[Federal Register Volume 70, Number 70 (Wednesday, April 13, 2005)]
[Rules and Regulations]
[Pages 19263-19266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-7361]


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DEPARTMENT OF DEFENSE

Office of the Secretary of Defense

32 CFR Part 199

RIN 0720-AA79


TRICARE; Elimination of Non-Availability Statement and Referral 
Authorization Requirements and Elimination of Specialized Treatment 
Services Program

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: This rule implements Section 735 of the National Defense 
Authorization Act for Fiscal Year 2002 (NDAA-02) (Pub. L. 107-107). It 
also implements Section 728 of the Floyd D. Spence National Defense 
Authorization Act for Fiscal Year 2001 (NDAA-01) (Pub. L. 106-398). 
Section 735 of NDAA-02 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. Section 735 of 
NDAA-02, however, authorizes the Department of Defense to make 
exceptions to the elimination of the requirement for a NAS through the 
exercise of a waiver process under certain specified conditions. This 
section also 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 specialty care provider that is part of the contractor 
network be eliminated under any new TRICARE contract.

DATES: Effective Date: December 28, 2003.

ADDRESSES: 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 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 were to be available after 
March 2004, the NAS requirements are eliminated for admissions 
occurring on or after December 28, 2003, which is the date that is two 
years after the date of the enactment of NDAA-02. For obstetrical care, 
the NAS requirement is 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. The TRICARE 
policy requires

[[Page 19264]]

MTFs, TRICARE Regions, and the contractors to publicize any NAS 
requirements to the affected beneficiaries with respect to any use of 
the waiver authority. In addition, outreach efforts will include 
posting Web site announcements on the TRICARE Web site directing 
affected beneficiaries to their local MTF Web sites with regard to any 
use of the waiver authority.
    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 were those designated facilities with 
regional, multi-regional or national catchment areas which provided 
complex medical and surgical services pursuant to 32 CFR 199.4(a)(10). 
Since the Department decided to terminate the STS program no later than 
June 1, 2003, all regional, multi-regional, and national NAS 
requirements under TRICARE Standard and authorization requirements 
under TRICARE Prime for STSs were eliminated before that date. The 
rationale behind the termination of the STS program was 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 placed an 
unreasonable burden on our beneficiaries who had to travel extended 
distances to the STS facilities. This provided for enhanced continuity 
of care for TRICARE Standard beneficiaries who generally receive most 
medical and surgical services from civilian providers of their choice. 
The interim final rule gave 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 implements Section 728 of 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 required 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 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 preauthorizations based on a determination of best business 
practices.

III. Public Comments

    We published the interim final rule on July 31, 2003, and provided 
a 60-day comment period. We received comments from one national 
association and two other commenters. These comments and the 
Department's responses are summarized below.
    Comment: Essentially, the commenter raised concerns regarding the 
stated means of communicating to beneficiaries and providers the intent 
to exercise the waiver authority to require a nonavailability statement 
(NAS). The interim final rule stated that if the waiver authority is 
exercised, the Department will notify the affected beneficiaries by 
publishing a notice in the Federal Register.
    Response: While these are used to announce the program changes and 
requirements to the public, the Federal Register notices are not the 
only means of communication upon which the Department relies. The 
Department is sensitive to streamlining administrative processes and 
recognizes the importance of communicating with the beneficiaries and 
providers with regard to any use of the waiver authority and any new 
NAS requirements. It is for this reason that we have included a 
provision in the TRICARE Policy Manual that requires military treatment 
facilities (MTFs), TRICARE Regions, and the contractors to publicize 
any NAS requirements to the affected beneficiaries with respect to any 
use of the waiver authority. We have included this clarification in 
this final rule. Normally, the TRICARE policy changes and new 
requirements are announced in the routine provider bulletins and 
beneficiary newsletters by TRICARE contractors. In addition, outreach 
efforts will include posting Web site announcements on the TRICARE Web 
site directing affected beneficiaries to their local MTF Web sites; 
sharing information with military and civilian media and beneficiary 
association publications; and partnering with network and non-network 
providers through the contractors and local American Medical 
Association organizations.
    Comment: One commenter argued that the DoD should totally eliminate 
the NAS for TRICARE Standard beneficiaries and made several comments. 
With regard to the legislative provision that requires elimination of 
NAS or preauthorization from an MTF, this commenter stated that the law 
has eliminated preauthorization for TRICARE Standard, yet DoD rules do 
not comply. With regard to the title of this rule, the commenter argued 
that to title this rule ``Elimination of the nonavailability 
statement'' is deceiving to TRICARE Standard beneficiaries, since it 
has not been eliminated except for maternity care, and DoD should 
reveal the facts. The commenter stated that the beneficiary could have 
no rights under this rule to use TRICARE Standard rather than the MTF, 
and the rule grants authority to DoD to continue use of the NAS. With 
reference to the regulatory language in the rule, the commenter 
requested clarification regarding the use and impact of the term MTFs. 
Regarding the structure of the rule, the commenter stated that the 
entire document is confusing in applicability to TRICARE Prime vs. 
TRICARE Standard and suggested that at the beginning of each paragraph 
it should be specified whether it applies to Standard or Prime, or 
both. The commenter also raised concerns that the notification by a 
Federal Register notice with regard to using the waiver authority to 
require an NAS is inadequate and stated that unless a reasonable 
mechanism can be

[[Page 19265]]

established to notify each beneficiary and provider of the need for the 
NAS, the rule cannot be fairly implemented. In all cases when the 
beneficiary is denied a request for NAS, the commenter suggested that 
the beneficiary should be notified in writing within 24 hours giving 
the specific reasons related to: (a) The significant costs that would 
be avoided, (b) a specific procedure that must be provided at the 
affected MTF to ensure the proficiency levels of the practitioners, or 
(c) the lack of NAS data that would significantly interfere with 
TRICARE contract administration. The commenter emphasized the 
importance of detailed explanation for NAS denial and specific cost 
data and stated that the waiver authority is so liberal that the 
practical effect is to grant carte blanche authority to deny NAS 
request when the MTF is underutilized. Finally, the commenter presented 
a detailed argument in favor of total elimination of NAS.
    Response: The rule eliminated the NAS requirements as provided by 
the law. It is incorrect to say that the DoD rules do not comply with 
respect to the elimination of MTF preauthorization. The fact is that 
under TRICARE, no care is preauthorized by MTFs and it was NAS that was 
administered by MTFs. The TRICARE contractors were required to 
preauthorize those admissions that required an NAS and that 
preauthorization was eliminated with the elimination of NAS. The title 
of this rule is appropriate and it is not deceiving as the rule does 
eliminate maternity and inpatient NAS with the exception of NAS for 
mental health admissions, and all the relevant information is presented 
in the rule. The fact that the rule provides information with regard to 
the waiver authority to require an NAS does not mean that it does not 
eliminate the inpatient NAS. It is incorrect to say that the 
beneficiary could have no rights under this rule to use TRICARE 
Standard other than the MTF. Use of an MTF is not required for 
emergency care or when a beneficiary has other health insurance and an 
NAS can never be required in such situations. The use of the term MTFs 
in the regulatory language is consistent with the provisions in Section 
735 of the National Defense Authorization Act for Fiscal Year 2002. It 
is a plural of the term military treatment facility (MTF) and will be 
applicable when more than one MTF are granted a waiver to require an 
NAS. Regarding the structure of the rule, section I of the rule is 
clear that the NAS requirements are eliminated for non-enrolled 
beneficiaries and it has defined a non-enrolled beneficiaries as a 
beneficiary who is not enrolled in TRICARE Prime and has chosen to use 
TRICARE Standard and TRICARE Extra options. It should be noted that the 
NAS applies to non-enrolled beneficiaries and it does not apply under 
TRICARE Prime. With regard to termination of the specialized treatment 
service (STS) program, we have added language in Section I of the rule 
that clarifies that the STS program was terminated under both the 
TRICARE Standard and Prime. Section II. of the rule is clear that the 
elimination of prior authorization before referral to specialty care 
providers applies under TRICARE Prime. With regard to the notification 
concerning the waiver authority to require an NAS, see the response 
under the first comment, above. It should be noted that whenever an NAS 
is denied, the beneficiary is promptly notified and given the appeal 
rights. The specific information pertaining to the significant costs, 
procedures, etc., pertains to the waiver criteria for requiring an NAS 
and will be required by the Department for review and consideration 
from the MTF requesting the waiver. With the exception of maternity 
care, the law gives DoD the waiver authority to require an NAS under 
certain specified conditions. However, it should be noted that granting 
a waiver to an MTF to require an NAS is a complicated process and it 
involves notification to the Congress. Given the complexity of the 
process and its impact on beneficiaries and providers, the Department 
does not foresee any waivers at this time. However, should there be any 
exceptions, the Department anticipates any waivers granted would be 
implemented on a local basis, as needed, and the NAS requirements will 
be announced well in advance of their implementation. Essentially, this 
rule has followed the directions provided by the statute.
    Comment: The commenter supported the rule and suggested that 
TRICARE remove the requirement for prior authorization of outpatient 
medical procedures under TRICARE Standard that are approved by the 
beneficiary's other health insurance (OHI).
    Response: With the exception of adjunctive dental care, Program for 
Persons with Disabilities benefit, outpatient psychotherapy beyond the 
eighth visit, and psychoanalysis, an earlier policy change removed the 
preauthorization requirements for outpatient medical procedures for 
those TRICARE beneficiaries who have OHI.

Regulatory Procedure

    The rule has been reviewed by the Office of Management and Budget. 
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 an unfunded mandate under the Unfunded Mandate 
Reform Act and it is not a significant regulatory action under E.O. 
12866 that could potentially add more than $100 million in estimated 
annual costs for DoD, or state, local, tribal governments, and the 
private sector. 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).

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 199.7 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. 
Appropriate policy guidance may be issued as necessary to prescribe the 
conditions for issuance and use of a Nonavailability Statement.
* * * * *

[[Page 19266]]


0
3. Section 199.15 is amended by revising paragraphs (b)(4)(i)(B) and 
(b)(4)(ii)(D) to read as follows:


Sec.  199.15  Quality and utilization review peer review organization 
program.

* * * * *
    (b) * * *
    (4) * * *
    (i) * * *
    (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 requested 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 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, the Director, TRICARE Management Activity, or 
designee, may continue to require or waive medical necessity prior (or 
pre) authorization for other categories of other health care services 
based on best business practice.
* * * * *

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


Sec.  199.17  TRICARE program.

* * * * *
    (n) * * *
    (2) * * *
    (ii) * * *
    (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 (authorization numbers will be 
assigned so as to facilitate claims processing) but medical necessity 
preauthorization will not be required for 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 TRICARE Regional 
Directors, 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.
* * * * *

    Dated: April 7, 2005.
Jeannette Owings-Ballard,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 05-7361 Filed 4-12-05; 8:45 am]
BILLING CODE 5001-06-P