[Federal Register Volume 61, Number 3 (Thursday, January 4, 1996)]
[Proposed Rules]
[Pages 339-342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-65]



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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DoD 6010.8-R]


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); Individual Case Management

AGENCY: Office of the Secretary, DoD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule implements provisions of the 1993 National 
Defense Authorization Act which allows the Secretary of Defense to 
establish a case management program for CHAMPUS beneficiaries with 
extraordinary medical or psychological disorders and to allow such 
beneficiaries medical or psychological services, supplies, or durable 
medical equipment excluded by law or regulation as a CHAMPUS benefit. 
Under this program, waiver of benefit limits to the Basic CHAMPUS 
program may be authorized for beneficiaries when the provision of such 
services or supplies is cost effective and clinically appropriate, as 
compared to historical or projected CHAMPUS/MTF utilization of health 
care services. It is designed to develop a cost-effective plan of care 
by targeting appropriate resources to meet the individual needs of the 
beneficiary.

DATES: Written public comments must be received on or before March 4, 
1996.

FOR FURTHER INFORMATION CONTACT:
CAPT Deborah Kamin, Office of the Assistant Secretary of Defense 
(Health Affairs), (703)-697-8975.

SUPPLEMENTARY INFORMATION: The Civilian Health and Medical Program of 
the Uniformed Services (CHAMPUS) supplements the availability of health 
care in military hospitals and clinics. Case management centering on a 
multidisciplinary treatment approach offers the beneficiary and 
provider assurance that specific services and supplies are allowable as 
CHAMPUS benefits and provides an opportunity to use those benefits 
efficiently.

Statutory Authority

    The case management program is based on the authority of 10 U.S.C. 
1079(a)(17), which provides:

    The Secretary of Defense may establish a program for the 
individual case management of a person covered by this section or 
section 1086 of this title who has extraordinary medical or 
psychological disorders and, under such a program, may waive benefit 
limitations contained in paragraphs (5) and (13) of this subsection 
or section 1077(b)(1) of this title and authorize the payment for 
comprehensive home health care services, supplies, and equipment if 
the Secretary determines that such a waiver is cost effective and 
appropriate.

Case Management

    The CHAMPUS individual case management program seeks to achieve 
cost effective quality health care by considering alternatives to 
inpatient hospitalization and by recommending a waiver of the current 
CHAMPUS benefit limits that, when provided in lieu of inpatient care 
(or to prevent recurrent hospitalizations), are cost effective and 
clinically appropriate. Waivers of benefit limits must be approved and 
coordinated by the case manager and may include, but not be limited to 
services or supplies such as home health care, medical supplies, back-
up durable medical equipment, extended skilled nursing care and home 
health aides. CHAMPUS case managers will be employees or contractors of 
the Department of Defense. We propose to add to section 199.4 
authorization, as a case management related benefit and on a case-by-
case basis, services or supplies that would otherwise be excluded as 
non-medical or duplicate durable 

[[Page 340]]
equipment, custodial care, or domiciliary care. We also propose to add 
definitions for waiver of benefit limits, case management, case 
manager, case management multidisciplinary team, extraordinary 
condition, and primary caregiver.

Eligibility

    A beneficiary's eligibility for participation in the CHAMPUS case 
management program is dependent on: (1) The presence of an 
extraordinary medical or psychological condition which has resulted in 
high utilization of CHAMPUS/MTF resources in an inpatient setting, (2) 
the cost-effectiveness of providing services of supplies outside 
inpatient settings, and (3) the willingness of the beneficiary to 
participate, and (4) the presence of a primary caregiver in the home 
when the services provided include home health care.

Role/Purpose of a Primary Caregiver

    Candidates for this program will require a level of support which 
cannot occur safely outside an inpatient setting unless there is a 
primary caregiver in the home. Therefore, the presence of a primary 
caregiver to provide services is a pre-condition of participation. We 
envision that, in most cases, the role of primary caregiver will fall 
to members of the beneficiary's family.

Covered Services

    A list of services or supplies that may be covered as a waiver of 
benefit limits will not be established. Rather, we propose that, under 
the case management program, clinically appropriate services and/or 
supplies may be provided when those services or supplies are cost 
effective.

Custodial Care

    The provision of custodial care as a waiver of benefit limits is 
proposed as a transitional benefit for patients and families facing 
extraordinary medical or psychological conditions. To qualify for this 
waiver of benefit limits, the following conditions must be met: (1) The 
patient must have been rehospitalized for exacerbations or 
complications of his/her custodial condition on a recurring basis in 
the prior year, (2) The proposed treatment must be cost effective when 
compared to alternative treatment which would otherwise occur, (3) The 
patient's condition at referral for case management is either acute or 
there are indicators of a rapidly approaching acute episode, and (4) 
There must be a primary caregiver.
    We expect individual patients will require varying levels of 
support and time to stabilize in the home environment. We propose a 
maximum of 30 (thirty) days for custodial care under case management. 
However, this rule would allow case managers to extend the period of 
time beyond thirty days when it is considered cost effective to do so.

Prior Authorization

    Prior authorization from case managers will be required before the 
delivery of any case managed benefits. Because eligibility for a waiver 
of benefit limits is based on an indepth assessment of medical needs, 
as well as the cost effectiveness and clinical appropriateness of 
alternate services, any services provided absent prior authorization 
will not be covered by CHAMPUS. Retrospective requests for coverage 
under this program will not be authorized.

Military Health Services System Resource Management

    To ensure cost efficient as well as cost effective use of 
resources, the Department of Defense will include case management 
requirements, as described in this rule, in nationwide managed care 
support contracts now being procured. Managed care support contractors 
will be authorized to make available case management services to 
Military Medical Treatment Facilities. In areas where transition to 
managed care support contracts has not occurred, case management 
services will be provided through existing regional peer review 
organizations (Regional Review Centers, or RRCs). MTFs will be provided 
the opportunity to refer potential candidates to the appropriate 
CHAMPUS case manager. Where possible, Military Medical Treatment 
Facilities will provide care and services or supplies in support of 
regional case management programs.

Beneficiary Acknowledgment

    Case management is a collaborative process among the case manager, 
beneficiary, primary caregiver, and professional health care providers. 
For case management to be successful, the beneficiary and primary 
caregiver must participate in the process and be aware of and agree 
with the requirements of the program. To document the understanding of 
their roles, rights and responsibilities, a standard acknowledgment, 
signed by the beneficiary (or representative) and the primary 
caregiver, will be required prior to the start of case management 
services.

CHAMPUS HHC/HHC-CM Demonstration

    The 1986 Home Health Care and 1988 Home Health Care-Case Management 
Demonstration projects were developed to test whether case management, 
coupled with home health care benefits, could reduce medical costs and 
improve services to CHAMPUS beneficiaries. Under the 1986 
demonstration, case management services were limited to beneficiaries 
who, in the absence of case managed home health care, would have 
remained hospitalized. The 1988 program was less restrictive and no 
longer required case management services only as a substitute for 
continued hospitalization. The effectiveness of methods for identifying 
potentially eligible beneficiaries and establishing the clinical 
appropriateness and cost-effectiveness of services provided was 
addressed by the General Accounting Office (GAO). In their report, 
``DEFENSE HEALTH CARE: Further Testing and Evaluation of Case 
Management Home Care Is Needed,'' the GAO identified a need for 
stronger cost controls and improved targeting of potential candidates 
before implementation of a permanent case management program under 
CHAMPUS. While the GAO identified some weaknesses in both 
demonstrations, the more restrictive design of the 1986 program was 
seen as one which presented an acceptable level of risk to the 
government. With the GAO's recommendations and observations in mind, 
the Department is proposing a CHAMPUS case management program which is 
limited to beneficiaries who would remain hospitalized in the absence 
of such a program, or who have demonstrated a recent history of 
multiple inpatient episodes.

Regulatory Procedures

    Executive Order (EO) 12866 requires that a comprehensive regulatory 
impact analysis be performed on any economically significant regulatory 
action, defined as one which would result in an annual effect of $100 
million or more on the national economy or which would 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 proposed rule is a significant regulatory action under EO 
12866 and has been reviewed by the Office of 

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Management and Budget. In addition, we certify that this proposed rule 
will not significantly affect a substantial number of small entities.

Paperwork Reduction Act

    This rule, as written, imposes no burden as defined by the 
Paperwork Reduction Act of 1995. If however, any program implemented 
under this rule causes such a burden to be imposed, approval therefore 
will be sought of the Office of Management and Budget in accordance 
with the Act, prior to implementation.

List of Subjects in 32 CFR Part 199

    Claims, handicapped, health insurance, and military personnel.

    Accordingly, 32 CFR part 199 is proposed to be amended as follows:

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. chapter 55.

    2. Section 199.2(b) is amended by adding new definitions in 
alphabetical order:


Sec. 199.2  Definitions.

 * * * * *
    Case management. Case management is a collaborative process which 
assesses, plans, implements, coordinates, monitors, and evaluates the 
options and services required to meet an individual's health needs, 
using communication and available resources to promote quality, cost 
effective outcomes.
    Case manager. A licensed register nurse or licensed social worker 
who has a minimum of two (2) years of case management experience.
 * * * * *
    Extraordinary condition. A complex clinical condition which 
resulted, or is expected to result, in inpatient CHAMPUS/MTF costs or 
utilization above a threshold established by the Director, OCHAMPUS, or 
designee.
 * * * * *
    Primary caregiver. An individual who renders to a beneficiary 
services to support the essentials of daily living (as defined in 
Sec. 199.2) and specific services essential to the safe management of 
the beneficiary's condition.
 * * * * *
    Waiver of benefit limits. Coverage, under the Case Management 
Program, of medical care, services, and or equipment not otherwise a 
benefit under the Basis CHAMPUS program.
 * * * * *
    3. Section 199.4 is amended by adding new paragraphs (e)(20) and 
(i) as follows:


Sec. 199.4  Basic program benefits.

 * * * * *
    (e) Special benefit information.
* * * * *
    (20) Case management services. As part of case management for 
beneficiaries with complex medical or psychological conditions, payment 
for services or supplies not otherwise covered by the Basic CHAMPUS 
program may be authorized when they are provided in accordance with 
Sec. 199.4(i). Waiver of benefit limits to the basic CHAMPUS program 
may be cost shared where it is demonstrated that the absence of such 
services would result in the exacerbation of an existing extraordinary 
condition, as defined in Sec. 199.2, to the extent that frequent or 
extensive institutional services are required; and such services are a 
cost effective alternative to the Basic CHAMPUS program.
* * * * *
    (i) Case management program.
    (1) In general. Case management, as it applies to this program, 
provides a collaborative process among the case manager, beneficiary, 
primary caregiver, professional health care providers and funding 
sources to meet the medical needs of an individual with an 
extraordinary condition. It is designed to promote quality and cost-
effective outcomes through assessment, planning, implementing, 
monitoring and evaluating the options and services required. Payment 
for services or supplies not otherwise covered by the basic CHAMPUS 
program may be authorized when they are provided in accordance with 
this paragraph (i). Waiver of benefit limits may be cost-shared where 
it is demonstrated that the absence of such services would result in 
the exacerbation of an existing extraordinary condition, as defined in 
Sec. 199.2, to the extent that frequent or extensive hospitalizations 
are required; and such services are a cost-effective alternative to the 
Basic CHAMPUS program.
    (2) Applicability of case management program. A CHAMPUS eligible 
beneficiary may participate in the case management program if he/she 
has an extraordinary condition which is disabling and requires 
inpatient care at a CHAMPUS-covered level-of-care. The medical or 
psychological condition must also:
    (i) Be contained in the latest revision of the International 
Classification of Diseases Clinical Modification, or the Diagnostic and 
Statistical Manual of Mental Disorders;
    (ii) Meet at least one of the following:
    (A) Demonstrate a prior history of frequent, multiple inpatient 
admissions, generating high CHAMPUS costs in the year immediately 
preceding eligibility for the case management program; or
    (B) Require clinically appropriate services or supplies from 
multiple providers to address an extraordinary condition; and
    (iii) More cost effectively and in a more clinically appropriate 
manner be treated at a less resource intensive level of care.
    (3) Prior authorization required. Services or supplies allowable as 
a benefit exception under this Section shall be cost-shared only when a 
beneficiary's entire treatment has received prior authorization through 
an individual case management program.
    (4) Cost effectiveness requirement. Treatment cost effectiveness 
shall be calculated as the reduction in the cost to the Department of 
Defense for proposed treatment which substitutes individual case 
management services for more expensive care which would have otherwise 
been reimbursed under the basic program. Generally, cost effectiveness 
determinations will involve comparisons between treatments primarily 
using an inpatient setting and those primarily using an outpatient or 
in-home setting. Treatment must meet the requirements of appropriate 
medical care as defined in Sec. 199.2.
    (5) Limited waiver of exclusions and limitations. Limited waivers 
of exclusions and limitations normally applicable to the basic program 
may be granted for specific services or supplies only when a 
beneficiary's entire treatment has received prior authorization through 
the individual case management program described in this paragraph (i). 
The Director, OCHAMPUS may grant a patient-specific waiver of benefit 
limits for services or supplies in the following categories, subject to 
the waiver requirements of this section.
    (i) Durable equipment. The cost of a device or apparatus which does 
not qualify as Durable Medical Equipment (as defined in Sec. 199.2) or 
back-up durable medical equipment may be shared when determined by the 
Director, OCHAMPUS to be cost-effective and clinically appropriate.
    (ii) Custodial Care. The cost of services or supplies rendered to a 
beneficiary that would otherwise be excluded as custodial care (as 
defined in Sec. 199.2) may be cost-shared for a period of 30 (thirty) 
days when determined by 

[[Page 342]]
the Director, OCHAMPUS, to be cost effective and clinically 
appropriate. To qualify for a waiver of benefit limits of custodial 
care, the patient must meet all eligibility requirements of this 
paragraph (i), including an acute condition or an acute exacerbation of 
a chronic condition.
    (A) The patient must have been rehospitalized for exacerbations or 
complications of his/her custodial condition on a recurring basis in 
the prior year;
    (B) The proposed case management treatment must be cost effective 
when compared to alternative treatment which would otherwise occur;
    (C) The patient's condition at referral for case management is 
either acute or there are indicators of a rapidly approaching acute 
episode; and
    (D) There is a primary caregiver.
    (iii) Domiciliary care. The cost of services or supplies rendered 
to a beneficiary that would otherwise be excluded as domiciliary care 
(as defined in Sec. 199.2) may be shared when determined by the 
Director, OCHAMPUS to be cost effective and clinically appropriate.
    (iv) In home services. The cost of the following in-home services 
may be shared when determined by the Director, OCHAMPUS to be cost 
effective and clinically appropriate: nursing care, physical, 
occupational, speech therapy, medical social services, intermittent or 
part-time services of a home health aide, beneficiary transportation 
required for treatment plan implementation, and training for the 
beneficiary and primary caregiver sufficient to allow them to assume 
all feasible responsibility for the care of the beneficiary that will 
facilitate movement of the beneficiary to the least resource-intensive, 
clinically appropriate setting. (Qualifications for home health aides 
shall be based on the standards at 42 CFR 484.36.)
    (v) Waiver of custodial care limits. The Director, OCHAMPUS may, in 
extraordinary cases, waive the custodial care day limits described in 
paragraph (e)(5)(ii) of this section and authorize this exception to 
benefits beyond the 30-day limit. The criteria for waiver of the 30-day 
limit shall be those set in paragraph (e)(5)(ii) of this section. 
Additionally, there must be a specific determination that 
discontinuation of this waiver of benefit limits will result in 
immediate onset or exacerbation of an acute care episode and require 
hospitalization or services or supplies which increase significantly 
the cost and intensity of care.
    (6) Case management acknowledgment. The beneficiary, or 
representative, and the primary caregiver, shall sign a case management 
acknowledgment as a prerequisite to prior authorization of case 
management services. The acknowledgment shall include, in part, all of 
the following provisions:
    (i) The right to participate fully in the development and ongoing 
assessment of the treatment;
    (ii) That all health care services for which CHAMPUS cost sharing 
is sought shall be authorized by the case manager prior to their 
delivery;
    (iii) That there are limitations in scope and duration of the 
planned case management treatment, including provisions to transition 
to other arrangements;
    (iv) The conditions under which case management services are 
provided, including the requirement that the services must be cost 
effective and clinically appropriate; and
    (v) That a beneficiary's participation in the case management 
program shall be discontinued for any of the following reasons:
    (A) The loss of CHAMPUS eligibility;
    (B) A determination that the services or supplies provided are not 
cost effective or clinically appropriate;
    (C) The beneficiary, or representative, and/or primary caregiver, 
terminates participation in writing;
    (D) The beneficiary and/or primary caregiver's failure to comply 
with requirements in this paragraph (i); or
    (E) A determination that the beneficiary's condition no longer 
meets the requirements of participation as described in this paragraph 
(i).
    (7) Other administrative requirements.
    (i) Qualified providers of services or items not covered under the 
basic program, or who are not otherwise eligible for CHAMPUS-authorized 
status, may be authorized for a time-limited period when such 
authorization is essential to implement the planned treatment under 
case management. Such providers must not be excluded or suspended as a 
CHAMPUS provider, and must agree to participate on all claims related 
to the case management treatment.
    (ii) Retrospective requests for authorization of waiver of benefit 
limits will not be considered. Authorization of waiver of benefit 
limits is allowed only after all other options for services or supplies 
have been considered and either appropriately utilized or determined to 
be clinically inappropriate and/or not cost-effective.
    (iii) Experimental or investigational treatment or procedures shall 
not be cost-shared as an exception to standard benefits under this 
part.
    (iv) CHAMPUS case management services may be provided by 
contractors designated by the Director, OCHAMPUS.

    Dated: December 28, 1995.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 96-65 Filed 1-3-96; 8:45 am]
BILLING CODE 5000-04-M