[Federal Register Volume 62, Number 246 (Tuesday, December 23, 1997)]
[Proposed Rules]
[Pages 67018-67031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33111]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DoD 6010.8-R]
RIN 0720-AA39


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); Revisions to the Eligibility Requirements

AGENCY: Office of the Secretary, DoD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule revises the comprehensive CHAMPUS 
regulation pertaining to basic CHAMPUS benefits in accordance with 
several statutory changes. This proposed rule: sets forth the 
requirements for reinstatement of CHAMPUS eligibility for beneficiaries 
under age 65 who would otherwise have lost eligibility for CHAMPUS due 
to eligibility for Medicare as a result of disability or end-stage 
renal disease (ESRD); establishes new classes of CHAMPUS eligibles; 
establishes the Transitional Assistance Management Program which 
provides transitional health care for members (and their dependents) 
who served on active duty in support of a contingency operation and for 
members (and their dependents) who are involuntarily separated from 
active duty; allows former spouses who buy a conversion health policy 
to keep CHAMPUS eligibility for twenty-four (24) months for preexisting 
conditions that are not covered by the conversion policy; and makes 
minor technical revisions to the double coverage provisions. This 
proposed rule also adds a new category of eligible beneficiary under 
the Continued Health Care Benefit Program.

DATES: Comments must be received by February 23, 1998.

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

FOR FURTHER INFORMATION CONTACT:

Stephen E. Isaacson, Program Development Branch, OCHAMPUS, telephone 
(303) 361-1172.

SUPPLEMENTARY INFORMATION:

I. Eligibility Requirements

    This proposed rule adds or revises a number of eligibility 
provisions. Following is a brief summary of the classes of 
beneficiaries affected by this proposed rule. Generally, each class is 
eligible for CHAMPUS as a result of the change, and we have included 
the other salient points regarding each, but the reader should refer to 
the subsequent discussion for details regarding the specific conditions 
and requirements for each class.
    CHAMPUS/Medicare dual eligibles.
     Must be under age 65, eligible for Medicare due to 
disability or end-stage renal disease, and enrolled in Medicare Part B.
     Applies to all categories of CHAMPUS beneficiaries except 
dependents of active-duty members.
     Effective October 1, 1991.
    Dependents of a person who dies of an injury, illness, or disease 
incurred on the way to or from training with a duration of 30 days or 
less.
     Retiree cost-sharing.
     Effective November 14, 1986.
    Victims of abuse.
     By a member who was discharged or dismissed as a result of 
a court-martial conviction for the abuse.
     Eligibility limited to one year from member's separation.
     Coverage limited to treatment of conditions resulting from 
abuse.
     Effective November 14, 1986.
     By a member of former member who loses eligibility to 
retired pay as a result of the abuse.
     Effective October 23, 1992.
    Students who become incapable of self-support.
     Must be full-time student.
     The incapacitating condition must occur between the ages 
of 21 and 23.
     Effective October 23, 1992.
    Dependents of an active duty member who dies while on active duty.
     These individuals have always been eligible for CHAMPUS 
with retiree cost-sharing.
     The most recent change provides that all care is to be 
cost-shared as active duty.
     Special cost-sharing is limited to one year.
     Effective October 1, 1993.
     For dependents of active-duty members who die while on 
active duty between January 1, 1993, and October 1, 1993, only care for 
pre-existing conditions is to be cost-shared as active duty.
    Dependents placed in the custody of a member or former member by a 
court or a recognized placement agency.
     Effective July 1, 1994, if placed by a court.
     Effective October 5, 1994, if placed by a recognized 
placement agency.
     This category of beneficiary is also added to the 
Continued Health Care Benefit Program effective October 5, 1994.
    Transitional Assistance Management Program (TAMP)
     Claims for all individuals eligible under TAMP are cost-
shared as active-duty dependents.
     Members released from active duty in connection with 
contingency operations.
     Eligible up to thirty (30) days.
     Effective April 6, 1991.
     Members involuntarily separated with less than six (6) 
years of service.
     Eligible up to sixty (60) days.
     Effective October 1, 1990.
     Members involuntarily separated with six (6) or more years 
of service.
     Eligible up to 120 days.
     Effective October 1, 1990.

II. Reinstatement of CHAMPUS Eligibility for Certain Medicare 
Beneficiaries

A. Regulation Amendment

    The regulation is being amended to implement a series of laws 
enacted to reinstate CHAMPUS eligibility for certain individuals who, 
under previous laws, would have lost their CHAMPUS eligibility due to 
their eligibility for Medicare. This section briefly describes the 
amendment. A discussion of the legislative enactments will then follow, 
providing further explanation of the amendment and the various interim 
actions taken for implementation.
    The amendment provides that CHAMPUS eligibility will be reinstated 
for beneficiaries:
    1. Under age 65;
    2. Who would otherwise have lost eligibility for CHAMPUS due to 
eligibility for Medicare as a result of disability (as defined in 42 
U.S.C. 426(b)(2)) or as a result of end stage renal disease (ESRD) (as 
defined in 42 U.S.C. 426-1(a)); and,
    3. Who are enrolled in the supplementary medical insurance program 
under Medicare Part B.
    Under this amendment, CHAMPUS eligibility will be reinstated 
effective upon the date the individual meets all three requirements 
cited above except that eligibility cannot be reinstated for care 
received prior to October 1, 1991.
    Initially, a special coordination of benefits procedure was 
established by

[[Page 67019]]

law under which CHAMPUS benefits were paid for care received by these 
reinstated eligible beneficiaries. Under that special procedure, 
Medicare benefits would have to be paid first; then CHAMPUS, generally, 
would pay only the amount of the remaining bill which exceeded the 
beneficiaries; CHAMPUS deductible, copayment, and balance billing 
charge. Therefore, the beneficiary usually had to pay a portion of the 
bill even if the amount remaining after Medicare payment did not exceed 
the payment CHAMPUS would have made if the patient had not been 
eligible for Medicare.
    However, under the most recent legislation, the special 
coordination of benefits procedure has been suspended and the normal 
coordination of benefits procedure used by CHAMPUS has been authorized 
for reinstated eligible beneficiaries. Under that procedure, after 
Medicare benefits have been paid, CHAMPUS, generally, will pay the 
amount of the remaining bill up to the amount CHAMPUS would have paid 
if the patient had not been eligible for Medicare. Because some claims 
were processed under the special coordination of benefits procedure 
prior to enactment of this recent legislation, the regulation amendment 
permits beneficiaries to resubmit such claims for reprocessing and 
payment under the normal coordination of benefits procedure.
    Use of the normal coordination of benefits procedure was first 
authorized by the Department of Defense Appropriations Act for FY 1993. 
It was repeated in subsequent appropriations acts and was incorporated 
into the CHAMPUS law by the National Defense Authorization Act for 
Fiscal Year 1995 (P.L. 103-337)

B. Background

    Both section 704 of the National Defense Authorization Act for 
fiscal years 1992 and 1993 (P.L. 102-190) and section 8097 of the 
Department of Defense Appropriations Act, 1002. (P.L. 102-172) 
contained provisions which reinstate CHAMPUS eligibility for certain 
individuals who would otherwise have lost their CHAMPUS eligibility. As 
the Senate Armed Services Committee report stated, ``Under current law, 
a CHAMPUS beneficiary who is classified as fully disabled for two years 
under Social Security standards automatically becomes eligible for 
Medicare and loses CHAMPUS eligibility. This provision would authorize 
CHAMPUS to be a secondary payer to Medicare * * * .'' This action, 
according to the report, ``provides a needed, equitable safely net to 
CHAMPUS beneficiaries who currently lose their CHAMPUS coverage through 
no fault of their own before the normal point of conversion to Medicare 
at age 65.''
    The goal of this provision was to limit the out-of-pocket expenses 
of these individuals. By restoring CHAMPUS eligibility for these 
individuals, the coordination of benefits process will ensure that the 
Medicare payment is at least as much as the CHAMPUS payment would have 
been in the absence of Medicare, and, if it is not, CHAMPUS will pay 
the difference. Individuals will benefit, not only in cases where the 
CHAMPUS cost-share or deductible is less than Medicare's, but by being 
included in the more generous CHAMPUS coverage of certain services, 
notably prescription drugs and mental health services. For example, 
Medicare does not cover prescription drugs, but CHAMPUS does.
    These laws set forth special procedures for determining CHAMPUS 
payment in these dual eligibility cases, and these were distinct from 
the normal coordination of benefits procedures followed by CHAMPUS in 
double coverage situations. These procedures are explained in greater 
detail in Section D of this Section II. In addition, the laws 
established two effective dates depending upon the beneficiary class, 
and they limited application of these provisions to certain beneficiary 
classes. Specifically, only those beneficiaries whose eligibility for 
Medicare was based on disability were able to have their CHAMPUS 
eligibility restored, while those beneficiaries whose Medicare 
eligibility was based on end-stage renal disease (ESRD) were not 
affected by those provision and remained ineligible for CHAMPUS.
    In an attempt to rectify some of the inconsistencies above, further 
statutory changes were made for FY 1993. Section 705 of the National 
Defense Authorization Act for FY 1993 (P.L. 102-484, enacted October 
23, 1992) and Section 9084 of the Department of Defense Appropriations 
Act, 1993 (P.L. 102-396, enacted October 6, 1992) contain provisions 
which affect these procedures. The Authorization Act extended the dual 
eligibility provisions to individuals with ESRD, although the 
Appropriations Act continued to recognize only disabled former members 
and their dependents as eligible for reinstatement of CHAMPUS 
eligibility. On the other hand, the Appropriations Act required use of 
normal coordination of benefits procedures for disabled former members 
and their dependents while the Authorization Act continued to require 
use of the special payment procedures for all beneficiaries whose 
CHAMPUS eligibility was reinstated. The laws also changed the effective 
date of the provisions, making them retroactive to October 1, 1991, and 
eliminating the two effective dates. Lastly, the Appropriations Act 
contained a $20 million limitation on the total CHAMPUS payments which 
could be made under some of the provisions. This limitation is further 
described in Section F. of this Section II.
    Section 302 of the Supplemental Appropriations Act of 1993 (P.L. 
103-50, enacted on July 2, 1993) made additional changes to eliminate 
some of the remaining inconsistencies. It restored CHAMPUS eligibility 
for individuals who would have lost their CHAMPUS eligibility due to 
Medicare eligibility based on ESRD, and thus brought the Appropriations 
Act into agreement with the Authorization Act with regard to the 
individuals affected. It also required that the normal coordination of 
benefits procedures be used for all beneficiaries whose CHAMPUS 
eligibility has been reinstated under these provisions and made this 
retroactive to October 1, 1991. This also affects the application of 
the $20 million limitation on payments as described in Section F. 
below.
    The limitation on payments was not included in the FY 1994 
Appropriation Act, but the procedural differences from the 
authorization act continued. As of FY 1995 the differences were 
resolved by inclusion in the Authorization Act for FY 1995 language 
which specified use of normal double coverage procedures for these 
beneficiaries.

C. Eligibility

    We are applying this provision to all individuals eligible for 
CHAMPUS under title 10, U.S.C., section 1086(c). Initially the 
Appropriations Acts (both P.L. 102-172 and P.L. 102-396) included only 
former members of the Uniformed Services (those who are entitled to 
retired or retainer pay or equivalent pay) and the dependents of such 
former members. However, the Authorization Acts (P.L. 102-190 and P.L. 
102-484) and the Supplemental Appropriations Act of 1993 (as well as 
subsequent authorization and appropriations acts) included these 
beneficiaries as well as former spouses, dependents of deceased active 
duty members, and dependents of deceased former members.
    In addition to meeting the requirements of title 10, U.S.C., 
section 1086(c), individuals also must meet the following requirements 
in order to have their CHAMPUS eligibility restored.

[[Page 67020]]

    1. They must be under age 65, the age at which the beneficiary 
would normally be required to switch from CHAMPUS to Medicare coverage.
    2. They would otherwise have lost their CHAMPUS eligibility due to 
eligibility for Medicare Part A as a result of disability as defined in 
42 U.S.C. 426(b)(2) or ESRD as defined in 42 U.S.C. 426-1(a). Under the 
provisions of the 1992 Authorization and Appropriations Acts, only 
those individuals who are disabled may have their CHAMPUS eligibility 
restored. Individuals under age 65 who have lost their CHAMPUS 
eligibility based on entitlement to Medicare due to ESRD were excluded 
from both Acts. However, the Defense Authorization Act for 1993 and the 
Supplemental Appropriations Act of 1993 (and subsequent acts) included 
ESRD as a basis for reinstating CHAMPUS eligibility for all 
beneficiaries included in title 10, U.S.C. section 1086(c).
    3. The individual must be enrolled in Part B of Medicare. If an 
individual who is enrolled in Part B subsequently disenrolls, CHAMPUS 
eligibility will end effective with the date of termination of Part B 
enrollment. Likewise, CHAMPUS eligibility cannot begin prior to 
enrollment in Part B of Medicare.
    Any individual who meets these eligibility requirements must enroll 
under the Defense Enrollment Eligibility Reporting System (DEERS). 
Enrollment is available through the individual's Uniformed Service at 
the nearest military personnel office. As with all CHAMPUS eligibility, 
it is solely the individual's responsibility to enroll under DEERS, 
and, except as described in Section G. below, no attempt will be made 
by the Office of CHAMPUS (OCHAMPUS), by the CHAMPUS contractors, or by 
any other entity to identify or enroll eligible individuals. In 
enrolling under DEERS, the individual will be required to provide the 
necessary documentation of age, disability or ESRD, and Medicare 
enrollment in Parts A and B.

D. Coordination of Benefits

    These provisions do not affect in any way the CHAMPUS benefits 
available. They only extend CHAMPUS eligibility to the affected 
individuals and provide for payment procedures for CHAMPUS as secondary 
payer to Medicare. These provisions also do not affect the statutory 
limitations regarding CHAMPUS' status as secondary payer to all other 
coverage except Medicaid and CHAMPUS supplemental plans. Therefore, 
before a claim is submitted to CHAMPUS, it first must be submitted to 
all other coverages including Medicare supplemental plans.
    The FY 1992 Authorization and Appropriations Acts required special 
payment procedures for all beneficiaries affected by this provision. 
These procedures were intended to ensure that a beneficiary's out-of-
pocket expenses were no greater than they would have been if CHAMPUS 
were the primary payer. While this ensured that beneficiaries were not 
financially penalized for becoming eligible for Medicare due to 
disability, these procedures often resulted in less CHAMPUS payment 
(and a commensurate increase in beneficiary liability) than would have 
occurred under the normal coordination of benefits procedures. As a 
result of this, the FY 1993 Appropriations Act required normal 
coordination of benefits procedures to be used, but it only applied to 
claims for disabled former members and their dependents. The special 
payment procedures still were to be applied to former members and their 
dependents who are eligible for Medicare based on ESRD as well as to 
all affected dependents of deceased active duty members, dependents of 
deceased former members, and former spouses whether their eligibility 
for Medicare is based upon disability or ESRD. As a result of the 
Supplemental Appropriations Act of 1993 and subsequent authorization 
and appropriations acts, normal coordination of benefits procedures are 
to be applied to all beneficiaries whose CHAMPUS eligibility has been 
reinstated under these provisions.
    Under normal coordination of benefits procedures, CHAMPUS will 
reimburse the difference between the billed amount (or the amount the 
provider is required to accept as full payment) and what the other 
insurance coverage paid, if that difference is less than what CHAMPUS 
would have paid in the absence of other coverage. In most cases, this 
results in no remaining out-of-pocket expense for the beneficiary.
    Under the special payment procedures, CHAMPUS payment was limited 
to the amount by which the patient's Medicare deductible, cost-share, 
and appropriate balance billing costs exceed the patient's CHAMPUS 
deductible, cost-share, and balance billing costs. Since the CHAMPUS 
cost-share for these beneficiaries is often greater than the Medicare 
cost-share or deductible, in many cases this resulted in no CHAMPUS 
payment, and the beneficiary always had out-of-pocket expenses (unless 
the beneficiary also was covered by a Medicare or CHAMPUS supplemental 
plan).
    Even if CHAMPUS makes no payment it is still advantageous to the 
beneficiary for the claim to be submitted to CHAMPUS. On all such 
claims the CHAMPUS cost-sharing and deductible amounts which are paid 
by other health insurance, including Medicare, will be credited toward 
meeting the CHAMPUS deductible and the catastrophic cap. Only by 
submitting these claims to CHAMPUS can the deductible and catastrophic 
cap entries be made, and this can have a significant impact on CHAMPUS 
payments on subsequent claims, especially once the catastrophic cap has 
been met.
    If the care received by a beneficiary is not a benefit under 
Medicare but is under CHAMPUS (e.g. prescription drugs), CHAMPUS will 
process the claim as a routine claim. If the care is a benefit under 
both Medicare and CHAMPUS, the procedures explained above will be 
followed.
    In all cases, claims must first be processed by Medicare, and it 
will be necessary for a Medicare explanation of benefits to be 
forwarded to the CHAMPUS claims processing contractor with the claim. 
The Medicare explanation of benefits must reflect the Medicare payment 
and the patient's Medicare deductible and cost-share.
    This change will be applied on a claim by claim basis. In other 
words, if a beneficiary has an episode of care which involves an 
inpatient hospital stay and care by several professional providers, 
each claim submitted for the care will be processed independently, and 
there will be no attempt made to consolidate the claims.
    The following examples are provided to demonstrate the normal 
CHAMPUS coordination of benefits procedures and the special procedures 
and the impact of each on CHAMPUS payments. Although the special 
procedures are no longer used, we are including them in the examples, 
since the laws required them to be used for a period of time and a 
large number of claims were processed using them.

              1. Example 1--Normal Coordination of Benefits             
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
Hospital bills for inpatient care..........................    $5,722.00
Medicare DRG-based amount..................................     5,368.95
Medicare inpatient hospital deductible.....................       652.00
Medicare payment...........................................     4,716.95
CHAMPUS DRG-based amount...................................     4,949.59

[[Page 67021]]

                                                                        
CHAMPUS beneficiary cost-share.............................  \1\ 1,430.5
                                                                       0
------------------------------------------------------------------------
\1\ For claims paid under the CHAMPUS DRG-based payment system, the cost-
  share is the lesser of a per diem amount ($360 for FY 1997) or 25     
  percent of the billed charge. For this example we assumed a length-of-
  stay of five days.                                                    

    Step 1. Determine CHAMPUS payment in the absence of any other 
coverage. This amount is $3,519.09.
    Step 2. Subtract the Medicare primary payment from the CHAMPUS DRG-
based amount. This leaves $232.64.
    Step 3. Subtract the Medicare primary payment from the hospital's 
charges (or the amount the hospital is obligated to accept as payment 
in full, if that is less than the charges). The hospital must accept 
the Medicare DRG-based amount as payment in full, so this step results 
in $652.00.
    Step 4. Subtract any applicable beneficiary cost-sharing amounts 
from the provider's charges (or the amount the hospital is obligated to 
accept as payment in full, if that is less than the charges). This 
results in $4,043.95.
    Step 5. CHAMPUS payment is the least of Steps 1 through 4. CHAMPUS 
pays $232.64. The beneficiary's liability is zero, since the hospital 
has been paid the full CHAMPUS DRG-based amount, and it must accept 
this as payment in full.

                2. Example 2--Special Payment Procedures                
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
Hospital bills for inpatient care..........................    $5,722.00
Patient liability under medicare:                                       
    Medicare DRG-based amount..............................     5,368.95
    Inpatient hospital Medicare deductible.................       652.00
    Medicare pays..........................................     4,716.95
Patient liability under CHAMPUS:                                        
    CHAMPUS DRG-based amount...............................     4,949.59
    Beneficiary cost-share.................................  \1\ 1,430.5
                                                                       0
------------------------------------------------------------------------
\1\ For claims paid under the CHAMPUS DRG-based payment system, the cost-
  share is the lesser of a per diem amount ($360 for FY 1997) or 25     
  percent of the billed charge. For this example we assumed a length-of-
  stay of five days.                                                    

    Since the beneficiary's liability under Medicare is less than it is 
under CHAMPUS, CHAMPUS makes no payment.
    There are several other ramifications which are pertinent here. 
Since the beneficiary is eligible for CHAMPUS, the claim must be 
submitted to CHAMPUS before the beneficiary can be billed for any 
amounts. CHAMPUS must be billed if there is any remaining beneficiary 
liability after Medicare processes the claim--even if the provider is 
certain that no payment will be made by CHAMPUS. Any attempt to bill 
the beneficiary without first billing CHAMPUS can be considered a 
violation of the statutory-based participation requirement and can 
result in exclusion of the provider by CHAMPUS and possibly by 
Medicare. In the above example, once the claim is submitted to CHAMPUS, 
the CHAMPUS DRG-based allowance ($4,949.59) becomes the full payment 
amount for the claim. Even though CHAMPUS makes no payment, the 
beneficiary liability is decreased from $652 (the Medicare inpatient 
deductible) to $232.64 (the difference between the CHAMPUS DRG-based 
allowance and the amount Medicare paid).

             3. Example 3.--Normal Coordination of Benefits             
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
Physician bills for surgery................................    $1,200.00
Medicare allows............................................      925.000
Medicare cost-share........................................       185.00
Medicare payment...........................................       740.00
(Assumes the deductible has been met)                                   
CHAMPUS allows.............................................       975.00
CHAMPUS cost-share.........................................       243.75
(Assumes the deductible has been met)                                   
------------------------------------------------------------------------

    Step 1: Determine CHAMPUS payment in the absence of any other 
coverage. This amount is $731.25.
    Step 2: Subtract the primary payment from the billed charge. This 
results in $460.00.
    Step 3: CHAMPUS payment is the lesser of Steps 1 and 2. CHAMPUS 
pays $460.00, and the beneficiary's liability is zero.

                4. Example 4.--Special Payment Procedures               
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
Physician bills for surgery................................    $1,200.00
Patient liability under Medicare:                                       
    Medicare allows........................................       925.00
    Medicare cost-share....................................       185.00
    Medicare payment.......................................       740.00
(Assumes the deductible has been met)                                   
Patient liability under CHAMPUS:                                        
    CHAMPUS allows.........................................       975.00
    CHAMPUS cost-share.....................................       243.75
(Assumes the deductible has been met)                                   
------------------------------------------------------------------------

    Since the beneficiary's liability under Medicare is less than it is 
under CHAMPUS, CHAMPUS makes no payment, and the beneficiary's 
liability is $185 if the provider participates or $460 is the provider 
does not participate.

                5. Example 5.--Special Payment Procedures               
------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
Mental illness outpatient care bill........................      $450.00
(This is a benefit where Medicare pays only 50 percent of               
 the allowed charges.)                                                  
Patient liability under Medicare:                                       
    50% of allowed charges.................................       225.00
(Assumes the full billed charge was allowed and the $100                
 deductible has been met.)                                              
Patient liability under CHAMPUS:                                        
    25% of allowed charge..................................       112.50
(Assumes the full billed charge was allowed and the $150                
 deductible has been met)                                               
------------------------------------------------------------------------

    Since Medicare liability is greater than CHAMPUS liability, CHAMPUS 
pays the difference of $112.50, and the beneficiary is liable for the 
remaining $112.50.

E. Effective Date

    According to the FY 1993 Authorization Act and subsequent 
authorization and appropriations acts, the effective date of this 
change is October 1, 1991. This effective date applies only if the 
individual lost CHAMPUS eligibility prior to the effective date. If 
CHAMPUS eligibility was lost after the effective date, CHAMPUS 
eligibility, and use of the payment procedures required by this change, 
will begin on the date the individual first meets the eligibility 
requirements in Section C. above. In this case, effective means that 
the individual's eligibility will begin on the effective date and 
claims will be processed accordingly.
    The above effective date is changed from the effective date 
contained in the FY 1992 Authorization and Appropriation Acts. The 
procedures required by those acts were effective for former members and 
their dependents as of October 1, 1991, and for all other beneficiaries 
in title 10, U.S.C., section 1086(c) as of December 5, 1991.
    As noted in Section C. above, it is the individual's responsibility 
to establish eligibility through DEERS in order to have claims 
processed by CHAMPUS. In many cases this will result in retroactive 
implementation of this change for claims for services incurred between 
the effective date and implementation of the change pursuant to the 
final rule for this change. In order to provide for some closure to 
this retroactive implementation, we propose that beneficiaries will be 
given 180 days

[[Page 67022]]

from the date of publication of the final rule to apply to DEERS for 
reinstatement of their eligibility. After that period, we will begin 
eligibility effective with the date of application to DEERS. In 
addition, these beneficiaries will have 180 days from the date of 
publication of the final rule to submit claims pursuant to their 
reinstated eligibility which are outside of the normal CHAMPUS claims 
filing deadlines.

F. Limitation on Total Payments

    The FY 1993 Appropriations Act provided that ``$20,000,000 shall be 
available * * * to continue Civilian Health and Medical Program of the 
Uniformed Services (CHAMPUS) benefits, until age 65, * * * for a former 
member of the uniformed service who is entitled to retired or retainer 
pay or equivalent pay, or a dependent of such a member, who becomes 
eligible for hospital insurance benefits under part A of title XVIII of 
the Social Security Act * * * solely on the grounds of physical 
disability: * * * .'' We treated this as a maximum limitation on the 
amount that could be spent for these beneficiaries.
    The Supplemental Appropriations Act of 1993 did not directly alter 
this provision. However, as a result of the changes made by the 
Supplemental Appropriations Act of 1993, the limitation applied to all 
beneficiaries ``described by section 1086(c) of title 10, United States 
Code,'' and ESRD in addition to physical disability was included as a 
qualifying condition. As a result, all payments made for reinstated 
beneficiaries were subject to the limitation. This limit was not 
reached in FY 1993, and it was not included in subsequent 
appropriations acts.

III. Establishment of New Classes of CHAMPUS Eligibles

    Several new classes of CHAMPUS eligibles have been added by changes 
to the Department of Defense Authorization Acts for recent years. These 
new classes are:
     Eligible spouses (including former spouses) or children of 
a reservist who died after September 30, 1985, from an injury or 
illness incurred or aggravated while on active duty for a period of 30 
days or less, on active duty for training, or on inactive duty 
training, or while traveling to or from the place at which the 
reservist was to perform, or performed, such active duty, active duty 
for training, or inactive duty training. These beneficiaries are 
eligible for services or supplies provided on or after October 1, 1985, 
and were added by Section 652(c) of the Department of Defense 
Authorization Act, 1986 (P.L. 99-145).
     Eligible spouses (including former spouses) or children of 
a reservist who died from a disease incurred or aggravated after 
November 14, 1986, while on active duty for a period of 30 days or 
less, on active duty for training, or on inactive duty training, or 
while traveling to or from the place at which the reservist was to 
perform, or performed, such active duty, active duty for training, or 
inactive duty training. These beneficiaries are eligible for services 
or supplies provided on or after November 14, 1986, and were added by 
Section 604(a)(1) of the National Defense Authorization Act for Fiscal 
Year 1987 (P.L. 99-661).
     Eligible spouses (including former spouses) and children 
of a member who are victims of abuse by the member and the member 
receives a dishonorable or bad-conduct discharge or is dismissed from a 
Uniformed Service as a result of a court-martial conviction for abuse 
of the dependent, or was administratively discharged as a result of 
such an offense. Medical benefits are limited to treatment of injuries 
resulting from the abuse for one year from the date of the person's 
separation from the Uniformed Service. These beneficiaries are eligible 
for services or supplies provided on or after November 14, 1986, and 
were added by the National Defense Authorization Act for Fiscal Year 
1987 (P.L. 99-661).
     Eligible spouses (including former spouses) and children 
who are victims of abuse by a member or former member of a Uniformed 
Service who, while a member and as a result of misconduct involving 
abuse of a dependent, has eligibility to receive retired pay on the 
basis of years of service terminated. These beneficiaries are eligible 
for services or supplies provided on or after October 23, 1992, and 
were added by Section 653 of the National Defense Authorization Act for 
Fiscal Year 1993 (P.L. 102-484).
     Otherwise eligible dependent children who are not married 
and are incapable of self-support because of a mental or physical 
disability that occurred between the ages of twenty-one (21) and 
twenty-three (23) while the child was enrolled in a full-time course of 
study in an institution of higher learning approved by the 
Administering Secretary or the Department of Education, and is or was 
at the time of the member's or former member's death dependent on the 
member or former member for over one-half of his or her support. The 
incapacity must be continuous. If the incapacity significantly improves 
or ceases at any time, CHAMPUS eligibility cannot be reinstated on the 
basis of the incapacity unless the incapacity recurs and the 
beneficiary is under age twenty-one (21) or is under age twenty-three 
(23) and is enrolled as a full-time student. If the child was not 
incapacitated on his or her twenty-third (23rd) birthday, but becomes 
incapacitated after that date, no CHAMPUS eligibility exists on the 
basis of the incapacity. These beneficiaries are eligible for services 
or supplies provided on or after October 23, 1992, and were added by 
Section 653 of the National Defense Authorization Act for Fiscal Year 
1993 (P.L. 102-484).
     Dependents of active-duty members who die while on active 
duty. These individuals were previously eligible, but now all care is 
to be cost-shared as active duty for one year. These special cost-
sharing provisions apply to services or supplies provided on or after 
October 1, 1993. For dependents of activity-duty members who dies while 
on active duty between January 1, 1993, and October 1, 1993, only care 
for pre-existing conditions is to be cost-shared as active duty. In 
both situations it is important to note that this provision does not 
preclude loss of eligibility during the one-year period as a result of 
any condition which routinely results in loss of CHAMPUS eligibility 
such as reaching age limits, remarriage, etc. These provisions were 
added by Section 707(c) of the National Defense Authorization Act for 
Fiscal Year 1995 (P.L. 103-337).
     Dependents who are placed in the custody of a member or 
former member by a court for a period of twelve (12) consecutive months 
or more. These beneficiaries are eligible for services or supplies 
provided on or after July 1, 1994, and were added by Section 701 of the 
National Defense Authorization Act for Fiscal Year 1994 (P.L. 103-160).
     Dependents who are placed in the home of a member or 
former member by a placement agency which is recognized by the 
Secretary of Defense in anticipation of the legal adoption of the 
child. These beneficiaries are eligible for services or supplies 
provided on or after October 5, 1994, and were added by Section 701 of 
the National Defense Authorization Act for Fiscal Year 1995 (P.L. 103-
337).

IV. Transitional Assistance Management Program

    Based upon the provision of the National Defense Authorization Act, 
FY 1991 (P.L. 101-510), the Persian Gulf Conflict Supplemental 
Authorization and Personnel Benefits Act of 1991 (P.L. 102-25), and the 
National Defense Authorization Act, FY 1995, transitional health care 
benefits under CHAMPUS

[[Page 67023]]

have been authorized for certain service members and their families 
under limited circumstances. The categories affected include members 
and their dependents who served in connection with contingency 
operations and those members otherwise subject to involuntary 
separations from active duty. The program that implements these 
provisions is known as the Transitional Assistance Management Program 
(TAMP). All individuals eligible under TAMP will be subject to the same 
cost-sharing requirements applicable to dependents of active-duty 
members.
    Under TAMP, members who are released from active duty in connection 
with contingency operations are eligible for CHAMPUS for up to thirty 
(30) days or until covered by an employer-sponsored health plan, 
whichever occurs first. The earliest effective date of eligibility for 
these beneficiaries is April 6, 1991.
    UnderTAMP, members who are involuntarily separated with less than 
six (6) years of active service are eligible for CHAMPUS for sixty (60) 
days. Members who are involuntarily separated with six (6) or more 
years of active service are eligible for CHAMPUS for 120 days. The TAMP 
provisions applicable to involuntary separations are effective for nine 
years beginning October 1, 1990.
    TAMP also provided for extended CHAMPUS coverage for certain 
individuals on a premium basis. Previously, these individuals, upon 
losing CHAMPUS eligibility, were eligible to purchase temporary 
coverage under a plan arranged by the Department of Defense with Mutual 
of Omaha Insurance Company. This plan was known as Uniformed Services 
Voluntary Insurance Policy (US VIP). Section 4408 of P.L. 102-484 
significantly revised this program. The program is now required to 
provide coverage with premiums and benefits comparable to the Federal 
Employees Health Benefits Program (FEHBP) and for 18 to 36 months 
depending on the eligibility category. The program is known as the 
Continued Health Care Benefit Program (CHCBP) and is described in 
detail in 32 CFR Part 199.20. Eligibility under the CHCBP is extended 
to certain members who are discharged or released from active duty, 
whether voluntarily, or involuntarily, under other than adverse 
condition, to certain former spouses of members or former members, and 
to certain children of a member or former member who otherwise would 
not meet the requirements for eligibility as a dependent. Although 
technically these individuals are not CHAMPUS beneficiaries, this 
program is mentioned here because it will enable these individuals to 
purchase coverage similar to CHAMPUS. The program began October 1, 
1994, and specific implementation procedures have been published.

V. Extension of Eligibility Period for Former Spouses Who Buy a 
Conversion Health Policy

    Subsections 4407(b) and (c) of the National Defense Authorization 
Act for Fiscal Year 1993 amended Section 1086a of title 10 U.S.C. to 
allow otherwise eligible former spouses who buy a conversion health 
policy to keep CHAMPUS eligibility for twenty-four (24) months for 
preexisting conditions that are not covered by the conversion policy. 
The previous limit on such extended CHAMPUS benefits was one year. This 
provision applied only to the USVIP policies, and the CHCBP does not 
have an exclusion for preexisting conditions. Since the USVIP expired 
on September 30, 1994, this two-year extension of CHAMPUS benefits was 
effective only until September 30, 1996. Therefore, we re not including 
any change to the regulation to incorporate this provision, since this 
provision has already expired.

VI. Eligibility Determinations

    Although OCHAMPUS is tasked with publishing legislatively mandated 
eligibility changes to Title 10 U.S.C., determination of dependent 
eligibility for CHAMPUS is the primary responsibility of the Uniformed 
Services. CHAMPUS relies primarily on the Defense Enrollment 
Eligibility Reporting System (DEERS) for eligibility verification. 
However, a determination by the Uniformed Services that a person is 
eligible does not automatically entitle such a person to CHAMPUS 
payments. Before any CHAMPUS benefits may be extended, additional 
requirements of CFR Part 199 must be met. Disputes regarding 
eligibility as a dependent or dates of beginning eligibility for 
benefits under CHAMPUS can only be resolved by the appropriate 
Uniformed Service Secretary.

VII. Technical Revisions to the Double Coverage Provisions

    We are also making several wording changes to Paragraph (a) of 
Section 199.8, Double Coverage, in order to make it conform to the 
latest version of 10 U.S.C. 1079(j)(1) as revised by Section 713, P.L. 
102-190. These changes merely revise some of the wording and have no 
affect on the actual double coverage procedures under CHAMPUS. We are 
making them at this time, since Section 199.8 is being revised by this 
rule.

VIII. Addition of New Category of Eligible Beneficiary Under the 
Continued Health Care Benefit Program (CHCBP)

    Section 702 of the 1995 National Defense Authorization Act (P.L. 
103-337) expanded the eligibility for health care coverage under the 
CHCBP to a fourth group of beneficiaries from the group originally 
authorized in the CHCBP Final Rule, published in the Federal Register 
on September 30, 1994, (59 FR 49817). Eligibility to enroll in the 
CHCBP has been expanded to now include unmarried persons placed in the 
legal custody of a member or former member as the result of a court 
order or by a placement agency recognized by the Secretary of Defense.
    Health care coverage in the CHCBP is for a specific time period. 
For the new group of eligible beneficiaries--unmarried persons placed 
in the legal custody of a member or former member (age 21 if not in 
college or up to age 23 if in college)--coverage can be up to a total 
of 36 months. These individuals will have 60 days to enroll beginning 
the date they become eligible.
    This change is effective October 5, 1994.

IX. Regulatory Procedures

    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 not a significant regulatory action under 
Executive Order 12866. The changes set forth in this proposed rule are 
minor revisions to the existing regulation. Since this proposed rule 
does not impose information collection requirements, it does not need 
to be reviewed by the Executive Office of Management and Budget under 
authority of the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 
35).

List of Subjects in 32 CFR Part 199

    Claims, Health insurance, Individuals with disabilities, Military 
personnel, Reporting and recordkeeping requirements.

    Accordingly, 32 CFR Part 199 is amended as follows:

PART 199--[AMENDED]

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


[[Page 67024]]


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

    2. Section 199.2 is amended by adding new definitions for Abused 
dependent, Deceased reservist, Deceased retiree, Former member, Member, 
Reservist in alphabetical order, by removing the definition for 
Deceased service member and adding in alphabetical order a new 
definition for Deceased member, and by revising the definitions for 
Child, Defense Enrollment Eligibility Reporting System (DEERS), 
Dependent, Sponsor, Spouse, Widow or Widower to read as follows:


Sec. 199.2  Definitions.

* * * * *
    (b) * * *
    Abused dependent. An eligible spouse or child, who meets the 
criteria in Sec. 199.3 of this part, of a former member who received a 
dishonorable or bad-conduct discharge or was dismissed from a Uniformed 
Service as a result of a court-martial conviction for an offense 
involving physical or emotional abuse or was administratively 
discharged as a result of such an offense, or of a member or former 
member who has had their entitlement to receive retired pay terminated 
because of misconduct involving physical or emotional abuse.
* * * * *
    Child. An unmarried child of a member or former member, who meets 
the criteria (including age requirements) in Sec. 199.3 of this part.
* * * * *
    Deceased member. A person who, at the time of his or her death, was 
an active duty member of a Uniformed Service under a call or order that 
did not specify a period of 30 days or less.
    Deceased reservist. A reservist in a Uniformed Service who incurs 
or aggravates an injury, illness, or disease, during, or on the way to 
or from, active duty training for a period of 30 days or less or 
inactive duty training and dies as a result of that specific injury, 
illness or disease.
    Deceased retiree. A person who, at the time of his or her death, 
was entitled to retired or retainer pay or equivalent pay based on duty 
in a Uniformed Service. For purposes of this part, it also includes a 
person who died before attaining age 60 and at the time of his or her 
death:
    (1) Would have been eligible for retired pay as a reservist but for 
the fact that he or she was not 60 years of age; and
    (2) Had elected to participate in the Survivor Benefit Plan 
established under chapter 73 of tile 10 U.S.C.
* * * * *
    Defense Enrollment Eligibility Reporting System (DEERS). An 
automated system maintained by the Department of Defense for the 
purpose of:
    (1) Enrolling members, former members and their dependents; and
    (2) Verifying members', former members' and their dependents' 
eligibility for health care benefits in the direct care facilities and 
for CHAMPUS.
* * * * *
    Dependent. Individuals whose relationship to the sponsor (including 
NATO members who are stationed in or passing through the United States 
on official business when authorized) leads to entitlement to benefits 
under this part. (See Sec. 199.3 of this part for specific categories 
of dependents).
* * * * *
    Former member. A retiree, deceased member, deceased retiree, or 
deceased reservist in certain circumstances (see Sec. 199.3 of this 
part for additional information related to certain deceased reservists' 
dependents' eligibility). Under conditions specified under Sec. 199.3 
of this part, former member may also include a member of the Uniformed 
Services who has been discharged from active duty (or, in some cases, 
full-time National Guard duty), whether voluntarily or involuntarily, 
under other than adverse conditions and qualifies for CHAMPUS benefits 
under the Transitional Assistance Management Program or the Continued 
Health Care Benefits Program.
* * * * *
    Member. A person on active duty in a Uniformed Service under a call 
or order that does not specify a period of 30 days or less. (For 
CHAMPUS cost-sharing purposes only, a former member who received a 
dishonorable or bad-conduct discharge or was dismissed from a Uniformed 
Service as a result of a court-martial conviction for an offense 
involving physical or emotional abuse or was administratively 
discharged as a result of such an offense is considered a member).
* * * * *
    Reservist. A person who is under an active duty call or order to 
one of the Uniformed Services for a period of 30 days or less or is on 
inactive training.
* * * * *
    Sponsor. A member or former member of a Uniformed Service upon 
whose status his or her dependents' eligibility for CHAMPUS is based. A 
sponsor also includes a person who, while a member of the Uniformed 
Services and after becoming eligible to be retired on the basis of 
years of service, has his or her eligibility to receive retired pay 
terminated as a result of misconduct involving abuse of a spouse or 
dependent child. It also includes NATO members who are stationed in or 
passing through the United States on official business when authorized. 
It also includes individuals eligible for CHAMPUS under the 
Transitional Assistance Management Program.
    Spouse. A lawful husband or wife, who meets the criteria in 
Sec. 199.3 of this part, regardless of whether or not dependent upon 
the member or former member for his or her own support.
* * * * *
    Widow or Widower. A person who was a spouse at the time of death of 
a member or former member and who has not remarried.
* * * * *
    3. Section 199.3 is revised 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. A determination that a 
person is eligible does not automatically entitle such a person to 
CHAMPUS payments. Before any CHAMPUS benefits may be extended, 
additional requirements, as set forth in other sections of this Part, 
must be met. Additionally, the use of CHAMPUS may be denied if a 
Uniformed Service medical treatment facility capable of providing the 
needed care is available. CHAMPUS relies primarily on the Defense 
Enrollment Eligibility Reporting System (DEERS) for eligibility 
verification.
    (b) CHAMPUS eligibles--(1) Retiree. A member or former member of a 
Uniformed Service who is entitled to retired, retainer, or equivalent 
pay based on duty in a Uniform Service.
    (2) Dependent. Individuals whose relationship to the sponsor leads 
to entitlement to benefits. CHAMPUS eligible dependent include the 
following:
    (i) Spouse. A lawful husband or wife of a member or former member. 
The spouse of a deceased member or retiree must not be remarried. A 
former spouse also may qualify for benefits as a dependent spouse. A 
former spouse is a spouse who was married to a military member, or 
former member, but whose marriage has been terminated by a final decree 
of divorce, dissolution or annulment. To be eligible for CHAMPUS 
benefits, a former spouse must meet the criteria described in paragraph 
(b)(2)(i)(A) through (b)(2)(i)(E) of this section and must qualify 
under

[[Page 67025]]

the group defined in paragraph (b)(2)(i)(F)(1) or (b)(2)(i)(F)(2):
    (A) Must be unremarried; and
    (B) Must not be covered by an employer-sponsored health plan; and
    (C) Must have been married to a member or former member who 
performed at least 20 years of service which can be credited in 
determining the member's or former member's eligibility for retired or 
retainer pay; and
    (D) Must not be eligible for Part A of Title XVII of the Social 
Security Act (Medicare) except as provided in paragraphs (f)(3)(viii) 
and (f)(3)(ix) of this section; and
    (E) Must not be the dependent of a NATO member; and
    (F) Must meet the requirements of paragraph (b)(2)(i)(F)(1) or 
(b)(2)(i)(F)(2) of this section:
    (1) The former spouse must have been married to the same member or 
former member for at least 20 years, at least 20 of which were 
creditable in determining the member's or former member's eligibility 
for retired or retainer pay. Eligibility continues indefinitely unless 
affected by any of the conditions of paragraphs (b)(2)(i)(A) through 
(b)(2)(i)(E).
    (i) If the date of the final decree of divorce, dissolution, or 
annulment was before February 1, 1983, the former spouse is eligible 
for CHAMPUS coverage of health care received on or after January 1, 
1985.
    (ii) If the date of the final decree of the divorce, dissolution, 
or annulment was on or after February 1, 1983, the former spouse is 
eligible for CHAMPUS coverage of health care which is received on or 
after the date of the divorce, dissolution, or annulment.
    (2) The former spouse must have been married to the same member or 
former member for at least 20 years, and at least 15, but less than 20 
of those married years were creditable in determining the member's or 
former member's eligibility for retired or retainer pay.
    (i) If the date of the final decree of divorce, dissolution, or 
annulment is before April 1, 1985, the former spouse is eligible only 
for care received on or after January 1, 1985, or the date of the 
divorce, dissolution, or annulment, whichever is later. Eligibility 
continues indefinitely unless affected by any of the conditions of 
paragraphs (b)(2)(i)(A) through (b)(2)(i)(E).
    (ii) If the date of the final decree of divorce, dissolution or 
annulment is on or after April 1, 1985, but before September 29, 1988, 
the former spouse is eligible only for care received from the date of 
the decree of divorce, dissolution, or annulment until December 31, 
1988, or for two years from the date of the divorce, dissolution, or 
annulment, whichever is later.
    (iii) If the date of the final decree of divorce, dissolution, or 
annulment is on or after September 29, 1988, the former spouse is 
eligible only for care received within the 365 days (366 days in the 
case of a leap year) immediately following the date of the divorce, 
dissolution, or annulment.
    (ii) Child. A dependent child is an unmarried child of a member or 
former member who has not reached his or her twenty-first (21st) 
birthday, except an incapacitated adopted child meeting the 
requirements of paragraph (b)(2)(ii)(H)(2) of this section, and who 
bears one of the following relationships to a member or former member 
of one of the Uniformed Services:
    (A) A legitimate child; or
    (B) An adopted child whose adoption has been legally completed on 
or before the child's twenty-first (21st) birthday; or
    (C) A legitimate stepchild; or
    (D) An illegitimate child of a member or former member whose 
paternity/maternity has been determined judicially, and the member or 
former member directed to support the child; or
    (E) An illegitimate child of a member or former member whose 
paternity/maternity has not been determined judicially, who resides 
with or in the home provided by the member or former member, and is or 
continues to be dependent upon the member or former member for over 
one-half of his or her support, or who was so dependent on the former 
member at the time of the former member's death; or
    (F) An illegitimate child of a spouse of a member who resides with 
or in a home provided by the member and is, and continues to be 
dependent upon the member for over one-half of his or her support; or
    (G) An illegitimate child of a spouse of a former member who 
resides with or in a home provided by a former member or the former 
member's spouse at the time of death of the former member, and is, or 
continues to be, or was, dependent upon the former member for more than 
one-half of his or her support at the time of death; or
    (H) An individual who falls into one of following classes:
    (1) A student. A child determined to be a member of one of the 
classes in paragraphs (b)(2)(ii)(A) through (b)(2)(ii)(G) of this 
section, who is not married, has passed his or her 21st birthday but 
has not passed his or her 23rd birthday, is dependent upon the member 
or former member for over 50 percent of his or her support or was 
dependent upon the member or former member for over 50 percent of his 
or her support on the date of the member's or former member's death, 
and is pursuing a full-time course of education in an institution of 
higher learning approved by the Secretary of Defense or the Department 
of Education (as appropriate) or by a state agency under 38 U.S.C., 
Chapters 34 and 35.

    Note to paragraph (b)(2)(ii)(H)(1): Courses of education offered 
by institutions listed in the ``Education Directory, ``Higher 
Education'' or ``Accredited Higher Institutions'' issued 
periodically by the Department of Education meet the criteria 
approved by the Administering Secretary or the Secretary of 
Education. For determination of approval of courses offered by a 
foreign institution, by an institution not listed in either of the 
above directories, or by an institution not approved by a state 
agency pursuant to 38 U.S.C. chapters 34 and 35, a statement may be 
obtained from the Department of Education, Washington, D.C. 20202.

    (2) An incapacitated child. A child determined to be a member of 
one of the classes in paragraphs (b)(2)(ii)(A) through (b)(2)(ii)(G) of 
this section, who is not married, has not attained the age of 21, and 
is incapable of self-support because of a mental or physical disability 
that:
    (i) Existed before the child's twenty-first (21st) birthday; or
    (ii) Occurred between the ages of 21 and 23 while the child was 
enrolled in a full-time course of study in an institution of higher 
learning approved by the Administering Secretary or the Department of 
Education (see Note to paragraph (b)(2)(ii)(H)(2)), and is or was at 
the time of the member's or former member's death dependent on the 
member or former member for over one-half of his or her support; and
    (iii) The incapacity is continuous. (If the incapacity 
significantly improves or ceases at any time, CHAMPUS eligibility 
cannot be reinstated on the basis of the incapacity, unless the 
incapacity recurs and the beneficiary is under age 21, or is under age 
23 and is enrolled as a full-time student under paragraph 
(b)(2)(ii)(H)(2)(ii) of this section. If the child was not 
incapacitated after that date, no CHAMPUS eligibility exists on the 
basis of the incapacity. However, incapacitated children who marry and 
who subsequently become unmarried through divorce, annulment, or death 
of spouse, may be reinstated as long as they still meet all other 
requirements).

    Note to paragraph (b)(2)(ii)(H)(2): An institution of higher 
learning is a college, university, or similar institution, including 
a technical or business school, offering post-

[[Page 67026]]

secondary level academic instruction that leads to an associate or 
higher degree, if the school is empowered by the appropriate State 
education authority under State law to grant an associate, or 
higher, degree. When there is no State law to authorize the granting 
of a degree, the school may be recognized as an institution of 
higher learning if it is accredited for degree programs by a 
recognized accrediting agency. The term also shall include a 
hospital offering educational programs at the post-secondary level 
regardless of whether the hospital grants a post-secondary degree. 
The term also shall include an educational institution that is not 
located in a State, that offers a course leading to a standard 
college degree, or the equivalent, and that is recognized as such by 
the Secretary of Education (or comparable official) of the country, 
or other jurisdiction, in which the institution is located (38 
U.S.C. chapter 34, section 1661, and chapter 35, section 1701). 
Courses of education offered by institutions listed in the 
``Education Directory'', ``Higher Education'' or ``Accredited Higher 
Institutions'' issued periodically by the Department of Education 
meet the criteria approved by the Administering Secretary or the 
Secretary of Education. For determination of approval of courses 
offered by a foreign institution, by an institution not listed in 
either of the above directories, or by an institution not approved 
by a state agency pursuant to 38 U.S.C. chapters 34 and 35, a 
statement may be obtained from the Department of Education, 
Washington, D.C. 20202.

    (3) A child of a deceased reservist. A child, who is determined to 
be a member of one of the classes in paragraphs (b)(2)(ii)(A) through 
(b)(2)(ii)(G) of this section, of a reservist in a Uniformed Service 
who incurs or aggravates an injury, illness, or disease, during, or on 
the way to or from, active duty training for a period of 30 days or 
less or inactive duty training, and the reservist dies as a result of 
that specific injury, illness or disease.
    (4) A child placed in legal custody of a member or former member. A 
child who is placed in legal custody of a member or former member by a 
court or who is placed in the home of a member or former member by a 
recognized placement agency in anticipation of the legal adoption of 
the child.
    (iii) Abused dependents.--(A) Categories of abused dependents. An 
abused dependent may be either a spouse or a child. Eligibility for 
either class of abused dependent results from being either:
    (1) The spouse (including a former spouse) or child of a member who 
has received a dishonorable or bad-conduct discharge, or dismissal from 
a Uniformed Service as a result of a court-martial conviction for an 
offense involving physical or emotional abuse of the spouse or child, 
or was administratively discharged as a result of such an offense. 
Medical benefits are limited to care related to the physical or 
emotional abuse and for a period of 12 months following the member's 
separation from the Uniformed Service.
    (2) The spouse (including a former spouse) or child of a member or 
former member who while a member and as a result of misconduct 
involving abuse of the spouse or child has eligibility to receive 
retired pay on the basis of years of service terminated.
    (B) Requirements for categories of abused dependents. (1) Abused 
spouse. As long as the spouse is receiving payments from the Dod 
Military Retirement Fund under court order, the spouse is eligible for 
health care under the same conditions as any spouse of a retired 
member. The abused spouse must:. 
    (i) Under paragraph (b)(2)(iii)(A)(1) of this section, be a lawful 
husband or wife or a former spouse of the member; or
    (ii) Under paragraph (b)(2)(iii)(A)(2) of this section, be a lawful 
husband or wife or a former spouse of the member or former member, and 
the spouse is receiving payments from the Department of Defense 
Military Retirement Fund under 10 U.S.C. 1408(h) pursuant to a court 
order; and--
    (A) Be a victim of the abuse; and
    (B) Have been married to the member or former member at the time of 
the abuse; or
    (C) Be the natural or adoptive parent of a dependent child of the 
member or former member who was the victim of the abuse.
    (2) Abused child. The abused child must:
    (i) Under paragraph (b)(2)(iii)(A)(1) of this section, be a 
dependent child of the member or former member.
    (ii) Under paragraph (b)(2)(iii)(A)(2) of this section--
    (A) Have been a member of the household where the abuse occurred; 
and
    (B) Be an unmarried legitimate child, including an adopted child or 
stepchild of the member or former member; and
    (C) Be under the age of 18; or
    (D) Be incapable of self support because of a mental or physical 
incapacity that existed before becoming 18 years of age and be 
dependent on the member or former member for over one-half of his or 
her support; or
    (E) If enrolled in a full-time course of study in an institution of 
higher learning recognized by the Secretary of Defense (for the purpose 
of 10 U.S.C. 1408(h)), be under 23 years of age and be dependent on the 
member or former member for over one-half of his or her support.
    (iii) The dependent child is eligible for health care, regardless 
of whether any court order exists, under the same conditions as any 
dependent of a retired member.
    (3) TAMP eligibles. A former member, including his or her 
dependents, who is eligible under the provisions of the Transitional 
Assistance Management Program as described in paragraph (e) of this 
section.
    (c) Beginning dates of eligibility. (1) Beginning dates of 
eligibility dependent on the class to which the individual belongs and 
the date the individual became a member of the class. Those who join 
after the class became eligible attain individual eligibility on the 
date they join.
    (2) Beginning dates of eligibility for each class of spouse 
(excluding spouses who are victims of abuse and eligible spouses of 
certain deceased reservists) are as follows:
    (i) A spouse of a member for:
    (A) Medical benefits authorized by the Dependents' Medical Care Act 
of 1956, December 7, 1956;
    (B) Outpatient medical benefits under the Basic Program, October 1, 
1966;
    (C) Inpatient medical benefits under the Basic Program and benefits 
under the Program for Persons with Disabilities (formerly known as the 
Program for the Handicapped), January 1, 1967;
    (ii) A spouse of a former member:
    (A) For medical benefits under the Basic Program, January 1, 1967;
    (B) Ineligible for benefits under the Program for Persons with 
Disabilities (formerly known as the Program for the Handicapped);
    (iii) A former spouse:
    (A) For medical benefits under the Basic Program, dates of 
beginning eligibility are as indicated for each category of eligible 
former spouse identified in paragraph (b)(2)(i) of this section;
    (B) Ineligible for benefits under the Program for Persons with 
Disabilities (formerly known as the Program for the Handicapped).
    (3) Beginning dates of eligibility for spouses who are victims of 
abuse (excluding spouses who are victims of abuse of certain deceased 
reservists) are as follows:
    (i) An abused spouse meeting the requirements of paragraph 
(b)(2)(iii) of this section, including an eligible former spouse:
    (A) For medical and dental care for problems associated with the 
physical or emotional abuse under the Basic Program for a period of up 
to one year (12 months) following the person's separation from the 
Uniformed Service, November 14, 1986.
    (B) For medical and dental care for problems associated with the 
physical

[[Page 67027]]

or emotional abuse under the Program for Persons with Disabilities 
(formerly known as the Program for the Handicapped) for a period up to 
one year (12 months) following the person's separation from the 
Uniformed Service, November 14, 1986.
    (ii) An abused spouse meeting the requirements of paragraph 
(b)(2)(iii) of this section, including an eligible former spouse:
    (A) For all benefits under the CHAMPUS Basic Program, October 23, 
1992.
    (B) Ineligible for benefits under the Program for Persons with 
Disabilities (formerly known as the Program for the Handicapped).
    (4) Beginning dates of eligibility for spouses of certain deceased 
reservists, including spouses who are victims of abuse of certain 
deceased reservists, are as follows:
    (i) A spouse meeting the requirements of paragraph (b)(2)(i) of 
this section, including an eligible former spouse:
    (A) For benefits under the Basic Program, November 14, 1986.
    (B) Ineligible for benefits under the Program for Persons with 
Disabilities (formerly known as the Program for the Handicapped).
    (ii) An abused spouse of certain deceased reservists, meeting the 
requirements of paragraph (b)(2)(iii) of this section, including an 
eligible former spouse, for the limited benefits and period of 
eligibility described in paragraph (b)(2)(iii) of this section:
    (A) For benefits under the Basic Program, November 14, 1986.
    (B) For benefits under the Program for Persons with Disabilities 
(formerly known as the Program for the Handicapped), November 14, 1986.
    (iii) An abused spouse of certain deceased reservists, including an 
eligible former spouse, meeting the requirements of paragraph 
(b)(2)(iii) of this section:
    (A) For benefits under the Basic Program, October 23, 1992.
    (B) Ineligible for benefits under the Program for Persons with 
Disabilities (formerly known as the Program for the Handicapped).
    (5) Beginning dates of eligibility for each class of dependent 
children, (excluding dependent children of certain deceased reservists, 
abused children and incapacitated children whose incapacity occurred 
between the ages of 21 and 23 while enrolled in a full-time course of 
study in an institution of higher learning), are as follows:
    (i) Legitimate child, adopted child, or legitimate stepchild of a 
member, for:
    (A) Medical benefits authorized by the Dependents' Medical Care Act 
of 1956, December 7, 1956.
    (B) Outpatient medical benefits under the Basic Program, October 1, 
1966.
    (C) Inpatient medical benefits under the Basic Program and benefits 
under the Program for Persons with Disabilities (formerly known as the 
Program for the Handicapped), January 1, 1967.
    (ii) Legitimate child, adopted child or legitimate stepchild of 
former members:
    (A) For medical benefits under the Basic Program, January 1, 1967.
    (B) Ineligible for benefits under the Program for Persons with 
Disabilities (formerly known as the Program for the Handicapped).
    (iii) Illegitimate child of a male or female member or former 
member whose paternity/maternity has been determined judicially and the 
member or former member has been directed to support the child, for:
    (A) All benefits for which otherwise entitled, August 31, 1972.
    (B) Program for Persons with Disabilities (formerly known as the 
Program for the Handicapped) benefits limited to dependent children of 
members only, August 31, 1972.
    (iv) Illegitimate child of:
    (A) A male member or former member whose paternity has not been 
determined judicially;
    (B) A female member or former member who resides with, or in a home 
provided by the member or former member, or who was residing in a home 
provided by the member or former member at the time of the member's or 
former member's death, and who is or continues to be dependent on the 
member for over one-half of his or her support, or was so dependent on 
the member or former member at the time of death;
    (C) A spouse of a member or former member who resides with or in a 
home provided by the member or former member, or the parent who is the 
spouse of the member or former member or was the spouse of a member or 
former member at the time of death, and who is and continues to be 
dependent upon the member or former member for over one-half or his or 
her support, or was so dependent on the member or former member at the 
time of death; for:
    (1) All benefits for which otherwise eligible, January 1, 1969.
    (2) Program for Persons with Disabilities (formerly known as the 
Program for the handicapped) limited to dependent children of members 
only, January 1, 1969.
    (v) An adopted child, 21 years or older, with an incapacitating 
condition that existed before the age of 21, who was adopted after the 
age of 21, who has been residing with a member or former member for at 
least 12 months prior to the date of the adoption and is, or continues 
to be, dependent upon the member or former member for over one-half of 
his or her support, or was so dependent upon the former member at the 
time of the former member's death; for:
    (A) All benefits for which otherwise entitled, October 23, 1992.
    (B) Program for Persons with Disabilities (formerly known as the 
Program for the Handicapped) benefits limited to dependents of members 
only, October 23, 1992.
    (6) Beginning dates of eligibility for children of certain deceased 
reservists who meet the requirements of paragraph (b)(2)(ii)(H)(3) of 
this section, excluding incapacitated children who meet the 
requirements of paragraph (b)(2)(ii)(H)(2) of this section, for:
    (i) Benefits under the Basic program, November 14, 1986.
    (ii) Not eligible for benefits under the Program for Persons with 
Disabilities (formerly known as the Program for the Handicapped).
    (7) Beginning dates of eligibility for children who are victims of 
abuse who meet the requirements of paragraph (b)(2)(iii) of this 
section, including incapacitated children who meet the requirements of 
paragraph (b)(2)(ii)(H)(2) of this section for:
    (i) Medical and dental care for problems associated with the 
physical or emotional abuse under the Basic Program for a period of up 
to one year (12 months) following the person's separation from the 
Uniformed Service, November 14, 1986.
    (ii) Medical and dental care for problems associated with the 
physical or emotional abuse under the Program for Persons with 
Disabilities (formerly known as the Program for the Handicapped) for a 
period up to one year (12 months) following the person's separation 
from the Uniformed Service, November 14, 1986.
    (8) Beginning dates of eligibility for incapacitated children who 
meet the requirements of paragraph (b)(2)(ii)(H)(2) of this section, 
whose incapacity occurred between the ages of 21 and 23 while enrolled 
in a full-time course of study in an institution of higher learning 
approved by the Administering Secretary or the Department of Education, 
and, are or were at the time of the member's or former member's death, 
dependent on the member or former member for over one-half of their 
support for:

[[Page 67028]]

    (i) All benefits for which otherwise entitled; October 23, 1992.
    (ii) Program for Persons with Disabilities (formerly known as the 
Program for the Handicapped) benefits limited to children of members 
only, October 23, 1992.
    (9) Beginning dates of eligibility for a child who meets the 
requirements of paragraph (b)(2)(ii)(H)(4) and:
    (i) Has been placed in custody by a court:
    (A) All benefits for which entitled, July 1, 1994.
    (B) Program for Persons with Disabilities (formerly known as the 
Program for the Handicapped) benefits limited to children of members 
only, July 1, 1994.
    (ii) Has been placed in custody by a recognizing adoption agency:
    (A) All benefits for which entitled, October 5, 1994.
    (B) Program for Persons with Disabilities (formerly known as the 
Program for the Handicapped) benefits limited to children of members 
only, October 5, 1994.
    (10) Beginning dates of eligibility for a retiree for:
    (i) Medical benefits under the Basic Program January 1, 1967.
    (ii) Retirees and their dependents are not eligible for benefits 
under the Program for Persons with Disabilities (formerly known as the 
Program for the Handicapped).
    (d) Dual eligibility. Dual eligibility occurs when a person is 
entitled to benefits from two sources. For example, when an active duty 
member is also the dependent of another active duty member, a retiree, 
or a deceased active duty member or retiree, dual eligibility, that is, 
entitlement to direct care from the Uniformed Services medical care 
system and CHAMPUS is the result. Since the active duty status is 
primary, and it is the intent that all medical care be provided an 
active duty member through the Uniformed Services medical care system, 
CHAMPUS eligibility is terminated as of 12:01 a.m. on the day following 
the day the dual eligibility begins. However, any dependent children in 
a marriage of two active duty persons or of an active duty member and a 
retiree, are CHAMPUS eligible in the same manner as dependent children 
of a marriage involving only one CHAMPUS sponsor. Should a spouse or 
dependent who has dual eligibility leave active duty status, that 
person's CHAMPUS eligibility is reinstated as of 12:01 a.m. of the day 
active duty ends, if he or she otherwise is eligible as a dependent of 
a CHAMPUS sponsors.

    Note to paragraph (d): No CHAMPUS eligibility arises as the 
result of the marriage of two active duty members.

    (e) Eligibility under the Transitional Assistance Management 
Program (TAMP). Transitional health care benefits under CHAMPUS are 
authorized for the applicable time period described as follows for:
    (1) Up to thirty (30) days or until again covered by an employer-
sponsored health plan, whichever occurs earlier, following release from 
active duty for:
    (i) Activated Guard/Reserve and their dependents;
    (ii) Involuntary stop-loss and their dependents; and
    (iii) Voluntary stop-loss and their dependents; and
    (iv) Members who accepted Voluntary Separation Incentives (VSI).
    (2) Sixty (60) days for regular DoD military and their dependents 
when the sponsor is involuntarily separated with less than six years of 
active service. Involuntary separation must occur during the five year 
period beginning October 1, 1990.
    (3) One hundred twenty (120) days for regular military and their 
dependents when the sponsor is involuntarily separated with six or more 
years of active service. Involuntary separation must occur during the 
five year period beginning October 1, 1990. Each branch of service will 
determine eligibility, including dates, for its members and their 
dependents and provide data to DEERS.
    (f) Changes in status which result in termination of CHAMPUS 
eligibility. Changes in status which result in a loss of CHAMPUS 
eligibility as of 12:01 a.m. of the day following the day the event 
occurred, unless otherwise indicated, are as follows:
    (1) Changes in the status of a member. (i) When an active duty 
member's period of active duty ends, excluding retirement or death.
    (ii) When an active duty member is placed on desertion status 
(eligibility is reinstated when the active duty member is removed from 
desertion status and returned to military control).

    Note to paragraph (f)(1): A member serving a sentence of 
confinement in conjunction with a sentence of punitive discharge is 
still considered on active duty until such time as the discharge is 
executed.

    (2) Changes in the status of a retiree. (i) When a retiree ceases 
to be entitled to retired, retainer, or equivalent pay for any reason, 
the retiree's dependents lose their eligibility unless the dependent is 
otherwise eligible (e.g., some former spouses, some dependents who are 
victims of abuse and some incapacitated children as outlined in 
paragraph (b)(2)(ii)(H)(2) of this section).
    (ii) A retiree also loses eligibility when no longer entitled to 
retired, retainer, or equivalent pay.

    Note to paragraph (f)(2): A retiree who waives his or her 
retired, retainer or equivalent pay is still considered a retiree 
for the purposes of CHAMPUS eligibility.

    (3) Changes in the status of a dependent. (i) Divorce, except for 
certain classes of former spouses as provided in paragraph (b)(2)(i) of 
this section and the member or former member's own children (i.e., 
legitimate, adopted, and judicially determined illegitimate children).

    Note to paragraph (f)(3)(i): An unadopted stepchild loses 
eligibility as of 12:01 a.m. of the day following the day the 
divorce becomes final.

    (ii) Annulment, except for certain classes of former spouse as 
provided in paragraph (b)(2)(i) of this section and the member or 
former member's own children (i.e., legitimate, adopted, and judicially 
determined illegitimate children).

    Note to paragraph (f)(3)(ii): An unadopted stepchild loses 
eligibility as of 12:01 a.m. of the day following the day the 
annulment becomes final.

    (iii) Adoption, except for adoptions occurring after the death of a 
member or former member.
    (iv) Marriage of a child, except when the marriage is terminated by 
death, divorce, or annulment before the child is 21 or 23 if an 
incapacitated child as provided in paragraph (b)(2)(ii)(H)(2) of this 
section.
    (v) Marriage of a widow or widower, except for the child of the 
widow or widower who was the stepchild of the deceased member or former 
member at the time of death. The stepchild continues CHAMPUS 
eligibility as other classes of dependent children.
    (vi) Attainment of entitlement to hospital insurance benefits (Part 
A) under Medicare except as provided in paragraphs (f)(3)(viii) and 
(f)(3)(ix) of this section. (This also applies to individuals living 
outside the United States where Medicare benefits are not available).
    (vii) Attainment of age 65, except for dependents of active duty 
member's and beneficiaries not eligible for Part A Medicare. CHAMPUS 
eligibility is lost at 12:01 a.m. on the last day of the month 
preceding the month of attainment of age 65.

    Note to paragraph (f)(3)(vii): If the person is not eligible for 
Part A of Medicare, he or she must file a Social Security

[[Page 67029]]

Administration ``Notice of Disallowance'' certifying to that fact 
with the Uniformed Service responsible for the issuance of his or 
her identification card so a new card showing CHAMPUS eligibility 
can be issued. Individuals who lose their CHAMPUS eligibility 
because they have reached the age limitation or were eligible for 
Part A, Medicare cannot be reinstated under CHAMPUS. Additionally, 
individuals entitled only to supplementary medical insurance (Part 
B) of Medicare, but not Part A, or Part A through the Premium HI 
provisions (provided for under the 1972 Amendments to the Social 
Security Act, retain eligibility under CHAMPUS (refer to Sec. 199.8 
of this part for additional information when a double coverage 
situation is involved).

    (vii) End stage renal disease. Medicare coverage begins with the 
third month after the month a course of maintenance dialysis begins, or 
with the first month of dialysis if the individual participates in a 
self-dialysis training program during the 3-month waiting period, or 
with the month in which a patient enters the hospital to prepare to 
receive a transplant (providing the transplant is performed within the 
following 2 months). If a transplant is delayed more than 2 months 
after the preparatory hospitalization, Medicare coverage will begin 
with the second month prior to the month of transplant. All 
beneficiaries, except dependents of active duty members, lose their 
CHAMPUS eligibility when Medicare coverage becomes available to a 
person because of chronic renal disease unless the following conditions 
have been met. CHAMPUS eligibility will continue if:
    (A) The individual is under 65 years old;
    (B) The individual became eligible for Medicare under the 
provisions of 42 U.S.C. 426-1(a);
    (C) The individual is enrolled in Part B of Medicare; and
    (D) The individual has applied and qualified for continued CHAMPUS 
eligibility through the Defense Eligibility Enrollment System (DEERS).
    (ix) Individuals with certain disabilities. Each case relating to 
Medicare eligibility resulting from being disabled requires individual 
investigation. All beneficiaries except dependents of active duty 
members lose their CHAMPUS eligibility when Medicare coverage becomes 
available to a disabled person unless the following conditions have 
been met. CHAMPUS eligibility will continue if:
    (A) The individual is under 65 years old;
    (B) The individual became eligible for Medicare under the 
provisions of 42 U.S.C. 426(b)(2);
    (C) The individual is enrolled in Part B of Medicare; and
    (D) The individual has applied and qualified for continued CHAMPUS 
eligibility through the Defense Eligibility Enrollment System (DEERS).
    (x) Disabled students, that is children age 21 or 22, who are 
pursuing a full-time course of higher education and who, either during 
the school year or between semesters, suffer a disabling illness or 
injury with resultant inability to resume attendance at the institution 
remain eligibility for CHAMPUS medical benefits for 6 months after the 
disability is removed or until the student passes his or her 23rd 
birthday, whichever occurs first. However, if recovery occurs before 
the 23rd birthday and there is resumption of a full-time course of 
higher education, CHAMPUS benefits can be continued until the 23rd 
birthday. The normal vacation periods during an established school year 
do not change the eligibility status of a dependent child 21 or 22 
years old in a full time student status. Unless an incapacitating 
condition existed before, and at the time of, a dependent child's 21st 
birthday, a dependent child 21 or 22 years old in student status does 
not have eligibility and may not qualify for eligibility under the 
requirements related to mental or physical incapacity as described in 
paragraph (b)(2)(ii)(H)(2) of this section.
    (g) Reinstatement of CHAMPUS eligibility. Circumstances which 
result in reinstatement of CHAMPUS eligibility are as follows:
    (1) End stage renal disease. Medicare coverage ceases for end stage 
renal disease patients with the 36th month after the month in which a 
successful kidney transplant takes place or with the 12th month after 
the month in which the course of maintenance dialysis ends. Unless 
CHAMPUS eligibility has been continued under paragraph (f)(3)(viii) of 
the section, at this point CHAMPUS eligibility resumes if the person is 
otherwise still eligible. He or she is required to take action to be 
reinstated as a CHAMPUS beneficiary and to obtain a new identification 
card.
    (2) Disability. Some disabilities are permanent, others temporary. 
Each case must be reviewed individually. Unless CHAMPUS eligibility has 
been continued under paragraph (f)(3)(ix) of this section, when 
disability ends and Medicare eligibility ceases, CHAMPUS eligibility 
resumes if the person is otherwise still eligible. Again, he or she is 
required to take action to obtain a new CHAMPUS identification card.
    (h) Determination of eligibility status. Determination of an 
individual's eligibility as a CHAMPUS beneficiary is the primary 
responsibility of the Uniformed Service in which the member or former 
member is, or was, a member, or in the case of dependents of a NATO 
military member, the Service that sponsors the NATO member. For the 
purpose of program integrity, the appropriate Uniformed Service shall, 
upon request of the Director, OCHAMPUS, review the eligibility of a 
specific person when there is reason to question the eligibility 
status. In such cases, a report on the results of the review and any 
action taken will be submitted to the Director, OCHAMPUS, or a 
designee.
    (i) Procedures for determination of eligibility. Procedures for the 
determination of eligibility are prescribed within the Department of 
Defense Instruction 1000.13 available at local military facilities 
personnel offices.
    (j) CHAMPUS procedures for verification of eligibility. (1) 
Eligibility for CHAMPUS benefits will be verified through the Defense 
Enrollment Eligibility Reporting System (DEERS) maintained by the 
Uniformed Services, except for abused dependents as set forth in 
paragraph (b)(2)(iii) of this section. It is the responsibility of the 
CHAMPUS beneficiary, or parent, or legal representative, when 
appropriate, to provide the necessary evidence required for entry into 
the DEERS file to establish CHAMPUS eligibility and to ensure that all 
changes in status that may affect eligibility be reported immediately 
to the appropriate Uniformed Service for action.
    (2) Ineligibility for CHAMPUS benefits may be presumed in the 
absence of prescribed eligibility evidence in the DEERS file.
    (3) The Director, OCHAMPUS, shall issue guidelines as necessary to 
implement the provisions of this section.
    4. Section 199.4 is amended by revising paragraphs (e)(5)(iii)(B), 
(f)(1), (f)(2) heading and introductory text, (f)(2)(ii), (f)(2)(iii), 
(f)(2)(iv), (f)(3) heading and introductory text, (f)(3)(i), 
(f)(3)(iii), (f)(4) introductory text and (f)(4)(ii) to read as 
follows:


Sec. 199.4  Basic program benefits.

* * * * *
    (e) * * *
    (5) * * *
    (iii) * * *
    (B) In most instances, for costs related to kidney transplants, 
Medicare (not CHAMPUS) benefits will be applicable. If a CHAMPUS 
beneficiary participates as a kidney donor for a Medicare beneficiary, 
Medicare will pay for expenses in connection with the kidney transplant 
to include all reasonable

[[Page 67030]]

preparatory, operation and postoperation recovery expenses associated 
with the donation (postoperative recovery expenses are limited to the 
actual period of recovery). (See Sec. 199.3 of this part for additional 
information on end stage renal disease.)
* * * * *
    (f) * * *
    (1) General. As stated in paragraph (a) of this section, the Basic 
Program is essentially a supplemental program to the Uniformed Services 
direct medical care system. To encourage use of the Uniformed Services 
direct medical care system wherever its facilities are available and 
appropriate, the Basic Program benefits are designed so that it is to 
the financial advantage of a CHAMPUS beneficiary or sponsor to use the 
direct medical care system. When medical care is received from civilian 
sources, a CHAMPUS beneficiary is responsible for payment of certain 
deductible and cost-sharing amounts in connection with otherwise 
covered services and supplies. By statute, this joint financial 
responsibility between the beneficiary or sponsor and CHAMPUS is more 
favorable for dependents of members than for other classes of 
beneficiaries.
    (2) Dependents of members of the Uniformed Services. CHAMPUS 
beneficiary or sponsor liability set forth for dependents of members is 
as follows:
* * * * *
    (ii) Inpatient cost-sharing. Dependents of members of the Uniformed 
Services are responsible for the payment of the first $25 of the 
allowable institutional costs incurred with each covered inpatient 
admission to a hospital or other authorized institutional provider 
(refer to Sec. 199.6 of this part), or the amount the beneficiary or 
sponsor would have been charged had the inpatient care been provided in 
a Uniformed Service hospital, whichever is greater.
    (iii) Outpatient cost-sharing. Dependents of members of the 
Uniformed Services are responsible for payment of 20 percent of the 
CHAMPUS-determined allowable cost or charge beyond the annual fiscal 
year deductible amount (as described in paragraph (f)(2)(i) of this 
section) for otherwise covered services or supplies provided on an 
outpatient basis by authorized providers.
    (iv) Ambulatory surgery. Notwithstanding the above positions 
pertaining to outpatient cost-sharing, dependents of members of the 
Uniformed Services are responsible for payment of $25 for surgical care 
that is authorized and received while in an outpatient status and that 
has been designated in guidelines issued by the Director, OCHAMPUS, or 
a designee.
* * * * *
    (3) Former members and dependents of former members. CHAMPUS 
beneficiary liability set forth for former members and dependents of 
former members is as follows:
    (i) Annual fiscal year deductible for outpatient services or 
supplies. The annual fiscal year deductible for otherwise covered 
outpatient services or supplies provided former members and dependents 
of former members is the same as the annual fiscal year outpatient 
deductible applicable to dependents of active duty members of rank E-5 
or above (refer to paragraph (f)(2)(i) (A) or (B) of this section).
* * * * *
    (iii) Outpatient cost-sharing. Former members and dependents of 
former members are responsible for payment of 25 percent of the 
CHAMPUS-determined allowable costs or charges beyond the annual fiscal 
year deductible amount (as described in paragraph (f)(2)(i) of this 
section) for otherwise covered services or supplies provided on an 
outpatient basis by authorized providers.
* * * * *
    (4) Former spouses. CHAMPUS beneficiary liability for former 
spouses eligible under the provisions set forth in Sec. 199.3 of this 
part is as follows:
* * * * *
    (ii) Inpatient cost-sharing. Eligible former spouses are 
responsible for payment of cost-sharing amounts the same as those 
required for former members and dependents of former members.
* * * * *
    6. Section 199.8 is amended by revising paragraphs (a) and (d)(1) 
to read as follows.


Sec. 199.8  Double coverage.

    (a) Introduction. (1) in enacting CHAMPUS legislation, Congress 
clearly has intended that CHAMPUS be the secondary payer to all health 
benefit and insurance plans. 10 U.S.C. 1079(j)(1) specifically 
provides:

A benefit may not be paid under a plan [CHAMPUS] covered by this 
section in the case of a person enrolled in or covered by any other 
insurance, medical service, or health plan to the extent that the 
benefit also is a benefit under the other plan, except in the case 
of a plan [Medicaid] administered under title 19 of the Social 
Security Act (42 U.S.C. 1396, et seq.).

    (2) The provision in paragraph (a)(1) of this section is made 
applicable specifically to retired members, dependents, and survivors 
by 10 U.S.C. 1086(d). The underlying intent, in addition to preventing 
waste of Federal resources, is to ensure that CHAMPUS beneficiaries 
receive maximum benefits while ensuring that the combined payments of 
CHAMPUS and other health benefit and insurance plans do not exceed the 
total charges.
* * * * *
    (d) * * *
    (1) CHAMPUS and Medicare. Under certain circumstances a CHAMPUS 
beneficiary can also be eligible for Medicare. In any double coverage 
situation involving Medicare, Medicare is always the primary payer. 
When Part A, ``Hospital Insurance,'' of Medicare is involved, the 
Medicare ``lifetime reserve'' benefit must be used before CHAMPUS 
benefits may be used. The procedures to be followed for these 
circumstances are as follows.
    (i) Dependents of active duty members. For dependents of active 
duty members, payment will be determined in accordance with paragraph 
(c) of this section.
    (ii) Medicare end stage renal disease beneficiaries. In any case 
involving a Medicare end stage renal disease beneficiary as provided in 
Sec. 199.3(f)(3)(viii), CHAMPUS secondary payments will be determined 
in accordance with paragraph (c) of this section.
    (iii) Medicare disabled beneficiaries. In any case involving a 
Medicare disabled beneficiary as provided in Sec. 199.3(f)(3)(ix), 
CHAMPUS payment is determined in accordance with paragraph (c) of this 
section.
* * * * *
    7. Section 199.20 is amended by adding paragraph (d)(1)(iv) to read 
as follows.


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

* * * * *
    (d) * * *
    (1) * * *
    (iv) An unmarried person who:
    (A) Is placed in the legal custody of a member of former member by 
a court or who is placed in the home of a member or former member by a 
recognized placement agency in anticipation of the legal adoption of 
the child; and
    (B) Either:
    (1) Has not attained the age of 21 if not in school or age 23 if 
enrolled in a full time course of study at an institution of higher 
learning; or
    (2) Is incapable of self-support because of a mental or physical 
incapacity which occurred while the

[[Page 67031]]

person was considered a dependent of the member or former member; and
    (C) Is dependent on the member or former member for over one-half 
of the person's support; and
    (D) Resides with the members or former member unless separated by 
the necessity of military service or to receive institutional care as a 
result of disability or incapacitation; and
    (E) Is not a dependent of a member or former member as described in 
Sec. 199.3 (b)(2).
    Dated: December 15, 1997.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 97-33111 Filed 12-22-97; 8:45 am]
BILLING CODE 5000-04-M