[Federal Register Volume 67, Number 64 (Wednesday, April 3, 2002)]
[Rules and Regulations]
[Pages 15721-15725]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-7862]



[[Page 15721]]

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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN 0720-AA62


Civilian Health and Medical Program of the Uniformed Services 
(CHAMPUS)/TRICARE; Partial Implementation of Pharmacy Benefits Program; 
Implementation of National Defense Authorization Act for Fiscal Year 
2001

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: This final rule implements several sections of the Floyd D. 
Spence National Defense Authorization Act for Fiscal Year 2001. The 
rule allows coverage of physical examinations for beneficiaries ages 5 
through 11 that are required in connection with school enrollment; 
provides an additional two-year period for survivors of deceased 
active-duty members to remain eligible for TRICARE medical and dental 
benefits at active-duty dependent rates; extends eligibility for 
medical and dental benefits to Medal of Honor recipients and their 
immediate dependents in the same manner as if the recipient were 
entitled to retired pay; partially implements the Pharmacy Benefits 
Program establishing revised co-pays and cost-shares for the 
prescription drug benefit; implements the TRICARE Senior Pharmacy 
Program by establishing a new eligibility for prescription drug 
benefits for Medicare-eligible retirees; allows a waiver of copayments, 
cost-shares, and deductibles for all Uniformed Services TRICARE 
eligible active duty family members residing with their TRICARE Prime 
Remote eligible Active Duty Service Member Sponsor within a TRICARE 
Prime Remote designated area until implementation of the TRICARE Prime 
Remote for Family Member Program or October 30, 2001, whichever is 
later; provides for the elimination of TRICARE Prime copayments for 
active duty family members enrolled in TRICARE Prime; provides for the 
reimbursement of reasonable travel expenses for TRICARE Prime 
beneficiaries referred by a primary care provider to a specialty care 
provider who provides services over 100 miles away; and reduces the 
maximum amount which retirees, their family members and survivors would 
be liable from $7,500 to $3,000.

EFFECTIVE DATE: April 1, 2001.

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

FOR FURTHER INFORMATION CONTACT: Tariq Shahid, Medical Benefits and 
Reimbursement Systems, TRICARE Management Activity, Office of the 
Assistant Secretary of Defense (Health Affairs), telephone (303) 676-
3801. Questions regarding payment of specific CHAMPUS claims should be 
addressed to the appropriate TRICARE/CHAMPUS contractor.

SUPPLEMENTARY INFORMATION:

I. Overview of the Rule

    On October 30, 2000, the Floyd D. Spence National Defense 
Authorization Act for Fiscal Year 2001 (Public Law 106-398) was signed 
into law. On February 9, 2001 (66 FR 9651), DoD published an interim 
final rule to partially implement the Pharmacy Benefits Program and 
implement several sections of this Act. On February 15, 2001 (66 FR 
10367), March 26, 2001 (66 FR 16400), and March 19, 2002 (67 FR 12472), 
DoD published administrative corrections to the interim final rule. 
This final rule is being published as a follow-up to the interim final 
rule incorporating all three of the administrative corrections. It also 
makes administrative corrections in Section 199.4(g)(68) and Section 
199.22.
    The final rule implements provisions of the Act that were effective 
upon the date of enactment or a date within 180 days thereafter. 
Specifically, this rule implements the following sections of the Act:
    Section 703, school required physicals, which was effective on the 
date of enactment.
    Section 704, two-year extension of benefits for survivors, which 
was effective on the date of enactment.
    Section 706, benefits for Medal of Honor recipients, which was 
effective on the date of enactment.
    Section 711, TRICARE Senior Pharmacy Program, which was effective 
April 1, 2001.
    Section 722, that portion of TRICARE Prime Remote for Family 
Members that was effective on the date of enactment.
    Section 752, elimination of copayments for Active Duty Dependents 
in TRICARE Prime, which the statute requires be implemented within 180 
days.
    Section 758, reimbursement of certain travel expenses for TRICARE 
Prime beneficiaries, which was effective on the date of enactment; and
    Section 759, reduction of retiree catastrophic cap, which was 
effective on the date of enactment.
    In addition, because of the effect on the overall pharmacy program 
of the new TRICARE Senior Pharmacy Program and the change in TRICARE 
Prime active duty dependent copayments, this rule also partially 
implements the Pharmacy Benefits Program, as authorized by Section 
1074g of title 10, United States Code, as a significant step toward 
expected implementation in 2002 of the comprehensive Pharmacy Benefits 
Program.

II. School Required Physicals

    This rule implements Section 703 of the National Defense 
Authorization Act for Fiscal Year 2001 which extends coverage of 
physical examinations to CHAMPUS eligible beneficiaries ages 5 through 
11 that are required in connection with school enrollment. The scope of 
the legislative provision encompasses all programs and beneficiary 
categories. These newly covered school physicals will be recognized as 
preventive services, and as such, subject to the same cost-sharing/
copayment and referral/authorization requirements as prescribed under 
TRICARE Prime and Standard/Extra clinical preventive benefits. TRICARE 
Prime enrollees will not be required to pay copayments or seek 
referral/authorization from their primary care managers (PCMs) unless 
they go to a non-network provider. While Standard and Extra 
beneficiaries will not require referral and/or authorization, they will 
have to pay the applicable cost-sharing and deductibles for preventive 
services as prescribed under their respective plans.
    School physicals for TRICARE Prime enrollees ages 5 through 11 will 
be covered under the enhanced benefit provision of the CHAMPUS 
administering regulation (32 CFR 199.18(b)(3)), which allows benefit 
enhancements and waiver or relaxation of benefit restrictions under the 
Uniform HMO Benefit at the discretion of the Assistant Secretary of 
Defense (Health Affairs). However, since coverage also extends to both 
Standard and Extra beneficiaries, an exception is being added to the 
preventive care general exclusion (32 CFR 199.4(g)(37)) that will allow 
school physicals for these beneficiary categories (i.e., active duty 
family members, retirees and their family members that are seeking care 
under Standard or Extra plans).

III. Two-Year Extension of Benefits for Survivors

    This rule implements Section 704 of the National Defense 
Authorization Act for Fiscal Year 2001 which amended

[[Page 15722]]

chapter 55 of title 10, United States Code, by providing a two-year 
extension to the one-year period for survivors of deceased active-duty 
members to remain eligible for TRICARE medical and dental benefits at 
active-duty dependent rate. Before the Authorization Act, survivors of 
members who die while on active duty were allowed to continue 
participation in TRICARE Prime, Extra, or Standard as active-duty 
dependent family members for a period of one year following the date of 
death of the deceased member. At the end of the one-year period, these 
family members continued eligibility for care under TRICARE, but faced 
higher out-of-pocket costs as non-active-duty dependents. With respect 
to the TRICARE dental insurance benefits, family members enrolled in 
the TRICARE Dental Program (TDP) at the time of the member's death, 
continued to receive benefits for one year from the member's date of 
death, with the Government paying 100 percent of the TDP premiums.

IV. Benefits for Medal of Honor Recipients

    This rule implements Section 706 of the National Defense 
Authorization Act for Fiscal Year 2001 which amended chapter 55 of 
title 10, United States Code, by adding a new Section 1074h. Section 
1074h expands eligibility to Medal of Honor recipients who are not 
otherwise entitled to medical and dental care including their immediate 
dependents. The term immediate dependent means a dependent described in 
title 10, United States Code, chapter 55, section 1072, (2)(A), (B), 
(C), or (D). They are entitled to the same medical and dental benefit 
that is provided to former members who are entitled to military retired 
pay and the dependents of those former members. To receive TRICARE/
CHAMPUS benefits, they must register in the Defense Enrollment 
Eligibility Reporting System (DEERS). Eligible beneficiaries are 
required to obtain an identification card. The Medal of Honor 
recipients should visit the Uniformed Service identification card 
issuing facility nearest to them. The address for the closest location 
may currently be obtained by calling 1-800-538-9552. The recipient 
should bring a photo identification card and the departmental order or 
citation for the Medal of Honor. To register family members in DEERS, 
the following additional documentation is required: marriage license, 
birth certificates, and death certification or DD Form 1300, Report of 
Casualty if the Medal of Honor recipient is deceased.

V. Partial Implementation of Pharmacy Benefits Program

    The Secretary of Defense is required under title 10, United States 
Code, Section 1074g, to establish an effective, efficient, and 
integrated Pharmacy Benefits Program. The Secretary may establish cost-
sharing/copayment requirements under the Pharmacy Benefits Program as a 
percentage and/or fixed dollar amount for generic, formulary (non-
generic), and non-formulary pharmaceutical agents. Designation of 
pharmaceutical agents as non-formulary will be based upon an evaluation 
of the agent's clinical and cost-effectiveness in comparison to other 
agents in the therapeutic class by the DoD Pharmacy and Therapeutics 
Committee and the comments on that evaluation by the Uniform Formulary 
Beneficiary Advisory Committee. The Department is unable to implement 
the portion of the Pharmacy Benefits Program that allows classification 
of a drug as non-formulary as outlined in section 1074g until Proposed 
and Final Rules fully implementing the Pharmacy Benefits Program have 
been published and required Committees become operational. Existing 
Department policies on non-formulary pharmaceutical agents remain in 
effect at this time. However, partial implementation of the Pharmacy 
Benefits Program, including reform of cost-sharing/copayment 
requirements under Section 1074g should proceed in connection with the 
April 1, 2001, start date of the TRICARE Senior Pharmacy Program and 
overall reform of TRICARE Prime active duty dependent copayments.
    The prescription drug and medicine benefit under CHAMPUS includes 
the Food and Drug Administration approved drugs and medicines that by 
United States law require a physician's or other authorized individual 
professional provider's prescription (acting within the scope of their 
license) that has been ordered or prescribed by them. The benefit does 
not include prescription drugs for medical conditions that are 
expressly excluded from the TRICARE benefit by statute or regulation. 
Pharmaceutical agents are subject to preauthorization or utilization 
review requirements to assure medical necessity. Until full 
implementation of the Pharmacy Benefits Program under which all 
authorized drugs will be classified as generic, formulary, or non-
formulary, during this period of partial implementation, drugs and 
medicines shall be designated as either generic drugs and medicines, 
which are those that have the identical chemical composition of a name 
brand drug or medicine, or non-generic (or brand name) drugs.
    Before the effective date of this rule, cost-sharing/copayment 
requirements were based upon beneficiary status, enrollment or non-
enrollment in TRICARE Prime, and the location where the drug or 
medicine was purchased, i.e., the point of sale, such as a military 
treatment facility, network or non-network pharmacy, or the National 
Mail Order Pharmacy (NMOP). This led to a complex set of cost sharing 
requirements, difficult for beneficiaries to understand, lacking in 
clear incentives for appropriate use, and inconsistent with evolving 
industry practice. DoD is implementing new cost sharing requirements in 
this regulation, consistent with the Congressional direction to 
modernize the pharmacy program. Cost-sharing/copayment requirements 
will no longer be based upon beneficiary status, except for active duty 
members who never pay cost-shares/copays. Cost-sharing/copayment 
requirements of prescription drugs and medicines based upon their 
status as generic or non-generic are being implemented through this 
rule. Cost-sharing/copayment requirements will no longer be based upon 
a beneficiary's enrollment or non-enrollment in TRICARE Prime (except 
point of service charges will still apply for beneficiaries enrolled in 
TRICARE Prime), but will be based upon the drug or medicine's status as 
generic or non-generic and its point of sale.
    The new cost-sharing/copayment structure is based on commercial 
industry practices in pharmacy benefit design and benefit management. 
Cost-sharing/copayment amounts were selected to assure that all 
beneficiaries could obtain a reduction in their current cost-sharing/
copayment through use of generic products, and that brand-name cost-
sharing/copayment was substantially higher than generic without unduly 
penalizing beneficiaries in relation to their current cost-sharing/
copayment levels.
    Active duty members do not pay a cost-share/copayment. Cost-
sharing/copayment requirements for pharmaceutical agents for all other 
beneficiaries will be based upon the generic/non-generic status and the 
point of sale (i.e., network pharmacy, non-network pharmacy, NMOP) from 
which the agent was acquired. There is a $9.00 copay per prescription 
required under the retail pharmacy network program for up to a 30-day 
supply of a non-generic drug or medicine, and a $3.00 copay for up to a 
30-day supply of a generic drug or medicine. There is a $9.00 copay per

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prescription required under the NMOP program for up to a 90-day supply 
of a non-generic drug or medicine, and a $3.00 copay for up to a 90-day 
supply of a generic drug or medicine. There is a 20 percent or $9.00 
(whichever is greater) copay per prescription required for all drugs 
obtained under the retail pharmacy non-network program for up to a 30-
day supply. The TRICARE Standard annual deductible of $150 individual/
$300 family (or $50 individual/$100 family for lower grade enlisted 
families) applies only to services obtained from non-network 
pharmacies. The TRICARE annual catastrophic cap of $1,000 for active 
duty families and $3,000 for retiree families (as reduced by the Fiscal 
Year 2001 National Defense Authorization Act) also applies. TRICARE 
Prime enrollees generally face higher ``point-of-service'' cost-sharing 
when they obtain non-network services, as described in Sec. 199.17(n). 
With regard to pharmacy services, TRICARE Prime beneficiaries who use 
non-network pharmacies will face point-of-service cost-sharing rather 
than the 20 percent cost-sharing which applies to TRICARE Standard 
beneficiaries. This point-of-service cost-sharing includes a deductible 
of $300 individual or $600 family, and a 50 percent cost-share. No 
deductibles apply to prescription drugs acquired from network retail 
pharmacies and NMOP.
    The revised co-pay amounts simplify the cost-share structure and 
are consistent with the best business practices used in the private 
sector. The co-pay amounts were selected because they provide an 
equitable adjustment across the current co-pay matrix, will encourage 
the use of cost effective sources of pharmaceuticals for both the 
beneficiaries and the government, and will encourage the use of generic 
products where clinically appropriate. For most beneficiaries and in 
most circumstances, cost-sharing/copayments will be reduced under the 
new cost-sharing/copayment structure; in all cases beneficiaries will 
have lower costs if they use generic products. The pricing structure 
reflects a reduction for active duty family members using the NMOP. In 
some cases, beneficiaries will pay more than at present if they obtain 
brand-name products: active duty family members will pay $4 to $5 more 
for brand-name products, and retirees and their family members will pay 
$1.00 more for mail order brand-name products.

VI. TRICARE Senior Pharmacy Program

    This rule implements Section 711 of the National Defense 
Authorization Act for Fiscal Year 2001, which establishes the TRICARE 
Senior Pharmacy Program for DoD beneficiaries who are 65 years of age 
and older, effective April 1, 2001. Under the TRICARE Senior Pharmacy 
Program, the Act requires the same coverage for pharmacy services and 
the same requirements for cost-sharing and reimbursement as are 
applicable under Section 1086 of title 10, United States Code.
    As specified further in the regulation, to be eligible for the 
TRICARE Senior Pharmacy Program, a person is required to be a retiree, 
dependent, or survivor who is Medicare eligible, 65 years of age or 
older, and enrolled in Medicare Part B (except for a person who 
attained age 65 prior to April 1, 2001).
    To receive benefits under the TRICARE Senior Pharmacy Program, 
beneficiaries must be registered in DEERS. Currently, the TRICARE 
Senior Pharmacy Program beneficiaries are not eligible to enroll in 
TRICARE Prime.
    The benefit under the TRICARE Senior Pharmacy Program includes the 
Basic Program pharmacy benefit as found under 32 CFR 199.4(d)(vi). The 
senior beneficiaries are entitled to the same pharmacy benefit that was 
found at 32 CFR 199.17(k), but it is no longer limited to the Base 
Realignment and Closure (BRAC) sites and access to non-network retail 
drugstores is included. These beneficiaries will have access to retail 
network pharmacies, non-network pharmacies, and the National Mail Order 
Pharmacy (NMOP) program with the associated revised copays and cost-
shares as described under Partial Implementation of Pharmacy Benefits 
Program, above. For prescription drugs acquired from non-network retail 
pharmacies, the Senior Pharmacy Program beneficiaries are subject to 
TRICARE Standard annual deductible of $150 individual/$300 family. The 
catastrophic cap of $3000.00 per federal fiscal year, as reduced by the 
Fiscal Year 2001 National Defense Authorization Act, will apply to 
beneficiaries who are eligible under the TRICARE Senior Pharmacy 
Program.
    The double coverage rules in 32 CFR 199.8 are applicable to 
services provided to all beneficiaries under the retail pharmacy 
network, retail pharmacy non-network, or NMOP programs. For this 
purpose, to the extent they provide a prescription drug benefit, 
Medicare supplemental insurance plans or Medicare HMO plans are double 
coverage plans and will be the primary payor.
    The TRICARE Senior Pharmacy Program replaces the BRAC pharmacy 
benefit and the Pharmacy Redesign Pilot Program in accordance with 
Section 711 of the Act.

VII. TRICARE Prime Remote for Family Members

    This rule implements Section 722(b)(2) of the National Defense 
Authorization Act for Fiscal Year 2001 (Public Law 106-398) which 
modified Section 731(b) of the National Defense Authorization Act for 
Fiscal Year 1998 (Public Law 105-85). This rule provides a waiver of 
charges for TRICARE eligible family members residing with their active 
duty uniformed services TRICARE Prime Remote (TPR) eligible sponsor.
    Full implementation of the TPR program for active duty family 
members will be subject of a proposed rule to be published soon. The 
TPR program will supplant the waiver of charges described in this 
rulemaking, effective October 30, 2001 or later. In order to obtain 
coverage under the follow-on TPR program, it will be proposed that 
eligible beneficiaries will be required to enroll in TPR and be subject 
to many of the rules of TRICARE Prime. Full details will be provided in 
the proposed rule to be published soon.
    Some Active Duty Service Members (ADSM) are assigned Permanent 
Change of Station Orders to locations where Military Treatment 
Facilities are unavailable. TPR was established by Section 731(b) of 
the National Defense Authorization Act for Fiscal Year 1998 to provide 
a TRICARE Prime-like benefit. As defined by 10 U.S.C. 1074(c)(3) the 
benefit is for ADSM assigned to remote locations, who pursuant to that 
assignment, work and reside at a location that is more than 50 miles, 
or approximately one hour of driving time to the nearest military 
medical treatment facility. ADSM who are TPR eligible are required to 
enroll in TPR. Starting October 30, 2000, TRICARE eligible Active Duty 
Family Members residing with TPR eligible ADSM sponsors within a TPR 
designated area, have copayments, cost-shares, and deductibles waived 
for CHAMPUS covered benefits, except for pharmacy benefits, until the 
implementation of TRICARE Prime Remote for Family Members or October 
30, 2001 whichever is later. Non-covered CHAMPUS benefits are not 
waived and shall be processed according to current requirements. The 
claims processor will pay the waived portion of the claim to the 
eligible

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family member or the provider, as appropriate. If the claims processor 
is able to determine the eligible family member has already paid the 
waived portion of the claim, the processor shall reimburse the family 
member. Retrospective payments of waived charges for dates of service 
on or after October 30, 2000 are authorized.
    Eligible family members will be able to access authorized providers 
without preauthorization for services covered by TRICARE. However, when 
accessing care, eligible family members are required to use network 
providers where and when available within the TRICARE access standards 
to obtain the waiver of charges. If a network provider cannot be 
identified within the access standards established under TRICARE, the 
eligible family member shall use an authorized provider to be eligible 
for the waiver. Existing specialty care preauthorization requirements 
remain in affect for eligible family members enrolled in TRICARE Prime. 
To the greatest extent possible, contractors will assist eligible 
family members in finding a TRICARE network, participating, or 
authorized provider.

VIII. Elimination of TRICARE Prime Copayments for Dependents of 
Active Duty Members

    Section 752 of the National Defense Authorization Act for Fiscal 
Year 2001 provides that no copayment shall be charged for care provided 
under TRICARE Prime to a dependent of a member of the uniformed 
services. Copayments for prescriptions and point-of-service (POS) 
charges are not covered by this provision and will continue to be 
applied. Copayments for prescriptions will be in accordance with those 
authorized by 10 U.S.C. 1074g, partially implemented by this rule. This 
is consistent with the Conference Committee Report statement that ``it 
is not the intent of the conferees to eliminate copayments for 
pharmaceutical benefits under the mail order pharmacy program or such 
similar cost shares.'' (H. Conf. Rept. No 106-945, p. 819-20.) Point-
of-service (POS) charges are not covered by Section 752 because they 
are not for care provided under TRICARE Prime, but rather for care 
provided outside the TRICARE Prime network structure under the POS 
option. The POS option allows enrollees to self-refer for non-emergency 
health care services to any TRICARE authorized civilian provider. The 
elimination of copayments applies to all CHAMPUS-covered services 
received by a TRICARE Prime active duty family member on or after April 
1, 2001.

IX. Reimbursement of Reasonable Travel Expenses for Distant 
Referrals of TRICARE Prime Beneficiaries

    Section 758 of the National Defense Authorization Act for Fiscal 
Year 2001 provides reimbursement of reasonable travel expenses for 
TRICARE Prime beneficiaries referred by their primary care manager to a 
specialty care provider who provides services more than 100 miles from 
the primary care manager's office.

X. Reduction of Retiree Catastrophic Cap

    Section 759 of the National Defense Authorization Act for Fiscal 
Year 2001 modified chapter 55 of title 10, United States Code, by 
amending Section 1086(b)(4) and reducing the catastrophic cap on 
payments from $7,500 to $3,000 for retirees, their family members and 
survivors.

XI. Public Comments

    We published the interim final rule on February 9, 2001, and 
provided a 60-day comment period. We received public comments from one 
commenter who indicated that she was writing on behalf of over 150 
recruiting families remotely located in Wisconsin and the upper 
peninsula of Michigan. This commenter made two recommendations.
    The first recommendation pertains to the coverage for school 
required physicals. While she applauded the addition of coverage for 
school required physicals for CHAMPUS eligible beneficiaries ages 5 
through 11, the commenter raised concerns that the scope of such 
coverage with regard to age is too limited. The commenter stated that a 
physical examination in reality is a necessity and recommended to 
extend coverage for yearly physical examinations to all CHAMPUS 
eligible dependent children. The recommendation cannot be accommodated 
since the legislative language was specific regarding the requirements 
for coverage under the program. Section 703 of the National Defense 
Authorization Act for Fiscal Year 2001 (Pub. L. 106-398) restricts 
coverage of school physicals to beneficiaries ages 5 through 11 
required in connection with school requirement. Legislative action 
would be required in order to extend physical examinations to all 
eligible dependent children.
    The second recommendation pertains to the higher cost-shares for 
TRICARE Prime enrollees under the point-of-service option when they use 
non-network pharmacies. The point-of-service cost sharing includes a 
deductible of $300 individual or $600 family, and a 50 percent cost-
share. The commenter stated that TRICARE Prime enrollees, located in 
areas where Military Treatment Faciities are unavailable (remote 
locations), face an unjust hardship financially with this rule and 
quite often in remote locations they do not have a choice of pharmacies 
for filling their prescriptions. She gave an example of a situation 
where a medication was not available through network pharmacies or the 
mail order pharmacy but was available through a non-network pharmacy 
and raised her concerns regarding the higher point-of-service cost 
sharing in this case when according to her the use of non-network 
pharmacy was the only choice. With reference to section 199.21(f)(4), 
regarding application of point-of-service cost-share of 50 percent for 
Prime enrollees who use non-network pharmacies without proper 
authorization, she requested clarification of the wording ``without 
proper authorization.'' The commenter recommended that TRICARE Prime 
enrollees should face, at most, the same cost-share and deductibles 
faced by TRICARE Standard beneficiaries when using non-network 
pharmacies. The Standard beneficiaries pay 20 percent or $9.00 copay, 
whichever is greater, per prescription from non-network retail 
pharmacies for a 30-day supply of a drug. We non-concur with the 
commenter's recommendation. The point-of-service cost sharing for 
TRICARE Prime enrollees is the same as existing policy and is simply 
restated in the rule for completeness. The advantages of establishing 
retail networks is to keep prices down for both the beneficiary and the 
government. Non-network pharmacies can charge the government and the 
beneficiary higher prices. Network pharmacies are under contract to 
provide services at negotiated prices. As with all national health 
plans, enrollees who do not take advantage of established networks will 
pay an additional portion of the cost-share that could have been 
avoided had they used the networks established by their plan sponsor. 
Regarding the example on availability of drugs, the availability of 
prescription drugs generally is the same for networks as non-network 
pharmacies. Normally, if a covered drug is available at a non-network 
pharmacy, it should also be available at a network pharmacy. If a 
TRICARE Prime enrollee is encountering availability problems of a 
specific medication, then the Managed Care Support (MCS) contractor for 
that TRICARE region should be contacted for

[[Page 15725]]

assistance. The term ``proper authorization'' applies to authorization 
that must be given by the MCS contractor when the enrollee requires the 
use of non-network source of care. The primary focus of this clause is 
for extenuating circumstances and situations involving out of region 
care. With these authorizations, enrollees are not subject to the 
point-of-service cost sharing. Situations for remote locations are also 
being addressed in a separate rule on TRICARE Prime Remote for Family 
Members.
    All comments within DoD and from other interested federal agencies 
have been reviewed and considered.

XII. Regulatory Procedures

    Executive Order 12866 requires certain regulatory assessments for 
any significant regulatory action, defined as one 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 rule is a significant regulatory action under Executive Order 
12866, as it would add over $200 million for DoD in annual healthcare 
benefit costs. This cost estimate is based on historical TRICARE costs 
and an assessment of potential users times average benefit costs per 
person for each of the provisions addressed. Benefits of the rule 
include an increased level of health care, particularly pharmacy 
coverage for Medicare-eligible beneficiaries of the Department of 
Defense military health system. It has been determined to be major 
under the Congressional Review Act. However, this rule does not require 
a regulatory flexibility analysis as it would have no significant 
economic impact on a substantial number of small entities. This rule 
will not impose additional information collection requirements on the 
public under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3511).

List of Subjects in 32 CFR Part 199

    Claims, Dental health, Health care, Health insurance, Individuals 
with disabilities, Military personnel.

    The interim final rule published on February 9, 2001 (66 FR 9651), 
and corrected on February 15, 2001 (66 FR 10367), March 26, 2001 (66 FR 
16400), and March 19, 2002 (67 FR 12472) is adopted as final with the 
following changes:

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 199.3 is amended by revising paragraphs (b)(2)(i)(D), 
(b)(4)(iii), (f)(3)(vi) and the text of paragraph (f)(3)(vii) preceding 
the note to read as follows:


Sec. 199.3  Eligibility.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (D) Must not be eligible for Part A of Title XVIII of the Social 
Security Act (Medicare) except as provided in paragraphs (b)(3), 
(f)(3)(vii), (f)(3)(viii) and (f)(3)(ix) of this section; and
* * * * *
    (4) * * *
    (iii) Effective date. The CHAMPUS eligibility established by 
paragraphs (b)(4)(i) and (ii) of this section is applicable to health 
care services provided on or after October 30, 2000.
* * * * *
    (f) * * *
    (3) * * *
    (vi) Attainment of entitlement to hospital insurance benefits (Part 
A) under Medicare except as provided in paragraphs (b)(3), (f)(3)(vii), 
(f)(3)(viii) and (f)(3)(ix) of this section. (This also applies to 
individuals living outside the United States where Medicare benefits 
are not available.)
    (vii) Attainment of age 65, except for dependents of active duty 
members, beneficiaries not eligible for Part A of Medicare, 
beneficiaries entitled to Part A of Medicare who have enrolled in Part 
B of Medicare; and as provided in paragraph (b)(3) of this section. For 
those who do not retain CHAMPUS, CHAMPUS eligibility is lost at 12:01 
a.m. on the first day of the month in which the beneficiary becomes 
entitled to Medicare.
* * * * *
    3. Section 199.4 is amended by revising paragraph (g)(68) to read 
as follows:


Sec. 199.4  Basic program benefits.

* * * * *
    (g) * * *
    (68) Travel. All travel even though prescribed by a physician and 
even if its purpose is to obtain medical care, except as specified in 
paragraph (a)(6) of this section in connection with a CHAMPUS-required 
physical examination and as specified in Sec. 199.17(n)(2)(vi).
* * * * *
    4. Section 199.22 is amended by revising paragraph (d)(1)(i) and 
adding a Note after paragraph (d)(1)(v) to read as follows:


Sec. 199.22  TRICARE Retiree Dental Program (TRDP).

* * * * *
    (d) * * *
    (1) * * *
    (i) Members of the Uniformed Services who are entitled to retired 
pay, or former members of the armed forces who are Medal of Honor 
recipients and who are not otherwise entitled to dental benefits;
* * * * *
    (v) * * *
    Note to paragraphs (d)(1)(iii), (d)(1)(iv), and (d)(1)(v): 
Eligible dependents of Medal of Honor recipients are described in 
Sec. 199.3(b)(2)(i) (except for former spouses) and 
Sec. 199.3(b)(2)(ii) (except for a child placed in legal custody of 
a Medal of Honor recipient under Sec. 199.3(b)(2)(ii)(H)(4)).
* * * * *

    Dated: March 20, 2002.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 02-7862 Filed 4-2-02; 8:45 am]
BILLING CODE 5001-08-P