[Federal Register Volume 76, Number 182 (Tuesday, September 20, 2011)]
[Proposed Rules]
[Pages 58202-58204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23763]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[Docket ID: DOD-2011-HA-0035]
RIN 0720-AB49


TRICARE; TRICARE Sanction Authority for Third-Party Billing 
Agents

AGENCY: Office of the Secretary, Department of Defense.

ACTION: Proposed rule.

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SUMMARY: The rule proposes to provide the Director, TRICARE Management 
Activity (TMA), or designee, with the authority to sanction third-party 
billing agents by invoking the administrative remedy of exclusion or 
suspension from the TRICARE program. Such sanctions

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may be invoked in situations involving fraud or abuse on the part of 
third-party billing agents that prepare or submit claims presented to 
TRICARE for payment.

DATES: Written comments received at the address indicated below by 
November 21, 2011 will be accepted.

ADDRESSES: You may submit comments, identified by docket number and or 
Regulatory Information Number (RIN) number and title, by either of the 
following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Federal Docket Management System Office, 4800 Mark 
Center Drive, 2nd Floor, East Tower, Suite 02G09, Alexandria, VA 22350-
3100.
    Instructions: All submissions received must include the agency name 
and docket number or RIN for this Federal Register document. The 
general policy for comments and other submissions from members of the 
public is to make these submissions available for public viewing on the 
Internet at http://www.regulations.gov as they are received without 
change, including any personal identifiers or contact information.

FOR FURTHER INFORMATION CONTACT: Ms. Joy Saly, TRICARE Management 
Activity, Medical Benefits and Reimbursement Branch, telephone (303) 
676-3742.

SUPPLEMENTARY INFORMATION: 

I. Background

    TRICARE has regulatory authority under 32 CFR 199.9 to invoke 
sanctions in situations involving fraud or abuse on the part of 
providers of TRICARE services. A provider is defined in 32 CFR 199.2 
as, ``A hospital or other institutional provider, a physician, or other 
individual professional provider, or other provider of services or 
supplies as specified in Sec 199.6 of this part.'' Third-party billing 
agents do not meet the definition of a provider as stated in 32 CFR 
199.2, nor do TRICARE regulations currently define third-party billing 
agents.
    Title 42 of the CFR subpart C--Exclusions at 42 CFR 402.200(b)(1) 
provides for the imposition of an exclusion from the Medicare and 
Medicaid programs (and, where applicable, other Federal health care 
programs) against persons that violate the provisions provided in Sec. 
402.1(e) (and further described in Sec. 402.1(c)). However, TRICARE has 
to date established no independent regulatory authority to sanction or 
exclude third-party billing agents.
    When TRICARE identifies submission of improper claims by a third-
party billing agent not identified by the Centers for Medicare and 
Medicaid Services (CMS), TRICARE must refer the case to another Federal 
agency (Defense Criminal Investigative Service, Department of Justice, 
etc.) for action. In addition, CMS' authority extends only to those 
third-party billing agents in the United States because Medicare only 
covers care received in the U.S. or its territories.

II. Department of Defense Inspector General Report on TRICARE Controls 
Over Claims Prepared by Third-party Billing Agents

    The Department of Defense, Office of Inspector General (DoD IG) 
initiated an audit in February 2008 to review TRICARE controls over 
claims submitted by third-party billing agents (Department of Defense 
Inspector General Report No. D-2009-037--``TRICARE Controls Over Claims 
Prepared by Third-Party Billing Agencies''). The DoD IG published a 
report on December 31, 2008. The report included a recommendation that 
the Director, TMA strengthen internal controls by initiating action to 
obtain statutory or regulatory authority to sanction billing agencies 
or any entities that prepare or submit improper health care claims to 
TRICARE contractors.
    Statutory authority already exists that provides the Secretary with 
the authority to administer the TRICARE program to ensure quality of 
care for program beneficiaries, including sanctioning entities 
determined to be involved fraud, abuse, or conflict of interest. 
TRICARE already has regulatory authority to invoke sanctions on 
providers under 32 CFR 199.9. Based on the existing statutory 
authority, TMA is pursuing a regulatory change that will provide the 
authority to ensure both providers and third-party billing agents are 
held accountable for the submission of correct and proper billings. The 
regulatory change proposes to implement the DoD IG recommendation by 
adding third-party billing agents as another entity under the 
regulation that can be sanctioned in situations where fraud and abuse 
are identified on the part of third-party billing agents that prepare 
or submit claims presented to TRICARE for payment.
    TRICARE program policy acknowledges a participating provider may 
arrange for a third-party to act on its behalf in the submission and 
the monitoring of third-party claims, including TRICARE claims. There 
must be an agency relationship established in which the third-party 
billing agent is reimbursed for the submission and monitoring of 
claims, but the claim remains that of the provider and the proceeds of 
any third-party payments, including TRICARE payments, are paid to the 
provider. TRICARE contractors may deal with these agents in much the 
same manner as they deal with the provider's accounts receivable 
department. This proposed rule does not intend to change the current 
acknowledgment of a provider's right to use a third-party billing agent 
as a separate billing resource.
    This rule seeks to establish that such entities, when acting on 
behalf of a provider, are held to an equal standard in regard to 
accuracy and honesty when filing claims for services and supplies under 
the TRICARE program. As such, these entities should be subject to the 
same administrative controls applied to providers in ensuring that 
funds are disbursed appropriately. This rule will allow TRICARE to 
sanction third-party billing agents to prevent the payment of false or 
improper billings.

Regulatory Procedures

Executive Order 12866, ``Regulatory Planning and Review'' and Executive 
Order 13563, ``Improving Regulation and Regulatory Review''

    Section (Sec.) 801 of title 5, United States Code, and Executive 
Order (E.O.) 12866 require certain regulatory assessments and 
procedures for any major rule or significant regulatory action, defined 
as one that would result in an annual effect of $100 million or more on 
the national economy or which would have other substantial impacts. It 
has been certified that this rule is not a significant regulatory 
action.

Public Law 104-4, Section 202, ``Unfunded Mandates Reform Act''

    Section 202 of Public Law 104-4, ``Unfunded Mandates Reform Act,'' 
requires that an analysis be performed to determine whether any Federal 
mandate may result in the expenditure by State, local and tribal 
governments, in the aggregate, or by the private sector of $100 million 
in any one year. It has been certified that this proposed rule does not 
contain a Federal mandate that may result in the expenditure by State, 
local and tribal governments, in aggregate, or by the private sector, 
of $100 million or more in any one year, and thus this proposed rule is 
not subject to this requirement.

Public Law 96-354, ``Regulatory Flexibility Act'' (RFA) (5 U.S.C. 601)

    Public Law 96-354, ``Regulatory Flexibility Act'' (RFA) (5 U.S.C. 
601),

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requires that each Federal agency prepare a regulatory flexibility 
analysis when the agency issues a regulation which would have a 
significant impact on a substantial number of small entities. This 
proposed rule is not an economically significant regulatory action, and 
it has been certified that it will not have a significant impact on a 
substantial number of small entities. Therefore, this proposed rule is 
not subject to the requirements of the RFA.

Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)

    This rule does not contain a ``collection of information'' 
requirement, and will not impose additional information collection 
requirements on the public under Public Law 96-511, ``Paperwork 
Reduction Act'' (44 U.S.C. Chapter 35).

Executive Order 13132, ``Federalism''

    E.O. 13132, ``Federalism,'' requires that an impact analysis be 
performed to determine whether the rule has federalism implications 
that would have substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. It has been certified that this proposed rule does not have 
federalism implications, as set forth in E.O. 13132.

 List of Subjects in 32 CFR part 199

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

    Accordingly, 32 CFR part 199 is proposed to be amended as follows:

PART 199--[AMENDED]

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

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

    2. Section 199.2 is amended by adding to paragraph (b), to appear 
in alphabetical order, a definition of ``Third-party billing agent,'' 
to read as follows:


Sec.  199.2  Definitions.

* * * * *
    (b) * * *
    Third-party billing agent. Any entity that acts on behalf of a 
provider to prepare, submit and monitor claims, excluding those 
entities that act solely as a collection agency.
* * * * *
    3. Section 199.9 is amended by adding paragraph (n) to read as 
follows:


Sec.  199.9  Administrative Remedies for Fraud, Abuse, and Conflict of 
Interest.

* * * * *
    (n) * * * Third-party billing agents as defined in Sec.  199.2(b) 
of this part, while not considered providers, are subject to the 
provisions of this section to the same extent as such provisions apply 
to providers.
* * * * *

    Dated: August 24, 2011.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2011-23763 Filed 9-19-11; 8:45 am]
BILLING CODE 5001-06-P