[Federal Register Volume 81, Number 20 (Monday, February 1, 2016)]
[Proposed Rules]
[Pages 5061-5085]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01703]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DOD-2015-HA-0109]
RIN 0720-AB65


TRICARE; Mental Health and Substance Use Disorder Treatment

AGENCY: Office of the Secretary, Department of Defense (DoD).

ACTION: Proposed rule.

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SUMMARY: This rulemaking proposes comprehensive revisions to the 
TRICARE regulation to reduce administrative barriers to access to 
mental health benefit coverage and to improve access to substance use 
disorder (SUD) treatment for TRICARE beneficiaries, consistent with 
earlier Department of Defense and Institute of Medicine 
recommendations, current standards of practice in mental health and 
addiction medicine, and governing laws. This proposed rule has four 
main objectives: (1) To eliminate quantitative and qualitative 
treatment limitations on SUD and mental health benefit coverage and 
align beneficiary cost-sharing for mental health and SUD benefits with 
those applicable to medical/surgical benefits; (2) to expand covered 
mental health and SUD treatment under TRICARE, to include coverage of 
intensive outpatient programs and treatment of opioid use disorder; (3) 
to streamline the requirements for mental health and SUD institutional 
providers to become TRICARE authorized providers; and (4) to develop 
TRICARE reimbursement methodologies for newly recognized mental health 
and SUD intensive outpatient programs and opioid treatment programs.

DATES: Written comments received at the addresses indicated below will 
be considered for possible revisions to this rule in development of the 
final rule. Comments must be received on or before April 1, 2016.

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: www.regulations.gov. Follow 
the instructions for submitting documents.
     Mail: Department of Defense, Office of the Deputy Chief 
Management Officer, Directorate of Oversight and Compliance, Regulatory 
and Audit Matters Office, 9010 Defense Pentagon, Washington, DC 20301-
9010.
    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: Dr. Patricia Moseley, Defense Health 
Agency, Clinical Support Division, Condition-Based Specialty Care 
Section, 703-681-0064.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Purpose of the Proposed Rule

1. The Need for the Regulatory Action
    This proposed rule seeks to comprehensively update TRICARE mental 
health and substance use disorder benefits, consistent with earlier 
Department of Defense and Institute of Medicine recommendations, 
current standards of practice in mental health and addiction medicine, 
and our governing laws. The Department of Defense remains intently 
focused on ensuring the mental health of our service members and their 
families, as this continues to be a top priority. The Department is 
also working to further de-stigmatize mental health treatment and 
expand the ways by which our beneficiaries can access authorized mental 
health services. This proposed regulatory action is in furtherance of 
these goals and imperative in order to eliminate requirements that may 
be viewed as barriers to medically necessary and appropriate mental 
health services.
(a) Eliminating Quantitative and Qualitative Treatment Limitations on 
SUD and Mental Health Benefit Coverage and Aligning Beneficiary Cost-
Sharing for Mental Health and SUD Benefits With Those Applicable to 
Medical/Surgical Benefits
    The requirements of the Mental Health Parity Act (MHPA) of 1996 and 
the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction 
Equity Act (MHPAEA) of 2008, as well as the plan benefit provisions 
contained in the Patient Protection and Affordable Care Act (PPACA) do 
not apply to the TRICARE program. The provisions of MHPAEA and PPACA 
serve as models for TRICARE in proposing changes to existing benefit 
coverage. These changes intend to reduce administrative barriers

[[Page 5062]]

to treatment and increase access to medically or psychologically 
necessary mental health care consistent with TRICARE statutory 
authority.
    Section 703 of the National Defense Authorization Act (NDAA) 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015, 
signed into law December 19, 2014, amends section 1079 of title 10 of 
the U.S.C. to remove prior existing statutory limits and requirements 
on TRICARE coverage of inpatient mental health services. This proposed 
rule is necessary to conform the regulation to provisions in the 
recently enacted law. Specifically, TRICARE coverage is no longer 
subject to an annual limit on stays in inpatient mental health 
facilities of 30 days for adults and 45 days for children. In addition, 
TRICARE coverage is no longer subject to a 150-day annual limit for 
stays at Residential Treatment Centers (RTCs) for eligible 
beneficiaries.
    In addition to the elimination of these statutory inpatient day 
limits, and corresponding waiver provisions, the proposed rule also 
seeks to eliminate other regulatory quantitative and qualitative 
treatment limitations, consistent with principles of mental health 
parity and our governing laws. These include the 60-day partial 
hospitalization program limitation; annual and lifetime limitations on 
SUD treatment; presumptive limitations on outpatient services including 
the number of psychotherapy sessions per week and family therapy 
sessions for the treatment of SUD per benefit period; and limitations 
on the smoking cessation program. While there are clear waiver 
provisions in place for all of the existing quantitative treatment 
benefit limitations in order to ensure that beneficiaries have access 
to medically or psychologically necessary and appropriate care, these 
presumptive limitations may serve as an administrative barrier and thus 
disincentive to continued care regardless of the continued medical 
necessity of such care.
    Additionally, this rulemaking proposes to remove the categorical 
exclusion on treatment of gender dysphoria. This proposed change will 
permit coverage of all non-surgical medically necessary and appropriate 
care in the treatment of gender dysphoria, consistent with the program 
requirements applicable for treatment of all mental or physical 
illnesses. Surgical care remains prohibited by statute at 10 U.S.C. 
1079(a)(11), as discussed further below.
    Finally, following the recent repeal (section 703 of the NDAA for 
FY 15) of the statutory authority (previously codified at 10 U.S.C. 
1079(i)(2)) for separate beneficiary financial liability for mental 
health benefits, the proposed rule revises the cost-sharing 
requirements for mental health and SUD benefits to be consistent with 
those that are applicable to TRICARE medical and surgical benefits.
(b) Expanding Coverage To Include Mental Health and SUD Intensive 
Outpatient Programs and Treatment of Opioid Use Disorder
    Currently, TRICARE benefits do not fully reflect the full range of 
contemporary SUD treatment approaches (i.e., outpatient counseling and 
intensive outpatient program (IOP)) that are now endorsed by the 
American Society of Addiction Medicine (ASAM), the Department of Health 
and Human Services (DHHS) Substance Abuse and Mental Health Services 
Administration (SAMHSA), and the VA/DoD Clinical Practice Guidelines 
(CPGs) for SUDs. Some existing benefit coverage restrictions inhibit 
access to community based outpatient services; may cause beneficiaries 
to be separated from their families while they are receiving treatment 
in geographically distant facilities; and may result in beneficiaries 
electing to forgo treatment. Further, restrictions may lead to 
difficulty receiving appropriate step-down care following acute 
inpatient and residential treatment services. TRICARE currently limits 
SUD treatment to TRICARE-authorized SUD Rehabilitation Facilities 
(SUDRFs) and hospitals.
    An amendment to the regulation is necessary to authorize TRICARE 
benefit coverage of medically and psychologically necessary services 
and supplies which represent appropriate medical care and that are 
generally accepted by qualified professionals to be reasonable and 
adequate for the diagnosis and treatment of mental disorders. Office-
based individual outpatient treatment is an effective, empirically-
validated level of treatment for substance use disorder endorsed by The 
ASAM Criteria: Treatment Criteria for Addictive, Substance-Related, and 
Co-Occurring Conditions, Third Edition, 2013. Furthermore, TRICARE 
coverage of medication assisted treatment (MAT) for opioid use 
disorder, extended through regulatory revisions, as published in the 
Federal Register on October 22, 2013 (78 FR 62427), is currently 
limited to MAT provided by a TRICARE authorized SUDRF. This proposed 
revision of the TRICARE SUD treatment benefit will allow office-based 
opioid treatment (OBOT) by individual TRICARE-authorized physicians and 
will also add coverage of qualified opioid treatment programs (OTPs) as 
TRICARE authorized institutional providers of SUD treatment for opioid 
use disorder, which will expand access to this type of care.
(c) Streamlining Requirements for Institutional Mental Health and SUD 
Providers To Become TRICARE Authorized Providers
    The current TRICARE certification requirements for institutional 
mental health and SUD providers were implemented over 20 years ago and 
designed to create comprehensive, stand-alone standards to address the 
full spectrum of requirements and expectations for mental health 
facilities and providers, rather than as mere supplements to the 
standards employed by the Joint Commission, which at the time had moved 
toward a more general set of facility standards. Over the last several 
decades, the accreditation process for institutional providers has 
evolved, and these standards are now monitored through a number of 
industry-accepted accrediting bodies. While TRICARE's comprehensive 
certification standards were once considered necessary to ensure 
quality and safety, these comprehensive certification requirements are 
now proving to be overly restrictive and at times inconsistent with 
current industry-based institutional provider standards and 
organization. There are currently several geographic areas that are 
inadequately served because providers in those regions do not meet 
TRICARE certification requirements, even though they may meet the 
industry standard. The proposed rule seeks to streamline TRICARE 
regulations to be consistent with industry standards for authorization 
of qualified institutional providers of mental health and SUD 
treatment. It is anticipated that these revisions will result in an 
increase in the number and geographic coverage areas of participating 
institutional providers of mental health and SUD treatment for TRICARE 
beneficiaries.
(d) TRICARE Reimbursement Methodologies for Newly Recognized Mental 
Health and SUD Intensive Outpatient Programs and Opioid Treatment 
Programs
    Along with recognition of several new categories of TRICARE 
authorized providers, the proposed rule establishes reimbursement 
methodologies for these providers. Specifically, new reimbursement 
methodologies have been proposed for IOPs for mental health and SUD 
treatment as well as OTPs, as these providers have not

[[Page 5063]]

previously been recognized by TRICARE and thus appropriate 
reimbursement methodologies must be established. Existing reimbursement 
methodologies for SUDRFs, RTCs, and PHPs will continue to apply.
2. Legal Authority for the Regulatory Action
    This regulation is proposed under the authorities of 10 U.S.C., 
section 1073, which authorizes the Secretary of Defense to make 
decisions concerning TRICARE and to administer the medical and dental 
benefits provided in title 10 U.S.C., chapter 55. The Department is 
authorized to provide medically necessary and appropriate medical care 
for mental and physical illnesses, injuries and bodily malfunctions, 
including hospitalization, outpatient care, drugs, and treatment of 
mental conditions under 10 U.S.C. 1077(a)(1) through (3) and (5). 
Although section 1077 identifies the types of health care to be 
provided in military treatment facilities (MTFs) to those authorized 
such care under section 1076, these same types of health care (with 
certain specified exceptions) are authorized for coverage within the 
civilian health care sector for ADFMs under section 1079 and for 
retirees and their dependents under section 1086. In general, the scope 
of TRICARE benefits covered within the civilian health care sector and 
the TRICARE authorized providers of those benefits are found at 32 CFR 
199.4 and 199.6, respectively.
    TRICARE beneficiary cost-sharing is governed by statute and 
regulation based upon both the beneficiary category and TRICARE option 
being utilized. Pursuant to 10 U.S.C. 1079(b)(1), dependents of members 
of the uniformed services utilizing TRICARE Standard are responsible 
for a $25 beneficiary cost-share for each covered inpatient admission 
to a hospital, or the amount the beneficiary or sponsor would have been 
charged had the inpatient care been provided in a Uniformed Service 
hospital, whichever is greater. Section 1079(i)(2) permits the 
Secretary to prescribe separate payment requirements for the provision 
of mental health services and, under this authority, the Secretary did 
prescribe different copays for mental health versus medical/surgical 
benefits for active duty family members under the TRICARE Standard 
option as well as for retirees, their family members, and survivors 
under the TRICARE Prime option.
    Under TRICARE Standard, an inpatient cost-sharing amount for mental 
health services of $20 per day for each day of inpatient admission was 
established by regulation (32 CFR 199.4(f)(2)(ii)(D)) and applies to 
admissions to any hospital for mental health services, any residential 
treatment facility, any substance use rehabilitation facility, and any 
partial hospitalization program (PHP) providing mental health services.
    Section 731 of the NDAA for FY 1994 (Pub. L. 103-160) directed the 
Secretary of Defense to implement a health benefit option modelled on 
health maintenance organization plans offered in the private sector. 
This uniform health maintenance organization (HMO) benefit is known as 
TRICARE Prime and was implemented through regulation (32 CFR 199.17 and 
199.18). Pursuant to 10 U.S.C. 1097(e), the Secretary of Defense is 
authorized to prescribe by regulation a premium, deductible, copayment, 
or other charge for health care for Prime beneficiaries. The specific 
cost-sharing requirements for Prime are found at 32 CFR 199.18. Under 
TRICARE Prime, the regulation (32 CFR 199.18(f)(3)(ii) and (e)(3)) 
established an outpatient copay of $25 per mental health visit and $17 
per group outpatient mental health visit and $40 per diem charge for 
inpatient mental health for retirees, their family members, and 
survivors. In establishing TRICARE Prime, these separate and higher 
copayments for mental health services were determined to be necessary 
to preserve the distinct treatment of mental health services as 
authorized by law in effect at the time.
    Section 703 of the NDAA for FY 2015 enacted a statutory amendment 
to 10 U.S.C. 1079, effective December 19, 2014. This action removed the 
authority for separate patient cost-sharing of mental health services 
and necessitates regulatory changes to re-classify partial 
hospitalization services as outpatient services for purposes of cost-
sharing and to bring the active duty family member Standard inpatient 
cost-sharing regulations into alignment with the statute. The proposed 
regulatory changes further equalize the retiree and dependent mental 
health copay amounts to the medical/surgical copay amounts under 
TRICARE Prime.
    With respect to institutional provider reimbursement, pursuant to 
10 U.S.C. 1079(i)(2), the Secretary is required to publish regulations 
establishing the amount to be paid to any provider of services, 
including hospitals, comprehensive outpatient rehabilitation 
facilities, and any other institutional facility providing services for 
which payment may be made. The amount of such payments shall be 
determined, to the extent practicable, in accordance with the same 
reimbursement rules as apply to payments to providers of services of 
the same type under Medicare. TRICARE provider reimbursement methods 
are found at 32 CFR 199.14. When it is not practicable to adopt 
Medicare's methods or Medicare has no established reimbursement 
methodology (e.g. Medicare does not reimburse freestanding SUDRFs or 
PHPs that are not hospital-based or part of a Community Mental Health 
Clinic, while TRICARE does), TRICARE establishes its own rates through 
proposed and final rulemaking. This rule invites comments on the 
approach proposed to be adopted by TRICARE.

B. Summary of the Major Provisions of the Proposed Rule

    The proposed rule makes a number of comprehensive revisions to the 
TRICARE mental health and SUD treatment coverage. In an effort to 
further de-stigmatize SUD care, treatment of SUDs is no longer 
separately identified as a limited special benefit under 32 CFR 
199.4(e) but rather has now been incorporated into the general mental 
health provisions in Sec.  199.4(b) governing institutional benefits 
and Sec.  199.4(c) governing professional service benefits. Further, 
this proposed rule seeks to eliminate a number of mental health and SUD 
quantitative and qualitative treatment limitations, and corresponding 
waiver provisions, instead relying on determinations of medical 
necessity and appropriate utilization management tools, as are used for 
all other medical and surgical benefits. Proposed revisions include 
eliminating:
     All inpatient mental health day limits, following the 
statutory revisions to 10 U.S.C. 1079;
     The 60-day partial hospitalization and SUDRF residential 
treatment limitations;
     Annual and lifetime limitations on SUD treatment;
     Presumptive limitations on outpatient services including 
the six-hours per year limit on psychological testing; the limit of two 
sessions per week for outpatient therapy; and limits for family therapy 
(15 visits) and outpatient therapy (60 visits) provided in free-
standing or hospital based SUDRFs;
     The limit of two smoking cessation quit attempts in a 
consecutive 12 month period and 18 face-to-face counseling sessions per 
attempt; and
     The regulatory prohibition that categorically excludes all 
treatment of gender dysphoria.
    The rule also proposes changes to cost-sharing for mental health 
treatment for TRICARE Prime and Standard/Extra

[[Page 5064]]

beneficiaries to align with the applicable cost-sharing provisions for 
other non-mental health inpatient and outpatient benefits. 
Additionally, revisions have been proposed to clearly identify services 
that will be cost-shared on an inpatient (e.g., inpatient admissions to 
a hospital, residential treatment center, SUDRF residential treatment 
program, or skilled nursing facility) versus outpatient (including 
partial hospitalization programs, intensive outpatient treatment 
services, and opioid treatment program services) cost-sharing basis to 
ensure consistency with the statutory requirements in 10 U.S.C. 1079 
and 1086. In many cases, these proposed modifications to cost-sharing 
would enhance TRICARE beneficiary access to care through lower out-of-
pocket costs.
    The proposed regulatory language defines and authorizes new 
services by TRICARE authorized institutional and individual providers 
of SUD care outside of SUDRF settings at Sec. Sec.  199.2 and 199.6. 
Revisions to treatment benefits at Sec.  199.4 and Sec.  199.6 would 
allow intensive outpatient programs (IOPs) for mental health and SUD 
treatment; care in opioid treatment programs (OTPs); and outpatient SUD 
treatment (i.e., office-based opioid treatment, psychosocial treatment 
and family therapy) by individual TRICARE authorized providers.
    Significant revisions to 32 CFR 199.6 are proposed in order to 
eliminate the administratively burdensome provider certification 
process and streamline approval for institutional mental health and SUD 
providers to become TRICARE authorized providers. In multiple regions 
providers may meet industry standards but do not meet TRICARE 
certification requirements. Consequently providers in these regions are 
unable to serve TRICARE beneficiaries. The applicable provisions for 
residential treatment centers, psychiatric and SUD partial 
hospitalization programs, and SUDRFs, have been rewritten in their 
entirety to address institutional provider eligibility, organization 
and administration, participation agreement requirements and any other 
requirements for approval as a TRICARE authorized provider. The 
requirement and formal process of certification is proposed for 
elimination. Similarly, new regulatory provisions have been proposed 
for the newly recognized categories of institutional providers, namely 
IOPs and OTPs.
    Finally, amendments to 32 CFR 199.14, which specifies provider 
reimbursement methods, are proposed to establish allowable all-
inclusive per diem payment rates for psychiatric and SUD PHP, IOP and 
OTP services.

C. Costs and Benefits

    The proposed amendment is not anticipated to have an annual effect 
on the economy of $100 million or more. An independent government cost 
estimate found that this proposed rule is estimated to have a net 
increase in costs of approximately $55 million. The government's 
regulatory impact analysis based on this cost estimate can be found in 
the docket folder associated with this proposed rule at http://www.regulations.gov/#!docketDetail;D=DOD-2015-HA-0109. To summarize, 
provisions to implement mental health parity account for approximately 
$34 million (62%) of the $55 net cost increase. While modifying mental 
health cost-sharing will increase costs, these revisions are required 
as the former statutory authority for mental health-specific cost 
sharing has been deleted from the statute (section 703 of the NDAA for 
FY15). As a result, the existing statutory cost-shares are utilized and 
this aligns mental health cost-shares with the current medical-surgical 
cost-shares. The largest cost increase ($21.6 million) is attributable 
to lowering outpatient mental health cost-sharing for Non-Active Duty 
Dependent (NADD) TRICARE beneficiaries (from $25 per visit to the 
medical/surgical outpatient cost-sharing of $12 per visit).
    Elimination of the statutory day limits for inpatient psychiatric 
and Residential Treatment Center (RTC) care for children (to comply 
with section 703 of the NDAA for FY15) will only minimally increase 
costs. This is because these previously published presumptive day 
limits were also subject to waivers and TRICARE had been reimbursing 
for medically necessary inpatient stays with waivers when continued 
medical necessity was supported. Eliminating the limit of two sessions 
per week for outpatient therapy is estimated to incur an increased cost 
($7.5 million), but this is based on the conservative assumption that 
the proportion of NADD beneficiaries who will pursue three 
psychotherapy sessions per week is comparable to the proportion of 
Active Duty Service Members (ADSMs) who do so (17%), even though ADSMs 
incur no cost-sharing and most receive psychotherapy within MTFs 
instead of civilian providers. Eliminating other limits (e.g., annual 
and lifetime limits on SUD treatment, smoking cessation program limits, 
and others as outlined above) will have a relatively minimal increase 
in costs. Overall, the benefit of removing these quantitative limits to 
mental health treatment will ensure that all beneficiaries receive the 
appropriate amount of care based on medical and psychological 
necessity.
    Creating additional levels, providers, and types of mental health 
care (e.g., intensive outpatient programs, opioid treatment programs, 
non-surgical coverage for gender dysphoria, and also allowing 
outpatient substance use treatment) will increase costs to the program 
by approximately $16.8 million. Some of the cost increases will be 
offset through utilization of lower and less expensive levels of care 
(e.g., IOP versus residential or full day PHP) and prevention of 
relapse requiring more costly, intensive inpatient intervention. 
Currently, PHPs are the only step-down care from inpatient substance 
use disorder treatment currently covered by TRICARE. In many rural and 
sparely-populated states, such as Utah, Arizona, New Mexico, South 
Dakota, Wyoming, Idaho, and Montana, there are relatively few PHPs (on 
average 20 or fewer, with 4 states having fewer than 10 PHPs). IOPs in 
these rural states, on the other hand, are four times more plentiful 
than PHPs, and TRICARE coverage of IOP substance use disorder treatment 
will greatly increase beneficiary access to SUD treatment, particularly 
in these remote geographic areas. Similarly, in FY14, 15,000 services 
of psychotherapy by individual professional providers were denied for 
beneficiaries with an SUD. Coverage of outpatient SUD treatment by 
TRICARE authorized individual providers will facilitate early 
intervention for SUDs and help reduce relapse following more intensive 
treatment though the availability of outpatient aftercare from these 
professionals. Additionally, TRICARE currently has an estimated 15,000 
to 20,000 beneficiaries with opioid use disorder who, under the current 
benefit, cannot access medication-assisted treatment (MAT; e.g., 
buprenorphine or methadone). According to SAMHSA, there are 
approximately 1155 OTPs in the United States and 31,363 physicians with 
a DEA waiver to provide MAT for opioid use disorder, but none of these 
facilities or providers is TRICARE-authorized or eligible to be 
reimbursed by TRICARE under current regulation. Once the changes 
proposed in this rule are implemented, TRICARE beneficiaries will have 
ready access to MAT on an outpatient basis as recommended by ASAM and 
clinical practice guidelines developed jointly by the Department of 
Veterans Affairs (VA) and DoD.
    Streamlining requirements for institutional providers to become 
TRICARE authorized providers of

[[Page 5065]]

mental health and SUD care will incur an estimated increased cost of 
$3.2 million due to an anticipated increase in the number of 
institutional providers joining the TRICARE network. To focus on RTC 
care as an example, TRICARE strives to provide a robust mental health 
treatment benefit to our child beneficiaries, but access to RTC care 
for children is significantly limited in many geographic areas by 
TRICARE's existing certification requirements. Less than one sixth of 
RTCs certified by the Joint Commission are currently TRICARE certified, 
and only about one half of individual states have at least one TRICARE-
certified RTC. California, Oklahoma, Alabama, and Louisiana all have no 
TRICARE-certified RTCs but do have sizeable TRICARE populations. 
Revising TRICARE institutional provider authorization requirements for 
RTCs will make it much more likely that parents will seek RTC care for 
their children whose behavioral health condition is so severe as to 
require RTC services, and this change to the TRICARE behavioral health 
benefit is projected to increase utilization of RTC services by 20 
percent. Ultimately, the net increase in costs associated with this 
proposed rule will greatly be outweighed by the enhanced mental health 
benefits, options and access available to beneficiaries.

II. Discussion of the Proposed Rule

A. Background

    TRICARE implemented both financial and treatment controls to manage 
care, ensure quality, and control costs for medically or 
psychologically necessary and appropriate mental health and substance 
use care. In part, these controls have been implemented in response to 
Congressional concerns. In the National Defense Authorization Act for 
Fiscal Year 1991 and the Defense Appropriations Act for Fiscal Year 
1991, Congress addressed the problem of spiraling costs for mental 
health services under the Civilian Health and Medical Program of the 
Uniformed Services (CHAMPUS). As stated by the House Armed Services 
Committee:

    The cost of mental health and substance abuse is of particular 
concern to the committee. While CHAMPUS expenditures have generally 
increased by 50 percent between 1986 and 1989, CHAMPUS mental health 
expenditures have more than doubled. Last year mental health costs 
accounted for about one-quarter of CHAMPUS's total spending far 
above the typical proportion in private employers' health care 
plans. These statutes established: (1) The new day limits for 
inpatient mental health services: 30 days for acute care for 
patients 19 years of age and older, 45 days for acute care for 
patients under 19 years of age, and 150 days of residential 
treatment-each of these limits subject to waiver that takes into 
account the level, intensity and availability of the care needs of 
the patient; and (2) mandated prior authorization for all 
nonemergency inpatient mental health admissions.

    Additionally, in the early 1990s, two Comptroller General Reports 
highlighted the need for mental health program reform within the 
Civilian Health and Medical Program of the Uniform Services (CHAMPUS). 
At the time, there were widespread concerns with the quality of mental 
health care within CHAMPUS as well as fraud and abuse. The Reports 
highlighted weaknesses within the benefit that resulted in unnecessary 
hospital admissions, excessive inpatient stays and sometimes, 
inadequate quality of care. The first of these two reports, ``Defense 
Health Care: Additional Improvements Needed in CHAMPUS's Mental Health 
Program,'' GAO/HRD-93-34, May 1993, stated that, although DoD has taken 
actions to improve the program, several problems persist.'' A second 
Comptroller General Report, ``Psychiatric Fraud and Abuse: Increased 
Scrutiny of Hospital Stays is Needed to Lessen Federal Health Program 
Vulnerability,'' (GAO/HRD-93-92, September 1993) called for 
improvements in the CHAMPUS mental health program to include reversing 
the financial incentives to use inpatient care by introducing larger 
copayments for CHAMPUS inpatient care.
    In response to these concerns, the certification standards for 
mental health facilities as well as treatment limits and cost-sharing 
requirements applicable to mental health and SUD services under the 
TRICARE program were implemented in a 1995 Final Rule, ``Civilian 
Health and Medical Program of the Uniformed Services (CHAMPUS): Mental 
Health Services.'' These standards, limits, and requirements have 
remained in place over the last 20 years.
    In 1996, Congress enacted the Mental Health Parity Act of 1996 
(MHPA 1996) which required employment-related group health plans and 
health insurance coverage offered in connection with group health plans 
to provide parity in aggregate lifetime and annual dollar limits for 
mental health benefits and medical and surgical benefits. In October 
2008, the Paul Wellstone and Pete Domenici Mental Health Parity and 
Addiction Equity Act (MHPAEA) was signed into law as part of the Tax 
Extenders and Alternative Minimum Tax Relief Act of 2008. The changes 
made by MHPAEA consist of new requirements, including parity for 
substance use disorder benefits, as well as amendments to the existing 
mental health parity provisions enacted in MHPA. This law requires 
group health insurance plans that provide both medical/surgical and 
mental health or substance use disorder benefits to meet parity 
standards. Specifically, financial requirements (e.g., deductibles, co-
payments, or coinsurance) and treatment limitations (e.g., days of 
coverage and number of visits) that apply to mental health or substance 
use disorder benefits cannot be more restrictive than the predominant 
financial requirements and treatment limitations that apply to 
substantially all medical/surgical benefits. The MHPAEA was amended by 
the Patient Protection and Affordable Care Act, as amended by the 
Health Care and Education Reconciliation Act of 2010, to also apply to 
individual health insurance coverage. TRICARE is not a group health 
plan subject to the MHPA 1996, the MHPAEA of 2008, or the Health Care 
and Education Reconciliation Act of 2010. However, the provisions of 
these acts serve as a model for TRICARE in proposing changes to 
existing benefit coverage so as to reduce administrative barriers to 
treatment and increase access to medically or psychologically necessary 
mental health care consistent with TRICARE statutory authority.
    In July 2011, DoD issued a Report to Congress entitled, 
``Comprehensive Plan on Prevention, Diagnosis, and Treatment of 
Substance Use Disorders and Disposition of Substance Use Offenders in 
the Armed Forces,'' in which the Department identified to Congress the 
need to revise certain aspects of TRICARE regulatory language governing 
SUD treatment services to provide a benefit that takes into account 
generally accepted standards of practice. The report is available for 
download at http://health.mil/About-MHS/Defense-Health-Agency/Special-Staff/Congressional-Relations/Reports-to-Congress. DoD's findings were 
affirmed in 2012 by an independent study conducted by the Institute of 
Medicine (IOM) entitled, ``Substance Use Disorders in the U.S. Armed 
Forces,'' (available at www.iom.edu/reports/2012/Substance-Use-Disorders-in-the-Armed-Forces.aspx).
    The Department seeks to revise and streamline TRICARE regulations 
to be consistent with industry standards, as well as to incorporate 
applicable recommendations from the July 2011 Congressional report, the 
IOM 2012 study, and evidence-based practices delineated by the U.S. 
Department of Veterans Affairs (VA) and DoD clinical

[[Page 5066]]

practice guidelines (VA/DoD CPGs) for SUD to improve access to 
medically or psychologically necessary SUD treatment for TRICARE 
beneficiaries in accordance with generally accepted standards of 
practice.

B. Expanded TRICARE Coverage of Mental Health and SUD Treatment

1. Eliminating Quantitative and Qualitative Treatment Limitations on 
SUD and Mental Health Benefit Coverage
    There are existing waiver provisions for all of the quantitative 
treatment benefit limitations to ensure beneficiaries have access to 
medically or psychologically necessary and appropriate treatment. 
However, these limitations, which were designed to contain costs and 
address abuses decades ago, along with differential financial cost-
sharing requirements relative to medical/surgical care are currently 
viewed as barriers to coverage of mental health services.
    This proposed rule seeks to remove a number of quantitative and 
qualitative limits for coverage of mental health and SUD care under the 
TRICARE Program, including:
     All inpatient mental health day (30 days maximum for 
adults and 45 days maximum for children at 32 CFR 199.4(b)(9)) and 
annual day limits (150 days at 32 CFR 199.4(b)(8)) for RTC care for 
beneficiaries 21 years and younger, following the statutory revisions 
to 10 U.S.C. 1079;
     The 60-day limitation on partial hospitalization (32 CFR 
199.4(b)(10)(iv)) and SUDRF residential treatment (32 CFR 
199.4(e)(4)(ii)(A));
     Annual (60 days in a benefit period) and lifetime (three 
treatment episodes--32 CFR 199.4(e)(4)(ii)) limitations on SUD 
treatment;
     Presumptive limitations on outpatient services including 
the six-hour per year limit on psychological testing (32 CFR 
199.4(c)(3)(ix)(A)(5)) and the limit of two sessions per week for 
outpatient therapy (32 CFR 199.4(c)(3)(ix)(B));
     Limits on family therapy (15 visits (32 CFR 
199.4(e)(4)(ii)(C)) and outpatient therapy (60 visits--(32 CFR 
199.4(e)(4)(ii)(B)) provided in free-standing or hospital based SUDRFs; 
and
     The limit of two smoking cessation quit attempts in a 
consecutive 12 month period and 18 face-to-face counseling sessions per 
attempt (32 CFR 199.4(e)(30)).
    This proposed rule will allow coverage of outpatient treatment that 
is medically or psychologically necessary, including family therapy and 
other covered diagnostic and therapeutic services, by a TRICARE 
authorized institutional provider or by authorized individual mental 
health providers without limits on the number of treatment sessions. 
The removal of these limitations also recognizes that SUDs are chronic 
conditions with periodic phases of relapse and readmission, often 
requiring multiple interventions over several years to achieve full 
remission. All claims submitted for services under TRICARE remain 
subject to review for quality and appropriate utilization in accordance 
with the Quality and Utilization Review Peer Review Organization 
Program, under 10 U.S.C. 1079(n) and 32 CFR 199.15.
    The proposed rule also removes certain regulatory exclusions for 
the treatment of gender dysphoria for TRICARE beneficiaries who are 
diagnosed by a TRICARE authorized, qualified mental health 
professional, practicing within the scope of his or her license, to be 
suffering from a mental disorder, as defined in 32 CFR. 199.2. It is no 
longer justifiable to categorically exclude and not cover currently 
accepted medically and psychologically necessary treatments for gender 
dysphoria (such as psychotherapy, pharmacotherapy, and hormone 
replacement therapy) that are not otherwise excluded by statute. 
(Section 1079(a)(11) of title 10, U.S.C., excludes from CHAMPUS 
coverage surgery which improves physical appearance but is not expected 
to significantly restore functions, including mammary augmentation, 
face lifts, and sex gender changes.)
2. Aligning Beneficiary Cost-Sharing for Mental Health and SUD Benefits 
With Those Applicable to Medical/Surgical Benefits
    Following the recent repeal of statutory authority for separate 
beneficiary financial liability for mental health benefits, the 
proposed rule eliminates any differential in cost-sharing between 
mental health and SUD benefits and medical/surgical benefits. The 
following regulatory changes to 32 CFR 199.4(f) and 32 CFR 199.18 will 
reduce financial barriers to both outpatient and inpatient mental 
health and SUD benefits while, consistent with statutory requirements, 
minimizing out-of-pocket risk for those beneficiaries.
TRICARE Prime Co-Pays
    Active duty family members enrolled in TRICARE Prime pay no 
copayment for inpatient or outpatient services. Currently, retirees and 
their dependents enrolled in Prime pay higher copays for inpatient and 
outpatient mental health services than for other similar non-mental 
health services. Retirees and all other non-active duty dependents 
enrolled in Prime would see the following changes:
     The co-pay for individual outpatient mental health visits 
would be reduced from $25 to $12.
     The co-pay for group outpatient mental health visits would 
be reduced from $17 to $12.
    The per diem charge of $40 for mental health and SUD inpatient 
admissions would be reduced to the non-mental health per diem rate of 
$11, with a minimum charge of $25 per admission.
TRICARE Standard Cost-Sharing
    Currently, active duty family members (ADFMs) utilizing TRICARE 
Standard/Extra pay a higher per diem for mental health inpatient care 
than for other inpatient stays. ADFMs would see the following change:
     The per diem cost-share for inpatient mental health 
services would be reduced from $20/day to the daily charge ($18/day for 
FY16) that would have been charged had the inpatient care been provided 
in a Uniformed Services hospital.
    Retirees and their dependents who are not enrolled in Prime but use 
non-network providers (Standard) for mental health care are generally 
required to pay 25% of the allowable charges for inpatient care (for 
inpatient services subject to the DRG-based payment system or mental 
health per diem payment system, beneficiaries pay the lesser of the per 
diem amount (which is equivalent to 25% of the CHAMPUS-determined 
allowable costs) or 25% of the hospital's billed charges). This would 
not change. Retirees and their dependents using Standard and Extra are 
currently responsible for their outpatient deductible and outpatient 
cost-sharing of 25% (Standard)/20% (Extra) of the CHAMPUS-determined 
allowable costs. This also would not change.
    It is also being proposed that cost-sharing for partial 
hospitalization programs (PHPs) be changed from inpatient to outpatient 
to more accurately reflect the services being rendered, ensure 
consistency with the applicable statutes governing cost-sharing, and to 
further ensure parity between the surgical/medical and mental health 
benefit. The definition of partial hospitalization, by its very nature, 
is inconsistent with the definition of inpatient care. Notwithstanding, 
in a final rule (58 FR 35403) published on July 1, 1993, and pursuant 
to the authority granted to the Secretary to establish different cost-

[[Page 5067]]

shares for mental health care [10 U.S.C. 1079(j)(2)], partial 
hospitalization is currently classified as an inpatient level of care 
for the purposes of cost-sharing by beneficiaries. This classification 
was originally adopted out of concern that the cost-sharing associated 
with outpatient care would result in substantially higher out-of-pocket 
expenses for TRICARE beneficiaries which, in turn, would provide a 
financial incentive for beneficiaries to seek a higher level of care 
(i.e., acute or residential) than may be necessary. As a result, 
authority was employed to cost-share partial hospitalization services 
on an inpatient basis. It is important to note, however, beneficiaries 
now have the ability to minimize cost-sharing through enrollment 
options available under the TRICARE managed care program. As noted 
above, ADFMs enrolled in TRICARE Prime/Prime Remote, do not pay co-pays 
for inpatient or outpatient services. For retirees and their dependents 
enrolled in Prime, the current inpatient per diem charge of $40 for 
partial hospitalization program services would be reduced to an 
outpatient co-pay of $12 per day of services.
    Realigning cost-sharing of partial hospitalization program services 
from inpatient to outpatient will impact ADFMs utilizing TRICARE 
Standard/Extra. Specifically, for ADFMs, the current inpatient per diem 
charge of $20/day (with a minimum $25 charge per admission) for partial 
hospitalization program services would instead be subject to the 
applicable outpatient deductible and cost-sharing of 20% (Standard)/15% 
(Extra) of the PHP per diem rate. For example, if the full-day PHP per 
diem rate is $382, the cost-sharing for ADFMs would be $57.30 under 
Extra and $76.40 under Standard. However, these ADFMs would still 
retain the option of enrolling in TRICARE Prime/Prime Remote, where the 
cost-sharing is $0 (i.e., no cost-sharing is applied). The financial 
liability of ADFMs under Extra and Standard would be further limited by 
the annual $1,000 catastrophic cap.
    In an analysis to evaluate the potential financial impact on non-
Prime ADFMs (i.e., ADFMs utilizing TRICARE Extra and Standard options) 
of converting to PHP outpatient cost-sharing, it was found that in FY 
2014 there were only 143 non-Prime ADFMs that had full-day or half-day 
PHP care. On average, they received 17 PHP services during the year 
with an average allowed amount per service of $343. Based on these 
figures, non-Prime ADFMs' out-of-pocket liability (accumulated cost-
sharing) would be approximately $875 under Extra, or $1,166 under 
Standard. (However, Standard ADFM liability in this example would be 
limited by the $1,000 catastrophic cap.) This analysis indicates that a 
very small number of non-Prime ADFMs have historically used PHP care 
and that those who have would, on average, either already hit or would 
be likely to hit the catastrophic cap. It is estimated that shifting to 
outpatient cost-sharing for PHP might cause about 50 to 80 additional 
non-Prime ADFMs to hit the catastrophic cap due to the higher PHP cost-
sharing.
    Conversion of PHP cost-sharing from inpatient to outpatient would 
more accurately reflect the services being provided. Further, Congress 
revoked the statutory authority granted to the Secretary to establish 
different cost-shares for mental health care. These factors provide the 
impetus for adoption of outpatient cost-sharing for PHPs.
3. Intensive Outpatient Program (IOP) Care for Psychiatric and 
Substance Use Disorders
    Substance Use Disorder IOP services are currently not identified as 
separate levels of care from partial hospitalization in TRICARE 
regulations. Although hospital-based and free-standing facilities that 
are TRICARE authorized to offer partial hospitalization services can 
provide less intensive IOP, covered at the half-day partial 
hospitalization rate, the existing TRICARE certification requirements 
for these programs restrict the typical SUD IOP from being recognized 
as a separate program and provider type in its own right. SUD IOPs 
offer a validated level of care endorsed by ASAM, and the provision of 
IOP services through institutional providers also would have the 
potential benefit of expanding the volume of TRICARE participating 
providers and improving access to care.
    While TRICARE beneficiaries may currently receive treatment for SUD 
or psychiatric disorders at a TRICARE authorized PHP, the proposed rule 
clearly authorizes IOP care as a covered benefit for treatment of SUD 
and psychiatric disorders. This proposed rule would authorize IOP care 
by a new class of institutional provider, which will provide a less 
restrictive setting than an inpatient or partial hospital setting. IOP 
care institutional providers will be required to be accredited by an 
accrediting body approved by the Director, Defense Health Agency, and 
meet the proposed requirements outlined in 32 CFR 199.6(b)(4)(xviii) in 
order to become TRICARE authorized.
    Similar to IOPs for SUD treatment, psychiatric IOPs are not 
currently explicitly reimbursed by TRICARE. This lack of authorization 
for IOP psychiatric care has restricted coverage options for TRICARE 
beneficiaries who may require step-down services from an inpatient stay 
or a PHP. As described regarding SUD IOP, psychiatric IOP services are 
considered separate levels of care from psychiatric partial 
hospitalization. Although current regulatory language defines partial 
hospitalization broad enough to permit coverage of IOP treatment 
conducted under the auspices of partial hospitalization, the absence of 
explicit IOP treatment coverage, along with the requirement that all 
IOP level of care be rendered by a TRICARE certified PHP, has limited 
access to this level of care and has led to confusion regarding TRICARE 
coverage of these services. The proposed regulatory language explicitly 
authorizing IOP treatment and establishing an authorized provider 
category will resolve these issues.
4. Treatment of Opioid Use Disorder
    This rule proposes expanded treatment of opioid use disorder, with 
the provision of medication assisted treatment (MAT), through both 
TRICARE authorized institutional and individual providers. In addition 
to SUD IOPs, this rule proposes TRICARE coverage of opioid treatment 
programs (OTPs), with the inclusion of a definition of OTPs in 32 CFR 
199.2 and the requirements for OTPs to become TRICARE authorized 
institutional providers outlined in 32 CFR 199.6(b)(4)(xix). 
Additionally, this rule proposes coverage of OBOT, as defined in 32 CFR 
199.2, and coverage of MAT on an outpatient basis as extended in 32 CFR 
199.4(c)(3)(ix)(A)(9).
5. Outpatient Substance Use Disorder Treatment by Individual 
Professional Providers
    By current regulation, reimbursement for office-based SUD 
outpatient treatment provided by TRICARE authorized individual mental 
health providers, as specified in 32 CFR 199.6, is not permitted. Such 
outpatient SUD treatment services currently must be provided by a 
TRICARE approved institutional provider (i.e., a hospital-based or 
free-standing SUDRF). However, although some accredited TRICARE 
authorized SUDRFs provide office-based SUD outpatient treatment, 
institutional providers of SUD care primarily provide services to 
patients requiring a higher level of SUD care. This creates a counter-
therapeutic restriction on access to office-based outpatient treatment. 
To address this limitation in access, the proposed

[[Page 5068]]

regulation would revise the current reimbursement regime to provide 
coverage for individual outpatient SUD care, such as office-based 
outpatient treatment, outside of a SUDRF.
    The 2007 report of the DoD Task Force on Mental Health 
(recommendation 5.3.4.8) stated, ``TRICARE should allow outpatient 
substance abuse care to be provided by qualified professionals, 
regardless of whether they are affiliated with a day hospital or 
residential treatment program, including standard individual or group 
outpatient care.'' The DoD Task Force recommendation is consistent with 
the American Psychiatric Association, ASAM, and SAMHSA endorsement of 
individual therapies as an accepted and recommended clinical practice, 
also endorsed by National Institute on Drug Abuse, National Quality 
Forum, and VA/DoD CPG for Management of Substance Use Disorders. These 
proposed changes to the regulation would remove barriers to coverage of 
care for beneficiaries who are appropriate for treatment in an 
outpatient office setting, but who would otherwise only be able to 
access care at a SUDRF as required by current regulations.
    This proposed rule also covers services of TRICARE authorized 
individual mental health providers, within the scope of their licensure 
or certification, offering medically or psychologically necessary SUD 
treatment services (including outpatient and family therapy) outside of 
a SUDRF, to include MAT and treatment of opioid use disorder by a 
TRICARE authorized physician delivering OBOT on an outpatient basis.

C. Streamlined Requirements for Institutional Providers To Become 
TRICARE Authorized Institutional Providers of Mental Health and 
Substance Use Disorder Care

    Nearly two decades ago, the Final Rule: ``Civilian Health and 
Medical Program of the Uniformed Services (CHAMPUS): Mental Health 
Services,'' as published in 60 FR 12419, March 7, 1995, reformed 
quality of care standards and reimbursement methods for inpatient 
mental health services. In the 1995 Final Rule, standards were 
developed to address identified problems of quality of care, fraud, and 
abuse in RTCs, SUDRFs, and PHPs. They were developed to provide ``clear 
[and] specific standards for psychiatric facilities on staff 
qualifications, clinical practices, and all other aspects directly 
impacting the quality of care.''
    Since publication of the 1995 Final Rule, several organizations 
that accredit various forms of healthcare delivery have developed 
strong standards to protect patient care in mental health facilities. 
There are now a number of industry-accepted accrediting bodies with 
standards that meet or exceed the current TRICARE-established standards 
(e.g., TJC, Commission on Accreditation of Rehabilitation Facilities). 
Also in the interim, scientific knowledge, standards of care and 
patient safety, technology, and psychotropic pharmaceuticals have 
improved. Alongside with updating the current benefits, we believe 
streamlining procedures to qualify as a TRICARE authorized 
institutional provider will not only increase access to approved care, 
but also decrease the overall cost of certifying duplicative and now 
unnecessary quality standards first implemented by the 1995 Final Rule.
    This proposed rule simplifies the regulation to account for 
existing industry-wide accepted accreditation standards for TRICARE 
institutional providers of mental health care, including RTCs, 
freestanding PHPs, and freestanding SUDRFs. Requirements for TRICARE 
certification beyond industry-accepted accreditation, while once 
considered necessary to ensure quality and safety, are now proving to 
be unnecessarily restrictive and inconsistent with current 
institutional provider standards and organization. Specifically, the 
proposed rule streamlines procedures and requirements for SUDRFs, RTCs, 
PHPs, IOPs and OTPs to qualify as TRICARE authorized providers, relying 
primarily on accreditation by a national body approved by the Director, 
as opposed to detailed, lengthy, stand-alone TRICARE requirements 
(e.g., regarding such things as the qualifications and authority of the 
clinical director, staff composition and qualifications, and standards 
for physical plant and environment, amongst others). In general, mental 
health and SUD institutional providers may become TRICARE authorized 
institutional providers if the facility is accredited by an accrediting 
organization approved by the Director and agrees to execute a 
participation agreement with TRICARE, as outlined in the proposed 
regulations. This streamlined approval process is a greatly simplified 
process from the current, detailed certification process for current 
institutional providers.
    Furthermore, given that there are now a growing number of 
accrediting bodies established for institutional providers of mental 
health care and industry standards that are widely accepted, the 
proposed rule eliminates by name references to specific accrediting 
bodies (e.g., The Joint Commission (TJC)), where appropriate. Instead, 
the specific mention of accrediting bodies is replaced with the term, 
``an accrediting organization, approved by Director.'' This will allow 
the Defense Health Agency (DHA) flexibility in selecting and 
recognizing the authority of various accrediting bodies to assist in 
authorization of institutional providers of mental health care and SUD 
care. Rather than name all the approved accrediting bodies in 
regulation, DHA will identify specific accrediting bodies for various 
types of mental health care in TRICARE sub-regulatory policy found at 
manuals.tricare.osd.mil.

D. TRICARE Reimbursement Methodologies for Newly Recognized Mental 
Health and SUD Intensive Outpatient Programs and Opioid Treatment 
Programs and Cost-Sharing Methodology

    The newly recognized IOPs and methadone OTPs established in this 
rule will be reimbursed using bundled per diem amounts based on the 
intensity, frequency and duration of services and/or drugs provided in 
these well-established treatment programs. Since IOPs provide a step-
down in services from an inpatient stay or full-day PHP (i.e., the 
intensity, frequency and duration of the services provided in IOPs are 
considered to be less than those provided in an inpatient or PHP 
setting), the per diems will be proportionally reduced from currently 
established full-day PHP per diems. This proportional reduction in per 
diems is consistent with past methodologies used in establishing full-
day and half-day PHP payments. Since IOPs are also provided in PHPs as 
a step-down in intensity of care, the IOP designation will be used in 
lieu of half-day PHP for beneficiaries typically receiving treatment 
two to five hours per day, two to five times a week, as directed by 
their individualized treatment plan, in a PHP authorized setting. The 
IOP services, whether provided in a PHP or newly recognized IOP 
setting, will be paid a regionally adjusted per diem rate of 75 percent 
of the rate for a full-day PHP. In other words, PHP treatments of less 
than six hours--with a minimum of two hours--will be recognized as IOPs 
for coverage and reimbursement under the program.
    OTPs that administer methadone as a treatment for SUD will be 
reimbursed a bundled weekly per diem payment to include the cost of the 
medication, along with integrated psychosocial and medical treatment 
support services. When buprenorphine or naltrexone is administered, 
OTPs will, on the other hand, be reimbursed on a fee-for-service

[[Page 5069]]

basis (i.e., separate payments will be allowed for both the medication 
and accompanying support services) due to the variability in the 
recommended dosage and frequency of the administered drugs based on 
conditions requiring medical oversight. The individual fee-for-service 
payments for buprenorphine and naltrexone will be subject to outpatient 
cost-sharing on a per-visit basis, while the cost-sharing for methadone 
OTP services will be applied on a weekly basis. Established per diem 
rates for OTPs administering methadone will be updated annually by the 
Medicare update factor used for that program's Inpatient Prospective 
Payment System. 32 CFR 199.14(a)(4)(ix) is amended in its entirety to 
reflect payment for psychiatric and SUD PHP, IOP and OTP services as 
discussed above.
1. Intensive Outpatient Program Reimbursement
    Under current regulatory provisions [32 CFR 199.14(a)(2)(ix)(C)], 
the maximum per diem payment amount for a full-day partial 
hospitalization program (minimum of six hours) is 40 percent of the 
average per diem amount per case established under the TRICARE mental 
health per diem reimbursement system for both high and low volume 
psychiatric hospitals and units. Likewise, PHPs less than six hours 
(with a minimum of three hours) are paid a per diem rate at 75 percent 
of the rate for a full-day program. In analysis of the reimbursement 
methodology to be used for reimbursement of IOPs, it became apparent 
that the step-down in intensity, frequency and duration of treatment 
designated as half-day PHPs, were in fact, intensive outpatient 
services provided within a PHP authorized setting. While there is some 
variability in the intensity, frequency and duration of treatment under 
both programs (that is, less than six hours per day with a minimum of 
three hours for half-day PHPs; and two to five times per week, two to 
five hours per day for IOPs), it appears that both the services 
rendered and the professional provider categories responsible for 
providing the services are quite similar. As a result of this 
observation/analysis, a decision has been made to use the IOP 
designation in lieu of half-day PHP for treatment of less than six 
hours per day--with a minimum of two hours per day--rendered in a PHP 
authorized setting. While the minimum hours have been reduced from 
three to two hours per day for coverage/reimbursement, they are still 
within the acceptable range for IOP services typically provided in a 
PHP. Since intensive outpatient services can be provided in either a 
PHP or newly authorized IOP setting, and IOP services are essentially 
the same as half-day PHP services, it is only logical that IOP per 
diems be set at 75 percent of the full-day PHP per diem. This would be 
the case regardless of whether the IOP services were provided in a PHP 
or IOP.
2. Opioid Treatment Program Reimbursement and Cost-Sharing
    As defined in this proposed rule, OTPs are outpatient settings for 
opioid treatment that use a therapeutic maintenance drug for a drug 
addiction when medically or psychologically necessary and appropriate 
for the medical care of a beneficiary undergoing supervised treatment 
for a SUD. The program includes an initial assessment, along with 
integrated psychosocial and medical treatment and support services. 
Since OTPs are individually tailored programs of medication therapy, 
separate reimbursement methodologies are being established based on the 
particular medication being administered for treatment of the SUD. By 
far the most common medication used in OTPs is methadone. Methadone OTP 
care includes initial medical intake/assessment, urinalysis and drug 
dispensing and screening as part of the bundled rate, as well as 
ongoing counseling services. Based on a preliminary review of industry 
billing practices, the proposed weekly bundled per diem for 
administration of methadone will include a daily drug cost of $3, along 
with a $15 per day cost for integrated psychosocial and medical support 
services. The daily projected per diem costs ($18/day) will be 
converted to a weekly per diem rate of $126 ($18/day x 7 days) and 
billed once a week to TRICARE using the Healthcare Common Procedure 
Coding System (HCPCS) code H0020, ``Alcohol and/or drug services; 
methadone administration and/or service.'' The bundled per diem rate is 
how Medicaid and other third-party payers typically reimburse for 
methadone treatment in OTPs. The methadone OTP rate will be updated 
annually by the Medicare update factor used for other mental health 
care services rendered (i.e. the Inpatient Prospective Payment System 
update factor) under TRICARE. The updated rates will be effective 
October 1 of each year, and will be published annually on the TRICARE 
Web site. Outpatient cost-sharing will be applied to a weekly per diem, 
since the copayment amounts for Prime NADDs and ADFMs under Extra and 
Standard would be near, or in some cases, above the daily charge for 
OTPs, essentially resulting in a non-benefit.
    While the other two medications (buprenorphine and naltrexone) are 
more likely to be prescribed and administered in an OBOT setting, OTP 
reimbursement methodologies are being established for both medications 
to allow OTPs the full range of medications currently available for 
treatment of SUDs. Since the reimbursement of buprenorphine and 
naltrexone administered in OTPs are not conducive to the bundled per 
diem methodology due to variations in dosage and frequency of the drug 
and the non-drug services (e.g., administration fees and counseling 
services) will be reimbursed separately on a fee-for-service basis. We 
recognize that Healthcare Common Procedure Coding System (HCPCS) and 
Current Procedural Terminology (CPT) codes are updated on a regular 
basis. The following referenced codes are current as of the writing of 
this proposed rule. If necessary, updated codes will be included in the 
TRICARE Policy Manual or TRICARE Reimbursement Manual found at 
manuals.tricare.osd.mil. In the case of Buprenorphine, the OTP will 
bill TRICARE using the HCPCS code H0047, ``Alcohol and/or other drug 
use services, not otherwise specified,'' for the medical intake/
assessment, drug dispensing and monitoring and counseling, along with 
HCPCS code J8499, ``Prescription drug, oral, non-chemotherapeutic, 
nos,'' for the prescribed medication. The OTP will include the National 
Drug Code for the Buprenorphine, along with the dosage and acquisition 
cost on its claim. Prevailing rates will be established for drug 
related services (e.g., drug monitoring and counseling services) billed 
under HCPCS code H0047, while the drug itself will be reimbursed at 95 
percent of the average wholesale price. Outpatient cost-sharing will be 
applied on a per-visit basis. The preliminary weekly cost estimate for 
Buprenorphine OTPs is $115 per week, assuming that the patient is 
stabilized and visiting the OTP twice a week. This is based on an 
estimated drug cost of $10 per day and an estimated non-drug cost of 
$22.50 per visit [(7 x $10) + (2 x $22.50) = $115/week]. These amounts 
mentioned above are preliminary and estimates and not intended to 
reflect final reimbursement rates.
    Naltrexone, unlike methadone and buprenorphine, is not an agonist 
or partial agonist, but an inhibitor designed to block the brain's 
opiate receptors, diminishing the urges and cravings for alcohol, 
heroin, and prescription painkillers such as oxycodone. Due to the 
extreme cost of

[[Page 5070]]

injectable naltrexone and the fact that it is only administered once a 
month, the drug, its administration fee and ongoing counseling will be 
paid separately on a fee-for-service basis. The OTP will bill TRICARE 
using HCPCS code H0047 for the counseling services and other OTP 
services. Prevailing rates will be established for drug related 
services (e.g., drug monitoring and counseling services) billed under 
HCPCS code H0047. The naltrexone injection will be billed using the 
HCPCS code J2315 with the number of milligrams used, while its 
administration fee will be billed using CPT code 96372. OTP outpatient 
cost-sharing will be applied on a per-visit basis, which in this case 
would be once a month. The projected monthly amount for naltrexone is 
$1,177 ($1,129 for the injectable drug (J2315) + $25 for the drug's 
administration fee (CPT 96372) + $22.50 for other related services 
(H0047) = $1,176.50). These amounts may be subject to change based on 
health care market forces, but are not expected to change 
significantly.
    The Director will have discretionary authority in establishing the 
reimbursement methodologies for new drugs and biologicals that may 
become available for the treatment of SUDs in OTPs. The type of 
reimbursement (e.g., fee-for-service versus bundled per diem payments) 
will be dependent in large part on the variability of the dosage and 
frequency of the medication being administered.
    While TRICARE provider reimbursement methods are normally tied to 
Medicare reimbursement, there were no Medicare reimbursement rules 
applicable to the above providers of services. As a result, DoD 
particularly invites public comment on these proposed reimbursement 
methodologies in an effort to ensure they bear a reasonable 
relationship to the cost of providing such services.
3. Removal of Federal Register Publication of TRICARE Hospital-Specific 
Rates and Fixed Daily Copayment Amounts
    Under current regulatory provisions [32 CFR 199.4(f)(3)(ii)(B) and 
32 CFR 199.14(a)(2)(iv)(C)(4)], annually updated psychiatric hospital 
regional per diems and fixed daily copayment amounts are to be 
published in the Federal Register at approximately the start of each 
fiscal year. While the initial intent of this regulatory requirement 
was to provide widespread notice of changes to regional psychiatric 
hospital per diems and fixed copayment mounts, its relevancy has been 
subsequently overshadowed by the public's online accessibility to the 
TRICARE manuals and reimbursement rates on the official Web site of the 
Military Health System and the DHA (www.health.mil). As a result, the 
public has ready online access to psychiatric hospital regional per 
diems and fixed daily copayment amounts, as well as maximum rates for 
mental health rates, to include freestanding psychiatric PHPs in the 
TRICARE Reimbursement Manual or on the official Web site of the 
Military Health System and the DHA (www.health.mil). Because of the 
readily available online access to updated mental health rates and the 
ongoing administrative burden of publishing annual notices to the 
Federal Register, it is being proposed that the regulatory requirements 
be removed and that updates to psychiatric hospital regional per diems 
and fixed copayment amounts be maintained on the Agency's official Web 
site. However, psychiatric hospitals and units with hospital-specific 
rates will continue to be notified individually of their rates due to 
confidentiality restrictions. The new proposed per diem rates for IOPs 
and methadone OTPs will also be maintained and available to the public 
on the official Web site of the Military Health System and the DHA 
(www.health.mil).

E. Additional Proposed Regulatory Revisions

    There are a number of additional proposed revisions that are more 
technical and administrative in nature that we would like to highlight 
here to ensure the public is made aware of these changes and the 
purpose for the proposed changes. Within 32 CFR 199.2, the definition 
of ``adequate medical documentation, mental health records'' is revised 
to eliminate specific reference to Joint Commission standards and 
instead reference ``standards of an accrediting organization approved 
by the Director'' consistent with the changes in accreditation 
requirements as part of the proposed streamlining of TRICARE approval 
of institutional providers. The definition of ``mental disorder'' has 
been revised to include SUD. The definition of ``Director'' has been 
revised to incorporate the Director of the Defense Health Agency, 
consistent with DoD's current organizational structure. Additionally, 
throughout the proposed revisions, the term ``Director'' has been 
substituted for all other terms such as ``Director, CHAMPUS'' and 
``Director, TRICARE Management Activity.'' A definition of ``qualified 
mental health provider'' has been added for easy reference (as it was 
previously discussed in 32 CFR 199.4 but not specifically defined), and 
the definitions of ``Case managers'' and ``Consultants'' have been 
amended to include qualified mental health providers. Additionally, the 
elimination of quantitative limitations has also necessitated a number 
of revisions to other sections of the regulation that referenced these 
limits, including 32 CFR 199.4(e)(2), 32 CFR 199.7(e)(2) and 32 CFR 
199.15(a)(6). Also, 32 CFR 199.14(a)(2)(iv)(C)(2) clarifies that the 
Medicare's Inpatient Prospective Payment System update factor is used 
for TRICARE's mental health rates.

Regulatory Procedures

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

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distribute impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. Subsequently, the Department completed an Independent 
Government Cost Estimate and the results are referenced in C. Cost and 
Benefits. This proposed rule has been designated a ``significant 
regulatory action,'' although not economically significant, under 
section 3(f) of Executive Order 12866. Accordingly, the proposed rule 
has been reviewed by the Office of Management and Budget (OMB).

Congressional Review Act, 5 U.S.C. 804(2)

    Under the Congressional Review Act, a major rule may not take 
effect until at least 60 days after submission to Congress of a report 
regarding the rule. A major rule is one that would have an annual 
effect on the economy of $100 million or more or have certain other 
impacts. This proposed rule is not a major rule under the Congressional 
Review Act.

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

    The Regulatory Flexibility Act requires that each Federal agency 
analyze options for regulatory relief of small businesses if a rule has 
a significant impact on a substantial number of small entities. For 
purposes of the RFA, small entities include small

[[Page 5071]]

businesses, nonprofit organizations, and small governmental 
jurisdictions. This proposed rule is not an economically significant 
regulatory action, and 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 104-4, Sec. 202, ``Unfunded Mandates Reform Act''

    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any one year of 
$100 million in 1995 dollars, updated annually for inflation. That 
threshold level is currently approximately $140 million. This proposed 
rule will not mandate any requirements for state, local, or tribal 
governments or the private sector.

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

    This rulemaking 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''

    This proposed rule has been examined for its impact under E.O. 
13132, and it does not contain policies that have 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 powers and responsibilities among the various 
levels of Government. Therefore, consultation with State and local 
officials is not required.

Public Comments Invited

    This rulemaking is being issued as a proposed rule. DoD invites 
public comments on all provisions of the proposed rule. All submissions 
will be considered for possible revision to be included in the final 
rule.

List of Subjects in 32 CFR Part 199

    Claims, Dental health, Health care, Health insurance, Individuals 
with disabilities, Mental health, Mental health parity, Military 
personnel, Substance use disorder treatment.

    For the reasons stated in the preamble, the Department of Defense 
proposes to amend 32 CFR part 199 as set forth below:

PART 199--CIVILIAN HEALTH AND MEDICAL PROGRAM OF THE UNIFORMED 
SERVICES (CHAMPUS)

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(b) is amended by:
0
a. Revising the definitions of ``Adequate medical documentation, mental 
health records'', ``Case management'', ``Case managers'', 
``Consultation'', and ``Director'';
0
b. Adding definitions for ``Intensive outpatient program (IOP)'' and 
``Medication assisted treatment (MAT)'' in alphabetical order;
0
c. Removing the definition of ``Mental disorder'';
0
d. Adding definitions for ``Mental disorder, to include substance use 
disorder'', ``Office-based opioid treatment'' and ``Opioid treatment 
program'' in alphabetical order;
0
e. Revising the definitions of ``Other special institutional 
providers'' and ``Partial hospitalization'';
0
f. Adding a definition for ``Qualified mental health provider'' in 
alphabetical order;
0
g. Revising the definition of ``Residential treatment center (RTC)'';
0
h. Adding a definition for ``Substance use disorder rehabilitation 
facility (SUDRF)'' in alphabetical order; and
0
i. Revising the definition of ``Treatment plan''.
    The revisions and additions read as follows:


Sec.  199.2  Definitions

* * * * *
    (b) * * *
* * * * *
    Adequate medical documentation, mental health records. Adequate 
medical documentation provides the means for measuring the type, 
frequency, and duration of active treatment mechanisms employed and 
progress under the treatment plan. Under CHAMPUS, it is required that 
adequate and sufficient clinical records be kept by the provider to 
substantiate that specific care was actually and appropriately 
furnished, was medically or psychologically necessary (as defined by 
this part), and to identify the individual(s) who provided the care. 
Each service provided or billed must be documented in the records. In 
determining whether medical records are adequate, the records will be 
reviewed under the generally acceptable standards (e.g., the standards 
of an accrediting organization approved by the Director, and the 
provider's state or local licensing requirements) and other 
requirements specified by this part. The psychiatric and psychological 
evaluations, physician orders, the treatment plan, integrated progress 
notes (and physician progress notes if separate from the integrated 
progress notes), and the discharge summary are the more critical 
elements of the mental health record. However, nursing and staff notes, 
no matter how complete, are not a substitute for the documentation of 
services by the individual professional provider who furnished 
treatment to the beneficiary. In general, the documentation 
requirements of a professional provider are not less in the outpatient 
setting than the inpatient setting. Furthermore, even though a hospital 
that provides psychiatric care may be accredited under The Joint 
Commission (TJC) manual for hospitals rather than the behavioral health 
standards manual, the critical elements of the mental health record 
listed above are required for CHAMPUS claims.
* * * * *
    Case management. Case management is a collaborative process which 
assesses, plans, implements, coordinates, monitors, and evaluates the 
options and services required to meet an individual's health needs, 
including mental health needs, using communication and available 
resources to promote quality, cost effective outcomes.
    Case managers. A licensed registered nurse, licensed clinical 
social worker, licensed psychologist, licensed physician, or qualified 
mental health provider who has a minimum of two (2) years case 
management experience.
* * * * *
    Consultation. A deliberation with a specialist physician, dentist, 
or qualified mental health provider requested by the attending 
physician primarily responsible for the medical care of the patient, 
with respect to the diagnosis or treatment in any particular case. A 
consulting physician or dentist or qualified mental health provider may 
perform a limited examination of a given system or one requiring a 
complete diagnostic history and examination. To qualify as a 
consultation, a written report to the attending physician of the 
findings of the consultant is required.

    Note:  Staff consultations required by rules and regulations of 
the medical staff of a hospital or other institutional provider do 
not qualify as consultation.

* * * * *
    Director. The Director of the Defense Health Agency, Director, 
TRICARE Management Activity, or Director,

[[Page 5072]]

Office of CHAMPUS. Any references to the Director, Office of CHAMPUS, 
or OCHAMPUS, or TRICARE Management Activity, shall mean the Director, 
Defense Health Agency (DHA). Any reference to Director shall also 
include any person designated by the Director to carry out a particular 
authority. In addition, any authority of the Director may be exercised 
by the Assistant Secretary of Defense (Health Affairs).
* * * * *
    Intensive outpatient program (IOP). A treatment setting capable of 
providing an organized day or evening program that includes assessment, 
treatment, case management and rehabilitation for individuals not 
requiring 24-hour care for mental health disorders, to include 
substance use disorders, as appropriate for the individual patient. The 
program structure is regularly scheduled, individualized and shares 
monitoring and support with the patient's family and support system.
* * * * *
    Medication assisted treatment (MAT). MAT for diagnosed opioid use 
disorder is a holistic modality for recovery and treatment that employs 
evidence-based therapy, including psychosocial treatments and 
psychopharmacology, and FDA-approved medications as indicated for the 
management of withdrawal symptoms and maintenance.
* * * * *
    Mental disorder, to include substance use disorder. For purposes of 
the payment of CHAMPUS benefits, a mental disorder is a nervous or 
mental condition that involves a clinically significant behavioral or 
psychological syndrome or pattern that is associated with a painful 
symptom, such as distress, and that impairs a patient's ability to 
function in one or more major life activities. A substance use disorder 
is a mental condition that involves a maladaptive pattern of substance 
use leading to clinically significant impairment or distress; impaired 
control over substance use; social impairment; and risky use of a 
substance(s). Additionally, the mental disorder must be one of those 
conditions listed in the current edition of the Diagnostic and 
Statistical Manual of Mental Disorders. ``Conditions Not Attributable 
to a Mental Disorder,'' or V codes, are not considered diagnosable 
mental disorders. Co-occurring mental and substance use disorders are 
common and assessment should proceed as soon as it is possible to 
distinguish the substance related symptoms from other independent 
conditions.
* * * * *
    Office-based opioid treatment. TRICARE authorized providers acting 
within the scope of their licensure or certification to prescribe 
outpatient supplies of the medication to assist in withdrawal 
management (detoxification) and/or maintenance of opioid use disorder, 
as regulated by 42 CFR part 8, addressing office-based opioid treatment 
(OBOT).
* * * * *
    Opioid Treatment Program. Opioid Treatment Programs (OTPs) are 
service settings for opioid treatment, either free standing or hospital 
based, that adhere to the Department of Health and Human Services' 
regulations at 42 CFR part 8 and use medications indicated and approved 
by the Food and Drug Administration. Treatment in OTPs provides a 
comprehensive, individually tailored program of medication therapy 
integrated with psychosocial and medical treatment and support services 
that address factors affecting each patient, as certified by the Center 
for Substance Abuse Treatment (CSAT) of the Department of Health and 
Human Services's Substance Abuse and Mental Health Services 
Administration. Treatment in OTPs can include management of withdrawal 
symptoms (detoxification) from opioids and medically supervised 
withdrawal from maintenance medications. Patients receiving care for 
substance use and co-occurring disorders care can be referred to, or 
otherwise concurrently enrolled in, OTP services.
* * * * *
    Other special institutional providers. Certain specialized medical 
treatment facilities, either inpatient or outpatient, other than those 
specifically defined, that provide courses of treatment prescribed by a 
doctor of medicine or osteopathy; when the patient is under the 
supervision of a doctor of medicine or osteopathy during the entire 
course of the inpatient admission or the outpatient treatment; when the 
type and level of care and services rendered by the institution are 
otherwise authorized in this part; when the facility meets all 
licensing or other certification requirements that are extant in the 
jurisdiction in which the facility is located geographically; which is 
accredited by the Joint Commission or other accrediting organization 
approved by the Director if an appropriate accreditation program for 
the given type of facility is available; and which is not a nursing 
home, intermediate facility, halfway house, home for the aged, or other 
institution of similar purpose.
* * * * *
    Partial hospitalization. A treatment setting capable of providing 
an interdisciplinary program of medically monitored therapeutic 
services, to include management of withdrawal symptoms, as medically 
indicated. Services may include day, evening, night and weekend 
treatment programs which employ an integrated, comprehensive and 
complementary schedule of recognized treatment approaches. Partial 
hospitalization is a time-limited, ambulatory, active treatment program 
that offers therapeutically intensive, coordinated, and structured 
clinical services within a stable therapeutic environment. Partial 
hospitalization is an appropriate setting for crisis stabilization, 
treatment of partially stabilized mental disorders, to include 
substance disorders, and a transition from an inpatient program when 
medically necessary.
* * * * *
    Qualified mental health provider. Psychiatrists or other 
physicians; clinical psychologists, certified psychiatric nurse 
specialists, certified clinical social workers, certified marriage and 
family therapists, TRICARE certified mental health counselors, pastoral 
counselors under a physician's supervision, and supervised mental 
health counselors under a physician's supervision.
* * * * *
    Residential treatment center (RTC). A facility (or distinct part of 
a facility) which meets the criteria in Sec.  199.6(b)(4)(vii).
* * * * *
    Substance use disorder rehabilitation facility (SUDRF). A facility 
or a distinct part of a facility that meets the criteria in Sec.  
199.6(b)(4)(xiv).
* * * * *
    Treatment plan. A detailed description of the medical care being 
rendered or expected to be rendered a CHAMPUS beneficiary seeking 
approval for inpatient and other benefits for which preauthorization is 
required as set forth in Sec.  199.4(b). Medical care described in the 
plan must meet the requirements of medical and psychological necessity. 
A treatment plan must include, at a minimum, a diagnosis (either 
International Statistical Classification of Diseases and Related Health 
Problems (ICD) or Diagnostic and Statistical Manual or Mental Disorders 
(DSM)); detailed reports of prior treatment, medical history, family 
history, social history, and physical examination; diagnostic test 
results; consultant's reports (if any); proposed treatment by type 
(such as surgical, medical, and psychiatric); a description

[[Page 5073]]

of who is or will be providing treatment (by discipline or specialty); 
anticipated frequency, medications, and specific goals of treatment; 
type of inpatient facility required and why (including length of time 
the related inpatient stay will be required); and prognosis. If the 
treatment plan involves the transfer of a CHAMPUS patient from a 
hospital or another inpatient facility, medical records related to that 
inpatient stay also are required as a part of the treatment plan 
documentation.
* * * * *
0
3. Section 199.4 is amended by:
0
a. Revising paragraphs (a)(1)(i) and the paragraph heading of (a)(12);
0
b. Adding paragraphs (a)(14), (b)(1)(vi), (b)(2)(xix) and (xx), and 
(b)(3)(xvi) and (xvii);
0
c. Removing paragraphs (b)(4)(viii) and (ix);
0
d. Removing and reserving paragraphs (b)(6)(iii) and (iv);
0
e. Revising paragraph (b)(7) introductory text;
0
f. Revising paragraphs (b)(8), (9), and (10);
0
g. Adding paragraph (b)(11);
0
h. Revising paragraph (c)(3)(ix);
0
i. Removing and reserving paragraphs (e)(4) and (e)(7);
0
j. Revising paragraph (e)(8)(ii)(A);
0
k. Adding paragraph (e)(8)(ii)(D);
0
l. Removing and reserving paragraph (e)(8)(iv)(P);
0
m. Revising paragraphs (e)(8)(iv)(Q) and (R);
0
n. Revising paragraph (e)(11) introductory text
0
o. Revising paragraph (e)(13)(i)(B);
0
p. Removing paragraph (e)(30)(iii);
0
q. Revising paragraph (f)(2)(ii) introductory text;
0
r. Removing paragraph (f)(2)(ii)(D);
0
s. Removing and reserving paragraph (f)(2)(v);
0
t. Revising paragraph (f)(3)(ii);
0
u. Removing paragraph (f)(3)(iv);
0
v. Revising paragraphs (g)(1) and (g)(29);
0
w. Removing and reserving paragraph (g)(72); and
0
x. Revising paragraph (g)(73).
    The revisions and additions read as follows:


Sec.  199.4  Basic program benefits.

    (a) * * *
    (1)(i) Scope of benefits. Subject to all applicable definitions, 
conditions, limitations, or exclusions specified in this part, the 
CHAMPUS Basic Program will pay for medically or psychologically 
necessary services and supplies required in the diagnosis and treatment 
of illness or injury, including maternity care and well-baby care. 
Benefits include specified medical services and supplies provided to 
eligible beneficiaries from authorized civilian sources such as 
hospitals, other authorized institutional providers, physicians, other 
authorized individual professional providers, and professional 
ambulance service, prescription drugs, authorized medical supplies, and 
rental or purchase of durable medical equipment.
* * * * *
    (12) Utilization review, quality assurance, and reauthorization for 
all mental health services provided by institutional providers. * * *
* * * * *
    (14) Confidentiality of substance use disorder treatment. Release 
of any patient identifying information, including that required to 
adjudicate a claim, must comply with the provisions of section 543 of 
the Public Health Service Act, as amended, (42 U.S.C. 290dd-2), and 
implementing regulations at 42 CFR part 2, which governs the release of 
medical and other information from the records of patients undergoing 
treatment of substance use disorder. If the patient refuses to 
authorize the release of medical records which are, in the opinion of 
the Director, Defense Health Agency, or a designee, necessary to 
determine benefits on a claim for treatment of substance use disorder, 
the claim will be denied.
    (b) * * *
    (1) * * *
    (vi) Substance use disorder treatment exclusions. (A) The 
programmed use of physical measures, such as electric shock, alcohol, 
or other drugs as negative reinforcement (aversion therapy) is not 
covered, even if recommended by a physician.
    (B) Domiciliary settings. Domiciliary facilities generally referred 
to as halfway or quarterway houses are not authorized providers and 
charges for services provided by these facilities are not covered.
    (2) * * *
    (xix) Medication assisted treatment. Covered drugs and medicines 
for the treatment of substance use disorder include the substitution of 
a therapeutic drug, with addictive potential, for a drug addiction when 
medically or psychologically necessary and appropriate medical care for 
a beneficiary undergoing supervised treatment for a substance use 
disorder.
    (xx) Withdrawal management (detoxification). For a beneficiary 
undergoing treatment for a substance use disorder, this includes 
management of a patient's withdrawal symptoms (detoxification).
    (3) * * *
    (xvi) Medication assisted treatment. Covered drugs and medicines 
for the treatment of substance use disorder include the substitution of 
a therapeutic drug, with addictive potential, for a drug addiction when 
medically or psychologically necessary and appropriate medical care for 
a beneficiary undergoing supervised treatment for a substance use 
disorder.
    (xvii) Withdrawal management (detoxification). For a beneficiary 
undergoing treatment for a substance use disorder, this includes 
management of a patient's withdrawal symptoms (detoxification).
* * * * *
    (7) Emergency inpatient hospital services. In the case of a medical 
emergency, benefits can be extended for medically necessary inpatient 
services and supplies provided to a beneficiary by a hospital, 
including hospitals that do not meet CHAMPUS standards or comply with 
the nondiscrimination requirements under title VI of the Civil Rights 
Act and other nondiscrimination laws applicable to recipients of 
federal financial assistance, or satisfy other conditions herein set 
forth. In a medical emergency, medically necessary inpatient services 
and supplies are those that are necessary to prevent the death or 
serious impairment of the health of the patient, and that, because of 
the threat to the life or health of the patient, necessitate, the use 
of the most accessible hospital available and equipped to furnish such 
services. Emergency services are covered when medically necessary for 
the active medical treatment of the acute phases of substance 
withdrawal (detoxification), for stabilization and for treatment of 
medical complications for substance use disorder. The availability of 
benefits depends upon the following three separate findings and 
continues only as long as the emergency exists, as determined by 
medical review. If the case qualified as an emergency at the time of 
admission to an unauthorized institutional provider and the emergency 
subsequently is determined no longer to exist, benefits will be 
extended up through the date of notice to the beneficiary and provider 
that CHAMPUS benefits no longer are payable in that hospital.
* * * * *
    (8) Residential treatment for substance use disorder--(i) In 
general. Rehabilitative care, to include withdrawal management 
(detoxification), in an inpatient residential setting of an authorized 
hospital or substance use disorder

[[Page 5074]]

rehabilitative facility, whether free-standing or hospital-based, is 
covered on a residential basis. The medical necessity for the 
management of withdrawal symptoms must be documented. Any withdrawal 
management (detoxification) services provided by the substance use 
disorder rehabilitation facility must be under general medical 
supervision.
    (ii) Criteria for determining medical or psychological necessity of 
residential treatment for substance use disorder. Residential treatment 
for substance use disorder will be considered necessary only if all of 
the following conditions are present:
    (A) The patient has been diagnosed with a substance use disorder.
    (B) The patient is experiencing withdrawal symptoms or potential 
symptoms severe enough to require inpatient care and physician 
management, or who have less severe symptoms that require 24-hour 
inpatient monitoring or the patient's addiction-related symptoms, or 
concomitant physical and emotional/behavioral problems reflect 
persistent dysfunction in several major life areas.
    (iii) Services and supplies. The following services and supplies 
are included in the per diem rate approved for an authorized 
residential treatment for substance use disorder.
    (A) Room and board. Includes use of the residential treatment 
program facilities such as food service (including special diets), 
laundry services, supervised therapeutically constructed recreational 
and social activities, and other general services as considered 
appropriate by the Director, or a designee.
    (B) Patient assessment. Includes the assessment of each individual 
accepted by the facility, and must, at a minimum, consist of a physical 
examination; psychiatric examination; psychological assessment; 
assessment of physiological, biological and cognitive processes; case 
management assessment; developmental assessment; family history and 
assessment; social history and assessment; educational or vocational 
history and assessment; environmental assessment; and recreational/
activities assessment. Assessments conducted within 30 days prior to 
admission to a residential treatment program for substance use disorder 
(SUD) may be used if approved and deemed adequate to permit treatment 
planning by the residential treatment program for SUD.
    (C) Psychological testing. Psychological testing is provided based 
on medical and psychological necessity.
    (D) Treatment services. All services, supplies, equipment and space 
necessary to fulfill the requirements of each patient's individualized 
diagnosis and treatment plan. All mental health services must be 
provided by a TRICARE authorized individual professional provider of 
mental health services. [Exception: Residential treatment programs that 
employ individuals with master's or doctoral level degrees in a mental 
health discipline who do not meet the licensure, certification, and 
experience requirements for a qualified mental health provider but are 
actively working toward licensure or certification may provide services 
within the all-inclusive per diem rate, but such individuals must work 
under the clinical supervision of a fully qualified mental health 
provider employed by the facility.]
    (iv) Case management required. The facility must provide case 
management that helps to assure arrangement of community based support 
services, referral of suspected child or elder abuse or domestic 
violence to the appropriate state agencies, and effective after care 
arrangements, at a minimum.
    (v) Professional mental health benefits. Professional mental health 
benefits are billed separately from the residential treatment program 
per diem rate only when rendered by an attending, TRICARE authorized 
mental health professional who is not an employee of, or under contract 
with, the program for purposes of providing clinical patient care.
    (vi) Non-mental health related medical services. Separate billing 
will be allowed for otherwise covered non-mental health related 
services.
    (9) Psychiatric and substance use disorder partial hospitalization 
services--(i) In general. Partial hospitalization services are those 
services furnished by a TRICARE authorized partial hospitalization 
program and authorized mental health providers for the active treatment 
of a mental disorder. All services must follow a medical model and vest 
patient care under the general direction of a licensed TRICARE 
authorized physician employed by the partial hospitalization program to 
ensure medication and physical needs of all the patients are 
considered. The primary or attending provider must be a TRICARE 
authorized mental health provider (see paragraph (c)(3)(ix) of this 
section), operating within the scope of his/her license. These 
categories include physicians, clinical psychologists, certified 
psychiatric nurse specialists, clinical social workers, marriage and 
family counselors, TRICARE certified mental health counselors, pastoral 
counselors, and supervised mental health counselors. All categories 
practice independently except pastoral counselors and supervised mental 
health counselors who must practice under the supervision of TRICARE 
authorized physicians. Partial hospitalization services and 
interventions are provided at a high degree of intensity and 
restrictiveness of care, with medical supervision and medication 
management. Partial hospitalization services are covered as a basic 
program benefit only if they are provided in accordance with paragraph 
(b)(9) of this section. Such programs must enter into a participation 
agreement with TRICARE; and be accredited and in substantial compliance 
with the specified standards of an accreditation organization approved 
by the Director.
    (ii) Criteria for determining medical or psychological necessity of 
psychiatric and SUD partial hospitalization services. Partial 
hospitalization services will be considered necessary only if all of 
the following conditions are present:
    (A) The patient is suffering significant impairment from a mental 
disorder (as defined in Sec.  199.2) which interferes with age 
appropriate functioning or the patient is in need of rehabilitative 
services for the management of withdrawal symptoms from alcohol, 
sedative-hypnotics, opioids, or stimulants that require medically-
monitored ambulatory detoxification, with direct access to medical 
services and clinically intensive programming of rehabilitative care 
based on individual treatment plans.
    (B) The patient is unable to maintain himself or herself in the 
community, with appropriate support, at a sufficient level of 
functioning to permit an adequate course of therapy exclusively on an 
outpatient basis, to include outpatient treatment program, outpatient 
office visits, or intensive outpatient services (but is able, with 
appropriate support, to maintain a basic level of functioning to permit 
partial hospitalization services and presents no substantial imminent 
risk of harm to self or others). These patients require medical 
support; however, they do not require a 24-hour medical environment.
    (C) The patient is in need of crisis stabilization, acute symptom 
reduction, treatment of partially stabilized mental health disorders, 
or services as a transition from an inpatient program.
    (D) The admission into the partial hospitalization program is based 
on the development of an individualized diagnosis and treatment plan 
expected to be effective for that patient and

[[Page 5075]]

permit treatment at a less intensive level.
    (iii) Services and supplies. The following services and supplies 
are included in the per diem rate approved for an authorized partial 
hospitalization program:
    (A) Board. Includes use of the partial hospital facilities such as 
food service, supervised therapeutically constructed recreational and 
social activities, and other general services as considered appropriate 
by the Director, or a designee.
    (B) Patient assessment. Includes the assessment of each individual 
accepted by the facility, and must, at a minimum, consist of a physical 
examination; psychiatric examination; psychological assessment; 
assessment of physiological, biological and cognitive processes; case 
management assessment; developmental assessment; family history and 
assessment; social history and assessment; educational or vocational 
history and assessment; environmental assessment; and recreational/
activities assessment. Assessments conducted within 30 days prior to 
admission to a partial program may be used if approved and deemed 
adequate to permit treatment planning by the partial hospital program.
    (C) Psychological testing.
    (D) Treatment services. All services, supplies, equipment and space 
necessary to fulfill the requirements of each patient's individualized 
diagnosis and treatment plan. All mental health services must be 
provided by a TRICARE authorized individual professional provider of 
mental health services. [Exception: Partial hospitalization programs 
that employ individuals with master's or doctoral level degrees in a 
mental health discipline who do not meet the licensure, certification, 
and experience requirements for a qualified mental health provider but 
are actively working toward licensure or certification, may provide 
services within the all-inclusive per diem rate, but such individuals 
must work under the clinical supervision of a fully qualified mental 
health provider employed by the partial hospitalization program.]
    (iv) Case management required. The facility must provide case 
management that helps to assure the patient appropriate living 
arrangements after treatment hours, transportation to and from the 
facility, arrangement of community based support services, referral of 
suspected child or elder abuse or domestic violence to the appropriate 
state agencies, and effective after care arrangements, at a minimum.
    (v) Educational services required. Programs treating children and 
adolescents must ensure the provision of a state certified educational 
component which assures that patients do not fall behind in educational 
placement while receiving partial hospital treatment. CHAMPUS will not 
fund the cost of educational services separately from the per diem 
rate. The hours devoted to education do not count toward the 
therapeutic intensive outpatient program or full day program.
    (vi) Family therapy required. The facility must ensure the 
provision of an active family therapy treatment component, which 
assures that each patient and family participate at least weekly in 
family therapy provided by the institution and rendered by a TRICARE 
authorized individual professional provider of mental health services. 
There is no acceptable substitute for family therapy. An exception to 
this requirement may be granted on a case-by-case basis by the 
Director, or designee, only if family therapy is clinically 
contraindicated.
    (vii) Professional mental health benefits. Professional mental 
health benefits are billed separately from the partial hospitalization 
per diem rate only when rendered by an attending, TRICARE authorized 
mental health professional who is not an employee of, or under contract 
with, the partial hospitalization program for purposes of providing 
clinical patient care.
    (viii) Non-mental health related medical services. Separate billing 
will be allowed for otherwise covered, non-mental health related 
medical services.
    (10) Intensive psychiatric and substance use disorder outpatient 
services--(i) In general. Intensive outpatient services are those 
services furnished by a TRICARE authorized intensive outpatient program 
and qualified mental health provider(s) for the active treatment of a 
mental disorder, to include substance use disorder.
    (ii) Criteria for determining medical or psychological necessity of 
intensive outpatient services. In determining the medical or 
psychological necessity of intensive outpatient services, the 
evaluation conducted by the Director, or designee, shall consider the 
appropriate level of care, based on the patient's clinical needs and 
characteristics matched to a service's structure and intensity. In 
addition to the criteria set for this paragraph (b)(10) of this 
section, additional evaluation standards, consistent with such 
criteria, may be adopted by the Director, or designee. Treatment in an 
intensive outpatient setting shall not be considered necessary unless 
the patient requires care that is more intensive than an outpatient 
treatment program or outpatient office visits and less intensive than 
inpatient psychiatric care or a partial hospital program. Intensive 
outpatient services will be considered necessary only if the following 
conditions are present:
    (A) The patient is suffering significant impairment from a mental 
disorder, to include a substance use disorder (as defined in Sec.  
199.2), which interferes with age appropriate functioning. Patients 
receiving a higher intensity of treatment may be experiencing moderate 
to severe instability, exacerbation of severe/persistent disorder, or 
dangerousness with some risk of confinement. Patients receiving a lower 
intensity of treatment may be experiencing mild instability with 
limited dangerousness and low risk for confinement.
    (B) The patient is unable to maintain himself or herself in the 
community, with appropriate support, at a sufficient level of 
functioning to permit an adequate course of therapy exclusively in an 
outpatient treatment program or an outpatient office basis (but is 
able, with appropriate support, to maintain a basic level of 
functioning to permit a level of intensive outpatient treatment and 
presents no substantial imminent risk of harm to self or others).
    (C) The patient is in need of stabilization, symptom reduction, and 
prevention of relapse for chronic mental illness. The goal of 
maintenance of his or her functioning within the community cannot be 
met by outpatient office visits, but requires active treatment in a 
stable, staff-supported environment;
    (D) The admission into the intensive outpatient program is based on 
the development of an individualized diagnosis and treatment plan 
expected to be effective for that patient and permit treatment at a 
less intensive level.
    (iii) Services and supplies. The following services and supplies 
are included in the per diem rate approved for an authorized intensive 
outpatient program.
    (A) Patient assessment. Includes the assessment of each individual 
accepted by the facility.
    (B) Treatment services. All services, supplies, equipment, and 
space necessary to fulfill the requirements of each patient's 
individualized diagnosis and treatment plan. All mental health services 
must be provided by a TRICARE authorized individual qualified mental 
health provider. [Exception: Intensive outpatient

[[Page 5076]]

programs that employ individuals with master's or doctoral level 
degrees in a mental health discipline who do not meet the licensure, 
certification, and experience requirements for a qualified mental 
health provider but are actively working toward licensure or 
certification, may provide services within the all-inclusive per diem 
rate but such individuals must work under the clinical supervision of a 
fully qualified mental health provider employed by the facility.]
    (iv) Case management. When appropriate, and with the consent of the 
person served, the facility should coordinate the care, treatment, or 
services, including providing coordinated treatment with other 
services.
    (v) Professional mental health benefits. Professional mental health 
benefits are billed separately from the intensive outpatient per diem 
rate only when rendered by an attending, TRICARE authorized qualified 
mental health provider who is not an employee of, or under contract 
with, the program for purposes of providing clinical patient care.
    (vi) Non-mental health related medical services. Separate billing 
will be allowed for otherwise covered, non-mental health related 
medical services.
    (11) Opioid treatment programs--(i) In general. Outpatient 
treatment and management of withdrawal symptoms for substance use 
disorder provided at a TRICARE authorized opioid treatment program are 
covered. If the patient is medically in need of management of 
withdrawal symptoms, but does not require the personnel or facilities 
of a general hospital setting, services for management of withdrawal 
symptoms are covered. The medical necessity for the management of 
withdrawal symptoms must be documented. Any services to manage 
withdrawal symptoms provided by the opioid treatment program must be 
under general medical supervision.
    (ii) Criteria for determining medical or psychological necessity of 
an opioid treatment program are set forth in 42 CFR part 8.
    (iii) Services and supplies. The following services and supplies 
are included in the reimbursement approved for an authorized opioid 
treatment program.
    (A) Patient assessment. Includes the assessment of each individual 
accepted by the facility.
    (B) Treatment services. All services, supplies, equipment, and 
space necessary to fulfill the requirements of each patient's 
individualized diagnosis and treatment plan. All mental health services 
must be provided by a TRICARE authorized individual professional 
provider of mental health services. [Exception: opioid treatment 
programs that employ individuals with degrees in a mental health 
discipline who do not meet the licensure, certification, and experience 
requirements for a qualified mental health provider but work under the 
clinical supervision of a fully qualified mental health provider 
employed by the facility.]
    (iv) Case management. Care, treatment, or services should be 
coordinated among providers and between settings, independent of 
whether they are provided directly by the organization or by an 
organization or by an outside source, so that the individual's needs 
are addressed in a seamless, synchronized, and timely manner.
    (c) * * *
    (3) * * *
    (ix) Treatment of mental disorders, to include substance use 
disorder. In order to qualify for CHAMPUS mental health benefits, the 
patient must be diagnosed by a TRICARE authorized qualified mental 
health professional practicing within the scope of his or her license 
to be suffering from a mental disorder, as defined in Sec.  199.2
    (A) Covered diagnostic and therapeutic services. CHAMPUS benefits 
are payable for the following services when rendered in the diagnosis 
or treatment of a covered mental disorder by a TRICARE authorized 
qualified mental health provider practicing within the scope of his or 
her license. Qualified mental health providers are: Psychiatrists or 
other physicians; clinical psychologists, certified psychiatric nurse 
specialists, certified clinical social workers, certified marriage and 
family therapists, TRICARE certified mental health counselors, pastoral 
counselors under a physician's supervision, and supervised mental 
health counselors under a physician's supervision.
    (1) Individual psychotherapy, adult or child. A covered individual 
psychotherapy session is no more than 60 minutes in length. An 
individual psychotherapy session of up to 120 minutes in length is 
payable for crisis intervention.
    (2) Group psychotherapy. A covered group psychotherapy session is 
no more than 90 minutes in length.
    (3) Family or conjoint psychotherapy. A covered family or conjoint 
psychotherapy session is no more than 90 minutes in length. A family or 
conjoint psychotherapy session of up to 180 minutes in length is 
payable for crisis intervention.
    (4) Psychoanalysis. Psychoanalysis is covered when provided by a 
graduate or candidate of a psychoanalytic training institution 
recognized by the American Psychoanalytic Association and when 
preauthorized by the Director, or a designee.
    (5) Psychological testing and assessment. Psychological testing and 
assessment is covered when medically or psychologically necessary. 
Psychological testing and assessment performed as part of an assessment 
for academic placement are not covered.
    (6) Administration of psychotropic drugs. When prescribed by an 
authorized provider qualified by licensure to prescribe drugs.
    (7) Electroconvulsive treatment. When provided in accordance with 
guidelines issued by the Director.
    (8) Collateral visits. Covered collateral visits are those that are 
medically or psychologically necessary for the treatment of the 
patient.
    (9) Medication assisted treatment. Medication assisted treatment, 
combining pharmacotherapy and holistic care, to include provision in 
office-based opioid treatment by an authorized TRICARE provider, is 
covered. The practice of an individual physician in office-based 
treatment is, as regulated by the Department of Health and Human 
Services' 42 CFR 8.12, the Center for Substance Abuse Treatment (CSAT), 
and the Drug Enforcement Administration (DEA), along with individual 
state and local regulations.
    (B) Therapeutic settings--(1) Outpatient psychotherapy. Outpatient 
psychotherapy generally is covered for individual, family, conjoint, 
collateral, and/or group sessions.
    (2) Inpatient psychotherapy. Coverage of inpatient psychotherapy is 
based on medical or psychological necessity for the services identified 
in the patient's treatment plan.
    (C) Covered ancillary therapies. Includes art, music, dance, 
occupational, and other ancillary therapies, when included by the 
attending provider in an approved inpatient, SUDRF, residential 
treatment, partial hospital, or intensive outpatient program treatment 
plan and under the clinical supervision of a qualified mental health 
professional. These ancillary therapies are not separately reimbursed 
professional services but are included within the institutional 
reimbursement.
    (D) Review of claims for treatment of mental disorder. The Director 
shall establish and maintain procedures for

[[Page 5077]]

review, including professional review, of the services provided for the 
treatment of mental disorders.
* * * * *
    (e) * * *
* * * * *
    (8) * * *
    (ii) * * *
    (A) For purposes of CHAMPUS, dental congenital anomalies such as 
absent tooth buds or malocclusion specifically are excluded.
* * * * *
    (D) Any procedures related to sex gender changes, except as 
provided in paragraph (g)(29) of this section, are excluded.
* * * * *
    (iv) * * *
    (Q) Penile implant procedure for psychological impotency or as 
related to sex gender changes, as prohibited by section 1079 of title 
10, United States Code.
    (R) Insertion of prosthetic testicles as related to sex gender 
changes, as prohibited by section 1079 of title 10, United States Code.
* * * * *
    (11) Drug abuse. Under the Basic Program, benefits may be extended 
for medically necessary prescription drugs required in the treatment of 
an illness or injury or in connection with maternity care (refer to 
paragraph (d) of this section). However, TRICARE benefits cannot be 
authorized to support or maintain an existing or potential drug abuse 
situation whether or not the drugs (under other circumstances) are 
eligible for benefit consideration and whether or not obtained by legal 
means. Drugs, including the substitution of a therapeutic drug with 
addictive potential for a drug of addiction, prescribed to 
beneficiaries undergoing medically supervised treatment for a substance 
use disorder as authorized under paragraphs (b) and (c) of this section 
are not considered to be in support of, or to maintain, an existing or 
potential drug abuse situation and are allowed. The Director may 
prescribe appropriate policies to implement this prescription drug 
benefit for those undergoing medically supervised treatment for a 
substance use disorder.
* * * * *
    (13) * * *
    (i) * * *
    (B) Home care is not suitable. Institutionalization of a child 
because a parent (or parents) is unable to provide a safe and nurturing 
environment due to a mental or substance use disorder, or because 
someone in the home has a contagious disease, are examples of why 
domiciliary care is being provided because the home setting is 
unsuitable.
* * * * *
    (f) * * *
    (2) * * *
    (ii) Inpatient cost-sharing. Dependents of members of the Uniformed 
Services are responsible for the payment of the first $25 of the 
allowable institutional costs incurred with each covered inpatient 
admission to a hospital or other authorized institutional provider 
(refer to Sec.  199.6, including inpatient admission to a residential 
treatment center, substance use disorder rehabilitation facility 
residential treatment program, or skilled nursing facility), or the 
amount the beneficiary or sponsor would have been charged had the 
inpatient care been provided in a Uniformed Service hospital, whichever 
is greater.
    Note: The Secretary of Defense (after consulting with the Secretary 
of Health and Human Services and the Secretary of Transportation) 
prescribes the fair charges for inpatient hospital care provided 
through Uniformed Services medical facilities. This determination is 
made each fiscal year.
* * * * *
    (3) * * *
    (ii) Inpatient cost-sharing. Inpatient admissions to a hospital or 
other authorized institutional provider (refer to Sec.  199.6, 
including inpatient admission to a residential treatment center, 
substance use disorder rehabilitation facility residential treatment 
program, or skilled nursing facility) shall be cost-shared on an 
inpatient basis. The cost-sharing for inpatient services subject to the 
TRICARE DRG-based payment system and the TRICARE per diem system shall 
be the lesser of the respective per diem copayment amount multiplied by 
the total number of days in the hospital (except for the day of 
discharge under the DRG payment system), or 25 percent of the 
hospital's billed charges. For other inpatient services, the cost-share 
shall be 25% of the CHAMPUS-determined allowable charges.
* * * * *
    (g) * * *
    (1) Not medically or psychologically necessary. Services and 
supplies that are not medically or psychologically necessary for the 
diagnosis or treatment of a covered illness (including mental disorder, 
to include substance use disorder) or injury, for the diagnosis and 
treatment of pregnancy or well-baby care except as provided in the 
following paragraph.
* * * * *
    (29) Intersex surgery and sex gender changes. Services and supplies 
related to intersex surgery and sex gender change, also referred to as 
sex reassignment surgery, as prohibited by section 1079 of title 10, 
United States Code. This exclusion does not apply to surgery and 
related medically necessary services performed to correct sex gender 
confusion (that is, ambiguous genitalia) which has been documented to 
be present at birth.
* * * * *
    (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. 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
4. Section 199.6 is amended by revising paragraphs (b)(4)(iv)(B) and 
(D), (b)(4)(vii), (b)(4)(xii), (b)(4)(xiv), (b)(4)(xviii), and 
(b)(4)(xix) to read as follows:


Sec.  199.6  TRICARE-authorized providers.

    (b) * * *
    (4) * * *
    (iv) * * *
    (B) In order for the services of a psychiatric hospital to be 
covered, the hospital shall comply with the provisions outlined in 
paragraph (b)(4)(i) of this section. All psychiatric hospitals shall be 
accredited under an accrediting organization approved by the Director, 
in order for their services to be cost-shared under CHAMPUS. In the 
case of those psychiatric hospitals that are not accredited because 
they have not been in operation a sufficient period of time to be 
eligible to request an accreditation survey, the Director, or a 
designee, may grant temporary

[[Page 5078]]

approval if the hospital is certified and participating under Title 
XVIII of the Social Security Act (Medicare, Part A). This temporary 
approval expires 12 months from the date on which the psychiatric 
hospital first becomes eligible to request an accreditation survey by 
an accrediting organization approved by the Director.
* * * * *
    (D) Although psychiatric hospitals are accredited under an 
accrediting organization approved by Director, their medical records 
must be maintained in accordance with accrediting organization's 
current standards manual, along with the requirements set forth in 
Sec.  199.7(b)(3). The hospital is responsible for assuring that 
patient services and all treatment are accurately documented and 
completed in a timely manner.
* * * * *
    (vii) Residential treatment centers. This paragraph (b)(4)(vii) 
establishes the definition of and eligibility standards and 
requirements for residential treatment centers (RTCs).
    (A) Organization and administration--(1) Definition. A Residential 
Treatment Center (RTC) is a facility or a distinct part of a facility 
that provides to beneficiaries under 21 years of age a medically 
supervised, interdisciplinary program of mental health treatment. An 
RTC is appropriate for patients whose predominant symptom presentation 
is essentially stabilized, although not resolved, and who have 
persistent dysfunction in major life areas. Residential treatment may 
be complemented by family therapy and case management for community 
based resources. Discharge planning should support transitional care 
for the patient and family, to include resources available in the 
geographic area where the patient will be residing. The extent and 
pervasiveness of the patient's problems require a protected and highly 
structured therapeutic environment. Residential treatment is 
differentiated from:
    (i) Acute psychiatric care, which requires medical treatment and 
24-hour availability of a full range of diagnostic and therapeutic 
services to establish and implement an effective plan of care which 
will reverse life-threatening and/or severely incapacitating symptoms;
    (ii) Partial hospitalization, which provides a less than 24-hour-
per-day, seven-day-per-week treatment program for patients who continue 
to exhibit psychiatric problems but can function with support in some 
of the major life areas;
    (iii) A group home, which is a professionally directed living 
arrangement with the availability of psychiatric consultation and 
treatment for patients with significant family dysfunction and/or 
chronic but stable psychiatric disturbances;
    (iv) Therapeutic school, which is an educational program 
supplemented by psychological and psychiatric services;
    (v) Facilities that treat patients with a primary diagnosis of 
substance use disorder; and
    (vi) Facilities providing care for patients with a primary 
diagnosis of mental retardation or developmental disability.
    (2) Eligibility. (i) In order to qualify as a TRICARE authorized 
provider, every RTC must meet the minimum basic standards set forth in 
paragraphs (b)(4)(vii)(A) through (C) of this section, and as well as 
such additional elaborative criteria and standards as the Director 
determines are necessary to implement the basic standards.
    (ii) To qualify as a TRICARE authorized provider, the facility is 
required to be licensed and fully operational for six months (with a 
minimum average daily census of 30 percent of total bed capacity) and 
operate in substantial compliance with state and federal regulations.
    (iii) The facility is currently accredited by an accrediting 
organization approved by the Director.
    (iv) The facility has a written participation agreement with 
OCHAMPUS. The RTC is not a CHAMPUS-authorized provider and CHAMPUS 
benefits are not paid for services provided until the date upon which a 
participation agreement is signed by the Director.
    (B) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(vii), of this section in 
order for the services of an RTC to be authorized, the RTC shall have 
entered into a Participation Agreement with OCHAMPUS. The period of a 
participation agreement shall be specified in the agreement, and will 
generally be for not more than five years. In addition to review of a 
facility's application and supporting documentation, an on-site 
inspection by OCHAMPUS authorized personnel may be required prior to 
signing a Participation Agreement. Retroactive approval is not given. 
In addition, the Participation Agreement shall include provisions that 
the RTC shall, at a minimum:
    (1) Render residential treatment center inpatient services to 
eligible CHAMPUS beneficiaries in need of such services, in accordance 
with the participation agreement and CHAMPUS regulation;
    (2) Accept payment for its services based upon the methodology 
provided in Sec.  199.14(f) or such other method as determined by the 
Director;
    (3) Accept the CHAMPUS all-inclusive per diem rate as payment in 
full and collect from the CHAMPUS beneficiary or the family of the 
CHAMPUS beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec.  199.4, and charges for services and 
supplies that are not a benefit of CHAMPUS;
    (4) Make all reasonable efforts acceptable to the Director, to 
collect those amounts, which represents the beneficiary's liability, as 
defined in Sec.  199.4;
    (5) Comply with the provisions of Sec.  199.8, and submit claims 
first to all health insurance coverage to which the beneficiary is 
entitled that is primary to CHAMPUS;
    (6) Submit claims for services provided to CHAMPUS beneficiaries at 
least every 30 days (except to the extent a delay is necessitated by 
efforts to first collect from other health insurance). If claims are 
not submitted at least every 30 days, the RTC agrees not to bill the 
beneficiary or the beneficiary's family for any amounts disallowed by 
CHAMPUS;
    (7) Certify that:
    (i) It is and will remain in compliance with the TRICARE standards 
and provisions of paragraph (b)(4)(vii) of this section establishing 
standards for Residential Treatment Centers; and
    (ii) It will maintain compliance with the CHAMPUS Standards for 
Residential Treatment Centers Serving Children and Adolescents with 
Mental Disorders, as issued by the Director, except for any such 
standards regarding which the facility notifies the Director that it is 
not in compliance.
    (8) Designate an individual who will act as liaison for CHAMPUS 
inquiries. The RTC shall inform OCHAMPUS in writing of the designated 
individual;
    (9) Furnish OCHAMPUS, as requested by OCHAMPUS, with cost data 
certified by an independent accounting firm or other agency as 
authorized by the Director, OCHAMPUS;
    (10) Comply with all requirements of this section applicable to 
institutional providers generally concerning accreditation 
requirements, preauthorization, concurrent care review, claims 
processing, beneficiary liability, double coverage, utilization and 
quality review, and other matters;
    (11) Grant the Director, or designee, the right to conduct quality 
assurance

[[Page 5079]]

audits or accounting audits with full access to patients and records 
(including records relating to patients who are not CHAMPUS 
beneficiaries) to determine the quality and cost-effectiveness of care 
rendered. The audits may be conducted on a scheduled or unscheduled 
(unannounced) basis. This right to audit/review includes, but is not 
limited to:
    (i) Examination of fiscal and all other records of the RTC which 
would confirm compliance with the participation agreement and 
designation as a TRICARE authorized RTC;
    (ii) Conducting such audits of RTC records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided CHAMPUS 
beneficiaries;
    (iii) Examining reports of evaluations and inspections conducted by 
federal, state and local government, and private agencies and 
organizations;
    (iv) Conducting on-site inspections of the facilities of the RTC 
and interviewing employees, members of the staff, contractors, board 
members, volunteers, and patients, as required;
    (v) Audits conducted by the United States Government Accountability 
Office.
    (C) Other requirements applicable to RTCs. (1) Even though an RTC 
may qualify as a TRICARE authorized provider and may have entered into 
a participation agreement with CHAMPUS, payment by CHAMPUS for 
particular services provided is contingent upon the RTC also meeting 
all conditions set forth in Sec.  199.4 especially all requirements of 
Sec.  199.4(b)(4).
    (2) The RTC shall provide inpatient services to CHAMPUS 
beneficiaries in the same manner it provides inpatient services to all 
other patients. The RTC may not discriminate against CHAMPUS 
beneficiaries in any manner, including admission practices, placement 
in special or separate wings or rooms, or provisions of special or 
limited treatment.
    (3) The RTC shall assure that all certifications and information 
provided to the Director, incident to the process of obtaining and 
retaining authorized provider status is accurate and that it has no 
material errors or omissions. In the case of any misrepresentations, 
whether by inaccurate information being provided or material facts 
withheld, authorized status will be denied or terminated, and the RTC 
will be ineligible for consideration for authorized provider status for 
a two year period.
* * * * *
    (xii) Psychiatric and substance use disorder partial 
hospitalization programs. This paragraph (b)(4)(xii) establishes the 
definition of and eligibility standards and requirements for 
psychiatric and substance use disorder partial hospitalization 
programs.
    (A) Organization and administration--(1) Definition. Partial 
hospitalization is defined as a time-limited, ambulatory, active 
treatment program that offers therapeutically intensive, coordinated, 
and structured clinical services within a stable therapeutic milieu. 
Partial hospitalization programs serve patients who exhibit psychiatric 
symptoms, disturbances of conduct, and decompensating conditions 
affecting mental health. Partial hospitalization is appropriate for 
those whose psychiatric and addiction-related symptoms or concomitant 
physical and emotional/behavioral problems can be managed outside the 
hospital for defined periods of time with support in one or more of the 
major life areas. A partial hospitalization program for the treatment 
of substance use disorders is an addiction-focused service that 
provides active treatment to adolescents between the ages of 13 and 18 
or adults aged 18 and over.
    (2) Eligibility. (i) To qualify as a TRICARE authorized provider, 
every partial hospitalization program must meet minimum basic standards 
set forth in paragraphs (b)(4)(xii)(A) through (D) of this section, as 
well as such additional elaborative criteria and standards as the 
Director determines are necessary to implement the basic standards. 
Each partial hospitalization program must be either a distinct part of 
an otherwise-authorized institutional provider or a free-standing 
program. Approval of a hospital by TRICARE is sufficient for its 
partial hospitalization program to be an authorized TRICARE provider. 
Such hospital-based partial hospitalization programs are not required 
to be separately authorized by TRICARE.
    (ii) To be approved as a TRICARE authorized provider, the facility 
is required to be licensed and fully operational for a period of at 
least six months (with a minimum patient census of at least 30 percent 
of bed capacity) and operate in substantial compliance with state and 
federal regulations.
    (iii) The facility is required to be currently accredited by an 
accrediting organization approved by the Director. Each PHP authorized 
to treat substance use disorder must be accredited to provide the level 
of required treatment by an accreditation body approved by the 
Director.
    (iv) The facility is required to have a written participation 
agreement with OCHAMPUS. The PHP is not a CHAMPUS-authorized provider 
and CHAMPUS benefits are not paid for services provided until the date 
upon which a participation agreement is signed by the Director.
    (B) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(xii) of this section, in 
order for the services of a PHP to be authorized, the PHP shall have 
entered into a Participation Agreement with OCHAMPUS. A single 
consolidated participation agreement is acceptable for all units of the 
TRICARE authorized facility granted that all programs meet the 
requirements of this part. The period of a Participation Agreement 
shall be specified in the agreement, and will generally be for not more 
than five years. The PHP shall not be considered to be a CHAMPUS 
authorized provider and CHAMPUS payments shall not be made for services 
provided by the PHP until the date the participation agreement is 
signed by the Director. In addition to review of a facility's 
application and supporting documentation, an on-site inspection by 
OCHAMPUS authorized personnel may be required prior to signing a 
participation agreement. The Participation Agreement shall include at 
least the following requirements:
    (1) Render partial hospitalization program services to eligible 
CHAMPUS beneficiaries in need of such services, in accordance with the 
participation agreement and CHAMPUS regulation.
    (2) Accept payment for its services based upon the methodology 
provided in Sec.  199.14, or such other method as determined by the 
Director;
    (3) Accept the CHAMPUS all-inclusive per diem rate as payment in 
full and collect from the CHAMPUS beneficiary or the family of the 
CHAMPUS beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec.  199.4, and charges for services and 
supplies that are not a benefit of CHAMPUS;
    (4) Make all reasonable efforts acceptable to the Director to 
collect those amounts, which represent the beneficiary's liability, as 
defined in Sec.  199.4;
    (5) Comply with the provisions of Sec.  199.8, and submit claims 
first to all health insurance coverage to which the

[[Page 5080]]

beneficiary is entitled that is primary to CHAMPUS;
    (6) Submit claims for services provided to CHAMPUS beneficiaries at 
least every 30 days (except to the extent a delay is necessitated by 
efforts to first collect from other health insurance). If claims are 
not submitted at least every 30 days, the PHP agrees not to bill the 
beneficiary or the beneficiary's family for any amounts disallowed by 
CHAMPUS;
    (7) Certify that:
    (i) It is and will remain in compliance with the TRICARE standards 
and provisions of paragraph (b)(4)(xii) of this section establishing 
standards for psychiatric and substance use disorder partial 
hospitalization programs; and
    (ii) It will maintain compliance with the CHAMPUS Standards for 
Psychiatric Substance Use Disorder Partial Hospitalization Programs, as 
issued by the Director, except for any such standards regarding which 
the facility notifies the Director, or designee, that it is not in 
compliance.
    (8) Designate an individual who will act as liaison for CHAMPUS 
inquiries. The PHP shall inform the Director, or designee, in writing 
of the designated individual;
    (9) Furnish OCHAMPUS, as requested by OCHAMPUS, with cost data 
certified by an independent accounting firm or other agency as 
authorized by the Director;
    (10) Comply with all requirements of this section applicable to 
institutional providers generally concerning accreditation 
requirements, preauthorization, concurrent care review, claims 
processing, beneficiary liability, double coverage, utilization and 
quality review, and other matters;
    (11) Grant the Director, or designee, the right to conduct quality 
assurance audits or accounting audits with full access to patients and 
records (including records relating to patients who are not CHAMPUS 
beneficiaries) to determine the quality and cost-effectiveness of care 
rendered. The audits may be conducted on a scheduled or unscheduled 
(unannounced) basis. This right to audit/review includes, but is not 
limited to:
    (i) Examination of fiscal and all other records of the PHP which 
would confirm compliance with the participation agreement and 
designation as a TRICARE authorized PHP provider;
    (ii) Conducting such audits of PHP records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided CHAMPUS 
beneficiaries;
    (iii) Examining reports of evaluations and inspections conducted by 
federal, state and local government, and private agencies and 
organizations;
    (iv) Conducting on-site inspections of the facilities of the PHP 
and interviewing employees, members of the staff, contractors, board 
members, volunteers, and patients, as required;
    (v) Audits conducted by the United States General Account Office.
    (C) Other requirements applicable to PHPs. (1) Even though a PHP 
may qualify as a TRICARE authorized provider and may have entered into 
a participation agreement with CHAMPUS, payment by CHAMPUS for 
particular services provided is contingent upon the PHP also meeting 
all conditions set forth in Sec.  199.4.
    (2) The PHP may not discriminate against CHAMPUS beneficiaries in 
any manner, including admission practices, placement in special or 
separate wings or rooms, or provisions of special or limited treatment.
    (3) The PHP shall assure that all certifications and information 
provided to the Director incident to the process of obtaining and 
retaining authorized provider status is accurate and that is has no 
material errors or omissions. In the case of any misrepresentations, 
whether by inaccurate information being provided or material facts 
withheld, authorized provider status will be denied or terminated, and 
the PHP will be ineligible for consideration for authorized provider 
status for a two year period.
* * * * *
    (xiv) Substance use disorder rehabilitation facilities. This 
paragraph (b)(4)(xiv) establishes the definition of eligibility 
standards and requirements for residential substance use disorder 
rehabilitation facilities (SUDRF).
    (A) Organization and administration--(1) Definition. A SUDRF is a 
residential or rehabilitation facility, or distinct part of a facility, 
that provides medically monitored, interdisciplinary addiction-focused 
treatment to beneficiaries who have psychoactive substance use 
disorders. Qualified health care professionals provide 24-hour, seven-
day-per-week, assessment, treatment, and evaluation. A SUDRF is 
appropriate for patients whose addiction-related symptoms, or 
concomitant physical and emotional/behavioral problems reflect 
persistent dysfunction in several major life areas. Residential or 
inpatient rehabilitation is differentiated from:
    (i) Acute psychoactive substance use treatment and from treatment 
of acute biomedical/emotional/behavioral problems; which problems are 
either life-threatening and/or severely incapacitating and often occur 
within the context of a discrete episode of addiction-related 
biomedical or psychiatric dysfunction;
    (ii) A partial hospitalization center, which serves patients who 
exhibit emotional/behavioral dysfunction but who can function in the 
community for defined periods of time with support in one or more of 
the major life areas;
    (iii) A group home, sober-living environment, halfway house, or 
three-quarter way house;
    (iv) Therapeutic schools, which are educational programs 
supplemented by addiction-focused services;
    (v) Facilities that treat patients with primary psychiatric 
diagnoses other than psychoactive substance use or dependence; and
    (vi) Facilities that care for patients with the primary diagnosis 
of mental retardation or developmental disability.
    (2) Eligibility. (i) In order to become a TRICARE authorized 
provider, every SUDRF must meet minimum basic standards set forth in 
paragraphs (b)(4)(xiv)(A) through (C) of this section, as well as such 
additional elaborative criteria and standards as the Director 
determines are necessary to implement the basic standards.
    (ii) To be approved as a TRICARE authorized provider, the SUDRF is 
required to be licensed and fully operational (with a minimum patient 
census of the lesser of: six patients or 30 percent of bed capacity) 
for a period of at least six months and operate in substantial 
compliance with state and federal regulations.
    (iii) The SUDRF is currently accredited by an accrediting 
organization approved by the Director. Each SUDRF must be accredited to 
provide the level of required treatment by an accreditation body 
approved by the Director.
    (iv) The SUDRF has a written participation agreement with OCHAMPUS. 
The SUDRF is not considered a TRICARE authorized provider, and CHAMPUS 
benefits are not paid for services provided until the date upon which a 
participation agreement is signed by the Director.
    (B) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(xiv) of this section, in 
order for the services of an inpatient rehabilitation center for the 
treatment of substance use disorders to be authorized, the center shall 
have entered into a Participation Agreement with OCHAMPUS. A single

[[Page 5081]]

consolidated participation agreement is acceptable for all units of the 
TRICARE authorized facility. The period of a Participation Agreement 
shall be specified in the agreement, and will generally be for not more 
than five years. The SUDRF shall not be considered to be a CHAMPUS 
authorized provider and CHAMPUS payments shall not be made for services 
provided by the SUDRF until the date the participation agreement is 
signed by the Director. In addition to review of the SUDRF's 
application and supporting documentation, an on-site visit by OCHAMPUS 
representatives may be part of the authorization process. In addition, 
such a Participation Agreement may not be signed until an SUDRF has 
been licensed and operational for at least six months. The 
Participation Agreement shall include at least the following 
requirements:
    (1) Render applicable services to eligible CHAMPUS beneficiaries in 
need of such services, in accordance with the participation agreement 
and CHAMPUS regulation;
    (2) Accept payment for its services based upon the methodology 
provided in Sec.  199.14, or such other method as determined by the 
Director;
    (3) Accept the CHAMPUS-determined rate as payment in full and 
collect from the CHAMPUS beneficiary or the family of the CHAMPUS 
beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec.  199.4, and charges for services and 
supplies that are not a benefit of CHAMPUS;
    (4) Make all reasonable efforts acceptable to the Director to 
collect those amounts which represent the beneficiary's liability, as 
defined in Sec.  199.4;
    (5) Comply with the provisions of Sec.  199.8, and submit claims 
first to all health insurance coverage to which the beneficiary is 
entitled that is primary to CHAMPUS;
    (6) Furnish OCHAMPUS with cost data, as requested by OCHAMPUS, 
certified to by an independent accounting firm or other agency as 
authorized by the Director;
    (7) Certify that:
    (i) It is and will remain in compliance with the provisions of 
paragraph (b)(4)(xiv) of the section establishing standards for 
substance use disorder rehabilitation facilities; and
    (ii) It has conducted a self-assessment of the facility's 
compliance with the CHAMPUS Standards for Substance Use Disorder 
Rehabilitation Facilities, as issued by the Director and notified the 
Director of any matter regarding which the facility is not in 
compliance with such standards; and
    (iii) It will maintain compliance with the CHAMPUS Standards for 
Substance Use Disorder Rehabilitation Facilities, as issued by the 
Director, except for any such standards regarding which the facility 
notifies the Director that it is not in compliance.
    (8) Designate an individual who will act as liaison for CHAMPUS 
inquiries. The SUDRF shall inform OCHAMPUS in writing of the designated 
individual;
    (9) Furnish OCHAMPUS, as requested by OCHAMPUS, with cost data 
certified by an independent accounting firm or other agency as 
authorized by the Director;
    (10) Comply with all requirements of this section applicable to 
institutional providers generally concerning accreditation 
requirements, preauthorization, concurrent care review, claims 
processing, beneficiary liability, double coverage, utilization and 
quality review, and other matters;
    (11) Grant the Director, or designee, the right to conduct quality 
assurance audits or accounting audits with full access to patients and 
records (including records relating to patients who are not CHAMPUS 
beneficiaries) to determine the quality and cost effectiveness of care 
rendered. The audits may be conducted on a scheduled or unscheduled 
(unannounced) basis. This right to audit/review included, but is not 
limited to:
    (i) Examination of fiscal and all other records of the center which 
would confirm compliance with the participation agreement and 
designation as an authorized TRICARE provider;
    (ii) Conducting such audits of center records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided CHAMPUS 
beneficiaries;
    (iii) Examining reports of evaluations and inspection conducted by 
federal, state and local government, and private agencies and 
organizations;
    (iv) Conducting on-site inspections of the facilities of the SUDRF 
and interviewing employees, members of the staff, contractors, board 
members, volunteers, and patients, as required.
    (v) Audits conducted by the United States Government Accountability 
Office.
    (C) Other requirements applicable to substance use disorder 
rehabilitation facilities.
    (1) Even though a SUDRF may qualify as a TRICARE authorized 
provider and may have entered into a participation agreement with 
CHAMPUS, payment by CHAMPUS for particular services provided is 
contingent upon the SUDRF also meeting all conditions set forth in 
Sec.  199.4.
    (2) The center shall provide inpatient services to CHAMPUS 
beneficiaries in the same manner it provides services to all other 
patients. The center may not discriminate against CHAMPUS beneficiaries 
in any manner, including admission practices, placement in special or 
separate wings or rooms, or provisions of special or limited treatment.
    (3) The substance use disorder facility shall assure that all 
certifications and information provided to the Director, incident to 
the process of obtaining and retaining authorized provider status, is 
accurate and that it has no material errors or omissions. In the case 
of any misrepresentations, whether by inaccurate information being 
provided or material facts withheld, authorized provider status will be 
denied or terminated, and the facility will be ineligible for 
consideration for authorized provider status for a two year period.
* * * * *
    (xviii) Intensive outpatient programs. This paragraph (b)(4)(xviii) 
establishes standards and requirements for intensive outpatient 
treatment programs for psychiatric and substance use disorder.
    (A) Organization and administration--(1) Definition. Intensive 
outpatient treatment (IOP) programs are defined in Sec.  199.2. IOP 
services consist of a comprehensive and complimentary schedule of 
recognized treatment approaches that may include day, evening, night, 
and weekend services consisting of individual and group counseling or 
therapy, and family counseling or therapy as clinically indicated for 
adolescents between the ages of 13 and 18 or adults aged 18 and may 
include case management to link patients and their families with 
community based support systems.
    (2) Eligibility. (i) In order to qualify as a TRICARE authorized 
provider, every intensive outpatient program must meet the minimum 
basic standards set forth in paragraphs (b)(4)(xviii)(A) through (C) of 
this section, as well as additional elaborative criteria and standards 
as the Director determines are necessary to implement the basic 
standards. Each intensive outpatient program must be either a distinct 
part of an otherwise-authorized institutional provider or a free-
standing psychiatric or substance use disorder intensive outpatient 
program. Approval of a hospital by TRICARE is sufficient for its IOP to 
be

[[Page 5082]]

an authorized TRICARE provider. Such hospital-based intensive 
outpatient programs are not required to be separately authorized by 
TRICARE.
    (ii) To qualify as a TRICARE authorized provider, the IOP is 
required to be licensed and fully operational for a period of at least 
six months (with a minimum patient census of at least 30 percent of 
capacity) and operate in substantial compliance with state and federal 
regulations.
    (iii) The IOP is currently accredited by an accrediting 
organization approved by the Director. Each IOP authorized to treat 
substance use disorder must be accredited to provide the level of 
required treatment by an accreditation body approved by the Director.
    (iv) The facility has a written participation agreement with 
TRICARE. The IOP is not considered a TRICARE authorized provider and 
TRICARE benefits are not paid for services provided until the date upon 
which a participation agreement is signed by the Director.
    (B) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(xii) of this section, in 
order for the services of an IOP to be authorized, the IOP shall have 
entered into a Participation Agreement with TRICARE. A single 
consolidated participation agreement is acceptable for all units of the 
TRICARE authorized facility granted that all programs meet the 
requirements of this part. The period of a Participation Agreement 
shall be specified in the agreement, and will generally be for not more 
than five years. In addition to review of a facility's application and 
supporting documentation, an on-site inspection by DHA authorized 
personnel may be required prior to signing a participation agreement. 
The Participation Agreement shall include at least the following 
requirements:
    (1) Render intensive outpatient program services to eligible 
TRICARE beneficiaries in need of such services, in accordance with the 
participation agreement and TRICARE regulation.
    (2) Accept payment for its services based upon the methodology 
provided in Sec.  199.14, or such other method as determined by the 
Director;
    (3) Collect from the TRICARE beneficiary or the family of the 
TRICARE beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec.  199.4, and charges for services and 
supplies that are not a benefit of TRICARE;
    (4) Make all reasonable efforts acceptable to the Director to 
collect those amounts, which represent the beneficiary's liability, as 
defined in Sec.  199.4;
    (5) Comply with the provisions of Sec.  199.8, and submit claims 
first to all health insurance coverage to which the beneficiary is 
entitled that is primary to TRICARE;
    (6) Submit claims for services provided to TRICARE beneficiaries at 
least every 30 days (except to the extent a delay is necessitated by 
efforts to first collect from other health insurance). If claims are 
not submitted at least every 30 days, the IOP agrees not to bill the 
beneficiary or the beneficiary's family for any amounts disallowed by 
TRICARE;
    (7) Free-standing intensive outpatient programs shall certify that:
    (i) It is and will remain in compliance with the provisions of 
paragraph (b)(4)(xii) of this section establishing standards for 
psychiatric and SUD IOPs;
    (ii) It has conducted a self-assessment of the facility's 
compliance with the CHAMPUS Standards for Intensive Outpatient 
Programs, as issued by the Director, and notified the Director of any 
matter regarding which the facility is not in compliance with such 
standards; and
    (iii) It will maintain compliance with the TRICARE standards for 
IOPs, as issued by the Director, except for any such standards 
regarding which the facility notifies the Director, or a designee that 
it is not in compliance.
    (8) Designate an individual who will act as liaison for TRICARE 
inquiries. The IOP shall inform TRICARE, or a designee in writing of 
the designated individual;
    (9) Furnish OCHAMPUS with cost data, as requested by OCHAMPUS, 
certified by an independent accounting firm or other agency as 
authorized by the Director.
    (10) Comply with all requirements of this section applicable to 
institutional providers generally concerning accreditation 
requirements, preauthorization, concurrent care review, claims 
processing, beneficiary liability, double coverage, utilization and 
quality review, and other matters;
    (11) Grant the Director, or designee, the right to conduct quality 
assurance audits or accounting audits with full access to patients and 
records (including records relating to patients who are not CHAMPUS 
beneficiaries) to determine the quality and cost effectiveness of care 
rendered. The audits may be conducted on a scheduled or unscheduled 
(unannounced) basis. This right to audit/review included, but is not 
limited to:
    (i) Examination of fiscal and all other records of the center which 
would confirm compliance with the participation agreement and 
designation as an authorized TRICARE provider;
    (ii) Conducting such audits of center records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided CHAMPUS 
beneficiaries;
    (iii) Examining reports of evaluations and inspection conducted by 
federal, state and local government, and private agencies and 
organizations;
    (iv) Conducting on-site inspections of the facilities of the IOP 
and interviewing employees, members of the staff, contractors, board 
members, volunteers, and patients, as required.
    (v) Audits conducted by the United States Government Accountability 
Office.
    (C) Other requirements applicable to Intensive Outpatient Programs 
(IOP).
    (1) Even though an IOP may qualify as a TRICARE authorized provider 
and may have entered into a participation agreement with CHAMPUS, 
payment by CHAMPUS for particular services provided its contingent upon 
the IOP also meeting all conditions set forth in Sec.  199.4.
    (2) The IOP may not discriminate against CHAMPUS beneficiaries in 
any manner, including admission practices, placement in special or 
separate wings or rooms, or provisions of special or limited treatment.
    (3) The IOP shall assure that all certifications and information 
provided to the Director incident to the process of obtaining and 
retaining authorized provider status is accurate and that is has no 
material errors or omissions. In the case of any misrepresentations, 
whether by inaccurate information being provided or material facts 
withheld, authorized provider status will be denied or terminated, and 
the IOP will be ineligible for consideration for authorized provider 
status for a two year period.
    (xix) Opioid Treatment Programs (OTP). This paragraph (b)(4)(xix) 
establishes standards and requirements for Opioid Treatment Programs.
    (A) Organization and administration. (1) Definition. Opioid 
Treatment Programs (OTP) are defined in Sec.  199.2. Opioid Treatment 
Programs (OTP) are organized, ambulatory, addiction treatment services 
for patients with an opioid use disorder. OTPs have the capacity to 
provide daily direct administration of medications without the 
prescribing of medications.

[[Page 5083]]

Medication supplies for patients to take outside of the OTP originate 
from within the OTP. OTP services offer medication assisted treatment, 
patient-centered, recovery-oriented individualized treatment through 
addiction counseling, mental health therapy, case management, and 
health education.
    (2) Eligibility. (i) Every free-standing Opioid Treatment Program 
must be accredited by an accrediting organization recognized by 
Director, under the current standards of an accrediting organization, 
as well as meet additional elaborative criteria and standards as the 
Director determines are necessary to implement the basic standards. 
OTPs adhere to requirements of the Department of Health and Human 
Services' 42 CFR part 8, the Substance Abuse and Mental Health Services 
Administration's Center for Substance Abuse Treatment, and the Drug 
Enforcement Agency. Each OTP must be either a distinct part of an 
otherwise authorized institutional provider or a free-standing program. 
Approval of a hospital by TRICARE is sufficient for its OTP to be an 
authorized TRICARE provider. Such hospital-based OTPs, if certified 
under 42 CFR 8, are not required to be separately authorized by 
TRICARE.
    (ii) To qualify as a TRICARE authorized provider, the OTP is 
required to be licensed and fully operational for a period of at least 
six months (with a minimum patient census of at least 30 percent of 
capacity) and operate in substantial compliance with state and federal 
regulations.
    (iii) The OTP has a written participation agreement with OCHAMPUS. 
The OTP is not considered a TRICARE authorized provider, and CHAMPUS 
benefits are not paid for services provided until the date upon which a 
participation agreement is signed by the Director.
    (B) Participation agreement requirements. In addition to other 
requirements set forth in paragraph (b)(4)(xix) of this section, in 
order for the services of an OTP to be authorized, the OTP shall have 
entered into a Participation Agreement with TRICARE. A single 
consolidated participation agreement is acceptable for all units of a 
TRICARE authorized facility. The period of a Participation Agreement 
shall be specified in the agreement, and will generally be for not more 
than five years. In addition to review of a facility's application and 
supporting documentation, an on-site inspection by DHA authorized 
personnel may be required prior to signing a participation agreement. 
The Participation Agreement shall include at least the following 
requirements:
    (1) Render OTP services to eligible TRICARE beneficiaries in need 
of such services, in accordance with the participation agreement and 
TRICARE regulation.
    (2) Accept payment for its services based upon the methodology 
provided in Sec.  199.14, or such other method as determined by the 
Director;
    (3) Collect from the TRICARE beneficiary or the family of the 
TRICARE beneficiary only those amounts that represent the beneficiary's 
liability, as defined in Sec.  199.4, and charges for services and 
supplies that are not a benefit of TRICARE;
    (4) Make all reasonable efforts acceptable to the Director to 
collect those amounts, which represent the beneficiary's liability, as 
defined in Sec.  199.4;
    (5) Comply with the provisions of Sec.  199.8, and submit claims 
first to all health insurance coverage to which the beneficiary is 
entitled that is primary to TRICARE;
    (6) Submit claims for services provided to TRICARE beneficiaries at 
least every 30 days (except to the extent a delay is necessitated by 
efforts to first collect from other health insurance). If claims are 
not submitted at least every 30 days, the OTP agrees not to bill the 
beneficiary or the beneficiary's family for any amounts disallowed by 
TRICARE;
    (7) Free-standing opioid treatment programs shall certify that:
    (i) It is and will remain in compliance with the provisions of 
paragraph (b)(4)(xii) of this section establishing standards for opioid 
treatment programs;
    (ii) It will maintain compliance with the TRICARE standards for 
OTPs, as issued by the Director, except for any such standards 
regarding which the facility notifies the Director, or a designee, that 
it is not in compliance.
    (8) Designate an individual who will act as liaison for TRICARE 
inquiries. The OTP shall inform TRICARE, or a designee, in writing of 
the designated individual;
    (9) Furnish TRICARE, or a designee, with cost data, as requested by 
TRICARE, certified by an independent accounting firm or other agency as 
authorized by the Director;
    (10) Comply with all requirements of this section applicable to 
institutional providers generally concerning accreditation 
requirements, claims processing, beneficiary liability, double 
coverage, utilization and quality review, and other matters;
    (11) Grant the Director, or designee, the right to conduct quality 
assurance audits or accounting audits with full access to patients and 
records (including records relating to patients who are not TRICARE 
beneficiaries) to determine the quality and cost effectiveness of care 
rendered. The audits may be conducted on a scheduled or unscheduled 
(unannounced) basis. This right to audit/review includes, but is not 
limited to:
    (i) Examination of fiscal and all other records of the OTP which 
would confirm compliance with the participation agreement and 
designation as an authorized TRICARE provider;
    (ii) Conducting such audits of OTP records including clinical, 
financial, and census records, as may be necessary to determine the 
nature of the services being provided, and the basis for charges and 
claims against the United States for services provided TRICARE 
beneficiaries;
    (iii) Examining reports of evaluations and inspections conducted by 
federal, state and local government, and private agencies and 
organizations.
    (C) Other requirements applicable to OTPs. (1) Even though an OTP 
may qualify as a TRICARE authorized provider and may have entered into 
a participation agreement with CHAMPUS, payment by CHAMPUS for 
particular services provided is contingent upon the OTP also meeting 
all conditions set forth in Sec.  199.4.
    (2) The OTP may not discriminate against CHAMPUS beneficiaries in 
any manner, including admission practices or provisions of special or 
limited treatment.
    (3) The OTP shall assure that all certifications and information 
provided to the Director incident to the process of obtaining and 
retaining authorized provider status is accurate and that is has no 
material errors or omissions. In the case of any misrepresentations, 
whether by inaccurate information being provided or material facts 
withheld, authorized provider status will be denied or terminated, and 
the OTP will be ineligible for consideration for authorized provider 
status for a two year period.
* * * * *


Sec.  199.7  [Amended]

0
5. Section 199.7 is amended by removing and reserving paragraph (e)(2).
0
6. Section 199.14 is amended by revising paragraphs (a)(2)(iv)(C)(2) 
and (4) and (a)(2)(ix) to read as follows:

[[Page 5084]]

Sec.  199.14  Provider reimbursement methods.

    (a) * * *
    (2) * * *
    (iv) * * *
    (C) * * *
    (2) Except as provided in paragraph (a)(2)(iv)(C)(3) of this 
section, for subsequent federal fiscal years, each per diem shall be 
updated by the Medicare Inpatient Prospective Payment System update 
factor.
* * * * *
    (4) Hospitals and units with hospital-specific rates will be 
notified of their respective rates prior to the beginning of each 
Federal fiscal year. New hospitals shall be notified at such time as 
the hospital rate is determined. The actual amount of each regional per 
diem that will apply in any Federal fiscal year shall be posted to the 
Agency's official Web site at the start of that fiscal year.
* * * * *
    (ix) Payment for psychiatric and substance use disorder 
rehabilitation partial hospitalization services, intensive outpatient 
psychiatric and substance use disorder services and opioid treatment 
services--(A) Per diem payments. Psychiatric and substance use disorder 
partial hospitalization services, intensive outpatient psychiatric and 
substance use disorder services and opioid treatment services 
authorized by Sec.  199.4(b)(9), (b)(10), and (b)(11), respectively, 
and provided by institutional providers authorized under Sec.  
199.6(b)(4)(xii), (b)(4)(xviii) and (b)(4)(xix), respectively, are 
reimbursed on the basis of prospectively determined, all-inclusive per 
diem rates pursuant to the provisions of paragraphs (a)(2)(ix)(A)(1) 
through (3) of this section, with the exception of hospital-based 
psychiatric and substance use disorder and opioid services which are 
reimbursed in accordance with provisions of paragraph (a)(6)(ii) of 
this section and freestanding opioid treatment programs when reimbursed 
on a fee-for-service basis as specified in paragraph 
(a)(2)(ix)(A)(3)(ii) of this section. The per diem payment amount must 
be accepted as payment in full, subject to the outpatient cost-sharing 
provisions under Sec.  199.4(f), for institutional services provided, 
including board, routine nursing services, group therapy, ancillary 
services (e.g., music, dance, and occupational and other such 
therapies), psychological testing and assessment, overhead and any 
other services for which the customary practice among similar providers 
is included in the institutional charges, except for those services 
which may be billed separately under paragraph (a)(2)(ix)(B) of this 
section. Per diem payment will not be allowed for leave days during 
which treatment is not provided.
    (1) Partial hospitalization programs. For any full-day partial 
hospitalization program (minimum of 6 hours), the maximum per diem 
payment amount is 40 percent of the average inpatient per diem amount 
per case established under the TRICARE mental health per diem 
reimbursement system during the fiscal year for both high and low 
volume psychiatric hospitals and units [as defined in paragraph (a)(2) 
of this section]. Intensive outpatient services provided in a PHP 
setting lasting less than 6 hours, with a minimum of 2 hours, will be 
paid as provided in paragraph (a)(2)(ix)(A)(2) of this section. PHP per 
diem rates will be updated annually by the Medicare update factor used 
for their Inpatient Prospective Payment System.
    (2) Intensive outpatient programs. For intensive outpatient 
programs (IOPs) (minimum of 2 hours), the maximum per diem amount is 75 
percent of the rate for a full-day partial hospitalization program as 
established in paragraph (a)(2)(ix)(A)(1) of this section. IOP per diem 
rates will be updated annually by the Medicare update factor used for 
their Inpatient Prospective Payment System.
    (3) Opioid treatment programs. Opioid treatment programs (OTPs) 
authorized by Sec.  199.4(b)(11) and provided by providers authorized 
under Sec.  199.6(b)(4)(xix) will be reimbursed based on the 
variability in the dosage and frequency of the drug being administered 
and in related supportive services.
    (i) Weekly all-inclusive per diem rate. Methadone OTPs will be 
reimbursed a weekly all-inclusive per diem rate, including the cost of 
the drug and related services (i.e., the costs related to the initial 
intake/assessment, drug dispensing and screening and integrated 
psychosocial and medical treatment and support services). The bundled 
weekly per diem payments will be accepted as payment in full, subject 
to the outpatient cost-sharing provisions under Sec.  199.4(f). The 
methadone OTP per diem rate will be updated annually by the Medicare 
update factor used for their Inpatient Prospective Payment System.
    (ii) Exceptions to per diem reimbursement. When providing other 
medications which are more likely to be prescribed and administered in 
an office-based opioid treatment setting, but which are still available 
for treatment of substance use disorders in an outpatient treatment 
program setting, OTPs will be reimbursed on a fee-for-service basis 
(i.e., separate payments will be allowed for both the medication and 
accompanying support services), subject to the outpatient cost-sharing 
provisions under Sec.  199.4(f). OTP rates will be updated annually by 
the Medicare update factor used for their Inpatient Prospective Payment 
System.
    (iii) Discretionary authority. The Director, TRICARE, will have 
discretionary authority in establishing the reimbursement methodologies 
for new drugs and biologicals that may become available for the 
treatment of substance use disorders in OTPs. The type of reimbursement 
(e.g., fee-for-service versus bundled per diem payments) will be 
dependent on the variability of the dosage and frequency of the 
medication being administered, as well as the support services.
    (B) Services which may be billed separately. Psychotherapy sessions 
and non-mental health related medical services not normally included in 
the evaluation and assessment of a PHP, IOP or OTP, provided by 
authorized independent professional providers who are not employed by, 
or under contract with, a PHP, IOP or OTP for the purposes of providing 
clinical patient care are not included in the per diem rate and may be 
billed separately. This includes ambulance services when medically 
necessary for emergency transport.
* * * * *


Sec.  199.15  [Amended]

0
7. Section 199.15 is amended by revising paragraph (a)(6) to delete ``, 
such as inpatient mental health services in excess of 30 days in any 
year'' in the last sentence.
0
8. Section 199.18 is amended by:
0
a. Revising paragraph (d)(2)(ii);
0
b. Removing and reserving paragraph (d)(3)(ii); and
0
c. Revising paragraphs (e)(2) and (e)(3).
    The revisions read as follows:


Sec.  199.18  Uniform HMO Benefit.

* * * * *
    (d) * * *
    (2) * * *
    (ii) The per visit fee provided in paragraph (d)(2)(i) of this 
section shall also apply to partial hospitalization services, intensive 
outpatient treatment, and opioid treatment program services. The per 
visit fee shall be applied on a per day basis on days services are 
received, with the exception of opioid treatment program services 
reimbursed in accordance with Sec.  199.14(a)(2)(ix)(A)(3)(i) which per 
visit fee will apply on a weekly basis.
* * * * *

[[Page 5085]]

    (e) * * *
    (2) Structure of cost-sharing. For inpatient admissions, there is a 
nominal copayment for retired members, dependents of retired members, 
and survivors. This nominal copayment shall apply to an inpatient 
admission to any hospital or other authorized institutional provider, 
including inpatient admission to a residential treatment center, 
substance use disorder rehabilitation facility residential treatment 
program, or skilled nursing facility.
    (3) Amount of inpatient cost-sharing requirements. In fiscal year 
2001, the inpatient cost-sharing requirements for retirees and their 
dependents for acute care admissions and other inpatient admissions is 
a per diem charge of $11, with a minimum charge of $25 per admission.
* * * * *

    Dated: January 26, 2016.
Morgan E. Park,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2016-01703 Filed 1-29-16; 8:45 am]
 BILLING CODE 5001-06-P