHAMPUS.
    (d) Eligibility and enrollment.
    (1) Eligibility. Enrollment in the Continued Health Care Benefit 
Program is open to the following individuals:
    (i) Members of armed forces, who:
    (A) Are discharged or released from active duty (or full time 
National Guard duty), whether voluntarily or involuntarily, under other 
than adverse conditions;
    (B) Immediately preceding that discharge or release, were entitled 
to medical and dental care under 10 U.S.C. 1074(a) (except in the case 
of a member discharged or released from full time National Guard duty); 
and,
    (C) After that discharge or release and any period of transitional 
health care provided under 10 U.S.C. 1145(a) would not otherwise be 
eligible for any benefit under 10 U.S.C. chapter 55,
    (ii) A person who:
    (A) Ceases to meet requirements for being considered an unmarried 
dependent child of a member or former member of the armed forces under 
10 U.S.C. 1072(2)(D);
    (B) On the day before ceasing to meet those requirements, was 
covered under a health benefits plan under 10 U.S.C. chapter 55, or 
transitional health care under 10 U.S.C. 1145(a) as a dependent of the 
member or former member; and,
    (C) Would not otherwise be eligible for any benefits under 10 
U.S.C. chapter 55,
    (iii) A person who: (A) Is an unremarried former spouse of a member 
or former member of the armed forces;
    (B) On the day before the date of the final decree of divorce, 
dissolution, or annulment was covered under a health benefits plan 
under 10 U.S.C. chapter 55, or transitional health care under 10 U.S.C. 
1145(a) as a dependent of the member or former member; and,
    (C) Is not a dependent of the member or former member under 10 
U.S.C. 1072 (2) (F) or (G) or ends a one-year period of dependency 
under 10 U.S.C. 1072(2)(H).
    (2) Notification of eligibility.
    (i) The Department of Defense will notify persons eligible to 
receive health benefits under the Continued Health Care Benefit 
Program.
    (ii) In the case of a member who becomes (or will become) eligible 
for continued coverage, the Department of Defense shall notify the 
member of their rights for coverage as part of preseparation counseling 
conducted under 10 U.S.C. 1142.
    (iii) In the case of a child of a member or former member who 
becomes eligible for continued coverage:
    (A) The member or former member may submit to the Department of 
Defense a notice of the child's change in status (including the child's 
name, address, and such other information needed; and
    (B) The Department, within 14 days after receiving such 
information, will inform the child of the child's rights under 10 
U.S.C. 1142.
    (iv) In the case of a former spouse of a member or former member 
who becomes eligible for continued coverage, the Department of Defense 
will notify the individual of eligibility for CHCBP when he or she 
declares the change in marital status to a military personnel office.
    (3) Election of coverage.
    (i) In order to obtain continued coverage, written election by 
eligible beneficiary must be made, within a prescribed time period. In 
the case of a member discharged or released from active duty (or full 
time National Guard duty), whether voluntarily or involuntarily; an 
unremarried spouse of a member or former member; or a child emancipated 
from a member or former member, the written election shall be submitted 
to the Department of Defense before the end of the 60-day period 
beginning on the later of:
    (A) The date of the discharge or release of the member from active 
duty or full-time National Guard duty;
    (B) The date on which the period of transitional health care 
applicable to the member under 10 U.S.C. 1145(a) ends; or
    (C) The date the member receives the notification of eligibility.
    (ii) A member of the armed forces who is eligible for enrollment 
under paragraph (d)(1)(i) of this section may elect self-only or family 
coverage. Family members who may be included in such family coverage 
are the spouse and children of the member.
    (4) Enrollment. Enrollment in the Continued Health Care Benefit 
will be accomplished by submission of an application to a Third Party 
Administrator (TPA). Upon submittal of an application to the Third 
Party Administrator, the enrollee must submit proof of eligibility.
    (i) One of the following types of evidence will validate 
eligibility for care:
    (A) A Defense Enrollment Eligibility Reporting System (DEERS) 
printout which indicates the appropriate sponsor status and the 
sponsor's and dependent's eligibility dates'';
    (B) A copy of a verified and approved DD Form 1172, ``Application 
for Uniformed Services Identification and Privilege Card;'' and
    (C) A front and back copy of a DD Form 1173, ``Uniformed Services 
Identification and Privilege Card'' overstamped ``TA'' for Transition 
Assistance Management Program.
    (5) Period of coverage. Continued Health Care Benefit Program 
coverage may not exceed beyond:
    (i) For a member discharged or released from active duty (or full 
time National Guard duty), whether voluntarily or involuntarily, the 
date which is 18 months after the date the member ceases to be entitled 
to care under 10 U.S.C. 1074(a) and any transitional care under 10 
U.S.C. 1145.
    (ii) In the case of an unmarried dependent child of a member or 
former member, the date which is 36 months after the date on which the 
person first ceases to meet the requirements for being considered an 
unmarried dependent child under 10 U.S.C. 1072(2)(D).
    (iii) In the case of an unremarried former spouse of a member or 
former member, the date which is 36 months after the later of:
    (A) The date on which the final decree of divorce, dissolution, or 
annulment occurs; or
    (B) If applicable, the date the one-year extension of dependency 
under 10 U.S.C. 1072(2)(H) expires.
    (iv) For the beneficiary who become eligible for Continued Health 
Care Benefit Program by ceasing to meet the requirements for being 
considered an unremarried dependent child of a member or former member, 
health care coverage may not extend beyond the date which is 36 months 
after the date the member becomes ineligible for medical and dental 
care under 10 U.S.C. 1074(a) and any transitional health care under 10 
U.S.C. 1145(a).
    (v) Though beneficiaries have sixty-days (60) to elect coverage 
under the CHCBP, upon enrolling, the period of coverage must begin the 
day after entitlement to a military health care plan (including 
transitional health care under section 1145(a)) ends.
    (e) CHCBP Benefits.
    (1) In general. Except as provided in paragraph (e)(2) of this 
section, the provisions of section 199.4 shall apply to the Continued 
Health Care Benefit Program as they do to CHAMPUS.
    (2) Exceptions. The following provisions of section 199.4 are not 
applicable to the Continued Health Care Benefit Program:
    (i) Paragraph (a)(2) concerning eligibility:
    (ii) All provisions regarding nonavailability statements or 
requirements to use facilities of the uniformed services.
    (3) Beneficiary liability. For purposes of beneficiary liability, 
CHAMPUS deductible and cost sharing requirements, for separating active 
duty members and active duty dependents who lose CHAMPUS eligibility, 
paragraph 199.4(f)(2) applies. For all others, paragraph 199.4(f)(3) 
applies. For catastrophic caps, limits by beneficiary category are the 
same as those established for basic CHAMPUS.
    (f) Authorized providers. The provisions of section 199.6 shall 
apply to the Continued Health Care Benefit Program as they do to 
CHAMPUS.
    (g) Claims submission, review, and payment. The provisions of 
section 199.7 shall apply to the Continued Health Care Benefit program 
as they do CHAMPUS, except that no provisions regarding nonavailability 
statements shall apply.
    (h) Double coverage. The provisions of section 199.8 shall apply to 
the Continued Health Care Benefit Program as they do to CHAMPUS.
    (i) Administrative remedies for fraud, abuse and conflict of 
interest. The provisions of section 199.9 shall apply to the Continued 
Health Care Benefit Program as they do to CHAMPUS.
    (j) Appeal and hearing procedures. The provisions of section 199.10 
shall apply to the Continue Health Care Benefit Program as they do to 
CHAMPUS.
    (k) Overpayment recovery. The provisions of section 199.11 shall 
apply to the Continued Health Care Benefit Program as they do to 
CHAMPUS.
    (l) Third Party recoveries. The provisions of section 199.12 shall 
apply to the Continued Health Care Benefit Program as they do to 
CHAMPUS.
    (m) Provider reimbursement methods. The provisions of section 
199.14 shall apply to the continued Health Care Benefit Program as they 
do to CHAMPUS.
    (n) Peer Review Organization Program. The provisions of section 
199.15 shall apply to the Continued Health Care Benefit Program as they 
do to CHAMPUS.
    (o) Preferred provider organization programs available. Any 
preferred provider organization program under this part that provides 
for reduced cost sharing for using designated providers, such as the 
``TRICARE Extra'' option under section 199.17, shall be available to 
participants in the Continued Health Care Benefit Program as it is to 
CHAMPUS beneficiaries.
    (p) Special programs not applicable.
    (1) In general. Special programs established under this Part that 
are not part of the basic CHAMPUS program established pursuant to 10 
U.S.C. 1079 and 1086 are not, unless specifically provided in this 
section, available to participants in the Continued Health Care Benefit 
Program.
    (2) Examples. The special programs referred to in paragraph (p)(1) 
of this section include:
    (i) The Program for the Handicapped under section 199.5;
    (ii) The Active Duty Dependents Dental Plan under section 199.13;
    (iii) The Supplemental Health Care Program for active duty members 
under section 199.16;
    (iv) The TRICARE Enrollment Program under section 199.17, except 
for TRICARE Extra program under that section; and
    (v) The special programs for civilian sector services in lieu of 
military hospital services under section 199.19.
    (3) Exemptions to the restriction. In addition to the provision to 
make TRICARE Extra available to CHCBP beneficiaries, the following two 
demonstration projects are also available to CHCBP enrollees:
    (i) Home Health Care Demonstration; and
    (ii) Home Health Care-Case Management Demonstration.
    (q) Premiums.
    (1) Rates. Premium rates will be established by the Assistant 
Secretary of Defense (Health Affairs) for two rate groups--individual 
and family. Eligible beneficiaries will select the level of coverage 
they require and pay the appropriate premium payment. The rates shall 
be based on Federal Employee Health Benefit Program employee and agency 
contributions which would be required for a comparable health benefits 
plan, plus an administrative fee. The administrative fee, not to exceed 
ten percent of the basic premium amount, shall be determined based on 
actual expected administrative costs for administration of the program. 
Premiums may be revised annually and shall be published annually for 
each fiscal year. Premiums will be paid by enrollees quarterly.
    (2) Effects of failure to make premium payments. Failure by 
enrollees to submit timely and proper premium payments will result in 
denial of continued enrollment and denial of payment of medical claims. 
Premium payments which are late 30 days or more past the start of the 
quarter for which payment is due will result in the ending of 
beneficiary enrollment. Beneficiaries denied continued enrollment due 
to lack of premium payments will not be allowed to reenroll. In such a 
case, benefit coverage will cease at the end of the ninety day (90) 
period for which a premium payment was received. Enrollees will be held 
liable for medical claims costs in this instance.
    (r) Transitional provisions. The Department of Defense shall 
provide for a period of enrollment for members and former member of the 
uniformed services for whom the availability of transitional health 
care under 10 U.S.C. 1145(a) expires before the October 1, 1994, 
implementation of the Continued Health Care Benefit Program.
    (1) Enrollment in the U.S. VIP program will continue up to October 
1, 1994. Policies written prior to October 1, 1994, will remain in 
effect until the end of the policy life.
    (2) After the October 1, 1994, implementation of the Continued 
Health Care Benefit Program, beneficiaries who enrolled in the U.S. VIP 
program prior to October 1, 1994, may elect to cancel their U.S. VIP 
policy and enroll in the CHCBP.
    (s) Procedures. The Director, OCHAMPUS, may establish other rules 
and procedures for the administration of the Continued Health Care 
Benefits Program.

    Dated: March 31, 1994.
L.M. Bynum,
Alternative OSD Federal Register Liaison Officer, Department of 
Defense.
[FR Doc. 94-8113 Filed 4-5-94; 8:45 am]
BILLING CODE 5000-04-M