[Federal Register Volume 63, Number 46 (Tuesday, March 10, 1998)]
[Proposed Rules]
[Pages 11635-11641]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6076]
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Part 220
[RIN 0790-AG51]
Collection From Third Party Payers of Reasonable Costs of
Healthcare Services
AGENCY: Office of the Assistant Secretary of Defense (Health Affairs),
DoD.
ACTION: Proposed rule.
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SUMMARY: This proposed rule implements several recent statutory changes
and makes other revisions to the Third Party Collection Program. The
primary matter include implementation of new statutory authority to
include workers' compensation programs under the Third Party Collection
Program; the addition of special rules for collections from preferred
provider organizations; and other program revisions.
DATES: Comments are requested by May 11, 1998.
ADDRESSES: Forward comments to: Third Party Collection Program, Office
of the Assistant Secretary of Defense (Health Affairs), Health Services
Operations and Readiness, 1200 Defense Pentagon, Washington, DC 20301-
1200.
FOR FURTHER INFORMATION CONTACT:
LTC Michael Montgomery, 703-681-8910.
SUPPLEMENTARY INFORMATION: This proposes rule implements several recent
statutory changes and makes other revisions to the Third Party
Collection Program under 10 U.S.C. 1095, as discussed below.
1. Preferred Provider Organizations
Section 713(b)(1) of the National Defense Authorization Act for
Fiscal Year 1994, Pub. L. 103-160, amended the Third Party Collection
Program's definition of ``insurance, medical service, or health plan''
to clarify that any ``preferred provider organization'' (PPO) is
included in the definition. This amendment codified DoD's previous
interpretation. Experience in applying the statutory authority to the
context of preferred provider organizations has indicated a need to
establish some special rules for plans with PPO provisions or options
so that all parties will have a clear understanding of their
obligations and rights under the statute. We propose to do this by
amending Sec. 220.12.
It is our interpretation of 10 U.S.C. 1095 that a plan with a PPO
provision or option generally has an obligation to pay the United
States the reasonable costs of health care services provided through
any facility of the Uniformed Services to a Uniformed Services
beneficiary who is also a beneficiary under the plan. No provision of
any PPO plan having the effect of excluding from coverage or limiting
payment for certain care if that care is provided through a facility of
the Uniformed Services shall operate to prevent collection under this
part.
10 U.S.C. 1095 strikes a careful balance. On the one hand, it
disallows third party payer rules that would have the effect of
excluding from coverage or limiting payment because the care was
provided in a DoD facility. The law renders inoperative numerous
administrative procedures and payments rules of third party payers that
would defeat the purpose of 10 U.S.C. 1095 or result in a windfall for
a third party payer who has collected premiums but then avoided
payments. On the other hand, the statute does not require third party
payers to maker
[[Page 11636]]
fundamental changes in their own rules in order to accommodate
Government providers. This proposed rule seeks to reflect that balance
in our special rules for PPOs.
Consistent with the statutory mandate that the operation of the
Third Party Collection Program is not dependent upon a participation
agreement or similar contractual relationship between military
treatment facilities and third party payers, this proposed rule states
that the lack of a PPO agreement or the absence of privity of contract
is not a permissible ground for refusing or reducing payment. Based on
this and the careful statutory balance, we believe that under the law,
the lack of a contractual relationship between the PPO and the facility
of the Uniformed Services may not be a basis for the plan to treat the
DoD facility as a non-PPO provider for purposes of the PPO's payment
amount, if the facility of the Uniformed Services accommodates the
PPO's fundamental price and utilization review standards.
Under this proposed rule, a DoD facility accommodates a PPO's
fundamental price standards by accepting, in lieu of the normal Third
Party Collection Program rates established under Sec. 220.8, the PPO's
prevailing rates of payment paid to preferred providers in the same
geographic area for the same or similar aggregate groups of services,
if such rates are, in the aggregate, less than the DoD rates. A DoD
facility accommodates a PPO's fundamental utilization review standards
by complying with the reasonable pretreatment, concurrent, or
retrospective review procedures that are required of all preferred
providers under the PPO plan and by accepting denials of requested
payment that are consistent with prevailing standards in the geographic
area of medical necessity and proper level of care for the services
involved.
By accommodating a PPO's fundamental price and utilization review
standards, DoD does not seek to compel the third party payer to make
fundamental changes in the PPO program in order to conform to the DoD
facility's operations. But other rules and procedures of the PPO that
would have the effect of denying or limiting payment are not allowed.
This proposed rule includes several examples of such impermissible PPO
requirements. Among these is any PPO requirement that would purport to
require a facility of the Uniformed Services, in order to effectuate
the legislative purpose of 10 U.S.C. 1095, to act in a manner
inconsistent with the basic nature of facilities of the Uniformed
Services.
2. Workers' Compensation Programs
Section 735(b)(1) of the National Defense Authorization Act for
Fiscal Year 1997, Pub. L.104-201, expanded the definition of ``third
party payer'' to include any ``workers' compensation program or plan.''
The proposed rule adds Sec. 220.13 and a definition of the statutory
term to implement this amendment.
While specific statutory schemes vary from State to State, workers'
compensation plans generally provide compensation to employees or their
dependents for loss resulting from the injury, disablement, or death of
a worker due to an employment related accident, casualty, or disease.
The common characteristic of workers' compensation programs is the
provision of compensation based upon a fixed statutory scheme without
regard to fault. Payment for the costs and provision of medical care
are also common elements of workers' compensation programs, whether the
program operates on the basis of insurance, a State fund, or other
mechanism.
Proposed Sec. 220.13 states that a workers' compensation program
generally has an obligation to pay the United States the reasonable
costs of health care services provided in or through any facility of
the Uniformed Services to a Uniformed Services beneficiary who is also
a beneficiary of the workers' compensation program and whose condition
is due to an employment related accident, casualty, or disease, We have
added several special rules concerning lump-sum payments and compromise
settlements. These special rules are modeled after Medicare Secondary
Payer rules applicable to workers' compensation programs, which appear
at 42 CFR 411.46-47. We have not determined whether additional special
rules for applying 10 U.S.C. 1095 in the context of workers'
compensation programs are necessary. Therefore, we solicit public
comments from all interested parties on whether we need to clarify
further the applicability of 10 U.S.C. 1095 to workers' compensation
plan and, if so, specific suggestions as to such special rules.
3. Other Program Revisions and Clarifications
This proposed rule makes several other program revisions and
clarifications, including:
Proposed amendment to Sec. 220.2(a) to conform with
statutory language making 10 U.S.C. 1095 applicable to services
provided in or ``through'' a facility of the Uniformed Services.
Proposed amendment to Sec. 220.2(d) to clarify the
obligation of the third party payer to pay under the Third Party
Collection Program is not only not dependent upon an assignment of
benefits, it is also not dependent upon any other submission by the
beneficiary to the third party payer, including any claim or appeal.
Proposed addition of Sec. 220.2(e) to codify in the
regulation our interpretation of the preemptive effect of 10 U.S.C.
1095 in relation to any conflicting State laws or regulations.
Proposed addition of Sec. 220.3(c)(5) to record our
interpretation of the applicability of 10 U.S.C. 1095 in connection
with Medicare carve-out and Medicare secondary payer provisions of
third party payer plans (other than Medicare supplemental plans). This
is another application of the general rule that third party payers may
not treat claims from facilities of the Uniformed Services less
favorably than they lawfully treat claims from other provider (in this
context, other providers to whom primary payment would not be made by
Medicare or a Medicare HMO).
Proposed amendment to Sec. 220.4 to clarify the
permissibility of certain third party payer rules, including
utilization review practices, and HMO plan restrictions.
Proposed addition of Sec. 220.4(d) to record our
requirement for payers to provide us plan information necessary to
establish the permissibility of terms and conditions of third party
payers' plans.
Proposed amendment to Sec. 220.7 to clarify the United
States' remedies concerning collections from third party payers.
Proposed amendment to Sec. 220.8 to change and clarify
DoD's actions in categorizing standardized amounts for the DRG-based
payment method for inpatient care, in subdividing outpatient billings,
and in replacing the ``same day surgery'' category of care with an
expanded ``ambulatory procedure visit'' category.
Proposed amendment to Sec. 220.8(h), a special rule for
certain ancillary services ordered by outside providers and provided by
a facility of the Uniformed Services, to lower the high cost ancillary
threshold value from $25 to $0. For this reason, effective March 1,
1998, ``high cost ancillary services'' will be referred to as
``ancillary services ordered by an outside provider and provided by a
facility of the Uniformed Services.''
Proposed amendment to Sec. 220.8(j), concerning the former
Public Health Service hospitals, to conform to the
[[Page 11637]]
changes to that program directed by Congress in sections 721 to 727 of
the National Defense Authorization Act for Fiscal Year 1997.
Proposed amendment to Sec. 220.9(c) which elaborates on
the obligations of beneficiaries to cooperate with facilities of the
Uniformed Services in implementing these regulations.
Proposed additions and amendments to Sec. 220.14 to add
and change, as necessary, the definitions of terms used in this part.
4. Other Issues
Under Sec. 220.10(c), we provide preliminary notice of our
intention to begin, effective January 1, 1998, to collect from Medicare
supplemental plans reasonable costs for inpatient and outpatient
copayments, other than the inpatient hospital deductible amount, and
other services covered by Medicare supplemental plans. Although this
authority is currently established in Sec. 220.10(c), we had previously
decided to defer implementation.
Executive Order 12866, ``Regulatory Planning and Review''
It has been determined that this rule is not a significant rule as
defined under section 3(f)(1) through 3(f)(4) of Executive Order 12866.
Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. 601)
It has been determined that this rule will not have a significant
economic impact on a substantial number of small entities because it
affects only DoD employees and certain former DoD employees.
Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Charter
35)
It has been certified that this rule does not impose any reporting
or recordkeeping requirements under the Paperwork Reduction Act of
1995.
Public comments are invited on all provisions. All comments will be
considered. Significant comments will be addressed in the final rule.
List of Subjects in 32 CFR Part 220
Claims, Health care, Health insurance.
For the reasons stated in the preamble, 32 CFR part 220 is proposed
to be amended as follows:
PART 220--COLLECTION FROM THIRD PARTY PAYERS OF REASONABLE COSTS OF
HEALTH CARE SERVICES
1. The authority citation for 32 CFR part 220 continues to read as
follows:
Authority: 5 U.S.C. 301, 10 U.S.C. 1095.
2. Section 220.2 is proposed to be amended by revising paragraphs
(a) and (d) and by adding a new paragraph (e) to read as follows:
Sec. 220.2 Statutory obligation of third party payer to pay.
(a) Basic rule. Pursuant to 10 U.S.C. 1095(a)(1), a third party
payer has an obligation to pay the United States the reasonable costs
of health care services provided in or through any facility of the
Uniformed Services to a Uniformed Services beneficiary who is also a
beneficiary under the third party payer's plan. The obligation to pay
is to the extent that the beneficiary would be eligible to receive
reimbursement of indemnification from the third party payer if the
beneficiary were to incur the costs on the beneficiary's own behalf.
* * * * *
(d) Assignment of benefits or other submission by beneficiary not
necessary. The obligation of the third party payer to pay is not
dependent upon the beneficiary executing an assignment of benefits to
the United States. Nor is the obligation to pay dependent upon any
other submission by the beneficiary to the third party payer, including
any claim or appeal. In any case in which a facility of the Uniformed
Services makes a claim, appeal, representation, or other filing under
the authority of this part, any procedural requirement in any third
party payer plan for the beneficiary of such plan to make the claim,
appeal, representation, or other filing must be deemed to be satisfied.
A copy of the completed and signed DoD insurance declaration form will
be provided to payers upon request, in lieu of a claimant's statement
or coordination of benefits form.
(e) Preemption of conflicting State laws. Any provision of a law or
regulation of a State or political subdivision thereof that purports to
establish any requirement on a third party payer that would have the
effect of excluding from coverage or limiting payment, for any health
care services for which payment by the third party payer under 10
U.S.C. 1095 or this part is required, is preempted by 10 U.S.C. 1095
and shall have no force or effect in connection with the third party
payer's obligations under 10 U.S.C. 1095 or this part.
3. Section 220.3 is proposed to be amended by adding a new
paragraph (c)(5) to read as follows:
Sec. 220.3 Exclusions impermissible.
* * * * *
(c) * * *
(5) Medicare carve-out and Medicare secondary payer provisions. A
provision in a third party payer plan, other than a Medicare
supplemental plan under Sec. 220.10, that seeks to make Medicare the
primary payer and the plan the secondary payer or that would operate to
carve out of the plan's coverage an amount equivalent to the Medicare
payment the would be made if the services were provided by a provider
to whom payment would be made under Part A or Part B of Medicare is not
a permissible ground for refusing or reducing payment as the primary
payer to the facility of the Uniformed Services by the third party
payer unless the provision:
(i) Expressly disallows payment as the primary payer to all
providers to whom payment would not be made under Medicare (including
payment under Part A, Part B, or a Medicare HMO); and
(ii) Is otherwise in accordance with applicable law.
4. Section 220.4 is proposed to be amended by revising paragraphs
(b)(2), (c)(2), and (c)(3) and by adding a new paragraph (d) to read as
follows:
Sec. 220.4 Reasonable terms and conditions of health plan permissible.
* * * * *
(b) * * *
* * * * *
(2) Except as provided by 10 U.S.C. 1095, this part, or other
applicable law, third party payers are not required to treat claims
arising from services provided in or through facilities of the
Uniformed Services more favorably than they treat claims arising from
services provided in other facilities or by other health care
providers.
(c) * * *
(2) Generally applicable utilization review provisions. (1)
Reasonable and generally applicable provisions of a third party payer's
plan requiring pre-admission screening, second surgical opinions,
retrospective review or other similar utilization review activities may
be permissible grounds to refuse or reduce third party payment if such
refusal or reduction is required by the third party payer's plan.
(ii) Such provisions are not permissible if they are applied in a
manner that would result in claims arising from services provided by or
through facilities of the Uniformed Services being treated less
favorably than claims arising from services provided by other hospitals
or providers.
(iii) Such provisions are not permissible if they would not affect
a third party payer's obligation under this part. For example,
concurrent review of an inpatient hospitalization would
[[Page 11638]]
generally not affect the third party payer's obligation because of the
DRG-based, per-admission basis for calculating reasonable costs under
Sec. 220.8(a) (except in long stay outlier cases, noted in
Sec. 220.8(a)(4)).
(3) Restrictions in HMO plans. Generally applicable exclusions in
Health Maintenance Organization (HMO) plans of non-emergency or non-
urgent services provided outside the HMO (or similar exclusions) are
permissible. However, HMOs may not exclude claims or refuse to certify
emergent and urgent services provided within the HMO's service area or
otherwise covered non-emergency services provided out of the HMO's
service area. In addition, opt-out or point-of-service options
available under an HMO plan may not exclude services otherwise payable
under 10 U.S.C. 1095 or this part.
(d) Procedures for establishing reasonable terms and conditions. In
order to establish that a term or condition of a third party payer's
plan is permissible, the third party payer must provide appropriate
documentation to the facility of the Uniformed Services. This includes,
when applicable, copies of explanation of benefits (EOBs), remittance
advice, or payment to provider forms. It also includes copies of
policies, employee certificates, booklets, or handbooks, or other
documentation detailing the plan's health care benefits, exclusions,
limitations, deductibles, co-insurance, and other pertinent policy or
plan coverage and benefit information.
5. Section 220.7 is proposed to be amended by revising the section
heading and paragraph (c) and by adding a new paragraph (d) to read as
follows:
Sec. 220.7 Remedies and procedures.
* * * * *
(c) The authorities provided by 31 U.S.C. 3701, et seq., 28 CFR
part 11, and 4 CFR parts 101-104 regarding collection of indebtedness
due the United States shall be available to effect collections pursuant
to 10 U.S.C. 1095 and this part.
(d) A third party payer may not, without the consent of a U.S.
Government official authorized to take action under 10 U.S.C. 1095 and
this part, offset or reduce any payment due under 10 U.S.C. 1095 or
this part on the grounds that the payer considers itself due a refund
from a facility of the Uniformed Services. A request for refund must be
submitted and adjudicated separately from any other claims submitted to
the third party payer under 10 U.S.C. 1095 or this part.
6. Section 220.8 is proposed to be amended by revising paragraphs
(a)(2), (a)(6), (e)(1), (f), and (h); by redesignating paragraph (j) as
paragraph (j)(1); and by adding a new paragraph (j)(2), to read as
follows:
Sec. 220.8 Reasonable costs.
(a) * * *
(2) Standardized amount. The standardized amount shall be
determined by dividing the total costs of all inpatient care in all
military treatment facilities by the total number of discharges. This
will produce a single national standardized amount. The Department of
Defense is authorized, but not required by this part, to calculate
three standardized amounts, one for large urban, other urban/rural, and
overseas areas, utilizing the same distinctions in identifying the
first two areas as is used for CHAMPUS under 32 CFR 199.14(a)(1). Using
this applicable standardized amount, the Department of Defense may make
adjustments for area wage rates and indirect medical education costs
(as identified in paragraph (a)(4) of this section), producing for each
inpatient facility of the Uniformed Services a facility-specific
``adjusted standardized amount'' (ASA).
* * * * *
(6) Outpatient billings. Outpatient billings (including those for
ambulatory procedure visits) may, but are not required by this part, to
be subdivided into two categories:
(i) Professional charges (which refers to professional services
provided by physicians and certain other providers); and
(ii) Outpatient services (which refers to overhead and ancillary,
diagnostic and treatment services, other than professional services
provided in connection with the outpatient visit).
* * * * *
(e) Per visit rates. (1) As authorized by 10 U.S.C. 1095(f)(2), the
computation of reasonable costs for purposes of collections for most
outpatient services shall be based on a per visit rate for a clinical
specialty or subspecialty. The per visit charge shall be equal to the
outpatient full reimbursement rate for that clinical specialty or
subspecialty and includes all routine ancillary services. A separate
charge will be calculated for cases that are considered ambulatory
procedure visits. These rates shall be updated and published annually.
As with inpatient billing categories, clinical groups representing
selected board certified specialties/subspecialties widely accepted by
graduate medical accrediting organizations such as the Accreditation
Council for Graduate Medical Education (ACGME) or the American Board of
Medical Specialties will be used for ambulatory billing categories.
Related clinical groups may be combined for purposes of billing
categories.
* * * * *
(f) Ambulatory procedure visit rates. A separate charge will be
calculated for ambulatory procedure visits (APVs). APVs are same day
surgery visits and other outpatient visits provided by designated,
special treatment units in facilities of the Uniformed Services. APV
rates shall be based on the total cost of immediate (day of procedure)
pre-procedure; procedure; and immediate post-procedure care performed
in the ambulatory procedure unit setting for care requiring less than
24 hours in the facility. An APV is not inpatient care. Initially, a
single rate will be established for all types of ambulatory procedure
visits. The Department of Defense is authorized, but not required by
this part, to establish multiple ambulatory procedure visit
reimbursement categories based on the clinic or subspecialty performing
the ambulatory procedure. The average cost of APVs will be published
annually.
* * * * *
(h) Special rule for ancillary services ordered by outside
providers and provided by a facility of the Uniformed Services. If a
Uniformed Services facility provides certain ancillary services,
prescription drugs or other procedures requested by a source other than
a Uniformed Services facility and are not incident to any outpatient
visit or inpatient services, the reasonable cost will not be based on
the usual Diagnostic Related Group (DRG) or per visit rate. Rather, a
separate standard rate shall be established based on the cost of the
particular services, drugs, or procedures provided. Effective March 1,
1998, this special rule applies to all services, drugs or procedures
ordered by an outside provider and provided by a facility of the
Uniformed Services. For such ancillary services provided prior to March
1, 1998, this special rule applies only to services, drugs or
procedures having a cost of at least $25. The reasonable cost for the
services, drugs or procedures to which this special rule applies shall
be calculated and made available to the public annually.
* * * * *
(j) * * *
(2) The special rule set forth in paragraph (j)(1) of this section
expires September 30, 1997. Effective October 1, 1997, collections for
health care services
[[Page 11639]]
provided by these facilities are no longer covered by this part, but
are covered by 32 CFR 199.8 (CHAMPUS Double Coverage).
* * * * *
7. Section 220.9 is proposed to be amended by revising paragraph
(c) to read as follows:
Sec. 220.9. Rights and obligations of beneficiaries.
* * * * *
(c) Obligation to disclose information and cooperate with
collection efforts. (1) Uniformed Services beneficiaries are required
to provide correct information to the facility of the Uniformed
Services regarding whether the beneficiary is covered by a third party
payer's plan. Such beneficiaries are also required to provide correct
information regarding whether particular health care services might be
covered by a third party payer's plan, including services arising from
an accident or workplace injury or illness. In the event a third party
payer's plan might be applicable, a beneficiary has an obligation to
provide such information as may be necessary to carry out 10 U.S.C.
1095 and this part, including identification of policy numbers, claim
numbers, involved parties and their representatives, and other relevant
information.
(2) Uniformed Services beneficiaries are required to take other
reasonable steps to cooperate with the efforts of the facility of the
Uniformed Services to make collections under 10 U.S.C. 1095 and this
part, such as submitting to the third party payer (or other entity
involved in adjudicating a claim) any requests or documentation that
might be required by the third party payer (or other entity), if
consistent with this part, to facilitate payment under this part.
(3) Intentionally providing false information or willfully failing
to satisfy beneficiary's obligations are grounds for disqualification
for health care services from facilities of the Uniformed Services.
8. Part 220 is further proposed to be amended by redesignating
Sec. 220.12 as Sec. 220.14 and by adding new Secs. 220.12 and 220.13 to
read as follows:
Sec. 220.12 Special rules for preferred provider organizations.
(a) Statutory requirement. (1) Pursuant to the general duty of
third party payers to pay under 10 U.S.C. 1095(a)(1) and the
definitions of 10 U.S.C. 1095(h), a plan with a preferred provider
organization (PPO) provision or option generally has an obligation to
pay the United States the reasonable costs of health care services
provided through any facility of the Uniformed Services to a Uniformed
Services beneficiary who is also a beneficiary under the plan.
(2) This section provides specific rules for applying 10 U.S.C.
1095 and this part in the context of plans with a PPO provision or
option.
(b) PPO plan exclusions and limitations impermissible. Under 10
U.S.C. 1095(b), no provision of any plan with a PPO provision or option
having the effect of excluding from coverage or limiting payment for
certain care if that care is provided through a facility of the
Uniformed Services shall operate to prevent collection under this part.
(c) PPO agreement not required. The lack of a PPO agreement or the
absence of privity of contract between a plan with a preferred provider
organization provision or option and a facility of the Uniformed
Services is not a permissible ground for refusing or reducing payment
by the plan. The lack of a contractual relationship between the plan
and the facility of the Uniformed Services may not be a basis for the
plan to treat a facility of the Uniformed Services as a non-PPO
provider for purposes of the plan's PPO payment amount, if the facility
of the Uniformed Services accommodates the plan's fundamental price and
utilization review standards for its PPO provision or option, as
provided in this section.
(d) Accommodation of PPO's fundamental price and utilization review
standards. A plan's duty to pay under this section is premised on the
accommodation by the facility of the Uniformed Services of the plan's
fundamental price and utilization review standards for its PPO
provision or option, as provided in this paragraph.
(1) A facility of the Uniformed Services accommodates a plan's
fundamental PPO price standards by accepting, in lieu of the rates
established under Sec. 220.8, the plan's demonstrated PPO prevailing
rates of payment paid to preferred providers in the same geographic
area for the same or similar aggregate groups of services, if such
rates are, in the aggregate, less than the rates established under
Sec. 220.8. The determination of the plan's PPO prevailing rates shall
be based on a review of all rates, including the professional and
technical components, contained in all valid contractual arrangements
with facilities and providers in the PPO network for the year in which
the services were rendered. The rates for any specific ancillary
procedure must include both professional and technical components.
(2) A facility of the Uniformed Services accommodates a plan's
fundamental PPO utilization review standards by complying with the
reasonable pretreatment, concurrent, or retrospective review procedures
that are required of all preferred providers under the plan and by
accepting denials or reductions of requested payment that are
consistent with prevailing standards in the geographic area for medical
necessity and proper level of care for the services involved.
(e) Examples of impermissible PPO requirements. PPO requirements
unnecessary for the achievement of the PPO's fundamental price and
utilization review standards and would have the effect of excluding or
limiting payment to a facility of the Uniformed Services are
impermissible. Examples of such impermissible PPO requirements follow:
(1) A requirement that a PPO provider accept all beneficiaries of
the PPO's plan. A facility of the Uniformed Services may provide health
care services only to persons with eligibility established pursuant to
10 U.S.C.
(2) A requirement that a PPO provider meet particular
credentialing, licensing, certification, or other provider selection
requirements intended to promote good quality of care. Facilities of
the Uniformed Services comply with federal quality standards and a
comprehensive system of provider credentialing and quality assurance.
(3) A requirement that PPO providers restrict patient referrals to
particular providers in the PPO network or order ancillary services
only from particular providers. Facilities of the Uniformed Services
carry out patient referrals and the ordering of ancillary services in
accordance with applicable Department of Defense rules and procedures.
(4) Any other PPO requirement that would purport to require a
facility of the Uniformed Services, in order to effectuate the
legislative purpose of 10 U.S.C. 1095, to act in a manner inconsistent
with the basic nature of facilities of the Uniformed Services.
Sec. 220.13 Special rules for workers' compensation programs.
(a) Basic rule. Pursuant to the general duty of third party payers
under 10 U.S.C. 1095(a)(1) and the definitions of 10 U.S.C. 1095(h), a
workers' compensation program or plan generally has an obligation to
pay the United States the reasonable costs of health care services
provided in or through any facility of the Uniformed Services to a
Uniformed Services beneficiary who is also a beneficiary under a
workers' compensation program due to an employment related injury,
illness, or disease. Except to the extent modified or supplemented by
this section, all provisions of this part are applicable to
[[Page 11640]]
any workers' compensation program or plan in the same manner as they
are applicable to any other third party payer.
(b) Special rules for lump-sum settlements. In cases in which a
lump-sum workers' compensation settlement is made, the special rules
established in this paragraph (b) shall apply for purposes of
compliance with this section.
(1) Lump-sum commutation of future benefits. If a lump-sum worker's
compensation award stipulates that the amount paid is intended to
compensate the individual for all future medical expenses required
because of the work-related injury, illness, or disease, the Uniformed
Service health care facility is entitled to reimbursement for injury,
illness, or disease related, future health care services or items
rendered or provided to the individual up to the amount of the lump-sum
payment.
(2) Lump-sum compromise settlement. (i) A lump sum compromise
settlement, unless otherwise stipulated by an official authorized to
take action under 10 U.S.C. 1095 and this part, is deemed to be a
workers' compensation payment for the purpose of reimbursement to the
facility of the Uniformed Services for services and items provided,
even if the settlement agreement stipulates that there is no liability
under the workers' compensation law, program, or plan.
(ii) If a settlement appears to represent an attempt to shift to
the facility of the Uniformed Services the responsibility of providing
uncompensated services or items for the treatment of the work-related
condition, the settlement will not be recognized and reimbursement to
the unformed health care facility will be required. For example, if the
parties to a settlement attempt to maximize the amount of disability
benefits paid under workers' compensation by releasing the employer or
workers' compensation carrier from liability for medical expenses for a
particular condition even though the facts show that the condition is
work-related, the facility of the Uniformed Services must be
reimbursed.
(iii) Except as specified in paragraph (b)(2)(iv) of this section,
if a lump-sum compromise settlement forecloses the possibility of
future payment or workers' compensation benefits, medical expenses
incurred by a facility of the Uniformed Services after the date of the
settlement are not reimbursable under this section.
(iv) As an exception to the rule of paragraph (b)(2)(iii) of this
section, if the settlement agreement allocates certain amounts for
specific future medical services, the facility of the Uniformed
Services is entitled to reimbursement for those specific services and
items provided resulting from the work-related injury, illness, or
disease up to the amount of the lump-sum settlement allocated to future
expenses.
(3) Apportionment of a lump-sum compromise settlement of a workers'
compensation claim. If a compromise settlement allocates a portion of
the payment for medical expenses and also gives reasonable recognition
to the income replacement element, that apportionment may be accepted
as a basis for determining the payment obligation of a workers'
compensation program or plan under this section to a facility of the
Uniformed Services. If the settlement does not give reasonable
recognition to both elements of a workers' compensation award or does
not apportion the sum granted, the portion to be considered as payment
for medical expenses is computed as follows: Determine the ratio of the
amount awarded (less the reasonable and necessary costs incurred in
procuring the settlement) to the total amount that would have been
payable under workers' compensation if the claim had not been
compromised; multiply that ratio by the total medical expenses incurred
as a result of the injury or disease up to the date of settlement. The
product is the amount of workers' compensation settlement to be
considered as payment or reimbursement for medical expenses.
(c) Other special rules. [Reserved]
8. Newly designated Sec. 220.14 is amended by removing paragraph
designations (a) through (l), by revising the definitions of
``insurance, medical service or health plan,'' ``Medicare supplemental
insurance plan,'' ``third party payer,'' and ``third party payer
plan,'' and by adding and placing in alphabetical order new definitions
of ``ambulatory procedure visit,'' ``Assistant Secretary of Defense
(Health Affairs),'' ``covered beneficiaries,'' ``preferred provider
organization,'' and ``workers' compensation program or plan,'' to read
as follows:
Sec. 220.14 Definitions.
Ambulatory procedure visit. An ambulatory procedure visit is a type
of outpatient visit in which immediate (day of procedure) pre-procedure
and immediate post-procedure care require an unusual degree of
intensity and are provided in an ambulatory procedure unit (APU) of the
facility of the Uniformed Services. Care is required in the facility
for less than 24 hours. An APU is specially designated and is accounted
for separately from any outpatient clinic.
Assistant Secretary of Defense (Health Affairs). This term includes
any authorized designee of the Assistant Secretary of Defense (Health
Affairs).
Automobile liability insurance. * * *
CHAMPUS supplemental plan. * * *
Covered beneficiaries. Covered beneficiaries are all health care
beneficiaries under chapter 55 of title 10, United States Code, except
members of the Uniformed Services on active duty.
Facility of the Uniformed Services. * * *
Healthcare services. * * *
Inpatient hospital care. * * *
Insurance, medical service or health plan. Any plan (including any
plan, policy program, contract, or liability arrangement) that provides
compensation, coverage, or indemnification for expenses incurred by a
beneficiary for health or medical services, items, products, and
supplies. It includes but is not limited to:
(1) Any plan offered by an insurer, reinsurer, employer,
corporation, organization, trust, organized health care group or other
entity.
(2) Any plan for which the beneficiary pays a premium to an issuing
agent as well as any plan to which the beneficiary is entitled as a
result of employment or membership in or association with an
organization or group.
(3) Any Employee Retirement Income and Security Act (ERISA) plan.
(4) Any Multiple Employer Trust (MET).
(5) Any Multiple Employer Welfare Arrangement (MEWA).
(6) Any Health Maintenance Organization (HMO) plan, including any
such plan with a point-of-service provision or option.
(7) Any individual practice association (IPA) plan.
(8) Any exclusive provider organization (EPO) plan.
(9) Any physician hospital organization (PHO) plan.
(10) Any integrated delivery system (IDS) plan.
(11) Any management service organization (MSO) plan.
(12) Any group or individual medical services account.
(13) Any preferred provider organization (PPO) plan or any PPO
provision or option of any third party payer plan.
(14) Any Medicare supplemental insurance plan.
(15) Any automobile liability insurance plan.
(16) Any no fault insurance plan, including any personal injury
protection plan or medical payments benefit plan
[[Page 11641]]
for personal injuries arising from the operation of a motor vehicle.
Medicare eligible provider. * * *
Medicare supplemental insurance plan. A Medicare supplemental
insurance plan is an insurance, medical service or health plan
primarily for the purpose of supplementing an eligible person's benefit
under Medicare. The term has the same meaning as ``Medicare
supplemental policy'' in section 1882(g)(1) of the Social Security Act
(42 U.S.C. 1395ss) and 42 CFR part 403, subpart B.
No-fault insurance. * * *
Preferred provider organization. A preferred provider organization
(PPO) is any arrangement in a third payer plan under which coverage is
limited to services provided by a select group of providers who are
members of the PPO or incentives (for example, reduced copayments) are
provided for beneficiaries under the plan to receive health care
services from the members of the PPO rather than from other providers
who, although authorized to be paid, are not included in the PPO.
However, a PPO does not include any organization that is recognized as
a health maintenance organization.
Third party payer. A third party payer is an entity that provides
an insurance, medical service, or health plan by contract or agreement.
It includes but is not limited to:
(1) State and local governments that provide such plans.
(2) Insurance underwriters or carriers.
(3) Private employers or employer groups offering self-insured or
partially self-insured medical service or health plans.
(4) Automobile liability insurance underwriter or carrier.
(5) No fault insurance underwriter or carrier.
(6) Workers' compensation program or plan sponsor, underwriter,
carrier, or self-insurer.
Third party payer plan. A third party payer plan is any plan or
program provided by a third party payer, but not including an income or
wage supplemental plan.
Uniformed Services beneficiary. * * *
Workers' compensation program or plan. A workers' compensation
program or plan is any program or plan that provides compensation for
loss, to employees or their dependents, resulting from the injury,
disablement, or death of an employee due to an employment related
accident, casualty or disease. The common characteristic of such a plan
or program is the provision of compensation regardless of fault, in
accordance with a delineated schedule based upon loss or impairment of
the worker's wage earning capacity, as well as indemnification or
compensation for medical expenses relating to the employment related
injury or disease. A workers' compensation program or plan includes any
such program or plan:
(1) Operated by or under the authority of any law of any State (or
the District of Columbia, American Samoa, Guam, Puerto Rico, and the
Virgin Islands).
(2) Operated through an insurance arrangement or on a self-insured
basis by an employer.
(3) Operated under the authority of the Federal Employees
Compensation Act or the Longshoremen's and Harbor Workers' Compensation
Act.
Dated: March 4, 1998.
L.M.Bynum,
Alternate OSD Federal Register Liaison Officer Department of Defense.
[FR Doc. 98-6076 Filed 3-9-98; 8:45 am]
BILLING CODE 5000-04-M
