[Federal Register Volume 68, Number 27 (Monday, February 10, 2003)]
[Rules and Regulations]
[Pages 6617-6621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3159]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN-0720-AA52


TRICARE Program; Double Coverage; Third-Party Recoveries

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: This final rule implements section 711 of the Strom Thurmond 
National Defense Authorization Act for Fiscal Year 1999, as amended by 
section 716(c)(2) of the National Defense Authorization Act for Fiscal 
Year 2000, which allows the Secretary of Defense to authorize certain 
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 TRICARE costs incurred on behalf of 
the beneficiary.

DATES: This final rule is effective March 12, 2003.

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

FOR FURTHER INFORMATION CONTACT: Stephen Isaacson Medical Benefits and 
Reimbursement Systems, TMA, (303)-676-3572.

SUPPLEMENTARY INFORMATION: 

I. Summary of Final Rule Provisions

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

[[Page 6618]]

beneficiary. The radar should refer to the proposed rule that was 
published on October 19, 1999 (64 FR 56283), for more detailed 
information regarding these changes.

II. Public Comments

    We provided a 60-day comment period on the proposed rule. We 
received no public comments.

III. Changes in the Final Rule

    We have made changes in the final rule based on section 716 of the 
National Defense Authorization Act for Fiscal Year 2000, Pub. L. 106-
65, which was passed subsequent to preparation of the proposed rule. We 
have removed paragraph (c)(2)(iii) of Section 199.8 as originally set 
forth in the proposed rule. The essence of this change is to remove the 
proposed requirement for contractors to assign the government any 
rights to seek recovery from third-party payers. Based on the section 
716 of the National Defense Authorization Act for Fiscal Year 2000, it 
is clear that the government, rather than the contractor, has the 
authority to collect amounts paid on behalf of TRICARE beneficiaries 
for which there is a liable third party.
    Based on Section 8118 of the Fiscal Year 2000 Department of Defense 
Appropriations Act, we also have eliminated the change to paragraph 
(d)(2) of Section 199.8 established Medicaid as primary payer to 
TRICARE under the case management program that is set out in Part 
199.4(i). As a result, TRICARE will continue to be primary to Medicaid 
in all situations including case management.

IV. Regulatory Procedures

    Executive Order (EO) 12866 requires that a comprehensive regulatory 
impact analysis be performed on any economically significant regulatory 
action, defined as one that 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 that would 
have a significant impact on a substantial number of small entities.
    This rule has been designated as significant rule and has been 
reviewed by the Office of Management and Budget as required under the 
provisions of E.O. 12866. In addition, we certify that this final rule 
will not significantly affect a substantial number of small entities.

Paperwork Reduction Act.

    This final rule, as written, imposes no burden as defined by the 
Paperwork Reduction Act of 1995. If, however, any program implemented 
under this final rule causes such a burden to be imposed, approval will 
be sought of 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 amended by adding new definitions automobile 
liability insurance, no-fault insurance, and third-party payer 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), 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 whom 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-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) 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.


    Note: TRICARE is secondary payer to all third-party payers. 
Under limited circumstances described in Sec.  199.8(c)(2) of this 
part, TRICARE payment may be authorized to be paid in advance of 
adjudication of the claim by certain third-party payers. TRICARE 
advance payments will not be made when a third-party provider is 
determined to be a primary medical insurer under Sec.  199.8(c)(3) 
of this part.''

* * * * *
    3. Section 199.8 is amended by revising paragraphs (a), (c)(1), 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 TRICARE legislation, Congress 
clearly has intended that TRICARE be the secondary payer to all health 
benefit, insurance and third-party payer plans. 10 U.S.C. 1079(j)(1) 
specifically provides that 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 provision in paragraph (a)(1) of this section 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 TRICARE beneficiaries 
receive maximum benefits while ensuring that the combined payments of 
TRICARE and other health and insurance plans do not exceed the total 
charges.
* * * * *

[[Page 6619]]

    (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 a 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 from the operation of a motor vehicle.
* * * * *
    (c) * * *
    (1) TRICARE last pay. For any claim that involves a double coverage 
plan as defined in paragraph (b) of this section, TRICARE shall be last 
pay except as may be authorized by the Director, TRICARE Management 
Activity, or a designee, pursuant to paragraph (c)(2) of this section. 
That is, TRICARE benefits may not be extended until all other double 
coverage plans have adjudicated the claim.
    (2) TRICARE advance payment. The Director, TRICARE Management 
Activity, or a designee, 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 TRICARE 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; and,
    (ii) The claim is identified as involving services for which a 
third-party payer, other than a primary medical insurer, may be liable.
    (3) Primary medical insurer. 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, TRICARE Management Activity, or a designee, in any 
policy guidance or instructions issued in implementation of this Part.
* * * * *
    (d) * * *
    (3) TRICARE and Workers' Compensation. TRICARE 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, TRICARE Management Activity, or a 
designee, 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 TRICARE costs of health care 
incurred on behalf of the covered beneficiary.
* * * * *

    4. Section 199.12 is revised 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 TRICARE beneficiaries. These third-parties may be 
individuals or entities that are liable for tort damages to the injured 
TRICARE 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.
    Authority. (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 TRICARE claims to be paid, even though a 
third-party payer may be primary payer, with authority to collect from 
the third-party payer the TRICARE 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 TRICARE 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), Public Law 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 TRICARE. 
Actions taken under this section are not initial determinations for the 
purpose of the appeal procedures of Sec.  199.10 of this part. 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 TRICARE 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 TRICARE contractor may deny payment for 
services that are determined to be excluded as TRICARE benefits because 
they are found to be not medically necessary. In that event the TRICARE 
contractor will offer an administrative appeal as provided in Sec.  
199.10 of this part 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 TRICARE

[[Page 6620]]

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 TRICARE 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 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, TRICARE 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 TRICARE 
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 service 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, 
TRICARE Management Activity, or a designee, authorizes certain TRICARE 
claims to be paid, even though a third-party payer may be primary 
payer, the right to collect from a third-party payer the TRICARE 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, as amended (31 U.S.C. 3701 et. seq.) and any implementing 
regulations (including Sec.  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 TRICARE, 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 conditional precedent of the processing of a TRICARE 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) Reponsibility for recovery. The Director, TRICARE Management 
Activity, or a designee, is responsible for insuring that TRICARE 
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 TRICARE 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 by a 
TRICARE contractor, initial identification of potential third-party 
payers will be by the TRICARE contractor. In such cases, the TRICARE 
contractor is responsible for conducting a preliminary investigation 
and referring the case to designated appropriate claims authorities of 
the Uniformed Services.
    (2) Processing TRICARE claims. When the TRICARE 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 identify of any 
potential third-party payer from the beneficiary or other responsible 
party unless adequate information is submitted with the claim. The 
TRICARE 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 TRICARE beneficiary may expedite 
the processing of his or her TRICARE 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 on 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 responsible for

[[Page 6621]]

asserting the claim against the third-party payer recive from the 
TRICARE 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 
TRICARE 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 TRICARE contractor updated 
information to insure that all amounts expended under TRICARE 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 TRICARE-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 TRICARE 
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 TRICARE. To facilitate 
the preparation of this report and to maintain program integrity, the 
following reporting requirements are established:
    (1) TRICARE contractors. Each TRICARE contractor shall submit on or 
before January 31 of each year an annual report to the Director, 
TRICARE Management Activity, or a designee, covering the 12 months of 
the previous calendar year. This report shall contain, as a minimum, 
the number and total dollar 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, TRICARE Management Activity, 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 
TRICARE payments received from TRICARE contractors, the number and 
dollar amount of cases involving TRICARE payments received from other 
sources, and the number and dollar amount of claims actually asserted 
against, and the dollar amount of recoveries from, third-payment 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, 
TRICARE Management Activity, or a designee shall issue guidance for 
implementation of the reporting requirements prescribed by this 
section.

    Dated: February 4, 2003.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 03-3159 Filed 2-7-03; 8:45 am]
BILLING CODE 5001-08-M