[Federal Register Volume 62, Number 125 (Monday, June 30, 1997)]
[Rules and Regulations]
[Pages 35086-35097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17001]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DoD 6010.8-R]
RIN 0720-AA32


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); Program for Persons with Disabilities; Basic Program

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: This final rule simplifies the administration of benefits 
under the CHAMPUS Program for the Handicapped (PFTH) and changes the 
name of this benefit to Program for Persons with Disabilities (PFPWD); 
adds occupational therapists in independent practice to the list of 
authorized individual professional providers; provides criteria for 
cost-sharing certain procedures when data is transferred electronically 
from the patient's home to a medical practitioner; defines and limits 
plans recognized as supplemental insurance under CHAMPUS; and adopts 
the Federal Claims Collection Act and the Federal Claims Collection 
Standards by reference.

DATES: This rule is effective October 28, 1997, except 
Sec. 199.11(g)(1) which is effective November 15, 1990.

ADDRESSES: Office of the Civilian Health and Medical Program of the 
Uniformed Services (OCHAMPUS), Program Development Branch, Aurora, CO 
80045-6900.

FOR FURTHER INFORMATION CONTACT:
Michael Kottyan, telephone (303) 361-1120.

SUPPLEMENTARY INFORMATION: The CHAMPUS supplements the availability of 
health care resources for Military Health Services System (MHSS) 
beneficiaries. The MHSS consists of military hospitals and the CHAMPUS. 
CHAMPUS consists of basic general medical and surgical benefits, and 
non-medical benefits through the Program for Persons with Disabilities 
(PFPWD).
    A summary of written comments received, the CHAMPUS response, and 
the amendments being made by this final rule follow.

I. Program for Persons With Disabilities (PFPWD)

    On June 10, 1991, a proposed rule was published in the Federal 
Register (56 FR 26635) regarding administrative revisions to the 
CHAMPUS Program for the Handicapped (PFTH), which included renaming 
these benefits the Program for Persons with Disabilities (PFPWD).
    By law, PFPWD benefits are limited to spouses or children with 
diagnosed moderate or severe mental retardation, or serious physical 
disability, who have an active duty Uniformed Service Member sponsor, 
or who are determined to be an abused dependent of certain former 
Members. Unlike the basic benefit, the PFPWD applies a fixed, pay-grade 
based cost-share amount regardless of the amount of expense allowable 
as a benefit (basic benefit beneficiary cost-share is a percentage of 
the allowed amount), has no annual deductible amount, includes certain 
necessary services and items that are not medical in nature, and has a 
$1,000 per month benefit limit for most beneficiaries.
    A distinctive aspect of the PFPWD is the statutory requirement that 
ties eligibility for benefits to the use of public facilities to the 
extent that such facilities are available and adequate to meet a 
specific disability related need.
    CHAMPUS PFPWD benefits do not alter the obligations which Section 
504 of the Rehabilitation Act, as amended, and the Americans with 
Disabilities Act, as amended, places upon CHAMPUS providers, nor are 
CHAMPUS benefits a substitute for special education and related 
services associated with a free appropriate public education which the 
Individuals with Disabilities Education Act, as amended, makes 
available.
    Comment: Two comments noted that this rule should use the type of 
language currently preferred by the disability community. The terms 
``handicap'' and ``the handicapped'' are no longer acceptable. The 
preferred forms are ``disability'' and ``persons with disabilities.''
    Response: We have renamed the Program for the Handicapped (PFTH) 
the Program for Persons with Disabilities (PFPWD). This name change 
recognizes that the term ``handicapped'' presumes an unavoidable 
consequence of illness or injury that unnecessarily discounts the 
capabilities of every CHAMPUS beneficiary with a disability. Editorial 
changes throughout the final rule are responsive to current terminology 
preferences.
    Comment: The statement that PFPWD beneficiaries reside, with few 
exceptions, within Military Treatment Facility catchment areas, and 
that the proposed change will facilitate beneficiary access to needed 
services and items is not true for the other three Uniformed Services 
and could adversely affect the Coast Guard, the Public Health Service, 
and the National Oceanic and Atmospheric Administration.
    Response: We are aware that MHSS beneficiaries with sponsors in 
these Uniformed Services are not usually within a military hospital's 
catchment area. PFPWD eligibility determination, benefit authorization, 
and related support, will continue to be available through the network 
of regional CHAMPUS contractors.
    Comment: A PFPWD qualifying condition is required to be certified 
again at least every 36 months. For certain conditions (i.e. severe 
mental retardation, cerebral palsy with paralysis, muscular dystrophy, 
missing essential body parts, etc.) there will never be a change in 
PFPWD clinical eligibility. A list of conditions which do not require 
frequent certification should be used.
    Response: We have removed the 36 month review requirement. Rather 
than a list, reviews will now be based upon the prognosis for a change 
in the qualifying condition.
    Comment: One comment recommended extending PFPWD benefits to 
retired members because, in many cases, beneficiaries will never lose 
their dependence on the sponsor. Special needs beneficiaries may force 
sponsors to remain on active duty longer than they desire merely to 
remain eligible for PFPWD.
    Response: The limitation of PFPWD benefits to dependents of active 
duty uniformed service members is a requirement of the law that 
authorizes PFPWD benefits.
    Comment: Two comments noted that the provisions for transportation 
should allow movement from one State to another when necessary to 
obtain care.
    Response: We have clarified the transportation exclusion to assure 
that transportation between any of the United States, and certain other 
areas defined as a state by the Regulation, is not excluded.
    Comment: The current edition of the Diagnostic and Statistical 
Manual of Mental Disorders is the Third Edition, Revised; Down Syndrome 
is generally preferred to Down's Syndrome; the phrase ``. . . are 
eligible for payment under a State plan for medical assistance under 
Title XIX of the Social Security Act (Medicaid) . . .'' should be used 
throughout when referring to Medicaid benefits; and Medicaid

[[Page 35087]]

Intermediate Care Facilities are now termed Medicaid Nursing 
Facilities.
    Response: We will specify the most current edition of the 
Diagnostic and Statistical Manual of Mental Disorders in administrative 
instruction. All other technical changes have been incorporated into 
this final rule.
    Comment: The proposed changes appear to place the active duty 
sponsor at a higher financial risk under the PFPWD than those active 
duty sponsors using basic benefits. There is presently a $1,000 
catastrophic cap for basic benefits and the governments would then 
assume a payment obligation of the cost-share over that cap. Any 
additional cost for care under the PFPWD beyond the $1,000/month 
benefit limit remains the responsibility of the active duty sponsor.
    Response: The catastrophic loss protection provision of law does 
not allow PFPWD cost-share amounts, or amounts in excess of the $1,000/
month PFPWD benefit limit paid by a beneficiary, to be counted toward 
the catastrophic loss active duty family threshold of $1,000/fiscal 
year. Only basic benefit deductible and cost-share amounts can be 
applied to this threshold. PFPWD beneficiaries obtain most of their 
medical care as a basic benefit. These changes to the PFPWD provide the 
active duty sponsor with more control over financial risk by allowing a 
choice between PFPWD or basic benefits where no choice previously 
existed. PFPWD allowable services and items which are excluded as basic 
benefits include institutional care for protective custody or training, 
training, special education, nonmedical equipment, transportation, and 
certain prosthetic devices. A key consideration when a choice between 
PFPWD or basic benefits is available is catastrophic loss protection. 
We have addressed the issue of informed choice between basic and PFPWD 
benefits in two ways. First, we will provide written guidance and 
training for Health Benefits Advisors at Military Treatment Facilities 
regarding the beneficiary cost-share liability implications of using 
PFPWD benefits, rather than basic benefits, whenever such a choice 
exists. Second, we have added a provision to this final rule that will 
assure that a family that finds they inadvertently have a liability for 
PFPWD benefits, that would otherwise not have existed after activation 
of the basic benefit catastrophic loss protection, will have a way to 
request relief.
    Comment: The proposed rule would define rehabilitation as ``the 
restoration of physical functioning lost due to illness or injury.'' By 
focusing narrowly on physical functioning, we fear that this definition 
would serve to limit the range of services available to address the 
rehabilitation needs of the physically handicapped. Rehabilitation 
restores not only the physical functioning of an individual, but also 
the individual's physiological, social, vocational, educational, and 
economic adjustment to the handicap. The proposed rule lists categories 
of services available under the PFPWD benefit and addresses some 
nonphysical aspects of rehabilitation, such as training and special 
education. We are encouraged that CHAMPUS does not intend to limit 
rehabilitation services to those related strictly to physical 
functioning. However this list does not explicitly mention services 
related to the individual's psychosocial needs. We suggest a clearer 
and more explicit treatment of the scope of rehabilitative services 
available under the PFPWD. Fist we recommend defining rehabilitation as 
the restoration of physical, psychological, social, vocational, and 
educational functioning lost due to illness or injury. Second, we would 
add explicit recognition of the broad range of rehabilitative services 
that may be necessary to restore or improve functioning for the 
physically handicapped.
    Response: We agree that physical rehabilitation is but one facet of 
restoring an individual's ability to function. We have rewritten this 
definition to accommodate the extensive scope of providers and 
processes which pursue restorative outcomes for a growing range of 
dysfunctions. The revised definition focuses upon functional limitation 
reduction as the critical outcome produced by rehabilitative processes. 
The widest scope of individual need, with allowance for the dynamic 
nature of the rehabilitative process, is subsumed within this 
definition. Rather than simply restating well established elements of 
rehabilitative focus and treatment at the regulatory level, we have 
chosen to create an outcome standard for these benefits which allows 
maximum flexibility for identifying services and items that confirm, 
arrest, or reduce disabling effects of a qualifying condition. This 
approach allows responsiveness to the success of traditional, evolving, 
and emerging rehabilitative and habilitative resources in providing 
functional gains to CHAMPUS beneficiaries.
    Comment: The ``in whole or in part'' phrase should be deleted from 
the definition of public facility adequacy. This phrase suggests the 
possibility that care could be fragmented among several providers, a 
result we do not believe CHAMPUS intended. For example, a public 
facility may be funded only to provide for a specific number of 
physical therapy sessions per week, but based on the medical opinion of 
the practitioner, the patient requires more frequent services. Under 
the proposed definition the individual's needs could be met ``in part'' 
by this facility, so it would be considered adequate and the individual 
would be required to use it. The additional services, beyond what the 
public facility can provide, would have to be obtained from another 
provider or paid for out-of-pocket.
    Response: We have deleted this phrase and have rewritten the 
provision to avoid such conflicts.
    Comment: Although we support the changes being proposed, we have 
concern that the CHAMPUS program itself, for which changes are not 
being proposed, is also in need of revision. We would encourage you to 
propose recommendations to change the basic CHAMPUS legislation so that 
children with less severe disabilities would also be eligible for 
services, and that the $1,000 per month limitation on services be 
expanded.
    Response: The $1,000/month PFPWD benefit limit and related 
eligibility criteria are provisions of law. Beneficiaries with less 
than serious disability have access to basic benefits which provide a 
wide range of medical and allied health services. Long-term use of the 
entire $1,000/month PFPWD is rare. Such maximum benefit use is 
predominantly associated with declining use of long term residential 
care.
    Comment: Although some limitations are statutory, it appears that 
it would be possible to revise the proposed regulation so that persons 
with disabilities have access to CHAMPUS benefits more in line with the 
intent of Section 504 of the Rehabilitation Act (29 U.S.C. 794). This 
law is implemented within the Department of Defense by DoD Directive 
1020.1, ``Nondiscrimination on the Basis of Handicap in Programs and 
Activities Assisted or Conducted by the Department of Defense,'' dated 
March 31, 1982. It seems unfair that the proposed regulation requires 
persons with disabilities to make choices about benefits that could 
result in their losing money. In some situations, beneficiaries could 
be forced to trade one type of benefit for another. In other 
situations, they could lose benefits because of an ill-advised choice. 
By contrast, benefits are straightforward for beneficiaries who are not 
disabled and therefore have no need for the special program. CHAMPUS 
beneficiaries, whether they are disabled or not, should receive the

[[Page 35088]]

maximum benefits to which they are entitled in any particular 
situation. Proposed language states in effect, that the wrong decision 
about benefits is irreversible. This language should be deleted and 
replaced with provisions that make CHAMPUS staff responsible for 
assuring that beneficiaries with disabilities receive all the benefits 
for which they are eligible.
    Response: Assisting beneficiaries make prudent health care choices 
is a responsibility shared by many Military Health Services System 
(MHSS) entities. CHAMPUS will provide Policy Manual guidance and 
CHAMPUS Handbook and pamphlet information to assist beneficiaries to 
determine the best election of benefits in a given family's situation. 
Ongoing public information efforts can be responsive to demonstrated 
beneficiary understanding of the choices among MHSS benefit options. We 
have also provided administrative means to minimize any adverse 
economic effect upon the beneficiary or family of PFPWD use because of 
basic benefit catastrophic loss protection.
    Comment: The definition of the term serious physical handicap 
imposes a ``substantial productive activity'' limitation on persons who 
have qualifying disabilities. Does this mean that a dependent teenager 
who uses a wheelchair and has a part-time job would not be covered? It 
would be preferable to use a functional definition, such as the one in 
DoD Directive 1020.1, instead of linking the definition to 
productivity.
    Response: Employability has never been a PFPWD eligibility 
criterion. However, we have rewritten the definition of ``Serious 
Physical Handicap'' (as ``Serious Physical Disabilities'') and added 
complementary definitions for ``Major Life Activity'' and ``Handicap'' 
to focus upon the underlying loss of function rather than the 
productivity of the beneficiary.
    Comment: Proposed language suggests that services that should be 
provided for pupils with disabilities through public schools, or 
through DoD operated schools, are to be funded through this CHAMPUS 
cost-sharing program. There should be clarification of the relationship 
of this program to requirements under DoD Directive 1342.16, 
``Provision of Free Public Education for Eligible Dependent Children 
pursuant to section 6, Pub. L. 81-874, as amended.''
    Response: CHAMPUS will treat DoD Directive 1342.16 schools the same 
as any other local educational agency within the state in which the DoD 
school is located. The Individuals with Disabilities Education Act 
requires persons with disabilities be provided a free public education. 
Accordingly, special education services that are within the State Plan 
required by the Act, and are a part of a beneficiary's Individual 
Educational Plan, are excluded as a PFPWD benefit. Such exclusion is 
because of the Act's requirements upon public schools, and because 
CHAMPUS statutory authority requires that to qualify for PFPWD 
benefits, public facilities, such as public schools, must be used to 
the extent available and adequate. Because CHAMPUS benefits have 
legally imposed beneficiary cost-share requirements (and benefit amount 
limits for PFPWD benefits) the Act's requirement that the student or 
parents not be charged for such services cannot be met.
    Comment: This regulation should include a statement that all 
CHAMPUS services are provided in accordance with DoD Directive 1020.1 
[Nondiscrimination on the Basis of Handicap in Programs and Activities 
Assisted or Conducted by the Department of Defense]. Complaints under 
Section 504 [of the rehabilitation Act] indicate the need for special 
attention to certain requirements. For example, there would be specific 
references to telecommunication devices and certified sign language 
interpreters for persons who are deaf, as well as special signs and 
readers for persons who are blind and architectural accessibility and 
personal assistants for individuals with other types of disabilities.
    Response: We have made explicit in this final rule that the 
services of an interpreter, reader, or personal assistant is an 
allowable PFPWD benefit when the service is not an adjunct to receipt 
of a PFPWD allowable service or item. PFPWD cost-share of these types 
of services for beneficiaries with serious disabilities does not 
relieve CHAMPUS providers of their obligation to provide CHAMPUS 
beneficiaries with disabilities equal access, to include the provision 
of communication resources and architectural accessibility.

Overview of PFTH/PFPWD Changes

    Editorial changes have been made throughout this final rule, 
including the addition and reorganization of material for clarity. The 
following provides an overview of the changes to those sections in this 
final rule pertaining to the PFPWD. Substantial changes between the 
proposed and final documents are noted.

Section 199.2, Definitions

    The proposed definitions for rehabilitation and habilitation have 
been rewritten to focus upon the reduction of inability to function 
rather than upon the underlying cause of the disability. We have 
rewritten the definition of ``serious physical disability'' for clarity 
and have added supporting definitions for ``handicap'' and ``major life 
activity.'' We have moved the definitions for ``public facility 
availability'' and ``public facility adequacy'' from Sec. 199.5 to 
Sec. 199.2. Other definitions are unchanged.

Section 199.5(a), General

    The name Program for the Handicapped (PFTH) has been changed to 
Program for Persons with Disabilities (PFPWD).
    We have shortened the proposed statement of purpose to focus upon 
reducing disabling effects.
    We have allowed the beneficiary the choice of using PFPWD or basic 
benefits whenever possible. This changes the PFTH policy that resulted 
in loss of access to basic benefits for outpatient services directly 
related to the disability.
    We have continued to exclude the use of basic benefits to cover 
otherwise allowable PFPWD benefit cost which is not payable because the 
monthly PFPWD benefit limit has been reached. The law authorizing PFPWD 
benefits prohibits the government from paying, in any month, an amount 
which exceeds the maximum allowable PFPWD benefit; consequently, basic 
benefits cannot be used to pay for any PFPWD benefit residual expense 
once the PFPWD monthly benefit limit is reached.
    We have added a provision for readjudication of claims when the 
PFPWD created a cost-share liability for services or items which would 
not otherwise have been incurred due to basic benefit catastrophic loss 
protection.
    We have separated the determination of PFPWD eligibility from the 
adjudication of benefit requests. PFTH eligibility previously had to be 
established each time a benefit was requested. This change will 
significantly reduce the paperwork required for a beneficiary to access 
PFPWD benefits.
    We have continued to require information about how a requested 
benefit will contribute to confirming, arresting, or reducing the 
disabling effects of a qualifying condition.
    We have removed the absolute requirement for PFPWD benefit 
preauthorization by allowing those services or items requiring

[[Page 35089]]

preauthorization to be specified in administrative policy. 
Preauthorization serves to safeguard the beneficiary from benefit 
denials.
    We have limited the maximum length of a benefit authorization to 
six months.
    We have provided for retrospective waiver of a required 
preauthorization on a case-by-case basis.
    We have rewritten public facility use requirements to promote 
continuity of care.
    We have allowed the Commander of a Military Treatment Facility to 
certify the lack of public facility availability or adequacy.
    We have provided for benefit approval when a public official 
refuses to provide a public facility use certification so as not to 
disadvantage a beneficiary due to circumstances beyond the 
beneficiary's control.
    We have provided that repair or maintenance for owned equipment 
does not require public facility use certification. This type of 
service is rarely available through a public facility and timely access 
to such services is usually critical to the beneficiary with a 
disability.
    We have provided that more than one item of the same type of 
equipment for the same beneficiary may not be authorized concurrently.
    We have eliminated the requirement that public facility 
availability be determined for both the beneficiary's domicile and the 
sponsor's domicile when beneficiary and sponsor are separated following 
a Service Member's permanent change of duty station.
    We have removed the absolute 36 month review cycle for qualifying 
conditions in recognition that certain conditions will not change over 
time.
    We have added a provision to assure that no beneficiary receiving 
PFPWD benefits loses eligibility solely as an unintended consequence of 
these administrative changes.

Section 199.5(b), Eligibility

    We have added certain abused dependents as a new PFPWD eligibility 
category as required by law.
    We have explicitly accommodated latent qualifying conditions which 
cannot usually be definitively diagnosed in infancy, but for which 
early clinical intervention is considered appropriate to minimize 
disabling effects.
    We have removed the detailed criteria and discussion of mental 
retardation in favor of the diagnostic criteria in the ``Diagnostic and 
Statistical Manual of Mental Disorders'' published by the American 
Psychiatric Association. The Third edition, Revised, will apply 
immediately, and newer additions will apply as they are published.
    We have removed the examples of conditions that may cause serious 
physical disability. This material was only informational. Such 
screening criteria can be more responsive to changing technology and 
standards of care when issued as administrative guidance.
    We have removed the provision that extended PFTH benefits beyond 
the date of eligibility for benefits.

Section 199.5(c), Benefits

    Statutory benefit categories have been defined and types of derived 
benefits have been described.
    A standard of necessity has been established to permit services and 
items to be allowed which are not explicit in this rule (derived PFPWD 
benefits).

Section 199.5(d), Exclusions

    We have excluded inpatient acute care as it is fully available as a 
basic benefit and such care is likely to usually exceed the $1,000/
month PFPWD benefit limit.
    We have excluded structural alterations to buildings as a type of 
service outside the scope of authorized benefits.
    We have excluded homemaker, sitter, or companion services as 
custodial care.
    We have defined certain adjunct services as benefits because they 
are directly related to the efficiency and purpose of the PFPWD, and 
are consistent with Department of Defense Directive 1020.1 regarding 
``Nondiscrimination on the Basis of Handicap in Programs and Activities 
Assisted or Conducted by the Department of Defense.''
    We have excluded dental care and orthodontic treatment since dental 
care is not included in the statutory authority for PFPWD benefits.
    We have excluded nondomestic travel for care and treatment. Active 
duty dependents officially residing with an active duty Service Member 
outside of the United States are the responsibility of the Sponsor's 
Military Command which will provide medical evacuation to the United 
States for medical treatment when necessary.
    We have excluded the cost differential for deluxe accommodations 
for allowable travel when not necessary to the safety of the 
beneficiary.
    We have rewritten and shortened transportation related exclusions 
to improve clarity.
    We have excluded payment for services or items when the beneficiary 
has no legal obligation to pay.
    We have excluded services or items furnished by a public facility. 
CHAMPUS benefits are, by law, last pay to other health care benefits 
for which the beneficiary is eligible (Medicaid excepted).
    We have excluded study, grant, or research programs as services or 
items not rendered in accordance with accepted standards as 
investigational or experimental in nature.
    We have excluded services or items provided by immediate family or 
household to minimize conflict of interest.
    We have excluded court ordered care, unless such care would 
otherwise be a PFPWD benefit.
    We have excluded excursions as beyond the scope of the PFPWD travel 
benefit.
    We have excluded therapeutic absences.
    We have clarified that drugs and medicines must meet basic benefit 
criteria.
    We have added an exclusion of medical devices which are not 
approved for commercial distribution by the U.S. Food and Drug 
Administration.

Section 199.5(e), Cost-share Liability

    Minor editorial changes were made for improved clarity.

Section 199.5(f), Benefit Payment

    We have added this paragraph to consolidate payment related 
requirements that were scattered throughout the proposed rule.

Section 199.6(e), Providers

    We have established PFPWD-unique providers as a separate class of 
CHAMPUS providers due to the extra medical nature of PFPWD-unique 
benefits.
    We have added a provision that allows exclusion or suspension of a 
provider of PFPWD services or items due to a pattern of discrimination 
on the basis of disability.

Section 199.7(f), Preauthorization

    We have removed the detailed documentation requirements for PFPWD 
claims as this level of detail is more flexibly addressed in 
administrative guidance.

Section 199.8(d), Special Considerations

    We have established that Medicaid (services and items eligible for 
payment under a State plan for medical assistance under Title XIX of 
the Social Security Act) is not to be considered a public facility 
resource in PFPWD adjudication. Medicaid is not considered to be 
``other insurance'' for CHAMPUS coordination of benefits.

[[Page 35090]]

II. Occupational Therapists

    On March 8, 1995, a proposed rule was published in the Federal 
Register (60 FR 12717) regarding several issues including the addition 
of occupational therapists in independent practice to the list of 
authorized individual professional providers recognized by CHAMPUS. 
This will allow qualified self-employed occupational therapists to be 
authorized for direct CHAMPUS payment for allowable services.
    We received four comments regarding this proposed change.
    One comment from a national association voiced strong support for 
the proposal and recommended that this change be implemented 
retroactively. Unless there is a statutorily-established effective date 
or some compelling reason for making a change retroactive, we do not 
normally implement benefit changes retroactively. We do not believe any 
such compelling reason exists for this change.
    One comment from another national association suggested that 
CHAMPUS modify its reimbursement policy to include coverage for the 
services of physical therapy assistants who are employed by 
independently authorized physical therapists. We will look into this 
possibility, but such a change would require publication of a proposed 
rule. Therefore, we are not including it in this final rule.
    Two comments were received from occupational therapy providers who 
strongly supported this change.

III. Procedures Involving the Electronic Transfer of Data

    On September 24, 1991, a proposed rule was published in the Federal 
Register (56 FR 48134) regarding criteria for allowing clinical 
procedures and consultations involving transtelephonic monitoring and 
electronic data transfer.
    No written comments were received during the public comment period.
    The CHAMPUS Basic Program excludes payment for ``services or advice 
rendered by telephone or other telephonic device, including remote 
monitoring, except for transtelephonic monitoring of cardiac 
pacemakers''. This exclusion promotes the quality of care standard that 
a substantive service of a diagnostic or treatment nature requires a 
face-to-face contact between provider and patient. Transtelephonic 
monitoring exception for cardiac pacemakers, added in 1984 [49 FR 
35934], recognized that remote monitoring can be an efficient 
alternative to certain outpatient visits to a physician's office or 
hospital. Coverage of a procedure subsequent to the promulgation of 
this final rule requires that both clinical and fiscal advantages be 
demonstrated compared to the procedure without the electronic data 
transfer element.

IV. Supplemental Insurance

    On June 12, 1991, a proposed rule was published in the Federal 
Register (56 FR 26946) regarding CHAMPUS-supplemental insurance plans.
    In compliance with applicable statutory provisions (10 U.S.C. 1079 
(j)(1) and 10 U.S.C. 1086 (d)) on double coverage CHAMPUS pays benefits 
only after all other health plans have made payment, with the exception 
of Medicaid and certain insurance policies that are specifically 
designed to supplement CHAMPUS benefits. This means that if a CHAMPUS 
beneficiary has another health plan, the other plan must pay whatever 
it covers before CHAMPUS will make any type of payment. The CHAMPUS 
beneficiary may have coverage through an employer, an association, or a 
private insurer. This also includes any coverage for which students may 
qualify through school health plans. In most circumstances, after the 
CHAMPUS beneficiary's other plan has paid its maximum benefits, then 
CHAMPUS will pay for covered services up to the amount it would have 
paid, had there been no other health benefits plan involved.
    This provision will assist CHAMPUS beneficiaries, providers, and 
other third-party payers by clarifying what is recognized as a 
supplemental insurance plan.
    The regulation previously provided that coverage specifically 
designed to supplement CHAMPUS benefits was not considered a double 
coverage plan. This provision lacked the specificity needed in light of 
attempts by some insurance plans to achieve second pay status by merely 
defining themselves as supplementary plans even though their coverage 
may not be limited to CHAMPUS beneficiaries.
    To qualify as supplemental insurance, such insurance must meet the 
definition and criteria under supplemental insurance plan in 
Sec. 199.2(b).
    One comment suggested removal of criterion iii from the definition 
of Supplemental Insurance Plan assuming that it would limit the extent 
of supplemental insurance which CHAMPUS beneficiaries may purchase. 
Criterion iii was retained since it is not a limitation on the amount 
of insurance which CHAMPUS beneficiaries may purchase. It merely 
defines the purpose of supplemental insurance; which is to pay for 
services not covered by CHAMPUS.
    Some comments suggested that criterion v defeated the purpose of 
supplemental insurance because it was interpreted to mean that the 
supplemental insurance could not pay the deductible and cost-share on 
behalf of the subscribers. That was not the intent of criterion v, but 
in the interest of clarifying its intent, the wording was revised to 
state that the supplemental insurance coverage cannot result in lower 
deductibles and cost-shares than those imposed by law. The supplemental 
insurance may pay the legally imposed deductibles and cost-shares on 
behalf of the subscribers, but cannot impose arbitrarily lower amounts 
nor can it waive the deductibles or cost-shares.
    Other comments suggested adding a statement to criterion iii, to 
the effect that supplemental insurance may also provide coverage for 
costs in excess of the CHAMPUS allowable charges. That suggestion was 
accepted and the wording was added under criterion iii.
    A Health Maintenance Organization (HMO) suggested adding wording 
that would permit the HMO to offer supplementary insurance through one 
of its affiliates since the HMO is not an indemnity insurance plan. We 
have added wording that will accept supplemental insurance plans 
offered by HMOs.

V. Federal Claims Collection Act

    On September 24, 1991, a proposed rule was published in the Federal 
Register (56 FR 48135) regarding CHAMPUS use of the Federal Claims 
Collection Act and the Federal Claims Collection Standards and former 
spouse eligibility. The former spouse portion of the proposed rule is 
not being published as a final rule at this time and will be included 
in a future complete update of the eligibility section of the CHAMPUS 
regulation (Sec. 199.3). No written comments were received during the 
public comment period.
    The amendment of both the Federal Claims Collection Act, 31 U.S.C. 
3711(a)(2) and the Federal Claims Collection Standards, 4 CFR 103.1 and 
104.1, allows Federal Agencies to compromise, suspend, or terminate 
collection actions on claims when the amount, exclusive of interest 
costs, does not exceed $100,000. This rule adopts, by reference, the 
language of the Federal Claims Collection Act and Federal Claims 
Collection Standards so that future amendments to the Act and the 
Regulation will not necessitate corresponding amendments to DoD 6010.8-
R.

[[Page 35091]]

    This rule will reduce the number of claims which must be referred 
to the Department of Justice, facilitate more timely resolution of 
CHAMPUS claims, diminish the size of the backlog of claims which, under 
the old system, only the Department of Justice was authorized to 
review, and enhance the timeliness of reviews.

VI. Regulatory Procedures

    Executive Order 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. This is not an economically significant regulatory 
action under the provisions of Executive Order 12866 for the following 
reasons:
    The PFPWD annual government cost has not exceeded $9 million.
    We expect the inclusion of qualified self-employed occupational 
therapists as CHAMPUS-authorized individual professional providers will 
result in no additional costs. Occupational therapist services are 
currently available when billed through other sources.
    The telephone services exclusion modification is not expected to 
increase the volume (or cost) of covered procedures relative to the 
volume anticipated to have been acceptably performed in a different 
manner in the absence of this change.
    The addition of a definition for qualifying CHAMPUS-supplement 
insurance plans only provides CHAMPUS beneficiaries with criteria for 
identification of plans which CHAMPUS will treat as second-pay 
insurance plans.
    The CHAMPUS adoption of Federal Claims Collection Act and the 
Federal Claims Collection Standards is only a linkage to existing 
Federal law and regulation.
    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. We 
certify that this final rule will not have a significant economic 
impact on a substantial number of small entities under the criteria of 
the Regulatory Flexibility Act for the following reasons:
    The PFPWD simplification of the administrative structure does not 
alter the CHAMPUS pricing methods for PFPWD services or items nor the 
scope of providers of PFPWD covered services or items.
    The inclusion of qualified self-employed occupational therapists as 
authorized individual professional providers will not significantly 
affect the provision of services by these individuals.
    The telephonic services exclusion modification does not add or 
remove requirements for providers of services to CHAMPUS beneficiaries 
or substantially alter the scope of services which providers have found 
to be covered by the CHAMPUS.
    The CHAMPUS-supplement insurance definition only provides CHAMPUS 
beneficiaries with criteria for identification of plans which CHAMPUS 
will treat as second-pay insurance plans.
    The CHAMPUS adoption of Federal Claims Collection Act and the 
Federal Claims Collection Standards is only a linkage to existing 
Federal law and regulation. OMB has reviewed this rule as a significant 
rulemaking pursuant to EO12866.

List of Subjects in 32 CFR Part 199

    Administrative practice and procedure, Claims, Fraud, Health care, 
Health insurance, Individuals with disabilities, 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: 5 U.S.C. 301; 10 U.S.C. chapter 55.

    2. Section 199.2(b) is amended by removing the definitions for 
``Management plan'', ``Mental retardation'', ``Physical handicap'', 
``Program for the handicapped (PFTH)'', and ``Special tutoring'', and 
by revising the last sentence of the note following the definition of 
``Domiciliary care'', and by adding definitions for ``Durable 
equipment'', ``Habilitation'', ``Handicap'', ``Major life activity'', 
``Not-for-profit entity'', ``Occupational therapist'', ``Program for 
Persons with Disabilities (PFPWD)'', ``Public facility'', ``Public 
facility adequacy'', ``Public facility availability'', 
``Rehabilitation'', ``Serious physical disability'', ``State,'' and 
``Supplemental insurance plan'' in alphabetical order to read as 
follows:


Sec. 199.2  Definitions.

* * * * *
    (b) * * *
    Domiciliary care. * * *

    Note: * * * Domiciliary care is not covered under either the 
CHAMPUS Basic Program or the Program for Persons with Disabilities 
(PFPWD).
* * * * *
    Durable equipment. A device or apparatus which does not qualify as 
Durable Medical Equipment (as defined in this section), and which is 
essential to the efficient arrest or reduction of functional loss 
resulting from a qualifying condition as provided by Sec. 199.5.
* * * * *
    Habilitation. The provision of functional capacity, absent from 
birth due to congenital anomaly or developmental disorder, which 
facilitates performance of an activity in the manner, or within the 
range considered normal, for a human being.
* * * * *
    Handicap. For the purposes of this part, the term ``handicap'' is 
synonymous with the term ``disability.''
* * * * *
    Major life activity. Breathing, cognition, hearing, seeing, and age 
appropriate ability essential to bathing, dressing, eating, grooming, 
speaking, stair use, toilet use, transferring, and walking.
* * * * *
    Not-for-profit entity. An organization or institution owned and 
operated by one or more nonprofit corporations or associations formed 
pursuant to applicable state laws, no part of the net earnings of which 
inures, or may lawfully inure, to the benefit of any private 
shareholder or individual.
    Occupational therapist. A person who is trained specially in the 
skills and techniques of occupational therapy (that is, the use of 
purposeful activity with individuals who are limited by physical injury 
of illness, psychosocial dysfunction, developmental or learning 
disabilities, poverty and cultural differences, or the aging process in 
order to maximize independence, prevent disability, and maintain 
health) and who is licensed to administer occupational therapy 
treatments prescribed by a physician.
* * * * *
    Program for Persons with Disabilities PFPWD). The CHAMPUS benefits 
described in Sec. 199.5.
* * * * *
    Public facility. A public authority or entity legally constituted 
within a State (as defined in this section) to administer, control or 
perform a service function for public health, education or human 
services programs in a city, county, or township, special district, or 
other political subdivision, or such combination of political 
subdivisions or

[[Page 35092]]

special districts or counties as are recognized as an administrative 
agency for a State's public health, education or human services 
programs, or any other public institution or agency having 
administrative control and direction of a publicly funded health, 
education or human services program.
    Public facility adequacy. An available public facility shall be 
considered adequate when the Director, OCHAMPUS, or designee, 
determines that the quality, quantity, and frequency of an available 
service or item otherwise allowable as a CHAMPUS benefit is sufficient 
to meet the beneficiary's specific disability related need in a timely 
manner.
    Public facility availability. A public facility shall be considered 
available when the public facility usually and customarily provides the 
requested service or item to individuals with the same or similar 
disability related need as the otherwise equally qualified CHAMPUS 
beneficiary.
* * * * *
    Rehabilitation. The reduction of an acquired loss of ability to 
perform an activity in the manner, or within the range considered 
normal, for a human being.
* * * * *
    Serious physical disability. Any physiological disorder or 
condition or anatomical loss affecting one or more body systems which 
has lasted, or with reasonable certainty is expected to last, for a 
minimum period of 12 contiguous months, and which precludes the person 
with the disorder, condition or anatomical loss from unaided 
performance of at least one Major Life Activity as defined in this 
section.
* * * * *
    State. For purposes of this part, any of the several States, the 
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth 
of the Northern Mariana Islands, and each territory and possession of 
the United States.
* * * * *
    Supplemental insurance plan. A health insurance policy or other 
health benefit plan offered by a private entity to a CHAMPUS 
beneficiary, that primarily is designed, advertised, marketed, or 
otherwise held out as providing payment for expenses incurred for 
services and items that are not reimbursed under CHAMPUS due to program 
limitations, or beneficiary liabilities imposed by law. CHAMPUS 
recognizes two types of supplemental plans, general indemnity plans, 
and those offered through a direct service health maintenance 
organization (HMO).
    (1) An indemnity supplemental insurance plan must meet all of the 
following criteria:
    (i) It provides insurance coverage, regulated by state insurance 
agencies, which is available only to beneficiaries of CHAMPUS.
    (ii) It is premium based and all premiums relate only to the 
CHAMPUS supplemental coverage.
    (iii) Its benefits for all covered CHAMPUS beneficiaries are 
predominantly limited to non-covered services, to the deductible and 
cost-shared portions of the pre-determined allowable charges, and/or to 
amounts exceeding the allowable charges for covered services.
    (iv) It provides insurance reimbursement by making payment directly 
to the CHAMPUS beneficiary or to the participating provider.
    (v) It does not operate in a manner which results in lower 
deductibles or cost-shares than those imposed by law, or that waives 
the legally imposed deductibles or cost-shares.
    (2) A supplemental insurance plan offered by a Health Maintenance 
Organization (HMO) must meet all of the following criteria:
    (i) The HMO must be authorized and must operate under relevant 
provisions of state law.
    (ii) The HMO supplemental plan must be premium based and all 
premiums must relate only to CHAMPUS supplemental coverage.
    (iii) The HMO's benefits, above those which are directly reimbursed 
by CHAMPUS, must be limited predominantly to services not covered by 
CHAMPUS and CHAMPUS deductible and cost-share amounts.
    (iv) The HMO must provide services directly to CHAMPUS 
beneficiaries through its affiliated providers who, in turn, are 
reimbursed by CHAMPUS.
    (v) The HMO's premium structure must be designed so that no overall 
reduction in the amount of the beneficiary deductibles or cost-shares 
will result.
* * * * *
    3. Section 199.3 is amended by revising paragraphs (a), 
(c)(2)(i)(D), the note under paragraph (c)(2)(ii), the note under 
paragraph (c)(2)(iii), and the last sentence and note of paragraph 
(c)(2)(vi) to read as follows:


Sec. 199.3  Eligibility.

    (a) General. This section sets forth those persons who, by the 
provisions of 10 U.S.C., Chapter 55, and the NATO Status of Forces 
Agreement, are eligible for CHAMPUS benefits. For additional statements 
concerning the special requirements of the Program for Persons with 
Disabilities (PFPWD), refer to Sec. 199.5. A determination that a 
person is eligible does not entitle such a person automatically to 
CHAMPUS payments. Other sections of this part set forth additional 
requirements that must be met before any CHAMPUS benefits may be 
extended. Additionally, the use of CHAMPUS may be denied if a Uniformed 
Services medical facility capable of providing the needed care is 
available.
* * * * *
    (c) * * *
    (2) * * *
    (i) * * *
    (D) For benefits under the PFPWD, January 1, 1967.
    (ii) * * *

    Note: Retirees and their dependents are not eligible for 
benefits of the PFPWD.

    (iii) * * *

    Note: These classes do not have eligibility for benefits of the 
PFPWD.
* * * * *
    (vi) * * * For benefits under the PFPWD, dependents of an active 
duty member only, January 1, 1969.

    Note. Retirees or their dependents do not have eligibility for 
benefits of the PFPWD.
* * * * *
    4. Section 199.4 is amended by revising paragraphs (b)(8)(iii), 
(b)(9)(iv), (c)(3)(x), (g)(52) and (g)(73) to read as follows:


Sec. 199.4  Basic program benefits.

* * * * *
    (b) * * *
    (8) * * *
    (iii) RTC day limits do not apply to services provided under the 
Program for Persons with Disabilities (Sec. 199.5) or services provided 
as partial hospitalization care.
    (9) * * *
    (iv) Acute care day limits do not apply to services provided under 
the Program for Persons with Disabilities (Sec. 199.5) or services 
provided as partial hospitalization care.
* * * * *
    (c) * * *
    (3) * * *
    (x) Physical and occupational therapy. Assessment and treatment 
services of a CHAMPUS-authorized physical or occupational therapist may 
be cost-shared when:
    (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

[[Page 35093]]

    (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) * * *
    (52) Telephone services. Services or advice rendered by telephone 
are excluded, except that a diagnostic or monitoring procedure which 
incorporates electronic transmission of data or remote detection and 
measurement of a condition, activity, or function (biotelemetry) is not 
excluded when:
    (i) The procedure without electronic transmission of data or 
biotelemetry is otherwise an explicit or derived benefit of this 
section; and
    (ii) The addition of electronic transmission of data or 
biotelemetry to the procedure is found by the Director, CHAMPUS, or 
designee, to be medically necessary and appropriate medical care which 
usually improves the efficiency of the management of a clinical 
condition in defined circumstances; and
    (iii) That each data transmission or biotelemetry device 
incorporated into a procedure that is otherwise an explicit or derived 
benefit of this section, has been classified by the U.S. Food and Drug 
Administration, either separately or as a part of a system, for use 
consistent with the defined circumstances in paragraph (g)(52)(ii) of 
this section.
* * * * *
    (73) Economic interest in connection with mental health admissions. 
Inpatient mental health services (including both acute care and RTC 
services) are excluded for care received when a patient is referred to 
a provider of such services by a physician (or other health care 
professional with authority to admit) who has an economic interest in 
the facility to which the patient is referred, unless a waiver is 
granted. Requests for waiver shall be considered under the same 
procedure and based on the same criteria as used for obtaining 
preadmission authorization (or continued stay authorization for 
emergency admissions), with the only additional requirement being that 
the economic interest be disclosed as part of the request. The same 
reconsideration and appeals procedures that apply to day limit waivers 
shall also apply to decisions regarding requested waivers of the 
economic interest exclusion. However, a provider may appeal a 
reconsidered determination that an economic relationship constitutes an 
economic interest within the scope of the exclusion to the same extent 
that a provider may appeal determinations under Sec. 199.15(i)(3). This 
exclusion does not apply to services under the Program for Persons with 
Disabilities (Sec. 199.5) or provided as partial hospital care. If a 
situation arises where a decision is made to exclude CHAMPUS payment 
solely on the basis of the provider's economic interest, the normal 
CHAMPUS appeals process will be available.
* * * * *
    5. Section 199.5 is revised to read as follows:


Sec. 199.5  Program for Persons with Disabilities (PFPWD).

    (a) General. This PFPWD provides financial assistance for certain 
CHAMPUS beneficiaries who are moderately or severely mentally retarded, 
or seriously physically disabled. The PFPWD is not intended to be a 
stand alone benefit.
    (1) Purpose. The primary purpose of the PFPWD is to assist in 
reducing the disabling effects of a PFPWD qualifying condition.
    (2) Benefit source election. A PFPWD beneficiary (or sponsor or 
guardian acting on behalf of the beneficiary) may elect to use the 
provisions of either this section, or the provisions of Sec. 199.4, for 
a specific service or item which is allowable by both sections.
    (i) Election limitation. No amount for authorized, or otherwise 
allowed, PFPWD services or items remaining after the maximum PFPWD 
benefit dollar amount has been reached in a given month may be cost-
shared through the provisions of Sec. 199.4.
    (ii) Election change. A beneficiary (or sponsor or guardian acting 
on behalf of the beneficiary) shall have the right to request the 
Director, OCHAMPUS, or designee, to allow PFPWD cost-shared services or 
items otherwise allowable as a benefit of Sec. 199.4, and which were 
rendered after the catastrophic loss protection provision applicable to 
Sec. 199.4 was in effect for a given PFPWD beneficiary's sponsor, to be 
readjudicated according to the provisions of Sec. 199.4. The Director, 
OCHAMPUS, or designee, shall allow readjudication when the sponsor's 
family's CHAMPUS benefit year cost-share liability would be reduced by 
such readjudication. Such requests are subject to the claims filing 
deadline provisions of Sec. 199.7. The determination regarding 
readjudication is conclusive and may not be appealed.
    (3) Application required. A beneficiary shall establish PFPWD 
eligibility as a prerequisite to authorization or payment of any PFPWD 
benefits. Subsequent review of the PFPWD qualifying condition to 
confirm continued eligibility shall be made in accordance with the 
prognosis for a change in severity such that the condition would not 
likely continue to be a PFPWD qualifying condition.
    (4) Benefit authorization. To establish whether a requested service 
or item is a PFPWD benefit, the beneficiary (or sponsor or guardian 
acting on the behalf of the beneficiary) shall provide such information 
about how the requested benefit will contribute to confirming, 
arresting, or reducing the disabling effects of the qualifying 
condition as the Director, OCHAMPUS, or designee, determines necessary 
for benefit adjudication.
    (i) Written authorization. The Director, OCHAMPUS, or designee, may 
require written authorization for any PFPWD category or type of service 
or item as a prerequisite for adjudication of related claims.
    (ii) Format. An authorization issued by the Director, OCHAMPUS, or 
designee, shall specify, such description, dates, amounts, 
requirements, limitations or information as necessary for exact 
identification of approved benefits and efficient adjudication of 
resulting claims.
    (iii) Valid period. An authorization for a particular PFPWD service 
or item shall not exceed six consecutive months.
    (iv) Authorization waiver. The Director, OCHAMPUS, or designee, 
shall waive the requirement for a written CHAMPUS authorization for 
rendered PFPWD services or items that, except for the absence of the 
written CHAMPUS authorization, would be allowable as a PFPWD benefit.
    (v) Public facility use. A PFPWD beneficiary residing within a 
State, as defined in Sec. 199.2, must demonstrate that a public 
facility, as defined in Sec. 199.2, funds, except funds administered 
under a State plan for medical assistance under Title XIX of the Social 
Security Act (Medicaid) is not available or adequate, as defined in 
Sec. 199.2, to meet the qualifying condition related need.
    (A) Equipment repair or maintenance for beneficiary owned equipment 
shall be considered not available when the equipment is a type 
allowable as a benefit.
    (B) A beneficiary shall not be required to change the provider of 
public facility funded therapy when public facility funding is depleted 
during that beneficiary's course of therapy and when such a change is 
determined by the Director, OCHAMPUS, or designee, to be clinically 
contraindicated. When contraindicated, other public facilities

[[Page 35094]]

for the therapy shall not be considered adequate for the beneficiary.
    (5) Public facility use certification. Written certification, in 
accord with information requirements, formats, and procedures 
established by the Director, OCHAMPUS, or designee that requested PFPWD 
services or items cannot be obtained from public facilities because the 
services or items are not available, or if available, are not adequate, 
is a prerequisite for PFPWD benefit payment.
    (i) A Military Treatment Facility (MTF) Commander, or designee, may 
make such certification for a beneficiary residing within a defined 
geographic area.
    (ii) An administrator of a public facility, or designee, may make 
such certification for a beneficiary residing within the service area 
of that public facility.
    (iii) The domicile of the beneficiary shall be the basis for the 
determination of public facility availability when the sponsor and 
beneficiary are separately domiciled due to the sponsor's move to a new 
permanent duty station or due to legal custody requirements.
    (iv) The Director, OCHAMPUS, or designee, may determine, on a case-
by-case basis, that apparent public facility availability for a 
requested type of service or item can not be substantiated for a 
specific beneficiary's request for PFPWD benefits and is not available.
    (A) A case-specific determination shall be shall be based upon a 
written statement by the beneficiary (or sponsor or guardian acting on 
behalf of the beneficiary) which details the circumstances wherein a 
specific individual representing a specific public facility refused to 
provide a public facility use certification, and such other information 
as the Director, OCHAMPUS, or designee determines to be material to the 
determination.
    (B) A case-specific determination of public facility availability 
by the Director, OCHAMPUS, or designee, is conclusive, and is not 
appealable.
    (6) Equipment. (i) An item of equipment shall not be authorized 
when such authorization would allow concurrent PFPWD cost-sharing of 
more than one item of the same type of equipment for the same 
beneficiary.
    (ii) Reasonable repairs and maintenance shall be allowable for any 
beneficiary owned equipment otherwise allowable by this section.
    (7) Implementing instructions. The Director, OCHAMPUS, or designee 
shall issue policies, instructions, procedures, guidelines, standards, 
and criteria necessary to assure the quality and efficiency of services 
and items furnished as a PFPWD benefit and to otherwise accomplish the 
purpose of the PFPWD.
    (i) Other requirements. All provisions of this part, except the 
provisions of Sec. 199.4, apply to the PFPWD unless otherwise provided 
by this section.
    (ii) Continuity of eligibility. A CHAMPUS beneficiary who has an 
outstanding Program for the Handicapped (PFTH) benefit authorization 
during the 30 calendar day period immediately prior to the effective 
date of the Program for Persons with Disabilities (PFPWD) shall be 
deemed to have a PFPWD qualifying condition for the duration of the 
period during which the beneficiary is otherwise eligible for PFPWD and 
the beneficiary continues to meet the applicable PFTH qualifying 
condition criteria.
    (b) Eligibility--(1) Spouse or child. PFPWD benefits are limited to 
a CHAMPUS eligible child or spouse, but not a former spouse, except as 
provided in paragraph (b)(1)(ii) of this section, of:
    (i) Active duty sponsor. An active duty member of one of the 
Uniformed Services as determined in accordance with the provisions of 
Sec. 199.3; or
    (ii) Former member sponsor. After November 13, 1986, a former 
member of a Uniformed Service, when the qualifying condition is the 
result of, or has been exacerbated by, an injury or illness resulting 
from physical or emotional abuse; or
    (iii) Deceased sponsor. A CHAMPUS beneficiary who is receiving 
PFPWD benefits at the time of the death of the sponsoring active duty 
Uniformed Service member remains eligible for PFPWD benefits through 
midnight of the beneficiary's twenty-first birthday when the sponsor 
died after January 1, 1997, and the sponsor was, at the time of death, 
eligible for receipt of hostile-fire pay or died as a result of disease 
or injury incurred while eligible for such pay.
    (2) Loss of PFPWD eligibility. Eligibility for PFPWD benefits 
ceases as of 12.:01 a.m. of the day following the day that:
    (i) The sponsor ceases to be an active duty member for any reason 
other than death; or
    (ii) Eligibility based upon the abused dependent provisions of 
paragraph (b)(1) of this section expires; or
    (iii) Eligibility based upon the deceased sponsor provisions of 
paragraph (b)(1) of this section expires; or
    (iv) The Director, OCHAMPUS, or designee, determines that the 
beneficiary no longer has a qualifying condition.
    (3) Qualifying condition--(i) Mental retardation. A diagnosis of 
moderate or severe mental retardation made in accordance with the 
criteria of the current edition of the ``Diagnostic and Statistical 
Manual of Mental Disorders'' published by the American Psychiatric 
Association is a PFPWD qualifying condition.
    (ii)Serious physical disability. A serious physical disability as 
defined in Sec. 199.2, is a PFPWD qualifying condition.
    (iii) Infant/toddler. For CHAMPUS beneficiaries under the age of 
three years with a diagnosed neuromuscular developmental condition or 
Down syndrome, or other condition that can to a reasonable medical 
probability be expected to precede a diagnosis of moderate or severe 
mental retardation or be characterized as a serious physical disability 
before the age of seven, the Director, OCHAMPUS, or designee, shall 
establish criteria for PFPWD eligibility in lieu of the requirements of 
paragraph (b)(3)(i) or paragraph (b)(3)(ii) of this section.
    (iv) Multiple disabilities. The cumulative disabling effect shall 
be used in the adjudication of a qualifying condition determination 
when an applicant has two or more disabilities involving separate body 
systems.
    (c) Benefit. Items or services which the Director, OCHAMPUS, or 
designee, has determined to be intrinsic to the following benefit 
categories and has determined to be capable of confirming, arresting, 
or reducing the severity of the disabling effects of a qualifying 
condition, generally or in a specific case, and which are not otherwise 
excluded by this PFPWD, may be allowed.
    (1) Diagnostic procedures to establish a qualifying condition 
diagnosis or to measure the extent of functional loss.
    (2) Treatment through the use of such medical, habilitative, or 
rehabilitative methods, techniques, therapies and equipment which 
otherwise meet the requirements of this PFPWD. Treatment includes, but 
is not limited to, prosthetic devices, orthopedic braces, and 
orthopedic appliances. Otherwise allowable treatment may be rendered 
in-home, or as inpatient or outpatient care as appropriate.
    (3) Training when required to allow the use of an assistive 
technology device or to acquire skills which are expected to assist the 
beneficiary to reduce the disabling effects of a qualifying condition 
and for parents (or guardian) and siblings of a PFPWD beneficiary when 
required as an integral part of the management of the qualifying 
condition.

[[Page 35095]]

    (4) Special education instruction, other than training specifically 
designed to accommodate the disabling effects of a qualifying 
condition.
    (5) Institutional care within a State, as defined in Sec. 199.2, 
when the severity of the qualifying condition requires protective 
custody or training in a residential environment.
    (6) Transportation when required to convey the PFPWD beneficiary to 
or from a facility or institution to receive otherwise allowable 
services or items. Transportation for a medical attendant may be 
approved when medically necessary for the safe transport of the PFPWD 
eligible beneficiary.
    (7) Adjunct services--(i) Assistive services. Services of a 
qualified interpreter or translator for PFPWD beneficiaries who are 
deaf, readers for PFPWD beneficiaries who are blind, and personal 
assistants for PFPWD beneficiaries with other types of qualifying 
conditions, when such services are not directly related to the 
rendering or delivery of service or item otherwise an allowable PFPWD 
benefit.
    (ii) Equipment adaptation. The allowable equipment purchase shall 
encompass such services and structural modification to the equipment as 
necessary to make the equipment serviceable for a particular 
disability.
    (iii) Equipment maintenance. Reasonable repairs and maintenance for 
that portion of the useful life of beneficiary owned equipment that is 
concurrent with the beneficiary's PFPWD eligibility.
    (d) Exclusions--(1) Inpatient acute care for medical or surgical 
treatment of an acute illness, or of an acute exacerbation of the 
qualifying condition, is excluded.
    (2) Structural alterations to living space and permanent fixtures 
attached thereto, including alterations necessary to accommodate 
installation of equipment, or to facilitate entrance or exit, are 
excluded.
    (3) Homemaker, sitter, or companion services, except as 
institutional care of adjunct services, which predominantly provide 
assistance with daily living activities or accomplish household chores 
or provide companionship or provide supervision or observation, or any 
combination of these functions, are excluded.
    (4) Dental care or orthodontic treatment is excluded.
    (5) Nondomestic travel which originates or terminates outside of a 
State, as defined in Sec. 199.2, is excluded.
    (6) Deluxe travel accommodation price differential between the 
price for a type of accommodation which provides services or features 
which exceed the requirements of the beneficiary's condition for safe 
transport and the price for a type of accommodation without those 
deluxe features, is excluded.
    (7) Equipment. Exclusions for durable medical equipment at 
Sec. 199.4(d)(3)(ii)(D) apply to all PFPWD allowable equipment.
    (8) Medical devices. Prosthetic devices and medical equipment which 
do not meet the benefit requirements of Sec. 199.4 are excluded.
    (9) No obligation to pay. Services or items for which the 
beneficiary or sponsor has no legal obligation to pay, or for which no 
charge would be made if the beneficiary was not eligible for the 
CHAMPUS, are excluded.
    (10) Public facility or Federal government. Services or items paid 
for, or eligible for payment, directly or indirectly by a Public 
Facility, as defined in Sec. 199.2, or by the Federal government, other 
than the Department of Defense, are excluded, except when such services 
or items are eligible for payment under a State plan for medical 
assistance under Title XIX of the Social Security Act (Medicaid).
    (11) Study, grant, or research programs. Services and items 
provided as a part of a scientific clinical study, grant, or research 
program are excluded.
    (12) Unproven drugs, devices, and medical treatments or procedures. 
 Services and items whose safety and efficacy have not been established 
as described in Sec. 199.4 are unproven and cannot be cost-shared by 
CHAMPUS.
    (13) Immediate family or household.  Services or items provided or 
prescribed by a member of the beneficiary's immediate family, or a 
person living in the beneficiary's or sponsor's household, are 
excluded.
    (14) Court or agency ordered care. Services or items ordered by a 
court or other government agency that are not otherwise a legitimate 
PFPWD benefit are excluded.
    (15) Excursions. Additional or special charges for excursions, 
other than otherwise allowable transportation, are excluded even though 
part of a program offered by an approved provider.
    (16) Drugs and medicines. Drugs and medicines which do not meet the 
benefit requirements of Sec. 199.4 are excluded.
    (17) Therapeutic absences. Therapeutic absences from an inpatient 
facility are excluded.
    (e) Cost-share liability--(1) No deductible.  PFPWD benefits are 
not subject to a deductible amount.
    (2) Sponsor/beneficiary cost-share liability. The total sponsor 
cost-share for allowed PFPWD benefits in a given month may not exceed 
the amount for the sponsor's pay grade as specified below, regardless 
of the number of dependents of that same sponsor receiving PFPWD 
benefits in a given month:

------------------------------------------------------------------------
                                                                 Monthly
                       Member's pay grade                         share 
------------------------------------------------------------------------
E-1 through E-5................................................      $25
E-6............................................................       30
E-7 and O-1....................................................       35
E-8 and O-2....................................................       40
E-9, W-1, W-2, and O-3.........................................       45
W-3, W-4, and O-4..............................................       50
O-5............................................................       65
O-6............................................................       75
O-7............................................................      100
O-8............................................................      150
O-9............................................................      200
O-10...........................................................      250
------------------------------------------------------------------------

    (3) Government cost-share liability: member who sponsors one PFPWD 
beneficiary. The government share of the cost of any PFPWD benefit 
provided in a given month to a beneficiary who is the sponsor's only 
PFPWD eligible dependent may not exceed $1,000 in a given month, after 
application of allowable payment methodology.
    (4) Government cost-share liability: member who sponsors two or 
more PFPWD beneficiaries. The government share of the cost of any PFPWD 
benefits provided in a given month, after October 1, 1966, to a 
beneficiary who is one of two or more PFPWD eligible dependents of the 
same sponsor shall be determined as follows:
    (i) Maximum benefit limit determination. The $1,000 maximum monthly 
government PFPWD benefit amount shall apply to the beneficiary 
incurring the least amount of allowable PFPWD expense in a given month, 
after application of allowable payment methodology. When two or more 
PFPWD eligible beneficiaries have exactly the same amount of allowable 
PFPWD expense in a given month, and that amount is determined to be the 
least amount for the sponsor's family group, the $1,000 maximum monthly 
benefit in that month shall apply to only one of the PFPWD eligible 
beneficiaries in the family group.
    (ii) Maximum benefit limit exception. For all other PFPWD 
dependents of the same sponsor with allowable PFPWD expense in a given 
month, the $1,000 maximum monthly benefit does not apply, and the 
government shall cost-share the entire amount for otherwise allowable 
services or items received in that month.
    (f) Benefit payment--(1) Equipment. The allowable amount for 
equipment shall be calculated in the same manner

[[Page 35096]]

as durable medical equipment allowable through Sec. 199.4.
    (2) Transportation. The allowable amount for transportation is 
limited to the actual cost of the standard published fare plus any 
standard surcharge made to accommodate any person with a similar 
disability or to the actual cost of specialized medical transportation 
when nonspecialized transport cannot accommodate the beneficiary's 
disability related needs, or when specialized transport is more 
economical than nonspecialized transport. When transport is by private 
vehicle, the allowable amount is limited to the Federal government 
employee mileage reimbursement rate in effect on the trip date.
    (3) Proration of equipment expense. The PFPWD beneficiary (or 
sponsor or guardian acting on the beneficiary's behalf) may, only at 
the time of the request for authorization of equipment, specify that 
the allowable cost of the equipment be prorated. Equipment expense 
proration permits the allowable cost of an item of PFPWD authorized 
equipment to be apportioned so that no portion of the allowable cost 
exceeds the monthly benefit limit and allows each apportioned amount to 
be separately authorized as a benefit during subsequent contiguous 
months.
    (i) Maximum period. The maximum number of contiguous months during 
which a prorated amount may be authorized for cost-share shall be the 
lesser of:
    (A) The number of months calculated by dividing the initial 
allowable cost for the item of equipment by $1,000 and doubling the 
resulting quotient; or
    (B) The number of months of useful equipment life for the 
requesting beneficiary, as determined by the Director, OCHAMPUS, or 
designee.
    (ii) Cost-share. A cost-share is applicable in any month in which a 
prorated amount is authorized, subject to the cost-share provisions for 
a sponsor with two or more PFPWD eligible beneficiaries.
    (iii) Termination. Prorated payments shall be terminated as of the 
first day of the month following the death of a beneficiary or as of 
the effective date of a beneficiary's loss of PFPWD eligibility for any 
other reason.
    (4) For-profit institutional care provider. Institutional care 
provided by a for-profit entity may be allowed only when the care for a 
specific PFPWD beneficiary:
    (i) Is contracted for by a public facility, as defined in 
Sec. 199.2, as a part of a publicly funded long-term inpatient care 
program; and
    (ii) Is provided based upon the PFPWD beneficiary's being eligible 
for the publicly funded program which has contracted for the care; and
    (iii) Is authorized by the public facility as a part of a publicly 
funded program; and
    (iv) Would cause a cost-share liability in the absence of CHAMPUS 
eligibility; and
    (v) Produces a PFPWD beneficiary cost-share liability that does not 
exceed the maximum charge by the provider to the public facility for 
the contracted level of care.
    (g) Implementing instructions. The Director, OCHAMPUS, or a 
designee, shall issue CHAMPUS policies, instructions, procedures, 
guidelines, standards, and criteria as may be necessary to implement 
the intent of this section.
    6. Section 199.6 is amended by removing and reserving paragraphs 
(a)(4) and (b)(4)(x)(B)(2), revising paragraph (c)(3)(iii)(I)(3), 
redesignating paragraphs (e) and (f) as paragraphs (f) and (g) and by 
adding a new paragraph (e) to read as follows:


Sec. 199.6  Authorized providers.

    (a) * * *
    (4) [Reserved]
* * * * *
    (b) * * *
    (4) * * *
    (x) * * *
    (B) * * *
    (2) [Reserved]
* * * * *
    (c) * * *
    (3) * * *
    (iii) * * *
    (I) * * *
    (3) Licensed registered physical therapists and occupational 
therapists.
* * * * *
    (e) Program for Persons with Disabilities Providers.--(1) General. 
(i) Services and items cost-shared through Sec. 199.5 must be rendered 
by a CHAMPUS-authorized provider.
    (ii) A Program for the Handicapped (PFTH) provider with CHAMPUS-
authorized status on the effective date for the Program for Persons 
with Disabilities (PFPWD) shall be deemed to be a CHAMPUS-authorized 
PFPWD provider until all outstanding PFTH benefit authorizations for 
services or items being rendered by the provider expire.
    (2) PFPWD provider categories.--(i) PFPWD inpatient care provider. 
A provider of residential institutional care which is otherwise a PFPWD 
benefit shall be:
    (A) A not-for-profit entity or a public facility, as defined in 
Sec. 199.2; and
    (B) Located within a State, as defined in Sec. 199.2; and
    (C) Be certified as eligible for Medicaid payment in accordance 
with a State plan for medical assistance under Title XIX of the Social 
Security Act (Medicaid) as a Medicaid Nursing Facility, or Intermediate 
Care Facility for the Mentally Retarded, or be a CHAMPUS-authorized 
Institutional Provider as defined in paragraph (b) of this section, or 
be approved by a State educational agency as a training institution.
    (ii) PFPWD outpatient care provider. A provider of PFPWD 
outpatient, ambulatory, or in-home services shall be:
    (A) A CHAMPUS-authorized provider of services as defined in this 
section; or
    (B) An individual, corporation, foundation, or public entity that 
predominantly renders services of a type uniquely allowable as a PFPWD 
benefit and not otherwise allowable as a benefit of Sec. 199.4, that 
meets all applicable licensing or other regulatory requirements that 
are extant in the state, county, municipality, or other political 
jurisdiction in which the PFPWD service is rendered.
    (iii) PFPWD vendor. A provider of an allowable PFPWD item, supply, 
equipment, orthotic, or device shall be deemed to be a CHAMPUS-
authorized vendor for the provision of the specific item, supply, 
equipment, orthotic, or device when the vendor supplies such 
information as the Director, OCHAMPUS, or designee, determines 
necessary to adjudicate a specific claim.
    (3) PFPWD provider exclusion or suspension. A provider of PFPWD 
services or items may be excluded or suspended for a pattern of 
discrimination on the basis of disability. Such exclusion or suspension 
shall be accomplished according to the provisions of Sec. 199.9.
* * * * *
    7. Section 199.7 is amended by revising paragraphs (a)(2), 
(b)(2)(xii) and (f)(2), removing paragraph (f)(3), redesignating 
paragraph (f)(4) as paragraph (f)(3), and adding a new paragraph (f)(4) 
to read as follows:


Sec. 199.7  Claims submission, review, and payment.

    (a) * * *
    (2) Claim required. No benefit may be extended under the Basic 
Program or Program for Persons with Disabilities (PFPWD) without the 
submission of a complete and properly executed appropriate claim form.
* * * * *
    (b) * * *
    (2) * * *

[[Page 35097]]

    (xii) Other authorized providers. For items from other authorized 
providers (such as medical supplies), an explanation as to the medical 
need must be attached to the appropriate claim form. For purchases of 
durable equipment under the PFPWD, it is necessary also to attach a 
copy of the preauthorization.
* * * * *
    (f) * * *
    (2) Treatment plan. Each preauthorization request shall be 
accompanied by a proposed medical treatment plan (for inpatient stays 
under the Basic Program) which shall include generally a diagnosis; a 
detailed summary of complete history and physical; a detailed statement 
of the problem; the proposed treatment modality, including anticipated 
length of time the proposed modality will be required; any available 
test results; consultant's reports; and the prognosis. When the 
preauthorization request involves transfer from a hospital to another 
inpatient facility, medical records related to the inpatient stay also 
must be provided.
* * * * *
    (4) Advance payment prohibited. No CHAMPUS payment shall be made 
for otherwise authorized services or items not yet rendered or 
delivered to the beneficiary.
* * * * *
    8. Section 199.8 is amended by revising paragraphs (b)(3)(ii) and 
(d)(4) to read as follows:


Sec. 199.8  Double coverage.

* * * * *
    (b) * * *
    (3) * * *
    (ii) Coverage specifically designed to supplement CHAMPUS benefits 
(a health insurance policy or other health benefit plan that meets the 
definition and criteria under supplemental insurance plan as set forth 
in Sec. 199.2(b));
* * * * *
    (d) * * *
    (4) Program for persons with disabilities (PFPWD). A PFPWD eligible 
beneficiary (or sponsor or guardian acting on behalf of the 
beneficiary) does not have the option of waiving the full use of public 
facilities which are determined by the Director, OCHAMPUS, or designee, 
to be available and adequate to meet a disability related need for 
which a PFPWD benefit was requested. Benefits eligible for payment 
under a State plan for medical assistance under Title XIX of the Social 
Security Act (Medicaid) are never considered to be available in the 
adjudication of PFPWD benefits.
* * * * *
    9. Section 199.11 is amended by revising paragraph (g)(1) to read 
as follows:


Sec. 199.11  Overpayments recovery.

* * * * *
    (g) * * *
    (1) Basic considerations. Federal claims against the debtor and in 
favor of the United States arising out of the administration of the 
CHAMPUS may be compromised or collection action taken thereon may be 
suspended or terminated in compliance with the Federal Claims 
Collection Act, 31 U.S.C. 3711(a)(2) as implemented by the Federal 
Claims Collection Standards, 4 CFR parts 101 through 105.
* * * * *
    10. Section 199.20 is amended by revising paragraph (p)(2)(i) to 
read as follows:


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

* * * * *
    (p) * * *
    (2) * * *
    (i) The Program for Persons with Disabilities under Sec. 199.5;
* * * * *

Appendix A to Part 199--[Amended]

    11. Appendix A to Part 199 is amended by revising ``PFTH--Program 
for the Handicapped'' to read ``PFPWD--Program for Persons with 
Disabilities''.

    Dated: June 24, 1997.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 97-17001 Filed 6-27-97; 8:45 am]
BILLING CODE 5000-04-M