[Federal Register Volume 64, Number 201 (Tuesday, October 19, 1999)]
[Proposed Rules]
[Pages 56283-56286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-27060]


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

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DoD 6010.8-R]


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS); TRICARE Program; Double Coverage; Third Party Recoveries

AGENCY: Office of the Secretary, DoD.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule implements section 711 of the Strom 
Thurmond National Defense Authorization Act for Fiscal Year 1999 which 
allows the Secretary of Defense to authorize certain CHAMPUS/TRICARE 
claims to be paid, even though other health insurance may be primary 
payer, with authority to collect from the other health insurance 
(third-party payer) the CHAMPUS/TRICARE costs incurred on behalf of the 
beneficiary.

DATES: Public comments must be received by December 20, 1999.

ADDRESSES: Forward comments to: TRICARE Management Activity (TMA), 
Office of General Counsel, 16401 East Centretech Parkway, Aurora, CO 
80011-9043.

FOR FURTHER INFORMATION CONTACT: Robert Shepherd, Office of General 
Counsel, TMA, (303) 676-3705.

SUPPLEMENTARY INFORMATION: This Civilian Health and Medical Program of 
the Uniformed Services (CHAMPUS) supplements the availability of health 
care in military hospitals and clinics.

Statutory Authority

    CHAMPUS/TRICARE is second pay to all other health insurance except, 
generally, Medicaid plans, based on authority of 10 U.S.C. 1079(j) and 
1086(g). Under these provisions, CHAMPUS/TRICARE could not pay a 
benefit for a person covered by any other health insurance (i.e., 
health insurance, medical service, or health plan, including any plan 
offered by a third-party payer) to the extent the benefit was covered 
under the other plan. Therefore, payment of CHAMPUS/TRICARE claims were 
delayed pending payment by the other health insurance in order for 
CHAMPUS/TRICARE to be second payer on the claim. In certain situations 
(e.g., for example when a patient was injured in an automobile 
accident) delays in payment by the responsible third-party frequently 
resulted in the beneficiary being billed directly by providers of care 
or collection agencies. Under the provision enacted in 1998 by Congress 
as section 711 of the Strom Thurmond National Defense Authorization Act 
for Fiscal Year 1999, Pub. L. 105-261, CHAMPUS/TRICARE can now pay a 
claim when a third-party payer (as defined in the law) is involved and 
then seek recovery of the CHAMPUS/TRICARE costs from the third-party 
payer. When a beneficiary is covered by primary health insurance (not a 
third-party payer), the primary health insurance will continue to be 
first payer on a claim before CHAMPUS/TRICARE will pay.

Proposed Changes

    This proposes a change to the CHAMPUS/TRICARE ``double coverage'' 
provisions authorizing payment of claims when a third-party payer is 
involved rather than delaying CHAMPUS/TRICARE payments pending payment 
by the third-party payer. In addition, this proposes a change to the 
CHAMPUS/TRICARE ``third party recoveries'' provisions incorporating the 
authority to collect from third-party payers the CHAMPUS/TRICARE costs 
for health care services incurred on behalf of the patient/beneficiary.

Regulatory Procedures

    Executive Order (EO) 12866 requires that a comprehensive regulatory 
impact analysis be performed on any economically significant regulatory 
action, defined as one which would result in an annual effect of $100 
million or more on the national economy or which would have other 
substantial impacts.
    The Regulatory Flexibility Act (RFA) requires that each Federal 
agency prepare, and make available for public comment, a regulatory 
flexibility analysis when the agency issues a regulation which would 
have a significant impact on a substantial number of small entities.
    This is not a significant regulatory action under EO 12866 and has 
been reviewed by the Office of Management and Budget. In addition, we 
certify that this proposed rule will not significantly affect a 
substantial number of small entities.

Paperwork Reduction Act

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

List of Subjects in 32 CFR Part 199

    Claims, Handicapped, Health insurance, and Military personnel.
    Accordingly, 32 CFR part 199 is 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 proposed to be amended by adding new 
definitions in alphabetical order:


Sec. 199.2  Definitions.

* * * * *
    Automobile liability insurance. Automobile liability insurance 
means insurance against legal liability for health and medical expenses 
resulting from personal injuries arising from operation of a motor 
vehicle. Automobile liability insurance includes:
    (1) Circumstances in which liability benefits are paid to an 
injured party only when the insured party's tortious acts are the cause 
of the injuries; and
    (2) Uninsured and underinsured coverage, in which there is a third 
party tortfeasor who caused the injuries (i.e., benefits are not paid 
on a no-fault basis),

[[Page 56284]]

but the insured party is not the tortfeasor.
* * * * *
    No-fault insurance. No-fault insurance means an insurance contract 
providing compensation for health and medical expenses relating to 
personal injury arising from the operation of a motor vehicle in which 
the compensation is not premised on who may have been responsible for 
causing such injury. No-fault insurance includes personal injury 
protection and medical payments benefits in cases involving personal 
injuries resulting from operation of a motor vehicle.
* * * * *
    Third-party payer. Third-party payer means an entity that provides 
an insurance, medical service, or health plan by contract or agreement, 
including an automobile liability insurance or no fault insurance 
carrier and a worker's compensation program or plan, and any other plan 
or program (e.g., homeowners insurance, etc.) that is designed to 
provide compensation or coverage for expenses incurred by a beneficiary 
for medical services or supplies. For purposes of the definition of 
``third-party payer,'' an insurance, medical service, or health plan 
includes a preferred provider organization, an insurance plan described 
as Medicare supplemental insurance, and a personal injury protection 
plan or medical payments benefit plan for personal injuries resulting 
from the operation of a motor vehicle.
* * * * *
    3. Section 199.8 is proposed to be amended by revising paragraphs 
(a), (c)(1), (d)(2), and (d)(3), redesignating paragraphs (b)(3), 
(c)(2) and (c)(3) as paragraphs (b)(4), (c)(4) and (c)(5), 
respectively, and adding new paragraphs (b)(3), (c)(2), and (c)(3) 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, insurance and third-party payer 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, including any plan 
offered by a third-party payer (as defined in 10 U.S.C. 1095(h)(1)) 
to the extent that the benefit is also a benefit under the other 
plan, except in the case of a plan administered under title XIX of 
the Social Security Act (42 U.S.C. 1396 et seq.).

    (2) The above provision is made applicable specifically to retired 
members, dependents, and survivors by 10 U.S.C. 1086(g). 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.
* * * * *
    (b) * * *
    (3) Third-party payer. A third-party payer means an entity that 
provides an insurance, medical service, or health plan by contract or 
agreement, including an automobile liability insurance or no fault 
insurance carrier and workers' compensation program or plan, and any 
other plan or program (e.g., homeowners insurance, etc.) that is 
designed to provide compensation or coverage for expenses incurred by a 
beneficiary for medical services or supplies. For purposes of the 
definition of ``third-party payer,'' an insurance, medical service or 
health plan includes a preferred provider organization, an insurance 
plan described as Medicare supplemental insurance, and a personal 
injury protection plan or medical payments benefit plan for personal 
injuries resulting form the operation of a motor vehicle.
* * * * *
    (c) * * *
    (1) For any claim that involves a double coverage plan as defined 
in paragraph (b) of this section, CHAMPUS shall be last pay except as 
may be authorized by the Director, OCHAMPUS, pursuant to paragraph 
(c)(2) of this section. That is, CHAMPUS benefits may not be extended 
until all other double coverage plans have adjudicated the claim.
    (2) The Director, OCHAMPUS, may authorize payment of a claim in 
advance of adjudication of the claim by a double coverage plan and 
recover, under Sec. 199.12, the CHAMPUS costs of health care incurred 
on behalf of the covered beneficiary under the following conditions:
    (i) The claim is submitted for health care services furnished to a 
covered beneficiary;
    (ii) The claim is identified as involving services for which a 
third-party payer, other than a primary medical insurer, may be liable; 
and,
    (iii) The authority to make payment in advance of adjudication and 
payment of the claim by the third-party payer is delegated to a CHAMPUS 
contractor under contractual terms in which the contractor assigns to 
the government any rights to seek recovery from the third-party payer 
of health care costs incurred on behalf of the covered beneficiary.
    (3) For purposes of paragraph (c)(2) of this section, a ``primary 
medical insurer'' is an insurance plan, medical service or health plan, 
or a third-party payer under this section, the primary or sole purpose 
of which is to provide or pay for health care services, supplies, or 
equipment. The term ``primary medical insurer'' does not include 
automobile liability insurance, no fault insurance, workers' 
compensation program or plan, homeowners insurance, or any other 
similar third-party payer as may be designated by the Director, 
OCHAMPUS, in any policy guidance or instructions issued in 
implementation of this part.
* * * * *
    (d) * * *
    (2) CHAMPUS and Medicaid. Medicaid is not a double coverage plan 
except under the case management program as specified in Sec. 199.4(i). 
With the exception of the case management program, in all other double 
coverage situations involving Medicaid, CHAMPUS is always the primary 
payer.
    (3) CHAMPUS and Workers' Compensation. CHAMPUS benefits are not 
payable for a work-related illness or injury that is covered under a 
workers' compensation program. Pursuant to paragraph (c)(2) of this 
section, however, the Director, OCHAMPUS may authorize payment of a 
claim involving a work-related illness or injury covered under a 
workers' compensation program in advance of adjudication and payment of 
the workers' compensation claim and then recover, under Sec. 199.12, 
the CHAMPUS costs of health care incurred on behalf of the covered 
beneficiary.
* * * * *
    4. Section 199.12 is proposed to be revised to read as follows:


Sec. 199.12  Third party recoveries.

    (a) General. This section deals with the right of the United States 
to recover from third parties the costs of medical care furnished to or 
paid on behalf of CHAMPUS beneficiaries. These third parties may be 
individuals or entities that are liable for tort damages to the injured 
CHAMPUS beneficiary or a liability insurance carrier covering the 
individual or entity. These third parties may also include other 
entities who are primarily responsible to pay for the medical care 
provided to the injured beneficiary by reason of an insurance policy, 
workers' compensation program or other source of primary payment.
    (b) Authority.

[[Page 56285]]

    (1) Third-party payers. This part implements the provisions of 10 
U.S.C. 1095b which, in general, allow the Secretary of Defense to 
authorize certain CHAMPUS claims to be paid, even though a third-party 
payer may be primary payer, with authority to collect from the third-
party payer the CHAMPUS costs incurred on behalf of the beneficiary. 
(See Sec. 199.2 for definition of ``third-party payer.'') Therefore, 10 
U.S.C. 1095b establishes the statutory obligation of third-party payers 
to reimburse the United States the costs incurred on behalf of CHAMPUS 
beneficiaries who are also covered by the third-party payer's plan.
    (2) Federal Medical Care Recovery Act.
    (i) In general. In many cases covered by this section, the United 
States has a right to collect under both 10 U.S.C. 1095b and the 
Federal Medical Care Recovery Act (FMCRA), Pub. L. 87-693 (42 U.S.C. 
2651 et seq.). In such cases, the authority is concurrent and the 
United States may pursue collection under both statutory authorities.
    (ii) Cases involving tort liability. In cases in which the right of 
the United States to collect from an automobile liability insurance 
carrier is premised on establishing some tort liability on some third 
person, matters regarding the determination of such tort liability 
shall be governed by the same substantive standards as would be applied 
under the FMCRA including reliance on state law for determinations 
regarding tort liability. In addition, the provisions of 28 CFR part 43 
(Department of Justice regulations pertaining to the FMCRA) shall apply 
to claims made under the concurrent authority of the FMCRA and 10 
U.S.C. 1095b. All other matters and procedures concerning the right of 
the United States to collect shall, if a claim is made under the 
concurrent authority of the FMCRA and this section, be governed by 10 
U.S.C. 1095b and this part.
    (c) Appealability. This section describes the procedures to be 
followed in the assertion and collection of third party recovery claims 
in favor of the United States arising from the operation of CHAMPUS. 
Actions taken under this section are not initial determinations for the 
purpose of the appeal procedures of Sec. 199.10. However, the proper 
exercise of the right to appeal benefit or provider status 
determinations under the procedures set forth in Sec. 199.10 may affect 
the processing of federal claims arising under this section. Those 
appeal procedures afford a CHAMPUS beneficiary or participating 
provider an opportunity for administrative appellate review in cases in 
which benefits have been denied and in which there is a significant 
factual dispute. For example, a CHAMPUS contractor may deny payment for 
services that are determined to be excluded as CHAMPUS benefits because 
they are found to be not medically necessary. In that event the CHAMPUS 
contractor will offer an administrative appeal as provided in 
Sec. 199.10 on the medical necessity issue raised by the adverse 
benefit determination. If the care in question results from an 
accidental injury and if the appeal results in a reversal of the 
initial determination to deny the benefit, a third party recovery claim 
may arise as a result of the appeal decision to pay the benefit. 
However, in no case is the decision to initiate such a claim itself 
appealable under Sec. 199.10.
    (d) Statutory obligation of third-party payer to pay.
    (1) Basic rule. Pursuant to 10 U.S.C. 1095b, when the Secretary of 
Defense authorizes certain CHAMPUS claims to be paid, even though a 
third-party payer may be primary payer (as specified under 
Sec. 199.8(c)(2), the right to collect from a third-party payer the 
CHAMPUS costs incurred on behalf of the beneficiary is the same as 
exists for the United States to collect from third party payers the 
cost of care provided by a facility of the uniformed services under 10 
U.S.C. 1095 and part 220 of this title. Therefore the obligation of a 
third-party payer to pay is to the same extent that the beneficiary 
would be eligible to receive reimbursement or indemnification from the 
third-party payer if the beneficiary were to incur the costs on the 
beneficiary's own behalf.
    (2) Application of cost shares. If the third-party payer's plan 
includes a requirement for a deductible or copayment by the beneficiary 
of the plan, then the amount the United States may collect from the 
third-party payer is the cost of care incurred on behalf of the 
beneficiary less the appropriate deductible or copayment amount.
    (3) Claim from the United States exclusive. The only way for a 
third-party payer to satisfy its obligation under 10 U.S.C. 1095b is to 
pay the United States or authorized representative of the United 
States. Payment by a third-party payer to the beneficiary does not 
satisfy 10 U.S.C. 1095b.
    (4) Assignment of benefits not necessary. The obligation of the 
third-party payer to pay is not dependent upon the beneficiary 
executing an assignment of benefits to the United States.
    (e) Exclusions impermissible.
    (1) Statutory requirement. With the same right to collect from 
third-party payers as exists under 10 U.S.C. 1095(b), no provision of 
any third-party payer's plan having the effect of excluding from 
coverage or limiting payment for certain care if that care is provided 
or paid by the United States shall operate to prevent collection by the 
United States.
    (2) Regulatory application. No provision of any third-party payer's 
plan or program purporting to have the effect of excluding or limiting 
payment for certain care that would not be given such effect under the 
standards established in part 220 of this title to implement 10 U.S.C. 
1095 shall operate to exclude or limit payment under 10 U.S.C. 1095b or 
this section.
    (f) Records available. When requested, CHAMPUS contractors or other 
representatives of the United States shall make available to 
representatives of any third-party payer from which the United States 
seeks payment under 10 U.S.C. 1095b, for inspection and review, 
appropriate health care records (or copies of such records) of 
individuals for whose care payment is sought. Appropriate records which 
will be made available are records which document that the CHAMPUS 
costs incurred on behalf of beneficiaries which are the subject of the 
claims for payment under 10 U.S.C. 1095b were incurred as claimed and 
the health care services were provided in a manner consistent with 
permissible terms and conditions of the third-party payer's plan. This 
is the sole purpose for which patient care records will be made 
available. Records not needed for this purpose will not be made 
available.
    (g) Remedies. Pursuant to 10 U.S.C. 1095b, when the Director, 
OCHAMPUS, authorizes certain CHAMPUS claims to be paid, even though a 
third-party payer may be primary payer, the right to collect from a 
third-party payer the CHAMPUS costs incurred on behalf of the 
beneficiary is the same as exists for the United States to collect from 
third party payers the cost of care provided by a facility of the 
uniformed services under 10 U.S.C. 1095.
    (1) This includes the authority under 10 U.S.C. 1095(e)(1) for the 
United States to institute and prosecute legal proceedings against a 
third-party payer to enforce a right of the United States under 10 
U.S.C. 1095b and this section.
    (2) This also includes the authority under 10 U.S.C. 1095(e)(2) for 
an authorized representative of the United States to compromise, settle 
or waive a claim of the United States under 10 U.S.C. 1095b and this 
section.
    (3) The authorities provided by the Federal Claims Collection Act 
of 1966,

[[Page 56286]]

as amended (31 U.S.C. 3701 et seq.), and any implementing regulations 
(including 32 CFR part 199.11) regarding collection of indebtedness due 
the United States shall also be available to effect collections 
pursuant to 10 U.S.C. 1095b and this section.
    (h) Obligations of beneficiaries. To insure the expeditious and 
efficient processing of third-party payer claims, any person furnished 
care and treatment under CHAMPUS, his or her guardian, personal 
representative, counsel, estate, dependents or survivors shall be 
required:
    (1) To provide information regarding coverage by a third-party 
payer plan and/or the circumstances surrounding an injury to the 
patient as a condition precedent to the processing of a CHAMPUS claim 
involving possible third-party payer coverage.
    (2) To furnish such additional information as may be requested 
concerning the circumstances giving rise to the injury or disease for 
which care and treatment are being given and concerning any action 
instituted or to be instituted by or against a third person; and,
    (3) To cooperate in the prosecution of all claims and actions by 
the United States against such third person.
    (i) Responsibility for recovery. The Director, OCHAMPUS, or a 
designee, is responsible for insuring that CHAMPUS claims arising under 
10 U.S.C. 1095b and this section (including claims involving the FMCRA) 
are properly referred to and coordinated with designated claims 
authorities of the uniformed services who shall assert and recover 
CHAMPUS costs incurred on behalf of beneficiaries. Generally, claims 
arising under this section will be processed as follows:
    (1) Identification and referral. In most cases where civilian 
providers provide medical care and payment for such care has been made 
by a CHAMPUS contractor, initial identification of potential third-
party payers will be by the CHAMPUS contractor. In such cases, the 
CHAMPUS contractor is responsible for conducting a preliminary 
investigation and referring the case to designated appropriate claims 
authorities of the Uniformed Services.
    (2) Processing CHAMPUS claims. When the CHAMPUS contractor 
initially identifies a claim as involving a potential third-party 
payer, it shall request additional information concerning the 
circumstances of the injury or disease and/or the identity of any 
potential third-party payer from the beneficiary or other responsible 
party unless adequate information is submitted with the claim. The 
CHAMPUS claim will be suspended and no payment issued pending receipt 
of the requested information. If the requested information is not 
received, the claim will be denied. A CHAMPUS beneficiary may expedite 
the processing of his or her CHAMPUS claim by submitting appropriate 
information with the first claim for treatment of an accidental injury. 
Third-party payer information normally is required only once concerning 
any single accidental injury or episode of care. Once the third-party 
payer information pertaining to a single incident or episode of care is 
received, subsequent claims associated with the same incident or 
episode of care may be processed to payment in the usual manner. If, 
however, the requested third-party payer information is not received, 
subsequent claims involving the same incident or episode of care will 
be suspended or denied as stated above.
    (3) Ascertaining total potential liability. It is essential that 
the appropriate claims authority responsible for asserting the claim 
against the third-party payer receive from the CHAMPUS contractor a 
report of all amounts expended by the United States for care resulting 
from the incident upon which potential liability in the third party is 
based (including amounts paid by CHAMPUS for both inpatient and 
outpatient care). Prior to assertion and final settlement of a claim, 
it will be necessary for the responsible claims authority to secure 
from the CHAMPUS contractor updated information to insure that all 
amounts expended under CHAMPUS are included in the government's claim. 
It is equally important that information on future medical payments be 
obtained through the investigative process and included as a part of 
the government's claim. No CHAMPUS-related claim will be settled, 
compromised or waived without full consideration being given to the 
possible future medical payment aspects of the individual case.
    (j) Reporting requirements. Pursuant to 10 U.S.C. 1079a, all 
refunds and other amounts collected in the administration of CHAMPUS 
shall be credited to the appropriation available for that program for 
the fiscal year in which the refund or amount is collected. Therefore, 
the Department of Defense requires an annual report stating the number 
and dollar amount of claims asserted against, and the number and dollar 
amount of recoveries from third-party payers (including FMCRA 
recoveries) arising from the operation of the CHAMPUS. To facilitate 
the preparation of this report and to maintain program integrity, the 
following reporting requirements are established:
    (1) CHAMPUS contractors. Each CHAMPUS contractor shall submit on or 
before January 31 of each year an annual report to the Director, 
OCHAMPUS, or a designee, covering the 12 months of the previous 
calendar year. This report shall contain, as a minimum, the number and 
total dollar amount of cases of potential third-party payer/FMCRA 
liability referred to uniformed services claims authorities for further 
investigation and collection. These figures are to be itemized by the 
states and uniformed services to which the cases are referred.
    (2) Uniformed Services. Each uniformed service will submit to the 
Director, OCHAMPUS, or designee, an annual report covering the 12 
calendar months of the previous year, setting forth, as a minimum, the 
number and total dollar amount of cases involving CHAMPUS payments 
received from CHAMPUS contractors, the number and dollar amount of 
cases involving CHAMPUS payments received from other sources, and the 
number and dollar amount of claims actually asserted against, and the 
dollar amount of recoveries from, third-party payers or under the 
FMCRA. The report, itemized by state and foreign claims jurisdictions, 
shall be provided no later than February 28 of each year.
    (3) Implementation of the reporting requirements. The Director, 
OCHAMPUS, or a designee shall issue guidance for implementation of the 
reporting requirements prescribed by this section.

    Dated: October 13, 1999.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 99-27060 Filed 10-18-99; 8:45 am]
BILLING CODE 5001-10-M