[Federal Register Volume 82, Number 188 (Friday, September 29, 2017)]
[Rules and Regulations]
[Pages 45438-45461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20392]


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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[Docket ID: DOD-2017-HA-0039]
RIN 0720-AB70


Establishment of TRICARE Select and Other TRICARE Reforms

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

ACTION: Interim final rule.

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SUMMARY: This interim final rule implements the primary features of 
section 701 and partially implements several other sections of the 
National Defense Authorization Act for Fiscal Year 2017 (NDAA-17). The 
law makes significant changes to the TRICARE program, especially to the 
health maintenance organization (HMO)-like health plan, known as 
TRICARE Prime; to the preferred provider organization (PPO) health 
plan, previously called TRICARE Extra which is to be replaced

[[Page 45439]]

by TRICARE Select; and to the third health care option, known as 
TRICARE Standard, which will be terminated as of December 31, 2017, and 
also replaced by TRICARE Select. The statute also adopts a new health 
plan enrollment system under TRICARE and new provisions for access to 
care, high value services, preventive care, and healthy lifestyles. In 
implementing the statutory changes, this interim final rule makes a 
number of improvements to TRICARE.

DATES: This interim final rule is effective October 1, 2017. Comments 
will be received by November 28, 2017.

ADDRESSES: You may submit comments, identified by docket number and 
title, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Department of Defense, Office of the Deputy Chief 
Management Officer, Directorate for Oversight and Compliance, 
Regulatory and Advisory Committee Division, 4800 Mark Center Drive, 
Mailbox #24, Suite 08D09B, Alexandria, VA 22350-1700.
    Instructions: All submissions received must include the agency 
name, docket number, or title 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: Mr. Mark Ellis, Defense Health Agency, 
TRICARE Health Plan, (703) 681-0063.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Purpose of the Interim Final Rule

    In implementing section 701 and partially implementing several 
other sections of NDAA-17, this interim final rule advances all four 
components of the Military Health System's quadruple aim of improved 
readiness, better care, better health, and lower cost. The aim of 
improved readiness is served by reinforcing the vital role of the 
TRICARE Prime health plan to refer patients, particularly those needing 
specialty care, to military medical treatment facilities (MTFs) in 
order to ensure that military health care providers maintain clinical 
currency and proficiency in their professional fields. The objective of 
better care is enhanced by a number of improvements in beneficiary 
access to health care services, including increased geographical 
coverage for the TRICARE Select provider network, reduced 
administrative hurdles for TRICARE Prime enrollees to obtain urgent 
care services and specialty care referrals, and promotion of high value 
services and medications. The goal of better health is advanced by 
expanding TRICARE coverage of preventive care services, treatment of 
obesity, high-value care, and telehealth. And the aim of lower cost is 
furthered by refining cost-benefit assessments for TRICARE plan 
specifications that remain under DoD's discretion and adding 
flexibilities to incentivize high-value health care services.

B. Legal Authority for the Regulatory Action

    This interim final rule is required to implement or partially 
implement several sections of NDAA-17, including 701, 706, 715, 718, 
and 729. The legal authority for this rule also includes chapter 55 of 
title 10, United States Code.

C. Summary of Major Provisions of the Interim Final Rule

    The major provisions of the interim final rule are:
    [rtarr8] The establishment of TRICARE Select as a self-managed, PPO 
option under the TRICARE program. TRICARE Select replaces the TRICARE 
Extra and Standard programs and adopts a number of improvements, 
including fixed copayments rather than cost shares for covered benefits 
provided by a civilian network provider. TRICARE Select beneficiaries 
can choose any provider for their healthcare; however, they will enjoy 
lower out-of-pocket costs if they choose preferred providers within the 
TRICARE civilian network.
    [rtarr8] The continuation of TRICARE Prime as a managed care, HMO-
like option under the TRICARE program. TRICARE Prime adopts a number of 
changes to conform to specifications in the new law, including 
categories of health care services applicable to the determination of 
copayment amounts (such as primary care, specialty care, emergency 
care).
    [rtarr8] Improved access to care, including a codified requirement 
that the TRICARE Select health care plan is available in all locations 
and at least 85% of the U.S. beneficiary TRICARE Select population is 
covered by the TRICARE network. Also, for TRICARE Prime enrollees, 
there are new procedures to ensure timely appointments for health care 
services and to authorize some or all urgent care visits without the 
need for referral from a primary care manager.
    [rtarr8] Promotion of high value services and medications, 
telehealth services, preventive health care, and healthy lifestyles.
    [rtarr8] A new design for the health care enrollment system, 
including mandatory enrollment to maintain TRICARE coverage, an annual 
open season enrollment period, and hassle-free enrollment procedures.
    [rtarr8] Other features include preservation of benefits for active 
duty dependents and TRICARE-for-Life beneficiaries, and changes to the 
TRICARE Young Adult (TYA), TRICARE Reserve Select (TRS), TRICARE 
Retired Reserve (TRR), Continued Health Care Benefit Program (CHCBP), 
and TRICARE Retiree Dental Program (TRDP) to conform with new statutory 
requirements.

II. Provisions of Interim Final Rule

A. Establishment of TRICARE Select

    The rule implements the new law (section 701 of NDAA-17) that 
establishes TRICARE Select as a self-managed, PPO program. It allows 
beneficiaries to use the TRICARE civilian provider network, with 
reduced out-of-pocket costs compared to care from non-network 
providers, as well as military treatment facilities (when space is 
available). Similar to the long-operating ``TRICARE Extra'' and 
``TRICARE Standard'' plans, which TRICARE Select replaces, a major 
feature is that enrollees will not have restrictions on their freedom 
of choice with respect to health care providers. TRICARE Select is 
based primarily on 10 U.S.C. 1075 (as added by section 701 of NDAA-17) 
and 10 U.S.C. 1097. With respect to beneficiary cost sharing, the 
statute introduces a new split of beneficiaries into two groups: One 
group (which the rule refers to as ``Group A'') consists of sponsors 
and their family members who first became affiliated with the military 
through enlistment or appointment before January 1, 2018, and the 
second group (referred to as ``Group B'') who first became affiliated 
on or after January 1, 2018. In general, beneficiary out-of-pocket 
costs for Group B are higher than for Group A.
    In addition to implementing the statutory specifications, the 
interim final rule also makes improvements for TRICARE Select Group A 
enrollees, compared to the features of the old TRICARE Extra plan. One 
such improvement is to convert the current cost-sharing requirement of 
15% for active duty family members and 20% for retirees and their 
family members of the allowable charge for care from a network provider 
to a fixed dollar

[[Page 45440]]

copayment calculated to approximately equal 15% or 20% of the average 
allowable charge for the category of care involved. Consistent with 
prevailing private sector health program practices, the fixed dollar 
copayment is more predictable for the patient and easier for the 
network health care provider to administer. The breakdown of categories 
of care (such as outpatient primary care visit, specialty care visit, 
emergency room visit, etc.) contained in the rule is the same as the 
categories now specified in the statute for Group B Select enrollees.
    A second improvement in TRICARE Select (for both Group A and Group 
B) is that additional preventive care services that previously were 
only offered to TRICARE Prime beneficiaries will now (under the 
authority of 10 U.S.C. 1097 and NDAA-17) also be covered for Select 
enrollees when furnished by a network health care provider. These are 
services recommended by the United States Preventive Services Task 
Force and the Health Resources and Services Administration of the 
Department of Health and Human Services.
    These improvements are based partly on the statutory provision (10 
U.S.C. 1075(c)(2)) that Group A Select enrollee cost-sharing 
requirements are calculated as if TRICARE Extra were still being 
carried out by DoD. TRICARE Extra specifications are based on the 
underlying authority of 10 U.S.C. 1097, which allows DoD to adopt 
special rules for the PPO plan. This statute was the basis for the 
original set of rules for TRICARE Extra, which were adopted in 1995, 
and is the authority for these improved rules for TRICARE Select Group 
A, adopted as if TRICARE Extra were still being carried out by DoD.
    Under the interim final rule, the cost sharing rules applicable to 
TRICARE Select Group B are those specified in 10 U.S.C. 1075. For 
TRICARE Select Group A, in addition to the copayment rules noted above, 
consistent with 10 U.S.C. 1075, an enrollment fee of $150 per person or 
$300 per family will begin January 1, 2021, for most retiree families, 
with annual updates thereafter based on the cost of living adjustment 
(COLA) applied to retired pay. At the same time, the catastrophic cap 
will increase from $3,000 to $3,500 for these retiree families. These 
changes, however, will not apply to TRICARE Select Group A active duty 
families, survivors of members who died while on active duty, or 
disability retiree families; that is, no enrollment fee will be 
applicable to this group and the applicable catastrophic cap will 
continue to be $1,000 for active duty families as established under 10 
U.S.C. 1079(b) and $3,000 for survivors of members who died while on 
active duty or disability retiree families as established under 10 
U.S.C. 1086(b).

B. Continuation of TRICARE Prime

    A second major feature of this interim final rule, based primarily 
on 10 U.S.C. 1075a (also added by section 701 of NDAA-17), is the 
continuation of TRICARE Prime as a managed care, HMO-like program. It 
generally features use of military treatment facilities (MTFs) and 
substantially reduced out-of-pocket costs for authorized care provided 
outside MTFs. Beneficiaries generally agree to use military treatment 
facilities and designated civilian provider networks and to follow 
certain managed care rules and procedures. Like with TRICARE Select, 
with respect to beneficiary cost sharing, the statute introduces a new 
split of beneficiaries into two groups (again referred to in the rule 
as Group A and Group B) based on the military sponsor's initial 
enlistment or appointment before January 1, 2018 (Group A), or on or 
after that date (Group B). Beneficiary cost sharing for Group B is 
slightly higher than for Group A.
    As with TRICARE Select, the cost sharing specifications for TRICARE 
Prime Group B are set forth in the statute, and those for Group A are 
calculated in accordance with other health care provisions of title 10 
(rather than the new section 1075a). The primary original statutory 
authority for the TRICARE Prime health plan, established by DoD 
regulation in 1995, was 10 U.S.C. 1097, and this continues to be relied 
upon for the continued operation of TRICARE Prime for Group A. Also 
relevant to the original terms of TRICARE Prime was section 731 of the 
National Defense Authorization Act for Fiscal Year 1994. That law 
required DoD to include, to the maximum extent practicable, the HMO-
like option under TRICARE. That law also required that the HMO-like 
option ``shall be administered so that the costs incurred by the 
Secretary under the TRICARE program are no greater than the costs that 
would otherwise be incurred'', to provide health care to beneficiaries. 
The extent to which this ``cost neutrality'' requirement has not been 
maintained was recently highlighted by the Congressional Budget Office: 
``CBO estimates that under current law, a typical retiree household 
enrolled in TRICARE Prime as a `family' in 2018, and for whom TRICARE 
is the primary payer of health benefits, will cost DoD about $17,400, 
and a typical family that uses Standard/Extra will cost DoD about 
$12,700.'' \1\
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    \1\ Congressional Budget Office Cost Estimate, S. 2943, National 
Defense Authorization Act for Fiscal Year 2017, June 10, 2016, page 
17.
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    Based on the TRICARE Prime cost neutrality provision in NDAA-1994, 
the original 1995 TRICARE Prime regulation included (at 32 CFR 
199.18(g)) that cost sharing requirements ``may be updated for 
subsequent years to the extent necessary to maintain compliance with 
statutory requirements pertaining to government costs.'' Since NDAA-
1994, Congress took away DoD's discretion for enrollment fee increases, 
which are now tied by law to the retired pay COLA. However, DoD 
continues to have discretion to update copayment amounts--which have 
not changed since 1995--and this discretion is confirmed by the newly 
enacted 10 U.S.C. 1075a(a)(3).
    This discretion to update copayment amounts is continued in the 
interim final rule, but the framework for setting Prime Group A 
copayment amounts is being revised. Specifically, DoD is adopting for 
Group A the same structure of categories of care that Congress adopted 
for Group B. Thus, for example, while the current TRICARE Prime 
copayment amount makes no distinction between primary care and 
specialty care services, the new Group B structure under the statute 
does have a different copayment for primary care and specialty care. 
Under the rule, copayment amounts for Group A beneficiaries will be set 
for each of those categories, as well as the other categories of care 
the statute now specifies for Group B enrollees. The interim final rule 
does not specify the amount for each category of care. Rather, 
consistent with DoD's discretion under current statute and regulation, 
the actual amount will be set each year prior to open season 
enrollment. The interim final rule does, however, specify that the 
amount for each category of care for Group A enrollees may not exceed 
the amount that Congress set for Group B enrollees. In this way, the 
Prime copay structure would be in alignment with proposed legislative 
changes recommended by the Department to Congress for enactment this 
year to eliminate the ``grandfathering'' of Group A retiree families 
and return to a single TRICARE Prime model for all working-age retiree 
families. Again, it should be noted that this applies only to per-
service copayments; enrollment fee increases for Group A enrollees will 
continue to be based on the retired pay COLA.

[[Page 45441]]

    The interim final rule also continues the point-of-service 
provision of the current TRICARE Prime plan. Any health care services 
obtained by a Prime enrollee not in accordance with the rules and 
procedures of Prime (e.g. failure to obtain a primary care manager 
referral when such a referral is required or seeing a non-network 
provider when a network provider is available) will not be paid for 
under Prime rules, but may be covered by the point-of-service option. 
This results in higher cost sharing--specifically, a deductible of $300 
per person and $600 per family, and a copayment of 50 percent of the 
allowable charges after the deductible. Point-of-service charges do not 
count against the annual catastrophic cap. These point-of-service rules 
continue for TRICARE Prime Group A and are also applicable to Group B. 
For Group B, the rules for point-of-service charges are specified in 10 
U.S.C. 1075a(c), which clarifies that point-of-service cost sharing is 
``notwithstanding'' the usual cost sharing rules of Prime Group B 
enrollees.
    One other matter on which the interim final rule preserves DoD 
discretion, similar to that in the current regulation, is with respect 
to the locations where TRICARE Prime is offered. This is noted in the 
current regulation at 32 CFR 199.17(a)(5). Under the interim final 
rule, the locations where TRICARE Prime will be offered will be 
determined by the Director, Defense Health Agency (DHA) and announced 
prior to the annual open season enrollment period. The guiding 
principle for this decision is that the purpose of TRICARE Prime is to 
support the medical readiness of the armed forces and the readiness of 
medical personnel. Codification in regulation of this guiding principle 
is a corollary to the codification by Congress in statute, specifically 
sections 703 and 725 of NDAA-17 that MTFs exist to support the medical 
readiness of the armed forces and the readiness of medical personnel.
    TRICARE Prime, especially for working age retirees and family 
members, provides MTFs clinical workload, including for a range of 
medical specialty areas that permit military health care providers to 
maintain currency and proficiency in their respective clinical fields. 
This important support of a ready medical force is what justifies the 
higher government cost of Prime (which CBO estimates at $17,400 per 
retiree family), notwithstanding the original statutory requirement of 
cost neutrality between TRICARE Prime and TRICARE Standard. This cost-
benefit assessment supports the conclusion that it is practicable to 
offer TRICARE Prime in areas where it supports the medical readiness of 
one or more MTFs. Additionally, where TRICARE Prime is offered, it may 
be limited to active duty family members if the Director, DHA 
determines it is not practicable to offer TRICARE Prime to retired 
beneficiaries as well--a determination that again would take into 
account the nature of the supported MTF and the range of services it 
offers.

C. Improved Access to Care

    A third significant change in the interim final rule is a set of 
improvements in standards for access to care. The TRICARE Select plan 
replaces TRICARE Standard as the generally applicable plan in all 
areas. Under TRICARE Select, eligible beneficiaries can choose any 
provider for their healthcare, and they will enjoy lower out-of-pocket 
costs if they choose providers within the TRICARE civilian network. The 
vast majority of TRICARE beneficiaries located in the United States 
will have access to TRICARE network providers (it is DoD's plan that at 
least 85% of the U.S. beneficiary population under TRICARE Select will 
be covered by the network upon implementation), similar to the current 
TRICARE Extra option, but with the benefit of predictable fixed dollar 
copayments. In cases in which a network provider is not available to a 
TRICARE Select enrollee, such as in remote locations where there are 
very few primary or specialty providers, enrollees will still have 
access to any TRICARE authorized provider, with cost sharing comparable 
to the current TRICARE Standard plan (i.e. 25% for retired category 
beneficiaries).
    A second interim final rule enhancement for access to care is that 
if a TRICARE Prime enrollee seeks to obtain an appointment for care 
from the managed care support contractor but is not offered an 
appointment within the applicable access time standards from a network 
provider, the enrollee will be authorized to receive care from any 
authorized provider without incurring the additional fees associated 
with point-of-service care.
    A third access to care improvement under the interim final rule is 
that the TRICARE Prime referral requirement may be waived for urgent 
care visits for Prime enrollees other than active duty members. This is 
similar to the current pilot program, which waives the referral 
requirement (other than for active duty members) for up to two urgent 
care visits per year. The specific number of urgent care visits without 
a referral will be determined annually prior to the beginning of the 
open season enrollment period.
    A fourth access to care improvement is adoption of the new 
statutory provision that a primary care manager who believes a referral 
to a specialty care network provider is medically necessary and 
appropriate need not obtain pre-authorization from the managed care 
support contractor. Managed care support contractor preauthorization is 
only required with respect to a primary care manager's referral for 
inpatient hospitalization, inpatient care at a skilled nursing 
facility, inpatient care at a residential treatment center and 
inpatient care at a rehabilitation facility.

D. Promotion of High Value Services and Medications and Telehealth 
Services

    In addition to the expansion noted above concerning preventive care 
services, the interim final rule makes a number of other improvements 
in TRICARE Prime and TRICARE Select based on provisions of sections 
701(h), 706, 718, and 729 of NDAA-17. Section 701(h), among other 
things, provides for a four-year pilot program to encourage use by 
patients of high value services and medications. Section 706, among 
other things, authorizes special arrangements with provider groups that 
will improve population-based health outcomes and focus more on 
preventive care. Section 729 calls for special actions to incentivize 
medical intervention programs to address chronic diseases and other 
conditions and healthy lifestyle interventions. Section 718, among 
other things, requires actions to promote greater use of telehealth 
services under TRICARE. While these sections of NDAA-17 also require 
actions outside the scope of this interim final rule (such as 
contracting actions) they can be partially implemented, consistent with 
Congressional intent, in this rule. The interim final rule does this in 
several ways.
    First, the interim final rule authorizes coverage under TRICARE 
Prime and TRICARE Select for medically necessary treatment of obesity 
even if it is the sole or major condition treated. Under 10 U.S.C. 
1079(a)(10), this is disallowed under the basic program. However, it is 
DoD's conclusion that the underlying authority of 10 U.S.C. 1097, 
together with section 729 of NDAA-17 (which specifically authorizes 
medical intervention for obesity), allow the Department to cover these 
services when provided by a network provider

[[Page 45442]]

for a TRICARE Prime or TRICARE Select enrollee.
    Second, the interim final rule codifies authority of the Director, 
DHA to waive or reduce copayment requirements for TRICARE Prime and 
TRICARE Select enrollees for care received from network providers for 
certain health care services that provide especially high value in 
terms of better health outcomes for patients. Authority for this 
includes section 706 and 729 of NDAA-17. This is also consistent with 
the four-year pilot program authority of section 701(h), but does not 
necessarily rely on that time-limited authority. Consistent with the 
intent of these sections, the Department also intends to use the 
authority of Sec.  199.21(j)(3) of the TRICARE Pharmacy Benefits 
Program section of the TRICARE regulations to encourage use of high 
value medications by reducing or eliminating the copayment of selected 
medicines.
    Third, consistent with section 718 of NDAA-17, the interim final 
rule provides that health care services covered by TRICARE and provided 
through the use of telehealth modalities are covered services to the 
same extent as if provided in person at the location of the patient if 
those services are medically necessary and appropriate for such 
modalities. The Director, DHA will establish standardized payment 
methods to reimburse for such services, and shall reduce or eliminate, 
as appropriate, beneficiary copayments or cost-shares for such services 
in cases in which a copayment would otherwise apply. This may be done 
by designating some telehealth services as high value services for 
which lower copays apply as well as the elimination of any beneficiary 
cost-sharing related to originating site fees when used to support the 
provision of telehealth services.

E. Changes to Health Plan Enrollment System

    A fourth major change in the interim final rule is its 
implementation of the new statutory design for the health care 
enrollment system. Starting in calendar year 2018, beneficiaries other 
than active duty members and TRICARE-for-Life beneficiaries must elect 
to enroll in TRICARE Select or TRICARE Prime in order to be covered by 
the private sector care portion of TRICARE. While TRICARE-for-Life 
beneficiaries under the age of 65 are permitted to enroll in TRICARE 
Prime under limited circumstances, their failure to enroll will not 
affect their coverage by the private sector care portion of TRICARE. 
Enrollment will be done during an open season period prior to the 
beginning of each plan year, which operates with the calendar year. An 
enrollment choice will be effective for the plan year. As an exception 
to the open season enrollment rule, enrollment changes can be made 
during the plan year for certain qualifying events, such as a change in 
eligibility status, marriage, divorce, birth of a new family member, 
relocation, loss of other health insurance, or other events.
    Eligible Prime or Select beneficiaries who do not enroll will no 
longer have private sector care coverage under the TRICARE program 
(including the TRICARE retail pharmacy and mail order pharmacy 
programs) until the next open enrollment season or they have a 
qualifying event, except that they do not lose any statutory 
eligibility for space-available care in military medical treatment 
facilities. There is a limited grace period exception to this 
enrollment requirement for calendar year 2018, as provided in section 
701(d)(3) of NDAA-17, to give beneficiaries another chance to adjust to 
this new requirement for annual enrollment. For the administrative 
convenience of beneficiaries, there are also procedures for automatic 
enrollment in Prime and Select for most active duty family members, and 
automatic renewal of enrollments of covered beneficiaries, subject to 
the opportunity to decline or cancel.
    Due to a compressed implementation schedule that precludes an 
annual open season enrollment period in calendar year 2017 for existing 
TRICARE beneficiaries to elect or change their TRICARE coverage, the 
Department will convert existing TRICARE Standard coverage to TRICARE 
Select coverage effective January 1, 2018. All other existing TRICARE 
coverages will be renewed effective January 1, 2018. As noted 
previously, beneficiaries may elect to change their TRICARE coverage 
anytime during the limited grace period in calendar year 2018.

F. Additional Provisions of Interim Final Rule

    The interim final rule has several other noteworthy provisions. 
First, there are no changes in benefits for TRICARE-for-Life 
beneficiaries, or generally in cost sharing levels for active duty 
family members. Second, although ``TRICARE Standard'' is terminated as 
a distinct TRICARE plan as of December 31, 2017, basic program benefits 
(as established under 32 CFR 199.4) continue under both TRICARE Prime 
and TRICARE Select. In addition, when a TRICARE Select beneficiary 
receives services covered by the basic program benefits from an 
authorized health care provider who is not part of the TRICARE provider 
network, that care is covered by TRICARE as ``out-of-network'' care 
under terms that match the old TRICARE Standard plan. Third, in order 
to transition enrollment fees, deductibles, and catastrophic caps from 
a fiscal year basis to a calendar year basis, special rules apply for 
the last quarter of calendar year 2017, including that a Prime 
enrollee's enrollment fee for the quarter is one-fourth of the 
enrollment fee for fiscal year 2017, and the deductible amount and the 
catastrophic cap amount for fiscal year 2017 will be applicable to the 
15-month period of October 1, 2016, through December 31, 2017. A 
similar transition rule will apply to TRICARE for Life, TYA, TRR and 
TRS to align remaining program deductibles and/or catastrophic caps 
from a fiscal year to calendar year basis for consistency and ease of 
administration.
    Additionally, the interim final rule adopts several changes to 
regulatory provisions applicable to the TYA, TRS, TRR, and TRDP 
programs to conform with new statutory requirements. In implementing 
section 701(a) of NDAA-17, together with section 701(j)(1)(F), the rule 
conforms the TYA regulation to the statutory language which established 
the eligibility of TYA under 10 U.S.C. 1110b to enroll in TRICARE 
Select and provided that the TYA premium shall apply instead of the 
otherwise applicable TRICARE Prime or Select enrollment fee. In 
implementing section 701(j)(1)(B), the rule conforms the TRICARE 
Reserve Select plan regulation to the statutory language which defines 
``TRICARE Reserve Select'' as the TRICARE Select self-managed, 
preferred-provider network option under 10 U.S.C. 1075 made available 
to beneficiaries under 10 U.S.C. 1076d and requires payment of a 
premium for coverage instead of the TRICARE Select enrollment fee. In 
implementing section 701(j)(1)(C), the rule conforms the TRICARE 
Retired Reserve plan regulation to the statutory language which defines 
``TRICARE Retired Reserve'' as the TRICARE Select self-managed, 
preferred-provider network option under 10 U.S.C. 1075 made available 
to beneficiaries under 10 U.S.C. 1076e and requires payment of a 
premium for coverage instead of the TRICARE Select enrollment fee. In 
implementing section 701(a) and 701(e), the rule conforms the CHCBP 
regulation to replace TRICARE Standard with TRICARE Select as the 
continuation health care benefit for Department of Defense and the 
other uniformed services beneficiaries losing eligibility.

[[Page 45443]]

In implementing section 715, the rule conforms the TRDP regulation to 
the statutory language which authorizes an interagency agreement 
between the Department of Defense and the Office of Personnel 
Management to allow beneficiaries otherwise eligible for the TRDP to 
enroll in a dental insurance plan offered under the Federal Employees 
Dental and Vision Insurance Program. Under the statute, TRDP 
beneficiaries will have the opportunity to access a dental plan with 
significantly higher annual maximum benefit and a lower premium cost 
than available under the current TRDP, while giving the Department an 
opportunity to eliminate costs associated with procuring and 
administering a separate TRDP contract.
    Also, the interim final rule adopts several changes to regulatory 
provisions applicable to benefit coverage of medically necessary food 
and vitamins. Section 714 of NDAA-17 confirms long-standing TRICARE 
policy authorizing benefit coverage of medically necessary vitamins 
when prescribed for management of a covered disease or condition. In 
addition, while section 714 confirms long-standing TRICARE policy 
authorizing medical nutritional therapy coverage of medically necessary 
food and medical equipment/supplies necessary to administer such food 
when prescribed for dietary management of a covered disease or 
condition, the law also allows the medically necessary food benefit to 
include coverage of low protein modified foods. Consistent with this we 
also recognize the role of Nutritionists and Registered Dieticians in 
the appropriate planning for the use of medically necessary foods.
    Additionally, the interim final rule adopts several conforming 
changes to regulatory provisions applicable to general TRICARE 
administration, the TRICARE Pharmacy Benefits Program and the Extended 
Health Care Option to reflect transition of deductibles, catastrophic 
caps, and program reimbursement limitations, as applicable, from a 
fiscal year basis to a calendar year basis for consistency and ease of 
administration. Simultaneously, technical corrections are being made to 
the TRICARE Pharmacy Benefits Program to conform regulation provisions 
to statutory provisions enacted by section 702 of the National Defense 
Authorization Act for Fiscal Year 2016.
    Finally, the interim final rule includes authority for the 
Director, DHA to establish preferred provider networks in areas outside 
the United States where it is determined to be economically in the best 
interests of the Department of Defense. As a result of the TRICARE 
Philippines Demonstration Project, which commenced in January 1, 2013, 
the Department has determined that the TRICARE contracted preferred 
provider network established in designated locations in the Philippines 
provided adequate access to beneficiaries with 97 percent of care 
delivered by network providers. It also successfully achieved the 
demonstration goals of reducing aberrant billing activities, reduced 
out-of-pocket expenses for beneficiaries, and increased overall 
beneficiary satisfaction while leading to a net savings to the 
government. Although the demonstration was projected to continue 
through December 31, 2018, the Philippines preferred provider network 
is determined to be economically in the interests of the Department of 
Defense and the demonstration shall terminate effective December 31, 
2017, with transition of the demonstration's approved preferred 
provider network to a TRICARE Select preferred provider network 
effective January 1, 2018.

G. Recap: Cost Sharing Tables

    The following two tables summarize beneficiary fees (including 
enrollment fees, deductibles, cost sharing amounts, and catastrophic 
loss protection limits) under TRICARE Select and TRICARE Prime for 
calendar year 2018. For future calendar years, all fees are subject to 
review and annual updating in accordance with sections 1075, 1075a, and 
1097 of title 10, United States Code. Table 1 is for active duty family 
members (ADFMs); Table 2 is for retiree families. As a guide for 
understanding the tables:
    [rtarr8] For services listed as ``to be determined (TBD)'', the 
Director, DHA will ensure the applicable fee for calendar year 2018 
will be available at www.health.mil/rates before December 1, 2017.
    [rtarr8] For services not specifically addressed in these tables, 
applicable cost-sharing requirements shall be established by the 
Director, DHA and published annually.
    [rtarr8] For services designated as ``IN'', the listed fee is for 
covered services or supplies obtained ``in-network,'' meaning received 
from TRICARE authorized network providers.
    [rtarr8] For TRICARE Prime beneficiaries, if covered services or 
supplies are not obtained in accordance with the rules and procedures 
of Prime (e.g., failure to obtain a required referral or unauthorized 
use of a non-network provider), the services or supplies will be 
reimbursed under a point-of-service option for which there is a 
deductible of $300 per person or $600 per family and a cost share of 50 
percent of the allowable charges after the deductible.
    [rtarr8] For services designated as ``OON'', the listed fee for 
TRICARE Select beneficiaries is for covered services or supplies 
obtained ``out-of-network'', meaning received from non-network TRICARE 
authorized providers.
    [rtarr8] Certain preventive services have no cost sharing whether 
received from network or non-network providers. However, certain 
preventive services are not covered services for TRICARE Prime or 
Select beneficiaries unless obtained from network providers. 
Additionally, TRICARE Prime beneficiaries are required to obtain 
services in accordance with the rules and procedures of Prime to avoid 
point-of-service charges.
    [rtarr8] Enrollment fees and deductibles are listed in the tables 
as individual/family, indicating the dollar amounts applicable per 
individual or per family.
    [rtarr8] The criteria for fees associated with High Value Primary 
Care Outpatient Care and High Value Specialty Outpatient Care are under 
development but will be designed to encourage beneficiaries to receive 
health care services from high-value providers as highlighted in the 
contractor's network provider directory. When finalized, the fees will 
be made available at www.health.mil/rates.
    [rtarr8] Inpatient subsistence refers to the rate charged for 
inpatient care obtained in a military treatment facility.
    [rtarr8] ``COLA'' is the cost-of-living adjustment for retired pay 
under 10 U.S.C. 1401a by which certain fees are required to be annually 
indexed.
    [rtarr8] ``<'' means less than; <= means less than or equal to.

[[Page 45444]]



              Table 1--TRICARE Select and TRICARE Prime Cost Sharing for Active Duty Family Members
                                             for Calendar Year 2018
----------------------------------------------------------------------------------------------------------------
                                    Select Group A      Select Group B       Prime Group A       Prime Group B
                                         ADFMs               ADFMs               ADFMs               ADFMs
----------------------------------------------------------------------------------------------------------------
Annual Enrollment...............  $0................  $0................  $0................  $0
Annual Deductible...............  E1-E4: $50/$100;    E1-E4: $50/$100;    0.................  0
                                   E5 & above: $150/   E5 & above: $150/
                                   $300.               $300.
Annual Catastrophic Cap.........  $1,000............  $1,000............  1,000.............  1,000
Preventive Care Outpatient Visit  $0................  $0................  0.................  0
Primary Care Outpatient Visit...  Fixed fee to = 15%  $15 primary care    0.................  0
                                   of average          IN; 20% OON.
                                   allowable amount
                                   IN; 20% OON.
Specialty Care Outpatient Visit.  Fixed fee to = 15%  $25 specialty care  0.................  0
                                   of average          IN; 20% OON.
                                   allowable amount
                                   IN; 20% OON.
High-Value Primary Care           Under Development;  Under Development;  0.................  0
 Outpatient Visit.                 Less than normal    Less than normal
                                   primary care        primary care
                                   amount.             amount.
High-Value Specialty Care         Under Development;  Under Development;  0.................  0
 Outpatient Visit.                 Less than normal    Less than normal
                                   primary care        primary care
                                   amount.             amount.
Emergency Room Visit............  Fixed fee to = 15%  $40 IN; 20% OON...  0.................  0
                                   of average
                                   allowable amount
                                   IN; 20% OON.
Urgent Care Center..............  Same as primary     $20 IN; 20% OON...  0.................  0
                                   care outpatient
                                   amount IN; 20%
                                   OON.
Ambulatory Surgery..............  $25...............  $25 IN; 20% OON...  0.................  0
Ambulance Service (not including  Fixed fee to = 15%  $15 IN; 20% OON...  0.................  0
 air).                             of average
                                   allowable amount
                                   IN; 20% OON.
Durable Medical Equipment.......  15% IN; 20% OON...  10% IN; 20% OON...  0.................  0
Inpatient Hospital Admission....  Subsistence charge/ $60/admission IN;   0.................  0
                                   day, minimum $25/   20% OON.
                                   admission.
Inpatient Skilled Nursing/Rehab   Subsistence charge/ $25/day IN; $50/    0.................  0
 Facility.                         day, minimum $25/   day OON.
                                   admission.
----------------------------------------------------------------------------------------------------------------


       Table 2--TRICARE Select and TRICARE Prime Cost Sharing for Retiree Families for Calendar Year 2018
----------------------------------------------------------------------------------------------------------------
                                    Select Group A      Select Group B       Prime Group A       Prime Group B
                                       Retirees            Retirees            Retirees            Retirees
----------------------------------------------------------------------------------------------------------------
Annual Enrollment...............  $0 until 2021;      $450/$900.........  FY17 amount         $350/$700.
                                   $150/$300 in 2021                       ($282.60/$565.20)
                                   +COLA?                                  +COLA.
Annual Deductible...............  $150/$300.........  $150/$300 IN; $300/ $0................  $0.
                                                       $600 OON.
Annual Catastrophic Cap.........  $3,000 until 2021;  $3,500............  $3,000............  $3,500.
                                   $3,500 in 2021.
Preventive Care Visit...........  $0................  $0................  $0................  $0.
Primary Care Outpatient Visit...  Fixed fee that =    $25 primary IN;     TBD, <=$20 primary  $20 primary.
                                   20% of average      25% OON.
                                   allowable amount
                                   IN; 25% OON.
Specialty Care Outpatient Visit.  Fixed fee that =    $40 specialty IN;   TBD, <=$30          $30 specialty.
                                   20% of average      25% OON.            specialty.
                                   allowable amount
                                   IN; 25% OON.
High Value Primary Care OP Visit  Under Development;  Under Development;  Under Development;  Under Development;