[Federal Register Volume 68, Number 73 (Wednesday, April 16, 2003)]
[Proposed Rules]
[Pages 18575-18579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-9153]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN 0720-AA77


TRICARE; Changes Included in the National Defense Authorization 
Act for Fiscal Year 2002, (NDAA-02), and a Technical Correction 
Included in the NDAA-03

AGENCY: Office of the Secretary, DoD.

ACTION: Proposed rule.

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SUMMARY: This rule proposes several changes to the TRICARE program that 
were enacted by Congress in the NDAA-02 (December 28, 2001). 
Specifically, revisions to the definition of durable medical equipment 
(DME); adoption of the same pricing methods for durable medical 
equipment, prosthetics, orthotics and supplies (DMEPOS) as are in 
effect for the Medicare program; clarification that rehabilitative 
therapy is a TRICARE benefit; addition of augmentative communication 
devices (ACD)/speech generating devices (SGD) as a TRICARE benefit; 
addition of hearing aids for family members of active duty members as a 
TRICARE benefit; revisions to the definition of prosthetics; permanent 
authority for transitional health care for certain members separated 
from active duty; and revisions to the time period of eligibility for 
transitional health care.
    This proposed rule also addresses a technical correction found in 
section 706 of the NDAA-03 relating to transitional health care for 
dependents of certain members separated from active duty.
    Public comments are invited and will be considered for possible 
revisions to the final rule.

DATES: Written comments will be accepted until June 16, 2003.

ADDRESSES: Forward comments to Medical Benefits and Reimbursement 
Systems, TRICARE Management Activity, 16401 East Centretech Parkway, 
Aurora, Colorado 80011-9066.

FOR FURTHER INFORMATION CONTACT: Ann N. Fazzini, Medical Benefits and 
Reimbursement Systems, TRICARE Management Activity, telephone, (303) 
676-3803. Questions regarding payment of specific claims should be 
addressed to the appropriate TRICARE contractor.

SUPPLEMENTARY INFORMATION:

I. Durable Medical Equipment (DME)

    Section 703 of the NDAA-02, Pub. L. 107-107, provides authority for 
any durable medical equipment that can improve, restore, or maintain 
the function of a malformed, diseased, or injured body part, or can 
otherwise minimize or prevent the deterioration of the patient's 
function or condition. It also provides authority for any durable 
medical equipment that can maximize the patient's function consistent 
with the patient's physiological or medical needs. Although the wording 
is not identical, TRICARE's policies and definitions in place at this 
time currently provide coverage within these criteria. Nonetheless, we 
are revising the current DME definition by adding the phrases found in 
the NDAA-02 to the regulatory definition of DME in order to ensure 
consistency between the law and the regulation.
    Section 703 also makes available coverage to customize or 
accessorize durable medical equipment if it is essential for achieving 
therapeutic benefit for the patient; making the equipment serviceable; 
or otherwise assuring the proper functioning of the equipment. Our 
policies in place at this time provide coverage within these criteria. 
Specifically, TRICARE's current policy regarding Durable Medical 
Equipment includes a provision to allow customization, accessories, and

[[Page 18576]]

supplies that are essential to provide therapeutic benefit, or to 
assure the proper functioning of the equipment or to make the equipment 
serviceable. Nonetheless, we are revising the current DME definition by 
adding the NDAA-02 language to the regulatory definition of DME in 
order to ensure consistency between the law and the regulation.

II. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
(DMEPOS) Reimbursement

    Section 707 of the NDAA-02, Pub. L. 107-107, changed the statutory 
authorization (in 10 U.S.C. 1079(j)(2)) that TRICARE payment methods 
``may be'' determined to the extent practicable in accordance with 
Medicare payment rules to a mandate that TRICARE payment methods 
``shall be'' so determined. As a result, TRICARE proposes to adopt 
Medicare's pricing of Durable Medical Equipment, Prosthetic, Orthotics, 
and Supplies (DMEPOS). Under Medicare, DMEPOS prices are established by 
using fee schedules, reasonable charge or average wholesale pricing 
(AWP). Most payments of DME are based on a fee schedule. A standard fee 
is established for each DMEPOS item by state. Payment is calculated 
using either the fee schedule amount or the actual charge submitted on 
the claim, whichever is lower. The fee schedule allowances include the 
application of national floors and ceilings. Reasonable charge 
allowances by Medicare are stipulated by Medicare law and not left to 
the discretion of the Medicare carrier. Medicare law specifically 
states that the amount allowed by Medicare must be the lowest of: The 
actual charge, the suppliers customary charge or the 50th percentile of 
arrayed and weighted customary charges in the absence of a customary 
charge for the specific service rendered; the prevailing charge, the 
Inflation-Indexed Charge or the Lowest Charge Level.

III. Rehabilitative Therapy

    Section 704 of the NDAA-02, Pub. L. 107-107, authorizes providing 
rehabilitative therapy to improve, restore, or maintain function, or to 
minimize or prevent deterioration of function, of a patient when 
prescribed by a physician. We interpret the term ``rehabilitative 
therapies'' to include physical therapy, speech therapy, and 
occupational therapy. We are adding a definition of rehabilitative 
therapy to our regulation and incorporating the NDAA-02 language found 
in section 704 into the definition. Physical, speech, and occupational 
therapies are currently covered by TRICARE to improve and/or restore 
function. Additionally, current policies provide no restrictions on 
medically necessary and appropriate therapies--in other words, there is 
no dollar limit on the care nor is care restricted to a specific number 
of visits.
    Section 701 of the NDAA-02, Pub. L. 107-107, provides a definition 
of custodial care as treatment or services regardless of who recommends 
such treatment of services or where such services are provided that (a) 
can be rendered safely and reasonably by a person who is not medically 
skilled; or (b) is or are designed mainly to help the patient with 
activities of daily living. The definition was revised by the interim 
final rule published in the Federal Register, 67 FR 40602, June 13, 
2002.
    We read the language in section 704 of the NDAA-02 in conjunction 
with the language in Section 701(c) of the NDAA-02 and conclude when 
TRICARE will cover rehabilitative therapies. That is, rehabilitative 
therapies shall be covered to improve, restore, or maintain function, 
or to minimize or prevent deterioration of function, of a patient when 
prescribed by a physician. The rehabilitative therapy must be medically 
necessary and appropriate, necessary to the establishment of a safe and 
effective maintenance program in connection with a specific medical 
condition, and not custodial care.

IV. Augmentative Communication Devices (ACD)/Speech Generating Device 
(SGD)

    Section 702 of the NDAA-02, Pub. L. 107-107, provides that an 
``augmentative communication device may be provided as a voice 
prosthesis'' under TRICARE. We propose a policy that is in line with 
the policy developed by the Centers for Medicare and Medicaid Services 
(CMS). We further propose using the same terminology used by Medicare 
when referring to this type of device--CMS refers to ``augmentative 
communication devices'' as ``speech generating devices''. In order to 
facilitate consistent terminology in the industry, we propose adopting 
the term ``speech generating device (SGD)''. In proposing this policy, 
we have also taken into consideration recommendations provided to us by 
the American Speech-Language-Hearing Association in defining this 
benefit.

V. Hearing Aids

    Section 702 of the NDAA-02, Pub. L. 107-107, provides for coverage 
of a hearing aid if a family member of an active duty member has a 
``profound'' hearing loss as determined under standards prescribed in 
regulations by the Secretary of Defense in consultation with the 
administering Secretaries. There is no industry standard or industry 
definition of ``profound'' hearing loss so we have developed one for 
TRICARE purposes and welcome comments regarding our proposed 
definition.
    The policy proposed in this rule enhances current TRICARE coverage 
of hearing aids by: (1) Offering a hearing aid benefit via the TRICARE 
Basic Program to family members of an active duty member when the 
family member has a ``profound'' hearing loss; (2) differentiating 
hearing thresholds for adults and children; and, (3) revising the 
hearing threshold levels currently in TRICARE policy.

VI. Prosthetics

    Section 702 of NDAA-02, Pub. L. 107-107, gives the Department the 
discretion to provide a prosthetic device that includes the following: 
(1) Any accessory or item of supply that is used in conjunction with 
the device for the purpose of achieving therapeutic benefit and proper 
functioning. (2) Services necessary to train the recipient of the 
device in the use of the device. (3) Repair of the device for normal 
wear and tear or damage. (4) Replacement of the device if the device is 
lost or irreparably damaged or the cost of repair would exceed 60 
percent of the cost of replacement. (5) A prosthetic device customized 
for a patient may be provided under this section only by a prosthetic 
practitioner who is qualified to customize the device, as determined 
under regulations prescribed by the Secretary of Defense in consult 
with the other Secretaries.
    TRICARE currently offers benefits for the above criteria 1, 2, 3, 
and 5. Regarding criterion (4), TRICARE currently allows for 
replacement when required due to growth or change in the patient's 
condition. Nonetheless, our policies will be revised to ensure 
consistency with the language found in section 702.
    Regarding criterion 5, TRICARE has no specific provider 
requirements for a prosthetic practitioner to be qualified to customize 
the device. Rather, otherwise authorized providers currently provide 
prostheses and customization of prostheses. We are aware that CMS has 
established a Negotiated Rulemaking Committee on Special Payment 
Provisions and Requirements for Prosthetics and Certain Custom-
Fabricated Orthotics. The purpose of this committee is to advise CMS on 
developing a proposed rule that would establish payment provisions and

[[Page 18577]]

requirements for providers of prostheses and custom-fabricated 
orthotics under the Medicare program. Once the Committee provides their 
findings, we will review them for consideration under the TRICARE 
program. In the meantime, we will continue to allow prostheses 
customization by otherwise authorized TRICARE providers.
    This proposed rule also updates the definition of prosthetic 
device, and adds definitions for prosthetics and prosthetic supplies. 
This brings us in line with industry standards.

VII. Transitional Health Care

    Section 736 of the NDAA-02, Pub. L. 107-107, makes permanent the 
authority for transitional health care benefits for certain members by 
deleting the expiration date that was in place for transitional health 
care benefits. Prior to Pub. L. 107-107, transitional health care 
benefits were to expire on December 31, 2001. Section 736 also extended 
coverage for either 60 or 120 days based on years of service to those 
eligible for transitional health care benefits. Further, it deleted 
coverage for dependents of those eligible for transitional coverage, 
but the Department of Defense created a demonstration project to 
include coverage for such dependents.
    Section 706 of the National Defense Authorization Act for Fiscal 
Year 03 (NDAA-03) re-inserted transitional health care coverage 
benefits for dependents and deemed the provision to have been enacted 
as part of section 736 of the NDAA-02. Consequently, there is no need 
for this rule to include regulatory language addressing the removal of 
dependents from transitional health care coverage.

VIII. Regulatory 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 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 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, 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 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 (44 U.S.C. 3501-3511). If, however, any 
program implemented under this rule causes such a burden to be imposed, 
approval thereof will be sought from the Office of Management and 
Budget in accordance with the Act, prior to implementation.

List of Subjects in 32 CFR Part 199

    Claims, Dental health, 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(b) is proposed to be amended by revising the 
definitions of ``Durable medical equipment'', and ``Prosthetic device 
(prosthesis)'', by adding definitions of ``Augmentative Communication 
Device'', ``Profound hearing loss''; ``Prosthetic'', ``Prosthetic 
supplies'', ``Rehabilitative therapy'', and ``Speech generating 
device'' in alphabetical order to read as follows:


Sec.  199.2  Definitions.

* * * * *
    (b) * * *
    Augmentative communication device. See Speech generating device.
* * * * *
    Durable medical equipment. Equipment for which the allowable charge 
is over $100 and which:
    (1) Is medically necessary for the treatment of a covered illness 
or injury;
    (2) Improves, restores, or maintains the function of a malformed, 
diseased, or injured body part, or can otherwise minimize or prevent 
the deterioration of the patient's function or condition;
    (3) Can maximize the patient's function consistent with the 
patient's physiological or medical needs.
    (4) Is primarily and customarily designed and intended to serve a 
medical purpose rather than primarily for transportation, comfort, or 
convenience.
    (5) Can withstand repeated use;
    (6) Provides the medically appropriate level of performance and 
quality for the medical condition present (that is, nonluxury or 
nondeluxe);
    (7) Is other than spectacles, eyeglasses, contact lenses, or other 
optical devices, hearing aids (unless otherwise provided as a covered 
TRICARE benefit), or other communication devices (unless otherwise 
provided as a covered TRICARE benefit); and
    (8) Is other than exercise equipment, spas, whirlpools, hot tubs, 
swimming pools or other such items.
* * * * *
    Profound hearing loss (adults). An ``adult'' (a spouse as defined 
in section 199.3(b) of this part of a member of the Uniformed Services 
on active duty for 30 days) with a hearing threshold of:
    (1) 40 dB HL or greater in one or both ears when tested at 500, 
1,000, 1,500, 2,000, 3,000 or 4,000Hz; or
    (2) 26 dB HL or greater in one or both ears at any three or more of 
those frequencies; or
    (3) A speech recognition score less than 94 percent.
    Profound hearing loss (children). A ``child'' (an unmarried child 
of an active duty member who otherwise meets the criteria (including 
age requirements) in section 199.3 of this part) with a 26dB or greater 
hearing threshold level in one or both ears when tested in the 
frequency range at 500, 1,000, 2,000, 3,000, or 4,000 Hz.
* * * * *
    Prosthetic. Artificial legs, arms, and eyes.
    Prosthetic device (prosthesis). Devices (other than a dental 
device) which replace all or part of an internal body organ (including 
contiguous tissue), or replace all or part of the function of a 
permanently inoperative or malfunctioning internal body organ are 
covered when furnished on a physician's order. Examples of prosthetic 
devices include cardiac pacemakers, breast prostheses (including a 
surgical brassiere) for post mastectomy patients, maxillofacial devices 
and devices which replace all or part of the ear or nose.
    Prosthetic supplies. Supplies that are necessary for the effective 
use of a prosthetic device.
* * * * *
    Rehabilitative therapy. Speech therapy, occupational therapy, and 
physical therapy to improve, restore, or maintain function, or to 
minimize or prevent deterioration of function, of a patient and 
prescribed by a physician.
* * * * *
    Speech generating device. (1) Speech aids that provide an 
individual who has severe speech impairment with the ability to meet 
his functional speaking needs. Such devices are considered

[[Page 18578]]

prosthetic devices and are characterized by:
    (i) Being a dedicated speech device, used solely by the individual 
who has severe speech impairment:
    (ii) May have digitized speech output, using pre-recorded messages, 
less than or equal to 8 minutes recording time;
    (iii) May have synthesized speech output, which requires message 
formulation by spelling and device access by physical contact with the 
device-direct selection techniques;
    (iv) May have synthesized speech output, which permits multiple 
methods of message formulation and multiple methods of device access; 
or
    (v) May be software that allows a laptop computer, desktop computer 
or personal digital assistant (PDA) to function as a speech generating 
device.
    (2) Examples of devices that do not meet the above definition and 
are excluded from coverages as SGDs include, but are not limited to:
    (i) Devices that are not dedicated speech devices, but are devices 
that are capable of running software for purposes other than for speech 
generation, e.g., devices that can also run a word processing package, 
an accounting program, or perform other non-medical functions.
    (ii) Laptop computers, desktop computers, or PDAs, which may be 
programmed to perform the same function as a speech generating device, 
are non-covered since they are not primarily medical in nature and do 
not meet the definition of prosthetic, prosthetic device, prosthetic 
supply, or durable medical equipment.
    (iii) A device that is useful to someone without severe speech 
impairment is not considered an SGD.
* * * * *
    3. Section 199.3 is proposed to be amended by revising paragraph 
(e) to read as follows:


Sec.  199.3  Eligibility.

* * * * *
    (e) Eligibility Under the Transitional Assistance Management 
Program (TAMP). (1) Transitional health care benefits under TRICARE are 
authorized for the following eligibles:
    (i) A member who is involuntarily separated from active duty and 
the dependents of the member.
    (ii) A member of a reserve component who is separated from active 
duty to which called or ordered in support of a contingency operation 
if the active duty is active duty for a period of more than 30 days and 
the dependents of the member.
    (iii) A member who is separated from active duty for which the 
member is involuntarily retained under 10 U.S.C. 12305, in support of a 
contingency operation and the dependents of the member.
    (iv) A member who is separated from active duty pursuant to a 
voluntary agreement of the member to remain on active duty for a period 
of less than one year in support of a contingency operation and the 
dependents of the member.
    (2) Time period of eligibility. Transitional health care shall be 
available for a specified period of time for members and dependents 
beginning on the date which the member is separated as follows:
    (i) For members separated with less than 6 years of service, 60 
days.
    (ii) For members separated with 6 or more years of active service, 
120 days.
* * * * *
    4. Section 199.4 is proposed to be amended by revising paragraph 
(d)(3)(ii)(A), paragraph (d)(3)(vii), the text of paragraph (g)(41) 
preceding the note, paragraph (g)(47), paragraph (g)(51) and by adding 
new paragraph (e)(23), new paragraph (e)(24), and new paragraph (e)(25) 
to read as follows:


Sec.  199.4  Basic program benefits.

* * * * *
    (d) * * *
    (3) * * *
    (ii) * * *
    (A) Scope of benefit. Subject to the exceptions in paragraphs (B) 
and (C) below, only durable medical equipment (DME) which is ordered by 
a physician for the specific use of the beneficiary, and which complies 
with the definition of ``Durable Medical Equipment'' in Sec. 199.2 of 
this part, and which is not otherwise excluded by this Regulation 
qualifies as a Basic Program Benefit. In addition, any customization of 
durable medical equipment owned by the patient is authorized to be 
provided to the patient and any accessory or item of supply for any 
such authorized durable medical equipment, may be provided to the 
patient if the customization, accessory, or item of supply is essential 
for--
    (1) Achieving therapeutic benefit for the patient
    (2) Making the equipment serviceable; or
    (3) Otherwise assuring the proper functioning of the equipment.
* * * * *
    (vii) Prosthetics, prosthetic devices, and prosthetic supplies, as 
determined by the Secretary of Defense to be necessary because of 
significant conditions resulting from trauma, congenital anomalies, or 
disease. Additionally, the following are covered:
    (A) Any accessory or item of supply that is used in conjunction 
with the device for the purpose of achieving therapeutic benefit and 
proper functioning;
    (B) Services necessary to train the recipient of the device in the 
use of the device;
    (C) Repair of the device for normal wear and tear or damage;
    (D) Replacement of the device if the device is lost or irreparably 
damaged or the cost of repair would exceed 60 percent of the cost of 
replacement.
* * * * *
    (e) * * *
    (23) A speech generating device (SGD) as defined in Sec.  199.2 of 
this part is covered as a voice prosthesis. The prosthesis provisions 
found in paragraph (d)(3)(vii) of this section apply.
    (24) A hearing aid, but only for a dependent of a member of the 
uniformed services on active duty and only if the dependent has a 
profound hearing loss as defined in Sec.  199.2 of this part. Medically 
necessary and appropriate services and supplies, including hearing 
examinations, required in connection with this hearing aid benefit are 
covered.
    (25) Rehabilitation therapy as defined in Sec.  199.2 of this part 
to improve, restore, or maintain function, or to minimize or prevent 
deterioration of function, of a patient when prescribed by a physician. 
The rehabilitation therapy must be medically necessary and appropriate, 
must be necessary to the establishment of a safe and effective 
maintenance program in connection with a specific medical condition, 
and must not be custodial care.
* * * * *
    (g) * * *
    (41) Hair transplants, wigs, hair pieces, or cranial prosthesis.

    Note: * * *

* * * * *
    (47) Eye and hearing examinations. Eye and hearing examinations 
except as specifically provided in paragraphs (c)(2)(xvi), (c)(3)(xi), 
and (e)(24) of this section, or except when rendered in connection with 
medical or surgical treatment of a covered illness or injury.
* * * * *
    (51) Hearing aids. Hearing aids or other auditory sensory enhancing 
devices, except those allowed in paragraph (e)(24) of this section.
* * * * *
    4. Section 199.14 is proposed to be amended by redesignating 
paragraphs (k) through (n) as paragraphs (l) through (o) and adding a 
new paragraphs (k) to read as follows:

[[Page 18579]]

Sec.  199.14  Provider reimbursement methods.

* * * * *
    (k) Reimbursement of Durable Medical Equipment, Prosthetics, 
Orthotics and Supplies (DMEPOS). Reimbursement of DMEPOS is based on 
the same amounts established under the Medicare DMEPOS fee schedule 
under 42 CFR part 414, subpart D.
* * * * *

    Dated: April 9, 2003.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 03-9153 Filed 4-15-03; 8:45 am]
BILLING CODE 5001-08-M