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

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN 0720-AA27

Civilian Health and Medical Program of the Uniformed Services

(CHAMPUS); Provider Certification Requirements--Corporate Services

Provider Class

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

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SUMMARY: This final rule presents requirements to permit payment of

professional or technical health care services rendered by certain

corporate providers; makes changes to clarify the general requirements

for individual professional providers; and adds standard provider

participation agreement provisions when such agreements are otherwise

required.

DATES: This rule is effective June 8, 1999.

ADDRESSES: TRICARE Management Activity, Medical Benefits and

Reimbursement Systems, 16401 East Centretech Parkway, Aurora, CO 80011-

9043.

FOR FURTHER INFORMATION CONTACT: David E. Bennett, TRICARE Management

Activity, Medical Benefits and Reimbursement Systems, telephone (303)

676-3492.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

CHAMPUS supplements the availability of health care in military

hospitals and clinics. Services and items allowable as CHAMPUS benefits

must be obtained from CHAMPUS authorized civilian providers to be

considered for payment. Requirements for CHAMPUS provider authorization

are published under 32 CFR 199.6.

CHAMPUS currently has requirements for three classes of providers.

The institutional provider class includes hospitals and other

categories of similar facilities. The individual professional providers

class includes physicians and other categories of licensed individuals

who render professional services independently, and certain allied

health and extra medical providers that must function under physician

orders and supervision. The third class of providers consists of

sellers of items and supplies of an ancillary or supplemental nature

such as durable medical equipment.

CHAMPUS payment depends upon a service being both allowable as a

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

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

physical therapist employed by a hospital may be paid (to the hospital)

while the same service provided by an employee of a freestanding

corporation or foundation is denied payment.

This administrative exclusion is difficult for beneficiaries to

apply when seeking health care services because it requires an

understanding of the underlying business structure of the provider. But

the underlying business structure of a provider organization is

[[Page 11766]]

important to CHAMPUS management decisions regarding quality assurance

and payment methods.

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

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

addition of the corporate class will recognize the current range of

providers within today's health care delivery structure, and give

beneficiaries access to another segment of the health care delivery

industry.

II. Provisions of the Rule

A. New Provider Category (Revisions to Sec. 199.6(f)

This paragraph creates a fourth class of CHAMPUS provider

consisting of freestanding corporations and foundations that render

principally professional ambulatory or in-home care and technical

diagnostic procedures. The intent of the rule is not to create

additional benefits that ordinarily would not be covered under CHAMPUS

is provided by a more traditional health care delivery system, but

rather to allow those services which would otherwise be allowed except

for an individual provider's affiliation with a freestanding corporate

facility.

While is recognized that some of the services and supplies provided

by freestanding corporate providers may substantially reduce costs in

comparison to extended care provided in a hospital, it is often

difficult to control the type and level of care actually provided

within these alternative treatment settings. It is also recognized that

some of the alternative delivery setting, such a Home Health Agencies

and Comprehensive Outpatient Rehabilitation Facilities, provide

services that are not a covered benefit under CHAMPUS. Often care

rendered in these setting is provided by an individual who is not

recognized by CHAMPUS as an authorized provider in his or her own right

(i.g., home health aides in the case of home health care), and as such,

is not covered under the provisions of this rule. Otherwise covered

professional services provided by CHAMPUS authorized individual

providers employed by or under contract with a freestanding corporate

entity will be paid under the CHAMPUS Maximum Allowable Charge (CMAC)

reimbursement system, subject to any restrictions and limitations as

may be prescribed under existing CHAMPUS policy. The corporate entity

will not be allowed additional facility charges that are not already

incorporated into the professional service fee structure (i.e.,

facility charges that are not already included in the overhead and

malpractice cost indices used in establishing locally-adjusted CMAC

rates.)

Payment will also be allowed for supplies used by a CHAMPUS

authorized individual provider employed by or contracted with a

corporate services provider covered under the provisions of this rule

in the direct treatment of a CHAMPUS eligible beneficiary. Payment for

both professional services and supplies will be paid directly to the

CHAMPUS authorized corporate service provider under its own tax

identification number.

Coporate services providers must be approved for Medicare payment,

or when Medicare approval status is not required, be accredited by a

qualified accreditation organization as defined in 32 CFR 199.2 order

to gain provider authorization status under CHAMPUS. Corporate services

providers must also enter into a participation agreement which will be

sent out as part of the initial certification process. The

participation agreement will ensure that CHAMPUS determined allowable

payments, combined with the cost-share/copayment, deductible, and other

health insurance amounts, will be accepted by the provider as payment

in full.

B. Direct Payment for Occupational Therapist (Revisions to

Sec. 199.4(3)(x)) and Sec. 199.6(c)(3)(iii)(l)(3)

The proposed rule, which was published on March 8, 1995 (60 FR

12717), allowed qualified self-employed occupational therapists to be

authorized for direct payment for allowable services. However, the

services has to be prescribed and monitored by a physician and reduce

the disabling effects of an illness, injury, or neuromuscular disorder.

The treatment also had to increase, stabilize, or slow the

deterioration of the beneficiary's ability to perform specified

purposeful activity within the range considered normal for human being.

The provisions for occupational therapists were pulled from the

proposed Corporate Services Provider Class rule and included as part of

the Program from Persons with Disabilities (PFPWD) final rule was

published in the Federal Register on June 30, 1997, (62 CFR 35086).

(Public comments received in response to the occupational therapist

provisions contained in the proposed rule were addressed and responded

to the PFPWS final rule.

C. Provisions for Provider Participation (Revision of Definition of

``Participating Provider'' in Sec. 199.2, Clarification of Types of

Provider Participation in Sec. 199.6(a)(8) and Additional Requirements

for Participation Under Sec. 199.6(a)(12) and Sec. 199.6(a)(13))

The final amendment expands and clarifies the various types of

provider participation available under CHAMPUS, emphasizing mandatory

participation by the new Corporate Services Provider class. Corporate

service providers must enter into a participation agreement that at

least complies with the minimum participation agreement requirements as

outlined under Sec. 199.6(a)(13). The amendment also establishes

minimum medical documentation requirements for authorized provider

organizations and individuals providing clinical services under

CHAMPUS.

D. Removal of Exclusions (Removal of Sec. 199.4(g)(70) and

Sec. 199.4(g)(71))

This amendment removes provision which exclude CHAMPS coverage of

civilian diagnostic and consultation services requested by a Military

Treatment Facility (MTF) physician in support of continued MTF care of

a CHAMPUS-eligible beneficiary. Because MTF's vary in size and clinical

capacity for the care of CHAMPUS-eligible beneficiaries, the lack of

access to specialized diagnostic and consultation resources through

CHAMPUS may result in the MTF purchasing the civilian services directly

without the advantage of CHAMPUS price requirements; the beneficiary

paying the total cost of such non-MTF services; or the beneficiary

choosing to obtain all care in the civilian community in order to take

advantage of CHAMPUS cost-share of all the necessary care. Removal of

these exclusions will allow flexibility in the implementation of an

MTF-based plan-of-care resulting in continuity of care at a lower cost

to both the beneficiary and the government.

E. Professional Corporation or Association (Revision of

Sec. 199.6(c)(1) and Sec. 199.6(c)(2))

The final rule more clearly establishes that a professional

corporation or association is not itself a provider but may file claims

and receive payment on behalf of an individual professional provider

member. The corporate entity is simply acting as a billing agent for

its professional members (i.e., it is billing for its members'

professional services under a single tax identification number) who are

practicing within the scope of their individual state licenses,

[[Page 11767]]

or have otherwise passed qualifying certification tests. The conditions

for authorization have been expanded and rearranged to more clearly

present the other general requirements for this provider category.

III. Public Comments

As a result of the publication of the proposed rule, the following

comments were received from interested providers, associations, and

agencies.

Comment 1. One commentor offered its corporate and clinical

personnel to serve on any advisory boards which may be established to

address credentialing concerns.

Response. Although we appreciate the commentor's offer to lend its

expertise (i.e., both corporate and clinical staff) to any future

advisory boards that might be convened on credentialing concerns,

reliance on Medicare approval for payment--or when Medicare approved

status is not required, accreditation by a qualified accreditation

organization as defined by amendment--has been found to be

administratively expeditious and cost effective for the program. As a

result, we do not expect the need for convening any future advisory

boards since the new provider categories will already be subject to

nationally recognized certification criteria.

Comment 2. Several commentors had concerns on how the qualified

accreditation organization defined in Sec. 199.2 would reinforce

CHAMPUS authorization requirements and promote efficient delivery of

CHAMPUS benefits. It was recommended that the final rule list the

initial agencies and criteria for recognition.

Response. Specific references to accreditation agencies would

negate the agency's authority to promptly recognize by administrative

policy, rather than the much longer Code of Federal Register (CFR)

amendment process, those newly recognized accreditation agencies or

organizations which might come to meet the criteria set forth in this

final rule. While it is anticipated that most, if not all, of the

alternative treatment settings initially eligible for inclusion under

this new provider category are authorized for payment under Medicare,

there is a provision in the final rule (32 CFR 199.6(f)(2)(v)) which

allows accreditation by a qualified accrediting organization as defined

in the definition section of CFR (32 CFR 199.2) when Medicare approved

status is not required. This definition provides specific criteria for

recognition of qualified accreditation organizations under CHAMPUS.

Under the prescribed provisions set forth in this final rule, the

corporate entity must be an authorized provider under CHAMPUS in order

for payment of professional services to be authorized. For example, a

corporate entity which is neither recognized by Medicare or any other

accreditation organization as prescribed under the definition section

of the CFR (32 CFR 199.2), coverage could not be extended for

professional services even if the individual professional providers

would have otherwise been eligible for payment except for their

affiliation with the corporate entity. In other words, while the

expanded provider category will allow coverage of professional services

for corporate entities, meeting the conditions for authorization

established under this rule, it will at the same time restrict coverage

of professional services for those corporate entities which cannot meet

those criteria for corporate services provider authorization under

CHAMPUS.

Comment 3. One commentor recommended that comprehensive outpatient

rehabilitation facilities (CORFs) be explicitly addressed in the final

rule as a type of corporate service provider so there is no

misunderstanding in the future as to the ability of CORFs to provide

services to CHAMPUS beneficiaries.

Response: The response to this comment is similar to the rationale

used in the previous response as to why a list of qualified

accreditation agencies or organizations are not specifically listed in

the final rule. Again, a laundry list of qualifying corporate service

providers would negate the agency's authority to promptly recognize by

administrative policy, rather than having to go through the much longer

rulemaking procedures for those corporate service providers who may in

the future meet the criteria for authorization set down in this rule.

For example, recognition of a new corporate services provider as an

authorized provider under CHAMPUS would take three to six months

through the administrative policy process (i.e., simply making changes

to the program policy guidelines), compared to twelve to sixteen months

through the formal rulemaking.

Comment 4. Another commentor felt that specific guidelines for the

authorization process should be addressed in the final rule so that

there is no misunderstanding by the providers or CHAMPUS contractors.

Response. It is felt that the incorporation of specific

certification guidelines is unnecessary, since the authorization status

of corporate services providers under CHAMPUS is already contingent on

nationally recognized certification criteria (i.e., authorization/

certification guidelines established by Medicare and other accrediting

organizations as prescribed under the definition section of the CFR (32

CFR 199.2)). This would also impose an unnecessary administrative

burden on the agency, since 32 CFR 199 would have to be continually

updated to keep current with changes in national certification

guidelines for this particular provider class.

Comment 5. One commentor wanted to know the conditions under which

the Director, OCHAMPUS, or designee, may limit the term of a

participation agreement for corporate services. It was recommended that

limitations be explicit and known to the providers and CHAMPUS

contractors.

Response. As was stated previously, corporate services providers

must also enter into a participation agreement which will be sent out

as part of the initial certification process. The participation

agreement will ensure that CHAMPUS determined allowable payments,

combined with the cost-share/copayment, deductible, and other health

insurance amounts, will be accepted by the provider as payment in full.

The agreement will be binding on the provider and OCHAMPUS upon

acceptance by the Director, OCHAMPUS, or designee, and shall stay in

effect until terminated by either party. The effective day of the

participation will be the date the agreement is signed by the Director,

OCHAMPUS, or designee.

The agreement may be terminated by either party giving the other

party written notice of termination. Such notice of termination is to

be received by the other party no later than 45 days prior of the date

of termination. In the event of transfer of ownership, the agreement is

assigned to the new owner, subject to the conditions specified in this

agreement and pertinent regulations. The participation agreement will,

at a minimum, contain all of the required provisions as outlined in

this rule (32 CFR 199.6(a)(13)). Violation of one or more of these

requirements will be ground for termination by the Director, OCHAMPUS,

or designee.

Comment 6. Another commentor wants to know if the definition of a

corporate services provider encompasses vocational rehabilitation

facilities and other community based rehabilitation providers.

Response. The following conditions must be met in order for

vocational rehabilitation and community based rehabilitation providers

to meet the definition of corporate services provider

[[Page 11768]]

as prescribed under the provisions of this rule: (1) that the corporate

entity be approved for Medicare payment, or when Medicare approval

status is not required, be accredited by a qualified accreditation

organization, as defined in 32 CFR 199.2; (2) that the services are

covered program benefits rendered by CHAMPUS authorized individual

providers as designated in 32 CFR 199.6 the corporate entity has

entered into a participation agreement that at least complies with the

minimum participation agreement requirements set forth in this final

rule.

Comment 7. One commentor had concerns regarding the potential cost

impact of provider expansion on the CHAMPUS program.

Response. Currently professional outpatient health care which could

be supplied by corporate services providers (e.g., home health agencies

and comprehensive outpatient rehabilitation facilities) is obtained

through hospitals. CHAMPUS reimburses professional outpatient hospital

services as billed if a specific procedure code is not identifiable on

the institutional billing form. The same services received from

corporate services providers are always paid under the CHAMPUS Maximum

Allowable Charge (CMAC) reimbursement methodology. Under CMAC

reimbursement is limited to the billed charge or CHAMPUS-determined

allowable amount (in most cases the CMAC), whichever is less. The CMAC

is generally less than the billed charge; therefore, with the addition

of the proposed types of providers, CHAMPUS could potentially pay less

for professional health services. At worst, the impact would be budget

neutral, given the fact that professional services are paid in

accordance with the CHAMPUS Maximum Allowable Charge regardless of

whether the provider is authorized under the CHAMPUS regulatory

definition for individual professional provider or under the corporate

services provider class.

Comment 8. One commentor recommended that CHAMPUS recognize the

Commission on Accreditation of Rehabilitation Facilities (CARF)

accreditation for corporate services providers, since it is a

nationally recognized accrediting body for inpatient, outpatient,

vocational, behavioral, community based rehabilitation services and

programs.

Response. Under the provisions promulgated in this rule, a

corporate entity must maintain Medicare approval for payment if it is a

category or type of provider that is substantially comparable to a

provider or supplier for which Medicare has regulatory conditions of

participation or coverage. However, if regulatory provisions for

participation in the Medicare program are not available for a

particular category of provider, accreditation by a qualified

accreditation organization may be used in lieu of Medicare for

conveying CHAMPUS provider authorization status. Recognition of the

Commission on Accreditation of Rehabilitation Facilities (CARF) for

accreditation of corporate services providers as a condition of

authorization under CHAMPUS is contingent on its compliance with the

qualifying criteria established under the definition of ``Qualified

accreditation organization'' appearing in 32 CFR 199.2. In other words,

if Medicare certifies a particular corporate services provider class,

the providers' Medicare certification (approval for payment) must be

used as a condition for authorization under CHAMPUS. If not, the

accreditation of an accrediting organization that meets the qualifying

criteria under the definition of ``Qualified accreditation

organization'' appearing in 32 CFR 100.2 will have to be used.

Comment 9. A final commentor wanted to know if a CORF that was also

a professional corporation or professional association would be

eligible as an authorized corporate services provider.

Response. One of the conditions of authorization under the new

provider class designation (i.e., to be authorized under CHAMPUS as a

corporate services provider) is that the applicant be a freestanding

corporation or foundation, but not a professional corporation or

professional association.

IV. Regulatory Matters

Executive Order 12866 requires certain regulatory assessments for

any ``significant regularly action'' defined as one that would result

in an annual effect on the economy of $100 million or more, or have

other substantial impacts.

The Regulatory Flexibility Act (RFA) requires that each Federal

agency prepare, and make available for public comment are regulatory

flexibility analysis when the agency issues a regulation which would

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

Approximately 850 corporate or foundation physician groups and

4,500 freestanding Medicare certified in-home health care agencies will

become eligible to apply for CHAMPUS provider status on the effective

date of this rule. Since these changes are simply a competitive

redistribution of ambulatory care benefit costs for already existing

benefits, we certify that this final rule is not a major under

Executive Order 12866, and will not have a significant economic impact

on a substantial number of small entities under the criteria set forth

in the Regulatory Flexibility Act.

Paperwork Reduction Act of 1995 (44 U.S.C. 3501-2511) requires all

Departments to submit to the Office of Management and Budget (OMB) for

review and approval any reporting or record keeping requirements in a

proposed or final rule. The final rule will require information from

the provider applicant to document that the criteria for CHAMPUS-

provider status are met. The development of a corporate services

provider application form has been accomplished along with an

accompanying participation agreement. A notice for the proposed

information collection appeared in the Federal Register on July 31,

1998 (63 FR 40882). The proposed information collection will be

submitted to OMB concurrently with the publication of the final rule in

the Federal Register.

Comments on these requirements should be submitted to the Office of

Information and Regulatory Affairs, OMB, 725 17th Street, N.W.,

Washington, DC 20503, marked ``Attention Desk Officer for Department of

Defense, Health Affairs.''

List of Subjects in 32 CFR Part 199

Claims, Health insurance, Individuals and disabilities, Military

personnel, Reporting and recordkeeping requirements.

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 revising the definition for

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

services provider,'' ``Economic interest,'' and ``Qualified

accreditation organization '' in alphabetical order to read as follows:

Sec. 199.2 Definitions.

* * * * *

(b) * * *

Corporate services provider. A health care provider that meets the

applicable requirements established by Sec. 199.6(f).

* * * * *

Economic interest. (1) Any right, title, or share in the income,

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

of an individual

[[Page 11769]]

or entity eligible to be a CHAMPUS-authorized provider, resulting,

directly or indirectly, from a referral relationship; or any direct or

indirect ownership, right, title, or share, including a mortgage, deed

of trust, note, or other obligation secured (in whole or in part) by

one entity for another entity in a referral or accreditation

relationship, which is equal to or exceeds 5 percent of the total

property and assets of the other entity.

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

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

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

a CHAMPUS-authorized provider.

(3) An accreditation relationship exists when a CHAMPUS-authorized

accreditation organization evaluates for accreditation an entity that

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

status.

* * * * *

Participating provider. A CHAMPUS-authorized provider that is

required, or has agreed by entering into a CHAMPUS participation

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

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

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

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

CHAMPUS beneficiary.

* * * * *

Qualified accreditation organization. A not-for-profit corporation

or a foundation that:

(1) Develops process standards and outcome standards for health

care delivery programs, or knowledge standards and skill standards for

health care professional certification testing, using experts both from

within and outside of the health care program area or individual

specialty to which the standards are to be applied;

(2) Creates measurable criteria that demonstrate compliance with

each standard;

(3) Publishes the organization's standards, criteria and evaluation

processes so that they are available to the general public;

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

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

with each standard;

(5) Provides on-site evaluation or individual testing on a national

or international basis;

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

limited written certification of compliance with the organization's

standards;

(7) Excludes certification of any program operated by an

organization which has an economic interest, as defined in this

section, in the accreditation organization or in which the

accreditation organization has an economic interest;

(8) Publishes promptly the certification outcomes of each program

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

public; and

(9) Has been found by the Director, OCHAMPUS, or designee, to apply

standards, criteria, and certification processes which reinforce

CHAMPUS provider authorization requirements and promote efficient

delivery of CHAMPUS benefits.

* * * * *

Sec. 199.4 [Amended]

3. Section 199.4 is amended by removing and reserving paragraphs

(g)(70) and (g)(71).

4. Section 199.6 is amended by revising paragraphs (a)(8), (c)(1),

and (c)(2); adding paragraphs (a)(12) and (a)(13); removing paragraph

(b)(1)(iii); redesignating paragraphs (f) and (g) as paragraphs (a)(14)

and (a)(15); and adding new paragraph (f) to read as follows:

Sec. 199.6 Authorized providers.

(a) * * *

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

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

circumstances:

(i) Mandatory participation. (A) All Medicare-participating

hospitals must be CHAMPUS participating providers for all inpatient

CHAMPUS claims.

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

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

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

into a participation agreement with CHAMPUS for all inpatient claims in

order to be a CHAMPUS-authorized provider.

(C) Corporate services providers authorized as CHAMPUS providers

under the provisions of paragraph (f) of this section must enter into a

participation agreement as provided by the Director, OCHAMPUS, or

designee.

(ii) Voluntary participation--(A) Total claims participation: The

participating provider program. A CHAMPUS-authorized provider that is

not required to participate by this part may become a participating

provider by entering into an agreement or memorandum of understanding

(MOU) with the Director, OCHAMPUS, or designee, which includes, but is

not limited to, the provisions of paragraph (a)(13) of this section.

The Director, OCHAMPUS, or designee, may include in a participating

provider agreement/MOU provisions that establish between CHAMPUS and a

class, category, type, or specific provider, uniform procedures and

conditions which encourage provider participation while improving

beneficiary access to benefits and contributing to CHAMPUS efficiency.

Such provisions shall be otherwise allowed by this part or by DoD

Directive or DoD Instruction specifically pertaining to CHAMPUS claims

participation. Participating provider program provisions may be

incorporated into an agreement/MOU to establish a specific CHAMPUS-

provider relationship, such as a preferred provider arrangement.

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

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

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

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

basis by indicating ``accept assignment'' on each claim form for which

participation is elected.

* * * * *

(12) Medical records. CHAMPUS-authorized provider organizations and

individuals providing clinical services shall maintain adequate

clinical records to substantiate that specific care was actually

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

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

is inpatient or outpatient. The minimum requirements for medical record

documentation are set forth by all of the following:

(i) The cognizant state licensing authority;

(ii) The Joint Commission on Accreditation of Healthcare

Organizations, or the appropriate Qualified Accreditation Organization

as defined in Sec. 199.2;

(iii) Standards of practice established by national medical

organizations; and

(iv) This part.

(13) Participation agreements. A participation agreement otherwise

required by this part shall include, in part, all of the following

provisions requiring that the provider shall:

(i) Not charge a beneficiary for the following:

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

CHAMPUS;

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

CHAMPUS

[[Page 11770]]

payment made had the provider complied with certain procedural

requirements.

(C) Services not medically necessary and appropriate for the

clinical management of the presenting illness, injury, disorder or

maternity;

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

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

and

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

in compliance with one or more conditions of authorization;

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

CHAMPUS administrative policy;

(iii) Accept the CHAMPUS determined allowable payment combined with

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

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

allowed services;

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

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

share;

(v) Permit access by the Director, OCHAMPUS, or designee, to the

clinical record of any CHAMPUS beneficiary, to the financial and

organizational records of the provider, and to reports of evaluations

and inspections conducted by state, private agencies or organizations;

(vi) Provide the Director, OCHAMPUS, or designee, prompt written

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

time during the twelve months preceding such employment, was employed

in a managerial, accounting, auditing, or similar capacity by an agency

or organization which is responsible, directly or indirectly for

decisions regarding Department of Defense payments to the provider;

(vii) Cooperate fully with a designated utilization and clinical

quality management organization which has a contract with the

Department of Defense for the geographic area in which the provider

renders services;

(viii) Obtain written authorization before rendering designated

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

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

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

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

service;

(x) Maintain contemporaneous clinical records that substantiate the

clinical rationale for each course of treatment, periodic evaluation of

the efficacy of treatment, and the outcome at completion or

discontinuation of treatment;

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

referring provider does not have an economic interest, as defined in

Sec. 199.2; and

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

receipt of payment by the CHAMPUS authorized provider discharges the

payment liability of the beneficiary.

* * * * *

(c) Individual professional providers of care--(1) General--(i)

Purpose. This individual professional provider class is established to

accommodate individuals who are recognized by 10 U.S.C. 1079(a) as

authorized to assess or diagnose illness, injury, or bodily malfunction

as a prerequisite for CHAMPUS cost-share of otherwise allowable related

preventive or treatment services or supplies, and to accommodate such

other qualified individuals who the Director, OCHAMPUS, or designee,

may authorize to render otherwise allowable services essential to the

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

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

(ii) Professional corporation affiliation or association membership

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

health care professionals who have formed a professional corporation or

association pursuant to applicable state laws. Such a professional

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

authorized individual professional provider and be the payee for any

payment resulting from such claims when the CHAMPUS-authorized

individual certifies to the Director, OCHAMPUS, or designee, in writing

that the professional corporation or association is acting on the

authorized individual's behalf.

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

authorized, otherwise allowable services provided by a CHAMPUS-

authorized individual professional provider shall be within the scope

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

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

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

was the basis for the individual's qualifying certification.

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

indirectly by contract, by an individual or entity to render

professional services otherwise allowable by this part is excluded from

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

of each employment.

(v) Training status exclusion. Individual health care professionals

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

ongoing supervision as training to be credited towards earning a

clinical academic degree or other clinical credential required for the

individual to practice independently are excluded from provider status

as established by this paragraph (c) for the duration of such training.

(2) Conditions of authorization--(i) Professional license

requirement. The individual must be currently licensed to render

professional health care services in each state in which the individual

renders services to CHAMPUS beneficiaries. Such license is required

when a specific state provides, but does not require, license for a

specific category of individual professional provider. The license must

be at full clinical practice level to meet this requirement. A

temporary license at the full clinical practice level is acceptable.

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

license a specific category of individual professional, certification

by a Qualified Accreditation Organization, as defined in Sec. 199.2, is

required. Certification must be at full clinical practice level. A

temporary certification at the full clinical practice level is

acceptable.

(iii) Education, training and experience requirement. The Director,

OCHAMPUS, or designee, may establish for each category or type of

provider allowed by this paragraph (c) specific education, training,

and experience requirements as necessary to promote the delivery of

services by fully qualified individuals.

(iv) Physician referral and supervision. When physician referral

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

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

referral and supervision means that the physicians must actually see

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

to referring the beneficiary to another provider and that the referring

physician provides ongoing oversight of the course of referral related

treatment throughout the period during which the beneficiary is being

treated in response to the referral. Written contemporaneous

documentation of the referring physician's basis for referral and

ongoing communication between the referring and treating provider

regarding the oversight of the treatment

[[Page 11771]]

rendered as a result of the referral must meet all requirements for

medical records established by this part. Referring physician

supervision does not require physical location on the premises of the

treating provider or at the site of treatment.

* * * * *

(f) Corporate services providers.--(1) General. (i) This corporate

services provider class is established to accommodate individuals who

would meet the criteria for status as a CHAMPUS authorized individual

professional provider as established by paragraph (c) of this section

but for the fact that they are employed directly or contractually by a

corporation or foundation that provides principally professional

services which are within the scope of the CHAMPUS benefit.

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

CHAMPUS-authorized corporate services provider subject to the

applicable requirements, exclusions and limitations of this part.

(iii) The Director, OCHAMPUS, or designee, may create discrete

types within any allowable category of provider established by this

paragraph (f) to improve the efficiency of CHAMPUS management.

(iv) The Director, OCHAMPUS, or designee, may require, as a

condition of authorization, that a specific category or type of

provider established by this paragraph (f):

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

requirement of paragraph (f)(2)(v) of this section;

(B) Cooperate fully with a designated utilization and clinical

quality management organization which has a contract with the

Department of Defense for the geographic area in which the provider

does business;

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

expected to be made by CHAMPUS only after obtaining CHAMPUS written

authorization; and

(D) Maintain Medicare approval for payment when the Director,

OCHAMPUS, or designee, determines that a category, or type, of provider

established by this paragraph (f) is substantially comparable to a

provider or supplier for which Medicare has regulatory conditions of

participation or conditions of coverage.

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

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

beneficiary's home under such circumstances as the Director, OCHAMPUS,

or designee, determines to be necessary for the efficient delivery of

such in-home services.

(vi) The Director, OCHAMPUS, or designee, may limit the term of a

participation agreement for any category or type of provider

established by this paragraph (f).

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

the following allowable categories based upon the predominate type of

procedure rendered by the organization;

(A) Medical treatment procedures;

(B) Surgical treatment procedures;

(C) Maternity management procedures;

(D) Rehabilitation and/or habilitation procedures; or

(E) Diagnostic technical procedures.

(viii) The Director, OCHAMPUS, or designee, shall determine the

appropriate procedural category of a qualified organization and may

change the category based upon the provider's CHAMPUS claim

characteristics. The category determination of the Director, OCHAMPUS,

designee, is conclusive and may not be appealed.

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

following conditions to be eligible for authorization as a CHAMPUS

corporate services provider:

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

corporation or professional association; and

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

Sec. 199.2; and

(iii) Provide:

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

individual professional providers or diagnostic technical services and

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

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

rendered or who is certified by a Qualified Accreditation Organization

as defined in Sec. 199.2; and

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

be provided with on-site sleeping accommodations and food in

conjunction with the delivery of services; and

(iv) Complies with all applicable organizational and individual

licensing or certification requirements that are extant in the state,

county, municipality, or other political jurisdiction in which the

provider renders services; and

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

substantially comparable under the provisions of paragraph

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

required, be accredited by a qualified accreditation organization, as

defined in Sec. 199.2; and

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

Director, OCHAMPUS, or designee, which at least complies with the

minimum participation agreement requirements of this section.

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

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

ownership, the provider agreement is automatically assigned to the new

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

agreement was made.

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

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

corporations or foundations resulting in the creation of a new

corporation or foundation, constitutes a change of ownership.

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

corporation or foundation into the provider corporation or foundation

does not constitute change of ownership.

(iii) The surviving corporation or foundation shall notify the

Director, OCHAMPUS, or designee, in writing of the change of ownership

promptly after the effective date of the transfer or change in

ownership.

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

procedures rendered by a provider authorized under this paragraph (f)

shall be limited to those methods for pricing and payment allowed by

this part which the Director, OCHAMPUS, or designee, determines

contribute to the efficient management of CHAMPUS.

(5) Termination of participation agreement. A provider may

terminate a participation agreement upon 45 days written notice to the

Director, OCHAMPUS, or designee, and to the public.

Dated: February 26, 1999.

L.M. Bynum,

Alternate OSD Federal Register Liaison, Officer, Department of Defense.

[FR Doc. 99-5528 Filed 3-9-99; 8:45 am]

BILLING CODE 5000-04-M