Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); Provider Certification RequirementsCorporate Services Provider Class; Occupational Therapists

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DoD 6010.8-R]

RIN-0720-AA27

Civilian Health and Medical Program of the Uniformed Services

(CHAMPUS); Provider Certification Requirements--Corporate Services

Provider Class; Occupational Therapists

AGENCY: Office of the Secretary, DoD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule presents requirements to permit payment of

professional or technical health care services rendered by certain

corporate providers and to self-employed occupational therapists; makes

changes to clarify the general requirements for individual professional

providers; and adds standard provider participation agreement

provisions when such agreements are otherwise required.

DATES: Comments must be submitted on or before May 8, 1995.

ADDRESSES: Office of CHAMPUS (PDD), Aurora, CO 80045-6900.

FOR FURTHER INFORMATION CONTACT:

Theresa R. Gilstrap, telephone (303) 361-1309.

SUPPLEMENTARY INFORMATION: The Civilian Health and Medical Program of

the Uniformed Services (CHAMPUS) supplements the availability of health

care in military hospitals and clinics. Services and items allowable as

CHAMPUS benefits must be obtained from CHAMPUS authorized civilian

providers to be considered for CHAMPUS payment. Requirements for

CHAMPUS provider authorization are published as regulation.

This amendment proposes to create a fourth class of CHAMPUS

provider consisting of freestanding corporations and foundations that

render principally professional ambulatory or in-home care and

technical diagnostic procedures. Such organizations are currently

excluded as an allowable type of CHAMPUS-authorized institutional

provider, and employees of these organizations are excluded as CHAMPUS-

authorized individual professional providers.

The CHAMPUS currently has requirements for three classes of

providers. The institutional provider class includes hospitals and

other categories of similar facilities. The individual professional

provider class includes physicians and other categories of licensed

individuals who render professional services independently, and certain

allied health and extra medical providers that must function under

physician orders and supervision. The third class of providers consists

of sellers of items and supplies of an ancillary or supplemental

nature, such as durable equipment.

CHAMPUS payment depends upon a service being both allowable as a

benefit and rendered by a CHAMPUS authorized provider. Consequently, it

is currently possible that, for example, outpatient treatment by an

occupational therapist employed by a hospital may be paid (to the

hospital) while the same service provided by an employee of a

freestanding clinic, home care agency, or self-employed occupational

therapist is denied payment.

This administrative exclusion is difficult for beneficiaries to

apply when seeking health care services because it requires an

understanding of the underlying business structure of the provider. But

the underlying business structure of a provider organization is

important to CHAMPUS management decisions regarding quality assurance

and payment methods.

Corporations, both not-for-profit and shareholder, and foundations

are an alternative source of ambulatory and in-home care. The proposed

addition of the corporate provider class will recognize the current

range of providers within today's health care delivery structure and

give beneficiaries access to another segment of the health care

delivery industry.

This amendment proposes to allow qualified self-employed

occupational therapists to be authorized for direct CHAMPUS payment for

allowable services as individual professional providers.

This amendment proposes to more clearly establish that a

professional corporation or association is not itself a provider but

may file claims and receive payment on behalf of an individual

professional provider member, and to more clearly state the other

general requirements for these providers.

This amendment proposes to establish standard general provisions

for agreements with certain providers when such agreements are

otherwise required. These provisions will improve

[[Page 12718]] efficiency in CHAMPUS oversight of providers and will

limit beneficiary liability related to claims denied due to provider

noncompliance with CHAMPUS requirements.

This amendment proposes to remove two provisions which exclude

CHAMPUS coverage of civilian diagnostic and consultation services

requested by a Military Treatment Facility (MTF) physician in support

of continued MTF care of a CHAMPUS-eligible beneficiary. Because MTFs

vary in size and clinical capacity for the care of CHAMPUS-eligible

beneficiaries, the lack of access to specialized diagnostic and

consultation resources through CHAMPUS may result in the MTF purchasing

the civilian services directly without the advantage of CHAMPUS price

requirements; the beneficiary paying the total cost of such non-MTF

services; or the beneficiary choosing to obtain all care in the

civilian community in order to take advantage of CHAMPUS cost-share of

all the necessary care. Removal of these exclusions will allow

flexibility in the implementation of an MTF-based plan-of-care

resulting in continuity of care at a lower cost to both the beneficiary

and the government.

Executive Order 12866. OMB has determined this is not a significant

rule as defined by Executive Order 12866.

The Regulatory Flexibility Act of 1980 requires that a federal

agency prepare an analysis when the agency issues regulations which

would have significant impact upon a substantial number of small

entities. An estimated 2,200 occupational therapists in private

practice; approximately 850 corporate or foundation physician groups;

and approximately 4,500 freestanding Medicare certified in-home health

care agencies would become eligible to apply for CHAMPUS provider

status if this proposed rule is finalized. These changes are expected

to competitively redistribute ambulatory care benefit costs for already

existing benefits. We certify that this proposed rule will not have a

significant economic impact on a substantial number of small entities

under the criteria of the Regulatory Flexibility Act.

Paperwork Reduction Act of 1980 requires all Departments to submit

to the Office of Management and Budget (OMB) for review and approval

any reporting or record keeping requirements in a proposed or final

rule. This proposed rule will, if adopted, require information from the

provider applicant to document that the criteria for CHAMPUS-provider

status are met.

List of Subjects in 32 CFR Part 199

Claims, Disability, Handicapped, Health insurance, and Military

personnel.

PART 199--[AMENDED]

Accordingly, 32 CFR part 199 is amended as follows:

1. The authority citation for part 199 is proposed to be to revised

to read as follows:

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

2. Section 199.2(b) is proposed to be amended by revising the

definition for ``Participating provider,'' and by adding definitions

for ``Corporate services provider,'' ``Economic interest,'' and

``Qualified accreditation organization'' in alphabetical order to read

as follows:

Sec. 199.2 Definitions.

(b) * * *

Corporate services provider. A health care provider which meets the

applicable requirements established by Sec. 199.6(e).

* * * * *

Economic interest. (i) Any right, title, or share in the income,

remuneration, payment, or profit of a CHAMPUS-authorized provider, or

of an individual or entity eligible to be a CHAMPUS-authorized

provider, resulting, directly or indirectly, from a referral

relationship; or any direct or indirect ownership, right, title, or

share, including a mortgage, deed of trust, note, or other obligation

secured (in whole or in part) by one entity for another entity in a

referral or accreditation relationship, which is equal to or exceeds 5

percent of the total property and assets of the other entity.

(ii) A referral relationship exists when a CHAMPUS beneficiary is

sent, directed, assigned or influenced to use a specific CHAMPUS-

authorized provider, or a specific individual or entity eligible to be

a CHAMPUS-authorized provider.

(iii) An accreditation relationship exists when a CHAMPUS-approved

accreditation organization evaluates for accreditation an entity that

is an applicant for, or recipient of, CHAMPUS-authorized provider

status.

* * * * *

Participating provider. A CHAMPUS-authorized provider that is

required, or has agreed by entering into a CHAMPUS participation

agreement or by act of indicating ``accept assignment'' on the CHAMPUS

claim form, to accept the CHAMPUS-allowable amount as the maximum total

charge for a service or item rendered to a CHAMPUS beneficiary whether

the amount is paid for fully by the CHAMPUS or requires cost-sharing by

the CHAMPUS beneficiary.

* * * * *

Qualified accreditation organization. A not-for-profit corporation

or a foundation that:

(i) Develops process standards and outcome standards for health

care delivery programs, or knowledge standards and skill standards for

health care professional certification testing, using experts both from

within and outside of the health care program area or individual

speciality to which the standards are to be applied;

(ii) Creates measurable criteria that demonstrate compliance with

each standard;

(iii) Publishes the organization's standards, criteria and

evaluation processes so that they are available to the general public;

(iv) Performs on-site evaluations of health care delivery programs,

or provides testing of individuals, to measure the extent of compliance

with each standard;

(v) Provides on-site evaluations or individual testing on a

national or international basis;

(vi) Provides to evaluated programs and tested individuals time-

limited written certification of compliance with the organization's

standards;

(vii) Excludes certification of any program operated by an

organization which has an economic interest, as defined by Sec. 199.2,

in the accreditation organization or in which the accreditation

organization has an economic interest;

(viii) Publishes promptly the certification outcome of each program

evaluation or individual test so that it is available to the general

public; and

(ix) Has been found by the Director to apply standards, criteria,

and certification processes which reinforce CHAMPUS provider

authorization requirements and promote efficient delivery of CHAMPUS

benefits.

* * * * *

3. Section 199.4 is proposed to be amended by revising paragraph

(c)(3)(x) and by removing and reserving (g)(70) and (g)(71) to read as

follows:

Sec. 199.4 Basic program benefits.

* * * * *

(c) * * *

(3) * * *

(x) Physical and occupational therapy. Assessment and treatment

services of a CHAMPUS-authorized physical or occupational therapist may

be cost-shared when: [[Page 12719]]

(A) The services are prescribed and monitored by a physician;

(B) The purpose of the prescription is to reduce the disabling

effects of an illness, injury, or neuromuscular disorder; and

(C) The prescribed treatment increases, stabilizes, or slows the

deterioration of, the beneficiary's ability to perform specified

purposeful activity in the manner, or within the range considered

normal, for a human being.

* * * * *

(g) Exclusions and limitations

(70)-(71)[Reserved]

* * * * *

4. Section 199.6 is proposed to be amended by adding new paragraphs

(a)(13) and (a)(14); removing paragraph (b)(1)(ii); revising paragraphs

(a)(8), (c)(1), (c)(2) and (c)(3)(iii)(I)(3), redesignating paragraph

(e) as (a)(15) and paragraph (f) as (a)(16) and by adding a new

paragraph (e) to read as follows:

Sec. 199.6 Authorized providers.

* * * * *

(a) * * *

(8) Participating providers. A CHAMPUS-authorized provider is a

participating provider, as defined in Sec. 199.2, under the following

circumstances:

(i) Mandatory participation.

(A) All medicare-participating hospitals must be CHAMPUS

participating providers for all inpatient CHAMPUS claims.

(B) Hospitals that are not Medicare-participating but are subject

to the CHAMPUS-DRG-based payment methodology or the CHAMPUS mental

health payment methodology as established by Sec. 199.14(a), must enter

into a participating agreement with the CHAMPUS for all inpatient

claims in order to be a CHAMPUS-authorized provider.

(C) Corporate services providers authorized as CHAMPUS providers

under the provisions of paragraph (e) of this section.

(ii) Voluntary participation.

(A) Total claims participation: The participating provider program.

A CHAMPUS-authorized provider that is not required to participate by

this part may become a participating provider by entering into an

agreement or memorandum of understanding (MOU) with the Director,

OCHAMPUS, which includes, but is not limited to, the provisions of

paragraph (a)(14) of this section. The Director, OCHAMPUS, may include

in a participating provider agreement/MOU provisions that establish

between OCHAMPUS and a class, category, type, or specific provider,

uniform procedures and conditions which encourage provider

participation while improving beneficiary access to benfits and

contributing to CHAMPUS efficiency. Such provisions shall be otherwise

allowed by this part or by DoD Directive or DoD Instruction.

Participating provider program provisions may be incorporated into an

agreement/MOU to establish a specific CHAMPUS-provider relationship,

such as a preferred provider arrangement.

(B) Claim-specific participation. A CHAMPUS-authorized provider

that is not required to participate and that has not entered into a

participation agreement pursuant to paragraph (a)(8)(ii)(A) of this

section may elect to be a participating provider on a claim-by-claim

basis by indicating ``accept assignment'' on each CHAMPUS claim form

for which participation is elected.

* * * * *

(13) Medical records: CHAMPUS-authorized provider organizations and

individuals providing clinical services shall maintain adequate

clinical records to substantiate that specific care was actually

furnished, was medically necessary, and appropriate, and identify(ies)

the individual(s) who provided the care. This applies whether the care

is inpatient or outpatient. The minimum requirements for medical record

documentation are set forth by all of the following:

(i) The cognizant state licensing authority;

(ii) The Joint Commission on Accreditation of Healthcare

Organizations, or the appropriate Qualified Accreditation Organization

as defined in Sec. 199.2;

(iii) Standards of practice established by national medical

organizations; and

(iv) This part.

(14) Participation agreements. Except for agreements in effect on

September 30, 1994, a participation agreement otherwise required by

this part shall include, in part, all of the following provisions

requiring that the provider shall:

(i) Not charge a beneficiary for the following:

(A) Services for which the provider is entitled to payment from

CHAMPUS;

(B) Services for which the beneficiary would be entitled to have

CHAMPUS payment made had the provider complied with certain procedural

requirements;

(C) Services not medically necessary and appropriate for the

clinical management of the presenting illness, injury, disorder or

maternity;

(D) Services for which a beneficiary would be entitled to payment

but for a reduction or denial in payment as a result of quality review;

and

(E) Services rendered during a period in which the provider was not

in compliance with one or more conditions of authorization;

(ii) Comply with the applicable provisions of this part and related

CHAMPUS administrative policy;

(iii) Accept the CHAMPUS determined allowable payment combined with

the cost-share, deductible, and other health insurance amounts payable

by, or on behalf of, the beneficiary, as full payment for CHAMPUS

allowed services;

(iv) Collect from the CHAMPUS beneficiary those amounts that the

beneficiary has a liability to pay for the CHAMPUS deductible and cost-

share;

(v) Permit accessed by the Director to the clinical record of any

CHAMPUS beneficiary, to the financial and organizational records of the

provider, and to reports of evaluations and inspections conducted by

state of private agencies or organizations;

(vi) Provide to the Director prompt written notification of the

provider's employment of an individual who, at any time during the

twelve months preceding such employment, was employed in a managerial,

accounting, auditing, or similar capacity by an agency or organization

which is responsible, directly or indirectly for decisions regarding

Department of Defense payments to the provider;

(vii) Cooperate fully with a designated utilization and clinical

quality management organization which has a contract with the

Department of Defense for the geographic area in which the provider

renders services;

(viii) Obtain written authorization before rendering designated

services or items for which CHAMPUS cost-share may be expected;

(ix) Maintain clinical and other records related to individuals for

whom CHAMPUS payment was made for services rendered by the provider, or

otherwise under arrangement, for a period of 60 months from the date of

service;

(x) Maintain contemporaneous clinical records that substantiate the

clinical rationale for each course of treatment, the methods,

modalities or means of treatment, periodic evaluation of the efficacy

of treatment, and the outcome at completion or discontinuation of

treatment;

(xi) Refer CHAMPUS beneficiaries only to providers with which the

referring provider does not have an [[Page 12720]] economic interest,

as defined in Sec. 199.2; and

(xii) Limit services furnished under arrangement to those for which

receipt of payment by the CHAMPUS authorized provider discharges the

payment liability of the beneficiary.

* * * * *

(c) Individual professional providers of care.

(1) General.

(i) Purpose. This individual professional provider class is

established to accommodate individuals who are recognized by 10 U.S.C.

1079(a) as authorized to assess or diagnose illness, injury, or bodily

malfunction as a prerequisite for CHAMPUS cost-share of otherwise

allowable related preventive or treatment services or supplies, and to

accommodate such other qualified individuals who the Director may

authorize to render otherwise allowable services essential to the

efficient implementation of a plan-of-care established and managed by a

10 U.S.C. 1079(a) authorized professional.

(ii) Professional corporation affiliation or association membership

permitted. Paragraph (c) of this section applies to those individual

health care professionals who have formed a professional corporation or

association pursuant to applicable state laws. Such a professional

corporation or association may file claims on behalf of a CHAMPUS-

authorized individual professional provider and be the payee for any

payment resulting from such claims when the CHAMPUS-authorized

individual certifies to the Director in writing that the professional

corporation or association is acting on the authorized individual's

behalf.

(iii) Scope of practice limitation. For CHAMPUS cost-sharing to be

authorized, otherwise allowable services provided by a CHAMPUS-

authorized individual professional provider shall be within the scope

of the individual's license as regulated by the applicable state

practice act of the state where the individual rendered the service to

the CHAMPUS beneficiary or shall be within the scope of the test which

was the basis for the individual's qualifying certification.

(iv) Employee status exclusion. An individual employed, directly,

or indirectly by contract, by an individual or entity to render

professional services otherwise allowable by this part is excluded from

provider status as established by paragraph (c) of this section for the

duration of such employment.

(v) Training status exclusion. Individual health care professionals

who are allowed to render health care services only under direct and

ongoing supervision as training to be credited towards earning a

clinical academic degree or other clinical credential required for the

individual to practice independently are excluded from provider status

as established by paragraph (c) of this section for the duration of

such training.

(2) Conditions of authorization.

(i) Professional license requirement. The individual must be

currently licensed to render professional health care services in each

state in which the individual renders services to CHAMPUS

beneficiaries. Such license is required when a specific state provides,

but does not require, license for a specific category of individual

professional provider. The license must be at a full clinical practice

level to meet this requirement. A temporary license at the full

clinical practice level is acceptable.

(ii) Professional certification requirement. When a state does not

license a specific category of individual professional certification by

a Qualified Accreditation Organization, as defined in Sec. 199.2 of

this part is required. Certification must be at the full clinical

practice level. A temporary certification at the full clinical practice

level is acceptable.

(ii) Education, training, and experience requirement. The director

may establish for each category or type of provider allowed by

paragraph (c) of this section specific education, training, and

experience requirements as necessary to promote the delivery of

services by fully qualified individuals.

(iv) Physician referral and supervision. When physician referral

and supervision is a prerequisite for CHAMPUS cost-sharing of the

services of a provider authorized under paragraph (c) of this section,

such referral and supervision means that the physician must actually

see the patient to evaluate and diagnose the condition to be treated

prior to referring the beneficiary to another provider and that the

referring physician provides ongoing oversight of the course of

referral related treatment throughout the period during which the

beneficiary is being treated in response to the referral. Written

contemporaneous documentation of the referring physician's basis for

referral, and of ongoing communication between the referring and

treating provider regarding the oversight of the treatment rendered as

a result of the referral must meet all requirements for medical records

established by this part. Referring physician supervision does not

require physical location on the premises of the treating provider or

at the site of treatment.

(3) * * *

(iii) * * *

(I) * * *

(3) Licensed registered physical therapists and occupational

therapists.

* * * * *

(e) Corporate services providers.

(1) General.

(1) This corporate services provider class is established to

accommodate individuals who would meet the criteria for status as a

CHAMPUS authorized individual professional provider as established by

paragraph (c) of this section but for the fact that they are employed

directly or contractually by a corporation or foundation that provides

principally professional services which are within the scope of the

CHAMPUS benefit.

(ii) Payment for otherwise allowable services may be made to a

CHAMPUS-authorized corporate services provider subject to the

applicable requirements, exclusions and limitations of this part.

(iii) The Director may create discrete types within any allowable

category of provider established by paragraph (e) of this section to

improve the efficiency of CHAMPUS management.

(iv) The Director may require, as a condition of authorization,

that a specific category or type of provider established by paragraph

(e) of this section:

(A) Maintain certain accreditation in addition to or in lieu of the

requirements of paragraph (e)(2)(v) of this section;

(B) Cooperate fully with a designated utilization and clinical

quality management organization which has a contract with the

Department of Defense for the geographic area in which the provider

does business;

(C) Render services for which direct or indirect payment is

expected to be made by the CHMPUS only after obtaining CHAMPUS written

authorization; and

(D) Maintain Medicare approval for payment when the Director

determines that a category, or type, of provider established by

paragraph (e) of this section is substantially comparable to a provider

or supplier for which Medicare has regulatory conditions of

participation or conditions of coverage;

(v) Otherwise allowable services may be rendered at the authorized

corporate services provider's place of business, or in the

beneficiary's home under such circumstances as the Director determines

to be necessary for the efficient delivery of such in-home

services. [[Page 12721]]

(vi) The Director may limit the term of a participation agreement

for any category or type of provider established by paragraph (e) of

this section.

(vii) Corporate services providers shall be assigned to only one of

the following allowable categories based upon the predominate type of

procedure rendered by the organization:

(A) Medical treatment procedures;

(B) Surgical treatment procedures;

(C) Maternity management procedures;

(D) Rehabilitation and/or habilitation procedures; or

(E) Diagnostic technical procedures.

(viii) The Director shall determine the appropriate procedural

category of a qualified organization and may change the category based

upon the provider's CHAMPUS claim characteristics. The category

determination of the Director is conclusive and may not be appealed.

(2) Conditions of authorization. An applicant must meet the

following conditions to be eligible for authorization as a CHAMPUS

corporate services provider:

(i) Be a corporation or a foundation, but not a professional

corporation or professional association, and

(ii) be institution-affiliated or freestanding as defined in

Sec. 199.2 and

(iii) Provide:

(A) Services and related supplies of a type rendered by CHAMPUS

individual professional providers or diagnostic technical services and

related supplies of a type which requires direct patient contact and a

technologist who is licensed by the state in which the procedure is

rendered for who is certified by a Qualified Accreditation Organization

as defined in Sec. 199.2 and

(B) A level of care which does not necessitate that the beneficiary

be provided with on-site sleeping accommodations and food in

conjunction with the delivery of services and

(iv) Complies with all applicable organizational and individual

licensing or certification requirements that are extant in the state,

county, municipality, or other political jurisdiction in which the

provider renders services and

(v) Be approved for Medicare payment when determined to be

substantially comparable under the provisions of paragraph

(e)(1)(iv)(D) of this section or, when Medicare approved status is not

required, be accredited by a qualified accreditation organization, as

defined in Sec. 199.2 and

(vi) Has entered into a participation agreement approved by the

Director which at least complies with the minimum participation

agreement requirements of this section.

(3) Transfer of participation agreement. In order to provide

continuity of care for beneficiaries when there is a change of provider

ownership, the provider agreement is automatically assigned to the new

owner, subject to all the terms and conditions under which the original

agreement was made.

(i) The merger of the provider corporation or foundation into

another corporation or foundation, or the consolidation of two or more

corporations or foundations, resulting in the creation of a new

corporation or foundation constitutes a change of ownership.

(ii) Transfer of corporate stock or the merger of another

corporation or foundation into the provider corporation or foundation

does not constitute change of ownership.

(iii) The surviving corporation or foundation shall notify the

Director in writing of the change of ownership promptly after the

effective date of the transfer or change in ownership.

(4) Pricing and payment methodology. The pricing and payment of

procedures rendered by a provider authorized under paragraph (e) of

this section shall be limited to those methods for pricing and payment

allowed by this part which the Director determines contribute to the

efficient management of the CHAMPUS.

(5) Termination of participation agreement. A provider may

terminate a participation agreement upon 45 days written notice to the

Director and to the public.

Dated: March 1, 1995.

L.M. Bynum,

Alternate OSD Federal Register Liaison Officer, Department of Defense.

[FR Doc. 95-5377 Filed 3-7-95; 8:45 am]

BILLING CODE 5000-04-M