[Federal Register Volume 63, Number 36 (Tuesday, February 24, 1998)]
[Rules and Regulations]
[Pages 9140-9143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4545]



[[Page 9140]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[0720-AA35]


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); TRICARE Program; Nonavailability Statement Requirements

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule revises certain requirements and procedures 
for the TRICARE Program, the purpose of which is to implement a 
comprehensive managed health care delivery system composed of military 
medical treatment facilities and CHAMPUS. Issues addressed in this rule 
include priority for access to care in military treatment facilities 
and requirements for payment of enrollment fees. This rule also 
includes provisions revising the requirement that certain beneficiaries 
obtain a non-availability statement from a military treatment facility 
commander prior to receiving certain health care services from civilian 
providers.

EFFECTIVE DATE: This rule is effective March 26, 1998.

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

FOR FURTHER INFORMATION CONTACT: Steve Lillie, Office of the Assistant 
Secretary of Defense (Health Affairs), telephone (703) 695-3350.
    Questions regarding payment of specific claims under the CHAMPUS 
allowable charge method should be addressed to the appropriate CHAMPUS 
contractor.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

A. Congressional Action

    Section 712 of the National Defense Authorization Act for Fiscal 
Year 1996 revised 10 U.S.C. 1097(c), regarding the role of military 
medical treatment facilities in managed care initiatives, including 
TRICARE. Prior to the revision, section 1097(c) read in part, 
``However, the Secretary may, as an incentive for enrollment, establish 
reasonable preferences for services in facilities of the uniformed 
services for covered beneficiaries enrolled in any program established 
under, or operating in connection with, any contract under this 
section.'' The Authorization Act provision replaced ``may'' with 
``shall'', which has the effect of directing access priority for 
TRICARE Prime enrollees over persons not enrolled.
    Another statutory provision relating to access priority is 10 
U.S.C. 1076(a), which establishes a special priority for survivors of 
sponsors who died on active duty: they are given the same priority as 
family members of active duty members. This special access priority is 
not time-limited, as is the special one-year cost sharing protection 
given to this category under 10 U.S.C. 1079.
    The National Defense Authorization Act of FY 1997, section 734 
amended 10 U.S.C. 1080 to establish certain exceptions to requirements 
for nonavailability statements in connection with payment of claims for 
civilian health care services. First, the Act eliminates authority for 
nonavailability statements for outpatient services; NASs have been 
required for a limited number of outpatient procedures over the past 
several years. Second, the Act eliminates authority for NAS 
requirements for enrollees in managed care plans, which has the effect 
of eliminating NAS requirements for TRICARE Prime enrollees. Finally, 
the Act gives the Secretary authority to waive NAS requirements based 
on an evaluation of the effectiveness of NAS in optimizing use of 
military facilities.
    The National Defense Authorization Act of FY 1996, section 713 
requires that enrollees in TRICARE Prime be permitted to pay applicable 
enrollment fees on a quarterly basis, and prohibits imposition of an 
administrative fee related to the quarterly payment option.

B. Public Comments

    The proposed rule was published in the Federal Register on April 7, 
1997 (62 FR 16510). We received no public comments.

II. Provisions of the Rule

A. Access Priority (Revisions to Sec. 199.17(d)).

1. Provisions of the Proposed Rule
    This paragraph explains that in Regions where TRICARE is 
implemented, the order of access priority for services in military 
treatment facilities is as follows: (1) Active duty service members; 
(2) family members of active duty service members enrolled in TRICARE 
Prime; (3) retirees, their family members and survivors enrolled in 
TRICARE Prime; (4) family members of active duty service members who 
are not enrolled in TRICARE Prime; and (5) all others based on current 
access priorities. For purposes of access priority, but not for cost 
sharing, survivors of sponsors who died on active duty are to be given 
the same priority as family members of active duty service members. 
This means that if they are enrolled in TRICARE Prime, they have the 
same access priority as family members of active duty service members 
who are enrolled in TRICARE Prime, or if not enrolled in TRICARE Prime, 
they have the same access priority for military treatment facility care 
as family members of active duty service members who are not enrolled 
in TRICARE Prime.
    The proposed rule also includes a provision explaining that 
enrollment status does not affect access priority for some groups and 
circumstances. This provision would allow the commander of a military 
medical treatment facility to designate for access priority certain 
individuals, for specific episodes of health care treatment. Such 
individuals may include Secretarial designees, active duty family 
members from outside the MTF's service area, foreign military and their 
family members authorized care through international agreements, DoD 
civilians with authorizing conditions, individuals on the Temporary 
Disability Retired List, and Reserve and National Guard members. 
Additional exceptions may be granted for other categories of 
individuals, eligible for treatment in the MTF, whose access to care is 
needed to provide a clinical case mix to support graduate medical 
education programs, upon approval by the Assistant Secretary of Defense 
(Health Affairs).
2. Provisions of the Final Rule
    The final rule is consistent with the proposed rule. Minor 
revisions emphasize that survivors of sponsors who died on active duty 
have the same access priority as active duty family members. Access 
priority for TRICARE Prime enrollees is not limited to military 
facilities near their residence, but includes access priority when they 
are traveling (although they are still required to access nonemergency 
care through their primary care manager, pursuant to Sec. 199.17(o)).

B. Enrollment Fees (Revisions to Secs. 199.17(o) and 199.18(c))

1. Provisions of the Proposed Rule
    These revisions would eliminate the requirement for a TRICARE Prime 
enrollee to pay an additional maintenance fee of $5.00 per installment 
for those TRICARE Prime enrollees who elect to pay their annual 
enrollment fee on a quarterly basis. Additionally, these revisions 
would permit waiver of enrollment fee

[[Page 9141]]

collection for retirees, their family members, and survivors who are 
eligible for Medicare on the basis of disability. This group is 
eligible for TRICARE/CHAMPUS as a secondary payor if they are enrolled 
in Part B of Medicare, and pay the applicable monthly premium.
2. Provisions of the Final Rule
    The final rule is consistent with the proposed rule.

C. Nonavailability Statements (Revisions to Sec. 199.4(a))

1. Provisions of the Proposed Rule
    Revisions of this section modify our existing requirements for 
beneficiaries to obtain nonavailability statements (NASs). The 
requirement for beneficiaries to obtain an NAS for selected outpatient 
procedures is eliminated. Beneficiaries who choose to obtain outpatient 
care, including ambulatory surgery, from civilian sources remain 
subject to current TRICARE/CHAMPUS cost sharing rules, but the 
requirement that the beneficiary obtain an NAS prior to TRICARE/CHAMPUS 
sharing in the civilian health care costs has been removed.
    The requirement for beneficiaries enrolled in TRICARE Prime to 
obtain an NAS for inpatient care is also eliminated. TRICARE was 
designed so that the military treatment facility is the first source of 
specialty care, with TRICARE Prime enrollees having access priority 
before non-enrolled beneficiaries. In general, TRICARE Prime enrollees 
obtain care from civilian network providers only when the military 
treatment facility cannot provide the care because it does not have the 
capability, or because the enrollee cannot be seen within time frames 
required by TRICARE Prime access standards. Since the Health Care 
Finder must authorize all non-emergency specialty care obtained from 
civilian sources, the NAS requirement for this category of beneficiary 
is redundant.
    Lastly, the revisions would eliminate the requirement that a non-
enrolled beneficiary must obtain an NAS for inpatient hospital 
maternity care before TRICARE/CHAMPUS shares in any costs for related 
outpatient maternity care. Some diagnostic tests, procedures, or 
consultations from civilian sources may be required during a course of 
maternity care and this allows TRICARE/CHAMPUS to share in the costs of 
the civilian care without requiring the beneficiary to obtain all 
maternity related care in a civilian setting.
3. Provisions of the Final Rule
    The final rule is consistent with the proposed rule. It should be 
noted that requirements of Sec. 199.15 related to preauthorization of 
services continue to apply. A key difference is that the responsibility 
for compliance, and penalties for noncompliance with the requirements 
of Sec. 199.15 fall on providers of care rather than on beneficiaries.

D. Revisions to the Uniform HMO Benefit (Revisions to Sec. 199.18(d))

1. Provisions of the Proposed Rule
    We are contemplating minor changes in the copayment structure of 
the Uniform HMO Benefit, which is used in TRICARE Prime. The proposed 
rule included two revisions, which would eliminate copayments for 
preventive services and for ancillary services. Current provisions 
include copayments for ancillary services unless they are provided as 
part of an office visit. This has resulted in multiple copayments in 
cases where beneficiaries are sent to multiple sites for diagnostic 
testing pursuant to a visit, which we regard as unfair.
2. Provisions of the Final Rule
    The final rule is consistent with the proposed rule.

E. TRICARE Prime Catastrophic Cap (Revisions to Sec. 199.18(f))

1. Provisions of the Proposed Rule
    The proposed rule included a provision regarding the 
inapplicability of the TRICARE Prime annual catastrophic cap to out-of-
pocket costs incurred under the TRICARE Prime point-of-service option. 
This is at Sec. 199.18(f)(2).
2. Provisions of the Final Rule
    The final rule is consistent with the proposed rule.

F. Preemption of State Laws (Revisions to Sec. 199.17(a))

1. Provisions of the Proposed Rule
    The proposed rule contained a restatement of current policy, at 
Sec. 199.17(a)(7), recording DoD interpretation of two statutory 
provisions preempting State and local laws in connection with TRICARE 
contracts.
2. Provisions of the Final Rule
    The final rule is similar to the proposed rule. The provision has 
been expanded to also record DoD's interpretation of these statutes in 
relation to State or local laws imposing premium taxes on health 
insurance carriers or health maintenance organizations.

III. Regulatory Procedures

    Executive Order 12866 requires certain regulatory assessments for 
any ``significant regulatory action,'' defined as one which would 
result in an annual effect on the economy of $100 million or more, or 
have other substantial impacts.
    The Regulatory Flexibility Act (RFA) requires that each Federal 
agency prepare, and make available for public comment, a regulatory 
flexibility analysis when the agency issues a regulation which would 
have a significant impact on a substantial number of small entities.
    This is not a significant regulatory action under the provisions of 
Executive Order 12866, and it would not have a significant impact on a 
substantial number of small entities.
    This rule will impose no additional information collection 
requirements on the public under the Paperwork Reduction Act of 1985 
(44 U.S.C. Chapter 55).

List of Subjects in 32 CFR Part 199

    Claims, Handicapped, Health insurance, and Military personnel.

    Accordingly, 32 CFR part 199 is amended as follows:

PART 199--[AMENDED]

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

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

    2. Section 199.2(b) is amended by revising the definition of 
nonavailability statement to read as follows:


Sec. 199.2  Definitions.

* * * * *
    (b) * * *
    Nonavailability statement. A certification by a commander (or a 
designee) of a Uniformed Services medical treatment facility, recorded 
on DEERS, generally for the reason that the needed medical care being 
requested by a non-TRICARE Prime enrolled beneficiary cannot be 
provided at the facility concerned because the necessary resources are 
not available in the time frame needed.
* * * * *
    3. Section 199.4 is amended by removing paragraphs (a)(9)(i)(C) and 
(a)(9)(v)(B) and the note following paragraph (a)(9)(vi), by 
redesignating paragraph (a)(9)(i)(D) as paragraph (a)(9)(i)(C) and 
paragraph (a)(9)(v)(A) as paragraph (a)(9)(v), and by revising

[[Page 9142]]

paragraphs (a)(9) introductory text, (a)(9)(i)(B), and (a)(9)(ii) and 
by adding new paragraph (a)(10)(vi)(E) to read as follows:


Sec. 199.4  Basic program benefits.

* * * * *
    (a) * * *
    (9) Nonavailability statements within a 40-mile catchment area. In 
some geographic locations, it is necessary for CHAMPUS beneficiaries 
not enrolled in TRICARE Prime to determine whether the required 
inpatient medical care can be provided through a Uniformed Services 
facility. If the required care cannot be provided, the hospital 
commander, or designee, will issue a Nonavailability Statement (DD form 
1251). Except for emergencies, a Nonavailability Statement should be 
issued before medical care is obtained from a civilian source. Failure 
to secure such a statement may waive the beneficiary's rights to 
benefits under CHAMPUS.
    (i) * * *
    (B) For CHAMPUS beneficiaries who are not enrolled in TRICARE 
Prime, an NAS is required for services in connection with nonemergency 
inpatient hospital care if such services are available at a facility of 
the Uniformed Services located within a 40 mile radius of the residence 
of the beneficiary, except that an NAS is not required for services 
otherwise available at a facility of the Uniformed Services located 
within a 40-mile radius of the beneficiary's residence when another 
insurance plan or program provides the beneficiary primary coverage for 
the services. This requirement for an NAS does not apply to 
beneficiaries enrolled in TRICARE Prime, even when those beneficiaries 
use the point-of-service option under Sec. 199.17(n)(3).
* * * * *
    (ii) Beneficiary responsibility. A CHAMPUS beneficiary who is not 
enrolled in TRICARE Prime is responsible for securing information 
whether or not he or she resides in a geographic area that requires 
obtaining a Nonavailability Statement. Information concerning current 
rules and regulations may be obtained from the Offices of the Army, 
Navy, and Air Force Surgeons General; or a representative of the 
TRICARE managed care support contractor's staff, or the Director, 
OCHAMPUS.
* * * * *
    (10) * * *
    (vi) * * *
    (E) The beneficiary is enrolled in TRICARE Prime.
* * * * *
    3. Section 199.17 is amended by adding paragraph (a)(7) and 
revising paragraphs (d)(1) and (o)(3) to read as follows:


Sec. 199.17  TRICARE program.

* * * * *
    (a) * * *
    (7) Preemption of State laws. (i) Pursuant to 10 U.S.C. 1103 and 
section 8025 (fourth proviso) of the Department of Defense 
Appropriations Act, 1994, the Department of Defense has determined that 
in the administration of 10 U.S.C. chapter 55, preemption of State and 
local laws relating to health insurance, prepaid health plans, or other 
health care delivery or financing methods is necessary to achieve 
important Federal interests, including but not limited to the assurance 
of uniform national health programs for military families and the 
operation of such programs at the lowest possible cost to the 
Department of Defense, that have a direct and substantial effect on the 
conduct of military affairs and national security policy of the United 
States.
    (ii) Based on the determination set forth in paragraph (a)(7)(i) of 
this section, any State or local law relating to health insurance, 
prepaid health plans, or other health care delivery or financing 
methods is preempted and does not apply in connection with TRICARE 
regional contracts. Any such law, or regulation pursuant to such law, 
is without any force or effect, and State or local governments have no 
legal authority to enforce them in relation to the TRICARE regional 
contracts. (However, the Department of Defense may by contract 
establish legal obligations of the part of TRICARE contractors to 
conform with requirements similar or identical to requirements of State 
or local laws or regulations).
    (iii) The preemption of State and local laws set forth in paragraph 
(a)(7)(ii) of this section includes State and local laws imposing 
premium taxes on health or dental insurance carriers or underwriters or 
other plan managers, or similar taxes on such entities. Such laws are 
laws relating to health insurance, prepaid health plans, or other 
health care delivery or financing methods, within the meaning of the 
statutes identified in paragraph (a)(7)(i) of this section. Preemption, 
however, does not apply to taxes, fees, or other payments on net income 
or profit realized by such entities in the conduct of business relating 
to DoD health services contracts, if those taxes, fees or other 
payments are applicable to a broad range of business activity. For 
purposes of assessing the effect of Federal preemption of State and 
local taxes and fees in connection with DoD health and dental services 
contracts, interpretations shall be consistent with those applicable to 
the Federal Employees Health Benefits Program under 5 U.S.C. 8909(f).
* * * * *
    (d) * * *
    (1) Military treatment facility (MTF) care.--(i) In general. All 
participants in Prime are eligible to receive care in military 
treatment facilities. Participants in Prime will be given priority for 
such care over other beneficiaries. Among the following beneficiary 
groups, access priority for care in military treatment facilities where 
TRICARE is implemented as follows:
    (A) Active duty service members;
    (B) Active duty service members' dependents and survivors of 
service members who died on active duty, who are enrolled in TRICARE 
Prime;
    (C) Retirees, their dependents and survivors, who are enrolled in 
TRICARE Prime;
    (D) Active duty service members' dependents and survivors of 
service members who died on active duty, who are not enrolled in 
TRICARE Prime; and
    (E) Retirees, their dependents and survivors who are not enrolled 
in TRICARE Prime. For purposes of this paragraph (d)(1), survivors of 
members who died while on active duty are considered as among 
dependents of active duty service members.
    (ii) Special provisions. Enrollment in Prime does not affect access 
priority for care in military treatment facilities for several 
miscellaneous beneficiary groups and special circumstances. Those 
include Secretarial designees, NATO and other foreign military 
personnel and dependents authorized care through international 
agreements, civilian employees under workers' compensation programs or 
under safety programs, members on the Temporary Disability Retired List 
(for statutorily required periodic medical examinations), members of 
the reserve components not on active duty (for covered medical 
services), military prisoners, active duty dependents unable to enroll 
in Prime and temporarily away from place of residence, and others as 
designated by the Assistant Secretary of Defense (Health Affairs). 
Additional exceptions to the normal Prime enrollment access priority 
rules may be granted for other categories of individuals, eligible for 
treatment in the MTF, whose access to care is necessary to provide an 
adequate clinical case mix to support graduate medical education 
programs or

[[Page 9143]]

readiness-related medical skills sustainment activities, to the extent 
approved by the ASD(HA).
* * * * *
    (o) * * *
    (3) Quarterly installment payments of enrollment fee. The 
enrollment fee required by Sec. 199.18(c) may be paid in quarterly 
installments, each equal to one-fourth of the total amount. For any 
beneficiary paying his or her enrollment fee in quarterly installments, 
failure to make a required installment payment on a timely basis 
(including a grace period, as determined by the Director, OCHAMPUS) 
will result in termination of the beneficiary's enrollment in Prime and 
disqualification from future enrollment in Prime for a period of one 
year. If enrollment in TRICARE Prime is terminated for failure to make 
a required installment payment, services received after the due date of 
the installment payment will be cost shared under TRICARE Extra.
* * * * *
    4. Section 199.18 is amended by revising paragraphs (d)(2)(i) and 
(f), and by adding paragraph (c)(3), to read as follows:


Sec. 199.18  Uniform HMO benefit.

* * * * *
    (c) * * *
    (3) Waiver of enrollment fee for certain beneficiaries. The 
Assistant Secretary of Defense (Health Affairs) may waive the 
enrollment fee requirements of this section for beneficiaries described 
in 10 U.S.C. 1086(d)(2) (i.e., those who are eligible for Medicare on 
the basis of disability or end stage renal disease and who maintain 
enrollment in Part B of Medicare).
* * * * *
    (d) * * *
    (2) * * *
    (i) For most physician office visits and other routine services, 
there is a per visit fee for each of the following groups: dependents 
of active duty members in pay grades E-1 through E-4; dependents of 
active duty members in pay grades of E-5 and above; and retirees and 
their dependents. This fee applies to primary care and specialty care 
visits, except as provided elsewhere in this paragraph (d)(2) of this 
section. It also applies to family health services, home health care 
visits, eye examinations, and immunizations. It does not apply to 
ancillary health services or to preventive health services described in 
paragraph (b)(2) of this section, or to maternity services under 
Sec. 199.4(e)(16).
* * * * *
    (f) Limit on out-of-pocket costs under the uniform HMO benefit. (1) 
Total out-of-pocket costs per family of dependents of active duty 
members under the Uniform HMO Benefit may not exceed $1,000 during the 
one-year enrollment period. Total out-of-pocket costs per family of 
retired members, dependents of retired members and survivors under the 
Uniform HMO Benefit may not exceed $3,000 during the one-year 
enrollment period. For this purpose, out-of-pocket costs means all 
payments required of beneficiaries under paragraphs (c), (d), and (e) 
of this section. In any case in which a family reaches this limit, all 
remaining payments that would have been required of the beneficiary 
under paragraphs (c), (d), and (e) of this section will be made by the 
program in which the Uniform HMO Benefit is in effect.
    (2) The limits established by paragraph (f)(1) of this section do 
not apply to out-of-pocket costs incurred pursuant to paragraph 
(m)(1)(i) or (m)(2)(i) of Sec. 199.17 under the point-of-service option 
of TRICARE Prime.
* * * * *
    Dated: February 17, 1998.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 98-4545 Filed 2-23-98; 8:45 am]
BILLING CODE 5000-04-M