Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); Individual Case Management

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DoD 6010.8-R]

Civilian Health and Medical Program of the Uniformed Services

(CHAMPUS); Individual Case Management

AGENCY: Office of the Secretary, DoD.

ACTION: Proposed rule.

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SUMMARY: This proposed rule implements provisions of the 1993 National

Defense Authorization Act which allows the Secretary of Defense to

establish a case management program for CHAMPUS beneficiaries with

extraordinary medical or psychological disorders and to allow such

beneficiaries medical or psychological services, supplies, or durable

medical equipment excluded by law or regulation as a CHAMPUS benefit.

Under this program, waiver of benefit limits to the Basic CHAMPUS

program may be authorized for beneficiaries when the provision of such

services or supplies is cost effective and clinically appropriate, as

compared to historical or projected CHAMPUS/MTF utilization of health

care services. It is designed to develop a cost-effective plan of care

by targeting appropriate resources to meet the individual needs of the

beneficiary.

DATES: Written public comments must be received on or before March 4,

1996.

FOR FURTHER INFORMATION CONTACT:

CAPT Deborah Kamin, Office of the Assistant Secretary of Defense

(Health Affairs), (703)-697-8975.

SUPPLEMENTARY INFORMATION: The Civilian Health and Medical Program of

the Uniformed Services (CHAMPUS) supplements the availability of health

care in military hospitals and clinics. Case management centering on a

multidisciplinary treatment approach offers the beneficiary and

provider assurance that specific services and supplies are allowable as

CHAMPUS benefits and provides an opportunity to use those benefits

efficiently.

Statutory Authority

The case management program is based on the authority of 10 U.S.C.

1079(a)(17), which provides:

The Secretary of Defense may establish a program for the

individual case management of a person covered by this section or

section 1086 of this title who has extraordinary medical or

psychological disorders and, under such a program, may waive benefit

limitations contained in paragraphs (5) and (13) of this subsection

or section 1077(b)(1) of this title and authorize the payment for

comprehensive home health care services, supplies, and equipment if

the Secretary determines that such a waiver is cost effective and

appropriate.

Case Management

The CHAMPUS individual case management program seeks to achieve

cost effective quality health care by considering alternatives to

inpatient hospitalization and by recommending a waiver of the current

CHAMPUS benefit limits that, when provided in lieu of inpatient care

(or to prevent recurrent hospitalizations), are cost effective and

clinically appropriate. Waivers of benefit limits must be approved and

coordinated by the case manager and may include, but not be limited to

services or supplies such as home health care, medical supplies, back-

up durable medical equipment, extended skilled nursing care and home

health aides. CHAMPUS case managers will be employees or contractors of

the Department of Defense. We propose to add to section 199.4

authorization, as a case management related benefit and on a case-by-

case basis, services or supplies that would otherwise be excluded as

non-medical or duplicate durable

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equipment, custodial care, or domiciliary care. We also propose to add

definitions for waiver of benefit limits, case management, case

manager, case management multidisciplinary team, extraordinary

condition, and primary caregiver.

Eligibility

A beneficiary's eligibility for participation in the CHAMPUS case

management program is dependent on: (1) The presence of an

extraordinary medical or psychological condition which has resulted in

high utilization of CHAMPUS/MTF resources in an inpatient setting, (2)

the cost-effectiveness of providing services of supplies outside

inpatient settings, and (3) the willingness of the beneficiary to

participate, and (4) the presence of a primary caregiver in the home

when the services provided include home health care.

Role/Purpose of a Primary Caregiver

Candidates for this program will require a level of support which

cannot occur safely outside an inpatient setting unless there is a

primary caregiver in the home. Therefore, the presence of a primary

caregiver to provide services is a pre-condition of participation. We

envision that, in most cases, the role of primary caregiver will fall

to members of the beneficiary's family.

Covered Services

A list of services or supplies that may be covered as a waiver of

benefit limits will not be established. Rather, we propose that, under

the case management program, clinically appropriate services and/or

supplies may be provided when those services or supplies are cost

effective.

Custodial Care

The provision of custodial care as a waiver of benefit limits is

proposed as a transitional benefit for patients and families facing

extraordinary medical or psychological conditions. To qualify for this

waiver of benefit limits, the following conditions must be met: (1) The

patient must have been rehospitalized for exacerbations or

complications of his/her custodial condition on a recurring basis in

the prior year, (2) The proposed treatment must be cost effective when

compared to alternative treatment which would otherwise occur, (3) The

patient's condition at referral for case management is either acute or

there are indicators of a rapidly approaching acute episode, and (4)

There must be a primary caregiver.

We expect individual patients will require varying levels of

support and time to stabilize in the home environment. We propose a

maximum of 30 (thirty) days for custodial care under case management.

However, this rule would allow case managers to extend the period of

time beyond thirty days when it is considered cost effective to do so.

Prior Authorization

Prior authorization from case managers will be required before the

delivery of any case managed benefits. Because eligibility for a waiver

of benefit limits is based on an indepth assessment of medical needs,

as well as the cost effectiveness and clinical appropriateness of

alternate services, any services provided absent prior authorization

will not be covered by CHAMPUS. Retrospective requests for coverage

under this program will not be authorized.

Military Health Services System Resource Management

To ensure cost efficient as well as cost effective use of

resources, the Department of Defense will include case management

requirements, as described in this rule, in nationwide managed care

support contracts now being procured. Managed care support contractors

will be authorized to make available case management services to

Military Medical Treatment Facilities. In areas where transition to

managed care support contracts has not occurred, case management

services will be provided through existing regional peer review

organizations (Regional Review Centers, or RRCs). MTFs will be provided

the opportunity to refer potential candidates to the appropriate

CHAMPUS case manager. Where possible, Military Medical Treatment

Facilities will provide care and services or supplies in support of

regional case management programs.

Beneficiary Acknowledgment

Case management is a collaborative process among the case manager,

beneficiary, primary caregiver, and professional health care providers.

For case management to be successful, the beneficiary and primary

caregiver must participate in the process and be aware of and agree

with the requirements of the program. To document the understanding of

their roles, rights and responsibilities, a standard acknowledgment,

signed by the beneficiary (or representative) and the primary

caregiver, will be required prior to the start of case management

services.

CHAMPUS HHC/HHC-CM Demonstration

The 1986 Home Health Care and 1988 Home Health Care-Case Management

Demonstration projects were developed to test whether case management,

coupled with home health care benefits, could reduce medical costs and

improve services to CHAMPUS beneficiaries. Under the 1986

demonstration, case management services were limited to beneficiaries

who, in the absence of case managed home health care, would have

remained hospitalized. The 1988 program was less restrictive and no

longer required case management services only as a substitute for

continued hospitalization. The effectiveness of methods for identifying

potentially eligible beneficiaries and establishing the clinical

appropriateness and cost-effectiveness of services provided was

addressed by the General Accounting Office (GAO). In their report,

``DEFENSE HEALTH CARE: Further Testing and Evaluation of Case

Management Home Care Is Needed,'' the GAO identified a need for

stronger cost controls and improved targeting of potential candidates

before implementation of a permanent case management program under

CHAMPUS. While the GAO identified some weaknesses in both

demonstrations, the more restrictive design of the 1986 program was

seen as one which presented an acceptable level of risk to the

government. With the GAO's recommendations and observations in mind,

the Department is proposing a CHAMPUS case management program which is

limited to beneficiaries who would remain hospitalized in the absence

of such a program, or who have demonstrated a recent history of

multiple inpatient episodes.

Regulatory Procedures

Executive Order (EO) 12866 requires that a comprehensive regulatory

impact analysis be performed on any economically significant regulatory

action, defined as one which would result in an annual effect of $100

million or more on the national economy or which would have other

substantial impacts.

The Regulatory Flexibility Act (RFA) requires that each Federal

agency prepare, and make available for public comment, a regulatory

flexibility analysis when the agency issues a regulation which would

have a significant impact on a substantial number of small entities.

This proposed rule is a significant regulatory action under EO

12866 and has been reviewed by the Office of

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Management and Budget. In addition, we certify that this proposed rule

will not significantly affect a substantial number of small entities.

Paperwork Reduction Act

This rule, as written, imposes no burden as defined by the

Paperwork Reduction Act of 1995. If however, any program implemented

under this rule causes such a burden to be imposed, approval therefore

will be sought of the Office of Management and Budget in accordance

with the Act, prior to implementation.

List of Subjects in 32 CFR Part 199

Claims, handicapped, health insurance, and military personnel.

Accordingly, 32 CFR part 199 is proposed to be amended as follows:

PART 199--[AMENDED]

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

follows:

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

2. Section 199.2(b) is amended by adding new definitions in

alphabetical order:

Sec. 199.2 Definitions.

* * * * *

Case management. Case management is a collaborative process which

assesses, plans, implements, coordinates, monitors, and evaluates the

options and services required to meet an individual's health needs,

using communication and available resources to promote quality, cost

effective outcomes.

Case manager. A licensed register nurse or licensed social worker

who has a minimum of two (2) years of case management experience.

* * * * *

Extraordinary condition. A complex clinical condition which

resulted, or is expected to result, in inpatient CHAMPUS/MTF costs or

utilization above a threshold established by the Director, OCHAMPUS, or

designee.

* * * * *

Primary caregiver. An individual who renders to a beneficiary

services to support the essentials of daily living (as defined in

Sec. 199.2) and specific services essential to the safe management of

the beneficiary's condition.

* * * * *

Waiver of benefit limits. Coverage, under the Case Management

Program, of medical care, services, and or equipment not otherwise a

benefit under the Basis CHAMPUS program.

* * * * *

3. Section 199.4 is amended by adding new paragraphs (e)(20) and

(i) as follows:

Sec. 199.4 Basic program benefits.

* * * * *

(e) Special benefit information.

* * * * *

(20) Case management services. As part of case management for

beneficiaries with complex medical or psychological conditions, payment

for services or supplies not otherwise covered by the Basic CHAMPUS

program may be authorized when they are provided in accordance with

Sec. 199.4(i). Waiver of benefit limits to the basic CHAMPUS program

may be cost shared where it is demonstrated that the absence of such

services would result in the exacerbation of an existing extraordinary

condition, as defined in Sec. 199.2, to the extent that frequent or

extensive institutional services are required; and such services are a

cost effective alternative to the Basic CHAMPUS program.

* * * * *

(i) Case management program.

(1) In general. Case management, as it applies to this program,

provides a collaborative process among the case manager, beneficiary,

primary caregiver, professional health care providers and funding

sources to meet the medical needs of an individual with an

extraordinary condition. It is designed to promote quality and cost-

effective outcomes through assessment, planning, implementing,

monitoring and evaluating the options and services required. Payment

for services or supplies not otherwise covered by the basic CHAMPUS

program may be authorized when they are provided in accordance with

this paragraph (i). Waiver of benefit limits may be cost-shared where

it is demonstrated that the absence of such services would result in

the exacerbation of an existing extraordinary condition, as defined in

Sec. 199.2, to the extent that frequent or extensive hospitalizations

are required; and such services are a cost-effective alternative to the

Basic CHAMPUS program.

(2) Applicability of case management program. A CHAMPUS eligible

beneficiary may participate in the case management program if he/she

has an extraordinary condition which is disabling and requires

inpatient care at a CHAMPUS-covered level-of-care. The medical or

psychological condition must also:

(i) Be contained in the latest revision of the International

Classification of Diseases Clinical Modification, or the Diagnostic and

Statistical Manual of Mental Disorders;

(ii) Meet at least one of the following:

(A) Demonstrate a prior history of frequent, multiple inpatient

admissions, generating high CHAMPUS costs in the year immediately

preceding eligibility for the case management program; or

(B) Require clinically appropriate services or supplies from

multiple providers to address an extraordinary condition; and

(iii) More cost effectively and in a more clinically appropriate

manner be treated at a less resource intensive level of care.

(3) Prior authorization required. Services or supplies allowable as

a benefit exception under this Section shall be cost-shared only when a

beneficiary's entire treatment has received prior authorization through

an individual case management program.

(4) Cost effectiveness requirement. Treatment cost effectiveness

shall be calculated as the reduction in the cost to the Department of

Defense for proposed treatment which substitutes individual case

management services for more expensive care which would have otherwise

been reimbursed under the basic program. Generally, cost effectiveness

determinations will involve comparisons between treatments primarily

using an inpatient setting and those primarily using an outpatient or

in-home setting. Treatment must meet the requirements of appropriate

medical care as defined in Sec. 199.2.

(5) Limited waiver of exclusions and limitations. Limited waivers

of exclusions and limitations normally applicable to the basic program

may be granted for specific services or supplies only when a

beneficiary's entire treatment has received prior authorization through

the individual case management program described in this paragraph (i).

The Director, OCHAMPUS may grant a patient-specific waiver of benefit

limits for services or supplies in the following categories, subject to

the waiver requirements of this section.

(i) Durable equipment. The cost of a device or apparatus which does

not qualify as Durable Medical Equipment (as defined in Sec. 199.2) or

back-up durable medical equipment may be shared when determined by the

Director, OCHAMPUS to be cost-effective and clinically appropriate.

(ii) Custodial Care. The cost of services or supplies rendered to a

beneficiary that would otherwise be excluded as custodial care (as

defined in Sec. 199.2) may be cost-shared for a period of 30 (thirty)

days when determined by

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the Director, OCHAMPUS, to be cost effective and clinically

appropriate. To qualify for a waiver of benefit limits of custodial

care, the patient must meet all eligibility requirements of this

paragraph (i), including an acute condition or an acute exacerbation of

a chronic condition.

(A) The patient must have been rehospitalized for exacerbations or

complications of his/her custodial condition on a recurring basis in

the prior year;

(B) The proposed case management treatment must be cost effective

when compared to alternative treatment which would otherwise occur;

(C) The patient's condition at referral for case management is

either acute or there are indicators of a rapidly approaching acute

episode; and

(D) There is a primary caregiver.

(iii) Domiciliary care. The cost of services or supplies rendered

to a beneficiary that would otherwise be excluded as domiciliary care

(as defined in Sec. 199.2) may be shared when determined by the

Director, OCHAMPUS to be cost effective and clinically appropriate.

(iv) In home services. The cost of the following in-home services

may be shared when determined by the Director, OCHAMPUS to be cost

effective and clinically appropriate: nursing care, physical,

occupational, speech therapy, medical social services, intermittent or

part-time services of a home health aide, beneficiary transportation

required for treatment plan implementation, and training for the

beneficiary and primary caregiver sufficient to allow them to assume

all feasible responsibility for the care of the beneficiary that will

facilitate movement of the beneficiary to the least resource-intensive,

clinically appropriate setting. (Qualifications for home health aides

shall be based on the standards at 42 CFR 484.36.)

(v) Waiver of custodial care limits. The Director, OCHAMPUS may, in

extraordinary cases, waive the custodial care day limits described in

paragraph (e)(5)(ii) of this section and authorize this exception to

benefits beyond the 30-day limit. The criteria for waiver of the 30-day

limit shall be those set in paragraph (e)(5)(ii) of this section.

Additionally, there must be a specific determination that

discontinuation of this waiver of benefit limits will result in

immediate onset or exacerbation of an acute care episode and require

hospitalization or services or supplies which increase significantly

the cost and intensity of care.

(6) Case management acknowledgment. The beneficiary, or

representative, and the primary caregiver, shall sign a case management

acknowledgment as a prerequisite to prior authorization of case

management services. The acknowledgment shall include, in part, all of

the following provisions:

(i) The right to participate fully in the development and ongoing

assessment of the treatment;

(ii) That all health care services for which CHAMPUS cost sharing

is sought shall be authorized by the case manager prior to their

delivery;

(iii) That there are limitations in scope and duration of the

planned case management treatment, including provisions to transition

to other arrangements;

(iv) The conditions under which case management services are

provided, including the requirement that the services must be cost

effective and clinically appropriate; and

(v) That a beneficiary's participation in the case management

program shall be discontinued for any of the following reasons:

(A) The loss of CHAMPUS eligibility;

(B) A determination that the services or supplies provided are not

cost effective or clinically appropriate;

(C) The beneficiary, or representative, and/or primary caregiver,

terminates participation in writing;

(D) The beneficiary and/or primary caregiver's failure to comply

with requirements in this paragraph (i); or

(E) A determination that the beneficiary's condition no longer

meets the requirements of participation as described in this paragraph

(i).

(7) Other administrative requirements.

(i) Qualified providers of services or items not covered under the

basic program, or who are not otherwise eligible for CHAMPUS-authorized

status, may be authorized for a time-limited period when such

authorization is essential to implement the planned treatment under

case management. Such providers must not be excluded or suspended as a

CHAMPUS provider, and must agree to participate on all claims related

to the case management treatment.

(ii) Retrospective requests for authorization of waiver of benefit

limits will not be considered. Authorization of waiver of benefit

limits is allowed only after all other options for services or supplies

have been considered and either appropriately utilized or determined to

be clinically inappropriate and/or not cost-effective.

(iii) Experimental or investigational treatment or procedures shall

not be cost-shared as an exception to standard benefits under this

part.

(iv) CHAMPUS case management services may be provided by

contractors designated by the Director, OCHAMPUS.

Dated: December 28, 1995.

L.M. Bynum,

Alternate OSD Federal Register Liaison Officer, Department of Defense.

[FR Doc. 96-65 Filed 1-3-96; 8:45 am]

BILLING CODE 5000-04-M