Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); Program for Persons with Disabilities; Basic Program

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

[DoD 6010.8-R]

RIN 0720-AA32

Civilian Health and Medical Program of the Uniformed Services

(CHAMPUS); Program for Persons with Disabilities; Basic Program

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: This final rule simplifies the administration of benefits

under the CHAMPUS Program for the Handicapped (PFTH) and changes the

name of this benefit to Program for Persons with Disabilities (PFPWD);

adds occupational therapists in independent practice to the list of

authorized individual professional providers; provides criteria for

cost-sharing certain procedures when data is transferred electronically

from the patient's home to a medical practitioner; defines and limits

plans recognized as supplemental insurance under CHAMPUS; and adopts

the Federal Claims Collection Act and the Federal Claims Collection

Standards by reference.

DATES: This rule is effective October 28, 1997, except

Sec. 199.11(g)(1) which is effective November 15, 1990.

ADDRESSES: Office of the Civilian Health and Medical Program of the

Uniformed Services (OCHAMPUS), Program Development Branch, Aurora, CO

80045-6900.

FOR FURTHER INFORMATION CONTACT:

Michael Kottyan, telephone (303) 361-1120.

SUPPLEMENTARY INFORMATION: The CHAMPUS supplements the availability of

health care resources for Military Health Services System (MHSS)

beneficiaries. The MHSS consists of military hospitals and the CHAMPUS.

CHAMPUS consists of basic general medical and surgical benefits, and

non-medical benefits through the Program for Persons with Disabilities

(PFPWD).

A summary of written comments received, the CHAMPUS response, and

the amendments being made by this final rule follow.

I. Program for Persons With Disabilities (PFPWD)

On June 10, 1991, a proposed rule was published in the Federal

Register (56 FR 26635) regarding administrative revisions to the

CHAMPUS Program for the Handicapped (PFTH), which included renaming

these benefits the Program for Persons with Disabilities (PFPWD).

By law, PFPWD benefits are limited to spouses or children with

diagnosed moderate or severe mental retardation, or serious physical

disability, who have an active duty Uniformed Service Member sponsor,

or who are determined to be an abused dependent of certain former

Members. Unlike the basic benefit, the PFPWD applies a fixed, pay-grade

based cost-share amount regardless of the amount of expense allowable

as a benefit (basic benefit beneficiary cost-share is a percentage of

the allowed amount), has no annual deductible amount, includes certain

necessary services and items that are not medical in nature, and has a

$1,000 per month benefit limit for most beneficiaries.

A distinctive aspect of the PFPWD is the statutory requirement that

ties eligibility for benefits to the use of public facilities to the

extent that such facilities are available and adequate to meet a

specific disability related need.

CHAMPUS PFPWD benefits do not alter the obligations which Section

504 of the Rehabilitation Act, as amended, and the Americans with

Disabilities Act, as amended, places upon CHAMPUS providers, nor are

CHAMPUS benefits a substitute for special education and related

services associated with a free appropriate public education which the

Individuals with Disabilities Education Act, as amended, makes

available.

Comment: Two comments noted that this rule should use the type of

language currently preferred by the disability community. The terms

``handicap'' and ``the handicapped'' are no longer acceptable. The

preferred forms are ``disability'' and ``persons with disabilities.''

Response: We have renamed the Program for the Handicapped (PFTH)

the Program for Persons with Disabilities (PFPWD). This name change

recognizes that the term ``handicapped'' presumes an unavoidable

consequence of illness or injury that unnecessarily discounts the

capabilities of every CHAMPUS beneficiary with a disability. Editorial

changes throughout the final rule are responsive to current terminology

preferences.

Comment: The statement that PFPWD beneficiaries reside, with few

exceptions, within Military Treatment Facility catchment areas, and

that the proposed change will facilitate beneficiary access to needed

services and items is not true for the other three Uniformed Services

and could adversely affect the Coast Guard, the Public Health Service,

and the National Oceanic and Atmospheric Administration.

Response: We are aware that MHSS beneficiaries with sponsors in

these Uniformed Services are not usually within a military hospital's

catchment area. PFPWD eligibility determination, benefit authorization,

and related support, will continue to be available through the network

of regional CHAMPUS contractors.

Comment: A PFPWD qualifying condition is required to be certified

again at least every 36 months. For certain conditions (i.e. severe

mental retardation, cerebral palsy with paralysis, muscular dystrophy,

missing essential body parts, etc.) there will never be a change in

PFPWD clinical eligibility. A list of conditions which do not require

frequent certification should be used.

Response: We have removed the 36 month review requirement. Rather

than a list, reviews will now be based upon the prognosis for a change

in the qualifying condition.

Comment: One comment recommended extending PFPWD benefits to

retired members because, in many cases, beneficiaries will never lose

their dependence on the sponsor. Special needs beneficiaries may force

sponsors to remain on active duty longer than they desire merely to

remain eligible for PFPWD.

Response: The limitation of PFPWD benefits to dependents of active

duty uniformed service members is a requirement of the law that

authorizes PFPWD benefits.

Comment: Two comments noted that the provisions for transportation

should allow movement from one State to another when necessary to

obtain care.

Response: We have clarified the transportation exclusion to assure

that transportation between any of the United States, and certain other

areas defined as a state by the Regulation, is not excluded.

Comment: The current edition of the Diagnostic and Statistical

Manual of Mental Disorders is the Third Edition, Revised; Down Syndrome

is generally preferred to Down's Syndrome; the phrase ``. . . are

eligible for payment under a State plan for medical assistance under

Title XIX of the Social Security Act (Medicaid) . . .'' should be used

throughout when referring to Medicaid benefits; and Medicaid

[[Page 35087]]

Intermediate Care Facilities are now termed Medicaid Nursing

Facilities.

Response: We will specify the most current edition of the

Diagnostic and Statistical Manual of Mental Disorders in administrative

instruction. All other technical changes have been incorporated into

this final rule.

Comment: The proposed changes appear to place the active duty

sponsor at a higher financial risk under the PFPWD than those active

duty sponsors using basic benefits. There is presently a $1,000

catastrophic cap for basic benefits and the governments would then

assume a payment obligation of the cost-share over that cap. Any

additional cost for care under the PFPWD beyond the $1,000/month

benefit limit remains the responsibility of the active duty sponsor.

Response: The catastrophic loss protection provision of law does

not allow PFPWD cost-share amounts, or amounts in excess of the $1,000/

month PFPWD benefit limit paid by a beneficiary, to be counted toward

the catastrophic loss active duty family threshold of $1,000/fiscal

year. Only basic benefit deductible and cost-share amounts can be

applied to this threshold. PFPWD beneficiaries obtain most of their

medical care as a basic benefit. These changes to the PFPWD provide the

active duty sponsor with more control over financial risk by allowing a

choice between PFPWD or basic benefits where no choice previously

existed. PFPWD allowable services and items which are excluded as basic

benefits include institutional care for protective custody or training,

training, special education, nonmedical equipment, transportation, and

certain prosthetic devices. A key consideration when a choice between

PFPWD or basic benefits is available is catastrophic loss protection.

We have addressed the issue of informed choice between basic and PFPWD

benefits in two ways. First, we will provide written guidance and

training for Health Benefits Advisors at Military Treatment Facilities

regarding the beneficiary cost-share liability implications of using

PFPWD benefits, rather than basic benefits, whenever such a choice

exists. Second, we have added a provision to this final rule that will

assure that a family that finds they inadvertently have a liability for

PFPWD benefits, that would otherwise not have existed after activation

of the basic benefit catastrophic loss protection, will have a way to

request relief.

Comment: The proposed rule would define rehabilitation as ``the

restoration of physical functioning lost due to illness or injury.'' By

focusing narrowly on physical functioning, we fear that this definition

would serve to limit the range of services available to address the

rehabilitation needs of the physically handicapped. Rehabilitation

restores not only the physical functioning of an individual, but also

the individual's physiological, social, vocational, educational, and

economic adjustment to the handicap. The proposed rule lists categories

of services available under the PFPWD benefit and addresses some

nonphysical aspects of rehabilitation, such as training and special

education. We are encouraged that CHAMPUS does not intend to limit

rehabilitation services to those related strictly to physical

functioning. However this list does not explicitly mention services

related to the individual's psychosocial needs. We suggest a clearer

and more explicit treatment of the scope of rehabilitative services

available under the PFPWD. Fist we recommend defining rehabilitation as

the restoration of physical, psychological, social, vocational, and

educational functioning lost due to illness or injury. Second, we would

add explicit recognition of the broad range of rehabilitative services

that may be necessary to restore or improve functioning for the

physically handicapped.

Response: We agree that physical rehabilitation is but one facet of

restoring an individual's ability to function. We have rewritten this

definition to accommodate the extensive scope of providers and

processes which pursue restorative outcomes for a growing range of

dysfunctions. The revised definition focuses upon functional limitation

reduction as the critical outcome produced by rehabilitative processes.

The widest scope of individual need, with allowance for the dynamic

nature of the rehabilitative process, is subsumed within this

definition. Rather than simply restating well established elements of

rehabilitative focus and treatment at the regulatory level, we have

chosen to create an outcome standard for these benefits which allows

maximum flexibility for identifying services and items that confirm,

arrest, or reduce disabling effects of a qualifying condition. This

approach allows responsiveness to the success of traditional, evolving,

and emerging rehabilitative and habilitative resources in providing

functional gains to CHAMPUS beneficiaries.

Comment: The ``in whole or in part'' phrase should be deleted from

the definition of public facility adequacy. This phrase suggests the

possibility that care could be fragmented among several providers, a

result we do not believe CHAMPUS intended. For example, a public

facility may be funded only to provide for a specific number of

physical therapy sessions per week, but based on the medical opinion of

the practitioner, the patient requires more frequent services. Under

the proposed definition the individual's needs could be met ``in part''

by this facility, so it would be considered adequate and the individual

would be required to use it. The additional services, beyond what the

public facility can provide, would have to be obtained from another

provider or paid for out-of-pocket.

Response: We have deleted this phrase and have rewritten the

provision to avoid such conflicts.

Comment: Although we support the changes being proposed, we have

concern that the CHAMPUS program itself, for which changes are not

being proposed, is also in need of revision. We would encourage you to

propose recommendations to change the basic CHAMPUS legislation so that

children with less severe disabilities would also be eligible for

services, and that the $1,000 per month limitation on services be

expanded.

Response: The $1,000/month PFPWD benefit limit and related

eligibility criteria are provisions of law. Beneficiaries with less

than serious disability have access to basic benefits which provide a

wide range of medical and allied health services. Long-term use of the

entire $1,000/month PFPWD is rare. Such maximum benefit use is

predominantly associated with declining use of long term residential

care.

Comment: Although some limitations are statutory, it appears that

it would be possible to revise the proposed regulation so that persons

with disabilities have access to CHAMPUS benefits more in line with the

intent of Section 504 of the Rehabilitation Act (29 U.S.C. 794). This

law is implemented within the Department of Defense by DoD Directive

1020.1, ``Nondiscrimination on the Basis of Handicap in Programs and

Activities Assisted or Conducted by the Department of Defense,'' dated

March 31, 1982. It seems unfair that the proposed regulation requires

persons with disabilities to make choices about benefits that could

result in their losing money. In some situations, beneficiaries could

be forced to trade one type of benefit for another. In other

situations, they could lose benefits because of an ill-advised choice.

By contrast, benefits are straightforward for beneficiaries who are not

disabled and therefore have no need for the special program. CHAMPUS

beneficiaries, whether they are disabled or not, should receive the

[[Page 35088]]

maximum benefits to which they are entitled in any particular

situation. Proposed language states in effect, that the wrong decision

about benefits is irreversible. This language should be deleted and

replaced with provisions that make CHAMPUS staff responsible for

assuring that beneficiaries with disabilities receive all the benefits

for which they are eligible.

Response: Assisting beneficiaries make prudent health care choices

is a responsibility shared by many Military Health Services System

(MHSS) entities. CHAMPUS will provide Policy Manual guidance and

CHAMPUS Handbook and pamphlet information to assist beneficiaries to

determine the best election of benefits in a given family's situation.

Ongoing public information efforts can be responsive to demonstrated

beneficiary understanding of the choices among MHSS benefit options. We

have also provided administrative means to minimize any adverse

economic effect upon the beneficiary or family of PFPWD use because of

basic benefit catastrophic loss protection.

Comment: The definition of the term serious physical handicap

imposes a ``substantial productive activity'' limitation on persons who

have qualifying disabilities. Does this mean that a dependent teenager

who uses a wheelchair and has a part-time job would not be covered? It

would be preferable to use a functional definition, such as the one in

DoD Directive 1020.1, instead of linking the definition to

productivity.

Response: Employability has never been a PFPWD eligibility

criterion. However, we have rewritten the definition of ``Serious

Physical Handicap'' (as ``Serious Physical Disabilities'') and added

complementary definitions for ``Major Life Activity'' and ``Handicap''

to focus upon the underlying loss of function rather than the

productivity of the beneficiary.

Comment: Proposed language suggests that services that should be

provided for pupils with disabilities through public schools, or

through DoD operated schools, are to be funded through this CHAMPUS

cost-sharing program. There should be clarification of the relationship

of this program to requirements under DoD Directive 1342.16,

``Provision of Free Public Education for Eligible Dependent Children

pursuant to section 6, Pub. L. 81-874, as amended.''

Response: CHAMPUS will treat DoD Directive 1342.16 schools the same

as any other local educational agency within the state in which the DoD

school is located. The Individuals with Disabilities Education Act

requires persons with disabilities be provided a free public education.

Accordingly, special education services that are within the State Plan

required by the Act, and are a part of a beneficiary's Individual

Educational Plan, are excluded as a PFPWD benefit. Such exclusion is

because of the Act's requirements upon public schools, and because

CHAMPUS statutory authority requires that to qualify for PFPWD

benefits, public facilities, such as public schools, must be used to

the extent available and adequate. Because CHAMPUS benefits have

legally imposed beneficiary cost-share requirements (and benefit amount

limits for PFPWD benefits) the Act's requirement that the student or

parents not be charged for such services cannot be met.

Comment: This regulation should include a statement that all

CHAMPUS services are provided in accordance with DoD Directive 1020.1

[Nondiscrimination on the Basis of Handicap in Programs and Activities

Assisted or Conducted by the Department of Defense]. Complaints under

Section 504 [of the rehabilitation Act] indicate the need for special

attention to certain requirements. For example, there would be specific

references to telecommunication devices and certified sign language

interpreters for persons who are deaf, as well as special signs and

readers for persons who are blind and architectural accessibility and

personal assistants for individuals with other types of disabilities.

Response: We have made explicit in this final rule that the

services of an interpreter, reader, or personal assistant is an

allowable PFPWD benefit when the service is not an adjunct to receipt

of a PFPWD allowable service or item. PFPWD cost-share of these types

of services for beneficiaries with serious disabilities does not

relieve CHAMPUS providers of their obligation to provide CHAMPUS

beneficiaries with disabilities equal access, to include the provision

of communication resources and architectural accessibility.

Overview of PFTH/PFPWD Changes

Editorial changes have been made throughout this final rule,

including the addition and reorganization of material for clarity. The

following provides an overview of the changes to those sections in this

final rule pertaining to the PFPWD. Substantial changes between the

proposed and final documents are noted.

Section 199.2, Definitions

The proposed definitions for rehabilitation and habilitation have

been rewritten to focus upon the reduction of inability to function

rather than upon the underlying cause of the disability. We have

rewritten the definition of ``serious physical disability'' for clarity

and have added supporting definitions for ``handicap'' and ``major life

activity.'' We have moved the definitions for ``public facility

availability'' and ``public facility adequacy'' from Sec. 199.5 to

Sec. 199.2. Other definitions are unchanged.

Section 199.5(a), General

The name Program for the Handicapped (PFTH) has been changed to

Program for Persons with Disabilities (PFPWD).

We have shortened the proposed statement of purpose to focus upon

reducing disabling effects.

We have allowed the beneficiary the choice of using PFPWD or basic

benefits whenever possible. This changes the PFTH policy that resulted

in loss of access to basic benefits for outpatient services directly

related to the disability.

We have continued to exclude the use of basic benefits to cover

otherwise allowable PFPWD benefit cost which is not payable because the

monthly PFPWD benefit limit has been reached. The law authorizing PFPWD

benefits prohibits the government from paying, in any month, an amount

which exceeds the maximum allowable PFPWD benefit; consequently, basic

benefits cannot be used to pay for any PFPWD benefit residual expense

once the PFPWD monthly benefit limit is reached.

We have added a provision for readjudication of claims when the

PFPWD created a cost-share liability for services or items which would

not otherwise have been incurred due to basic benefit catastrophic loss

protection.

We have separated the determination of PFPWD eligibility from the

adjudication of benefit requests. PFTH eligibility previously had to be

established each time a benefit was requested. This change will

significantly reduce the paperwork required for a beneficiary to access

PFPWD benefits.

We have continued to require information about how a requested

benefit will contribute to confirming, arresting, or reducing the

disabling effects of a qualifying condition.

We have removed the absolute requirement for PFPWD benefit

preauthorization by allowing those services or items requiring

[[Page 35089]]

preauthorization to be specified in administrative policy.

Preauthorization serves to safeguard the beneficiary from benefit

denials.

We have limited the maximum length of a benefit authorization to

six months.

We have provided for retrospective waiver of a required

preauthorization on a case-by-case basis.

We have rewritten public facility use requirements to promote

continuity of care.

We have allowed the Commander of a Military Treatment Facility to

certify the lack of public facility availability or adequacy.

We have provided for benefit approval when a public official

refuses to provide a public facility use certification so as not to

disadvantage a beneficiary due to circumstances beyond the

beneficiary's control.

We have provided that repair or maintenance for owned equipment

does not require public facility use certification. This type of

service is rarely available through a public facility and timely access

to such services is usually critical to the beneficiary with a

disability.

We have provided that more than one item of the same type of

equipment for the same beneficiary may not be authorized concurrently.

We have eliminated the requirement that public facility

availability be determined for both the beneficiary's domicile and the

sponsor's domicile when beneficiary and sponsor are separated following

a Service Member's permanent change of duty station.

We have removed the absolute 36 month review cycle for qualifying

conditions in recognition that certain conditions will not change over

time.

We have added a provision to assure that no beneficiary receiving

PFPWD benefits loses eligibility solely as an unintended consequence of

these administrative changes.

Section 199.5(b), Eligibility

We have added certain abused dependents as a new PFPWD eligibility

category as required by law.

We have explicitly accommodated latent qualifying conditions which

cannot usually be definitively diagnosed in infancy, but for which

early clinical intervention is considered appropriate to minimize

disabling effects.

We have removed the detailed criteria and discussion of mental

retardation in favor of the diagnostic criteria in the ``Diagnostic and

Statistical Manual of Mental Disorders'' published by the American

Psychiatric Association. The Third edition, Revised, will apply

immediately, and newer additions will apply as they are published.

We have removed the examples of conditions that may cause serious

physical disability. This material was only informational. Such

screening criteria can be more responsive to changing technology and

standards of care when issued as administrative guidance.

We have removed the provision that extended PFTH benefits beyond

the date of eligibility for benefits.

Section 199.5(c), Benefits

Statutory benefit categories have been defined and types of derived

benefits have been described.

A standard of necessity has been established to permit services and

items to be allowed which are not explicit in this rule (derived PFPWD

benefits).

Section 199.5(d), Exclusions

We have excluded inpatient acute care as it is fully available as a

basic benefit and such care is likely to usually exceed the $1,000/

month PFPWD benefit limit.

We have excluded structural alterations to buildings as a type of

service outside the scope of authorized benefits.

We have excluded homemaker, sitter, or companion services as

custodial care.

We have defined certain adjunct services as benefits because they

are directly related to the efficiency and purpose of the PFPWD, and

are consistent with Department of Defense Directive 1020.1 regarding

``Nondiscrimination on the Basis of Handicap in Programs and Activities

Assisted or Conducted by the Department of Defense.''

We have excluded dental care and orthodontic treatment since dental

care is not included in the statutory authority for PFPWD benefits.

We have excluded nondomestic travel for care and treatment. Active

duty dependents officially residing with an active duty Service Member

outside of the United States are the responsibility of the Sponsor's

Military Command which will provide medical evacuation to the United

States for medical treatment when necessary.

We have excluded the cost differential for deluxe accommodations

for allowable travel when not necessary to the safety of the

beneficiary.

We have rewritten and shortened transportation related exclusions

to improve clarity.

We have excluded payment for services or items when the beneficiary

has no legal obligation to pay.

We have excluded services or items furnished by a public facility.

CHAMPUS benefits are, by law, last pay to other health care benefits

for which the beneficiary is eligible (Medicaid excepted).

We have excluded study, grant, or research programs as services or

items not rendered in accordance with accepted standards as

investigational or experimental in nature.

We have excluded services or items provided by immediate family or

household to minimize conflict of interest.

We have excluded court ordered care, unless such care would

otherwise be a PFPWD benefit.

We have excluded excursions as beyond the scope of the PFPWD travel

benefit.

We have excluded therapeutic absences.

We have clarified that drugs and medicines must meet basic benefit

criteria.

We have added an exclusion of medical devices which are not

approved for commercial distribution by the U.S. Food and Drug

Administration.

Section 199.5(e), Cost-share Liability

Minor editorial changes were made for improved clarity.

Section 199.5(f), Benefit Payment

We have added this paragraph to consolidate payment related

requirements that were scattered throughout the proposed rule.

Section 199.6(e), Providers

We have established PFPWD-unique providers as a separate class of

CHAMPUS providers due to the extra medical nature of PFPWD-unique

benefits.

We have added a provision that allows exclusion or suspension of a

provider of PFPWD services or items due to a pattern of discrimination

on the basis of disability.

Section 199.7(f), Preauthorization

We have removed the detailed documentation requirements for PFPWD

claims as this level of detail is more flexibly addressed in

administrative guidance.

Section 199.8(d), Special Considerations

We have established that Medicaid (services and items eligible for

payment under a State plan for medical assistance under Title XIX of

the Social Security Act) is not to be considered a public facility

resource in PFPWD adjudication. Medicaid is not considered to be

``other insurance'' for CHAMPUS coordination of benefits.

[[Page 35090]]

II. Occupational Therapists

On March 8, 1995, a proposed rule was published in the Federal

Register (60 FR 12717) regarding several issues including the addition

of occupational therapists in independent practice to the list of

authorized individual professional providers recognized by CHAMPUS.

This will allow qualified self-employed occupational therapists to be

authorized for direct CHAMPUS payment for allowable services.

We received four comments regarding this proposed change.

One comment from a national association voiced strong support for

the proposal and recommended that this change be implemented

retroactively. Unless there is a statutorily-established effective date

or some compelling reason for making a change retroactive, we do not

normally implement benefit changes retroactively. We do not believe any

such compelling reason exists for this change.

One comment from another national association suggested that

CHAMPUS modify its reimbursement policy to include coverage for the

services of physical therapy assistants who are employed by

independently authorized physical therapists. We will look into this

possibility, but such a change would require publication of a proposed

rule. Therefore, we are not including it in this final rule.

Two comments were received from occupational therapy providers who

strongly supported this change.

III. Procedures Involving the Electronic Transfer of Data

On September 24, 1991, a proposed rule was published in the Federal

Register (56 FR 48134) regarding criteria for allowing clinical

procedures and consultations involving transtelephonic monitoring and

electronic data transfer.

No written comments were received during the public comment period.

The CHAMPUS Basic Program excludes payment for ``services or advice

rendered by telephone or other telephonic device, including remote

monitoring, except for transtelephonic monitoring of cardiac

pacemakers''. This exclusion promotes the quality of care standard that

a substantive service of a diagnostic or treatment nature requires a

face-to-face contact between provider and patient. Transtelephonic

monitoring exception for cardiac pacemakers, added in 1984 [49 FR

35934], recognized that remote monitoring can be an efficient

alternative to certain outpatient visits to a physician's office or

hospital. Coverage of a procedure subsequent to the promulgation of

this final rule requires that both clinical and fiscal advantages be

demonstrated compared to the procedure without the electronic data

transfer element.

IV. Supplemental Insurance

On June 12, 1991, a proposed rule was published in the Federal

Register (56 FR 26946) regarding CHAMPUS-supplemental insurance plans.

In compliance with applicable statutory provisions (10 U.S.C. 1079

(j)(1) and 10 U.S.C. 1086 (d)) on double coverage CHAMPUS pays benefits

only after all other health plans have made payment, with the exception

of Medicaid and certain insurance policies that are specifically

designed to supplement CHAMPUS benefits. This means that if a CHAMPUS

beneficiary has another health plan, the other plan must pay whatever

it covers before CHAMPUS will make any type of payment. The CHAMPUS

beneficiary may have coverage through an employer, an association, or a

private insurer. This also includes any coverage for which students may

qualify through school health plans. In most circumstances, after the

CHAMPUS beneficiary's other plan has paid its maximum benefits, then

CHAMPUS will pay for covered services up to the amount it would have

paid, had there been no other health benefits plan involved.

This provision will assist CHAMPUS beneficiaries, providers, and

other third-party payers by clarifying what is recognized as a

supplemental insurance plan.

The regulation previously provided that coverage specifically

designed to supplement CHAMPUS benefits was not considered a double

coverage plan. This provision lacked the specificity needed in light of

attempts by some insurance plans to achieve second pay status by merely

defining themselves as supplementary plans even though their coverage

may not be limited to CHAMPUS beneficiaries.

To qualify as supplemental insurance, such insurance must meet the

definition and criteria under supplemental insurance plan in

Sec. 199.2(b).

One comment suggested removal of criterion iii from the definition

of Supplemental Insurance Plan assuming that it would limit the extent

of supplemental insurance which CHAMPUS beneficiaries may purchase.

Criterion iii was retained since it is not a limitation on the amount

of insurance which CHAMPUS beneficiaries may purchase. It merely

defines the purpose of supplemental insurance; which is to pay for

services not covered by CHAMPUS.

Some comments suggested that criterion v defeated the purpose of

supplemental insurance because it was interpreted to mean that the

supplemental insurance could not pay the deductible and cost-share on

behalf of the subscribers. That was not the intent of criterion v, but

in the interest of clarifying its intent, the wording was revised to

state that the supplemental insurance coverage cannot result in lower

deductibles and cost-shares than those imposed by law. The supplemental

insurance may pay the legally imposed deductibles and cost-shares on

behalf of the subscribers, but cannot impose arbitrarily lower amounts

nor can it waive the deductibles or cost-shares.

Other comments suggested adding a statement to criterion iii, to

the effect that supplemental insurance may also provide coverage for

costs in excess of the CHAMPUS allowable charges. That suggestion was

accepted and the wording was added under criterion iii.

A Health Maintenance Organization (HMO) suggested adding wording

that would permit the HMO to offer supplementary insurance through one

of its affiliates since the HMO is not an indemnity insurance plan. We

have added wording that will accept supplemental insurance plans

offered by HMOs.

V. Federal Claims Collection Act

On September 24, 1991, a proposed rule was published in the Federal

Register (56 FR 48135) regarding CHAMPUS use of the Federal Claims

Collection Act and the Federal Claims Collection Standards and former

spouse eligibility. The former spouse portion of the proposed rule is

not being published as a final rule at this time and will be included

in a future complete update of the eligibility section of the CHAMPUS

regulation (Sec. 199.3). No written comments were received during the

public comment period.

The amendment of both the Federal Claims Collection Act, 31 U.S.C.

3711(a)(2) and the Federal Claims Collection Standards, 4 CFR 103.1 and

104.1, allows Federal Agencies to compromise, suspend, or terminate

collection actions on claims when the amount, exclusive of interest

costs, does not exceed $100,000. This rule adopts, by reference, the

language of the Federal Claims Collection Act and Federal Claims

Collection Standards so that future amendments to the Act and the

Regulation will not necessitate corresponding amendments to DoD 6010.8-

R.

[[Page 35091]]

This rule will reduce the number of claims which must be referred

to the Department of Justice, facilitate more timely resolution of

CHAMPUS claims, diminish the size of the backlog of claims which, under

the old system, only the Department of Justice was authorized to

review, and enhance the timeliness of reviews.

VI. Regulatory Procedures

Executive Order 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. This is not an economically significant regulatory

action under the provisions of Executive Order 12866 for the following

reasons:

The PFPWD annual government cost has not exceeded $9 million.

We expect the inclusion of qualified self-employed occupational

therapists as CHAMPUS-authorized individual professional providers will

result in no additional costs. Occupational therapist services are

currently available when billed through other sources.

The telephone services exclusion modification is not expected to

increase the volume (or cost) of covered procedures relative to the

volume anticipated to have been acceptably performed in a different

manner in the absence of this change.

The addition of a definition for qualifying CHAMPUS-supplement

insurance plans only provides CHAMPUS beneficiaries with criteria for

identification of plans which CHAMPUS will treat as second-pay

insurance plans.

The CHAMPUS adoption of Federal Claims Collection Act and the

Federal Claims Collection Standards is only a linkage to existing

Federal law and regulation.

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. We

certify that this final rule will not have a significant economic

impact on a substantial number of small entities under the criteria of

the Regulatory Flexibility Act for the following reasons:

The PFPWD simplification of the administrative structure does not

alter the CHAMPUS pricing methods for PFPWD services or items nor the

scope of providers of PFPWD covered services or items.

The inclusion of qualified self-employed occupational therapists as

authorized individual professional providers will not significantly

affect the provision of services by these individuals.

The telephonic services exclusion modification does not add or

remove requirements for providers of services to CHAMPUS beneficiaries

or substantially alter the scope of services which providers have found

to be covered by the CHAMPUS.

The CHAMPUS-supplement insurance definition only provides CHAMPUS

beneficiaries with criteria for identification of plans which CHAMPUS

will treat as second-pay insurance plans.

The CHAMPUS adoption of Federal Claims Collection Act and the

Federal Claims Collection Standards is only a linkage to existing

Federal law and regulation. OMB has reviewed this rule as a significant

rulemaking pursuant to EO12866.

List of Subjects in 32 CFR Part 199

Administrative practice and procedure, Claims, Fraud, Health care,

Health insurance, Individuals with disabilities, Military personnel.

Accordingly, 32 CFR part 199 is 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 removing the definitions for

``Management plan'', ``Mental retardation'', ``Physical handicap'',

``Program for the handicapped (PFTH)'', and ``Special tutoring'', and

by revising the last sentence of the note following the definition of

``Domiciliary care'', and by adding definitions for ``Durable

equipment'', ``Habilitation'', ``Handicap'', ``Major life activity'',

``Not-for-profit entity'', ``Occupational therapist'', ``Program for

Persons with Disabilities (PFPWD)'', ``Public facility'', ``Public

facility adequacy'', ``Public facility availability'',

``Rehabilitation'', ``Serious physical disability'', ``State,'' and

``Supplemental insurance plan'' in alphabetical order to read as

follows:

Sec. 199.2 Definitions.

* * * * *

(b) * * *

Domiciliary care. * * *

Note: * * * Domiciliary care is not covered under either the

CHAMPUS Basic Program or the Program for Persons with Disabilities

(PFPWD).

* * * * *

Durable equipment. A device or apparatus which does not qualify as

Durable Medical Equipment (as defined in this section), and which is

essential to the efficient arrest or reduction of functional loss

resulting from a qualifying condition as provided by Sec. 199.5.

* * * * *

Habilitation. The provision of functional capacity, absent from

birth due to congenital anomaly or developmental disorder, which

facilitates performance of an activity in the manner, or within the

range considered normal, for a human being.

* * * * *

Handicap. For the purposes of this part, the term ``handicap'' is

synonymous with the term ``disability.''

* * * * *

Major life activity. Breathing, cognition, hearing, seeing, and age

appropriate ability essential to bathing, dressing, eating, grooming,

speaking, stair use, toilet use, transferring, and walking.

* * * * *

Not-for-profit entity. An organization or institution owned and

operated by one or more nonprofit corporations or associations formed

pursuant to applicable state laws, no part of the net earnings of which

inures, or may lawfully inure, to the benefit of any private

shareholder or individual.

Occupational therapist. A person who is trained specially in the

skills and techniques of occupational therapy (that is, the use of

purposeful activity with individuals who are limited by physical injury

of illness, psychosocial dysfunction, developmental or learning

disabilities, poverty and cultural differences, or the aging process in

order to maximize independence, prevent disability, and maintain

health) and who is licensed to administer occupational therapy

treatments prescribed by a physician.

* * * * *

Program for Persons with Disabilities PFPWD). The CHAMPUS benefits

described in Sec. 199.5.

* * * * *

Public facility. A public authority or entity legally constituted

within a State (as defined in this section) to administer, control or

perform a service function for public health, education or human

services programs in a city, county, or township, special district, or

other political subdivision, or such combination of political

subdivisions or

[[Page 35092]]

special districts or counties as are recognized as an administrative

agency for a State's public health, education or human services

programs, or any other public institution or agency having

administrative control and direction of a publicly funded health,

education or human services program.

Public facility adequacy. An available public facility shall be

considered adequate when the Director, OCHAMPUS, or designee,

determines that the quality, quantity, and frequency of an available

service or item otherwise allowable as a CHAMPUS benefit is sufficient

to meet the beneficiary's specific disability related need in a timely

manner.

Public facility availability. A public facility shall be considered

available when the public facility usually and customarily provides the

requested service or item to individuals with the same or similar

disability related need as the otherwise equally qualified CHAMPUS

beneficiary.

* * * * *

Rehabilitation. The reduction of an acquired loss of ability to

perform an activity in the manner, or within the range considered

normal, for a human being.

* * * * *

Serious physical disability. Any physiological disorder or

condition or anatomical loss affecting one or more body systems which

has lasted, or with reasonable certainty is expected to last, for a

minimum period of 12 contiguous months, and which precludes the person

with the disorder, condition or anatomical loss from unaided

performance of at least one Major Life Activity as defined in this

section.

* * * * *

State. For purposes of this part, any of the several States, the

District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth

of the Northern Mariana Islands, and each territory and possession of

the United States.

* * * * *

Supplemental insurance plan. A health insurance policy or other

health benefit plan offered by a private entity to a CHAMPUS

beneficiary, that primarily is designed, advertised, marketed, or

otherwise held out as providing payment for expenses incurred for

services and items that are not reimbursed under CHAMPUS due to program

limitations, or beneficiary liabilities imposed by law. CHAMPUS

recognizes two types of supplemental plans, general indemnity plans,

and those offered through a direct service health maintenance

organization (HMO).

(1) An indemnity supplemental insurance plan must meet all of the

following criteria:

(i) It provides insurance coverage, regulated by state insurance

agencies, which is available only to beneficiaries of CHAMPUS.

(ii) It is premium based and all premiums relate only to the

CHAMPUS supplemental coverage.

(iii) Its benefits for all covered CHAMPUS beneficiaries are

predominantly limited to non-covered services, to the deductible and

cost-shared portions of the pre-determined allowable charges, and/or to

amounts exceeding the allowable charges for covered services.

(iv) It provides insurance reimbursement by making payment directly

to the CHAMPUS beneficiary or to the participating provider.

(v) It does not operate in a manner which results in lower

deductibles or cost-shares than those imposed by law, or that waives

the legally imposed deductibles or cost-shares.

(2) A supplemental insurance plan offered by a Health Maintenance

Organization (HMO) must meet all of the following criteria:

(i) The HMO must be authorized and must operate under relevant

provisions of state law.

(ii) The HMO supplemental plan must be premium based and all

premiums must relate only to CHAMPUS supplemental coverage.

(iii) The HMO's benefits, above those which are directly reimbursed

by CHAMPUS, must be limited predominantly to services not covered by

CHAMPUS and CHAMPUS deductible and cost-share amounts.

(iv) The HMO must provide services directly to CHAMPUS

beneficiaries through its affiliated providers who, in turn, are

reimbursed by CHAMPUS.

(v) The HMO's premium structure must be designed so that no overall

reduction in the amount of the beneficiary deductibles or cost-shares

will result.

* * * * *

3. Section 199.3 is amended by revising paragraphs (a),

(c)(2)(i)(D), the note under paragraph (c)(2)(ii), the note under

paragraph (c)(2)(iii), and the last sentence and note of paragraph

(c)(2)(vi) to read as follows:

Sec. 199.3 Eligibility.

(a) General. This section sets forth those persons who, by the

provisions of 10 U.S.C., Chapter 55, and the NATO Status of Forces

Agreement, are eligible for CHAMPUS benefits. For additional statements

concerning the special requirements of the Program for Persons with

Disabilities (PFPWD), refer to Sec. 199.5. A determination that a

person is eligible does not entitle such a person automatically to

CHAMPUS payments. Other sections of this part set forth additional

requirements that must be met before any CHAMPUS benefits may be

extended. Additionally, the use of CHAMPUS may be denied if a Uniformed

Services medical facility capable of providing the needed care is

available.

* * * * *

(c) * * *

(2) * * *

(i) * * *

(D) For benefits under the PFPWD, January 1, 1967.

(ii) * * *

Note: Retirees and their dependents are not eligible for

benefits of the PFPWD.

(iii) * * *

Note: These classes do not have eligibility for benefits of the

PFPWD.

* * * * *

(vi) * * * For benefits under the PFPWD, dependents of an active

duty member only, January 1, 1969.

Note. Retirees or their dependents do not have eligibility for

benefits of the PFPWD.

* * * * *

4. Section 199.4 is amended by revising paragraphs (b)(8)(iii),

(b)(9)(iv), (c)(3)(x), (g)(52) and (g)(73) to read as follows:

Sec. 199.4 Basic program benefits.

* * * * *

(b) * * *

(8) * * *

(iii) RTC day limits do not apply to services provided under the

Program for Persons with Disabilities (Sec. 199.5) or services provided

as partial hospitalization care.

(9) * * *

(iv) Acute care day limits do not apply to services provided under

the Program for Persons with Disabilities (Sec. 199.5) or services

provided as partial hospitalization care.

* * * * *

(c) * * *

(3) * * *

(x) Physical and occupational therapy. Assessment and treatment

services of a CHAMPUS-authorized physical or occupational therapist may

be cost-shared when:

(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

[[Page 35093]]

(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) * * *

(52) Telephone services. Services or advice rendered by telephone

are excluded, except that a diagnostic or monitoring procedure which

incorporates electronic transmission of data or remote detection and

measurement of a condition, activity, or function (biotelemetry) is not

excluded when:

(i) The procedure without electronic transmission of data or

biotelemetry is otherwise an explicit or derived benefit of this

section; and

(ii) The addition of electronic transmission of data or

biotelemetry to the procedure is found by the Director, CHAMPUS, or

designee, to be medically necessary and appropriate medical care which

usually improves the efficiency of the management of a clinical

condition in defined circumstances; and

(iii) That each data transmission or biotelemetry device

incorporated into a procedure that is otherwise an explicit or derived

benefit of this section, has been classified by the U.S. Food and Drug

Administration, either separately or as a part of a system, for use

consistent with the defined circumstances in paragraph (g)(52)(ii) of

this section.

* * * * *

(73) Economic interest in connection with mental health admissions.

Inpatient mental health services (including both acute care and RTC

services) are excluded for care received when a patient is referred to

a provider of such services by a physician (or other health care

professional with authority to admit) who has an economic interest in

the facility to which the patient is referred, unless a waiver is

granted. Requests for waiver shall be considered under the same

procedure and based on the same criteria as used for obtaining

preadmission authorization (or continued stay authorization for

emergency admissions), with the only additional requirement being that

the economic interest be disclosed as part of the request. The same

reconsideration and appeals procedures that apply to day limit waivers

shall also apply to decisions regarding requested waivers of the

economic interest exclusion. However, a provider may appeal a

reconsidered determination that an economic relationship constitutes an

economic interest within the scope of the exclusion to the same extent

that a provider may appeal determinations under Sec. 199.15(i)(3). This

exclusion does not apply to services under the Program for Persons with

Disabilities (Sec. 199.5) or provided as partial hospital care. If a

situation arises where a decision is made to exclude CHAMPUS payment

solely on the basis of the provider's economic interest, the normal

CHAMPUS appeals process will be available.

* * * * *

5. Section 199.5 is revised to read as follows:

Sec. 199.5 Program for Persons with Disabilities (PFPWD).

(a) General. This PFPWD provides financial assistance for certain

CHAMPUS beneficiaries who are moderately or severely mentally retarded,

or seriously physically disabled. The PFPWD is not intended to be a

stand alone benefit.

(1) Purpose. The primary purpose of the PFPWD is to assist in

reducing the disabling effects of a PFPWD qualifying condition.

(2) Benefit source election. A PFPWD beneficiary (or sponsor or

guardian acting on behalf of the beneficiary) may elect to use the

provisions of either this section, or the provisions of Sec. 199.4, for

a specific service or item which is allowable by both sections.

(i) Election limitation. No amount for authorized, or otherwise

allowed, PFPWD services or items remaining after the maximum PFPWD

benefit dollar amount has been reached in a given month may be cost-

shared through the provisions of Sec. 199.4.

(ii) Election change. A beneficiary (or sponsor or guardian acting

on behalf of the beneficiary) shall have the right to request the

Director, OCHAMPUS, or designee, to allow PFPWD cost-shared services or

items otherwise allowable as a benefit of Sec. 199.4, and which were

rendered after the catastrophic loss protection provision applicable to

Sec. 199.4 was in effect for a given PFPWD beneficiary's sponsor, to be

readjudicated according to the provisions of Sec. 199.4. The Director,

OCHAMPUS, or designee, shall allow readjudication when the sponsor's

family's CHAMPUS benefit year cost-share liability would be reduced by

such readjudication. Such requests are subject to the claims filing

deadline provisions of Sec. 199.7. The determination regarding

readjudication is conclusive and may not be appealed.

(3) Application required. A beneficiary shall establish PFPWD

eligibility as a prerequisite to authorization or payment of any PFPWD

benefits. Subsequent review of the PFPWD qualifying condition to

confirm continued eligibility shall be made in accordance with the

prognosis for a change in severity such that the condition would not

likely continue to be a PFPWD qualifying condition.

(4) Benefit authorization. To establish whether a requested service

or item is a PFPWD benefit, the beneficiary (or sponsor or guardian

acting on the behalf of the beneficiary) shall provide such information

about how the requested benefit will contribute to confirming,

arresting, or reducing the disabling effects of the qualifying

condition as the Director, OCHAMPUS, or designee, determines necessary

for benefit adjudication.

(i) Written authorization. The Director, OCHAMPUS, or designee, may

require written authorization for any PFPWD category or type of service

or item as a prerequisite for adjudication of related claims.

(ii) Format. An authorization issued by the Director, OCHAMPUS, or

designee, shall specify, such description, dates, amounts,

requirements, limitations or information as necessary for exact

identification of approved benefits and efficient adjudication of

resulting claims.

(iii) Valid period. An authorization for a particular PFPWD service

or item shall not exceed six consecutive months.

(iv) Authorization waiver. The Director, OCHAMPUS, or designee,

shall waive the requirement for a written CHAMPUS authorization for

rendered PFPWD services or items that, except for the absence of the

written CHAMPUS authorization, would be allowable as a PFPWD benefit.

(v) Public facility use. A PFPWD beneficiary residing within a

State, as defined in Sec. 199.2, must demonstrate that a public

facility, as defined in Sec. 199.2, funds, except funds administered

under a State plan for medical assistance under Title XIX of the Social

Security Act (Medicaid) is not available or adequate, as defined in

Sec. 199.2, to meet the qualifying condition related need.

(A) Equipment repair or maintenance for beneficiary owned equipment

shall be considered not available when the equipment is a type

allowable as a benefit.

(B) A beneficiary shall not be required to change the provider of

public facility funded therapy when public facility funding is depleted

during that beneficiary's course of therapy and when such a change is

determined by the Director, OCHAMPUS, or designee, to be clinically

contraindicated. When contraindicated, other public facilities

[[Page 35094]]

for the therapy shall not be considered adequate for the beneficiary.

(5) Public facility use certification. Written certification, in

accord with information requirements, formats, and procedures

established by the Director, OCHAMPUS, or designee that requested PFPWD

services or items cannot be obtained from public facilities because the

services or items are not available, or if available, are not adequate,

is a prerequisite for PFPWD benefit payment.

(i) A Military Treatment Facility (MTF) Commander, or designee, may

make such certification for a beneficiary residing within a defined

geographic area.

(ii) An administrator of a public facility, or designee, may make

such certification for a beneficiary residing within the service area

of that public facility.

(iii) The domicile of the beneficiary shall be the basis for the

determination of public facility availability when the sponsor and

beneficiary are separately domiciled due to the sponsor's move to a new

permanent duty station or due to legal custody requirements.

(iv) The Director, OCHAMPUS, or designee, may determine, on a case-

by-case basis, that apparent public facility availability for a

requested type of service or item can not be substantiated for a

specific beneficiary's request for PFPWD benefits and is not available.

(A) A case-specific determination shall be shall be based upon a

written statement by the beneficiary (or sponsor or guardian acting on

behalf of the beneficiary) which details the circumstances wherein a

specific individual representing a specific public facility refused to

provide a public facility use certification, and such other information

as the Director, OCHAMPUS, or designee determines to be material to the

determination.

(B) A case-specific determination of public facility availability

by the Director, OCHAMPUS, or designee, is conclusive, and is not

appealable.

(6) Equipment. (i) An item of equipment shall not be authorized

when such authorization would allow concurrent PFPWD cost-sharing of

more than one item of the same type of equipment for the same

beneficiary.

(ii) Reasonable repairs and maintenance shall be allowable for any

beneficiary owned equipment otherwise allowable by this section.

(7) Implementing instructions. The Director, OCHAMPUS, or designee

shall issue policies, instructions, procedures, guidelines, standards,

and criteria necessary to assure the quality and efficiency of services

and items furnished as a PFPWD benefit and to otherwise accomplish the

purpose of the PFPWD.

(i) Other requirements. All provisions of this part, except the

provisions of Sec. 199.4, apply to the PFPWD unless otherwise provided

by this section.

(ii) Continuity of eligibility. A CHAMPUS beneficiary who has an

outstanding Program for the Handicapped (PFTH) benefit authorization

during the 30 calendar day period immediately prior to the effective

date of the Program for Persons with Disabilities (PFPWD) shall be

deemed to have a PFPWD qualifying condition for the duration of the

period during which the beneficiary is otherwise eligible for PFPWD and

the beneficiary continues to meet the applicable PFTH qualifying

condition criteria.

(b) Eligibility--(1) Spouse or child. PFPWD benefits are limited to

a CHAMPUS eligible child or spouse, but not a former spouse, except as

provided in paragraph (b)(1)(ii) of this section, of:

(i) Active duty sponsor. An active duty member of one of the

Uniformed Services as determined in accordance with the provisions of

Sec. 199.3; or

(ii) Former member sponsor. After November 13, 1986, a former

member of a Uniformed Service, when the qualifying condition is the

result of, or has been exacerbated by, an injury or illness resulting

from physical or emotional abuse; or

(iii) Deceased sponsor. A CHAMPUS beneficiary who is receiving

PFPWD benefits at the time of the death of the sponsoring active duty

Uniformed Service member remains eligible for PFPWD benefits through

midnight of the beneficiary's twenty-first birthday when the sponsor

died after January 1, 1997, and the sponsor was, at the time of death,

eligible for receipt of hostile-fire pay or died as a result of disease

or injury incurred while eligible for such pay.

(2) Loss of PFPWD eligibility. Eligibility for PFPWD benefits

ceases as of 12.:01 a.m. of the day following the day that:

(i) The sponsor ceases to be an active duty member for any reason

other than death; or

(ii) Eligibility based upon the abused dependent provisions of

paragraph (b)(1) of this section expires; or

(iii) Eligibility based upon the deceased sponsor provisions of

paragraph (b)(1) of this section expires; or

(iv) The Director, OCHAMPUS, or designee, determines that the

beneficiary no longer has a qualifying condition.

(3) Qualifying condition--(i) Mental retardation. A diagnosis of

moderate or severe mental retardation made in accordance with the

criteria of the current edition of the ``Diagnostic and Statistical

Manual of Mental Disorders'' published by the American Psychiatric

Association is a PFPWD qualifying condition.

(ii)Serious physical disability. A serious physical disability as

defined in Sec. 199.2, is a PFPWD qualifying condition.

(iii) Infant/toddler. For CHAMPUS beneficiaries under the age of

three years with a diagnosed neuromuscular developmental condition or

Down syndrome, or other condition that can to a reasonable medical

probability be expected to precede a diagnosis of moderate or severe

mental retardation or be characterized as a serious physical disability

before the age of seven, the Director, OCHAMPUS, or designee, shall

establish criteria for PFPWD eligibility in lieu of the requirements of

paragraph (b)(3)(i) or paragraph (b)(3)(ii) of this section.

(iv) Multiple disabilities. The cumulative disabling effect shall

be used in the adjudication of a qualifying condition determination

when an applicant has two or more disabilities involving separate body

systems.

(c) Benefit. Items or services which the Director, OCHAMPUS, or

designee, has determined to be intrinsic to the following benefit

categories and has determined to be capable of confirming, arresting,

or reducing the severity of the disabling effects of a qualifying

condition, generally or in a specific case, and which are not otherwise

excluded by this PFPWD, may be allowed.

(1) Diagnostic procedures to establish a qualifying condition

diagnosis or to measure the extent of functional loss.

(2) Treatment through the use of such medical, habilitative, or

rehabilitative methods, techniques, therapies and equipment which

otherwise meet the requirements of this PFPWD. Treatment includes, but

is not limited to, prosthetic devices, orthopedic braces, and

orthopedic appliances. Otherwise allowable treatment may be rendered

in-home, or as inpatient or outpatient care as appropriate.

(3) Training when required to allow the use of an assistive

technology device or to acquire skills which are expected to assist the

beneficiary to reduce the disabling effects of a qualifying condition

and for parents (or guardian) and siblings of a PFPWD beneficiary when

required as an integral part of the management of the qualifying

condition.

[[Page 35095]]

(4) Special education instruction, other than training specifically

designed to accommodate the disabling effects of a qualifying

condition.

(5) Institutional care within a State, as defined in Sec. 199.2,

when the severity of the qualifying condition requires protective

custody or training in a residential environment.

(6) Transportation when required to convey the PFPWD beneficiary to

or from a facility or institution to receive otherwise allowable

services or items. Transportation for a medical attendant may be

approved when medically necessary for the safe transport of the PFPWD

eligible beneficiary.

(7) Adjunct services--(i) Assistive services. Services of a

qualified interpreter or translator for PFPWD beneficiaries who are

deaf, readers for PFPWD beneficiaries who are blind, and personal

assistants for PFPWD beneficiaries with other types of qualifying

conditions, when such services are not directly related to the

rendering or delivery of service or item otherwise an allowable PFPWD

benefit.

(ii) Equipment adaptation. The allowable equipment purchase shall

encompass such services and structural modification to the equipment as

necessary to make the equipment serviceable for a particular

disability.

(iii) Equipment maintenance. Reasonable repairs and maintenance for

that portion of the useful life of beneficiary owned equipment that is

concurrent with the beneficiary's PFPWD eligibility.

(d) Exclusions--(1) Inpatient acute care for medical or surgical

treatment of an acute illness, or of an acute exacerbation of the

qualifying condition, is excluded.

(2) Structural alterations to living space and permanent fixtures

attached thereto, including alterations necessary to accommodate

installation of equipment, or to facilitate entrance or exit, are

excluded.

(3) Homemaker, sitter, or companion services, except as

institutional care of adjunct services, which predominantly provide

assistance with daily living activities or accomplish household chores

or provide companionship or provide supervision or observation, or any

combination of these functions, are excluded.

(4) Dental care or orthodontic treatment is excluded.

(5) Nondomestic travel which originates or terminates outside of a

State, as defined in Sec. 199.2, is excluded.

(6) Deluxe travel accommodation price differential between the

price for a type of accommodation which provides services or features

which exceed the requirements of the beneficiary's condition for safe

transport and the price for a type of accommodation without those

deluxe features, is excluded.

(7) Equipment. Exclusions for durable medical equipment at

Sec. 199.4(d)(3)(ii)(D) apply to all PFPWD allowable equipment.

(8) Medical devices. Prosthetic devices and medical equipment which

do not meet the benefit requirements of Sec. 199.4 are excluded.

(9) No obligation to pay. Services or items for which the

beneficiary or sponsor has no legal obligation to pay, or for which no

charge would be made if the beneficiary was not eligible for the

CHAMPUS, are excluded.

(10) Public facility or Federal government. Services or items paid

for, or eligible for payment, directly or indirectly by a Public

Facility, as defined in Sec. 199.2, or by the Federal government, other

than the Department of Defense, are excluded, except when such services

or items are eligible for payment under a State plan for medical

assistance under Title XIX of the Social Security Act (Medicaid).

(11) Study, grant, or research programs. Services and items

provided as a part of a scientific clinical study, grant, or research

program are excluded.

(12) Unproven drugs, devices, and medical treatments or procedures.

Services and items whose safety and efficacy have not been established

as described in Sec. 199.4 are unproven and cannot be cost-shared by

CHAMPUS.

(13) Immediate family or household. Services or items provided or

prescribed by a member of the beneficiary's immediate family, or a

person living in the beneficiary's or sponsor's household, are

excluded.

(14) Court or agency ordered care. Services or items ordered by a

court or other government agency that are not otherwise a legitimate

PFPWD benefit are excluded.

(15) Excursions. Additional or special charges for excursions,

other than otherwise allowable transportation, are excluded even though

part of a program offered by an approved provider.

(16) Drugs and medicines. Drugs and medicines which do not meet the

benefit requirements of Sec. 199.4 are excluded.

(17) Therapeutic absences. Therapeutic absences from an inpatient

facility are excluded.

(e) Cost-share liability--(1) No deductible. PFPWD benefits are

not subject to a deductible amount.

(2) Sponsor/beneficiary cost-share liability. The total sponsor

cost-share for allowed PFPWD benefits in a given month may not exceed

the amount for the sponsor's pay grade as specified below, regardless

of the number of dependents of that same sponsor receiving PFPWD

benefits in a given month:

------------------------------------------------------------------------

Monthly

Member's pay grade share

------------------------------------------------------------------------

E-1 through E-5................................................ $25

E-6............................................................ 30

E-7 and O-1.................................................... 35

E-8 and O-2.................................................... 40

E-9, W-1, W-2, and O-3......................................... 45

W-3, W-4, and O-4.............................................. 50

O-5............................................................ 65

O-6............................................................ 75

O-7............................................................ 100

O-8............................................................ 150

O-9............................................................ 200

O-10........................................................... 250

------------------------------------------------------------------------

(3) Government cost-share liability: member who sponsors one PFPWD

beneficiary. The government share of the cost of any PFPWD benefit

provided in a given month to a beneficiary who is the sponsor's only

PFPWD eligible dependent may not exceed $1,000 in a given month, after

application of allowable payment methodology.

(4) Government cost-share liability: member who sponsors two or

more PFPWD beneficiaries. The government share of the cost of any PFPWD

benefits provided in a given month, after October 1, 1966, to a

beneficiary who is one of two or more PFPWD eligible dependents of the

same sponsor shall be determined as follows:

(i) Maximum benefit limit determination. The $1,000 maximum monthly

government PFPWD benefit amount shall apply to the beneficiary

incurring the least amount of allowable PFPWD expense in a given month,

after application of allowable payment methodology. When two or more

PFPWD eligible beneficiaries have exactly the same amount of allowable

PFPWD expense in a given month, and that amount is determined to be the

least amount for the sponsor's family group, the $1,000 maximum monthly

benefit in that month shall apply to only one of the PFPWD eligible

beneficiaries in the family group.

(ii) Maximum benefit limit exception. For all other PFPWD

dependents of the same sponsor with allowable PFPWD expense in a given

month, the $1,000 maximum monthly benefit does not apply, and the

government shall cost-share the entire amount for otherwise allowable

services or items received in that month.

(f) Benefit payment--(1) Equipment. The allowable amount for

equipment shall be calculated in the same manner

[[Page 35096]]

as durable medical equipment allowable through Sec. 199.4.

(2) Transportation. The allowable amount for transportation is

limited to the actual cost of the standard published fare plus any

standard surcharge made to accommodate any person with a similar

disability or to the actual cost of specialized medical transportation

when nonspecialized transport cannot accommodate the beneficiary's

disability related needs, or when specialized transport is more

economical than nonspecialized transport. When transport is by private

vehicle, the allowable amount is limited to the Federal government

employee mileage reimbursement rate in effect on the trip date.

(3) Proration of equipment expense. The PFPWD beneficiary (or

sponsor or guardian acting on the beneficiary's behalf) may, only at

the time of the request for authorization of equipment, specify that

the allowable cost of the equipment be prorated. Equipment expense

proration permits the allowable cost of an item of PFPWD authorized

equipment to be apportioned so that no portion of the allowable cost

exceeds the monthly benefit limit and allows each apportioned amount to

be separately authorized as a benefit during subsequent contiguous

months.

(i) Maximum period. The maximum number of contiguous months during

which a prorated amount may be authorized for cost-share shall be the

lesser of:

(A) The number of months calculated by dividing the initial

allowable cost for the item of equipment by $1,000 and doubling the

resulting quotient; or

(B) The number of months of useful equipment life for the

requesting beneficiary, as determined by the Director, OCHAMPUS, or

designee.

(ii) Cost-share. A cost-share is applicable in any month in which a

prorated amount is authorized, subject to the cost-share provisions for

a sponsor with two or more PFPWD eligible beneficiaries.

(iii) Termination. Prorated payments shall be terminated as of the

first day of the month following the death of a beneficiary or as of

the effective date of a beneficiary's loss of PFPWD eligibility for any

other reason.

(4) For-profit institutional care provider. Institutional care

provided by a for-profit entity may be allowed only when the care for a

specific PFPWD beneficiary:

(i) Is contracted for by a public facility, as defined in

Sec. 199.2, as a part of a publicly funded long-term inpatient care

program; and

(ii) Is provided based upon the PFPWD beneficiary's being eligible

for the publicly funded program which has contracted for the care; and

(iii) Is authorized by the public facility as a part of a publicly

funded program; and

(iv) Would cause a cost-share liability in the absence of CHAMPUS

eligibility; and

(v) Produces a PFPWD beneficiary cost-share liability that does not

exceed the maximum charge by the provider to the public facility for

the contracted level of care.

(g) Implementing instructions. The Director, OCHAMPUS, or a

designee, shall issue CHAMPUS policies, instructions, procedures,

guidelines, standards, and criteria as may be necessary to implement

the intent of this section.

6. Section 199.6 is amended by removing and reserving paragraphs

(a)(4) and (b)(4)(x)(B)(2), revising paragraph (c)(3)(iii)(I)(3),

redesignating paragraphs (e) and (f) as paragraphs (f) and (g) and by

adding a new paragraph (e) to read as follows:

Sec. 199.6 Authorized providers.

(a) * * *

(4) [Reserved]

* * * * *

(b) * * *

(4) * * *

(x) * * *

(B) * * *

(2) [Reserved]

* * * * *

(c) * * *

(3) * * *

(iii) * * *

(I) * * *

(3) Licensed registered physical therapists and occupational

therapists.

* * * * *

(e) Program for Persons with Disabilities Providers.--(1) General.

(i) Services and items cost-shared through Sec. 199.5 must be rendered

by a CHAMPUS-authorized provider.

(ii) A Program for the Handicapped (PFTH) provider with CHAMPUS-

authorized status on the effective date for the Program for Persons

with Disabilities (PFPWD) shall be deemed to be a CHAMPUS-authorized

PFPWD provider until all outstanding PFTH benefit authorizations for

services or items being rendered by the provider expire.

(2) PFPWD provider categories.--(i) PFPWD inpatient care provider.

A provider of residential institutional care which is otherwise a PFPWD

benefit shall be:

(A) A not-for-profit entity or a public facility, as defined in

Sec. 199.2; and

(B) Located within a State, as defined in Sec. 199.2; and

(C) Be certified as eligible for Medicaid payment in accordance

with a State plan for medical assistance under Title XIX of the Social

Security Act (Medicaid) as a Medicaid Nursing Facility, or Intermediate

Care Facility for the Mentally Retarded, or be a CHAMPUS-authorized

Institutional Provider as defined in paragraph (b) of this section, or

be approved by a State educational agency as a training institution.

(ii) PFPWD outpatient care provider. A provider of PFPWD

outpatient, ambulatory, or in-home services shall be:

(A) A CHAMPUS-authorized provider of services as defined in this

section; or

(B) An individual, corporation, foundation, or public entity that

predominantly renders services of a type uniquely allowable as a PFPWD

benefit and not otherwise allowable as a benefit of Sec. 199.4, that

meets all applicable licensing or other regulatory requirements that

are extant in the state, county, municipality, or other political

jurisdiction in which the PFPWD service is rendered.

(iii) PFPWD vendor. A provider of an allowable PFPWD item, supply,

equipment, orthotic, or device shall be deemed to be a CHAMPUS-

authorized vendor for the provision of the specific item, supply,

equipment, orthotic, or device when the vendor supplies such

information as the Director, OCHAMPUS, or designee, determines

necessary to adjudicate a specific claim.

(3) PFPWD provider exclusion or suspension. A provider of PFPWD

services or items may be excluded or suspended for a pattern of

discrimination on the basis of disability. Such exclusion or suspension

shall be accomplished according to the provisions of Sec. 199.9.

* * * * *

7. Section 199.7 is amended by revising paragraphs (a)(2),

(b)(2)(xii) and (f)(2), removing paragraph (f)(3), redesignating

paragraph (f)(4) as paragraph (f)(3), and adding a new paragraph (f)(4)

to read as follows:

Sec. 199.7 Claims submission, review, and payment.

(a) * * *

(2) Claim required. No benefit may be extended under the Basic

Program or Program for Persons with Disabilities (PFPWD) without the

submission of a complete and properly executed appropriate claim form.

* * * * *

(b) * * *

(2) * * *

[[Page 35097]]

(xii) Other authorized providers. For items from other authorized

providers (such as medical supplies), an explanation as to the medical

need must be attached to the appropriate claim form. For purchases of

durable equipment under the PFPWD, it is necessary also to attach a

copy of the preauthorization.

* * * * *

(f) * * *

(2) Treatment plan. Each preauthorization request shall be

accompanied by a proposed medical treatment plan (for inpatient stays

under the Basic Program) which shall include generally a diagnosis; a

detailed summary of complete history and physical; a detailed statement

of the problem; the proposed treatment modality, including anticipated

length of time the proposed modality will be required; any available

test results; consultant's reports; and the prognosis. When the

preauthorization request involves transfer from a hospital to another

inpatient facility, medical records related to the inpatient stay also

must be provided.

* * * * *

(4) Advance payment prohibited. No CHAMPUS payment shall be made

for otherwise authorized services or items not yet rendered or

delivered to the beneficiary.

* * * * *

8. Section 199.8 is amended by revising paragraphs (b)(3)(ii) and

(d)(4) to read as follows:

Sec. 199.8 Double coverage.

* * * * *

(b) * * *

(3) * * *

(ii) Coverage specifically designed to supplement CHAMPUS benefits

(a health insurance policy or other health benefit plan that meets the

definition and criteria under supplemental insurance plan as set forth

in Sec. 199.2(b));

* * * * *

(d) * * *

(4) Program for persons with disabilities (PFPWD). A PFPWD eligible

beneficiary (or sponsor or guardian acting on behalf of the

beneficiary) does not have the option of waiving the full use of public

facilities which are determined by the Director, OCHAMPUS, or designee,

to be available and adequate to meet a disability related need for

which a PFPWD benefit was requested. Benefits eligible for payment

under a State plan for medical assistance under Title XIX of the Social

Security Act (Medicaid) are never considered to be available in the

adjudication of PFPWD benefits.

* * * * *

9. Section 199.11 is amended by revising paragraph (g)(1) to read

as follows:

Sec. 199.11 Overpayments recovery.

* * * * *

(g) * * *

(1) Basic considerations. Federal claims against the debtor and in

favor of the United States arising out of the administration of the

CHAMPUS may be compromised or collection action taken thereon may be

suspended or terminated in compliance with the Federal Claims

Collection Act, 31 U.S.C. 3711(a)(2) as implemented by the Federal

Claims Collection Standards, 4 CFR parts 101 through 105.

* * * * *

10. Section 199.20 is amended by revising paragraph (p)(2)(i) to

read as follows:

Sec. 199.20 Continued Health Care Benefit Program (CHCBP).

* * * * *

(p) * * *

(2) * * *

(i) The Program for Persons with Disabilities under Sec. 199.5;

* * * * *

Appendix A to Part 199--[Amended]

11. Appendix A to Part 199 is amended by revising ``PFTH--Program

for the Handicapped'' to read ``PFPWD--Program for Persons with

Disabilities''.

Dated: June 24, 1997.

L.M. Bynum,

Alternate OSD Federal Register Liaison Officer, Department of Defense.

[FR Doc. 97-17001 Filed 6-27-97; 8:45 am]

BILLING CODE 5000-04-M