[Federal Register Volume 84, Number 32 (Friday, February 15, 2019)]
[Rules and Regulations]
[Pages 4326-4333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-02532]


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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: Final rule.

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SUMMARY: This 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 known as TRICARE Extra and replaced by TRICARE Select; and 
to the third health care option, known as TRICARE Standard, which was 
terminated December 31, 2017, and is 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 final rule makes a number of improvements to TRICARE.

DATES: This rule is effective March 18, 2019.

FOR FURTHER INFORMATION CONTACT: Mr. Mark Ellis, Defense Health Agency, 
TRICARE Health Plan, 7700 Arlington Boulevard, Suite 5101, Falls 
Church, VA 22042-5101, telephone (703) 275-6234.

SUPPLEMENTARY INFORMATION: 

I. Executive Summary

    An interim final rule (IFR) was published in the Federal Register 
on September 29, 2017 (82 FR 45438-45461) that established TRICARE 
Select and other TRICARE reforms. This rule is required to implement or 
partially implement several sections of NDAA-17, including sections 
701, 706, 715, 718, and 729. As a ``housekeeping'' matter, this rule 
also includes necessary changes to the TRICARE program to conform to 
new statutory specifications enacted in the National Defense 
Authorization Act for Fiscal Year 2018 (NDAA-18) over which the 
Department has no administrative discretion. The legal authority for 
this rule also includes chapter 55 of title 10, United States Code. In 
implementing section 701 and partially implementing several other 
sections of NDAA-17, this 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. Finally, 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.

[[Page 4327]]

II. Public Comments

    The IFR regarding the establishment of TRICARE Select and other 
TRICARE reforms was published in the Federal Register on September 29, 
2017. Online comments were received from eighty-nine individuals, 
medical affiliated organizations, and military and veterans 
associations via www.regulations.gov. We sincerely appreciated all 
comments. Specific matters raised by those comments are summarized 
below. We have carefully considered all public comments. Except as 
noted below, we reaffirm the policies and procedures incorporated in 
the IFR and incorporate the rationale presented in the preamble of the 
IFR into this final rule.

A. Establishment of TRICARE Select

1. Provisions of Interim Final Rule
    The rule implements the new law (section 701 of NDAA-17) that 
establishes TRICARE Select as a self-managed, PPO program. It allows 
TRICARE Select beneficiaries to use the TRICARE civilian provider 
network, with fixed copayments for most outpatient services compared to 
care from non-network providers, as well as MTFs 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, TRICARE Select beneficiary 
total out of pocket costs (taking into account enrollment fees and 
copayments) for Group B are higher than for Group A.
    In addition to implementing the statutory specifications, the final 
rule also makes improvements for TRICARE Select Group A enrollees, 
compared to the features of the former 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 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 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 TRICARE 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 IFR, 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).
2. Analysis of Major Public Comments
    The Department received multiple comments expressing 
dissatisfaction with the TRICARE Select cost sharing, grandfathering, 
higher catastrophic caps, and how the increased fees were calculated. 
Many comments generally noted that fixed rates create a barrier to 
healthcare. It was expressed that service members and their families 
were promised free health care and that promise has been broken.
    Response: We recognize the TRICARE Select cost shares and 
enrollment fees are higher than many expected. First, for Group B 
beneficiaries, the newly enacted out of pocket expenses are fixed by 
law (10 U.S.C. 1075), and the Department has implemented them without 
any modification.
    Second, since the start of the TRICARE program in 1995, we've 
understood many people enroll in TRICARE Prime not because of a great 
desire to have their care managed by a primary care manager (PCM) or 
desire to undergo a referral and authorization process before receiving 
specialty care, but because of the simplicity of a known fixed 
copayment amount when seen by a network provider for care. This allows 
families to budget for their out-of-pocket costs versus paying a 
percentage of an unknown amount to be billed by the provider. We 
thought those not enrolled in TRICARE Prime would welcome this 
simplicity as well and do not perceive that a barrier to healthcare is 
created by establishing a fixed copayment that is generally comparable 
to an alternative specified percentage of allowable amounts for similar 
services. Therefore, because Congress mandated in NDAA-17 that TRICARE 
Select Group B beneficiaries have fixed copayment amounts for network 
care, the Department used existing authorities to calculate, to the 
extent practicable, TRICARE Select fixed copayments for network care 
also for Group A enrollees. When determined not to be practicable, as 
in the categories of inpatient admissions and inpatient skilled 
nursing/rehabilitation admissions, the calculated cost-sharing amounts 
are not converted to fixed dollar amounts.
    While our goal is to provide at least 85% of TRICARE Select 
enrollees access to network providers, including those in non-PSAs, 
those using non-network providers will pay the same non-fixed cost 
shares (i.e., percentage of allowed amounts), whether they are in Group 
A

[[Page 4328]]

or B, the same as if they still had TRICARE Standard/Extra cost shares 
(a percentage of the Government allowed amount after satisfying the 
annual deductible amount).
    According to law, on average, out-of-pocket expenses for Group A 
are not to be any more than what they would have been had we continued 
the previous TRICARE Standard/Extra cost shares (a percentage of the 
Government allowed amount). Similar to the copayment for TRICARE Prime, 
our HMO option, the TRICARE Select calculated copayment amounts do not 
have separate copayments for ancillary services such as laboratory or 
radiology associated with the encounter, or for the facility charge if 
the encounter is in a facility, e.g., a hospital outpatient department. 
Although some concern was expressed that the inclusion of ancillary 
services in calculating the fixed copayment for the basic service 
resulted in a higher fixed copayment than existed under TRICARE 
Standard/Extra, the slight increase in the calculated copay accounts 
for separate copayments under TRICARE Standard/Extra for both the basic 
service and the ancillary service. Now, when a TRICARE Select enrollee 
pays a copayment for an office visit, any ancillary or facility changes 
would be part of that fixed copayment amount and no other out of pocket 
expense is incurred by the beneficiary. Having carefully considered 
this issue, our conclusion is that the advantages of having a 
predictable, fixed copayment amount under both TRICARE Prime and 
TRICARE Select outweigh the concerns about including the ancillary 
services in the calculation.
    Commenters also objected in general to TRICARE out of pocket cost 
increases, stating they were promised either free health care for life 
or objected to any future increases in their out of pocket expenses. We 
gratefully acknowledge the contributions to our Nation by those who 
have served in uniform as well as their family members. However, as a 
percentage of total health care costs, the beneficiary's cost share is 
substantially lower today than when the TRICARE program began more than 
20 years ago. Additionally, while beneficiary desires and expectations 
are understandable, neither the law nor DoD policy ever promised free 
health care or the availability of TRICARE Prime in all areas. It can 
be fairly said that they have been promised a very good health care 
program, and in the context of health plans across the United States, 
this promise has been kept.
    3. Provisions of the Final Rule: The final rule is consistent with 
the IFR.

B. Continuation of TRICARE Prime

1. Provisions of the Interim Final Rule
    A second major feature of the IFR, primarily based 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 MTFs and substantially reduced out-of-pocket costs for 
authorized care provided outside MTFs. Beneficiaries generally agree to 
use MTFs and designated civilian provider networks and to follow 
certain managed care rules and procedures. Like 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). Section 1075a mandated fixed copayments for specific 
categories of care received by Group B beneficiaries. However, Section 
1075a only directed that the copayments for Group A should be 
calculated in accordance with other authority granted to the 
Department. At the time of issuance of the IFR, the copayments for 
Group A had not been calculated but it specified that Group A cost 
sharing could not exceed the amount for each category of care set for 
Group B in Section 1075a. The Department continued to have the 
authority to set the TRICARE Prime Group A copayments, and they were 
set to match those of the Group B TRICARE Prime enrollees mandated by 
law. As such, TRICARE Prime copayments for both Group A and Group B 
enrollees are the same. It's important to note active duty family 
members (Group A or B) enrolled in TRICARE Prime continue to enjoy a $0 
out of pocket expense when authorized care is rendered by a TRICARE 
network provider.
2. Analysis of Major Public Comments
    The government received many comments expressing dissatisfaction 
with the authority, interpretation and methodology for copayment rates 
for grandfathered (Group A) beneficiaries. Among the comments was that 
Congress intended no change for grandfathered beneficiaries.
    Response: With the addition of 10 U.S.C. 1075a by NDAA-17, Congress 
established specific out of pocket expenses for Group B beneficiaries 
enrolled in TRICARE Prime as of January 1, 2018. In addition to a 
difference in the amount of the copayments, Congress also created 
additional categories of visits for Group B enrollees. With respect to 
Group A beneficiaries enrolled in TRICARE Prime, Congress did not 
specify copayment amounts but rather directed the Department to 
calculate cost-sharing requirements under other existing authorities.
    The IFR adopted for Group A beneficiaries enrolled in TRICARE Prime 
the same structure of categories of care that Congress adopted for 
Group B. In addition, it provided an overview of the authority and 
discretion of the Department for calculating the actual amount to be 
established as Group A cost sharing for each category of care. 
Consistent with that discretion under current statute and regulation, 
the Department determined the cost sharing for each category of care 
for Group A shall be the same amount as required for Group B under 
Section 1075a. The establishment of consistent copayments for all 
TRICARE Prime enrollees contributes to the effective and efficient 
administration of TRICARE, removes complexities in network provider 
billing for Prime enrollees, and simplifies the communication of 
program information to the public. In addition, it has been determined 
that the slight increase in fixed copayments for Group A are a 
reasonable and fair amount considering the overall rise in health care 
costs since initial establishment of the outpatient visit copayment 
first at $12 over twenty-three years ago in 1995. In addition, as noted 
in the preamble to the IFR, TRICARE Prime copays were originally 
intended to be updated every year or so to maintain ``cost neutrality'' 
compared to the TRICARE Standard program. But as things worked out, 
this is the first update in more than 20 years.
    The Department is proud that TRICARE remains one of the most 
comprehensive health benefits available in this country at 
exceptionally low beneficiary cost--a benefit that is commensurate with 
the sacrifice of those whom it serves.
    3. Provisions of the Final Rule: The final rule is consistent with 
the IFR.

C. Improved Access to Care

1. Provisions of the Interim Final Rule
    A third significant change in the IFR is a set of improvements in 
standards for access to care. The TRICARE Select plan replaces TRICARE 
Standard as the generally available plan worldwide. Under TRICARE 
Select, enrolled beneficiaries can choose any TRICARE authorized 
provider for their healthcare, and they will enjoy known out of pocket 
costs if they choose providers within the TRICARE civilian network. The 
vast

[[Page 4329]]

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 enrolled in TRICARE Select 
will have access to a preferred provider network upon implementation), 
similar to the old 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 old TRICARE Standard plan 
(i.e., 25% for retired category beneficiaries).
    A second IFR 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 TRICARE authorized provider 
without incurring the additional fees associated with point-of-service 
care.
    A third access to care improvement under the IFR 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 former pilot program, which waived 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. During plan year 2018, there is no limit to the 
number of urgent care visits that a Prime beneficiary (other than an 
active duty member) may receive without a referral from a PCM. The 
Department has no current plans to change that, but in order to 
evaluate the ongoing appropriateness of this policy, it remains a year-
by-year determination.
    A fourth access to care improvement is adoption of the new 
statutory provision that a PCM who believes a referral to a specialty 
care network provider for outpatient care is medically necessary and 
appropriate need not obtain preauthorization from the TRICARE regional 
contractor. TRICARE regional contractor preauthorization is only 
required in this particular context with respect to a PCM's referral 
for inpatient hospitalization, inpatient care at a skilled nursing 
facility, inpatient care at a residential treatment center, or 
inpatient care at a rehabilitation facility.
    It is important to note that the removal of the need for TRICARE 
Prime PCMs to get managed care support contractor preauthorization 
approval for referral to specialty care in NDAA-17 Section 701(c) 
[amending 10 U.S.C. 1095f] applies to the specialty consult itself but 
does not serve to preauthorize specific treatments, tests, or 
procedures that may be indicated by such consult. In other words, the 
treatment-specific preauthorization requirements separately set forth 
in the TRICARE Manuals still apply across the board. That change also 
applies only to referrals by a PCM to other network providers or within 
the network for covered services. Any referral to non-network specialty 
providers or services is not exempt from the preauthorization 
requirements. It is essential that the NDAA language concerning PCM 
referrals not be taken out of context and read too broadly--that 
language does not affect the longstanding and separate preauthorization 
requirements that apply to certain treatments/services/equipment 
generally.
    To explain further, Section 701 restrictions on prior 
authorizations (i.e., 10 U.S.C. 1095f(b) and (c)) only apply to TRICARE 
Prime enrollees. Thus, the IFR states in Sec.  199.17(i): ``All quality 
assurance, utilization review, and preauthorization requirements for 
the basic CHAMPUS program, as set forth in this part (see especially 
applicable provisions in Sec. Sec.  199.4 and 199.15), are applicable 
to Prime and Select except as provided in this chapter.'' The 
preauthorization requirements that are generally applicable under 
TRICARE independent of TRICARE Prime referrals, including those under 
the Pharmacy Benefits Program (under 10 U.S.C. 1074g and Sec.  199.21), 
certain laboratory and other ancillary services, and durable medical 
equipment.
    Therefore, TRICARE Select enrollees are also subject to all TRICARE 
Basic program preauthorization requirements even if the TRICARE Select 
enrollee seeks specialty care from a network provider. In sum, the 
preauthorization and referral requirements under TRICARE are an 
integral part of the program, were not entirely removed by NDAA-17, and 
can be complex in certain circumstances.
2. Analysis of Major Public Comments
    The government received many comments regarding the improved access 
to care and urgent care policy. Comments were received from 
beneficiaries who do not live near active military installations and 
expressed concerns about finding TRICARE authorized providers in their 
area or being discriminated against because the TRICARE Prime HMO 
option is not offered where they live. Other general concerns were 
expressed regarding inability to get timely scheduled appointments at 
MTFs. However, overall, comments were favorable about allowing 
unregulated urgent care visits.
    Response: As to the issue of beneficiaries who do not live near 
military installations not being able to find TRICARE authorized 
providers, we believe those who enroll in TRICARE Select will have 
better access to care from network providers than previous TRICARE 
Standard beneficiaries. It is the Department's plan that the TRICARE 
contractors offer improved access to ensure that at least 85% of 
TRICARE Select enrollees in each region in the U.S. have access to 
networks of providers near where they live. Therefore, for the majority 
of TRICARE Select enrollees, they will enjoy access to network 
providers that will charge no more than the established TRICARE 
copayment or cost share and will file claims on their behalf. 
Otherwise, TRICARE Select enrollees who do not live near an established 
network of preferred providers may use any TRICARE authorized provider. 
Finally, as a self-managed plan, TRICARE Select enrollees may elect to 
seek care from any TRICARE authorized provider, whether network or 
network, and also enjoy space available care at military hospitals and 
clinics. Therefore, TRICARE Select enrollees will generally have 
greater access to care but in no case less access than TRICARE Standard 
beneficiaries have always enjoyed.
    Several commenters claimed the Department discriminates against 
them because it does not offer the TRICARE Prime (HMO-like) option as 
they do not live near an active military installation. As noted in the 
IFR, 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 final rule 
continues our principle that the purpose of TRICARE Prime is to support 
the medical readiness of the armed forces and the readiness of medical 
personnel in areas of one or more MTFs. The rule preserves the 
Department's discretion with respect to the locations where TRICARE 
Prime is offered.
    As concerns the issue of timely appointments at MTFs, we are 
diligently working to improve beneficiary access and satisfaction with 
care at MTFs and to address the concerns raised with MTF same day care 
and scheduling MTF appointments. Regarding concerns about the quality 
of MTF care, all MTFs

[[Page 4330]]

have avenues to address concerns from patients, and we urge 
beneficiaries to utilize the services of the Customer Service and/or 
Quality Officers to address specific health care concerns.
    With respect to access to care standards for TRICARE Select 
enrollees, we did not specifically highlight this issue in the IFR 
because there was more focus on TRICARE Prime access standards. But the 
provisions of the IFR regarding the size, composition, and mix of 
providers being adequate to meet the needs of the enrolled population 
served apply to both TRICARE Prime and TRICARE Select enrollees. 
Because TRICARE Select is a self-managed plan where enrollees may 
choose to get care when and where they wish with no referrals, there 
are some differences between the TRICARE Prime and TRICARE Select plans 
regarding how those standards are implemented. But the access standards 
regarding availability of routine primary care, specialty care, urgent 
care, and emergency services are the same. As a means of monitoring 
implementation for TRICARE Select enrollees, their satisfaction with 
access to care will be surveyed and compared with those of high-
performing health care systems in the United States.
    4. Provisions of the Final Rule: The final rule is consistent with 
the IFR.

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

1. Provisions of the Interim Final Rule
    The IFR made 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. These involved high value services and medications, 
population-based health outcomes and focus more on preventive care, 
medical intervention programs, to address chronic diseases and other 
conditions and healthy lifestyle interventions, and telehealth 
services.
    The IFR authorizes coverage under TRICARE Prime and TRICARE Select 
for medically necessary treatment by a network provider of obesity even 
if it is the sole or major condition treated.
2. Analysis of Major Public Comments
    The Department received several comments expressing dissatisfaction 
with how the Department plans to implement coverage for medically 
necessary treatment of obesity, even if it is the sole of major 
condition treated. Registered Dietitian Nutritionists (RDNs) 
recommended that the provision more specifically include RDNs in the 
treating of obesity as RDNs are experts in food and nutrition and may 
be more knowledgeable than other health practitioners in treating this 
nutrition-related disease through diet and behavior modification.
    Response: Regarding the comment about a RDN's role in the treatment 
of obesity, the TRICARE regulation recognizes Registered Dietitians and 
Nutritionists as TRICARE authorized providers if they meet the required 
professional training and licensing requirements. If the otherwise 
qualified RDN provides medically necessary services in the treatment of 
obesity for an eligible beneficiary while under the supervision of a 
physician, the services will be covered as a TRICARE benefit. Nothing 
is required to be added by the final rule to authorize RDN services in 
the treatment of obesity.
    3. Provisions of the Final Rule: The final rule is consistent with 
the interim final rule.

E. Changes to Health Plan Enrollment System

1. Provisions of the Interim Final Rule
    A fourth major change in the IFR is the 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 
TRICARE Prime or TRICARE 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 precluded an 
annual open season enrollment period in calendar year 2017 for existing 
TRICARE beneficiaries to elect or change their TRICARE coverage, the 
Department converted existing TRICARE Standard coverage to TRICARE 
Select coverage effective January 1, 2018. All other existing TRICARE 
coverages were 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.
2. Analysis of Major Public Comments
    We received one public comment regarding the enrollment changes and 
open enrollment times. Instead of having to enroll in a TRICARE health 
plan, eligible beneficiaries simply would show their military 
identification card to any civilian provider, and then TRICARE would 
reimburse the provider. Or alternatively, the federal government should 
pay for the most expensive, lowest deductible plan offered by any 
insurance company, and charge retirees a reasonable percentage of the 
costs.
    Response: Neither suggestion is feasible. First, the law requires a 
TRICARE enrollment system, with specified enrollment fees, for all 
TRICARE eligible beneficiaries except for TRICARE-for-Life 
beneficiaries (i.e., those eligible for the Medicare wraparound 
coverage under 10 U.S.C. 1086(d)) and beneficiaries accessing space 
available care at MTFs. Under the required enrollment system, an 
eligible beneficiary is required to elect which option--TRICARE Prime 
or Select--to enroll in in order to be covered under the private sector 
health care benefit program. So, the proposed alternative is not 
consistent with the requirements of law. Second, the alternative of 
allowing the government to purchase a commercial insurance plan for 
beneficiaries also is not envisioned under the law. The law mandates

[[Page 4331]]

TRICARE as the program, as administered through the TRICARE regulation, 
by which authorized beneficiaries obtain DoD coverage on their civilian 
health care claims.
    3. Provisions of the Final Rule: The final rule is consistent with 
the IFR.

F. Additional Provisions of the Interim Final Rule

1. Provisions of the Interim Final Rule
    The IFR has several other noteworthy provisions. These included the 
continuation of benefits for TRICARE-for-Life beneficiaries, cost 
sharing levels for active duty family members, and TRICARE basic 
program benefits. Additionally, NDAA-17, section 701 directed Prime and 
Select beneficiary cost sharing be on a calendar year basis. In 
addition, a technical amendment enacted in NDAA-18, section 739(d), 
similarly directed that cost sharing of civilian health care by other 
beneficiaries also be on a calendar year basis.
    The IFR adopted several changes to regulatory provisions applicable 
to the TRICARE Young Adult, TRICARE Reserve Select, TRICARE Retired 
Reserve, and TRICARE dental coverage.
    Also, the IFR adopted 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.
2. Analysis of Major Public Comments
    Regarding changes to the regulation provisions on medically 
necessary food, we received two comments from national medical 
associations that suggested that the statute covers ``partial or 
exclusive'' feeding while TRICARE policy issuance implementing the 
regulation continues to only cover foods that provide ``primary 
source'' of calories. Also, one commenter challenged the exclusion of 
over-the-counter formula that don't need prescriptions arguing that the 
language of the statute allows medical foods furnished ``pursuant to 
prescription, order, or recommendation (as applicable)'' of a qualified 
provider.
    Response: The TRICARE Medically Necessary Food policy (TRICARE 
Policy Manual, Chapter 8, Section 7.2), as revised in implementation of 
the IFR, allows coverage of specifically formulated and processed food 
for the partial or exclusive feeding of an individual. Regarding the 
issue of over-the-counter formula, we note that the rule language is 
consistent with the statutory language in that one of the criteria for 
coverage of medically necessary food is a prescription, order, or 
recommendation of a TRICARE authorized provider. No revision in the 
final rule is required. However, the specific issue of coverage of 
over-the counter formula will be further reviewed to ensure TRICARE 
policy implementing the rule provides reasonable access to formula when 
qualifying as medically necessary food.
    As noted, the IFR adopted several conforming changes to regulatory 
provisions applicable to general TRICARE administration reflecting 
transition from program administration on a fiscal year to a calendar 
year basis and creating a program plan year for enrollment and benefit 
coverage on a calendar year basis. Further review has identified the 
need to provide flexibility in the updating of certain prospective 
payment methodologies to more closely correspond with the pertinent 
program plan benefit year. In that regard, the IFR will be revised in 
the final rule to provide such flexibility in Sec.  199.14(a)(1)(i)(D) 
for the update of the TRICARE Diagnostic Related Group (DRG) system.
    3. Provisions of the Final Rule: The final rule is consistent with 
the interim final rule except for revision of the TRICARE DRG system 
updates in Sec.  199.14(a)(1)(i)(D) transitioning such updates to the 
TRICARE program plan year.

G. Cost Sharing Tables

1. Provisions of the Interim Final Rule:
    The preamble to the IFR included tables recapping the new cost 
sharing requirements for beneficiaries as outlined in the summary of 
provisions of the IFR as the rates specifically related to calendar 
year 2018. At the time, the tables were incomplete in that certain 
requirements had not yet been determined. In addition, notice was given 
that all fees are subject to review and annual updating for future 
calendar years in accordance with law. The final rates for calendar 
year 2018 were published in the Federal Register on January 5, 2018, 
including the two official recap tables as Appendix A. The official 
tables are also available at www.health.mil/rates. In future years, a 
summary of changes in the TRICARE program (including updated rates) 
will be published in connection with the open season enrollment period. 
In view of the public notice of the official rates for calendar year 
2018 and their availability on the www.health.mil/rate website, the 
recap tables are not included as background information for this final 
rule.
    In addition, notice was given that all fees are subject to review 
and annual updating for future calendar years in accordance with law. 
Consistent with our previous implementation of law applicable to 
TRICARE Prime, we will utilize the overall annual COLA percentage 
increase under 10 U.S.C. 1401a(b)(2) when necessary to update the fixed 
dollar amounts in the tables for TRICARE Prime and TRICARE Select 
beginning calendar year 2019. This will permit maintaining uniform 
rates to facilitate efficiency and effectiveness in program 
administration.
    2. Provisions of the Final Rule: The final rule is consistent with 
the IFR.

H. Comments Submitted Beyond Scope of Interim Final Rule

    We received three comments that were beyond the scope of the IFR 
which included; opioid overdoses, dual basic allowance for housing for 
members in the same residence, and chiropractic benefits. Though not 
addressed in the final rule, these comments will be reviewed for action 
by appropriate DoD subject matter experts.

III. Changes Made to the Rule To Implement Provisions of the NDAA-18

    Certain provisions of the NDAA-18 amended or provided technical 
corrections to the provisions of the NDAA-17. Necessary revisions in 
the final rule based on these provisions are included to the extent the 
Department has no administrative discretion. The following provisions 
of NDAA-18 are noted.
    (1) Section 701(a) and (b) of NDAA-18 amended 10 U.S.C. 1076d (TRS) 
and 1076e (TRR), respectively, to correct the unintentional deletion of 
space available access to care to MTFs by TRS and TRR enrollees. 
Section 199.24(a)(4)(iv) for TRS and Sec.  199.25(a)(4)(iv) for TRR 
already include provisions for space available care at MTFs, when 
authorized, for

[[Page 4332]]

enrollees. Therefore, no regulatory change is needed.
    (2) Section 739(a) of NDAA-18 amended the definition of ``TRICARE 
Standard'' in 10 U.S.C. 1072(15) to correct the statutory authorities 
of ``TRICARE Standard'' to be section 1079(a) or 1086(a) of this title. 
The definition otherwise remains intact. The final rule makes a 
conforming change to the regulatory definition of ``TRICARE Standard.''
    (3) Section 739(b)(1)(A) of NDAA-18 amended 10 U.S.C. 1075(d) by 
adding at the end a new paragraph pertaining to TRICARE Select, 
providing that the cost-sharing requirements applicable to services not 
specifically addressed in the statue shall be established by the 
Secretary. The final rule (section 199.17(1)(1)(ii)) makes a conforming 
change to the regulation.
    (4) Section 739(b)(1)(B) of NDAA-18 amended 10 U.S.C. 1075(d)(1) in 
the first column of the table pertaining to TRICARE Select cost sharing 
amounts by striking out: ``Ambulance civilian network'' and inserting 
``Ground ambulance civilian network.'' Section 199.17(k)(2)(vi) 
included the Department's interpretation and implementation of the law 
as applying to ground ambulance services. NDAA-18 merely supports that 
interpretation. Therefore, no regulatory change is needed.
    (5) Section 739(b)(2)(A) of NDAA-18 amended 10 U.S.C. 1075a(b) by 
adding a new paragraph providing that the cost-sharing requirements 
applicable to services not specifically addressed in the table set 
forth in the statute shall be established by the Secretary. We are 
making a conforming change to the regulation (Sec.  199.17(1)(2)(ii)).
    (6) Section 739(b)(2)(B) of NDAA-18 amended 10 U.S.C. 1075a(b)(1) 
in the first column of the table pertaining to TRICARE Prime cost 
sharing amounts by striking out ``Ambulance civilian network'' and 
inserting ``Ground ambulance civilian network.'' Section 
199.17(k)(2)(vi) included the Department's interpretation and 
implementation of the law as applying to ground ambulance services. 
NDAA-18 merely supports that interpretation. Therefore, no regulatory 
change is needed.
    (7) Section 739(d)(1) and (2) of NDAA-18 amended 10 U.S.C. 1079(b) 
and 1086(b) respectively to reflect transition of deductibles, 
catastrophic caps, and program reimbursement limitations, as 
applicable, from fiscal year to calendar year for TRICARE beneficiaries 
not otherwise covered under the TRICARE Prime and Select programs. The 
IFR included this transition for consistency and ease of general 
TRICARE administration. The NDAA-18 amendments reflect congressional 
agreement through codification of the transition. Therefore, no 
regulatory change is needed.
    (8) Section 739(e) of NDAA-18 amended 10 U.S.C. 1095f(b) by adding 
a new paragraph requiring TRICARE Prime enrollees to obtain 
preauthorization with respect to a referral for inpatient care at a 
residential treatment facility. Section 199.17(n)(2)(iv)(D) already 
included this language. Therefore, no regulatory change is needed.
    (9) Section 739(f) of NDAA-18 amended 10 U.S.C. 1110b(c)(1) to 
clarify that an eligible beneficiary who enrolls in the TRICARE Young 
Adult (TYA) program will pay the TYA premium in lieu of either the 
otherwise applicable TRICARE Prime or Select premium. Section 
199.26(a)(4)(ii) included the clarification regarding the applicable 
premium for a TRICARE Young Adult enrollee based on any option to 
purchase TRICARE Prime or Select program coverage. Therefore, no 
regulatory change is needed.

IV. Technical Corrections to the Interim Final Rule

    The following technical corrections are being made to the IFR by 
the final rule.
    (1) In Sec.  199.17(f)(4), the reference to ``paragraph (f)(5)'' is 
revised to read ``paragraph (f)(4).''
    (2) In Sec.  199.17(n)(2)(vi), the reference to ``paragraph 
(l)(1)(iv)'' is revised to read ``paragraph (l)(1)(iii).''

V. Regulatory Procedures

Executive Order (E.O.) 13771, ``Reducing Regulation and Controlling 
Regulatory Costs''

    E.O. 13771 seeks to control costs associated with the government 
imposition of private expenditures required to comply with Federal 
regulation and to reduce regulations that impose such costs. This rule 
does not include government imposition of private expenditures required 
to comply with Federal regulation or requires regulations that impose 
such costs. Therefore, consistent with the analysis of transfer 
payments under OMB Circular A-4, this final rule does not involve 
regulatory costs subject to E.O. 13771.

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. It has been determined that this rule is not a significant 
regulatory action. The rule does not: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy; a section of the economy; productivity; competition; jobs; 
the environment; public health or safety; or State, local, or tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another Agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs, or the rights and obligations of recipients 
thereof; or (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
these Executive Orders.

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

    Under the Congressional Review Act (CRA), 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. The final rule is not a major rule under the CRA.

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

    The Regulatory Flexibility Act (RFA) requires that each Federal 
agency analyze options for regulatory relief of small business if a 
rule has a significant impact on a substantial number of small 
entities. For purposes of the RFA, small entities include small 
businesses, nonprofit organizations, and small governmental 
jurisdictions. This final 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 final 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

[[Page 4333]]

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 final 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 final 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.

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.

    Accordingly, the interim final rule amending 32 CFR part 199 which 
was published at 82 FR 45438-45461 on September 29, 2017 is adopted as 
a final rule with the following changes:

PART 199--[AMENDED]

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

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


0
2. Section 199.2 is amended in paragraph (b) by revising the definition 
of ``TRICARE Standard'' to read as follows:


Sec.  199.2  Definitions.

* * * * *
    (b) * * *
    TRICARE Standard. The TRICARE program made available prior to 
January 1, 2018, covering health benefits contracted for under the 
authority of 10 U.S.C. section 1079(a) or 1086(a) and subject to the 
same rates and conditions as apply to persons covered under those 
sections.
* * * * *

0
3. Section 199.14 is amended by revising paragraph (a)(1)(i)(D) to read 
as follows:


Sec.  199.14  Provider reimbursement methods.

    (a) * * *
    (1) * * *
    (i) * * *
    (D) DRG system updates. The CHAMPUS DRG-based payment system is 
modeled on the Medicare Prospective Payment System (PPS) and uses 
annually updated items and numbers from the Medicare PPS as provided 
for in this part and in instructions issued by the Director, DHA. The 
effective date of these items and numbers shall not correspond to that 
under Medicare PPS but shall be delayed until January 1, to align with 
TRICARE's program year reporting. This allows for an administrative 
simplicity that optimizes healthcare delivery by reducing existing 
administrative burden and costs.
* * * * *

0
4. Section 199.17 is amended by revising paragraphs (f)(4), (l)(1)(ii), 
(1)(2)(ii), and (n)(2)(vi) to read as follows:


Sec.  199.17  TRICARE program.

* * * * *
    (f) * * *
    (4) High value services. Under the authority of 10 U.S.C. 1097 and 
other authority, including sections 706 and 729 of the NDAA-17, for 
purposes of improving population-based health outcomes and 
incentivizing medical intervention programs to address chronic diseases 
and other conditions and healthy lifestyle interventions, the Director 
may waive or reduce cost sharing requirements for TRICARE Prime and 
TRICARE Select enrollees for care received from network providers for 
certain health care services designated for this purpose. The specific 
services designated for this purpose will be those the Director 
determines provide especially high value in terms of better health 
outcomes. The specific services affected for any plan year will be 
announced by the Director prior to the open season enrollment period 
for that plan year. Services affected by actions of the Director under 
this paragraph (f)(4) may be associated with actions taken for high 
value medications under Sec.  199.21(j)(3) for select pharmaceutical 
agents to be cost-shared at a reduced or zero dollar rate.
* * * * *
    (l) * * *
    (1) * * *
    (ii) For Group B TRICARE Prime enrollees, the enrollment fee, 
catastrophic cap, and cost sharing amounts are as set forth in 10 
U.S.C. 1075a. The cost sharing requirements applicable to services not 
specifically addressed in the table set forth in 10 U.S.C. 1075a(b)(1) 
shall be determined by the Director, DHA.
* * * * *
    (2) * * *
    (ii) For Group B TRICARE Select enrollees, the enrollment fee, 
annual deductible for services received while in an outpatient status, 
catastrophic cap., and cost sharing amounts are as provided in 10 
U.S.C. 1075 and as consistent with this section. The cost sharing 
requirements applicable to services not specifically addressed in 10 
U.S.C. 1075 shall be determined by the Director, DHA.
* * * * *
    (n) * * *
    (2) * * *
    (vi) The cost-sharing requirement for a beneficiary enrolled in 
TRICARE Prime who does not obtain a referral for care when it is 
required, including care from a non-network provider, is as provided in 
paragraph (l)(1)(iii) of this section concerning point of service care.
* * * * *

    Dated: February 12, 2019.
Aaron T. Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2019-02532 Filed 2-14-19; 8:45 am]
BILLING CODE 5001-06-P