[Federal Register Volume 68, Number 104 (Friday, May 30, 2003)]
[Rules and Regulations]
[Pages 32361-32364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13397]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN 0720-AA66


TRICARE Program; Eligibility and Payment Procedures for CHAMPUS 
Beneficiaries Age 65 and Over

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule; correction.

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SUMMARY: This final rule is republished to correct errors originally 
published. It is to implement section 712 of the Floyd D. Spence 
National Defense Authorization Act for Fiscal Year 2001. Section 712 
extends TRICARE eligibility to persons age 65 and over who would 
otherwise have lost their TRICARE eligibility due to attainment of 
entitlement to hospital insurance benefits under Part A of Medicare. 
This benefit, which has been named TRICARE for Life (TFL), was 
implemented on October 1, 2001, under an interim final rule published 
in the Federal Register on August 3, 2001.

DATES: This rule was effective October 1, 2001.

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

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

SUPPLEMENTARY INFORMATION: For background information on this rule, see 
the original submission published on April 30, 2003 (68 FR 23030).

List of Subjects in 32 Part 199

    Claims, Handicapped, Health insurance, Military personnel.


0
Accordingly, 32 CFR part 199 is amended to read as follows:

PART 199--[AMENDED]

0
1. The authority citation for part 199 continues to read as follows:

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

0
2. Section 199.2(b) is amended by revising the definition for Director, 
TRICARE Management Activity.


Sec.  199.2  Definitions.

* * * * *
    (b) * * *
    Director, TRICARE Management Activity. This term includes the 
Director, TRICARE Management Activity, the official sometimes referred 
to in this part as the Director, Office of CHAMPUS (or OCHAMPUS), or 
any designee of the Director, TRICARE Management Activity or the 
Assistant Secretary of Defense for Health Affairs who is designated for 
purposes of an action under this part.

0
3. Section 199.3 is amended by revising paragraphs (b)(2)(i)(D) 
(f)(3)(vi), and (f)(3)(vii) and the note following paragraph 
(f)(3)(vii), 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
* * * * *
    (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 entitled to 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.


    Note: If the person is not eligible for Part A of Medicare, he 
or she must file a Social Security Administration, ``Notice of 
Disallowance'' certifying to that fact with the Uniformed Service 
responsible for the issuance of his or her identification card so a 
new card showing CHAMPUS eligibility can be issued. Individuals 
entitled only to supplementary medical insurance (Part B) of 
Medicare, but not Part A, or Part A through the Premium HI 
provisions (provided for under the 1972 Amendments to the Social 
Security Act) retain eligibility under CHAMPUS (refer to Sec.  199.8 
for additional information when a double coverage situation is 
involved).

* * * * *

0
4. Section 199.8 is amended by revising paragraphs (c)(6) and (d)(1) to 
read as follows:


Sec.  199.8  Double coverage.

* * * * *
    (c) * * *
    (6) Lack of payment by double coverage plan. Amounts that have been 
denied by a double coverage plan simply because a claim was not filed 
timely or because the beneficiary failed to meet some other requirement 
of coverage cannot be paid. If a statement from the double coverage 
plan as to how much that plan would have paid ha the claim met the 
plan's requirements is provided to the CHAMPUS contractor, the claim 
can be processed as if the

[[Page 32362]]

double coverage plan actually paid the amount shown on the statement. 
If no such statement is received, no payment from CHAMPUS is 
authorized.
* * * * *
    (d) Special considerations. (1) CHAMPUS and Medicare.--(i) General 
rule. In any case in which a beneficiary eligible for both Medicare and 
CHAMPUS receives medical or dental care for which payment may be made 
under Medicare and CHAMPUS, Medicare is always the primary payer. For 
dependents of active duty members, payment will be determined in 
accordance to paragraph (c) of this section. For all other 
beneficiaries eligible for Medicare, the amount payable by CHAMPUS 
shall be the amount of the actual out-of-pocket costs incurred by the 
beneficiary for that care over the sum of the amount paid for that care 
under Medicare and the total of all amounts paid or payable by third 
party payers other than Medicare.
    (ii) Payment limit. The total CHAMPUS amount payable for care under 
paragraph (d)(1)(i) of this section may not exceed the total amount 
that would be paid under CHAMPUS if payment for that care was made 
solely under CHAMPUS.
    (iii) Application of general rule. In applying the general rule 
under paragraph (d)(1)(i) of this section, the first determination will 
be whether payment may be made under Medicare. For this purpose, 
Medicare exclusions, conditions, and limitations will be based for the 
determination.
    (A) For items or services or portions or segments of items or 
services for which payment may be made under Medicare, the CHAMPUS 
payment will be the amount of the beneficiary's actual out of pocket 
liability, minus the amount payable by Medicare, also minus amount 
payable by other third party payers, subject to the limit under 
paragraph (d)(1)(ii) of this section.
    (B) For items or services or segments of items or services for 
which no payment may be made under Medicare, the CHAMPUS payment will 
be the same as it would be for a CHAMPUS eligible retiree, dependent, 
or survivor beneficiary who is not Medicare eligible.
    (iv) Examples of applications of general rule. The following 
examples are illustrative. They are not all-inclusive.
    (A) In the case of a Medicare-eligible beneficiary receiving 
typical physician office visit services, Medicare payment generally 
will be made. CHAMPUS payment will be determined consistent with 
paragraph (d)(1)(iii)(A) of this section.
    (B) In the case of a Medicare-eligible beneficiary residing and 
receiving medical care overseas, Medicare payment generally may not be 
made. CHAMPUS payment will be determined consistent with paragraph 
(d)(1)(iii)(B) of this section.
    (C) In the case of a Medicare-eligible beneficiary receiving 
skilled nursing facility services a portion of which is payable by 
Medicare (such as during the first 100 days) and a portion of which is 
not payable by Medicare (such as after 100 days), CHAMPUS payment for 
the first portion will be determined consistent with paragraph 
(d)(1)(iii)(A) of this section and for the second portion consistent 
with paragraph (d)(1)(iii)(B) of this section.
    (v) Application of catastrophic cap. Only in cases in which CHAMPUS 
payment is determined consistent with paragraph (d)(1)(iii)(B) of this 
section, actual beneficiary out of pocket liability remaining after 
CHAMPUS payments will be counted for purposes of the annual 
catastrophic loss protection, set forth under Sec. 199.4(f)(10). When a 
family has met the cap, CHAMPUS will pay allowable amounts for 
remaining covered services through the end of that fiscal year.
    (vi) Effect of enrollment in Medicare+Choice plan. In the case of a 
beneficiary enrolled in a Medicare+Choice plan who receives items or 
services for which payment may be made under both the Medicare+Choice 
plan and CHAMPUS, a claim for the beneficiary's normal out-of-pocket 
costs under the Medicare+Choice plan may be submitted for CHAMPUS 
payment. However, consistent with paragraph (c)(4) of this section, 
out-of-pocket costs do not include costs associated with unauthorized 
out-of-system care or care otherwise obtained under circumstances that 
result in a denial or limitation of coverage for care that would have 
been covered or fully covered had the beneficiary met applicable 
requirements and procedures. In such cases, the CHAMPUS amount payable 
is limited to the amount that would have been paid if the beneficiary 
had received care covered by the Medicare+Choice plan.
    (vii) Effect of other double coverage plans, including medigap 
plans. CHAMPUS is second payer to other third-party payers of health 
insurance, including Medicare supplemental plans.
    (viii) Effect of employer-provided insurance. In the case of 
individuals with health insurance due to their current employment 
status, the employer insurance plan shall be first payer, Medicare 
shall be the second payer, and CHAMPUS shall be the tertiary payer.
* * * * *

0
5. Section 199.10 is amended by revising paragraph (a)(1)(ii) to read 
as follows:


Sec.  199.10.  Appeal and hearing procedures.

    (a) * * *
    (1) * * *
    (ii) Effect of initial determination.
    (A) The initial determination is final unless appealed in 
accordance with this chapter, or unless the initial determination is 
reopened by the TRICARE Management Activity, the CHAMPUS contractor, or 
the CHAMPUS peer review organization.
    (B) An initial determination involving a CHAMPUS beneficiary 
entitled to Medicare Part A, who is enrolled in Medicare Part B, may be 
appealed by the beneficiary or their provider under this section of 
this Part only when the claimed services or supplies are payable by 
CHAMPUS and are not payable under Medicare. Both Medicare and CHAMPUS 
offer an appeal process when a claim for healthcare services or 
supplies is denied and most healthcare services and supplies are a 
benefit payable under both Medicare and CHAMPUS. In order to avoid 
confusion on the part of beneficiaries and providers and to expedite 
the appeal process, services and supplies denied payment by Medicare 
will not be considered for coverage by CHAMPUS if the Medicare denial 
of payment is appealable under Medicare. Because such claims are not 
considered for payment by CHAMPUS, there can be no CHAMPUS appeal. If, 
however, a Medicare claim or appeal results in some payment by 
Medicare, the services and supplies paid by Medicare will be considered 
for payment by CHAMPUS. In that situation, any decision to deny CHAMPUS 
payment will be appealable under this section. The following examples 
of CHAMPUS appealable issues involving Medicare-eligible CHAMPUS 
beneficiaries are illustrative; they are not all-inclusive.
    (1) If Medicare processes a claim for a healthcare service or 
supply that is a Medicare benefit and the claim is denied by Medicare 
for a patient-specific reason, the claim is appealable through the 
Medicare appeal process. The Medicare decision will be final if the 
claim is denied by Medicare. The claimed services or supplies will not 
be considered for CHAMPUS payment and there is no CHAMPUS appeal of the 
CHAMPUS decision denying the claim.
    (2) If Medicare processes a claim for a healthcare service or 
supply that is a

[[Page 32363]]

Medicare benefit and the claim is paid, either on initial submission or 
as a result of a Medicare appeal decision, the claim will be submitted 
to CHAMPUS for processing as a second payer to Medicare. If CHAMPUS 
denies payment of the claim, the Medicare-eligible beneficiary or their 
provider have the same appeal rights as other CHAMPUS beneficiaries and 
their providers under this section.
    (3) If Medicare processes a claim and the claim is denied by 
Medicare because it is not a healthcare service or supply that is a 
benefit under Medicare, the claim is submitted to CHAMPUS. CHAMPUS will 
process the claim under this Part 199 as primary payer (or as secondary 
payer if another double coverage plan exists). If any part of the claim 
is denied, the Medicare-eligible beneficiary and their provider will 
have the same appeal rights as other CHAMPUS beneficiaries and their 
providers under this section.
* * * * *

0
6. Section 199.15 is amended by revising paragraph (a)(6) to read as 
follows:


Sec.  199.15.  Quality and Utilization Review Peer Review Organization 
Program.

    (a) * * *
    (6) Medicare rules used as model. The CHAMPUS Quality and 
Utilization Review Peer Review Organization program, based on specific 
statutory authority, follows many of the quality and utilization review 
requirements and procedures in effect for the Medicare Peer Review 
Organization program, subject to adaptations appropriate for the 
CHAMPUS program. In recognition of the similarity of purpose and design 
between the Medicare and CHAMPUS PRO programs, and to avoid unnecessary 
duplication of effort, the CHAMPUS Quality and Utilization Review Peer 
Review Organization program will have special procedures applicable to 
supplies and services furnished to Medicare-eligible CHAMPUS 
beneficiaries. These procedures will enable CHAMPUS normally to rely 
upon Medicare determinations of medical necessity and appropriateness 
in the processing of CHAMPUS claims as a second payer to Medicare. As a 
general rule, only in cases involving Medicare-eligible CHAMPUS 
beneficiaries where Medicare payment for services and supplies is 
denied for reasons other than medical necessity and appropriateness 
will the CHAMPUS claim be subject to review for quality of care and 
appropriate utilization under the CHAMPUS PRO program. TRICARE will 
continue to perform a medical necessity and appropriateness review for 
quality of care and appropriate utilization under the CHAMPUS PRO 
program where required by statute, such as inpatient mental health 
services in excess of 30 days in any year.
* * * * *

0
7. Section 199.17 is amended by revising paragraphs (a) introductory 
text, (a)(6) introductory text, (a)(6)(i), (a)(6)(ii), (b) introductory 
text, (b)(1), (c) introductory text, (c)(3), (c)(4), (m)(1)(ii) 
introductory text, (m)(2)(ii), (m)(3)(ii), and (v) to read as follows:


Sec.  199.17  TRICARE program.

    (a) Establishment. The TRICARE program is established for the 
purpose of implementing a comprehensive managed health care program for 
the delivery and financing of health care services in the Military 
Health System.
* * * * *
    (6) Major features of the TRICARE program. The major features of 
the TRICARE program, described in this section, include the following:
    (i) Comprehensive enrollment system. Under the TRICARE program, all 
health care beneficiaries become classified into one of four 
categories:
    (A) Active duty members, all of whom are automatically enrolled in 
TRICARE Prime;
    (B) TRICARE Prime enrollees;
    (C) TRICARE Standard participants, who are all CHAMPUS eligible 
beneficiaries who are not enrolled in TRICARE Prime;
    (D) Non-CHAMPUS beneficiaries, who are beneficiaries eligible for 
health care services in military treatment facilities, but not eligible 
for CHAMPUS;
    (ii) Establishment of a triple option benefit. A second major 
feature of TRICARE is the establishment of three options for receiving 
health care:
    (A) ``TRICARE Prime,'' which is a health maintenance organization 
(HMO)-like program. It generally features use of military treatment 
facilities and substantially reduced out-of-pocket costs for CHAMPUS 
care. Beneficiaries generally agree to use military treatment 
facilities and designated civilian provider networks and to follow 
certain managed care rules and procedures.
    (B) ``TRICARE Extra,'' which is a preferred provider organization 
(PPO) program. It allows TRICARE Standard beneficiaries to use the 
TRICARE provider network, including both military facilities and the 
civilian network, with reduced out-of-pocket costs. These beneficiaries 
also continue to be eligible for military medical treatment facility 
care on a space-available basis.
    (C) ``TRICARE Standard'' which is the basic CHAMPUS program. All 
eligible beneficiaries are automatically included in Standard unless 
they have enrolled in Prime. It preserves broad freedom of choice of 
civilian providers, but does not offer reduced out-of-pocket costs. 
These beneficiaries continue to be eligible to receive care in military 
medical treatment facilities on a space available basis.
* * * * *
    (b) Triple option benefit in general. Where the TRICARE program is 
fully implemented, eligible beneficiaries are given the option of 
enrolling in TRICARE Prime (also referred to as ``Prime'') or remaining 
in TRICARE Standard (also referred to as ``Standard''). In the absence 
of an enrollment in Prime, coverage under Standard is automatic.
    (1) Choice voluntary. With the exception of active duty members, 
the choice of whether to enroll in Prime is voluntary for all eligible 
beneficiaries. For dependents who are minors, the choice will be 
exercised by a parent or guardian.
* * * * *
    (c) Eligibility for enrollment. Where the TRICARE program is fully 
implemented, all CHAMPUS-eligible beneficiaries who are not Medicare 
eligible on the basis of age are eligible to enroll in Prime or to 
remain covered under Standard. CHAMPUS beneficiaries who are eligible 
for Medicare on basis of age (and are enrolled in Medicare Part B) are 
automatically covered under TRICARE Standard. Further, some rules and 
procedures are different for dependents of active duty members and 
retirees, dependents, and survivors. In addition, where the TRICARE 
program is implemented, a military medical treatment facility commander 
or other authorized individual may establish priorities, consistent 
with paragraph (c) of this section, based on availability or other 
operational requirements, for when and whether to offer enrollment in 
Prime.
* * * * *
    (3) Retired members, dependents of retired members, and survivors.
    (i) Where TRICARE is fully implemented, all CHAMPUS-eligible 
retired members, dependents of retired members, and survivors who are 
not eligible for Medicare on the basis of age are eligible to enroll in 
Prime. After all active duty members are enrolled and availability of 
enrollment is assured for all active duty dependents wishing to

[[Page 32364]]

enroll, this category of beneficiaries will have third priority for 
enrollment.
    (ii) If all eligible retired members, dependents of retired 
members, and survivors within the area concerned cannot be accepted for 
enrollment in Prime at the same time, the MTF Commander (or other 
authorized individual) may allow enrollment within this beneficiary 
group category on a first come, first served basis.
    (4) Coverage under Standard. All CHAMPUS-eligible beneficiaries who 
do not enroll in Prime will remain in Standard.
* * * * *
    (m) * * *
    (1) * * *
    (ii) For Standard participants, TRICARE Extra cost sharing applies. 
The deductible is the same as standard CHAMPUS. Cost shares are as 
follows:
* * * * *
    (m) * * *
    (2) * * *
    (ii) For Standard participants, cost sharing is as specified for 
the basic CHAMPUS program.
* * * * *
    (m) * * *
    (3) * * *
    (ii) For Standard participants, cost sharing is as provided in 
military treatment facilities.
* * * * *
    (v) Administrative procedures. The Assistant Secretary of Defense 
(Health Affairs), the Director, TRICARE Management Activity, and MTF 
Commanders (or other authorized officials) are authorized to establish 
administrative requirements and procedures, consistent with this 
section, this part, and other applicable DoD Directives or 
Instructions, for the implementation and operation of the TRICARE 
program.

    Dated: May 22, 2003.
L.M. Bynum,
Alternate OSD Federal Register, Liaison Officer, Department of Defense.
[FR Doc. 03-13397 Filed 5-29-03; 8:45 am]
BILLING CODE 5001-08-M