[Federal Register Volume 64, Number 46 (Wednesday, March 10, 1999)]
[Rules and Regulations]
[Pages 11765-11771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-5528]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN 0720-AA27


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

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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

DATES: This rule is effective June 8, 1999.

ADDRESSES: TRICARE Management Activity, Medical Benefits and 
Reimbursement Systems, 16401 East Centretech Parkway, Aurora, CO 80011-
9043.

FOR FURTHER INFORMATION CONTACT: David E. Bennett, TRICARE Management 
Activity, Medical Benefits and Reimbursement Systems, telephone (303) 
676-3492.

SUPPLEMENTARY INFORMATION: 

I. Introduction and Background

    CHAMPUS supplements the availability of health care in military 
hospitals and clinics. Services and items allowable as CHAMPUS benefits 
must be obtained from CHAMPUS authorized civilian providers to be 
considered for payment. Requirements for CHAMPUS provider authorization 
are published under 32 CFR 199.6.
    CHAMPUS currently has requirements for three classes of providers. 
The institutional provider class includes hospitals and other 
categories of similar facilities. The individual professional providers 
class includes physicians and other categories of licensed individuals 
who render professional services independently, and certain allied 
health and extra medical providers that must function under physician 
orders and supervision. The third class of providers consists of 
sellers of items and supplies of an ancillary or supplemental nature 
such as durable medical equipment.
    CHAMPUS payment depends upon a service being both allowable as a 
benefit and rendered by a CHAMPUS authorized provider. Consequently, it 
is currently possible, for example, that outpatient treatment by a 
physical therapist employed by a hospital may be paid (to the hospital) 
while the same service provided by an employee of a freestanding 
corporation or foundation is denied payment.
    This administrative exclusion is difficult for beneficiaries to 
apply when seeking health care services because it requires an 
understanding of the underlying business structure of the provider. But 
the underlying business structure of a provider organization is

[[Page 11766]]

important to CHAMPUS management decisions regarding quality assurance 
and payment methods.
    Corporations, both not-for-profit and shareholder, and foundations 
are an alternative source of ambulatory and in-home care. The proposed 
addition of the corporate class will recognize the current range of 
providers within today's health care delivery structure, and give 
beneficiaries access to another segment of the health care delivery 
industry.

II. Provisions of the Rule

A. New Provider Category (Revisions to Sec. 199.6(f)

    This paragraph creates a fourth class of CHAMPUS provider 
consisting of freestanding corporations and foundations that render 
principally professional ambulatory or in-home care and technical 
diagnostic procedures. The intent of the rule is not to create 
additional benefits that ordinarily would not be covered under CHAMPUS 
is provided by a more traditional health care delivery system, but 
rather to allow those services which would otherwise be allowed except 
for an individual provider's affiliation with a freestanding corporate 
facility.
    While is recognized that some of the services and supplies provided 
by freestanding corporate providers may substantially reduce costs in 
comparison to extended care provided in a hospital, it is often 
difficult to control the type and level of care actually provided 
within these alternative treatment settings. It is also recognized that 
some of the alternative delivery setting, such a Home Health Agencies 
and Comprehensive Outpatient Rehabilitation Facilities, provide 
services that are not a covered benefit under CHAMPUS. Often care 
rendered in these setting is provided by an individual who is not 
recognized by CHAMPUS as an authorized provider in his or her own right 
(i.g., home health aides in the case of home health care), and as such, 
is not covered under the provisions of this rule. Otherwise covered 
professional services provided by CHAMPUS authorized individual 
providers employed by or under contract with a freestanding corporate 
entity will be paid under the CHAMPUS Maximum Allowable Charge (CMAC) 
reimbursement system, subject to any restrictions and limitations as 
may be prescribed under existing CHAMPUS policy. The corporate entity 
will not be allowed additional facility charges that are not already 
incorporated into the professional service fee structure (i.e., 
facility charges that are not already included in the overhead and 
malpractice cost indices used in establishing locally-adjusted CMAC 
rates.)
    Payment will also be allowed for supplies used by a CHAMPUS 
authorized individual provider employed by or contracted with a 
corporate services provider covered under the provisions of this rule 
in the direct treatment of a CHAMPUS eligible beneficiary. Payment for 
both professional services and supplies will be paid directly to the 
CHAMPUS authorized corporate service provider under its own tax 
identification number.
    Coporate services providers must be approved for Medicare payment, 
or when Medicare approval status is not required, be accredited by a 
qualified accreditation organization as defined in 32 CFR 199.2 order 
to gain provider authorization status under CHAMPUS. Corporate services 
providers must also enter into a participation agreement which will be 
sent out as part of the initial certification process. The 
participation agreement will ensure that CHAMPUS determined allowable 
payments, combined with the cost-share/copayment, deductible, and other 
health insurance amounts, will be accepted by the provider as payment 
in full.

B. Direct Payment for Occupational Therapist (Revisions to 
Sec. 199.4(3)(x)) and Sec. 199.6(c)(3)(iii)(l)(3)

    The proposed rule, which was published on March 8, 1995 (60 FR 
12717), allowed qualified self-employed occupational therapists to be 
authorized for direct payment for allowable services. However, the 
services has to be prescribed and monitored by a physician and reduce 
the disabling effects of an illness, injury, or neuromuscular disorder. 
The treatment also had to increase, stabilize, or slow the 
deterioration of the beneficiary's ability to perform specified 
purposeful activity within the range considered normal for human being. 
The provisions for occupational therapists were pulled from the 
proposed Corporate Services Provider Class rule and included as part of 
the Program from Persons with Disabilities (PFPWD) final rule was 
published in the Federal Register on June 30, 1997, (62 CFR 35086). 
(Public comments received in response to the occupational therapist 
provisions contained in the proposed rule were addressed and responded 
to the PFPWS final rule.

C. Provisions for Provider Participation (Revision of Definition of 
``Participating Provider'' in Sec. 199.2, Clarification of Types of 
Provider Participation in Sec. 199.6(a)(8) and Additional Requirements 
for Participation Under Sec. 199.6(a)(12) and Sec. 199.6(a)(13))

    The final amendment expands and clarifies the various types of 
provider participation available under CHAMPUS, emphasizing mandatory 
participation by the new Corporate Services Provider class. Corporate 
service providers must enter into a participation agreement that at 
least complies with the minimum participation agreement requirements as 
outlined under Sec. 199.6(a)(13). The amendment also establishes 
minimum medical documentation requirements for authorized provider 
organizations and individuals providing clinical services under 
CHAMPUS.

D. Removal of Exclusions (Removal of Sec. 199.4(g)(70) and 
Sec. 199.4(g)(71))

    This amendment removes provision which exclude CHAMPS coverage of 
civilian diagnostic and consultation services requested by a Military 
Treatment Facility (MTF) physician in support of continued MTF care of 
a CHAMPUS-eligible beneficiary. Because MTF's vary in size and clinical 
capacity for the care of CHAMPUS-eligible beneficiaries, the lack of 
access to specialized diagnostic and consultation resources through 
CHAMPUS may result in the MTF purchasing the civilian services directly 
without the advantage of CHAMPUS price requirements; the beneficiary 
paying the total cost of such non-MTF services; or the beneficiary 
choosing to obtain all care in the civilian community in order to take 
advantage of CHAMPUS cost-share of all the necessary care. Removal of 
these exclusions will allow flexibility in the implementation of an 
MTF-based plan-of-care resulting in continuity of care at a lower cost 
to both the beneficiary and the government.

E. Professional Corporation or Association (Revision of 
Sec. 199.6(c)(1) and Sec. 199.6(c)(2))

    The final rule more clearly establishes that a professional 
corporation or association is not itself a provider but may file claims 
and receive payment on behalf of an individual professional provider 
member. The corporate entity is simply acting as a billing agent for 
its professional members (i.e., it is billing for its members' 
professional services under a single tax identification number) who are 
practicing within the scope of their individual state licenses,

[[Page 11767]]

or have otherwise passed qualifying certification tests. The conditions 
for authorization have been expanded and rearranged to more clearly 
present the other general requirements for this provider category.

III. Public Comments

    As a result of the publication of the proposed rule, the following 
comments were received from interested providers, associations, and 
agencies.
    Comment 1. One commentor offered its corporate and clinical 
personnel to serve on any advisory boards which may be established to 
address credentialing concerns.
    Response. Although we appreciate the commentor's offer to lend its 
expertise (i.e., both corporate and clinical staff) to any future 
advisory boards that might be convened on credentialing concerns, 
reliance on Medicare approval for payment--or when Medicare approved 
status is not required, accreditation by a qualified accreditation 
organization as defined by amendment--has been found to be 
administratively expeditious and cost effective for the program. As a 
result, we do not expect the need for convening any future advisory 
boards since the new provider categories will already be subject to 
nationally recognized certification criteria.
    Comment 2. Several commentors had concerns on how the qualified 
accreditation organization defined in Sec. 199.2 would reinforce 
CHAMPUS authorization requirements and promote efficient delivery of 
CHAMPUS benefits. It was recommended that the final rule list the 
initial agencies and criteria for recognition.
    Response. Specific references to accreditation agencies would 
negate the agency's authority to promptly recognize by administrative 
policy, rather than the much longer Code of Federal Register (CFR) 
amendment process, those newly recognized accreditation agencies or 
organizations which might come to meet the criteria set forth in this 
final rule. While it is anticipated that most, if not all, of the 
alternative treatment settings initially eligible for inclusion under 
this new provider category are authorized for payment under Medicare, 
there is a provision in the final rule (32 CFR 199.6(f)(2)(v)) which 
allows accreditation by a qualified accrediting organization as defined 
in the definition section of CFR (32 CFR 199.2) when Medicare approved 
status is not required. This definition provides specific criteria for 
recognition of qualified accreditation organizations under CHAMPUS.
    Under the prescribed provisions set forth in this final rule, the 
corporate entity must be an authorized provider under CHAMPUS in order 
for payment of professional services to be authorized. For example, a 
corporate entity which is neither recognized by Medicare or any other 
accreditation organization as prescribed under the definition section 
of the CFR (32 CFR 199.2), coverage could not be extended for 
professional services even if the individual professional providers 
would have otherwise been eligible for payment except for their 
affiliation with the corporate entity. In other words, while the 
expanded provider category will allow coverage of professional services 
for corporate entities, meeting the conditions for authorization 
established under this rule, it will at the same time restrict coverage 
of professional services for those corporate entities which cannot meet 
those criteria for corporate services provider authorization under 
CHAMPUS.
    Comment 3. One commentor recommended that comprehensive outpatient 
rehabilitation facilities (CORFs) be explicitly addressed in the final 
rule as a type of corporate service provider so there is no 
misunderstanding in the future as to the ability of CORFs to provide 
services to CHAMPUS beneficiaries.
    Response: The response to this comment is similar to the rationale 
used in the previous response as to why a list of qualified 
accreditation agencies or organizations are not specifically listed in 
the final rule. Again, a laundry list of qualifying corporate service 
providers would negate the agency's authority to promptly recognize by 
administrative policy, rather than having to go through the much longer 
rulemaking procedures for those corporate service providers who may in 
the future meet the criteria for authorization set down in this rule. 
For example, recognition of a new corporate services provider as an 
authorized provider under CHAMPUS would take three to six months 
through the administrative policy process (i.e., simply making changes 
to the program policy guidelines), compared to twelve to sixteen months 
through the formal rulemaking.
    Comment 4. Another commentor felt that specific guidelines for the 
authorization process should be addressed in the final rule so that 
there is no misunderstanding by the providers or CHAMPUS contractors.
    Response. It is felt that the incorporation of specific 
certification guidelines is unnecessary, since the authorization status 
of corporate services providers under CHAMPUS is already contingent on 
nationally recognized certification criteria (i.e., authorization/
certification guidelines established by Medicare and other accrediting 
organizations as prescribed under the definition section of the CFR (32 
CFR 199.2)). This would also impose an unnecessary administrative 
burden on the agency, since 32 CFR 199 would have to be continually 
updated to keep current with changes in national certification 
guidelines for this particular provider class.
    Comment 5. One commentor wanted to know the conditions under which 
the Director, OCHAMPUS, or designee, may limit the term of a 
participation agreement for corporate services. It was recommended that 
limitations be explicit and known to the providers and CHAMPUS 
contractors.
    Response. As was stated previously, corporate services providers 
must also enter into a participation agreement which will be sent out 
as part of the initial certification process. The participation 
agreement will ensure that CHAMPUS determined allowable payments, 
combined with the cost-share/copayment, deductible, and other health 
insurance amounts, will be accepted by the provider as payment in full. 
The agreement will be binding on the provider and OCHAMPUS upon 
acceptance by the Director, OCHAMPUS, or designee, and shall stay in 
effect until terminated by either party. The effective day of the 
participation will be the date the agreement is signed by the Director, 
OCHAMPUS, or designee.
    The agreement may be terminated by either party giving the other 
party written notice of termination. Such notice of termination is to 
be received by the other party no later than 45 days prior of the date 
of termination. In the event of transfer of ownership, the agreement is 
assigned to the new owner, subject to the conditions specified in this 
agreement and pertinent regulations. The participation agreement will, 
at a minimum, contain all of the required provisions as outlined in 
this rule (32 CFR 199.6(a)(13)). Violation of one or more of these 
requirements will be ground for termination by the Director, OCHAMPUS, 
or designee.
    Comment 6. Another commentor wants to know if the definition of a 
corporate services provider encompasses vocational rehabilitation 
facilities and other community based rehabilitation providers.
    Response. The following conditions must be met in order for 
vocational rehabilitation and community based rehabilitation providers 
to meet the definition of corporate services provider

[[Page 11768]]

as prescribed under the provisions of this rule: (1) that the corporate 
entity be approved for Medicare payment, or when Medicare approval 
status is not required, be accredited by a qualified accreditation 
organization, as defined in 32 CFR 199.2; (2) that the services are 
covered program benefits rendered by CHAMPUS authorized individual 
providers as designated in 32 CFR 199.6 the corporate entity has 
entered into a participation agreement that at least complies with the 
minimum participation agreement requirements set forth in this final 
rule.
    Comment 7. One commentor had concerns regarding the potential cost 
impact of provider expansion on the CHAMPUS program.
    Response. Currently professional outpatient health care which could 
be supplied by corporate services providers (e.g., home health agencies 
and comprehensive outpatient rehabilitation facilities) is obtained 
through hospitals. CHAMPUS reimburses professional outpatient hospital 
services as billed if a specific procedure code is not identifiable on 
the institutional billing form. The same services received from 
corporate services providers are always paid under the CHAMPUS Maximum 
Allowable Charge (CMAC) reimbursement methodology. Under CMAC 
reimbursement is limited to the billed charge or CHAMPUS-determined 
allowable amount (in most cases the CMAC), whichever is less. The CMAC 
is generally less than the billed charge; therefore, with the addition 
of the proposed types of providers, CHAMPUS could potentially pay less 
for professional health services. At worst, the impact would be budget 
neutral, given the fact that professional services are paid in 
accordance with the CHAMPUS Maximum Allowable Charge regardless of 
whether the provider is authorized under the CHAMPUS regulatory 
definition for individual professional provider or under the corporate 
services provider class.
    Comment 8. One commentor recommended that CHAMPUS recognize the 
Commission on Accreditation of Rehabilitation Facilities (CARF) 
accreditation for corporate services providers, since it is a 
nationally recognized accrediting body for inpatient, outpatient, 
vocational, behavioral, community based rehabilitation services and 
programs.
    Response. Under the provisions promulgated in this rule, a 
corporate entity must maintain Medicare approval for payment if it is a 
category or type of provider that is substantially comparable to a 
provider or supplier for which Medicare has regulatory conditions of 
participation or coverage. However, if regulatory provisions for 
participation in the Medicare program are not available for a 
particular category of provider, accreditation by a qualified 
accreditation organization may be used in lieu of Medicare for 
conveying CHAMPUS provider authorization status. Recognition of the 
Commission on Accreditation of Rehabilitation Facilities (CARF) for 
accreditation of corporate services providers as a condition of 
authorization under CHAMPUS is contingent on its compliance with the 
qualifying criteria established under the definition of ``Qualified 
accreditation organization'' appearing in 32 CFR 199.2. In other words, 
if Medicare certifies a particular corporate services provider class, 
the providers' Medicare certification (approval for payment) must be 
used as a condition for authorization under CHAMPUS. If not, the 
accreditation of an accrediting organization that meets the qualifying 
criteria under the definition of ``Qualified accreditation 
organization'' appearing in 32 CFR 100.2 will have to be used.
    Comment 9. A final commentor wanted to know if a CORF that was also 
a professional corporation or professional association would be 
eligible as an authorized corporate services provider.
    Response. One of the conditions of authorization under the new 
provider class designation (i.e., to be authorized under CHAMPUS as a 
corporate services provider) is that the applicant be a freestanding 
corporation or foundation, but not a professional corporation or 
professional association.

IV. Regulatory Matters

    Executive Order 12866 requires certain regulatory assessments for 
any ``significant regularly action'' defined as one that 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 are regulatory 
flexibility analysis when the agency issues a regulation which would 
have a significant impact on a substantial number of small entities.
    Approximately 850 corporate or foundation physician groups and 
4,500 freestanding Medicare certified in-home health care agencies will 
become eligible to apply for CHAMPUS provider status on the effective 
date of this rule. Since these changes are simply a competitive 
redistribution of ambulatory care benefit costs for already existing 
benefits, we certify that this final rule is not a major under 
Executive Order 12866, and will not have a significant economic impact 
on a substantial number of small entities under the criteria set forth 
in the Regulatory Flexibility Act.
    Paperwork Reduction Act of 1995 (44 U.S.C. 3501-2511) requires all 
Departments to submit to the Office of Management and Budget (OMB) for 
review and approval any reporting or record keeping requirements in a 
proposed or final rule. The final rule will require information from 
the provider applicant to document that the criteria for CHAMPUS-
provider status are met. The development of a corporate services 
provider application form has been accomplished along with an 
accompanying participation agreement. A notice for the proposed 
information collection appeared in the Federal Register on July 31, 
1998 (63 FR 40882). The proposed information collection will be 
submitted to OMB concurrently with the publication of the final rule in 
the Federal Register.
    Comments on these requirements should be submitted to the Office of 
Information and Regulatory Affairs, OMB, 725 17th Street, N.W., 
Washington, DC 20503, marked ``Attention Desk Officer for Department of 
Defense, Health Affairs.''

List of Subjects in 32 CFR Part 199

    Claims, Health insurance, Individuals and 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:

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

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


Sec. 199.2  Definitions.

* * * * *
    (b) * * *
    Corporate services provider. A health care provider that meets the 
applicable requirements established by Sec. 199.6(f).
* * * * *
    Economic interest. (1) Any right, title, or share in the income, 
remuneration, payment, or profit of a CHAMPUS-authorized provider, or 
of an individual

[[Page 11769]]

or entity eligible to be a CHAMPUS-authorized provider, resulting, 
directly or indirectly, from a referral relationship; or any direct or 
indirect ownership, right, title, or share, including a mortgage, deed 
of trust, note, or other obligation secured (in whole or in part) by 
one entity for another entity in a referral or accreditation 
relationship, which is equal to or exceeds 5 percent of the total 
property and assets of the other entity.
    (2) A referral relationship exists when a CHAMPUS beneficiary is 
sent, directed, assigned or influenced to use a specific CHAMPUS-
authorized provider, or a specific individual or entity eligible to be 
a CHAMPUS-authorized provider.
    (3) An accreditation relationship exists when a CHAMPUS-authorized 
accreditation organization evaluates for accreditation an entity that 
is an applicant for, or recipient of CHAMPUS-authorized provider 
status.
* * * * *
    Participating provider. A CHAMPUS-authorized provider that is 
required, or has agreed by entering into a CHAMPUS participation 
agreement or by act of indicating ``accept assignment'' on the claim 
form, to accept the CHAMPUS-allowable amount as the maximum total 
charge for a service or item rendered to a CHAMPUS beneficiary, whether 
the amount is paid for fully by CHAMPUS or requires cost-sharing by the 
CHAMPUS beneficiary.
* * * * *
    Qualified accreditation organization. A not-for-profit corporation 
or a foundation that:
    (1) Develops process standards and outcome standards for health 
care delivery programs, or knowledge standards and skill standards for 
health care professional certification testing, using experts both from 
within and outside of the health care program area or individual 
specialty to which the standards are to be applied;
    (2) Creates measurable criteria that demonstrate compliance with 
each standard;
    (3) Publishes the organization's standards, criteria and evaluation 
processes so that they are available to the general public;
    (4) Performs on-site evaluations of health care delivery programs, 
or provides testing of individuals, to measure the extent of compliance 
with each standard;
    (5) Provides on-site evaluation or individual testing on a national 
or international basis;
    (6) Provides to evaluated programs and tested individuals time-
limited written certification of compliance with the organization's 
standards;
    (7) Excludes certification of any program operated by an 
organization which has an economic interest, as defined in this 
section, in the accreditation organization or in which the 
accreditation organization has an economic interest;
    (8) Publishes promptly the certification outcomes of each program 
evaluation or individual test so that it is available to the general 
public; and
    (9) Has been found by the Director, OCHAMPUS, or designee, to apply 
standards, criteria, and certification processes which reinforce 
CHAMPUS provider authorization requirements and promote efficient 
delivery of CHAMPUS benefits.
* * * * *


Sec. 199.4  [Amended]

    3. Section 199.4 is amended by removing and reserving paragraphs 
(g)(70) and (g)(71).
    4. Section 199.6 is amended by revising paragraphs (a)(8), (c)(1), 
and (c)(2); adding paragraphs (a)(12) and (a)(13); removing paragraph 
(b)(1)(iii); redesignating paragraphs (f) and (g) as paragraphs (a)(14) 
and (a)(15); and adding new paragraph (f) to read as follows:


Sec. 199.6  Authorized providers.

    (a) * * *
    (8) Participating providers. A CHAMPUS-authorized provider is a 
participating provider, as defined in Sec. 199.2 under the following 
circumstances:
    (i) Mandatory participation. (A) All Medicare-participating 
hospitals must be CHAMPUS participating providers for all inpatient 
CHAMPUS claims.
    (B) Hospitals that are not Medicare-participating but are subject 
to the CHAMPUS-DRG-based payment methodology or the CHAMPUS mental 
health payment methodology as established by Sec. 199.14(a), must enter 
into a participation agreement with CHAMPUS for all inpatient claims in 
order to be a CHAMPUS-authorized provider.
    (C) Corporate services providers authorized as CHAMPUS providers 
under the provisions of paragraph (f) of this section must enter into a 
participation agreement as provided by the Director, OCHAMPUS, or 
designee.
    (ii) Voluntary participation--(A) Total claims participation: The 
participating provider program. A CHAMPUS-authorized provider that is 
not required to participate by this part may become a participating 
provider by entering into an agreement or memorandum of understanding 
(MOU) with the Director, OCHAMPUS, or designee, which includes, but is 
not limited to, the provisions of paragraph (a)(13) of this section. 
The Director, OCHAMPUS, or designee, may include in a participating 
provider agreement/MOU provisions that establish between CHAMPUS and a 
class, category, type, or specific provider, uniform procedures and 
conditions which encourage provider participation while improving 
beneficiary access to benefits and contributing to CHAMPUS efficiency. 
Such provisions shall be otherwise allowed by this part or by DoD 
Directive or DoD Instruction specifically pertaining to CHAMPUS claims 
participation. Participating provider program provisions may be 
incorporated into an agreement/MOU to establish a specific CHAMPUS-
provider relationship, such as a preferred provider arrangement.
    (B) Claim-specific participation. A CHAMPUS-authorized provider 
that is not required to participate and that has not entered into a 
participation agreement pursuant to paragraph (a)(8)(ii)(A) of this 
section may elect to be a participating provider on a claim-by-claim 
basis by indicating ``accept assignment'' on each claim form for which 
participation is elected.
* * * * *
    (12) Medical records. CHAMPUS-authorized provider organizations and 
individuals providing clinical services shall maintain adequate 
clinical records to substantiate that specific care was actually 
furnished, was medically necessary, and appropriate, and identify(ies) 
the individual(s) who provided the care. This applies whether the care 
is inpatient or outpatient. The minimum requirements for medical record 
documentation are set forth by all of the following:
    (i) The cognizant state licensing authority;
    (ii) The Joint Commission on Accreditation of Healthcare 
Organizations, or the appropriate Qualified Accreditation Organization 
as defined in Sec. 199.2;
    (iii) Standards of practice established by national medical 
organizations; and
    (iv) This part.
    (13) Participation agreements. A participation agreement otherwise 
required by this part shall include, in part, all of the following 
provisions requiring that the provider shall:
    (i) Not charge a beneficiary for the following:
    (A) Services for which the provider is entitled to payment from 
CHAMPUS;
    (B) Services for which the beneficiary would be entitled to have 
CHAMPUS

[[Page 11770]]

payment made had the provider complied with certain procedural 
requirements.
    (C) Services not medically necessary and appropriate for the 
clinical management of the presenting illness, injury, disorder or 
maternity;
    (D) Services for which a beneficiary would be entitled to payment 
but for a reduction or denial in payment as a result of quality review; 
and
    (E) Services rendered during a period in which the provider was not 
in compliance with one or more conditions of authorization;
    (ii) Comply with the applicable provisions of this part and related 
CHAMPUS administrative policy;
    (iii) Accept the CHAMPUS determined allowable payment combined with 
the cost-share, deductible, and other health insurance amounts payable 
by, or on behalf of, the beneficiary, as full payment for CHAMPUS 
allowed services;
    (iv) Collect from the CHAMPUS beneficiary those amounts that the 
beneficiary has a liability to pay for the CHAMPUS deductible and cost-
share;
    (v) Permit access by the Director, OCHAMPUS, or designee, to the 
clinical record of any CHAMPUS beneficiary, to the financial and 
organizational records of the provider, and to reports of evaluations 
and inspections conducted by state, private agencies or organizations;
    (vi) Provide the Director, OCHAMPUS, or designee, prompt written 
notification of the provider's employment of an individual who, at any 
time during the twelve months preceding such employment, was employed 
in a managerial, accounting, auditing, or similar capacity by an agency 
or organization which is responsible, directly or indirectly for 
decisions regarding Department of Defense payments to the provider;
    (vii) Cooperate fully with a designated utilization and clinical 
quality management organization which has a contract with the 
Department of Defense for the geographic area in which the provider 
renders services;
    (viii) Obtain written authorization before rendering designated 
services or items for which CHAMPUS cost-share may be expected;
    (ix) Maintain clinical and other records related to individuals for 
whom CHAMPUS payment was made for services rendered by the provider, or 
otherwise under arrangement, for a period of 60 months from the date of 
service;
    (x) Maintain contemporaneous clinical records that substantiate the 
clinical rationale for each course of treatment, periodic evaluation of 
the efficacy of treatment, and the outcome at completion or 
discontinuation of treatment;
    (xi) Refer CHAMPUS beneficiaries only to providers with which the 
referring provider does not have an economic interest, as defined in 
Sec. 199.2; and
    (xii) Limit services furnished under arrangement to those for which 
receipt of payment by the CHAMPUS authorized provider discharges the 
payment liability of the beneficiary.
* * * * *
    (c) Individual professional providers of care--(1) General--(i) 
Purpose. This individual professional provider class is established to 
accommodate individuals who are recognized by 10 U.S.C. 1079(a) as 
authorized to assess or diagnose illness, injury, or bodily malfunction 
as a prerequisite for CHAMPUS cost-share of otherwise allowable related 
preventive or treatment services or supplies, and to accommodate such 
other qualified individuals who the Director, OCHAMPUS, or designee, 
may authorize to render otherwise allowable services essential to the 
efficient implementation of a plan-of-care established and managed by a 
10 U.S.C. 1079(a) authorized professional.
    (ii) Professional corporation affiliation or association membership 
permitted. Paragraph (c) of this section applies to those individual 
health care professionals who have formed a professional corporation or 
association pursuant to applicable state laws. Such a professional 
corporation or association may file claims on behalf of a CHAMPUS-
authorized individual professional provider and be the payee for any 
payment resulting from such claims when the CHAMPUS-authorized 
individual certifies to the Director, OCHAMPUS, or designee, in writing 
that the professional corporation or association is acting on the 
authorized individual's behalf.
    (iii) Scope of practice limitation. For CHAMPUS cost-sharing to be 
authorized, otherwise allowable services provided by a CHAMPUS-
authorized individual professional provider shall be within the scope 
of the individual's license as regulated by the applicable state 
practice act of the state where the individual rendered the service to 
the CHAMPUS beneficiary or shall be within the scope of the test which 
was the basis for the individual's qualifying certification.
    (iv) Employee status exclusion. An individual employed directly, or 
indirectly by contract, by an individual or entity to render 
professional services otherwise allowable by this part is excluded from 
provider status as established by this paragraph (c) for the duration 
of each employment.
    (v) Training status exclusion. Individual health care professionals 
who are allowed to render health care services only under direct and 
ongoing supervision as training to be credited towards earning a 
clinical academic degree or other clinical credential required for the 
individual to practice independently are excluded from provider status 
as established by this paragraph (c) for the duration of such training.
    (2) Conditions of authorization--(i) Professional license 
requirement. The individual must be currently licensed to render 
professional health care services in each state in which the individual 
renders services to CHAMPUS beneficiaries. Such license is required 
when a specific state provides, but does not require, license for a 
specific category of individual professional provider. The license must 
be at full clinical practice level to meet this requirement. A 
temporary license at the full clinical practice level is acceptable.
    (ii) Professional certification requirement. When a state does not 
license a specific category of individual professional, certification 
by a Qualified Accreditation Organization, as defined in Sec. 199.2, is 
required. Certification must be at full clinical practice level. A 
temporary certification at the full clinical practice level is 
acceptable.
    (iii) Education, training and experience requirement. The Director, 
OCHAMPUS, or designee, may establish for each category or type of 
provider allowed by this paragraph (c) specific education, training, 
and experience requirements as necessary to promote the delivery of 
services by fully qualified individuals.
    (iv) Physician referral and supervision. When physician referral 
and supervision is a prerequisite for CHAMPUS cost-sharing of the 
services of a provider authorized under this paragraph (c), such 
referral and supervision means that the physicians must actually see 
the patient to evaluate and diagnose the condition to be treated prior 
to referring the beneficiary to another provider and that the referring 
physician provides ongoing oversight of the course of referral related 
treatment throughout the period during which the beneficiary is being 
treated in response to the referral. Written contemporaneous 
documentation of the referring physician's basis for referral and 
ongoing communication between the referring and treating provider 
regarding the oversight of the treatment

[[Page 11771]]

rendered as a result of the referral must meet all requirements for 
medical records established by this part. Referring physician 
supervision does not require physical location on the premises of the 
treating provider or at the site of treatment.
* * * * *
    (f) Corporate services providers.--(1) General. (i) This corporate 
services provider class is established to accommodate individuals who 
would meet the criteria for status as a CHAMPUS authorized individual 
professional provider as established by paragraph (c) of this section 
but for the fact that they are employed directly or contractually by a 
corporation or foundation that provides principally professional 
services which are within the scope of the CHAMPUS benefit.
    (ii) Payment for otherwise allowable services may be made to a 
CHAMPUS-authorized corporate services provider subject to the 
applicable requirements, exclusions and limitations of this part.
    (iii) The Director, OCHAMPUS, or designee, may create discrete 
types within any allowable category of provider established by this 
paragraph (f) to improve the efficiency of CHAMPUS management.
    (iv) The Director, OCHAMPUS, or designee, may require, as a 
condition of authorization, that a specific category or type of 
provider established by this paragraph (f):
    (A) Maintain certain accreditation in addition to or in lieu of the 
requirement of paragraph (f)(2)(v) of this section;
    (B) Cooperate fully with a designated utilization and clinical 
quality management organization which has a contract with the 
Department of Defense for the geographic area in which the provider 
does business;
    (C) Render services for which direct or indirect payment is 
expected to be made by CHAMPUS only after obtaining CHAMPUS written 
authorization; and
    (D) Maintain Medicare approval for payment when the Director, 
OCHAMPUS, or designee, determines that a category, or type, of provider 
established by this paragraph (f) is substantially comparable to a 
provider or supplier for which Medicare has regulatory conditions of 
participation or conditions of coverage.
    (v) Otherwise allowable services may be rendered at the authorized 
corporate services provider's place of business, or in the 
beneficiary's home under such circumstances as the Director, OCHAMPUS, 
or designee, determines to be necessary for the efficient delivery of 
such in-home services.
    (vi) The Director, OCHAMPUS, or designee, may limit the term of a 
participation agreement for any category or type of provider 
established by this paragraph (f).
    (vii) Corporate services providers shall be assigned to only one of 
the following allowable categories based upon the predominate type of 
procedure rendered by the organization;
    (A) Medical treatment procedures;
    (B) Surgical treatment procedures;
    (C) Maternity management procedures;
    (D) Rehabilitation and/or habilitation procedures; or
    (E) Diagnostic technical procedures.
    (viii) The Director, OCHAMPUS, or designee, shall determine the 
appropriate procedural category of a qualified organization and may 
change the category based upon the provider's CHAMPUS claim 
characteristics. The category determination of the Director, OCHAMPUS, 
designee, is conclusive and may not be appealed.
    (2) Conditions of authorization. An applicant must meet the 
following conditions to be eligible for authorization as a CHAMPUS 
corporate services provider:
    (i) Be a corporation or a foundation, but not a professional 
corporation or professional association; and
    (ii) Be institution-affiliated or freestanding as defined in 
Sec. 199.2; and
    (iii) Provide:
    (A) Services and related supplies of a type rendered by CHAMPUS 
individual professional providers or diagnostic technical services and 
related supplies of a type which requires direct patient contact and a 
technologist who is licensed by the state in which the procedure is 
rendered or who is certified by a Qualified Accreditation Organization 
as defined in Sec. 199.2; and
    (B) A level of care which does not necessitate that the beneficiary 
be provided with on-site sleeping accommodations and food in 
conjunction with the delivery of services; and
    (iv) Complies with all applicable organizational and individual 
licensing or certification requirements that are extant in the state, 
county, municipality, or other political jurisdiction in which the 
provider renders services; and
    (v) Be approved for Medicare payment when determined to be 
substantially comparable under the provisions of paragraph 
(f)(1)(iv)(D) of this section or, when Medicare approved status is not 
required, be accredited by a qualified accreditation organization, as 
defined in Sec. 199.2; and
    (vi) Has entered into a participation agreement approved by the 
Director, OCHAMPUS, or designee, which at least complies with the 
minimum participation agreement requirements of this section.
    (3) Transfer of participation agreement. In order to provide 
continuity of care for beneficiaries when there is a change of provider 
ownership, the provider agreement is automatically assigned to the new 
owner, subject to all the terms and conditions under which the original 
agreement was made.
    (i) The merger of the provider corporation or foundation into 
another corporation or foundation, or the consolidation of two or more 
corporations or foundations resulting in the creation of a new 
corporation or foundation, constitutes a change of ownership.
    (ii) Transfer of corporate stock or the merger of another 
corporation or foundation into the provider corporation or foundation 
does not constitute change of ownership.
    (iii) The surviving corporation or foundation shall notify the 
Director, OCHAMPUS, or designee, in writing of the change of ownership 
promptly after the effective date of the transfer or change in 
ownership.
    (4) Pricing and payment methodology: The pricing and payment of 
procedures rendered by a provider authorized under this paragraph (f) 
shall be limited to those methods for pricing and payment allowed by 
this part which the Director, OCHAMPUS, or designee, determines 
contribute to the efficient management of CHAMPUS.
    (5) Termination of participation agreement. A provider may 
terminate a participation agreement upon 45 days written notice to the 
Director, OCHAMPUS, or designee, and to the public.

    Dated: February 26, 1999.
L.M. Bynum,
Alternate OSD Federal Register Liaison, Officer, Department of Defense.
[FR Doc. 99-5528 Filed 3-9-99; 8:45 am]
BILLING CODE 5000-04-M