[Federal Register Volume 59, Number 189 (Friday, September 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24289]


[[Page Unknown]]

[Federal Register: September 30, 1994]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Parts 104 and 199

RIN 0720-AA24
[DoD 6010.8-R]

 

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

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: This final rule establishes a Continued Health Care Benefit 
Program (CHCBP) for certain DoD and other Uniformed Services health 
care beneficiaries who lose eligibility for health care in the Military 
Health Services System (MHSS). It also provides for use of the CHAMPUS 
benefit structure and CHAMPUS rules and outlines procedures for the 
CHCBP.

EFFECTIVE DATES: October 1, 1994.

ADDRESSES: Office of the Civilian Health and Medical Program of the 
Uniformed Services (OCHAMPUS), Program Development Branch; 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:

1. Overview of the Final Rule

    On April 6, 1994, an interim final rule regarding benefits and 
operational issues associated with implementation of the Continued 
Health Care Benefit Program (CHCBP) was published (59 FR 16136).
    The 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 
the Department of Defense, comparable to the health benefits provided 
for former civilian employees of the Federal government.
    Congress also directed that the program start by October 1, 1994, 
and replace the conversion health care programs authorized in 10 U.S.C. 
1086a and 1145(b). Conversion health care is provided via a DoD 
contract with Mutual of Omaha and is scheduled to end September 30, 
1994.
    The statute 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 Department of Defense 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 elected 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 System (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 Advisor (HBA).
    Congressional legislation caps premiums at a level equal to that of 
a comparable mid-range Health Maintenance Organization (HMO) program 
offered in the FEHBP. These premium rates were determined by category 
plan--either self or family and are not age/sex adjusted. (Similar to 
FEHBP premium schedules). Quarterly premium rates for fiscal year 1995 
will be: $410 for self and $891 for family.
    Following is a discussion of the comments we received regarding the 
Continued Health Care Benefit Program, and the action we are taking in 
response.

1. Quarterly Premium Rates

    Interim Final Rule. The interim final rule states that the 
Department has contracted with a private sector actuarial firm to help 
develop premium rates.
    Comment 1A. An organization has requested that the estimated rates 
be updated with the actual rates to be charged once they have been 
calculated.
    Response. The following will be the FY95 quarterly premium rates 
for the CHCBP. Self--$410; Family--$891.

2. Transitional Health Care Coverage

    Interim Final Rule. The interim final rule states the medical 
coverage for the Continued Health Care Benefit Program (CHCBP) will be 
offered via the Civilian Health and Medical Program of the Uniformed 
Services (CHAMPUS).
    Comment 2A. An organization of the military coalition has 
recommended that DoD offer transitional health benefits coverage 
through the Federal Employees Health Benefit Program (FEHBP), not 
CHAMPUS.
    Response. The Department requested the Office of Personnel 
Management (OPM) consider granting CHCBP beneficiaries authority to 
select health care from their list of FEHBP programs or to make CHCBP 
an FEHBP program. OPM opposed this request. Additionally, the 
requirement to cover preexisting conditions for new enrollees would 
make FEHBP private insurers unlikely to enroll CHCBP beneficiaries. 
Therefore, standard CHAMPUS was considered the most feasible means of 
ensuring entitled care.
    On January 19, 1988, (53 FR 1343), the Department of Defense 
published a rule, ``Voluntary Private Health Insurance Conversion 
Program.'' This subject has been incorporated into 32 CFR part 199, 
section 199.20. Therefore, 32 CFR part 104 is removed.

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 final 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. 
OMB has granted conditional approval based on their intention of 
reviewing the Application Form upon its completion.

List of Subjects in 32 CFR Parts 104 and 199

    Claims, handicapped, health insurance, and military personnel.

    Accordingly, by the authority of 10 U.S.C. 301, 32 CFR Part 104 is 
removed and Part 199 is amended as follows:

PART 104--[REMOVED]

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 199.20 is revised 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 the Department of 
Defense and the other Uniformed Services (e.g., NOAA, PHS, and the 
Coast Guard) health care 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 exclude, the general provisions of section 199.1 shall 
apply to the CHCBP 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 CHCBP, 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 
CHCBP is open to the following individuals:
    (i) Members of Uniformed Services, 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) Effective date. Except for the special transitional provisions 
in paragraph (r) of this section, eligibility in the CHCBP is limited 
to individuals who lost their entitlement to regular military health 
services system benefits on or after October 1, 1994.
    (3) Notification of eligibility. (i) The Department of Defense and 
the other Uniformed Services (National Oceanic and Atmospheric 
Administration (NOAA), Public Health Service (PHS), Coast Guard) will 
notify persons eligible to receive health benefits under the CHCBP.
    (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 pre-separation 
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 Third Party 
Administrator a notice of the child's change in status (including the 
child's name, address, and such other information needed); and
    (B) The Third Party Administrator, 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 Third Party 
Administrator will notify the individual of eligibility for CHCBP when 
he or she declares the change in marital status to a military personnel 
office.
    (4) 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 Third Party 
Administrator 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;
    (C) In the case of an unremarried former spouse of a member or 
former member, the date the one-year extension of dependency under 10 
U.S.C. 1072(2)(H) expires; or
    (D) 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.
    (5) Enrollment. Enrollment in the Continued Health Care Benefit 
Program 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. One of the following types of evidence will validate 
eligibility for care:
    (i) A Defense Enrollment Eligibility Reporting System (DEERS) 
printout which indicates the appropriate sponsor status and the 
sponsor's and dependent's eligibility dates;
    (ii) A copy of a verified and approved DD Form 1172, ``Application 
for Uniformed Services Identification and Privilege Card'';
    (iii) A front and back copy of a DD Form 1173, ``Uniformed Services 
Identification and Privilege Card'' overstamped ``TA'' for Transition 
Assistance Management Program; or
    (iv) A copy of a DD Form 214--``Certificate of Release or Discharge 
from Active Duty''.
    (6) Period of coverage. CHCBP coverage may not extend 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) In the case of an unremarried former spouse of a member or 
former member, whose divorce occurred prior to the end of transitional 
coverage, the period of coverage under the CHCBP is unlimited, if:
    (A) Has not remarried before the age of 55; and
    (B) Was enrolled in the CHCBP as the dependent of an involuntarily 
separated member during the 18-month period before the date of the 
divorce, dissolution, or annulment; and
    (C) Is receiving a portion of the retired or retainer pay of a 
member or former member or an annuity based on the retainer pay of the 
member; or
    (D) Has a court order for payment of any portion of the retired or 
retainer pay; or
    (E) Has a written agreement (whether voluntary or pursuant to a 
court order) which provides for an election by the member or former 
member to provide an annuity to the former spouse.
    (v) For the beneficiary who becomes eligible for the Continued 
Health Care Benefit Program by ceasing to meet the requirements for 
being considered an unmarried 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).
    (vi) 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 10 U.S.C. 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 CHCBP as they do to CHAMPUS.
    (2) Exceptions. The following provisions of section 199.4 are not 
applicable to the CHCBP:
    (i) Paragraph (a)(2) of this section concerning eligibility:
    (ii) All provisions regarding nonavailability statements or 
requirements to use facilities of the Uniformed Services.
    (3) Beneficiary liability. For purposes of CHAMPUS deductible and 
cost sharing requirements and catastrophic cap limits, amounts 
applicable to the categories of beneficiaries to which the CHCBP 
enrollee last belonged shall continue to apply, except that for 
separating active duty members, amounts applicable to dependents of 
active duty members shall apply.
    (f) Authorized providers. The provisions of section 199.6 shall 
apply to the CHCBP as they do to CHAMPUS.
    (g) Claims submission, review, and payment. The provisions of 
section 199.7 shall apply to the CHCBP as they do to CHAMPUS, except 
that no provisions regarding nonavailability statements shall apply.
    (h) Double coverage. The provisions of section 199.8 shall apply to 
the CHCBP as they do to CHAMPUS.
    (i) Fraud, abuse, and conflict of interest. Administrative remedies 
for fraud, abuse and conflict of interest. The provisions of section 
199.9 shall apply to the CHCBP as they do to CHAMPUS.
    (j) Appeal and hearing procedures. The provisions of section 199.10 
shall apply to the CHCBP as they do to CHAMPUS.
    (k) Overpayment recovery. The provisions of section 199.11 shall 
apply to the CHCBP as they do to CHAMPUS.
    (l) Third Party recoveries. The provisions of section 199.12 shall 
apply to the CHCBP as they do to CHAMPUS.
    (m) Provider reimbursement methods. The provisions of section 
199.14 shall apply to the CHCBP as they do to CHAMPUS.
    (n) Peer Review Organization Program. The provisions of section 
199.15 shall apply to the CHCBP 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 CHCBP 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 CHCBP.
    (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 under section 199.16; 
and
    (iv) The TRICARE Enrollment Program under section 199.17, except 
for TRICARE Extra program under that section.
    (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 at the time of initial enrollment (either 
individual or family) and pay the appropriate premium payment. The 
rates are based on Federal Employee Health Benefit Program employee and 
agency contributions 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 costs incurred after losing eligibility.
    (r) Transitional provisions. (1) There will be a sixty-day period 
of enrollment for all eligible beneficiaries (outlined in paragraph 
(d)(1) of this section) whose entitlement to regular military health 
services system coverage ended on or after August 2, 1994, but prior to 
the CHCBP implementation on October 1, 1994.
    (2) Enrollment in the U.S. VIP program may continue up to October 
1, 1994. Policies written prior to October 1, 1994, will remain in 
effect until the end of the policy life.
    (3) On or 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.
    (4) With the exception of persons enrolled in the U.S. VIP program 
who may convert to the CHCBP, individuals who lost their entitlement to 
regular military health services system coverage prior to August 2, 
1994, are not eligible for the CHCBP.
    (s) Procedures. The Director, OCHAMPUS, may establish other rules 
and procedures for the administration of the Continued Health Care 
Benefit Program.

    Dated: September 26, 1994.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 94-24289 Filed 9-29-94; 8:45 am]
BILLING CODE 5000-04-M