[Federal Register Volume 60, Number 45 (Wednesday, March 8, 1995)]
[Proposed Rules]
[Pages 12717-12721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5377]



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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DoD 6010.8-R]
RIN-0720-AA27


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); Provider Certification Requirements--Corporate Services 
Provider Class; Occupational Therapists

AGENCY: Office of the Secretary, DoD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule presents requirements to permit payment of 
professional or technical health care services rendered by certain 
corporate providers and to self-employed occupational therapists; makes 
changes to clarify the general requirements for individual professional 
providers; and adds standard provider participation agreement 
provisions when such agreements are otherwise required.

DATES: Comments must be submitted on or before May 8, 1995.

ADDRESSES: Office of CHAMPUS (PDD), Aurora, CO 80045-6900.

FOR FURTHER INFORMATION CONTACT:
Theresa R. Gilstrap, telephone (303) 361-1309.

SUPPLEMENTARY INFORMATION: The Civilian Health and Medical Program of 
the Uniformed Services (CHAMPUS) supplements the availability of health 
care in military hospitals and clinics. Services and items allowable as 
CHAMPUS benefits must be obtained from CHAMPUS authorized civilian 
providers to be considered for CHAMPUS payment. Requirements for 
CHAMPUS provider authorization are published as regulation.
    This amendment proposes to create a fourth class of CHAMPUS 
provider consisting of freestanding corporations and foundations that 
render principally professional ambulatory or in-home care and 
technical diagnostic procedures. Such organizations are currently 
excluded as an allowable type of CHAMPUS-authorized institutional 
provider, and employees of these organizations are excluded as CHAMPUS-
authorized individual professional providers.
    The CHAMPUS currently has requirements for three classes of 
providers. The institutional provider class includes hospitals and 
other categories of similar facilities. The individual professional 
provider class includes physicians and other categories of licensed 
individuals who render professional services independently, and certain 
allied health and extra medical providers that must function under 
physician orders and supervision. The third class of providers consists 
of sellers of items and supplies of an ancillary or supplemental 
nature, such as durable equipment.
    CHAMPUS payment depends upon a service being both allowable as a 
benefit and rendered by a CHAMPUS authorized provider. Consequently, it 
is currently possible that, for example, outpatient treatment by an 
occupational therapist employed by a hospital may be paid (to the 
hospital) while the same service provided by an employee of a 
freestanding clinic, home care agency, or self-employed occupational 
therapist is denied payment.
    This administrative exclusion is difficult for beneficiaries to 
apply when seeking health care services because it requires an 
understanding of the underlying business structure of the provider. But 
the underlying business structure of a provider organization is 
important to CHAMPUS management decisions regarding quality assurance 
and payment methods.
    Corporations, both not-for-profit and shareholder, and foundations 
are an alternative source of ambulatory and in-home care. The proposed 
addition of the corporate provider class will recognize the current 
range of providers within today's health care delivery structure and 
give beneficiaries access to another segment of the health care 
delivery industry.
    This amendment proposes to allow qualified self-employed 
occupational therapists to be authorized for direct CHAMPUS payment for 
allowable services as individual professional providers.
    This amendment proposes to more clearly establish that a 
professional corporation or association is not itself a provider but 
may file claims and receive payment on behalf of an individual 
professional provider member, and to more clearly state the other 
general requirements for these providers.
    This amendment proposes to establish standard general provisions 
for agreements with certain providers when such agreements are 
otherwise required. These provisions will improve 
[[Page 12718]] efficiency in CHAMPUS oversight of providers and will 
limit beneficiary liability related to claims denied due to provider 
noncompliance with CHAMPUS requirements.
    This amendment proposes to remove two provisions which exclude 
CHAMPUS coverage of civilian diagnostic and consultation services 
requested by a Military Treatment Facility (MTF) physician in support 
of continued MTF care of a CHAMPUS-eligible beneficiary. Because MTFs 
vary in size and clinical capacity for the care of CHAMPUS-eligible 
beneficiaries, the lack of access to specialized diagnostic and 
consultation resources through CHAMPUS may result in the MTF purchasing 
the civilian services directly without the advantage of CHAMPUS price 
requirements; the beneficiary paying the total cost of such non-MTF 
services; or the beneficiary choosing to obtain all care in the 
civilian community in order to take advantage of CHAMPUS cost-share of 
all the necessary care. Removal of these exclusions will allow 
flexibility in the implementation of an MTF-based plan-of-care 
resulting in continuity of care at a lower cost to both the beneficiary 
and the government.
    Executive Order 12866. OMB has determined this is not a significant 
rule as defined by Executive Order 12866.
    The Regulatory Flexibility Act of 1980 requires that a federal 
agency prepare an analysis when the agency issues regulations which 
would have significant impact upon a substantial number of small 
entities. An estimated 2,200 occupational therapists in private 
practice; approximately 850 corporate or foundation physician groups; 
and approximately 4,500 freestanding Medicare certified in-home health 
care agencies would become eligible to apply for CHAMPUS provider 
status if this proposed rule is finalized. These changes are expected 
to competitively redistribute ambulatory care benefit costs for already 
existing benefits. We certify that this proposed rule will not have a 
significant economic impact on a substantial number of small entities 
under the criteria of the Regulatory Flexibility Act.
    Paperwork Reduction Act of 1980 requires all Departments to submit 
to the Office of Management and Budget (OMB) for review and approval 
any reporting or record keeping requirements in a proposed or final 
rule. This proposed rule will, if adopted, require information from the 
provider applicant to document that the criteria for CHAMPUS-provider 
status are met.

List of Subjects in 32 CFR Part 199

    Claims, Disability, Handicapped, Health insurance, and Military 
personnel.

PART 199--[AMENDED]

    Accordingly, 32 CFR part 199 is amended as follows:
    1. The authority citation for part 199 is proposed to be to revised 
to read as follows:

    Authority:  5 U.S.C. 301; 10 U.S.C. chapter 55.

    2. Section 199.2(b) is proposed to be amended by revising the 
definition for ``Participating provider,'' and by adding definitions 
for ``Corporate services provider,'' ``Economic interest,'' and 
``Qualified accreditation organization'' in alphabetical order to read 
as follows:


Sec. 199.2  Definitions.

(b) * * *
    Corporate services provider. A health care provider which meets the 
applicable requirements established by Sec. 199.6(e).
* * * * *
    Economic interest. (i) Any right, title, or share in the income, 
remuneration, payment, or profit of a CHAMPUS-authorized provider, or 
of an individual or entity eligible to be a CHAMPUS-authorized 
provider, resulting, directly or indirectly, from a referral 
relationship; or any direct or indirect ownership, right, title, or 
share, including a mortgage, deed of trust, note, or other obligation 
secured (in whole or in part) by one entity for another entity in a 
referral or accreditation relationship, which is equal to or exceeds 5 
percent of the total property and assets of the other entity.
    (ii) A referral relationship exists when a CHAMPUS beneficiary is 
sent, directed, assigned or influenced to use a specific CHAMPUS-
authorized provider, or a specific individual or entity eligible to be 
a CHAMPUS-authorized provider.
    (iii) An accreditation relationship exists when a CHAMPUS-approved 
accreditation organization evaluates for accreditation an entity that 
is an applicant for, or recipient of, CHAMPUS-authorized provider 
status.
* * * * *
    Participating provider. A CHAMPUS-authorized provider that is 
required, or has agreed by entering into a CHAMPUS participation 
agreement or by act of indicating ``accept assignment'' on the CHAMPUS 
claim form, to accept the CHAMPUS-allowable amount as the maximum total 
charge for a service or item rendered to a CHAMPUS beneficiary whether 
the amount is paid for fully by the CHAMPUS or requires cost-sharing by 
the CHAMPUS beneficiary.
* * * * *
    Qualified accreditation organization. A not-for-profit corporation 
or a foundation that:
    (i) Develops process standards and outcome standards for health 
care delivery programs, or knowledge standards and skill standards for 
health care professional certification testing, using experts both from 
within and outside of the health care program area or individual 
speciality to which the standards are to be applied;
    (ii) Creates measurable criteria that demonstrate compliance with 
each standard;
    (iii) Publishes the organization's standards, criteria and 
evaluation processes so that they are available to the general public;
    (iv) Performs on-site evaluations of health care delivery programs, 
or provides testing of individuals, to measure the extent of compliance 
with each standard;
    (v) Provides on-site evaluations or individual testing on a 
national or international basis;
    (vi) Provides to evaluated programs and tested individuals time-
limited written certification of compliance with the organization's 
standards;
    (vii) Excludes certification of any program operated by an 
organization which has an economic interest, as defined by Sec. 199.2, 
in the accreditation organization or in which the accreditation 
organization has an economic interest;
    (viii) Publishes promptly the certification outcome of each program 
evaluation or individual test so that it is available to the general 
public; and
    (ix) Has been found by the Director to apply standards, criteria, 
and certification processes which reinforce CHAMPUS provider 
authorization requirements and promote efficient delivery of CHAMPUS 
benefits.
* * * * *
    3. Section 199.4 is proposed to be amended by revising paragraph 
(c)(3)(x) and by removing and reserving (g)(70) and (g)(71) to read as 
follows:


Sec. 199.4  Basic program benefits.

 * * * * *
    (c) * * *
    (3) * * *
    (x) Physical and occupational therapy. Assessment and treatment 
services of a CHAMPUS-authorized physical or occupational therapist may 
be cost-shared when: [[Page 12719]] 
    (A) The services are prescribed and monitored by a physician;
    (B) The purpose of the prescription is to reduce the disabling 
effects of an illness, injury, or neuromuscular disorder; and
    (C) The prescribed treatment increases, stabilizes, or slows the 
deterioration of, the beneficiary's ability to perform specified 
purposeful activity in the manner, or within the range considered 
normal, for a human being.
 * * * * *
    (g) Exclusions and limitations
    (70)-(71)[Reserved]
 * * * * *
    4. Section 199.6 is proposed to be amended by adding new paragraphs 
(a)(13) and (a)(14); removing paragraph (b)(1)(ii); revising paragraphs 
(a)(8), (c)(1), (c)(2) and (c)(3)(iii)(I)(3), redesignating paragraph 
(e) as (a)(15) and paragraph (f) as (a)(16) and by adding a new 
paragraph (e) to read as follows:


Sec. 199.6  Authorized providers.

 * * * * *
    (a) * * *
    (8) Participating providers. A CHAMPUS-authorized provider is a 
participating provider, as defined in Sec. 199.2, under the following 
circumstances:
    (i) Mandatory participation.
    (A) All medicare-participating hospitals must be CHAMPUS 
participating providers for all inpatient CHAMPUS claims.
    (B) Hospitals that are not Medicare-participating but are subject 
to the CHAMPUS-DRG-based payment methodology or the CHAMPUS mental 
health payment methodology as established by Sec. 199.14(a), must enter 
into a participating agreement with the CHAMPUS for all inpatient 
claims in order to be a CHAMPUS-authorized provider.
    (C) Corporate services providers authorized as CHAMPUS providers 
under the provisions of paragraph (e) of this section.
    (ii) Voluntary participation.
    (A) Total claims participation: The participating provider program. 
A CHAMPUS-authorized provider that is not required to participate by 
this part may become a participating provider by entering into an 
agreement or memorandum of understanding (MOU) with the Director, 
OCHAMPUS, which includes, but is not limited to, the provisions of 
paragraph (a)(14) of this section. The Director, OCHAMPUS, may include 
in a participating provider agreement/MOU provisions that establish 
between OCHAMPUS and a class, category, type, or specific provider, 
uniform procedures and conditions which encourage provider 
participation while improving beneficiary access to benfits and 
contributing to CHAMPUS efficiency. Such provisions shall be otherwise 
allowed by this part or by DoD Directive or DoD Instruction. 
Participating provider program provisions may be incorporated into an 
agreement/MOU to establish a specific CHAMPUS-provider relationship, 
such as a preferred provider arrangement.
    (B) Claim-specific participation. A CHAMPUS-authorized provider 
that is not required to participate and that has not entered into a 
participation agreement pursuant to paragraph (a)(8)(ii)(A) of this 
section may elect to be a participating provider on a claim-by-claim 
basis by indicating ``accept assignment'' on each CHAMPUS claim form 
for which participation is elected.
 * * * * *
    (13) Medical records: CHAMPUS-authorized provider organizations and 
individuals providing clinical services shall maintain adequate 
clinical records to substantiate that specific care was actually 
furnished, was medically necessary, and appropriate, and identify(ies) 
the individual(s) who provided the care. This applies whether the care 
is inpatient or outpatient. The minimum requirements for medical record 
documentation are set forth by all of the following:
    (i) The cognizant state licensing authority;
    (ii) The Joint Commission on Accreditation of Healthcare 
Organizations, or the appropriate Qualified Accreditation Organization 
as defined in Sec. 199.2;
    (iii) Standards of practice established by national medical 
organizations; and
    (iv) This part.
    (14) Participation agreements. Except for agreements in effect on 
September 30, 1994, a participation agreement otherwise required by 
this part shall include, in part, all of the following provisions 
requiring that the provider shall:
    (i) Not charge a beneficiary for the following:
    (A) Services for which the provider is entitled to payment from 
CHAMPUS;
    (B) Services for which the beneficiary would be entitled to have 
CHAMPUS payment made had the provider complied with certain procedural 
requirements;
    (C) Services not medically necessary and appropriate for the 
clinical management of the presenting illness, injury, disorder or 
maternity;
    (D) Services for which a beneficiary would be entitled to payment 
but for a reduction or denial in payment as a result of quality review; 
and
    (E) Services rendered during a period in which the provider was not 
in compliance with one or more conditions of authorization;
    (ii) Comply with the applicable provisions of this part and related 
CHAMPUS administrative policy;
    (iii) Accept the CHAMPUS determined allowable payment combined with 
the cost-share, deductible, and other health insurance amounts payable 
by, or on behalf of, the beneficiary, as full payment for CHAMPUS 
allowed services;
    (iv) Collect from the CHAMPUS beneficiary those amounts that the 
beneficiary has a liability to pay for the CHAMPUS deductible and cost-
share;
    (v) Permit accessed by the Director to the clinical record of any 
CHAMPUS beneficiary, to the financial and organizational records of the 
provider, and to reports of evaluations and inspections conducted by 
state of private agencies or organizations;
    (vi) Provide to the Director prompt written notification of the 
provider's employment of an individual who, at any time during the 
twelve months preceding such employment, was employed in a managerial, 
accounting, auditing, or similar capacity by an agency or organization 
which is responsible, directly or indirectly for decisions regarding 
Department of Defense payments to the provider;
    (vii) Cooperate fully with a designated utilization and clinical 
quality management organization which has a contract with the 
Department of Defense for the geographic area in which the provider 
renders services;
    (viii) Obtain written authorization before rendering designated 
services or items for which CHAMPUS cost-share may be expected;
    (ix) Maintain clinical and other records related to individuals for 
whom CHAMPUS payment was made for services rendered by the provider, or 
otherwise under arrangement, for a period of 60 months from the date of 
service;
    (x) Maintain contemporaneous clinical records that substantiate the 
clinical rationale for each course of treatment, the methods, 
modalities or means of treatment, periodic evaluation of the efficacy 
of treatment, and the outcome at completion or discontinuation of 
treatment;
    (xi) Refer CHAMPUS beneficiaries only to providers with which the 
referring provider does not have an [[Page 12720]] economic interest, 
as defined in Sec. 199.2; and
    (xii) Limit services furnished under arrangement to those for which 
receipt of payment by the CHAMPUS authorized provider discharges the 
payment liability of the beneficiary.
* * * * *
    (c) Individual professional providers of care.
    (1) General.
    (i) Purpose. This individual professional provider class is 
established to accommodate individuals who are recognized by 10 U.S.C. 
1079(a) as authorized to assess or diagnose illness, injury, or bodily 
malfunction as a prerequisite for CHAMPUS cost-share of otherwise 
allowable related preventive or treatment services or supplies, and to 
accommodate such other qualified individuals who the Director may 
authorize to render otherwise allowable services essential to the 
efficient implementation of a plan-of-care established and managed by a 
10 U.S.C. 1079(a) authorized professional.
    (ii) Professional corporation affiliation or association membership 
permitted. Paragraph (c) of this section applies to those individual 
health care professionals who have formed a professional corporation or 
association pursuant to applicable state laws. Such a professional 
corporation or association may file claims on behalf of a CHAMPUS-
authorized individual professional provider and be the payee for any 
payment resulting from such claims when the CHAMPUS-authorized 
individual certifies to the Director in writing that the professional 
corporation or association is acting on the authorized individual's 
behalf.
    (iii) Scope of practice limitation. For CHAMPUS cost-sharing to be 
authorized, otherwise allowable services provided by a CHAMPUS-
authorized individual professional provider shall be within the scope 
of the individual's license as regulated by the applicable state 
practice act of the state where the individual rendered the service to 
the CHAMPUS beneficiary or shall be within the scope of the test which 
was the basis for the individual's qualifying certification.
    (iv) Employee status exclusion. An individual employed, directly, 
or indirectly by contract, by an individual or entity to render 
professional services otherwise allowable by this part is excluded from 
provider status as established by paragraph (c) of this section for the 
duration of such employment.
    (v) Training status exclusion. Individual health care professionals 
who are allowed to render health care services only under direct and 
ongoing supervision as training to be credited towards earning a 
clinical academic degree or other clinical credential required for the 
individual to practice independently are excluded from provider status 
as established by paragraph (c) of this section for the duration of 
such training.
    (2) Conditions of authorization.
    (i) Professional license requirement. The individual must be 
currently licensed to render professional health care services in each 
state in which the individual renders services to CHAMPUS 
beneficiaries. Such license is required when a specific state provides, 
but does not require, license for a specific category of individual 
professional provider. The license must be at a full clinical practice 
level to meet this requirement. A temporary license at the full 
clinical practice level is acceptable.
    (ii) Professional certification requirement. When a state does not 
license a specific category of individual professional certification by 
a Qualified Accreditation Organization, as defined in Sec. 199.2 of 
this part is required. Certification must be at the full clinical 
practice level. A temporary certification at the full clinical practice 
level is acceptable.
    (ii) Education, training, and experience requirement. The director 
may establish for each category or type of provider allowed by 
paragraph (c) of this section specific education, training, and 
experience requirements as necessary to promote the delivery of 
services by fully qualified individuals.
    (iv) Physician referral and supervision. When physician referral 
and supervision is a prerequisite for CHAMPUS cost-sharing of the 
services of a provider authorized under paragraph (c) of this section, 
such referral and supervision means that the physician must actually 
see the patient to evaluate and diagnose the condition to be treated 
prior to referring the beneficiary to another provider and that the 
referring physician provides ongoing oversight of the course of 
referral related treatment throughout the period during which the 
beneficiary is being treated in response to the referral. Written 
contemporaneous documentation of the referring physician's basis for 
referral, and of ongoing communication between the referring and 
treating provider regarding the oversight of the treatment rendered as 
a result of the referral must meet all requirements for medical records 
established by this part. Referring physician supervision does not 
require physical location on the premises of the treating provider or 
at the site of treatment.
    (3) * * *
    (iii) * * *
    (I) * * *
    (3) Licensed registered physical therapists and occupational 
therapists.
* * * * *
    (e) Corporate services providers.
    (1) General.
    (1) This corporate services provider class is established to 
accommodate individuals who would meet the criteria for status as a 
CHAMPUS authorized individual professional provider as established by 
paragraph (c) of this section but for the fact that they are employed 
directly or contractually by a corporation or foundation that provides 
principally professional services which are within the scope of the 
CHAMPUS benefit.
    (ii) Payment for otherwise allowable services may be made to a 
CHAMPUS-authorized corporate services provider subject to the 
applicable requirements, exclusions and limitations of this part.
    (iii) The Director may create discrete types within any allowable 
category of provider established by paragraph (e) of this section to 
improve the efficiency of CHAMPUS management.
    (iv) The Director may require, as a condition of authorization, 
that a specific category or type of provider established by paragraph 
(e) of this section:
    (A) Maintain certain accreditation in addition to or in lieu of the 
requirements of paragraph (e)(2)(v) of this section;
    (B) Cooperate fully with a designated utilization and clinical 
quality management organization which has a contract with the 
Department of Defense for the geographic area in which the provider 
does business;
    (C) Render services for which direct or indirect payment is 
expected to be made by the CHMPUS only after obtaining CHAMPUS written 
authorization; and
    (D) Maintain Medicare approval for payment when the Director 
determines that a category, or type, of provider established by 
paragraph (e) of this section is substantially comparable to a provider 
or supplier for which Medicare has regulatory conditions of 
participation or conditions of coverage;
    (v) Otherwise allowable services may be rendered at the authorized 
corporate services provider's place of business, or in the 
beneficiary's home under such circumstances as the Director determines 
to be necessary for the efficient delivery of such in-home 
services. [[Page 12721]] 
    (vi) The Director may limit the term of a participation agreement 
for any category or type of provider established by paragraph (e) of 
this section.
    (vii) Corporate services providers shall be assigned to only one of 
the following allowable categories based upon the predominate type of 
procedure rendered by the organization:
    (A) Medical treatment procedures;
    (B) Surgical treatment procedures;
    (C) Maternity management procedures;
    (D) Rehabilitation and/or habilitation procedures; or
    (E) Diagnostic technical procedures.
    (viii) The Director shall determine the appropriate procedural 
category of a qualified organization and may change the category based 
upon the provider's CHAMPUS claim characteristics. The category 
determination of the Director is conclusive and may not be appealed.
    (2) Conditions of authorization. An applicant must meet the 
following conditions to be eligible for authorization as a CHAMPUS 
corporate services provider:
    (i) Be a corporation or a foundation, but not a professional 
corporation or professional association, and
    (ii) be institution-affiliated or freestanding as defined in 
Sec. 199.2 and
    (iii) Provide:
    (A) Services and related supplies of a type rendered by CHAMPUS 
individual professional providers or diagnostic technical services and 
related supplies of a type which requires direct patient contact and a 
technologist who is licensed by the state in which the procedure is 
rendered for who is certified by a Qualified Accreditation Organization 
as defined in Sec. 199.2 and
    (B) A level of care which does not necessitate that the beneficiary 
be provided with on-site sleeping accommodations and food in 
conjunction with the delivery of services and
    (iv) Complies with all applicable organizational and individual 
licensing or certification requirements that are extant in the state, 
county, municipality, or other political jurisdiction in which the 
provider renders services and
    (v) Be approved for Medicare payment when determined to be 
substantially comparable under the provisions of paragraph 
(e)(1)(iv)(D) of this section or, when Medicare approved status is not 
required, be accredited by a qualified accreditation organization, as 
defined in Sec. 199.2 and
    (vi) Has entered into a participation agreement approved by the 
Director which at least complies with the minimum participation 
agreement requirements of this section.
    (3) Transfer of participation agreement. In order to provide 
continuity of care for beneficiaries when there is a change of provider 
ownership, the provider agreement is automatically assigned to the new 
owner, subject to all the terms and conditions under which the original 
agreement was made.
    (i) The merger of the provider corporation or foundation into 
another corporation or foundation, or the consolidation of two or more 
corporations or foundations, resulting in the creation of a new 
corporation or foundation constitutes a change of ownership.
    (ii) Transfer of corporate stock or the merger of another 
corporation or foundation into the provider corporation or foundation 
does not constitute change of ownership.
    (iii) The surviving corporation or foundation shall notify the 
Director in writing of the change of ownership promptly after the 
effective date of the transfer or change in ownership.
    (4) Pricing and payment methodology. The pricing and payment of 
procedures rendered by a provider authorized under paragraph (e) of 
this section shall be limited to those methods for pricing and payment 
allowed by this part which the Director determines contribute to the 
efficient management of the CHAMPUS.
    (5) Termination of participation agreement. A provider may 
terminate a participation agreement upon 45 days written notice to the 
Director and to the public.

    Dated: March 1, 1995.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 95-5377 Filed 3-7-95; 8:45 am]
BILLING CODE 5000-04-M