[Federal Register Volume 69, Number 144 (Wednesday, July 28, 2004)]
[Rules and Regulations]
[Pages 44942-44952]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16932]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN 0720-AA78


TRICARE; Individual Case Management Program; Program for Persons 
With Disabilities; Extended Benefits for Disabled Family Members of 
Active Duty Service Members; Custodial Care

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: The Department is publishing this final rule to implement 
requirements enacted by Congress in section 701(g) of the National 
Defense Authorization Act for Fiscal Year 2002 (NDAA-02), which 
terminates the Individual Case Management Program. The Department 
withdraws its proposed rule published at 66 FR 39699 on August 1, 2001, 
regarding the Individual Case Management Program. This rule also 
implements section 701(b) of the NDAA-02 which provides additional 
benefits for certain eligible active duty dependents by amending the 
TRICARE regulations governing the Program for Persons with 
Disabilities. The Program for Persons with Disabilities is now called 
the Extended Care Health Option. Other administrative amendments are 
included to clarify specific policies that relate to the Extended Care 
Health Option, custodial care, and to update related definitions.

DATES: Termination of the Individual Case Management Program (Sec.  
199.4(i)) became effective December 28, 2001. The remainder of this 
rule is effective July 1, 2004.

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

FOR FURTHER INFORMATION CONTACT: Michael Kottyan, Medical Benefits and 
Reimbursement Systems, TRICARE Management Activity, telephone (303) 
676-3520. Questions regarding payment of specific claims should be 
addressed to the appropriate TRICARE contractor.

SUPPLEMENTARY INFORMATION:

I. Background

    The Individual Case Management Program (ICMP). Under the provisions 
of section 704(3) of the NDAA-93 [Pub. L. 102-484], 10 U.S.C. 
1079(a)(17) was enacted which allowed the DoD to establish the ICMP, 
also known as the Individual Case Management Program for Persons with 
Extraordinary Conditions (ICMP-PEC). This allowed a reasonable 
deviation from the restrictive statutory coverage of health services 
for patients who had exceptionally serious, long-range, costly and 
incapacitating conditions. The ICMP was officially implemented in March 
1999 as a waiver program that provided coverage for care and services 
that were normally restricted from coverage under the Basic Program. 
Specifically, when a beneficiary was determined to meet the TRICARE 
definition of custodial care, coverage under the Basic Program was 
limited to one hour of skilled nursing care per day, twelve physician 
visits per year related to the custodial condition, durable medical 
equipment and prescription medications. The Department recognized that 
the exclusion of coverage when a family member is deemed to be a 
custodial care patient is both a financial and emotional burden. 
Consequently, the Department used the ICMP/ICMP-PEC authority to cover 
medically necessary care and to

[[Page 44943]]

enable TRICARE case managers to maximize available resources for these 
beneficiaries.
    Repeal of the ICMP. Section 701(g) of the NDAA-02 repealed 10 
U.S.C. 1079(a)(17), the statutory authority for the ICMP. However, 
section 701(d) allows the Department to continue to provide payment for 
home health care or custodial care services not otherwise authorized 
under the Basic Program as if the ICMP were still in effect. Payment 
may occur when a determination is made that discontinuation of payment 
would result in the provision of services inadequate to meet the needs 
of the eligible beneficiary and would be unjust to the beneficiary. 
Eligible beneficiaries are defined in section 701(d)(3) as covered 
beneficiaries who were regarded as custodial care patients under the 
ICMP/ICMP-PEC and received medically necessary skilled services for 
which the Secretary provided payment before December 28, 2001.
    Custodial Care. Section 701(c) of the NDAA-02 provides a statutory 
definition of custodial care that is more consistent with other federal 
programs. The change also results in the narrowing of the statutory 
exclusions of custodial care that has the effect of eliminating current 
program restrictions on paying for certain medically necessary care.


    Note: The statutory definition of custodial care under section 
701(c) began on December 28, 2001, the effective date of the NDAA-
02. Public notice of the substitution of the new statutory 
definition of the former custodial care definition in 32 CFR 199.2 
was published in the Federal Register at 67 FR 40597 on June 13, 
2002.


    Program for Persons with Disabilities (PFPWD). This program is now 
renamed the Extended Health Care Option (ECHO). The PFPWD was 
established by Congress in 1966 and was originally called the Program 
for the Handicapped (PFTH). The name was changed to PFPWD in 1997 to 
reflect the national shift away from the label of handicapped and in an 
effort to be more sensitive to our beneficiaries with special needs. 
The program was established to provide financial assistance for active 
duty family members who are moderately or severely mentally retarded or 
have a serious physical disability. The purpose of the program was to 
help defray the cost of services not available either through the Basic 
Program or through other public agencies as a result of state residency 
requirements. Section 701(b) of the NDAA-02 strikes 10 U.S.C. 1079(d), 
(e), and (f), which were the statutory authority for the PFPWD, and re-
authorizes the program with new sub-sections (d), (e), and (f). These 
new sub-sections add an extraordinary physical or psychological 
condition as a qualifying condition and limits the requirement to use 
public facilities to the extent that they are available and adequate to 
certain benefits under sub-section (e). They also include discretion to 
increase the monthly Government cost-share for allowable services from 
a maximum of $1,000 per month and expand the benefit to allow for 
coverage of ECHO home health care and services beyond the Basic 
program. Section 701(e) also includes the discretion to allow coverage 
for custodial care and respite care.

II. The Extended Care Health Option (ECHO)

    Purpose. The primary purpose of the ECHO is to provide extended 
benefits to eligible beneficiaries that assist in the reduction of the 
disabling effects of an ECHO qualifying condition and that are not 
available through the Basic Program. Under 10 U.S.C. 1079(e), ECHO 
benefits may be provided only to the extent such service, supply or 
equipment is not a covered benefit under the Basic Program. This may 
include comprehensive health care services, including services 
necessary to maintain, minimize or prevent deterioration of, function 
of an eligible beneficiary.
    Eligibility. Participation in the ECHO is voluntary and is 
available only for TRICARE-eligible family members of active duty 
service members who have a qualifying condition. Qualifying conditions 
are limited under 10 U.S.C. 1079(d)(3)(B) to beneficiaries who have
    (a) Moderate or severe mental retardation; or
    (b) A serious physical disability, as defined in 32 CFR 199.2; or
    (c) An extraordinary physical or psychological condition, as 
defined in 32 CFR 199.2.
    ECHO Benefits. ECHO benefits established herein include diagnostic 
procedures to establish a qualifying condition, inpatient, outpatient, 
and comprehensive home health care supplies and services, training, 
habilitative or rehabilitative services, special education, assistive 
technology devices, institutional care within a State when a 
residential environment is required, transportation under certain 
circumstances, certain other services such as assistive services of a 
qualified interpreter or translator for deaf or blind beneficiaries in 
conjunction with receipt of other allowed ECHO benefits, equipment 
adaptation and maintenance, and respite care, and ECHO home health 
care.
    ECHO Respite Care. Under 10 U.S.C. 1079(e)(6), the Department may 
provide respite care under the ECHO program. Respite care is defined in 
32 CFR 199.2 as short term care for a patient in order to provide rest 
and change for those who have been caring for the patient at home, 
usually the patient's family. DoD recognizes that caring for a special 
needs beneficiary poses special challenges, especially for active duty 
families. This rule establishes an ECHO benefit to provide a maximum of 
16 hours per month of respite care. The respite care benefit is 
available for ECHO beneficiaries in any month during which the 
beneficiary receives ECHO benefits other than respite care under the 
ECHO Home Health Care benefit. Respite care services will be provided 
by a TRICARE-authorized home health agency and will provide health care 
services for the covered beneficiary, and not baby-sitting or child-
care services for other members of the family. The benefit is not 
cumulative, that is, any respite care hours not used in one-month will 
not be carried over or banked for a subsequent month(s). The 
Government's cost-share incurred for the ECHO respite care services 
accrue to the ECHO maximum monthly benefit of $2,500.
    Government Cost-share Liability for ECHO. The Government's monthly 
cost-share of all benefits provided to a beneficiary in a particular 
month under the PFPWD was statutorily limited to $1,000 by 10 U.S.C. 
1079(e)(2). The Government's monthly cost-share of any benefits 
provided under ECHO is now statutorily limited to $2,500 by section 
701(b) of the NDAA-02 (10 U.S.C. 1079(f)(2)(A)) for benefits related to 
training, rehabilitation, special education, assistive technology 
devices, and institutional care in private, non-profit, public, and 
state institutions and facilities, and if appropriate, transportation 
to and from such institutions and facilities. Because the NDAA-02 
provided no statutory limitation concerning the amount of the 
Government's monthly cost-share for all other benefits under ECHO, the 
Department has discretion to determine the maximum monthly Government 
cost-share. Therefore, this rule increases the monthly Government cost-
share from $1,000 to $2,500 for all benefits under ECHO, except for the 
new ECHO Home Health Care (EHHC) benefit as established herein. The 
primary reason for this increase is that the maximum government cost-
share has not been adjusted since 1980. We will continue to review this 
issue to insure that the

[[Page 44944]]

government's cost-share reasonably meets the needs of beneficiaries.
    ECHO Home Health Care (EHHC). Under 10 U.S.C. 1079(e), extended 
benefits may be provided to eligible beneficiaries to the extent such 
benefits are not provided under provisions of chapter 55, title 10, 
United States Code, other than under this section. Under 10 U.S.C. 
1079(e)(2), the ECHO may include ``comprehensive home health care 
supplies and services which may include cost effective and medically 
appropriate services other than part-time or intermittent services 
(within the meaning of such terms as used in the second sentence of 
section 1861(m) of the Social Security Act).'' Section 701(a) of the 
NDAA-02 requires home health care services under the Basic Program be 
provided in the manner and under the conditions described in section 
1861(m) of the Social Security Act. Therefore, this rule establishes an 
ECHO Home Health Care (EHHC) benefit for qualifying beneficiaries.
    EHHC Eligibility. To qualify for EHHC, the beneficiary must meet 
all general ECHO program eligibility requirements and must
    (a) Physically reside within the 50 United States, the District of 
Columbia, Puerto Rico, the Virgin Islands, or Guam; and
    (b) Be homebound, as defined in Sec.  199.2 and as modified in this 
rule; and
    (c) Require medically necessary skilled services that exceed the 
maximum level of coverage provided under the Basic Program's home 
health care benefit, or
    (d) Require frequent interventions, other than skilled medical 
services, by the primary caregiver(s) (as ``primary caregiver'' is 
defined in Sec.  199.2) such that EHHC services are necessary to allow 
primary caregiver(s) the opportunity to rest; and
    (e) Be case managed (as ``case management'' is defined in Sec.  
199.2), including a periodic assessment of needs, and receive services 
as outlined in a written plan of care; and
    (f) Receive home health care services from a TRICARE-authorized 
home health agency as described in Sec.  199.6(b)(4)(xv).
    EHHC Benefit. Covered TRICARE-authorized home health agency 
services are the same as, and provided under the same conditions as, 
those services provided under the TRICARE Basic Program under Sec.  
199.4(e)(21), with the exception that the EHHC benefit is not limited 
to part-time or intermittent home health care. Therefore, this rule 
sets out that TRICARE beneficiaries who are eligible for the ECHO and 
require home health care services beyond the coverage limits under the 
Basic Program will receive all home health care services under EHHC and 
no portion will be provided under the Basic Program.
    EHHC Plan of Care. The level of ECHO home health care services 
authorized will be based on a written plan of care that supports the 
medical necessity of those services in excess of what can be authorized 
by the Basic Program, or, in the case of a beneficiary who requires 
frequent interventions, the need for EHHC in order to allow the primary 
caregiver(s) the opportunity to rest. The plan of care must include 
identification of the professional qualifications or skill level of the 
person required to provide the care. Reasonable justification for the 
medical necessity of the level of provider must be included in the plan 
of care, otherwise, reimbursement will not be authorized for that level 
of provider.
    EHHC Respite Care. This rule establishes respite care within the 
EHHC benefit specifically tailored for families with a beneficiary who 
has a medical condition(s) that requires frequent interventions by the 
primary caregiver. For the purpose of this respite care, the term 
``frequent'' means ``more than two interventions during the eight-hour 
per day period that the primary caregiver would normally be sleeping.'' 
The service performed during the interventions may have been taught to 
the primary caregiver by a medical professional, but the services 
performed by the primary caregiver are such that they can be performed 
safely and effectively by the average non-medical person without direct 
supervision of a licensed nurse or other health care provider. 
Therefore, when an eligible beneficiary's care plan reflects a need for 
frequent interventions by the primary caregiver, the beneficiary is 
eligible for EHHC respite care services in lieu of the ECHO respite 
care benefit. EHHC beneficiaries in this situation are eligible for 
eight hours per day for five (5) days per week of respite care by a 
TRICARE-authorized home health agency. The home health agency will 
provide health care services for the covered beneficiary so that the 
primary caregiver is relieved of his/her responsibility for providing 
such care for the duration of that period of respite care in order that 
the primary caregiver(s) may rest. The TRICARE-authorized home health 
agency will not provide baby-sitting or child care services for other 
members of the family. The benefit is not cumulative, that is, respite 
care hours not used in a given day will not be carried over or banked 
for use on another occasion. Also, EHHC respite care periods will not 
be provided consecutively, that is, a respite care period on one day 
will not be immediately followed by an EHHC respite care period the 
next day, thus prohibiting a continuous sixteen hour period of respite 
care. The government's cost-share incurred for these services accrue to 
the fiscal year maximum ECHO Home Health Care benefit.
    Government Cost-share Liability for EHHC. TRICARE-authorized home 
health agencies who provide services under the Basic Program are 
reimbursed under Sec.  199.14(h) using the same methods and rates as 
used under the Medicare home health agency prospective payment system 
under section 1895 of the Social Security Act (42 U.S.C. 1385fff) and 
42 CFR part 484, subpart E, except for children under age ten and 
except as otherwise necessary to recognize distinct characteristics of 
TRICARE beneficiaries and as described in instructions issued by the 
Director, TRICARE Management Activity. However, the Medicare home 
health agency prospective payment system is designed to reimburse 
providers who provide part-time or intermittent services; it is not 
designed to reimburse providers for services that exceed those limits. 
Therefore, this rule set outs that the Department will reimburse home 
health agencies the allowable charges or negotiated rates. The maximum 
annual fiscal year cap for EHHC services is what the highest locally 
wage-adjusted maximum Medicare Resource Utilization Grouping (RUG-III) 
category cost to the Department would be if such services were provided 
in a TRICARE-authorized skilled nursing facility. (See Federal Register 
67 FR 40597, June 13, 2002, concerning the TRICARE Sub-Acute Care 
Program; Uniform Skilled Nursing Facility Benefit; Home Health Care 
Benefit; Adopting Medicare Payment Methods for Skilled Nursing 
Facilities and Home Health Care Providers). Because the highest RUG-III 
category is used to determine the EHHC fiscal year cap, the Department 
will not attempt to determine what RUG-III category would apply to the 
beneficiary if such beneficiary were in fact admitted for care into a 
TRICARE-authorized skilled nursing facility. The fiscal year cap will 
be recalculated each year following publication of the ``Medicare 
Program; Prospective Payment System and Consolidated Billing for 
Skilled Nursing Facilities--Update; Notice'', or similar, by the 
Centers for Medicare and Medicaid Services in the Federal Register.
    The maximum monthly Government cost-share to be paid to the home 
health agency for ECHO home health care will

[[Page 44945]]

be the allowable charges or negotiated rates, but in no case will such 
payment exceed one-twelfth of the fiscal year cap calculated as above.
    When EHHC beneficiaries move within the 50 United States, the 
District of Columbia, Puerto Rico, the Virgin Islands, or Guam, the 
annual fiscal year cap will be recalculated as above to reflect the 
correct wage-adjusted maximum RUG-III category cost for the 
beneficiary's new location and will apply for the remaining portion of 
that fiscal year.
    EHHC Reimbursement. A TRICARE-authorized home health agency must 
bill for all authorized ECHO home health care services through 
established TRICARE claims mechanisms. No special billing arrangements 
will be authorized in coordination with coverage that may be provided 
by Medicaid (subject to any State Agency Billing Agreements), or other 
Federal, State, community or private programs.
    For authorized ECHO home health care and respite care, TRICARE will 
reimburse the allowable charges or negotiated rates.
    Beneficiary Cost-share Liability for ECHO, including EHHC. Under 10 
U.S.C. 1079(f), members are required to share in the cost of any 
benefits provided to their dependents under ECHO. ECHO benefits are not 
subject to a deductible amount. Regardless of the number of ECHO 
eligible family members, the sponsor's monthly cost-share for allowed 
ECHO benefits is based upon the rank of the uniformed service member. 
Under 10 U.S.C. 1079(f)(1)(A), members with a rank of E-1 are required 
to pay the first $25 incurred per month, and members with a rank of O-
10 are required to pay the first $250 incurred per month. This rules 
sets out the cost-share for members with ranks in-between such that the 
majority will pay less than $100 per month, with the most senior 
enlisted member paying less than $50 per month.
    Sponsor rank-based cost-sharing (refer to Table 1, 32 CFR 199.5) 
applies to benefits covered by the ECHO and these cost-shares do not 
apply toward the Basic Program's catastrophic cap under 10 U.S.C. 
1079(b)(5). Also, the waiver of cost-shares for active duty family 
members enrolled in TRICARE Prime does not apply to ECHO as the 
statutory basis for the ECHO program and its cost-shares is separate 
and distinct from the Basic Program, including TRICARE Prime.
    Other Requirements. Other ECHO requirements are as follows:
    Registration. Sec 701(b) of the NDAA-02 (10 U.S.C. 1079(d)(1)) 
requires registration to receive ECHO benefits. Sponsors of potentially 
qualifying beneficiaries will seek to register their family member(s) 
for ECHO benefits through the applicable Managed Care Support 
Contractor (MCSC). The MCSC will determine eligibility and update the 
Defense Enrollment Eligibility Reporting System (DEERS) to reflect the 
beneficiary's ECHO eligibility. No ECHO benefits may be authorized 
unless the beneficiary is registered in DEERS as ECHO-eligible.
    EFMP Enrollment. Each of the Military Services has its own 
Exceptional Family Member Program (EFMP). Although the EFMPs can 
interface with the Military Health System, they are actually military 
personnel programs. The purpose of those programs is to require 
military personnel offices to evaluate the ability of a military and 
civilian community to provide appropriate medical and/or educational 
services to service members' dependents who have special medical or 
educational needs before the Service re-assigns the member to a new 
location. Although each Service requires its members who have family 
members with special needs to enroll in the EFMP, some members do not 
comply with this requirement. The result is that some members arrive at 
assignment locations that are unable to accommodate the special medical 
and/or educational needs of their dependent(s). Dependents of members 
required to be enrolled in EFMP are similar if not identical to those 
who qualify for the ECHO program. The Services do not routinely provide 
EFMP enrollments to TRICARE, therefore, to provide a greater degree of 
coordination of services for TRICARE beneficiaries, this rules sets out 
that members will be required to provide evidence they are enrolled in 
their Services' Exceptional Family Member Program when registering for 
ECHO benefits. This requirement will enhance the probability that 
personnel are assigned to locations where there are sufficient 
qualified individual or institutional providers to provide the ECHO 
benefit to their dependents.
    Use of Public Facilities. For ECHO benefits related to training, 
rehabilitation, special education, assistive technology devices, and 
institutional care in private, non-profit, public, and state 
institutions and facilities, and if appropriate, transportation to and 
from such institutions and facilitates, the statute expressly requires 
use of public facilities to be the extent such facilities are available 
and adequate as determined under this regulation.

III. Public Comments

    We provided a 60-day public comment period following publication of 
the Proposed Rule in the Federal Register at 68 FR 46526 on August 6, 
2003. Two individuals provided several comments, summarized below.
    Comment: The first commentor questioned the Department's decision 
regarding where the ECHO, in particular ECHO Home Health Care and 
respite care, will be available.
    Response: The ECHO will generally be available wherever there are 
TRICARE beneficiaries eligible for the ECHO and appropriate TRICARE-
authorized providers.
    The focus of the ECHO Home Health Care benefit is to provide ECHO 
beneficiaries with the same benefit structure as provided by the Basic 
Program's Home Health Agency Prospective Payment System (HHA-PPS) but 
without its limitation that the services be provided on a ``part-time 
or intermittent'' basis. In order to assure the quality of care for 
TRICARE beneficiaries, the HHA-PPS provides that only Medicare-
authorized Home Health Agencies are eligible for designation as 
TRICARE-authorized providers. Likewise, the Department also elected to 
utilize those same home health agencies to provide the ECHO respite 
care. Consequently, ECHO respite care and the ECHO Home Health Care 
benefits are limited to locations where there are Medicare-authorized 
home health agencies. Currently that is limited to the 50 United 
States, the District of Columbia, Puerto Rico, the Virgin Islands, and 
Guam.
    Comment: That commentor also remarked about the cost of 
transportation to receive ECHO-authorized benefits.
    Response: This rule sets out that costs for public and private 
transportation necessary to receive authorized ECHO benefits will be 
reimbursed subject to the limits herein.
    Comment: The second commentor requested the Department provide the 
ECHO respite care benefit to multiple TRICARE beneficiaries within 
group settings, such as a day care center, and prorate the allowable 
cost among those receiving the respite care.
    Response: The Department has identified several issues regarding 
the comment. First, other than when allowed by specific exceptions to 
its policies, TRICARE professional outpatient benefits are provided 
one-on-one, that is, one patient with one provider per episode of care. 
Consequently, there is no general provision for ``group'' type 
episodes-of-care or settings.

[[Page 44946]]

    Second, the regulatory language at 32 CFR 199.2 defines respite 
care as `` * * * short-term care for a patient in order to provide rest 
and change for those who have been caring for the patient at home, 
usually the patient's family.'' Although there is no statutory 
restriction on where respite care services are provided, it is the 
Department's decision that such care be provided in the beneficiary's 
primary residence.
    Last, as set out in this rule, both the ECHO respite care and the 
ECHO Home Health Care respite care benefits will be provided by 
TRICARE-authorized home health agencies. These providers will be 
reimbursed on the basis of allowable charges or negotiated rates, 
neither of which provides pro-rated assignment of TRICARE benefits nor 
pro-rated payments based on multiple TRICARE beneficiaries receiving 
care in a group setting.

IV. Summary of Regulatory Modifications

    The following modifications were made as a result of developing the 
implementing instructions:
    (1) We clarified that TRICARE reimbursement for ECHO home health 
care and respite care will be the allowable charges or negotiated 
rates.

V. Regulatory Procedures

Executive Order (EO) 12866

    Executive Order 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 
which would have a significant impact on a substantial number of small 
entities. This rule is not an economically significant regulatory 
action and will not have a significant impact on a substantial number 
of small entities for purposes of the RFA. This rule, although not 
economically significant under Executive Order 12866, is a significant 
rule under Executive order 12866 and has been reviewed by the Office of 
Management and Budget.

Paperwork Reduction Act

    This rule will not impose additional information collection 
requirements on the public under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501-3511). Existing DoD information systems to include the 
Defense Enrollment Eligibility Reporting System (DEERS) will be 
upgraded to reflect ECHO registration.

List of Subjects in 32 CFR part 199

    Case management, Claims, Custodial care, Health insurance, 
Individuals with disabilities, Military personnel.


0
For the reasons set out in the preamble, the Department of Defense 
amends 32 CFR part 199 as follows:

PART 199--[AMENDED]

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

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

0
2. Section 199.2 is amended in paragraph (b) by removing the 
definitions of ``Program for Persons with Disabilities (PFPWD)'' and 
``Extraordinary condition'', by revising paragraph (v) of the 
definition of ``Double coverage plan'', by revising the definitions of 
``Durable equipment'', ``Homebound'', and ``Primary caregiver'', and by 
adding the definitions of ``Duplicate equipment'', ``Extended Care 
Health Option (ECHO)'', and ``Extraordinary physical or psychological 
condition'' in alphabetical order to read as follows:


Sec.  . 199.2  Definitions.

* * * * *
    (b) * * *
    Double coverage plan. * * *
    (v) Part C of the Individuals with Disabilities Education Act for 
services and items provided in accordance with Part C of the IDEA that 
are medically or psychologically necessary in accordance with the 
Individual Family Service Plan and that are otherwise allowable under 
the CHAMPUS Basic Program or the Extended Care Health Option (ECHO).
* * * * *
    Duplicate equipment. An item of durable equipment or durable 
medical equipment, as defined in this section that serves the same 
purpose that is served by an item of durable equipment or durable 
medical equipment previously cost-shared by TRICARE. For example, 
various models of stationary oxygen concentrators with no essential 
functional differences are considered duplicate equipment, whereas 
stationary and portable oxygen concentrators are not considered 
duplicates of each other because the latter is intended to provide the 
user with mobility not afforded by the former. Also, a manual 
wheelchair and an electric wheelchair, both of which otherwise meet the 
definition of durable equipment or durable medical equipment, would not 
be considered duplicates of each other if each is found to provide an 
appropriate level of mobility. For the purpose of this part, durable 
equipment or durable medical equipment that are essential to provide a 
fail-safe in-home life support system or that replaces in like kind an 
item of equipment that is not serviceable due to normal wear, 
accidental damage, a change in the beneficiary's condition, or has been 
declared adulterated by the U.S. FDA, or is being or has been recalled 
by the manufacturer, is not considered duplicate equipment.
    Durable equipment. A device or apparatus which does not qualify as 
durable medical equipment and which is essential to the efficient 
arrest or reduction of functional loss resulting from, or the disabling 
effects of a qualifying condition as provided in Sec.  199.5.
* * * * *
    Extended Care Health Option (ECHO). The TRICARE program of 
supplemental benefits for qualifying active duty family members as 
described in Sec.  199.5.
* * * * *
    Extraordinary physical or psychological condition. A complex 
physical or psychological clinical condition of such severity which 
results in the beneficiary being homebound as defined in this section.
* * * * *
    Homebound A beneficiary's condition is such that there exists a 
normal inability to leave home and, consequently, leaving home would 
require considerable and taxing effort. Any absence of an individual 
from the home attributable to the need to receive health care 
treatment, including regular absences for the purpose of participating 
in therapeutic, psychosocial, or medical treatment or in an adult day-
care program certified by a state, or accredited to furnish adult day-
care services in the state shall not disqualify an individual from 
being considered to be confined to his home. Any other absence of an 
individual from the home shall not disqualify an individual if the 
absence is infrequent or of relatively short duration. For the purposes 
of the preceding sentence, any absence for purpose of attending a 
religious service shall be deemed to be an absence of infrequent or 
short duration. Also, absences from the home for non-medical purposes, 
such as an occasional trip to the barber, a walk around the block or a 
drive, would not necessarily negate the beneficiary's homebound status 
if the absences are undertaken on an

[[Page 44947]]

infrequent basis and are of relatively short duration. In addition to 
the above, absences, whether regular or infrequent, from the 
beneficiary's primary residence for the purpose of attending an 
educational program in a public or private school that is licensed and/
or certified by a state, shall not negate the beneficiary's homebound 
status.
* * * * *
    Primary caregiver. An individual who renders to a beneficiary 
services to support the activities of daily living (as defined in Sec.  
199.2) and specific services essential to the safe management of the 
beneficiary's condition.
* * * * *


Sec.  199.3  [Amended]

0
3. Section 199.3 is amended by revising the term ``Program for Persons 
with Disabilities'' or the acronym ``PFPWD'' to read ``Extended Care 
Health Option'' or the acronym ``ECHO,'' respectively, in paragraphs 
(b)(2)(iii)(A)(1), (c)(2)(i)(C), (c)(2)(ii)(B), (c)(2)(iii)(B), 
(c)(3)(i)(C), (c)(3)(ii)(B), (c)(4)(i)(B), (c)(4)(ii)(B), 
(c)(4)(iii)(B), (c)(5)(i)(C), (c)(5)(ii)(B), (c)(5)(iii)(B), 
(c)(5)(iv)(C)(2), (c)(6)(ii), (c)(7)(i)(C), (c)(7)(ii)(B), (c)(8)(ii), 
(c)(9)(i)(B), (c)(9)(ii)(B), and (c)(10)(ii) wherever they appear.
0
4. Section 199.4 is amended by removing and reserving paragraph 
(e)(20); adding paragraph (g)(59); revising paragraph (g)(73); and 
removing paragraph (i) Case management program in its entirety; to read 
as follows:


Sec.  199.4  Basic program benefits.

* * * * *
    (g) * * *
    (59) Duplicate equipment. As defined in Sec.  199.2, duplicate 
equipment is excluded.
* * * * *
    (73) Economic interest in connection with mental health admissions. 
Inpatient mental health services (including both acute care and RTC 
services) are excluded for care received when a patient is referred to 
a provider of such services by a physician (or other health care 
professional with authority to admit) who has an economic interest in 
the facility to which the patient is referred, unless a waiver is 
granted. Requests for waiver shall be considered under the same 
procedure and based on the same criteria as used for obtaining 
preadmission authorization (or continued stay authorization for 
emergency admissions), with the only additional requirement being that 
the economic interest be disclosed as part of the request. The same 
reconsideration and appeals procedure that apply to day limit waivers 
shall also apply to decisions regarding requested waivers of the 
economic interest exclusion. However, a provider may appeal a 
reconsidered determination that an economic relationship constitutes an 
economic interest within the scope of the exclusion to the same extent 
that a provider may appeal determination under Sec.  199.15(i)(3). This 
exclusion does not apply to services under the Extended Care Health 
Option (ECHO) in Sec.  199.5 or provided as partial hospital care. If a 
situation arises where a decision is made to exclude CHAMPUS payment 
solely on the basis of the provider's economic interest, the normal 
CHAMPUS appeals process will be available.
* * * * *

0
5. Section 199.5 is revised to read as follows:


Sec.  199.5  TRICARE Extended Care Health Option (ECHO).

    (a) General. (1) The TRICARE ECHO is essentially a supplemental 
program to the TRICARE Basic Program. It does not provide acute care 
nor benefits available through the TRICARE Basic Program.
    (2) The purpose of the ECHO is to provide an additional financial 
resource for an integrated set of services and supplies designed to 
assist in the reduction of the disabling effects of the beneficiary's 
qualifying condition. Services include those necessary to maintain, 
minimize or prevent deterioration of function of an ECHO-eligible 
beneficiary.
    (b) Eligibility. (1) The following categories of TRICARE/CHAMPUS 
beneficiaries with a qualifying condition are eligible for ECHO 
benefits:
    (i) A child or spouse (as described in 10 U.S.C. 1072(2)(A), (D), 
or (I)) of a member of one of the Uniformed Services; or
    (ii) An abused dependent as described in Sec.  199.3(b)(2)(iii); or
    (iii) A child or spouse (as described in 10 U.S.C. 1072(2)(A), (D), 
or (I)) of a member of one of the Uniformed Services who dies while on 
active duty. In such case the child or spouse remain eligible for 
benefits under the ECHO for a period of three years from the date the 
active duty sponsor dies; or
    (iv) A child or spouse (as described in 10 U.S.C. 1072(2)(A), (D), 
or (I)) of a deceased member of one of the Uniformed Services, who, at 
the time of the member's death was receiving benefits under ECHO, and 
the member at the time of death was eligible for receipt of hostile-
fire pay, or died as a result of a disease or injury incurred while 
eligible for such pay. In such case the child or spouse remain eligible 
through midnight of the beneficiary's twenty-first birthday.
    (2) Qualifying condition. The following are qualifying conditions:
    (i) Mental retardation. A diagnosis of moderate or severe mental 
retardation made in accordance with the criteria of the current edition 
of the ``Diagnostic and Statistical Manual of Mental Disorders'' 
published by the American Psychiatric Association.
    (ii) Serious physical disability. A serious physical disability as 
defined in Sec.  199.2.
    (iii) Extraordinary physical or psychological condition. An 
extraordinary physical or psychological condition as defined in Sec.  
199.2.
    (iv) Infant/toddler. Beneficiaries under the age of 3 years who are 
diagnosed with a neuromuscular developmental condition or other 
condition that is expected to precede a diagnosis of moderate or severe 
mental retardation or a serious physical disability, shall be deemed to 
have a qualifying condition for the ECHO. The Director, TRICARE 
Management Activity or designee shall establish criteria for ECHO 
eligibility in lieu of the requirements of paragraphs (b)(2)(i), (ii) 
or (iii) of this section.
    (v) Multiple disabilities. The cumulative effect of multiple 
disabilities, as determined by the Director, TRICARE Management 
Activity or designee shall be used in lieu of the requirements of 
paragraphs (b)(2)(i), (ii) or (iii) of this section to determine a 
qualifying condition when the beneficiary has two or more disabilities 
involving separate body systems.
    (3) Loss of ECHO eligibility. Eligibility for ECHO benefits ceases 
as of 12:01 a.m. of the day following the day that:
    (i) The sponsor ceases to be an active duty member for any reason 
other than death; or
    (ii) Eligibility based upon the abused dependent provisions of 
paragraph (b)(1)(ii) of this section expires; or
    (iii) Eligibility based upon the deceased sponsor provisions of 
paragraphs (b)(1)(iii) or (iv) of this section expires; or
    (iv) Eligibility based upon a beneficiary's participation in the 
Transitional Assistance Management Program ends; or
    (v) The Director, TRICARE Management Activity or designee 
determines that the beneficiary no longer has a qualifying condition.
    (4) Continuity of eligibility. A TRICARE beneficiary who has an 
outstanding Program for Persons with Disabilities (PFPWD) benefit 
authorization on the date of

[[Page 44948]]

implementation of the ECHO program shall continue receiving such 
services for the duration of that authorization period provided the 
beneficiary remains eligible for the PFPWD. Upon termination of an 
existing PFPWD authorization, or if the beneficiary seeks benefits 
under this section before such termination, the beneficiary shall 
establish eligibility for the ECHO in accordance with this section.
    (c) ECHO benefit. Items and services that the Director, TRICARE 
Management Activity or designee has determined are capable of 
confirming, arresting, or reducing the severity of the disabling 
effects of a qualifying condition, includes, but are not limited to:
    (1) Diagnostic procedures to establish a qualifying condition or to 
measure the extent of functional loss resulting from a qualifying 
condition.
    (2) Medical, habilitative, rehabilitative services and supplies, 
durable equipment and durable medical equipment that are related to the 
qualifying condition. Benefits may be provided in the beneficiary's 
home or other environment as appropriate.
    (3) Training that teaches the use of assistive technology devices 
or to acquire skills that are necessary for the management of the 
qualifying condition. Such training is also authorized for the 
beneficiary's immediate family. Vocational training, in the 
beneficiary's home or a facility providing such, is also allowed.
    (4) Special education as provided by the Individuals with 
Disabilities Education Act and defined at 34 CFR 300.26 and that is 
specifically designed to accommodate the disabling effects of the 
qualifying condition.
    (5) Institutional care within a state, as defined in Sec.  199.2, 
in private nonprofit, public, and state institutions and facilities, 
when the severity of the qualifying condition requires protective 
custody or training in a residential environment. For the purpose of 
this section protective custody means residential care that is 
necessary when the severity of the qualifying condition is such that 
the safety and well-being of the beneficiary or those who come into 
contact with the beneficiary may be in jeopardy without such care.
    (6) Transportation of an ECHO beneficiary, and a medical attendant 
when necessary to assure the beneficiary's safety, to or from a 
facility or institution to receive authorized ECHO services or items.
    (7) Respite care. ECHO beneficiaries are eligible for 16 hours of 
respite care per month in any month during which the qualified 
beneficiary otherwise receives an ECHO benefit(s). Respite care is 
defined in Sec.  199.2. Respite care services will be provided by a 
TRICARE-authorized home health agency and will be designed to provide 
health care services for the covered beneficiary, and not baby-sitting 
or child-care services for other members of the family. The benefit 
will not be cumulative, that is, any respite care hours not used in one 
month will not be carried over or banked for use on another occasion.
    (i) TRICARE-authorized home health agencies must provide and bill 
for all authorized ECHO respite care services through established 
TRICARE claims' mechanisms. No special billing arrangements will be 
authorized in conjunction with coverage that may be provided by 
Medicaid or other federal, state, community or private programs.
    (ii) For authorized ECHO respite care, TRICARE will reimburse the 
allowable charges or negotiated rates.
    (iii) The Government's cost-share incurred for these services 
accrue to the maximum monthly benefit of $2,500.
    (8) Other services--(i) Assistive services. Services of qualified 
personal assistants, such as an interpreter or translator for ECHO 
beneficiaries who are deaf or mute and readers for ECHO beneficiaries 
who are blind, when such services are necessary in order for the ECHO 
beneficiary to receive authorized ECHO benefits.
    (ii) Equipment adaptation. The allowable equipment purchase shall 
include such services and modifications to the equipment as necessary 
to make the equipment useable for a particular ECHO beneficiary.
    (iii) Equipment maintenance. Reasonable repairs and maintenance of 
beneficiary owned or rented durable equipment or durable medical 
equipment provided by this section shall be allowed while a beneficiary 
is registered in the ECHO.
    (d) ECHO Exclusions. (1) Basic Program. Benefits allowed under the 
TRICARE Basic Program will not be provided through the ECHO.
    (2) Inpatient care. Inpatient acute care for medical or surgical 
treatment of an acute illness, or of an acute exacerbation of the 
qualifying condition, is excluded.
    (3) Structural alterations. Alterations to living space and 
permanent fixtures attached thereto, including alterations necessary to 
accommodate installation of equipment or to facilitate entrance or 
exit, are excluded.
    (4) Homemaker services. Services that predominantly provide 
assistance with household chores are excluded.
    (5) Dental care or orthodontic treatment. Both are excluded.
    (6) Deluxe travel or accommodations. The difference between the 
price for travel or accommodations that provide services or features 
that exceed the requirements of the beneficiary's condition and the 
price for travel or accommodations without those services or features 
is excluded.
    (7) Equipment. Purchase or rental of durable equipment and durable 
medical equipment, which are otherwise allowed by this section, are 
excluded when:
    (i) The beneficiary is a patient in an institution or facility that 
ordinarily provides the same type of equipment to its patients at no 
additional charge in the usual course of providing services; or
    (ii) The item is available to the beneficiary from a Uniformed 
Services Medical Treatment Facility; or
    (iii) The item has deluxe, luxury, immaterial or nonessential 
features that increase the cost to the Department relative to a similar 
item without those features; or
    (iv) The item is duplicate equipment as defined in Sec.  199.2.
    (8) Maintenance agreements. Maintenance agreements for beneficiary 
owned or rented equipment are excluded.
    (9) No obligation to pay. Services or items for which the 
beneficiary or sponsor has no legal obligation to pay are excluded.
    (10) Public facility or Federal government. Services or items paid 
for, or eligible for payment, directly or indirectly by a public 
facility, as defined in Sec.  199.2, or by the Federal government, 
other than the Department of Defense, are excluded for training, 
rehabilitation, special education, assistive technology devices, 
institutional care in private nonprofit, public, and state institutions 
and facilities, and if appropriate, transportation to and from such 
institutions and facilities, except when such services or items are 
eligible for payment under a state plan for medical assistance under 
Title XIX of the Social Security Act (Medicaid). Rehabilitation and 
assistive technology services or supplies may be available under the 
TRICARE Basic Program.
    (11) Study, grant, or research programs. Services and items 
provided as a part of a scientific clinical study, grant, or research 
program are excluded.
    (12) Unproven status. Drugs, devices, medical treatments, 
diagnostic, and therapeutic procedures for which the safety and 
efficacy have not been established in accordance with Sec.  199.4 are 
excluded.

[[Page 44949]]

    (13) Immediate family or household. Services or items provided or 
prescribed by a member of the beneficiary's immediate family, or a 
person living in the beneficiary's or sponsor's household, are 
excluded.
    (14) Court or agency ordered care. Services or items ordered by a 
court or other government agency, which are not otherwise an allowable 
ECHO benefit, are excluded.
    (15) Excursions. Excursions are excluded regardless of whether or 
not they are part of a program offered by a TRICARE-authorized 
provider. The transportation benefit available under ECHO is specified 
elsewhere in this section.
    (16) Drugs and medicines. Drugs and medicines that do not meet the 
requirements of Sec.  199.4 or Sec.  199.21 are excluded.
    (17) Therapeutic absences. Therapeutic absences from an inpatient 
facility or from home for a homebound beneficiary are excluded.
    (18) Custodial care. Custodial care, as defined in Sec.  199.2, is 
not a stand-alone benefit. Services generally rendered as custodial 
care may be provided only as specifically set out in this section.
    (19) Domiciliary care. Domiciliary care, as defined in Sec.  199.2, 
is excluded.
    (20) Respite care. Respite care for the purpose of covering primary 
caregiver (as defined in Sec.  199.2) absences due to deployment, 
employment, seeking of employment or to pursue education is excluded. 
Authorized respite care covers only the ECHO beneficiary, not siblings 
or others who may reside in or be visiting in the beneficiary's 
residence.
    (e) ECHO Home Health Care (EHHC). The EHHC benefit provides 
coverage of home health care services and respite care services 
specified in this section.
    (1) Home health care. Covered ECHO home health care services are 
the same as, and provided under the same conditions as those services 
described in Sec.  199.4(e)(21)(i), except that they are not limited to 
part-time or intermittent services. Custodial care services, as defined 
in Sec.  199.2, may be provided to the extent such services are 
provided in conjunction with authorized ECHO home health care services, 
including the EHHC respite care benefit specified herein. Beneficiaries 
who are authorized EHHC will receive all home health care services 
under EHHC and no portion will be provided under the Basic Program. 
TRICARE-authorized home health agencies are not required to use the 
Outcome and Assessment Information Set (OASIS) to assess beneficiaries 
who are authorized EHHC.
    (2) Respite care. EHHC beneficiaries whose plan of care includes 
frequent interventions by the primary caregiver(s) are eligible for 
respite care services in lieu of the ECHO general respite care benefit. 
For the purpose of this section, the term ``frequent'' means ``more 
than two interventions during the eight-hour period per day that the 
primary caregiver would normally be sleeping.'' The services performed 
by the primary caregiver are those that can be performed safely and 
effectively by the average non-medical person without direct 
supervision of a health care provider after the primary caregiver has 
been trained by appropriate medical personnel. EHHC beneficiaries in 
this situation are eligible for a maximum of eight hours per day, 5 
days per week, of respite care by a TRICARE-authorized home health 
agency. The home health agency will provide the health care 
interventions or services for the covered beneficiary so that the 
primary caregiver is relieved of the responsibility to provide such 
interventions or services for the duration of that period of respite 
care. The home health agency will not provide baby-sitting or child 
care services for other members of the family. The benefit is not 
cumulative, that is, any respite care hours not used in a given day may 
not be carried over or banked for use on another occasion. 
Additionally, the eight-hour respite care periods will not be provided 
consecutively, that is, a respite care period on one calendar day will 
not be immediately followed by a respite care period the next calendar 
day. The Government's cost-share incurred for these services accrue to 
the maximum yearly ECHO Home Health Care benefit.
    (3) EHHC eligibility. The EHHC is authorized for beneficiaries who 
meet all applicable ECHO eligibility requirements and who:
    (i) Physically reside within the 50 United States, the District of 
Columbia, Puerto Rico, the Virgin Islands, or Guam; and
    (ii) Are homebound, as defined in Sec.  199.2; and
    (iii) Require medically necessary skilled services that exceed the 
level of coverage provided under the Basic Program's home health care 
benefit; or
    (iv) Require frequent interventions by the primary caregiver(s) 
such that respite care services are necessary to allow primary 
caregiver(s) the opportunity to rest; and
    (v) Are case managed to include a reassessment at least every 90 
days, and receive services as outlined in a written plan of care; and
    (vi) Receive all home health care services from a TRICARE-
authorized home health agency, as described in Sec. 199.6(b)(4)(xv), in 
the beneficiary's primary residence.
    (4) EHHC plan of care. A written plan of care is required prior to 
authorizing ECHO home health care. The plan must include the type, 
frequency, scope and duration of the care to be provided and support 
the professional level of provider. Reimbursement will not be 
authorized for a level of provider not identified in the plan of care.
    (5) EHHC exclusions. (i) General. ECHO Home Health Care services 
and supplies are excluded from those who are being provided continuing 
coverage of home health care as participants of the former Individual 
Care Management Program for Persons with Extraordinary Conditions 
(ICMP-PEC) or previous case management demonstrations.
    (ii) Respite care. Respite care for the purpose of covering primary 
caregiver absences due to deployment, employment, seeking of employment 
or to pursue education is excluded. Authorized respite care covers only 
the ECHO beneficiary, not siblings or others who may reside in or be 
visiting in the beneficiary's residence.
    (f) Cost-share liability. (1) No deductible. ECHO benefits are not 
subject to a deductible amount.
    (2) Sponsor cost-share liability. (i) Regardless of the number of 
family members receiving ECHO benefits or ECHO Home Health Care in a 
given month, the sponsor's cost-share is according to the following 
table:

           Table 1.--Monthly Cost-Share by Member's Pay Grade
------------------------------------------------------------------------
 
------------------------------------------------------------------------
E-1 through E-5............................................          $25
E-6........................................................           30
E-7 and O-1................................................           35
E-8 and O-2................................................           40
E-9, W-1, W-2 and O-3......................................           45
W-3, W-4 and O-4...........................................           50
W-5 and O-5................................................           65
O-6........................................................           75
O-7........................................................          100
O-8........................................................          150
O-9........................................................          200
O-10.......................................................          250
------------------------------------------------------------------------

    (ii) The sponsor's cost-share shown in Table 1 in paragraph 
(f)(2)(i) of this section will be applied to the first allowed ECHO 
charges in any given month. The Government's share will be paid, up to 
the maximum amount specified in paragraph (f)(3) of this section, for 
allowed charges after the sponsor's cost-share has been applied.
    (iii) The provisions of Sec.  199.18(d)(1) and (e)(1) regarding 
elimination of copayments for active duty family members enrolled in 
TRICARE Prime do not eliminate, reduce, or otherwise

[[Page 44950]]

affect the sponsor's cost-share shown in Table 1 in paragraph (f)(2)(i) 
of this section.
    (iv) The sponsor's cost-share shown in Table 1 in paragraph 
(f)(2)(i) of this section does not accrue to the Basic Program's 
Catastrophic Loss Protection under 10 U.S.C. 1079(b)(5) as shown at 
Sec. Sec.  199.4(f)(10) and 199.18(f).
    (3) Government cost-share liability. (i) ECHO. The total Government 
share of the cost of all ECHO benefits, except ECHO home health care 
and EHHC respite care, provided in a given month to a beneficiary may 
not exceed $2,500 after application of the allowable payment 
methodology.
    (ii) ECHO home health care. (A) The maximum annual Government cost-
share for ECHO home health care, including EHHC respite care may not 
exceed the local wage-adjusted highest Medicare Resource Utilization 
Group (RUG-III) category cost for care in a TRICARE-authorized skilled 
nursing facility.
    (B) When a beneficiary moves to a different locality within the 50 
United States, the District of Columbia, Puerto Rico, the Virgin 
Islands, or Guam, the annual fiscal year cap will be recalculated to 
reflect the maximum established under paragraph (f)(3)(ii)(A) of this 
section for the beneficiary's new location and will apply to the EHHC 
benefit for the remaining portion of that fiscal year.
    (g) Benefit payment. (1) Transportation. The allowable amount for 
transportation of an ECHO beneficiary is limited to the actual cost of 
the standard published fare plus any standard surcharge made to 
accommodate any person with a similar disability or to the actual cost 
of specialized medical transportation when non-specialized transport 
cannot accommodate the beneficiary's qualifying condition related 
needs, or when specialized transport is more economical than non-
specialized transport. When transport is by private vehicle, the 
allowable amount is limited to the Federal government employee mileage 
reimbursement rate in effect on the date the transportation is 
provided.
    (2) Equipment. (i) The TRICARE allowable amount for durable 
equipment and durable medical equipment shall be calculated in the same 
manner as durable medical equipment allowable through Sec.  199.4.
    (ii) Allocating equipment expense. The ECHO beneficiary (or sponsor 
or guardian acting on the beneficiary's behalf) may, only at the time 
of the request for authorization of equipment, specify how the 
allowable cost of the equipment is to be allocated as an ECHO benefit. 
The entire allowable cost of the authorized equipment may be allocated 
in the month of purchase provided the allowable cost does not exceed 
the ECHO maximum monthly benefit of $2,500 or it may be prorated 
regardless of the allowable cost. Prorating permits the allowable cost 
of ECHO-authorized equipment to be allocated such that the amount 
allocated each month does not exceed the maximum monthly benefit.
    (A) Maximum period. The maximum number of consecutive months during 
which the allowable cost may be prorated is the lesser of:
    (1) The number of months calculated by dividing the allowable cost 
for the item by 2,500 and then doubling the resulting quotient, rounded 
off to the nearest whole number; or
    (2) The number of months of expected useful life of the equipment 
for the requesting beneficiary, as determined by the Director, TRICARE 
Management Activity or designee.
    (B) Alternative allocation period. The allowable equipment cost may 
be allocated monthly in any amount such that the maximum allowable 
monthly ECHO benefit of $2,500 or the maximum period under paragraph 
(g)(2)(ii)(A) of this section, is not exceeded.
    (C) Authorization. (1) The amount allocated each month as 
determined in accordance with paragraph (g)(2)(ii) of this section will 
be separately authorized as an ECHO benefit.
    (2) An item of durable equipment or durable medical equipment shall 
not be authorized when such authorization would allow cost-sharing of 
duplicate equipment, as defined in Sec.  199.2, for the same 
beneficiary.
    (D) Cost-share. A cost-share, as provided by paragraph (f)(2) of 
this section, is required for each month in which a prorated amount is 
authorized.
    (E) Termination. The sponsor's monthly cost-share and the prorated 
equipment expense provisions provided by paragraphs (f) and (g) of this 
section, shall be terminated as of the first day of the month following 
the death of a beneficiary or as of the effective date of a 
beneficiary's loss of ECHO eligibility for any other reason.
    (3) For-profit institutional care provider. Institutional care 
provided by a for-profit entity may be allowed only when the care for a 
specific ECHO beneficiary:
    (i) Is contracted for by a public facility as a part of a publicly 
funded long-term inpatient care program; and
    (ii) Is provided based upon the ECHO beneficiary's being eligible 
for the publicly funded program which has contracted for the care; and
    (iii) Is authorized by the public facility as a part of a publicly 
funded program; and
    (iv) Would cause a cost-share liability in the absence of TRICARE 
eligibility; and
    (v) Produces an ECHO beneficiary cost-share liability that does not 
exceed the maximum charge by the provider to the public facility for 
the contracted level of care.
    (4) ECHO home health care and EHHC respite care. (i) TRICARE-
authorized home health agencies must provide and bill for all 
authorized home health care services through established TRICARE 
claims' mechanisms. No special billing arrangements will be authorized 
in conjunction with coverage that may be provided by Medicaid or other 
federal, state, community or private programs.
    (ii) For authorized ECHO home health care and respite care, TRICARE 
will reimburse the allowable charges or negotiated rates.
    (iii) The maximum monthly Government reimbursement for EHHC, 
including EHHC respite care, will be based on the actual number of 
hours of EHHC services rendered in the month, but in no case will it 
exceed one-twelfth of the annual maximum Government cost-share as 
determined in this section.
    (h) Other Requirements. (1) Applicable part. All provisions of this 
part, except the provisions of Sec.  199.4 unless otherwise provided by 
this section or as directed by the Director, TRICARE Management 
Activity or designee, apply to the ECHO.
    (2) Registration. Active duty sponsors must register potential ECHO 
eligible beneficiaries through the Director, TRICARE Management 
Activity or designee prior to receiving ECHO benefits. The Director, 
TRICARE Management Activity or designee will determine ECHO eligibility 
and update the Defense Enrollment Eligibility Reporting System (DEERS) 
accordingly. Sponsors must provide evidence of enrollment in the 
Exceptional Family Member Program provided by their branch of Service 
at the time they register their family member(s) for the ECHO.
    (3) Benefit authorization. All ECHO benefits require authorization 
by the Director, TRICARE Management Activity or designee prior to 
receipt of such benefits.
    (i) Documentation. The sponsor shall provide such documentation as 
the Director, TRICARE Management Activity or designee requires as a 
prerequisite to authorizing ECHO benefits. Such documentation shall 
describe how the requested benefit will

[[Page 44951]]

contribute to confirming, arresting, or reducing the disabling effects 
of the qualifying condition, including maintenance of function or 
prevention of further deterioration of function, of the beneficiary.
    (ii) Format. An authorization issued by the Director, TRICARE 
Management Activity or designee shall specify such description, dates, 
amounts, requirements, limitations or information as necessary for 
exact identification of approved benefits and efficient adjudication of 
resulting claims.
    (iii) Valid period. An authorization for ECHO benefits shall be 
valid until such time as the Director, TRICARE Management Activity or 
designee determines that the authorized services are no longer 
appropriate or required or the beneficiary is no longer eligible under 
paragragh(b) of this section.
    (iv) Authorization waiver. The Director, TRICARE Management 
Activity or designee may waive the requirement for a written 
authorization for rendered ECHO benefits that, except for the absence 
of the written authorization, would be allowable as an ECHO benefit.
    (v) Public facility use. (A) An ECHO beneficiary residing within a 
state must demonstrate that a public facility is not available and 
adequate to meet the needs of their qualifying condition. Such 
requirement shall apply to beneficiaries who request authorization for 
training, rehabilitation, special education, assistive technology, and 
institutional care in private nonprofit, public, and state institutions 
and facilities, and if appropriate, transportation to and from such 
institutions and facilities. The maximum Government cost-share for 
services that require demonstration of pubic facility non-availability 
or inadequacy is limited to $2,500 per month per beneficiary. State-
administered plans for medical assistance under Title XIX of the Social 
Security Act (Medicaid) are not considered available and adequate 
facilities for the purpose of this section.
    (B) The domicile of the beneficiary shall be the basis for the 
determination of public facility availability when the sponsor and 
beneficiary are separately domiciled due to the sponsor's move to a new 
permanent duty station or due to legal custody requirements.
    (C) Written certification, in accordance with information 
requirements, formats, and procedures established by the Director, 
TRICARE Management Activity or designee that requested ECHO services or 
items cannot be obtained from public facilities because the services or 
items are not available and adequate, is a prerequisite for ECHO 
benefit payment for training, rehabilitation, special education, 
assistive technology, and institutional care in private nonprofit, 
public, and state institutions and facilities, and if appropriate, 
transportation to and from such institutions and facilities.
    (1) An administrator or designee of a public facility may make such 
certification for a beneficiary residing within the service area of 
that public facility.
    (2) The Director, TRICARE Management Activity or designee may 
determine, on a case-by-case basis, that apparent public facility 
availability or adequacy for a requested type of service or item cannot 
be substantiated for a specific beneficiary's request for ECHO benefits 
and therefore is not available.
    (i) A case-specific determination shall be based upon a written 
statement by the beneficiary (or sponsor or guardian acting on behalf 
of the beneficiary) which details the circumstances wherein a specific 
individual representing a specific public facility refused to provide a 
public facility use certification, and such other information as the 
Director, TRICARE Management Activity or designee determines to be 
material to the determination.
    (ii) A case-specific determination of public facility availability 
by the Director, TRICARE Management Activity or designee is conclusive 
and is not appealable under Sec.  199.10.
    (4) Repair or maintenance of beneficiary owned durable equipment 
and durable medical equipment is exempt from the public facility use 
certification requirements.
    (5) The requirements of this paragraph (i)(4)(v) notwithstanding, 
no public facility use certification is required for services and items 
that are provided under Part C of the Individuals with Disabilities 
Education Act in accordance with the Individual Family Services Plan 
and that are otherwise allowable under the ECHO.
    (i) Implementing instructions. The Director, TRICARE Management 
Activity or designee shall issue TRICARE policies, instructions, 
procedures, guidelines, standards, and criteria as may be necessary to 
implement the intent of this section.
    (j) Implementation transition. Pending administrative actions 
necessary for the effective implementation of this section on or after 
July 1, 2004, this section, as it existed prior to July 1, 2004, shall 
remain in effect. The dates on or after July 1, 2004, on which this 
section will be implemented in particular regions of the United States 
and elsewhere will be established by Federal Register notice(s) during 
2004.

0
6. Section 199.6 is amended by revising the section heading and 
paragraphs (e)(1)(ii), (e)(2) and (e)(3) to read as follows:


Sec.  199.6  TRICARE--authorized providers.

* * * * *
    (e) * * *
    (1) General. * * *
    (ii) A Program for Persons with Disabilities (PFPWD) provider with 
TRICARE-authorized status on the effective date for the Extended Care 
Health Option (ECHO) Program shall be deemed to be a TRICARE-authorized 
provider until the expiration of all outstanding PFPWD benefit 
authorizations for services or items being rendered by the provider.
    (2) ECHO provider categories. (i) ECHO inpatient care provider. A 
provider of residential institutional care, which is otherwise an ECHO 
benefit, shall be:
    (A) A not-for-profit entity or a public facility; and
    (B) Located within a state; and
    (C) Be certified as eligible for Medicaid payment in accordance 
with a state plan for medical assistance under Title XIX of the Social 
Security Act (Medicaid) as a Medicaid Nursing Facility, or Intermediate 
Care Facility for the Mentally Retarded, or be a TRICARE-authorized 
institutional provider as defined in paragraph (b) of this section, or 
be approved by a state educational agency as a training institution.
    (ii) ECHO outpatient care provider. A provider of ECHO outpatient, 
ambulatory, or in-home services shall be:
    (A) A TRICARE-authorized provider of services as defined in this 
section; or
    (B) An individual, corporation, foundation, or public entity that 
predominantly renders services of a type uniquely allowable as an ECHO 
benefit and not otherwise allowable as a benefit of Sec.  199.4, that 
meets all applicable licensing or other regulatory requirements of the 
state, county, municipality, or other political jurisdiction in which 
the ECHO service is rendered, or in the absence of such licensing or 
regulatory requirements, as determined by the Director, TRICARE 
Management Activity or designee.
    (iii) ECHO vendor. A provider of an allowable ECHO item, such as 
supplies or equipment, shall be deemed to be a TRICARE-authorized 
vendor for the provision of the specific item, supply or equipment when 
the vendor supplies such information as the Director, TRICARE 
Management Activity or

[[Page 44952]]

designee determines necessary to adjudicate a specific claim.
    (3) ECHO provider exclusion or suspension. A provider of ECHO 
services or items may be excluded or suspended for a pattern of 
discrimination on the basis of disability. Such exclusion or suspension 
shall be accomplished according to the provisions of Sec.  199.9.
* * * * *
0
7. Section 199.7 is amended by revising paragraphs (a)(2) and 
(b)(2)(xii) to read as follows:


Sec.  199.7  Claims submission, review, and payment.

    (a) * * *
    (2) Claim required. No benefit may be extended under the Basic 
Program or Extended Care Health Option (ECHO) Program without 
submission of an appropriate, complete and properly executed claim 
form.
* * * * *
    (b) * * *
    (2) * * *
    (xii) Other authorized providers. For items from other authorized 
providers (such as medical supplies), an explanation as to the medical 
need must be attached to the appropriate claim form. For purchases of 
durable equipment and durable medical equipment under the ECHO, it is 
necessary also to attach a copy of the preauthorization.
* * * * *

0
8. Section 199.8 is amended by revising paragraphs (d)(4) and (d)(5) to 
read as follows:


Sec.  199.8  Double coverage.

* * * * *
    (d) * * *
    (4) Extended Care Health Option (ECHO). For those services or 
supplies that require use of public facilities, an ECHO eligible 
beneficiary (or sponsor or guardian acting on behalf of the 
beneficiary) does not have the option of waiving the full use of public 
facilities which are determined by the Director, TRICARE Management 
Activity or designee to be available and adequate to meet a disability 
related need for which an ECHO benefit was requested. Benefits eligible 
for payment under a state plan for medical assistance under Title XIX 
of the Social Security Act (Medicaid) are never considered to be 
available in the adjudication of ECHO benefits.
    (5) Primary payer. The requirements of paragraph (d)(4) of this 
section notwithstanding, TRICARE is primary payer for services and 
items that are provided in accordance with the Individualized Family 
Service Plan as required by Part C of the Individuals with Disabilities 
Education Act and that are medically or psychologically necessary and 
otherwise allowable under the TRICARE Basic Program or the Extended 
Care Health Option.
* * * * *

0
9. Section 199.20 is amended by revising paragraph (p)(2)(i) to read as 
follows:


Sec.  199.20  Continued Health Care Benefits Program (CHCBP).

* * * * *
    (p) * * *
    (2) * * *
    (i) The Extended Care Health Option (ECHO) under Sec.  199.5.
* * * * *

0
10. Appendix A to part 199 is amended by adding the term ``ECHO'' and 
removing the term ``PFPWD'' to read as follows:

Appendix A to Part 199--Acronyms

* * * * *
    ECHO--Extended Care Health Option
* * * * *

    Dated: July 20, 2004.
L.M. Bynum,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 04-16932 Filed 7-27-04; 8:45 am]
BILLING CODE 5001-06-P