[Federal Register Volume 68, Number 147 (Thursday, July 31, 2003)]
[Rules and Regulations]
[Pages 44878-44882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19452]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN 0720-AA79


TRICARE; Elimination of Nonavailability Statement and Referral 
Authorization Requirements and Elimination of Specialized Treatment 
Services Program

AGENCY: Office of the Secretary, DoD

ACTION: Interim final rule.

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SUMMARY: This rule implements Section 735 of the National Defense 
Authorization Act for Fiscal Year 2002 (NDAA-02) (Public Law 107-107). 
It also implements Section 728 of the National Defense Authorization 
Act for Fiscal Year 2001 (NDAA-01) (Public Law 106-398). Section 735 of 
NDAA-02

[[Page 44879]]

eliminates the requirement for TRICARE Standard beneficiaries who live 
within a 40-mile radius of a military medical treatment facility (MTF) 
to obtain a nonavailability statement (NAS) or preauthorization from an 
MTF before receiving inpatient care (other than mental health services) 
or maternity care from a civilian provider in order that TRICARE will 
cost-share for such services. Further, this section eliminates the NAS 
requirement for specialized treatment services (STSs) for TRICARE 
Standard beneficiaries who live outside the 200-mile radius of a 
designated STS facility. This rule portrays the Department's decision 
to eliminate the STS program entirely. Finally, Section 728 of NDAA-01 
requires that prior authorization before referral to a speciality care 
provider that is part of the contractor network be eliminated under any 
new TRICARE contract. The Department is publishing this rule as an 
interim final rule with comment period as an exception to our standard 
practice of soliciting public comments prior to issuance in order to 
implement the statutory requirements. Public comments, however, are 
invited and will be considered for possible revisions to this rule.

DATES: This rule is effective: December 28, 2003.
    Comment Date: Written comments will be accepted until September 29, 
2003.

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

FOR FURTHER INFORMATION CONTACT: Tariq Shahid, TRICARE Management 
Activity, telephone (303) 676-3801.

SUPPLEMENTARY INFORMATION:

I. Elimination of Nonavailability Statement Requirement and Specialized 
Treatment Service Program

    The National Defense Authorization Act for Fiscal Year 2002 (NDAA-
02) was signed into law on December 28, 2001. Section 735 of NDAA-02 
amends Section 721 of the NDAA-01 with respect to the nonavailability 
statement (NAS) elimination requirements and eliminates the requirement 
for non-enrolled TRICARE beneficiaries who live within a 40-mile radius 
of a military medical treatment facility (MTF) to obtain an NAS or 
preauthorization from an MTF before receiving nonemergent inpatient or 
obstetrical (inpatient or outpatient) services from a civilian provider 
in order that TRICARE will cost-share for such services. A non-enrolled 
TRICARE beneficiary is a beneficiary who has not enrolled in TRICARE 
Prime, but who has chosen to use the TRICARE Standard and TRICARE Extra 
options. Section 735 retains MTF NAS authority for inpatient mental 
health services within the usual 40-mile catchment area. The section 
establishes that the NAS elimination requirements are to take effect on 
the earlier of the date the health care services are provided under new 
TRICARE contracts or the date that is two years after the date of the 
enactment of NDAA-02. As the health care services under new TRICARE 
contracts will not be available until after March 2004, the NAS 
requirements will be eliminated for admissions occurring on or after 
December 28, 2003, which is the date that is two years after the date 
of enactment of NDAA-02. For obstetrical care, the NAS requirement will 
be eliminated for maternity episodes wherein the first prenatal visit 
occurs on or after December 28, 2003. An NAS is required when the first 
prenatal visit occurs before December 28, 2003, by 10 U.S.C. 1080(b). 
The NAS for inpatient mental health care will continue to be required.
    With the exception of maternity care, Section 735 of NDAA-02 gives 
the Secretary of DoD the authority to waive the NAS elimination 
requirements if: (a) Significant costs would be avoided by performing 
specific procedures at the affected military treatment facility (MTF); 
(b) a specific procedure must be provided at the affected MTF to ensure 
the proficiency levels of the practitioners at the facility; or (c) the 
lack of NAS data would significantly interfere with TRICARE contract 
administration. When this waiver authority will be exercised, the 
Department will notify the affected beneficiaries by publishing a 
notice in the Federal Register and notify the Congress.
    Section 735 of NDAA-02 furthermore eliminates the multi-regional 
and national NAS requirement for specialized treatment services (STSs) 
for TRICARE Standard beneficiaries who live outside the 200-mile radius 
of a STS facility STS facilities are those designated facilities with 
regional, multi-regional or national catchment areas which provide 
complex medical and surgical services as currently provided in 32 CFR 
199.4(a)(10). Since the Department has decided to terminate the STS 
program no later than June 1, 2003, all regional, multi-regional, and 
national NAS requirements for STSs will be eliminated before that date. 
The rationale behind the termination of the STS program is that this 
program was not based upon nationally developed consensus or evidenced-
based criteria for clinical quality (there were none at the inception 
of this program) and had not consistently demonstrated cost-benefit to 
the government. In addition, the NAS requirement for STSs has placed an 
unreasonable burden on our beneficiaries who have had to travel 
extended distances to the STS facilities. This would provide for 
enhanced continuity of care for TRICARE Standard beneficiaries who 
generally receive most medical and surgical services from civilian 
providers of their choice. This rule gives notice of the Department's 
decision to terminate the STS program entirely no later than June 1, 
2003.

II. Elimination of Prior Authorization Before Referrals to Specialty 
Care Providers

    This rule will implement Section 728 of the National Defense 
Authorization Act for Fiscal Year 2001 (NDAA-01) (Pub. L. 106-398) 
which was enacted on October 30, 2000. Section 728 requires that prior 
authorization (or more precisely, preauthorization as defined in 32 CFR 
199.2(b)) before referral to a specialty care provider that is part of 
the network be eliminated as part of any new TRICARE contracts entered 
into by the Department of Defense after the date of the enactment of 
the Act. This means that medical necessity preauthorization will not be 
required when primary care or specialty care providers refer TRICARE 
Prime patients for consultation appointment services, which are 
provided within the contractors' network of providers. Only TRICARE 
Prime patients require preauthorization for obtaining consultation 
appointment services. TRICARE Prime beneficiaries are required to use 
network providers if available. This rule removes the requirement to 
obtain a medical necessity determination when the consultation services 
are provided within the contractor's network. Section 728 of NDAA-01 
does not eliminate the requirement for medical necessity 
preauthorizations for specific procedures or other health care services 
which specialty providers may recommend for beneficiaries as a result 
of the original consultation appointment or the need for 
preauthorization referral to non-network providers. For example, a 
consultation might result in a recommendation for a high cost surgical 
procedure on a nonemergent basis. The specialist's intent to perform 
this procedure may still be subjected to medical necessity 
preauthorization based upon utilization review criteria as

[[Page 44880]]

has been TRICARE policy for years in conformance with the peer review 
organization program in section 199.15.
    In summary, under new TRICARE contracts, requests for consultation 
appointment services will not be subjected to medical necessity 
preauthorization though other health care services may continue to 
require preauthorization. TRICARE contractors may determine which other 
categories of health care services (procedures, nonemergent admissions) 
will require medical necessity preauthorization in accordance with 
their best business practices.

Regulatory Procedure

    Executive Order 12866 requires certain regulatory assessments for 
any significant regulatory action, defined as one which would result in 
an annual effect on the economy of $100 million or more, or have other 
substantial impacts. The Regulatory Flexibility Act (RFA) requires that 
each Federal agency prepare, and make available for public comment, a 
regulatory flexibility analysis when the agency issues a regulation 
which would have significant impact on a substantial number of small 
entities.
    This rule is not a significant regulatory action under E.O. 12866 
that could potentially add more than $100 million in estimated annual 
costs for DoD. This rule does not require a regulatory flexibility 
analysis as the policy action was taken by Congress and the rule merely 
puts it into effect. The policy of the Regulatory Flexibility Act that 
agencies adequately evaluate all potential options for an action does 
not apply when Congress has already dictated the action.
    This rule will not impose significant additional information 
collection requirements on the public under the Paperwork Reduction Act 
of 1995 (44 U.S.C. 3501-3511).
    This rule is being issued as an interim final rule, with comment 
period, as an exception to our standard practice of soliciting public 
comments prior to issuance. This is because there is no discretion 
being exercised. The NDAA-02 (Pub. L. 107-107) mandated elimination of 
the NAS for maternity care entirely, and for inpatient care unless it 
met very restrictive criteria, and there is no discretion on the 
effective data. The Assistant Secretary of Defense (Health Affairs) has 
determined that following the standard practice in this case would be 
unnecessary, impractical, and contrary to the public interest.
    Public comments are invited. All comments will be carefully 
considered. A discussion of the major issues received by public 
comments will be included with the issuance of the final rule.

List of Subjects in 32 CFR Part 199

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

0
Accordingly, 32 CFR part 199 is amended 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 
``Preauthorization,'' by removing the definition for ``Specialized 
Treatment Service Facility,'' and by adding the definitions for 
``Consultation appointment'' and ``Medically or psychologically 
necessary preauthorization'' and placing them in alphabetical order to 
read as follows:


Sec.  199.2  Definitions.

* * * * *
    (b) * * *
* * * * *
    Consultation appointment. An appointment for evaluation of medical 
symptoms resulting in a plan for management which may include elements 
of further evaluation, treatment and follow-up evaluation. Such an 
appointment does not include surgical intervention or other invasive 
diagnostic or therapeutic procedures beyond the level of very simply 
office procedures, or basic laboratory work but rather provides the 
beneficiary with an authoritative opinion.
* * * * *
    Medically or psychologically necessary preauthorization: A pre (or 
prior) authorization for payment for medical/surgical or psychological 
services based upon criteria that are generally accepted by qualified 
professionals to be reasonable for diagnosis and treatment of an 
illness, injury, pregnancy, and mental disorder.
* * * * *
    Preauthorization. A decision issued in writing, or electronically 
by the Director, TRICARE Management Activity, or a designee, that 
TRICARE benefits are payable for certain services that a beneficiary 
has not yet received. The term prior authorization is commonly 
substituted for preauthorization and has the same meaning.
* * * * *

0
3. Section 199.4 is amended by revising paragraphs (a)(9) and 
(a)(9)(i)(B), by removing paragraph (a)(9)(i)(C), by revising paragraph 
(a)(9)(iv). by adding a new paragraph (a)(9)(vii), by removing and 
reserving paragraph (a)(10), and by revising paragraphs (e)(16)(i) and 
(e)(16)(ii) to read as follows:


Sec.  199.4  Basic program benefits.

    (a) * * *
    (9) Nonavailability Statements within a 40-mile catchment area. In 
some geographic locations, it is necessary for CHAMPUS beneficiaries 
not enrolled in TRICARE Prime to determine whether the required 
inpatient mental health care can be provided through a Uniformed 
Service facility. If the required care cannot be provided, the hospital 
commander, or a designee, will issue a Nonavailability Statement (NAS) 
(DD Form 1251). Except for emergencies, as NAS should be issued before 
inpatient mental health care is obtained from a civilian source. 
Failure to secure such a statement may waive the beneficiary's rights 
to benefits under CHAMPUS/TRICARE.
    (i) * * *
    (B) For CHAMPUS beneficiaries who are not enrolled in TRICARE 
Prime, an NAS is required for services in connection with nonemergency 
hospital inpatient mental health care if such services are available at 
a military treatment facility (MTF) located within a 40-mile radius of 
the residence of the beneficiary, except that a NAS is not required for 
services otherwise available at an MTF located within a 40-mile radius 
of the beneficiary's residence when another insurance plan or program 
provides the beneficiary's primary coverage for the services. This 
requirement for an NAS does not apply to beneficiaries enrolled in 
TRICARE Prime, even when those beneficiaries use the point-of-service 
option under Sec.  199.17(n)(3).
* * * * *
    (iv) Nonavailability Statement (DD Form 1251) must be filed with 
applicable claim. When a claim is submitted for TRICARE benefits that 
includes services for which an NAS was issued, a valid NAS 
authorization must be on the DoD required system.
* * * * *
    (vii) With the exception of maternity services, the Assistant 
Secretary of Defense for Health Affairs (ASD(HA)) may require an NAS 
prior to TRICARE cost-sharing for additional services from civilian 
sources if such services are to be provided to a beneficiary who lives 
within a 40-mile catchment area of an

[[Page 44881]]

MTF where such services are available and the ASD(HA):
    (A) Demonstrates that significant costs would be avoided by 
performing specific procedures at the affected MTF or MTFs; or
    (B) Determines that a specific procedure must be provided at the 
affected MTF or MTFs to ensure the proficiency levels of the 
practitioners at the MTF or MTFs; or
    (C) Determines that the lack of NAS data would significantly 
interfere with TRICARE contract administration; and
    (D) Provides notification of the ASD(HA)'s intent to require an NAS 
under this authority to covered beneficiaries who receive care at the 
MTF or MTFs that will be affected by the decision to require an NAS 
under this authority; and
    (E) Provides at least 60-day notification to the Committees on 
Armed Services of the House of Representatives and the Senate of the 
ASD(HA)'s intent to require an NAS under this authority, the reason for 
the NAS requirement, and the date that an NAS will be required.
    (10) [Reserved].
* * * * *
    (e) * * *
    (16) * * *
    (i) Benefit. The CHAMPUS Basic Program may share the cost of 
medically necessary services and supplies associated with maternity 
care which are not otherwise excluded by this part.
    (ii) Cost-share. Maternity care cost-share shall be determined as 
follows:
* * * * *

0
4. Section 199.7 is amended by revising paragraph (a)(7)(i) to read as 
follows:


Sec.  199.7  Claims Submission, Review, and Payment

    (a) * * *
    (7) * * *
    (i) Rules applicable to issuance of Nonavailability Statement. The 
ASD(HA) may issue a DoD Instruction to prescribe rules for the issuance 
of Nonavailability Statement.
* * * * *

0
5. Section 199.15 is amended by revising paragraph (b)(4)(i) and by 
adding a new paragraph (b)(4)(ii)(D) to read as follows:


Sec.  199.15  Quality and Utilization Review Peer Review Organization 
Program

* * * * *
    (b) * * *
    (4) * * *
    (i) In general. all health care services for which payment is 
sought under TRICARE are subject to review for appropriateness of 
utilization as determined by the Director, TRICARE Management Activity, 
or a designee.
    (A) The procedures for this review may be prospective (before the 
care is provided), concurrent (while the care is in process), or 
retrospective (after the care has been provided). Regardless of the 
procedures of this utilization review, the same generally accepted 
standards, norms and criteria for evaluating the medical necessity, 
appropriateness and reasonableness of the care involved shall apply. 
The Director, TRICARE Management Activity, or a designee, shall 
establish procedures for conducting reviews, including types of health 
care services for which preauthorization or concurrent review shall be 
required. Preauthorization or concurrent review may be required for 
categories of health care services. Except where required by law, the 
categories of health care services for which preauthorization or 
concurrent review is required may vary in different geographical 
locations or for different types of providers.
    (B) For healthcare services provided under TRICARE contracts 
entered into by the Department of Defense after October 30, 2000, 
medical necessity preauthorization will not be required for referrals 
for specialty consultation appointment services required by primary 
care providers or specialty providers when referring TRICARE Prime 
beneficiaries for specialty consultation appointment services within 
the TRICARE contractor's network. However, the lack of medical 
necessity preauthorization requirements for consultative appointment 
services does not mean that non-emergent admissions or invasive 
diagnostic or therapeutic procedures which in and of themselves 
constitute categories of health care services related to, but beyond 
the level of the consultation appointment service, are also not subject 
to medical necessity prior authorization. In fact many such health care 
services may continue to require medical necessity prior authorization 
as determined by the Director, TRICARE Management Activity, or a 
designee. TRICARE Prime beneficiaries are also required to obtain 
preauthorization before seeking health care services from a non-network 
provider.
    (ii) * * *
    (D) For healthcare services provided under TRICARE contracts 
entered into by the Department of Defense after October 30, 2000, 
medical necessity preauthorization for specialty consultation 
appointment services within the TRICARE contractor's network will not 
be required. However TRICARE contractors shall determine, based upon 
best-business practice, utility and cost-savings, the categories of 
other health care services which are best served by medical necessity 
prior (or pre) authorization and may request a waiver from the 
Director, TRICARE Management Activity, or designee, from compliance 
with previously established requirements for medical necessity prior 
(or pre) authorization.
* * * * *

0
6. Section 199.17 is amended by revising paragraph (n)(2)(ii) to read 
as follows:


Sec.  199.17  TRICARE Program

* * * * *
    (n) * * *
    (2) * * * (ii) For any necessary specialty care and nonemergent 
inpatient care, the primary care manager or the Health Care Finder will 
assist in making an appropriate referral.
    (A) For healthcare services provided under managed care support 
contracts entered into by the Department of Defense before October 30, 
2000, all such nonemergency specialty care and inpatient care must be 
preauthorized by the primary care manager or the Health Care Finder.
    (B) For healthcare services provided under TRICARE contracts 
entered into by the Department of Defense on or after October 30, 2000, 
referral requests (consultation requests) for specialty care 
consultation appointment services for TRICARE Prime beneficiaries must 
be submitted by primary care managers. Such referrals will be 
authorized by Health Care Finders (authorizations numbers will be 
assigned so as to facilitate claims processing) but medical necessity 
preauthorization will not be required by referral consultation 
appointment services within the TRICARE contractor's network. Some 
health care services subsequent to consultation appointments (invasive 
procedures, nonemergent admissions and other health care services as 
determined by the Director, TRICARE Management Activity, or a designee) 
will require medical necessity preauthorization. Though referrals for 
specialty care are generally the responsibility of the primary care 
managers, subject to discretion exercised by the regional Lead Agents, 
and established in regional policy or memoranda of understanding, 
specialist providers may be permitted to refer patients for additional 
specialty consultation appointment services within the TRICARE 
contractor's network without prior authorization by primary care 
managers or subject to medical necessity preauthorization.
* * * * *


[[Page 44882]]


    Dated: July 24, 2003.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 03-19452 Filed 7-30-03; 8:45 am]
BILLING CODE 5001-08-M