[Federal Register Volume 66, Number 167 (Tuesday, August 28, 2001)]
[Rules and Regulations]
[Pages 45171-45173]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-21634]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[RIN 0720-AA58]


TRICARE; Civilian Health and Medical Program of the Uniformed 
Services (CHAMPUS); Payments for Professional Services in Low-Access 
Locations

AGENCY: Office of the Secretary, DOD.

ACTION: Final rule.

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SUMMARY: This final rule implements 10 U.S.C. 1097b(a), as added by 
section 716 of the National Defense Authorization Act for Fiscal Year 
2000 which allows higher provider reimbursement rates than normally 
allowable, with certain limitations, when necessary to ensure an 
adequate TRICARE Prime network of qualified providers. This final rule 
also implements 10 U.S.c. 1079(h)(5), as added by section 747 of the 
Floyd D. Spence National Defense Authorization Act for Fiscal Year 
2001, to remedy circumstances in which TRICARE beneficiaries face very 
severe limitations on access to needed health care services.

EFFECTIVE DATE: September 27, 2001.

ADDRESSES: TRICARE Management Activity (TMA), Program Operations 
Directorate, 5111 Leesburg Pike, Suite 810, Falls Church, VA 22041-
3206.

FOR FURTHER INFORMATION CONTACT: Mr. Mike Talisnik, Office of the 
Assistant Secretary of Defense (Health Affairs)/TRICARE Management 
Activity, telephone (703) 681-0064 or Mr. Stan Regensberg, telephone 
(303) 676-3742.
    Questions regarding payment of specific claims under the CHAMPUS 
allowable charge method should be addressed to the appropriate TRICARE/
CHAMPUS contractor.

SUPPLEMENTARY INFORMATION:

I. Background on TRICARE and CHAMPUS Payments to Providers

    The relationship of DoD payment levels to Medicare's for 
institutional and professional health care services is central to the 
ongoing success of TRICARE. Payment levels have significant effects on 
DoD's ability to implement managed care programs, to assure beneficiary 
access to the full spectrum of health services, and to do this in a 
cost-effective manner.
    Legislative initiatives have linked DoD's payment rates for health 
care to Medicare, beginning in the early 1980s, with the initial focus 
on institutional services. Similar initiatives in the late 1980s linked 
DoD's payment levels for professional services to Medicare.
    A key principle of DoD's efforts in the linkage of reimbursement 
rates to Medicare has been the protection of access to services. In a 
1996 report to Congress, it was found that 86 percent of the time 
providers accepted the TRICARE payment limits called CMACs (CHAMPUS 
Maximum Allowable Charges) as payment in full. Most recently, that 
percentage has increased to over 94 percent acceptance. However, the 
very high rate of acceptance overall may hide the access problems in 
certain localities.
    When the CMAC payment approach was implemented in 1992, national 
payment levels were adjusted to reflect local economic conditions in 
over 200 localities, the same as those used by Medicare. Since that 
time, the number of localities has been reduced to fewer than 100, with 
the introduction of more and more statewide payment localities.
    In 1999, DoD undertook revisions to one statewide locality, Alaska, 
in recognition of the differences in acceptability of TRICARE payments 
in Anchorage compared to the rest of the state. Overall, CMAC's are 
accepted as full payment over 90 percent of the time in Alaska; 
however, the vast majority of services are provided in Anchorage, so 
that severe access problems elsewhere in the state are hidden. In an 
effort to increase acceptability of TRICARE payment rates outside of 
Anchorage, DoD created a new locality, including all of Alaska except 
Anchorage. While this action addressed one locality, DoD's current 
regulatory authority may not be sufficient in some other localities. 
Accordingly, this final rule provides for the mechanism to increase 
access to health care providers for TRICARE beneficiaries where access 
to health care services is severely impaired or where there is an 
inadequate number of qualified network providers.

II. Overview of the Rule

    This final rule would add a new Sec. 199.14(h)(1)(iv)(D) 
authorizing the establishing of higher payment rates for specific 
services than would otherwise be allowable, if it is determined that 
access to health care services is severely impaired. Payment rates 
could be established through addition of a percentage factor to an 
otherwise applicable payment amount, or by calculating a prevailing 
charge, or by using another governmental payment rate. Higher payment 
rates could be applied to all similar services performed in a locality, 
or a new locality could be defined for application of the higher 
payment rates.
    Other factors in determining the authority to establish a higher 
payment shall be based on the number of providers in a locality, the 
number of providers who are TRICARE participating providers, the number 
of eligible beneficiaries in the locality, and the availability of 
Military Treatment Facility providers.
    The final rule would also add a new Sec. 199.14(h)(1)(iv)(E) 
allowing the reimbursement of higher payment rates for health care 
services for services that would otherwise be allowable, if it is 
determined necessary to ensure adequate Preferred Provider networks. 
The amount of reimbursement for health care services would be limited 
to the lesser of: (1) An amount equal to the local fee for service 
charge in the area where the service is provided; or (2) 115 percent of 
the otherwise allowable TRICARE rate for the service. The higher rate 
will be authorized only if all reasonable efforts have been exhausted

[[Page 45172]]

in attempting to create an adequate network and that it is cost-
effective and appropriate to pay the higher rate to ensure an 
appropriate mix of primary care and specialists in the network.
    We have also added to the final rule a new definition of 
``Director'' to clear up any confusion associated with continued use in 
the CHAMPUS/TRICARE regulation to ``Director, OCHAMPUS.'' The TRICARE 
Management Activity (TMA) has replaced the old Office of CHAMPUS, and 
the Director of TMA exercises the authorities previously exercised by 
the Director, OCHAMPUS.

III. Review of Comments

    The proposed rule was published in the Federal Register on May 30, 
2000 (65 FR 34423). We received one comment from a managed care support 
contractor who felt that rate adjustments should be available in rural 
and/or medically under-served areas that are non TRICARE Prime areas.
    Response: The Department recognizes the need to ensure that access 
to health care is protected in areas that are medically underserved or 
in rural areas where there are few providers available. This final rule 
establishes new mechanisms to identify and address locations where 
access to care is severely impaired.

IV. Rulemaking Procedures

    Section 801 of title 5, United States Code, and Executive Order 
12866 requires certain regulatory assessments and procedures for any 
major rule or 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 major rule under 5 U.S.C. 801. It is a significant 
regulatory action but not economically significant under E. O. 12866, 
and it would not have a significant impact on a substantial number of 
small entities. In addition, the final rule will not impose additional 
information collection requirements on the public under the Paperwork 
Reduction Act of 1995 (44 U.S.C. Chapter 55).
    This rule is being issued as a final rule.

List of Subjects in 32 CFR Part 199

    Claims, Fraud, Health care, Health insurance, Individuals with 
disabilities, Military personnel.

    Accordingly, 32 CFR part 199 is amended as follows:

PART 199--[AMENDED]

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

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

    2. Section 199.2 is amended by revising the definition of 
``Director, OCHAMPUS'' and adding the definition of ``Director'' in 
alphabetical order to read as follows:


Sec. 199.2  Definitions.

* * * * *
    Director. The Director of the TRICARE Management Activity or 
Director, Office of CHAMPUS. Any references to the Director, Office of 
CHAMPUS, or OCHAMPUS, shall mean the Director, TRICARE Management 
Activity. Any reference to Director shall also include any person 
designated by the Director to carry out a particular authority. In 
addition, any authority of the Director may be exercised by the 
Assistant Secretary of Defense (Health Affairs).
* * * * *

    3. Section 199.14 is amended by adding new paragraphs (h)(1)(iv)(D) 
and (E) to read as follows:


Sec. 199.14  Provider reimforcement methods.

* * * * *
    (h) *  *  *
    (1) *  *  *
    (iv) *  *  *
    (D) Special locality-based exception to applicable CMACs to assure 
adequate beneficiary access to care. In addition to the authority to 
waive reductions under paragraph (h)(1)(iv)(C) of this section, the 
Director may authorize establishment of higher payment rates for 
specific services than would otherwise be allowable, under paragraph 
(h)(1) of this section, if the Director determines that available 
evidence shows that access to health care services is severely 
impaired. For this purpose, such evidence may include consideration of 
the number of providers in the locality who provide the affected 
services, the number of providers who are CHAMPUS participating 
providers, the number of CHAMPUS beneficiaries in the locality, the 
availability of military providers in the location or nearby, and any 
other factors the Director determines relevant.
    (1) Procedure. Providers or beneficiaries in a locality may submit 
to the Director, a petition, together with appropriate documentation 
regarding relevant factors, for a determination that adequate access to 
health care services is severely impaired. The Director, will consider 
and respond to all petitions. A decision to authorize a higher payment 
amount is subject to review and determination or modification by the 
Director at any time if circumstances change so that adequate access to 
health care services would no longer be severely impaired. A decision 
by the Director, to authorize, not authorize, terminate, or modify 
authorization of higher payment amounts is not subject to the appeal 
and hearing procedures of Sec. 199.10 of the part.
    (2) Establishing the higher payment rate(s). When the Director, 
determines that beneficiary access to health care services in a 
locality is severely impaired, the Director may establish the higher 
payment rate(s) as he or she deems appropriate and cost-effective 
through one of the following methodologies to assure adequate access:
    (i) A percent factor may be added to the otherwise applicable 
payment amount allowable under paragraph (h)(1) of this section;
    (ii) A prevailing charge may be calculated, by applying the 
prevailing charge methodology of paragraph (h)(1)(ii) of this section 
to a specific locality (which need not be the same as the localities 
used for purposes of paragraph (h)(1)(iv)(A) of this section; or 
another government payment rate may be adopted, for example, an 
applicable state Medicaid rate).
    (3) Application of higher payment rates. Higher payment rates 
defined under paragraph (h)(1)(iv)(D) of this section may be applied to 
all similar services performed in a locality, or, if circumstances 
warrant, a new locality may be defined for application of the higher 
payments. Establishment of a new locality may be undertaken where 
access impairment is localized and not pervasive across the existing 
locality. Generally, establishment of a new, more specific locality 
will occur when the area is remote so that geographical characteristics 
and other factors significantly impair transportation through normal 
means to health care services routinely available within the existing 
locality.
    (E) Special locality-based exception to applicable CMACs to ensure 
an adequate TRICARE Prime preferred network. The Director, may 
authorize reimbursements to health care providers participating in a 
TRICARE preferred provider network under Sec. 199.17(p) of this part at 
rates higher than would

[[Page 45173]]

otherwise be allowable under paragraph (h)(1) of this section, if the 
Director, determines that application of the higher rates is necessary 
to ensure the availability of an adequate number and mix of qualified 
health care providers in a network in a specific locality. This 
authority may only be used to ensure adequate networks in those 
localities designated by the Director, as requiring TRICAR preferred 
provider networks, not in localities in which preferred provider 
networks have been suggested or established but are not determined by 
the Director to be necessary. Appropriate evidence for determining that 
higher rates are necessary may include consideration of the number of 
available primary care and specialist providers in the network 
locality, availability (including reassignment) of military providers 
in the location or nearby, the appropriate mix of primary care and 
specialists needed to satisfy demand and meet appropriate patient 
access standards (appointment/waiting time, travel distance, etc.), the 
efforts that have been made to create an adequate network, other cost-
effective alternatives, and other relevant factors. The Director, may 
establish procedures by which exceptions to applicable CMACs are 
requested and approved or denied under paragraph (h)(1)(iv)(E) of this 
section. A decision by the Director, to authorize or deny an exception 
is not subject to the appeal and hearing procedures of Sec. 199.10. 
When the Director, determines that it is necessary and cost-effective 
to approve a higher rate or rates in order to ensure the availability 
of an adequate number of qualified health care providers in a network 
in a specific locality, the higher rate may not exceed the lesser of 
the following:
    (1) The amount equal to the local fee for service charge for the 
service in the service area in which the service is provided as 
determined by the Director, based on one or more of the following 
payment rates:
    (i) Usual, customary, and reasonable;
    (ii) The Health Care Financing Administration's Resource Based 
Relative Value Scale;
    (iii) Negotiated fee schedules;
    (iv) Global fees; or
    (v) Sliding scale individual fee allowances.
    (2) The amount equal to 115 percent of the otherwise allowable 
charge under paragraph (h)(1) of the section for the service.
* * * * *

    Dated: August 22, 2001.
L.M. Bynum,
Alternate Federal Register Notice Liaison Officer, Department of 
Defense.
[FR Doc. 01-21634 Filed 8-27-01; 8:45 am]
BILLING CODE 5001-08-M